Tritax EuroBox PLC Tritax EuroBox -BOXE - Results for the six months ended 31 March 2024
16/05/2024 07:00
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RNS Number : 6326O Tritax EuroBox PLC 16 May 2024
Half-year results for
the six months ended
31 March 2024
16 May 2024
Continued progress on strategic priorities has delivered a solid operational
performance, with good visibility on further improvement in the second half.
FY24 half-year key figures
Financial performance
Six months to: 31 March 2024 31 March 2023 Change
IFRS rental income €35.9m €32.6m 10.1%
Adjusted earnings per share (EPS)(1) 2.62 cents 2.70 cents (3.0)%
IFRS Basic EPS(1) (2.32) cents (27.20) cents 91.5%
Dividend per share 2.50 cents 2.50 cents -
Total Return (3.0)% (22.1)% 19.1 pts
31 March 2024 30 September 2023 Change
Portfolio value(2) €1,464.8m €1,561.9m (6.2)%
- like-for-like portfolio valuation change (2.9)%
EPRA net tangible assets (NTA) per share €0.96 €1.02 (5.9)%
IFRS Basic NAV per share €0.94 €0.99 (5.1)%
Loan to value (LTV) ratio(3) 44.5% 46.4% (1.9) pts
Annualised rental income(4) €74.3m €76.3m (2.6)%
Operational performance
31 March 2024 31 March 2023 30 September 2023
H1 24 H1 23 FY23
Like-for-like rental growth(5) (0.3)% 2.8% 4.5%
Rent collection 100% 100% 100%
Weighted average unexpired lease term(6) 7.8 years 7.9 years 7.9 years
EPRA vacancy rate 3.9% 5.4% 5.5%
Adjusted EPRA cost ratio(7) 24.1% 25.6% 24.2%
Average cost of debt 1.4% 1.2% 1.3%
Like-for-like estimated rental value (ERV) growth(8) 4.0% 3.4% 6.5%
Chairman's commentary
Robert Orr, Chairman of Tritax EuroBox plc, commented:
"Over the past six months, we have continued to build on the good progress
made on delivering the strategic priorities we outlined 18 months ago. A solid
operational performance is reflected in the cost ratio within our target
range, the dividend remaining fully covered, and the further advancement of
our planned disposal programme that continues to lower balance sheet leverage.
"Asset sales have now reached €173 million, and we expect to complete the
disposal programme and move our debt metrics towards target levels by the end
of 2024. In total, these transactions have been completed broadly in line
with book values, demonstrating the attractiveness of our portfolio in what
has been a challenging period in investment markets. Reflecting this uncertain
market backdrop, investment yields have continued to soften leading to our
portfolio valuation declining marginally over the period.
"We remain confident our high-quality portfolio and customer base continues to
place the Company in a strong position to benefit from the supportive
structural drivers and market dynamics in the European logistics sector.
However, despite the progress with our strategic priorities and
well-positioned portfolio, the Board remains acutely aware of the significant
share price discount to NAV. The Board is in regular dialogue with the Manager
and the Board's advisers about how to address this issue, and there is a clear
alignment and focus to deliver value for all shareholders in an effective and
efficient manner."
FY24 half-year results overview
Rental income impacted by disposals; dividend remains covered
· IFRS rental income of €35.9 million, up 10.1%, reflecting rent
indexations, asset management activity and conversion of rental guarantees
into income partly offset by disposals
· Annualised rental income of €74.3 million, down 2.6%, primarily due to
the sales programme. Like-for-like(5) rental decline of 0.3% over six months,
with income growth offset by lease and rental guarantee expiries.
· Adjusted EPRA Cost Ratio(7) of 24.1% (H1 23: 25.6%), in line with our
target range of 20-25%, benefiting from a lower Management fee due to the
lower portfolio valuation.
· Adjusted EPS(1) of 2.62 cents, down 3.0%, primarily due to disposals.
· Dividend per share of 2.50 cents was 104.7% covered by Adjusted EPS
for the period.
Investment portfolio let to strong customers on long-term, inflation-linked
leases
· Portfolio value(2) of €1,464.8 million (FY23: €1,561.9 million),
reflecting the disposals of Bochum and Malmö and a like-for-like reduction of
2.9% primarily due to continued sector-wide outward yield shift, partly offset
by ERV growth.
· Decline in portfolio value led to a reduction in NTA per share to
€0.96 (FY23: €1.02) and a negative Total Return of 3.0% (FY23: negative
22.5%).
· Portfolio reversion of 21.3% or €15.9 million, reflecting a
like-for-like increase in portfolio ERV of 4.0%.
· 97% of leases subject to annual rental increases, with a WAULT to expiry
of 9.5 years and 82% linked to inflation.
· Decrease in EPRA vacancy rate to 3.9% (FY23: 5.5%) reflecting the new
lettings in Italy, Sweden and Poland. The post period end short-term letting
in Poland reduces this to 3.1%.
Asset management and indexation added €1.8 million to annualised rental
income(4)
· Three new leases at Settimo Torinese, Rosersberg 1 and Strykow total
€1.6 million of annual rent. Post period end, signed an additional
short-term lease at Strykow, securing rent of €0.6 million.
· Asset sales in Bochum and Malmö for €46.8 million and €28.3
million respectively, and post period end in Gothenburg for €33.5 million.
The disposal programme has now reached €173 million, with overall sales in
line with book value.
· Ongoing integration of ESG objectives into operations, including
progress with the four German solar PV projects that will more than double
installed capacity to 21.5MWp from 10.3MWp. Installation is expected to
commence in Q4 2024.
Balance sheet benefitting from low cost of debt and no near-term refinancing
· 100% of drawn debt with fixed rates, with an average cost of debt of
1.43% for H1 24. €250.0 million of undrawn debt facilities as at period end.
· 3.0-year weighted maturity, with earliest refinancing of drawn debt
not required until Q2 2026.
· Fitch investment grade rating re-affirmed and outlook upgraded to
Stable.
· Loan to value (LTV) ratio(3) of 44.5% remains above our preferred
range, with the benefit of disposal proceeds partly offset by the portfolio
valuation decline and capital expenditure on the Oberhausen development.
· Taking into account the post period end disposal at Gothenburg, the
pro-forma LTV decreases to 43.3%.
· Covenant headroom with LTV(3) of 44.5%, interest cover of 4.8x and
gearing of 86.1%, versus covenants of 65%, 1.5x and 150.0% respectively.
Notes
1. See note 7 to the condensed financial statements for reconciliation.
2. Valuation under IFRS (excluding rental guarantees), this includes assets
held for sale.
3. As per KPI definition.
4. Contracted rent, on an annualised basis, at the reporting date. With the
additions of rental guarantees.
5. Excluding extensions at Strykow, the like-for-like rental income decline is
0.3%. Rental income growth for the stabilised portfolio of 0.6%.
6. Weighted average unexpired lease term to break is 7.8 years and weighted
average unexpired lease term to expiry is 9.5 years.
7. Including rental guarantees.
8. Like-for-like ERV growth for six months for H1 24 and H1 23, and for 12
months for FY23.
Presentation for investors and analysts
A Company presentation for analysts and investors will take place via a live
webcast at 09:00am (UK time) today. To view the live webcast, please register
via this link:
Tritax EuroBox plc - 2024 half-year results
(https://stream.brrmedia.co.uk/broadcast/6602f026734d5232a84634ec)
Analysts and investors will also be able to listen to the event via a
moderated conference call using the following details:
Phone number: +44 (0) 33 0551 0200
Participant access: quote 'EuroBox Half-year results'
The presentation will also be accessible on-demand later in the day from the
Company website:
tritaxeurobox.co.uk/investors/results-and-presentations/
(https://www.tritaxeurobox.co.uk/investors/results-and-presentations/) .
A Company presentation aimed more towards retail investors will take place via
a live webcast at 11:30am (UK time) on Friday 17 May 2024. Investors can sign
up to Investor Meet Company for free and add to meet Tritax EuroBox plc via:
https://www.investormeetcompany.com/tritax-eurobox-plc/register-investor
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
16 May 2024, 09:00am (UK time), or at any time during the live presentation.
Investors who already follow Tritax EuroBox plc on the Investor Meet Company
platform will automatically be invited.
Further information
Tritax EuroBox plc
+44 (0) 20 8051 5070
Phil Redding - CEO for Tritax EuroBox plc
Mehdi Bourassi - CFO for Tritax EuroBox plc
Charles Chalkly - Investor Relations Director for Tritax EuroBox plc
Kekst CNC (Media enquiries)
Tom Climie / Guy Bates
+44 (0) 7760 160 248 / +44 (0) 7581 056 415
tritax@kekstcnc.com (mailto:tritax@kekstcnc.com)
Notes:
Further information on the Company is available at: tritaxeurobox.co.uk
(http://www.tritaxeurobox.co.uk)
The Company's LEI is: 213800HK59N7H979QU33.
Chairman's statement
During the period, we have delivered further progress on the strategic
priorities set out 18 months ago. IFRS rental income has increased by 10.1%,
our Adjusted EPRA Cost Ratio of 24.1% remains within our target range and the
dividend remains well covered. We have disposed of three further assets and
are confident the remaining planned sales will move the LTV ratio towards our
preferred percentage range of low 40s by the end of the year. The use of sale
proceeds to primarily reduce leverage has, as expected, impacted annualised
rental income and Adjusted Earnings, which have reduced by 2.6% and 3.0%
respectively.
Despite the challenging macro-economic backdrop, our portfolio remains
well-positioned. The high-quality assets and strong income characteristics are
demonstrated by our 100% rent collection, high occupancy, roster of strong
customers on long leases and annual rental increases through indexation.
However, the continuation of restrictive monetary conditions has caused
investment markets to remain subdued and valuation yields to drift higher
across European logistics markets. Reflecting these market conditions, during
the period we experienced a small reduction in the valuation of our portfolio.
In spite of this, we are encouraged to see macro-economic expectations
improving and investor sentiment turning more positive.
Financial performance driven by further progress on our strategic priorities
IFRS rental income increased to €35.9 million (H1 23: €32.6 million),
mainly due to letting activity converting rental guarantees to IFRS income.
The Company's Adjusted EPRA Cost Ratio improved to 24.1% (H1 23: 25.6%),
benefiting from a reduced Management fee derived from the lower portfolio
valuation. However, the positive effect on earnings from these income and cost
movements was more than offset by the two disposals completed during the
period. The Adjusted EPS consequently decreased by 3.0% to 2.62 cents (H1 23:
2.70 cents).
However, the dividend remained covered at 104.7% of Adjusted EPS, with a
declared dividend totalling 2.50 cents per share for the period, in line with
the previous year.
The portfolio was independently valued by CBRE at €1,464.8 million at the
period end (FY23: €1,561.9 million), reflecting the two asset disposals and
representing a like-for-like valuation reduction of 2.9% versus September
2023. Valuation declines were partially mitigated by continued ERV growth of
4.0% growing the reversionary potential of the portfolio to €15.9 million
(21.3%). Overall, this resulted in EPRA NTA per share of €0.96, down 5.9%
(FY23: €1.02).
In line with our previously announced disposal programme, during the period we
completed the sales of assets in Bochum (Germany) for €46.8 million and in
Malmö (Sweden) for €28.3 million. Post period end we completed the sale of
an asset in Gothenburg (Sweden) for €33.5m and this brought sales completed
over the last 12 months to €173 million.
Including the post period end sale of Gothenburg, our LTV has reduced further
to 43.3%. We will look to complete the disposal programme in the second half
of 2024, which is expected to lower leverage towards our preferred percentage
range in the low 40s.
The Company continues to benefit from a low average cost of debt of 1.43% due
to the fixed or capped rates on all its borrowings. As the Revolving Credit
Facility (RCF) has been repaid during the period, the Company's earliest
refinancing is the €500 million green bond. The Company expects to refinance
the RCF and the bond ahead of their respective maturities in October 2025 and
June 2026.
During the period, Fitch Ratings affirmed the Company's investment grade
rating and revised up the Company's outlook to Stable from Negative. Together
these underline the good progress made on targeted disposals and the overall
quality of the portfolio.
Advancement of our ESG strategy, particularly our solar PV installations
We continue to focus on delivering our ESG strategy and on the targets we
launched a year ago. Improved ratings from CDP and Sustainalytics demonstrated
this progress in our ESG performance. Our focus over the past six months has
been on the four solar PV projects in Germany which will more than double
portfolio capacity to 21.5MWp from 10.3MWp. We have now secured a guaranteed
floor price for power entering the grid on the four schemes and have also made
good progress on agreeing Power Purchase Agreements with our customers.
Installation is expected to begin in Q4 2024.
As part of its ongoing programme of engagement with investors, the Board met
with seven of the top-10 shareholders and directly interacted with
approximately half of the Company's active, institutional shareholders during
the period. The Board remains committed to maintaining an active dialogue with
shareholders and has appreciated the productive discussions, including those
on strategic options available to the Company.
Outlook
The future performance of the business is underpinned by our portfolio of
high-quality, modern logistics assets that are mission-critical to our
customers. Our buildings have strong ESG credentials and are concentrated in
the major distribution corridors in key European markets, which means they
remain well-positioned to deliver performance and value to stakeholders over
the long term.
With a steady reduction in inflation in recent months, we have seen increasing
confidence that the rate hiking cycle in Europe is now behind us and
expectations that the next movement in rates will be downwards. Signs are
emerging that investor sentiment and wider capital markets are responding to
this shift, as demonstrated by the increase in European logistics transaction
volumes recorded in the period, up 17% versus the same period in the prior
year. This improvement underpins the growing consensus that we are near the
end of interest-rate-driven outward yield shift and the market backdrop should
be more supportive for asset values through the remainder of 2024 and into
2025.
Occupational markets remain broadly healthy, particularly in core markets
where supply remains constrained and vacancy levels are low. Take-up continues
to be well supported by the ongoing structural drivers of demand and the
diversified nature of occupational requirements from a range of business
sectors. However, we are seeing evidence of the more challenging economic
outlook in Continental Europe leading to increasing caution from some
occupiers, with decision-making taking longer and expansion plans being
reviewed.
Within this context, our high-quality and well-located portfolio has allowed
us to benefit from positive structural drivers and supportive market dynamics,
and the roster of strong customers on long, inflation-linked leases with
minimal exposure to development risk also provides defensive characteristics
in the event occupational markets become tougher.
Although future income growth from within our own portfolio will continue to
be primarily driven by the annual fixed and index-linked uplifts inherent in
nearly all our leases, unlocking the €15.9 million (21.3%) of rent reversion
within the portfolio through asset-management initiatives remains a priority.
In addition, the ongoing engagement with our strong customer base will
continue to be a source of new opportunities to grow income.
The Board continues to believe the emphasis on delivering high-quality
earnings, paying a covered dividend, and maintaining balance sheet strength
through completing the planned disposal programme, remains appropriate and
will deliver value to Shareholders in the long term.
However, despite the progress with our strategic priorities and
well-positioned portfolio, the Board remains acutely aware of the significant
share price discount to NAV. The Board is in regular dialogue with the Manager
and the Board's advisers about how to address this issue, and there is a clear
alignment and focus to deliver value for all shareholders in an effective and
efficient manner.
Manager's report
18 months ago, we set out four key priorities: to capture income growth
opportunities embedded within the existing portfolio; to improve operational
efficiencies to lower the cost ratio; to combine these activities to drive
earnings per share and deliver a covered dividend for the year; and to
underpin these activities by maintaining balance sheet strength. Over the past
six months, the Company has taken further steps in delivering these priorities
despite the economic and property market backdrop remaining challenging.
Market sentiment has continued to be influenced by macro-economic factors,
with the continuation of restrictive monetary conditions and uncertainty on
the timing of interest rate cuts, leading many investors to adopt a
"wait-and-see" approach. This environment has led to valuations across some of
our markets to drift lower during the period. However, with inflation in
Continental Europe on a downward trajectory and expectations that interest
rates will also turn lower, this should provide a more supportive backdrop for
our markets over the remainder of the year.
While investment volumes have remained subdued, more recently we have seen
evidence of activity picking up, particularly from those investors with high
conviction on the sector's long-term structural drivers and strong market
fundamentals. The reported up-tick in investment volumes during the period
reflects this trend and is also an encouraging sign that activity should gain
momentum through the year and into 2025. However, stability and valuation
improvement will likely remain dependent on the extent and timing of Central
Bank actions in the near term.
Occupier markets in Continental Europe have also not been immune to the more
challenging economic outlook, with take-up declining, albeit off the back of
three very strong years through the pandemic. Demand remains broad-based but
some occupiers are becoming more cautious, and decision-making is taking
longer.
The significant decline in development pipelines towards the end of last year
has mitigated to a degree this fall in demand, with average vacancy levels
only increasing moderately in most markets. Increases in country averages also
mask a divergence between core markets, that remain very tight, and peripheral
markets, where speculative development is taking longer to lease up. Overall,
occupier market fundamentals remain robust and continue to support positive
rental growth.
Delivering on our strategic priorities
A key part of our focus on driving operational performance is the capture of
income growth opportunities embedded within the existing property portfolio.
In line with this objective, we successfully completed several initiatives
during the period increasing IFRS rental Income to €35.9 million, up 10.1%
from the previous interim period, reflecting rent indexations, asset
management activity and new lettings converting rental guarantees into rental
income.
The annualised rental income of €74.3 million was down 2.6%, as a result of
the disposals over the past 12 months. On a like-for-basis, the annualised
income decreased by 0.3%, driven by the rental guarantee expiry at Rosersberg.
On the stabilised portfolio (excluding the Rosersberg assets), the
like-for-like income grew 0.6%. With good visibility on new income and lease
indexations weighted to the second half of the year, we anticipate the
stabilised portfolio will deliver like-for-like income growth of between 3%
and 5% for the full financial year.
The portfolio's EPRA vacancy rate reduced to 3.9% from 5.5% reflecting this
good progress in letting recently completed speculatively developed schemes at
Settimo Torinese (Italy) and Rosersberg (Sweden). The post period end
short-term letting of existing vacant space at Strykow (Poland) reduces this
further to 3.1%. The majority of the vacancy relates to the recently completed
speculative schemes at Rosersberg, with the lease-up of this space a key
priority for the remainder of the year.
Our Adjusted EPRA Cost Ratio declined to 24.1% from 25.6% in H1 23 as we
continued to manage our costs and benefited from a reduced Management fee due
to the alignment with the lower portfolio valuation. Our Adjusted EPRA Cost
Ratio remains within our target range of 20-25%. We continue to seek
opportunities to reduce the cost base further to enable us to move towards our
longer-term aspiration of being at the lower end of this range.
Reflecting the asset management and disposal activity during the period,
adjusted EPS consequently decreased by 3.0% to 2.62 cents. However, the
dividend remained covered at 104.7%. The Company declared quarterly dividends
totalling 2.50 cents in the period, in line with the prior year.
Underpinning these priorities is our objective to maintain a strong balance
sheet position, encompassing the management of our cost of debt, available
liquidity and metrics including the LTV and net debt/EBITDA ratios.
To support this objective, in May last year we announced our intention to sell
at least €150 million of assets to lower leverage and move debt metrics to
within target ranges. Two disposals were signed in the period at Bochum in
Germany for c.€47 million and Malmö in Sweden for c.€28 million. Together
with the previous disposal of Hammersbach in Germany for c.€65 million,
these transactions have brought sales completed to €139 million as at the
end of March.
Post period end, we announced the disposal of an asset in Gothenburg for
€33.5 million, 3.8% below the September 2023 valuation and in line with the
latest valuation. This sale increased proceeds from the disposal programme to
€173 million and, in total, have been secured at a price broadly in line
with book value. In the context of a subdued investment market backdrop and
lower transactional volumes, the ability to effectively execute the sales
programme through this period demonstrates the attractiveness of our
high-quality assets.
Including the post period end sale in Gothenburg, the pro forma LTV has now
reduced to 43.3%. We expect to complete the planned disposal programme over
the course of 2024 and remain confident of achieving our target of an LTV
percentage in the low 40s by the end of the calendar year.
Valuation performance
The Company's portfolio valuation movements over the past two years have
broadly reflected wider market trends, that in turn have been led by the rapid
change in the macro-economic and interest rate environment. The first signs of
outward yield shift became apparent in the second half of FY22 and were
followed by a greater impact in the first half of FY23. This yield expansion
moderated in the latter half of FY23 and at the latest valuation date at the
end of March 2024.
As at 31 March 2024, the property portfolio was valued by the Company's
independent valuer, CBRE, at €1,464.8 million compared with €1,561.9
million at 30 September 2023. The valuation declined by 2.9% on a
like-for-like basis during the period, driven by the modest outward yield
shift partly offset by asset management gains, indexations and continued ERV
growth.
As at 31 March 2024, the portfolio net initial yield was 4.7% (FY23: 4.4%),
with the equivalent yield at 5.2% (FY23: 4.9%). Lower yielding assets, larger
lot sizes and assets with vacancies experienced the most outward yield
movement with assets in supply-constrained markets such as the Netherlands and
Belgium performing well.
Portfolio ERV growth of 4.0% during the period continued the positive momentum
seen through FY23. As at 31 March 2024, the portfolio's ERV was €90.2
million (30 September 2023: €89.7 million). As a result, the portfolio
reversion has increased to €15.9 million or 21.3% (FY23: €13.4 million or
17.6%), and the reversionary yield has increased to 5.6% from 5.3% on 30
September 2023.
Enhancing our portfolio and its performance
We have made good progress during the period on our portfolio objectives.
Growing income through asset management activity
We have successfully completed several asset management initiatives during the
period, including:
Strykow, Poland:
§ Completion of 8,808 sqm building extension for Arvato together with a lease
re-gear, extending the unexpired term to break to 8 years and to expiry to 11
years on all of Arvato's 67,956 sqm of space. This added €0.5 million pa of
annualised rental income.
§ Lease re-gear signed with existing customer, Tillmann, for the expansion of
their unit of 3,287 sqm by an additional 4,680 sqm on a new 6.5-year lease.
§ Post period end, a short-term lease expiring in January 2025 signed with
Arvato for an additional 17,156 sqm and meaning the 102,328 sqm Strykow scheme
is now fully let. New rent of €0.6 million will be generated over the
10-month period.
Settimo Torinese, Italy:
§ Lease completed on 14,150 sqm Unit 1 with I-Dika, who also leased Unit 2 in
August 2023. The new six-year lease agreed at a rent of €0.71 million pa was
11.3% above the rental guarantee and 9% above the rent on the recently leased
Unit 2.
Rosersberg, Sweden:
§ Lease completed with Aprilice on 5,007 sqm DC2, on a 5-year lease with a
5-year extension option and a tenant-only break option. The agreed rent was
20% above the appraisal underwrite and 3.2% above the September 2023 ERV
level, representing €0.5 million of annualised rental income.
Bornem, Belgium:
§ Post period end, lease re-gear of 13,945 sqm unit B and new lease for
14,935 unit C; both are inflation-linked, with an eight-year duration and have
been agreed with an existing customer. Together the leases secure annualised
income of €1.5 million until 2032. Also, the customer signed a Power
Purchase Agreement for the existing 1.4MWp solar scheme, adding further
annualised income of €0.1 million.
Completing our pipeline of development projects
Following the completion of six forward-funded developments totalling 224,763
sqm in FY23, one further asset is under construction:
Oberhausen, Germany:
§ Construction commenced in July 2023 on this two-unit, 23,243 sqm
speculative forward funding, which has the potential to produce annualised
rental income of €1.9 million when completed and fully let. Practical
completion is scheduled for Q3 2024, and we are targeting a DGNB Gold
certification. Active discussions are on-going with potential customers.
Progressing the disposal programme
We made further progress with our planned disposal programme during the
period, with two sales completing at Bochum in Germany for c.€47 million and
Malmö in Sweden for c.€28 million. The Bochum sale price was broadly in
line with book value, with Malmö significantly ahead due to its specific user
case as a data centre commanding a high premium from the purchaser. Together
with the earlier disposal of Hammersbach in Germany for c.€65 million, these
transactions brought gross sale proceeds to €139 million.
Post period end we disposed of an asset in Gothenburg in Sweden for €33.5m
3.8% below the 30 September valuation and in line with the latest valuation.
The sale follows the Malmö disposal agreed in December 2023 and means our
Swedish portfolio now comprises only two assets in Rosersberg, located to the
north of Stockholm, where we continue to seek tenants for the remaining vacant
units.
We will look to complete the planned disposal programme over the remainder of
2024 to achieve our primary objectives of reducing our debt metrics to within
target ranges and funding existing portfolio opportunities. Following the
completion of the programme, we will continue to review the portfolio on our
usual biannual basis to ensure portfolio performance and positioning is
maintained and aligned with external market conditions.
Increase the solar PV generating capacity of the portfolio
Our focus over the past six months has been on the four solar PV projects in
Germany, in collaboration with our customers Wayfair, Action, Rhenus and GXO.
These proposed projects will the take current portfolio installed capacity to
21.5MWp from 10.3MWp, an increase of 109%. We have now secured a guaranteed
long-term floor price for power entering the grid and we have also made good
progress on agreeing Power Purchase Agreements with our customers.
Installation is expected to begin during Q4 2024.
In the near-term, there is a further 6.0MWp of capacity which can be installed
across three more assets in Germany plus an extension of the existing scheme
at Piacenza in Italy.
Delivering our ESG strategy
In addition to the advancement of the portfolio's solar PV schemes, we have
delivered progress across the updated ESG targets launched in 2023. During the
first half of FY24:
· We updated the ESG criteria we use for our Investment Committee
processes, enhancing investment decision-making.
· We held a workshop on our ESG ambitions and objectives with the
relevant country teams from CBRE property management, identifying ways in
which they can further support us in achieving these.
· We engaged with our supply chain and customers to explore options
for delivering net zero carbon emissions in partnership.
· We continued our charity partnership with Mission to Seafarers.
These activities have been complemented by some further development and asset
management progress. Specifically:
· Our units in Settimo Torinese achieved BREEAM New Construction Very
Good, and we are targeting a Gold DGNB certification for our Oberhausen
development.
· We signed three new green leases.
Finally, our progress was reflected in improved ESG rating agency scores,
including a CDP climate benchmark score of B, and a 9.8 (Negligible Risk)
score for Sustainalytics (2023: 14.3 (Low Risk)). These ratings bring us
within the 8(th) percentile of companies within the Real Estate industry.
Good visibility of further progress in the second half and beyond
Future growth potential and priorities
Future income growth from within our own portfolio will continue to be
primarily driven by the annual fixed and index-linked uplifts inherent in
nearly all our leases. However, the €15.9 million of rent reversion within
the portfolio represents a major opportunity and unlocking this potential
through asset-management initiatives remains a key priority. In addition, the
attractiveness of our well-located, high-quality portfolio and ongoing
engagement with our customers will facilitate further opportunities to grow
income. In the near-term, this potential includes annualised rental income of
€4.4 million from leasing vacant space at our speculative schemes at
Rosersberg and Oberhausen. In the medium-term, our solar PV revenue stream
will make an increasing contribution to portfolio income as the programme
continues to expand.
Outlook
Our portfolio of high-quality assets with strong income characteristics
continues to be well-placed to benefit from the sector's positive growth
drivers with its defensive qualities also providing income security through
the market cycle. In the second half we expect:
- the like-for-like rental growth to move up to between 3% and 5% on the
stabilised portfolio
- to maintain the cost ratio within our target range of 20-25% for the full
year.
- the dividend to remain fully covered for the financial year 2024, including
the impact of planned asset sales.
- to complete the planned disposal programme by the end of 2024 - as
originally outlined - and expect the LTV ratio to move to our target
percentage of low 40s.
Financial Review
Portfolio valuation
The portfolio was independently valued by CBRE as at 31 March 2024, in
accordance with the RICS Valuation - Global Standards. The portfolio's total
value at the period end was €1,464.8 million (30 September 2023: €1,561.9
million), reflecting a like-for-like valuation decrease of 2.9%. The
Valuation's equivalent yield increased by 26 bps over the past six months,
with this outward yield shift only partially offset by like-for-like ERV
growth of 4.0% in the period.
Financial results
Income
IFRS rental income for the period was €35.9 million (H1 23: €32.6
million), up 10.1%. The growth was primarily due to the conversion of previous
rental guarantees into rental income through the letting of assets under
development in the prior period. However, the increase was partly offset by
the three disposals completed since the start of the disposal programme in May
2023.
Over six months, the like-for-like rental decline of 0.3% with income growth
offset by lease and rental guarantee expiries. As at 31 March 2024, the
portfolio's annualised rent was €74.3 million (H1 23: €76.3 million),
including €1.6 million of annualised rental guarantees.
Costs
The Company's operating and administrative costs were €7.5 million (H1 23:
€9.0 million), which primarily comprised:
· the Management Fee payable to the Manager of €2.3 million (H1
23: €3.4 million);
· the Company's running costs, including accounting, tax and audit;
and
· the Directors' fees.
The EPRA Cost Ratio for the period (inclusive of vacancy cost) was 25.8% (H1
23: 30.3%). The Adjusted EPRA Cost Ratio of 24.1% (H1 23: 25.6%), including
rental guarantees received, remains within the stated target range of 20-25%.
The lower cost ratio was primarily driven by a lower Management fee due to the
decrease in portfolio valuation.
The total cost of debt for the period was €5.4 million (H1 23: €4.3
million), reflecting an attractive average cost of debt of 1.4% (H1 23: 1.2%).
This represents a small increase against the prior period, due to the expiry
of the previously held caps at the start of the financial year.
The Group made a consolidated loss before tax for the period of €17.95
million (H1 23: loss of €241.3 million), primarily driven by the negative
valuation movement of investment properties.
The current income taxation charge for the year was €5.4 million (H1 23:
€0.9 million). The relatively higher charge against prior period is the
result of capital gains realised on disposals of investment properties during
the year. This exceptional taxation charge was €3.9 million. Overall, the
taxation charge is incurred in the local jurisdictions in which the Company
invests. As an HMRC approved investment trust, the Company is exempt from UK
corporation tax on its chargeable gains. The Company is also exempt from UK
corporation tax on dividend income received, whether from UK or non-UK
companies, provided the dividends fall within one of the exempt classes under
the Corporation Tax Act 2009.
The corporation tax rate in future periods will depend primarily on the
jurisdictions where the Company owns property assets, given the differing tax
rates across Continental Europe. The Company does not use any structures
designed to artificially reduce its tax liabilities and looks to pay the
appropriate level of tax where it is due.
Earnings Per Share
IFRS Basic Earnings Per Share for the period was negative 2.32 cents (H1 23:
negative 27.20 cents), with the improvement versus the prior year reflecting a
less negative adverse valuation movement through the period. EPRA EPS, which
excludes valuation movements, was 2.60 cents (H1 23: 3.21 cents). Adjusted
Earnings, which include rental guarantees and other adjustments, was €21.1
million (H1 23: €21.8 million), resulting in Adjusted EPS of 2.62 cents (H1
23: 2.70 cents).
More information about the calculation of basic, EPRA and Adjusted EPS can be
found in Note 7 to the Financial Statements.
Net assets
The IFRS NAV per share at the year-end was €0.94 (FY23: €0.99). The EPRA
NTA per share at the year-end was €0.96 (FY23: €1.02). The valuation of
investment property is the main driver of the EPRA NTA movement and was
determined by CBRE as independent valuer.
The Board is satisfied that the valuation exercise was performed in accordance
with RICS Valuation - Global Standards. As such, the Board has full confidence
in the level of EPRA NTA disclosed in the financial statements at the
reporting date.
More information on EPRA's net asset valuation metrics can be found in the
EPRA Performance Measures section.
Debt financing
At the period end, the Company had total debt drawn of €700 million. This
resulted in an LTV ratio of 44.5% (30 September 2023: 46.4%), with €250.0
million available undrawn debt facilities. We expect the disposal programme to
complete over the second half of the financial year with the aim of reducing
the LTV towards our preferred percentage range of low 40s.
The Company expects to refinance the RCF and the bond ahead of their
respective maturities in October 2025 and June 2026. Our expectation is for
the refinanced debt facilities to be smaller than the current amount, albeit
at a higher rate to reflect a likely higher interest rate environment.
During the period Fitch Ratings re-affirmed the Company's investment grade
rating, comprising its Long-Term Issuer Default Rating at 'BBB-' and its
senior unsecured debt rating at 'BBB'. Fitch also upgraded the Company's
outlook to Stable from Negative, mainly as a result of the successful disposal
programme.
Dividends
The Company has declared the following dividends in respect of the year:
Declared Amount per share In respect of Paid/to be paid
15 February 2024 1.25 cents 1 October to 31 December 2022 14 March 2023
16 May 2023 1.25 cents 1 January to 31 March 2023 21 June 2023
The total dividend for the period was 2.50 cents per share or €20.2 million
(H1 23: 2.50 cents per share or €20.2 million) and was 104.7% covered by
Adjusted Earnings (H1 23: 108.0%). We expect the dividend for the full year to
be fully covered by Adjusted Earnings.
Post period-end activity
On 8 April 2024, a short-term lease was agreed with Arvato at Strykow, Poland.
On 1 May 2024 a lease re-gear of unit B and new lease for unit C was agreed at
Bornem, Belgium. The customer also signed a Power Purchase Agreement for the
existing solar scheme.
On 13 May 2024, the sale of Gothenburg, Sweden was agreed.
Related party transactions
Transactions with related parties included the Management Fee paid to the
Manager and the Directors' fees.
Alternative Investment Fund Manager (AIFM)
The Company is an Alternative Investment Fund within the meaning of the
Alternative Investment Fund Managers Directive 2011 and has appointed the
Manager as its AIFM. The Manager is authorised and regulated by the Financial
Conduct Authority as a full scope AIFM.
Our market
Structural drivers still support occupier markets despite weak macro-economic
conditions
Take-up across our markets during the period totalled 8.4 million sqm (H1 23:
11.2 million sqm) 1 (#_ftn1) . Logistics real estate markets have not been
immune to the weaker macro-economic backdrop which is reflected in activity
slowing across the continent. While demand remains broad-based, occupier
decision-making is taking longer.
Demand continues to be supported by the ongoing need for companies to evolve
warehouse networks to better meet customer requirements and their business
objectives. As well as the continuing shift to online sales, requirements are
underpinned by: the need to handle returns; secure greater supply chain
resilience; and, build out networks to meet demand for electric vehicles and
green energy solutions. Further, the growing importance of reflecting
corporate ESG ambitions throughout supply chain networks and physical estates
frames customer decision-making.
Vacancy rates continue to diverge between countries, reflecting a varied
supply picture
Pan-European vacancy moved up to 4.1% (Q3 2023: 3.3%) 2 (#_ftn2) . These
regional numbers, however, hide significant differences at a country, and
especially local-market, level. Vacancy in Spain and Poland is above 7%; while
Germany, Belgium, the Netherlands, and Italy continue to see national vacancy
levels below 3.5%(1). Vacancy in core markets within these countries is often
lower still.
Challenging financing conditions and lower demand have slowed development with
completions totalling 7.9 million sqm in the period, down from 10.8 million
sqm across the corresponding period last year(1). Speculative space under
construction across the continent remains below the record levels of recent
years. Again, however, the picture remains uneven. Speculative development,
for example, remains elevated in Italy (in response to the very tight market
conditions where the national vacancy rate is 1.5%); while activity in
countries such as Germany, France, the Netherlands, and Belgium remain below
2022/2023 levels.
Rental growth healthy but below recent peaks
European markets have seen further rental growth across the period with prime
headline rents increasing by 2.2% on average 3 (#_ftn3) (H1 2023: 5.0%). As
we highlighted 12 months ago, growth continues to slow from the exceptional
levels of recent years but remains healthy by longer-term standards. Rental
growth is also becoming more sub-market specific; not least because the volume
of new supply in many core markets remains limited due to high barriers to
development. We continue to believe our portfolio is well-positioned to
capitalise on this trend.
Sentiment improving and capital market pricing increasingly compelling
European capital markets saw a shift in sentiment and pricing through the
period. Uncertainty around further ECB rate hikes, the cost-of-capital and
corresponding pricing of assets has given way to a widespread belief that with
inflation steadily declining and little to no economic growth across the
continent, the current hiking cycle is complete.
Real estate logistics capital markets reflected this transition, albeit with a
time lag. Pricing uncertainty and investor hesitance resulted in a further
outward shift in yields across the period. At a country level, yields held
flat in Belgium and moved out by 50bps in France and Poland. Yield movements
in all other countries were between 15bps and 30bps(1).
The shift in sentiment and wider capital market pricing, however, alongside
sustained confidence in sector fundamentals and increasingly attractive
logistics pricing in both absolute and relative terms, has resulted in a
pick-up in transaction activity. Deal volumes totalled €12.3 billion for the
period, 17% higher than a year ago(1).
While the near-term outlook will continue to be influenced by macro trends, it
is encouraging to see logistics real estate deal volumes pick up off the back
of improved sentiment. Higher transaction activity lends support to the
premise that the sector is priced appropriately for current market conditions
and offers attractive returns over the medium term.
Portfolio strategy and composition
Our portfolio strategy is based on a long-term investment approach and the
goal to generate income-orientated returns with the ability to capture capital
growth over time. We seek to deliver this strategy through combining a
disciplined approach to capital allocation and proactive asset management and
customer engagement, with enhancing ESG performance central to all our
activities.
Our portfolio composition is based on the following characteristics:
· diversified by:
- geography, but with the objective of each country having the
appropriate critical mass to enable advantages of scale to be captured;
- building size, but with a focus on larger-scale warehouses that
facilitate operational efficiencies and where existing and potential supply is
limited; and
- customer and business sector, but with a focus on large,
multi-national organisations;
· displaying an appropriate balance between:
- stabilised, income producing assets; and
- exposure to opportunities to create value through asset management and
development activities;
· highly efficient:
- let on long leases to strong companies; and
- incorporating in-built, inflation-linked rent escalators;
· with market-leading ESG credentials:
- reducing the environmental impact of our own and our customers'
operations;
- making a meaningful difference to people and communities across our
geographies; and
- seeking green lease clauses, which commit customers to using buildings
sustainably, along with an obligation to share resource usage data.
At the period end, the portfolio comprised 22 high-quality warehouse assets,
diversified by location, building size and customer sector, plus one building
under construction. The assets are modern, with 87% of the portfolio built in
the past 10 years, located across Belgium, Germany, Italy, the Netherlands,
Poland, Spain and Sweden, and are relatively large, with 68% of the portfolio
in excess of 50,000 sqm (the average size being 67,000 sqm).
To deliver an attractive level of return with an appropriate level of risk,
our portfolio combines core, stabilised assets with a managed exposure to
development and land. The exposure to development and value-add activities is
managed dynamically to be aligned with investment and occupational market
conditions. With the external environment becoming more challenging over the
past 12 months, we have sought to reduce portfolio exposure to speculative
development risk and to focus on capturing income growth and value from the
existing stabilised portfolio.
The stabilised assets provide the portfolio's core income, comprise the
majority of the portfolio and reflect the relatively low-risk positioning of
the Company.
Exposure to development activity provides the potential for capturing higher
returns with the forward funding of pre-let developments representing the
lower end of the risk spectrum and the funding of speculative developments the
higher end. Rental guarantees are agreed with our developer-partners to
provide protection from potential void periods following the completion of the
building. Speculative development offers the opportunity to capture higher
market rental levels than appraised levels or the additional rental growth
that may have occurred through the construction phase of the development.
Asset type (as a % of portfolio value) H1 24 H1 23
Stabilised assets 98% 92%
Pre-let forward funding 0% 7%
Speculative forward funding 2% 1%
Development assets 2% 8%
Total 100% 100%
The stabilised assets combine to form a highly efficient portfolio, reinforced
by four distinct characteristics. Specifically, the assets are let:
i) On long leases
At the period end, the portfolio Weighted Average Unexpired Lease Term to
expiry was 9.5 years (H1 23: 9.6 years) and the Weighted Average Unexpired
Lease Term to the first break was 7.8 years (H1 23: 7.9 years).
Lease duration (as a % of passing rent) H1 24 H1 23
0 - 5 years 31% 37%
5 - 10 years 32% 28%
>10 years 37% 35%
Total 100% 100%
ii) To a high-quality customer base
Across the portfolio, the Company has 32 customers operating in a range of
business sectors. Many of the Company's customers are multi-billion Euro
businesses, including some of the world's best-known companies, underpinning
the security of the portfolio's rental income.
Customer (as a % of passing rent) H1 24 H1 23
Mango 14% 13%
Amazon 9% 8%
Puma 8% 7%
Lidl 8% 7%
Wayfair 7% 7%
Action Logistics 6% 6%
Rhenus 6% -%
Cummins 5% 5%
Arvato 4% 3%
GXO 4% -%
Other 29% 44%
Total 100% 100%
iii) With annual rental uplifts
The majority of the Company's leases contain indexation provisions offering
significant inflation protection and regular uplifts in income. Rental uplifts
are either linked to local inflation measures or fixed at an agreed rate, with
the increases usually taking place annually.
Indexation (as a % of passing rent) H1 24 H1 23
CPI uncapped 54% 54%
CPI - capped/other 28% 26%
Fixed 15% 17%
None 3% 3%
Total 100% 100%
iv) With structurally low vacancies
The EPRA vacancy at the period end was 3.9% (FY23: 5.5%). This decrease was
due to the lettings for the second half of the development at Settimo Torinese
(Italy) and the unit at Rosersberg I. Post period end, the short-term letting
of the vacant space at Strykow (Poland) reduced the vacancy rate to 3.1%. The
vacancy rate represents voids at Rosersberg 2, the second unit at Rosersberg 1
and Unit 2 at Bremen 1.
Strong ESG credentials
Our customers require the ESG performance of the buildings they occupy to be
aligned with their own ESG commitments and targets. The ESG credentials of our
buildings play an important role in attracting and retaining high-quality
occupiers to the portfolio and also enable our customers to meet the
expectations of their stakeholders. We have a clear ESG strategy focused on
working collaboratively with our customers to jointly deliver enhanced
building performance including carbon reduction, wellbeing and biodiversity.
The ESG performance of our buildings and alignment with our net zero carbon
pathway are key considerations in determining the future value and liquidity
of our assets. The Company holds a four Green Star rating from GRESB and EPRA
Gold for its Sustainability Best Practices Recommendations submission.
ESG credentials (as a % of passing rent) H1 24 FY23
EPC rating & green building certification 38% 35%
EPC rating 40% 45%
Green building certification 6% 6%
Unrated 16% 14%
Total 100% 100%
In addition, our progress was reflected in improved ESG rating agency scores,
including a CDP climate benchmark score of B, and a 9.8 (Negligible Risk)
score for Sustainalytics (2023: 14.3 (Low Risk)). These ratings bring us
within the 8(th) percentile of companies within the Real Estate industry.
A proactive approach to asset management
A fundamental part of how we deliver our portfolio strategy is our proactive
approach to asset management. This is focused on extracting income growth and
value uplifts from the opportunities embedded within the existing portfolio.
Our asset management operations are led by an experienced team, giving us
scope to take a direct and active role in the strategic asset management of
the portfolio and strengthen relationships with our customers. The in-house
team works closely and collaboratively with our locally based partners and
also draws on the specialist skills within the wider Tritax Group, such as
supply chain, ESG and power expertise, to help formulate our future asset
management plans.
We undertake a thorough bottom-up review of all our assets on a biannual
basis. This enables us to determine the value-maximising strategy for each
property and to review expected returns. In conjunction with this, a top-down
assessment is undertaken to ensure the portfolio is optimally positioned to
capture efficiencies and to benefit from the positive structural tailwinds
that continue to support the Continental European logistics sector.
This process informs our asset recycling strategy by highlighting those assets
where, for example, we have completed our asset management plans and maximised
value or where forecast ESG performance is not aligned with our overall
portfolio objectives. It also identifies markets where we expect performance
to be less strong or where we have a sub-scale position and gaining sufficient
scale in an appropriate timescale will be challenging. Such assets will be
identified for disposal, enabling us to recycle the capital into higher
returning opportunities, reduce leverage, or other purposes that enhances the
overall performance of the Company.
Key Performance Indicators
Set out below are the key performance indicators we use to track our strategic
progress.
KPI and definition Our progress in H1 FY24 Performance
1. Dividend per share Our policy is to pay an attractive and progressive dividend, with a minimum 2.50 cents per share for the six months to 31 March 2024
Dividends paid to shareholders and declared in relation to the period. payout of 85% of Adjusted Earnings.
(six months ended 31 March 2023: 2.50 cents per share)
While the Dividend per share was unchanged from the prior year, the dividend
remained covered despite the impact of disposals.
2. Total Return (TR) Dividends paid have been more than offset by the decline in portfolio asset (3.0)% for the six months to 31 March 2024
Total Return measures the change in the EPRA Net Tangible Assets (EPRA NTA) values, which was driven by market-wide yield shift reflecting higher levels
over the period plus dividends paid. of interest rates. (six months ended 31 March 2023: (22.1%)
3. Basic Net Asset Value Declines in portfolio valuation, reflecting impact of higher interest rates €757.5 million
Net asset value in IFRS GAAP. and market wide yield shift, outweighing the positive impact of continued
market rental growth and indexation. €0.94 per share at 31 March 2024
(€795.6 million or €0.99 per share at 30 September 2023)
4. Adjusted earnings Adjusted Earnings decreased by 3.0% in the six months, driven by loss of €21.1 million
EPRA earnings, adjusted to include licence fees and rental guarantees income from disposals offset by indexation events and asset management adding
receivable on forward funded development assets and for other earnings not to the rent roll. 2.62 cents per share for the six months to 31 March 2024
supported by cash flows - see note 7 of financial statements.
(six months to 31 March 2023: €21.8 million or 2.70 cents per share)
5. Loan to value ratio (LTV) The positive impact of disposals off-set by lower portfolio valuation and 44.5% at 31 March 2024
The proportion of our gross asset value that is funded by net borrowings development capital expenditure. The Company remains comfortably below the LTV
(excluding cash). ratio covenant of 65%. Including the disposal of Gothenburg, the pro forma LTV (30 September 2023: 46.4%)
is 43.3%.
6. Weighted average unexpired lease term (WAULT) The Company has a WAULB of 7.8 years and WAULT of 9.5 years. This remains 7.8 years at 31 March 2024, 9.5 years to term
The portfolio average of the remaining number of years, weighted by annual significantly above the portfolio target of >5 years.
passing rents, until the sooner of the lease expiry (WAULT) or the customer's (30 September 2023: 7.9 years, 9.6 years to term)
break option (WAULB).
7. Dividend cover A fully covered dividend, with the per share dividend maintained at 2.50 104.7% for the six months to 31 March 2024
Adjusted Earnings as a proportion of the dividend declared for the financial cents, at 104.7% of adjusted earnings.
period. (six months to 31 March 2023: 108.0%)
8. Interest cover The Company remains comfortably above its interest cover ratio covenant of 4.78 times for the six months to 31 March 2024
The ratio of consolidated earnings before interest and taxation to 1.5x.
consolidated net finance costs in respect of any measurement period. (six months to 31 March 2023: 6.79 times)
The definition, and calculation method, of interest cover ratio has changed
during the period aligning banking covenants and reporting. See Notes to EPRA
and Other Key Performance Indicators for calculation.
9. Like-for-like rental growth Like-for-like rental growth was negative 0.3% in the period. From our asset (0.3)% or €0.2 million for the six months to 31 March 2024
Like-for-like rental growth compares the growth of the rental income of the management initiatives and indexation but offset by rental guarantee and lease
portfolio that has been consistently in operation and not under development expiry. (six months to 31 March 2023: 5.8% or €4.3 million)
during the two full preceding periods, including rental guarantees.
EPRA performance measures
The table below shows additional performance measures, calculated in
accordance with the Best Practices Recommendations of the European Public Real
Estate Association (EPRA). We provide these measures to aid comparison with
other European real estate businesses. For a full reconciliation of the new
EPRA NAV measures, please see the Notes to the EPRA and Other Key Performance
Indicators.
KPI and definition Comments Performance
1. EPRA Net Reinstatement Value (EPRA NRV) A key measure to highlight the value of net assets on a long-term basis. The €853.9m
Basic NAV adjusted for mark-to-market valuation of derivatives, deferred tax metric reflects what would be needed to recreate the current portfolio of the
and transaction costs (real estate transfer tax and purchaser's costs). company. €1.06 per share at 31 March 2024
(30 September 2023: €903.0 million or €1.12 per share)
2. EPRA Net Tangible Assets (EPRA NTA) Assumes that entities buy and sell assets, thereby crystallising certain €776.2m
Basic NAV adjusted to remove the fair values of financial instruments and levels of unavoidable deferred tax.
deferred taxes. This excludes transaction costs. €0.96 per share at 31 March 2024
(30 September 2023: €820.6 million or €1.02 per share)
3. EPRA Net Disposal Value (EPRA NDV) Represents the shareholders' value under a disposal scenario, where deferred €757.5m
Equivalent to IFRS NAV, as this includes the fair values of financial tax, financial instruments and certain other adjustments are calculated to the
instruments and deferred taxes. full extent of their liability, net of any resulting tax. €0.94 per share at 31 March 2024
(30 September 2023: €795.6 million or €0.99 per share)
4. EPRA Earnings A key measure of the Company's underlying results and an indication of the €21.0 million
Earnings from operational activities. extent to which current dividend payments are supported by earnings.
2.60 cents per share for the six months to 31 March 2024
(six months to 31 March 2023: €25.9 million or 3.21 cents per share)
5. EPRA Net Initial Yield (NIY) This measure should make it easier for investors to judge for themselves how 4.8% at 31 March 2024
Annualised rental income based on the cash rents passing at the balance sheet the valuations of portfolios compare.
date, less non-recoverable property operating expenses, divided by the market (30 September 2023: 4.2%)
value of the property, increased with (estimated) purchasers' costs.
6. EPRA 'Topped-up' NIY This measure should make it easier for investors to judge for themselves how 4.7% at 31 March 2024
This measure incorporates an adjustment to the EPRA NIY in respect of the the valuations of portfolios compare.
expiration of rent-free periods (or other unexpired lease incentives such as (30 September 2023: 4.3%
discounted rent periods and step rents).
7. EPRA Vacancy Rate A 'pure' (%) measure of investment property space that is vacant, based on 3.9% as at 31 March 2024
Estimated Market Rental Value (ERV) of vacant space divided by ERV of the ERV.
whole portfolio. (30 September 2023: 5.5%)
8. EPRA Cost Ratio A key measure to enable meaningful measurement of the changes in a company's 25.8%(1) for the six months to 31 March 2024
Administrative and operating costs (including and excluding costs of direct operating costs.
vacancy) divided by gross rental income. (six months to 31 March 2023: 30.3%(1))
25.5%(2) for the six months to 31 March 2024
(six months to 31 March 2023: 29.3%(2))
9. Adjusted EPRA Cost Ratio This ratio includes licence fee income and rental guarantees and excludes 24.1% for the six months to 31 March 2024
EPRA Cost Ratio adjusted for non-operational items. exceptional items of a capital nature.
(six months to 31 March 2023: 25.6%)
10. EPRA Loan to value (LTV) ratio The EPRA LTV introduces a consistent and comparable metric for the sector, 45.7% as at 31 March 2024
The proportion of our gross asset value funded by net borrowings with the aim to assess the gearing of the shareholder equity within a real
(incorporating net payables). estate company. (30 September 2023: 46.3%)
(1) Inclusive of vacant property costs.
(2) Exclusive of vacant property costs.
Principal risks and uncertainties
At least twice a year, the Board undertakes a formal risk review, with the
assistance of the Audit & Risk Committee, to assess the effectiveness of
our risk management and internal control systems. During the period the Audit
& Risk Committee instructed BDO LLP to perform a risk review. In
conjunction with the Manager, the engagement was to enhance the Company's
approach to risk management. The outcome of the review has led to an improved
risk register, enhanced mitigations and a pathway to more adequate risk-based
decisions in the future.
The Audit & Risk Committee considers that general macroeconomic
uncertainty results in greater volatility on certain risks, namely the value
of the portfolio, finance costs and customer default risk.
The Company's principal risks are summarised below:
Property risks
1. Customers may default.*
2. The value of the property portfolio may experience adverse change.*
3. Portfolio growth may slow.
4. Lack of diversification may amplify local risks.
5. Development activities may not be profitable.
6. The product may not appeal to customers or investors.*
7. Getting the market cycle wrong, leading to wrong investment, divestment,
and/or leasing decisions.*
8. Inappropriate portfolio construct.*
Operational risks
9. The performance of the Manager and/or third-party suppliers may not be
adequate.*
10. Insurance at appropriate premiums may not be available.
Financial risks
11. Debt funding at appropriate levels may not be available.
12. The Euro may fluctuate against other currencies of countries in which the
Company operates.
13. The leverage level and target range may not be appropriate.*
14. Debt covenants may be breached.
Taxation risks
15. A change in the Company's investment trust status may cause loss.
16. Changes to local tax legislation in countries in which the Company is
invested may cause loss.
Political and market risks
17. General political and/or economic uncertainty may disrupt the Company's
ability to execute its strategy.
18. Rising energy prices may impact the overall economy and our customers.
ESG risks
19. Physical and transition risks from climate change.
Other risks
20. The Company's data may be exposed to cyber-attack.
21. Lack of corporate governance and/or lack of compliance with laws and
regulations.*
*Deemed as a key risk
STATEMENT OF DIRECTORS' RESPONSIBILITIES
We confirm that to the best of our knowledge:
•the condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the UK;
•the interim management report includes a fair review of the information
required by:
-DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
-DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
Approved by the Board on 15 May 2024 and signed on its behalf by:
Robert Orr
Director
INDEPENDENT REVIEW REPORT TO Tritax EuroBox PLC
Conclusion
We have been engaged by Tritax Eurobox plc ("the Company") to review the
condensed set of financial statements in the half-yearly financial report for
the six months ended 31 March 2024 which comprises the condensed group
statement of comprehensive income, condensed consolidated statement of
financial position, condensed group statement of changes in equity, condensed
group cash flow statement and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 March 2024 is not prepared, in
all material respects, in accordance with IAS 34 Interim Financial Reporting
as adopted for use in the UK and the Disclosure Guidance and Transparency
Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other
information contained in the half-yearly financial report and consider whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group's or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
John Waterson
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
15 May 2024
Condensed Group Statement of Comprehensive Income for the six months ended 31
March 2024
Six months ended Six months ended
31 March 31 March
2024 2023
(unaudited) (unaudited)
€m €m
Note
Rental income 4 35.91 32.55
Service charge income 4 6.16 5.60
Other income 4 0.09 0.37
Gross property income 4 42.16 38.52
Direct property costs (8.00) (6.88)
Net property income 34.16 31.64
Fair value loss on investment properties 9 (46.22) (267.70)
Gain on disposal of investment properties 9 6.36 -
Administrative and other expenses (7.53) (8.96)
Operating loss (13.23) (245.02)
Finance income 5 0.97 1.35
Finance expense 5 (8.15) (6.77)
Present value movement on remeasurement of put options 5 2.85 9.87
Effect of foreign exchange differences 0.16 (0.16)
Changes in fair value and realised loss on interest rate derivatives 14 (0.55) (0.56)
Loss before taxation (17.95) (241.29)
Taxation 6 (0.79) 21.85
Loss for the period (18.74) (219.44)
Other comprehensive income
Foreign currency translation differences- foreign operations 0.80 (3.75)
Total comprehensive (loss)/income for the year attributable to the (17.94) (223.19)
Shareholders
Earnings Per Share (EPS) (expressed in cents per share)
EPS - basic and diluted 7 (2.32) (27.20)
Condensed Consolidated Statement of Financial Position as at 31 March 2024
Note 31 March 30 September
2024 2023
(unaudited) (audited)
€m €m
Non-current assets
Investment properties 9 1,431.14 1,512.55
Derivative financial instruments 14 0.66 1.05
Trade and other receivables 11 1.76 1.76
Deferred tax assets 2.01 1.23
Total non-current assets 1,435.57 1516.59
Current assets
Asset held for sale 10 33.62 49.30
Trade and other receivables 11 13.71 33.63
Cash and cash equivalents 48.17 52.31
Total current assets 95.50 135.24
Total assets 1,531.07 1,651.83
Current liabilities
Trade and other payables (29.38) (30.21)
Income tax liability (5.96) (1.32)
Total current liabilities (35.34) (31.53)
Non-current liabilities
Trade and other payables (0.42) (1.71)
Loan notes and borrowings 12 (694.83) (770.10)
Deferred tax liabilities (21.31) (27.22)
Other liabilities 13 (19.32) (23.31)
Customer deposit (2.34) (2.34)
Total non-current liabilities (738.22) (824.68)
Total liabilities (773.56) (856.21)
Net assets 757.51 795.62
Equity
Share capital 16 8.07 8.07
Share premium reserve 597.58 597.58
Translation reserve (11.87) (12.67)
Retained earnings 163.73 202.64
Total equity 757.51 795.62
Net Asset Value ("NAV") per share (expressed in Euro per share)
Basic NAV 17 0.94 0.99
EPRA NTA 17 0.96 1.02
The financial statements were approved by the Board of Directors on 15 May
2024 and signed on its behalf by:
Robert Orr
Director
Condensed Group Statement of Changes in Equity for the six months ended 31
March 2024
Share Share premium Translation Reserve Retained earnings
capital
(Unaudited) Note
€m €m €m Total
€m
€m
At 1 October 2023 8.07 597.58 (12.67) 202.64 795.62
Net loss for the year - - - (18.74) (18.74)
Other comprehensive income - - 0.80 - 0.80
Total comprehensive income - - 0.80 (18.74) (17.94)
Contributions and distributions:
Dividends paid 8 - - - (20.17) (20.17)
Total contributions and distributions - - - (20.17) (20.17)
At 31 March 2024 8.07 597.58 (11.87) 163.73 757.51
(Audited) Share Share premium Translation Reserve Retained earnings Total
capital
Note
€m €m €m €m
€m
At 1 October 2022 8.07 597.58 (6.24) 466.34 1,065.75
Net profit for the year - - - (223.36) (223.36)
Other comprehensive income - - (6.43) - (6.43)
Total comprehensive income - - (6.43) (223.36) (229.79)
Contributions and distributions:
Dividends paid - - - (40.34) (40.34)
Total contributions and distributions - - - (40.34) (40.34)
At 30 September 2023 8.07 597.58 (12.67) 202.64 795.62
Share Share premium Translation Reserve Retained earnings
capital
(Unaudited) Note
€m €m €m Total
€m
€m
At 1 October 2022 8.07 597.58 (6.24) 466.34 1,065.75
Net profit for the year - - - (219.44) (219.44)
Other comprehensive income - - (3.75) (3.75)
Total comprehensive income - - (3.75) (219.44) (223.19)
Contributions and distributions:
Dividends paid 8 - - - (20.17) (20.17)
Total contributions and distributions - - - (20.17) (20.17)
At 31 March 2023 8.07 597.58 (9.99) 226.73 822.39
Condensed Group Cash Flow Statement for the six months ended 31 March 2024
Note Six months ended Six months ended
31 March 31 March
2024 (unaudited) €m 2023
(unaudited) €m
Cash flows from operating activities
Loss for the period (18.74) (219.44)
Gain on disposal of investment properties 9 (6.36) 0
Changes in fair value of investment properties 9 46.22 267.70
Changes in fair value of derivatives 14 0.98 0.56
Tax (credit)/expense 6 0.79 (21.85)
Net finance expense 5 4.35 (4.45)
Spreading of customer lease incentives 4 (0.77) (1.09)
Amortisation of capital contributions and lease commissions 0.02 0.48
Decrease/(increase) in trade and other receivables 19.38 (3.15)
Increase/(decrease) in trade and other payables 1.56 8.26
(Decrease)/increase in other liabilities (2.72) 0.42
Cash generated from operations 44.71 27.44
Tax paid (2.84) (0.40)
Net cash flow generated/(used) by operating activities 41.87 27.04
Investing activities
Purchase of investment properties 9 - (7.69)
Improvements to investment properties and development expenditure 9 (19.74) (98.53)
Proceeds from disposal of investment properties 72.17 -
Rental guarantees received 2.49 5.94
Net cash flow generated/(used) from investing activities 54.92 (100.28)
Financing activities
Loans received 12 - 68.00
Loans repaid (77.50) -
Premium paid for interest rate caps (0.59) -
Finance expense paid (2.93) (2.28)
Dividends paid to equity holders 8 (20.17) (20.17)
Net cash flow (used)/generated in financing activities (101.19) 45.55
Net movement in cash and cash equivalents for the period (4.40) (27.69)
Cash and cash equivalents at start of the period 52.31 90.18
Unrealised foreign exchange gains/(losses) 0.26 (0.32)
Cash and cash equivalents at end of the period 48.17 62.17
Notes to the Condensed Consolidated Financial Statements for the six months
ended 31 March 2024
1. Basis of preparation
These condensed financial statements for the six months ended 31 March 2024
have been prepared in accordance with the Disclosure Guidance and Transparency
Rules of the Financial Services Authority, IAS 34 'Interim Financial
Reporting', and with UK-adopted international accounting standards. These
condensed financial statements are unaudited and do not constitute statutory
accounts for the purposes of the Companies Act 2006. They were approved for
issue on 15 May 2024.
The Group's business is not judged to be highly seasonal, therefore
comparatives used for the six month period ended 31 March 2024 Consolidated
Income Statement are the six month period ended 31 March 2023 Consolidated
Income Statement. It is therefore not necessary to disclose the Consolidated
Income Statement for the full year ended 30 September 2023 (available in the
last annual report).
The comparative financial information presented herein for the period to 30
September 2023 for the Condensed Consolidated Statement of Financial Position
or 31 March 2023 for other primary statements does not constitute statutory
accounts as defined in section 434 of the Companies Act 2006. A copy of the
statutory accounts for that period has been delivered to the Registrar of
Companies. The auditor's report on those accounts for the period from 1
October 2022 to 30 September 2023 was not qualified, did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying the report, and did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
1.1. Going concern
The Directors have prepared cash flow forecasts for the Group for a period of
12 months from the date of approval of the condensed interim financial
statements. These forecasts include the Directors' assessment of plausible
downside scenarios on the Group. The assumptions underpinning these forecast
cash flows and covenant compliance forecasts were sensitised, to explore the
Group's resilience to the potential impact of its significant risks, or a
combination of those risks. These forecasts have been further sensitised for
the following scenarios:
1) The combined impact of four key tenants defaulting without replacement,
combined with a twelve-month delay in letting properties under development and
vacant units.
2) Yield expansion resulting in further property valuation falls and the
impact on debt covenants.
3) Worsening macroeconomic environment resulting in increasing debt costs.
The above sensitivities indicated that the Group would be able to operate
within its existing facilities and maintain covenant compliance in a severe
but plausible downside. The Group's cash balance at 31 March 2024 was €48.17
million. It also had undrawn amounts under its unsecured revolving credit
facility (the RCF) of a further €250 million at the date of approval of
these financial statements. Of the Group's total facilities (the RCF, Green
Bond and US private placement), €250 million will mature in October 2025,
€500 million in June 2026, €100 million in January 2029, €50 million in
January 2032 and €50 million in January 2034. The loans include financial
covenants for loan-to-value ("LTV"), interest cover ratio ("ICR") and gearing.
These covenants have been complied with throughout the period and up to the
date of approval of these financial statements.
LTV and gearing covenants are measured using "net borrowings" which reduces
the drawn debt by the Group's cash holdings at each measurement date. The LTV
covenant is measured quarterly based on the property valuation as used in the
consolidated financial statements. Based on the valuation as at 31 March 2024
of €1,464.8 million, the Group retained headroom against a covenant limit,
reporting 44.5% against the limit of 65%. LTV would breach 65% if the
valuation of the Group's investment properties were to decrease by 31.5%,
based on the latest valuation.
The gearing covenant is measured quarterly based on consolidated total net
borrowings to consolidated shareholders' funds. Based on the most recent
reporting the Group retained headroom against the covenant limit, reporting
86.1% against the limit of 150%. Gearing would breach 150% if the valuation of
the Group's investment properties were to decrease by 22.1%, based on the
latest valuation. The Directors are confident that there's sufficient headroom
from the potential downside scenarios identified in the reverse stress tests.
The ICR covenant is measured as the ratio of the Group's consolidated earnings
before income and tax, subject to certain adjustments, to consolidated net
finance costs in respect of any measurement period, by reference to accounting
income. Based on the most recent reporting, the Group was not in breach of its
covenant minimum reporting 4.8 times which leaves headroom above the 1.5 times
minimum.
As a result of the above considerations the Directors forecast that covenant
compliance will continue for at least the next 12 months.
Consequently, the directors are confident that the Group and the Company will
have sufficient funds to continue to meet their liabilities as they fall due
for at least 12 months from the date of approval of the financial statements
and therefore have prepared the financial statements on a going concern basis.
2. Significant accounting judgements, estimates and assumptions
The preparation of the Group's financial statements requires management to
make judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities and the disclosure of contingent
liabilities at the reporting date. However, uncertainty about these
assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability affected in future
periods.
2.1 Judgements
In the process of applying the Group's accounting policies, management has
made the following judgement, which has the most significant effect on the
amounts recognised in the consolidated financial statements:
Segment reporting
The Directors are of the opinion that the Group is engaged in a single segment
business, being the investment in European Big Box assets. The Directors
consider that these properties have similar economic characteristics and as a
result these individual properties have been reported as a single operating
segment.
2.2 Estimates
Fair valuation of investment property
The fair value of investment property is determined, by an independent
property valuation expert, to be the estimated amount for which a property
should exchange on the date of the valuation in an arm's length transaction.
Properties have been valued on an individual basis. The valuation expert uses
recognised valuation techniques, applying the principles of both IAS 40 and
IFRS 13.
The valuations have been prepared in accordance with the Royal Institution of
Chartered Surveyors ("RICS") Valuation - Global Standards January 2022 ("the
Red Book"). Factors reflected include current market conditions, annual
rentals, lease lengths and location. The significant methods and assumptions
used by valuers in estimating the fair value of investment property are set
out in note 9.
3.3 Summary of significant accounting policies
The accounting policies adopted in this report are consistent with those
applied in the Group's consolidated financial statements for the year ended 30
September 2023 and are expected to be applied consistently during the year
ending 30 September 2024.
Standards in issue and effective from 1 October 2023
There was no material effect from the adoption of amendments to IFRS effective
in the year. They have no impact to the Group significantly as they are either
not relevant to the Group's activities or require accounting which is
consistent with the Group's current accounting policies.
New standards issued but not yet effective
There are new standards and amendments to standards and interpretations which
have been issued that are effective in future accounting periods, and which
the Group has decided not to adopt early. None of these are expected to have a
material impact on the consolidated financial statements of the Group.
Certain new accounting standards and amendments are effective for annual
periods beginning
after 1 January 2024, and have not been applied in preparing these Financial
Statements:
- Amendments to IAS 1, 'Presentation of financial statements', on
classification of liabilities as Current or Non-current.
- Amendments to IFRS 16, 'Leases', on Lease liabilities in a Sale and
Leaseback transaction.
- Amendments to IAS 7, 'Statement of Cashflows' and IFRS 7, 'Financial
Instruments: Disclosures', on Supplier Finance Arrangements.
The amendments that are not yet effective are not expected to have a material
impact on the Group in the current or future reporting periods and on the
foreseeable future transactions.
4. Gross property income
Six months Six months
ended ended
31 March 31 March
2024 2023
(unaudited) (unaudited)
€m €m
Rental income 35.50 31.94
Spreading of customer incentives 0.77 1.09
Amortisation of capital contributions and lease commissions (0.36) (0.48)
Gross rental income 35.91 32.55
Service charges recoverable 6.16 5.60
Other income 0.09 0.37
Gross property income 42.16 38.52
The Group derives property income from the following countries:
Gross property income The Sweden
Netherlands
Belgium Germany Spain Italy Poland Total
(unaudited) €m €m €m €m €m €m €m €m
Period ended 31 March 2024 4.46 17.48 5.65 5.38 3.58 4.50 42.16
1.11
Period ended 31 March 2023 4.46 15.18 5.45 4.78 3.62 3.43 38.52
1.60
The future minimum lease payments under non-cancellable operating leases
receivable by the Group are as follows:
(Unaudited) Less than 1 year Between 1 and 2 years €m Between 2 and 3 years €m Between 3 and 4 years €m Between 4 and 5 years €m More than 5 years Total €m
€m €m
31 March 2024 71.55 68.14 64.55 59.41 52.07 259.13 574.85
31 March 2023 74.63 68.94 64.95 62.42 57.80 300.72 629.46
The Group's investment properties are leased mainly to single customers, some
of which have additional security, under the terms of a commercial property
lease. The majority have rent indexation that are linked to either RPI/CPI or
fixed uplifts.
One customer represented more than 10% of rental income during the period
(€5.12 million). As at 31 March 2024 one customer represented more than 10%
of passing rent (€5.08million). (31 March 2023: two customers represented
more than 10% of rental income (€5.16 million and €3.21) and three
customers represented more than 10% of passing rent (€5.08 million, €3.13
million and €2.89 million)).
5. Finance income and expense
Six months Six months
ended ended
31 March 31 March
2024 2023
(unaudited) (unaudited)
€m €m
Interest income on interest rate derivative 0.65 1.35
Interest income on bank deposits 0.32 -
Total finance income 0.97 1.35
Interest payable on loans and bank borrowings 5.27 4.61
Commitment fees payable on bank borrowings 0.55 0.51
Bank fees 0.07 0.17
Repayment of put option 0.55 0.20
Amortisation of loan arrangement fees and derivative financial instruments 1.71 1.28
Total finance expense 8.15 6.77
Present value movement on remeasurement of put options 2.85 9.87
The present value movement on remeasurement and repayment of put options
relates to the minority interest in the Group's German properties. This
reflects the minority interest's share of the respective financial result for
the financial year. In the prior period the present value movement on
remeasurement of put options was presented as a finance expense, however in
the current period this has been presented on a separate line.
The total interest payable on financial liabilities carried at amortised cost
comprises interest and commitment fees payable on bank borrowings of €5.82
million (31 March 2023: €5.12 million), of which nil was capitalised in both
periods. The total amortisation of loan arrangement fees for 31 March 2024 was
€1.28 million (31 March 2023: €1.28 million), of which nil was capitalised
into the loan in the period (31 March 2023: €nil).
6. Taxation
Tax charge in the Group Statement of Comprehensive Income
Six months Six months
ended ended
31 March 31 March
2024 2023
(unaudited) (unaudited)
€m €m
Current taxation:
UK taxation - -
Overseas taxation (5.38) (0.88)
Deferred taxation:
UK taxation - -
Overseas taxation 4.59 22.73
Total tax credit/(charge) (0.79) 21.85
The UK corporation tax charge of nil reflects the Company's intention to
declare sufficient "qualifying interest distributions" to fully offset its
"qualifying interest income" in the period, in accordance with its status as
an Investment Trust Company ("ITC").
An exceptional capital gain tax charge, following the disposal of the Malmo
asset, of €3.9 million was incurred in the period.
7. Earnings per share
Earnings per share ("EPS") amounts are calculated by dividing profit or loss
for the period attributable to ordinary equity holders of the Group by the
weighted average number of Ordinary Shares in issue during the period. As at
31 March 2024 there are no dilutive or potentially dilutive equity
arrangements in existence.
The calculation of EPS is based on the following:
For the period ended 31 March 2024 (unaudited) Net profit attributable to Ordinary Shareholders Weighted average number of Ordinary Shares '000 Earnings per share Cent
€m
Basic EPS (18.74) 806,804 (2.32)
Adjustments to remove:
Deferred and capital gains tax charge/(credit) (note 6) (0.67)
Changes in fair value of investment properties and investment properties under 46.22
construction (note 9)
Gain on disposal of investment properties (6.36)
Changes in fair value of interest rate derivatives (note 13) 0.55
EPRA EPS 21.00 806,804 2.60
Adjustments to include/(exclude):
Rental income recognised in respect of fixed uplifts (0.77)
Amortisation of capital contributions and lease commissions 0.36
Rental guarantee receipts excluded from property income-settled via cash 2.49
Amortisation of loan arrangement fees 1.28
Unrealised foreign exchange currency loss (0.17)
Present value movement on remeasurement of put option (2.85)
Over hedged portion of interest income from financial derivatives (0.23)
Adjusted EPS 21.11 806,804 2.62
For the period ended 31 March 2023 (unaudited) Net profit attributable to Ordinary Shareholders Weighted average number of Ordinary Shares(1) '000 Earnings per share Cent
€m
Basic EPS (219.44) 806,804 (27.20)
Adjustments to remove:
Deferred tax charge (note 6) (22.73)
Changes in fair value of investment properties (note 9) 267.70
Changes in fair value of interest rate derivatives (note 13) 0.37
EPRA EPS 25.90 806,804 3.21
Adjustments to include/(exclude):
Rental income recognised in respect of fixed uplifts (1.09)
Amortisation of capital contribution and lease commission 0.48
Rental guarantee receipts excluded from property income-settled via cash 5.94
Amortisation of loan arrangement fees 1.28
Unrealised foreign exchange currency gain 0.32
Gain on remeasurement of put option (10.10)
Over hedged portion of interest income from financial derivatives (0.93)
Adjusted EPS 21.80 806,804 2.70
1 Based on the weighted average number of Ordinary Shares in issue throughout
the period.
Adjusted Earnings is a performance measure used by the Board to assess the
level of the Group's dividend payments. The metric mainly adjusts EPRA
earnings for:
i. Exclusion of non-cash items credited or charged to the Group
Statement of Comprehensive Income, such as fixed rental uplift adjustments and
amortisation of loan arrangement fees;
ii. Inclusion of licence fees which relate to cash received from
developers during development periods, in order to access the land; and
iii. Inclusion of rental guarantee adjustments which relate to acquired
assets with properties which have had an income guarantee attached to them as
part of the acquisition of the asset. The rental guarantee is released
(through a cash movement or contracted liability settlement) as Adjusted
Earnings over the period of the lease which it is intended to cover or lease
break. However, this release does not go through rental income in the Group
Statement of Comprehensive Income, and as such an adjustment is made to
recognise the receipt.
iv. Exclusion of exceptional items, considered as an expense under IFRS,
which are capital in substance and nature and result in longer term value to
the business.
v. Exclusion of the over hedged portion of interest income from financial
derivatives, considered as income under IFRS, as financing activities are not
part of the Group's operations.
8. Dividends paid
Six months Six months
ended ended
31 March 31 March
2024 2023
(unaudited) (unaudited)
€m €m
Final dividend in respect of period ended 30 September 2023 at 1.25 cent per 10.08 10.08
Ordinary Share (30 September 2022: 1.25 cent)
First interim dividend in respect of year ended 30 September 2024 at 1.25 cent 10.09 10.09
per Ordinary Share (30 September 2023: 1.25 cent)
Total dividends paid 20.17 20.17
Total dividends paid per share for the period 2.50 cent 2.50 cent
Total dividends unpaid but declared per share for the period 1.25 cent 1.25 cent
Total dividends declared per share for the period 2.50 cent 2.50 cent
On 16 May 2024, the Directors of the Company declared a second interim
dividend in respect of the year ended 30 September 2024 of 1.25 cent per
Ordinary Share, which will be payable on or around 21 June 2024 to
Shareholders on the register on 24 May 2024.
Out of €10.08 million dividends declared for the period, €3.47 million is
designated as interest distribution.
9. Investment properties
The Group's investment property has been valued at fair value by CBRE, an
accredited independent valuer with a recognised and relevant professional
qualification and with recent experience in the locations and categories of
the investment properties being valued. The valuations have been prepared in
accordance with the RICS Valuation - Global Standards January 2022 ("the Red
Book") and incorporate the recommendations of the International Valuation
Standards which are consistent with the principles set out in IFRS 13. In
forming its opinion, CBRE makes a series of assumptions, which are typically
market related, such as yields and expected rental values and are based on the
valuer's professional judgement and the current tenancy of the properties.
The valuations are the ultimate responsibility of the Directors. Accordingly,
the critical assumptions used in establishing the independent valuation are
reviewed by the Board. Other than Tritax EuroBox plc, the external valuer
provides valuation and research-related services to the Tritax Group, as well
as to other funds Tritax Group manages. The Directors ensure full independence
of the valuer.
(Unaudited) Investment properties
Investment properties completed €m under construction €m Investment properties
Total
€m
As at 1 October 2023 1,494.86 17.69 1,512.55
Acquisition of properties(1) - - -
Additions to investment properties 0.60 13.08 13.68
Disposals of investment properties (16.51) - 16.51
Transfer from investment properties under construction to investment 8.10 (8.10) -
properties
Investment property transferred to asset held for sale (33.62) - (33.62)
Fixed rental uplift and tenant lease incentives2 1.56 - 1.56
Amortisation on rental uplift and customer lease incentives2 (0.81) - (0.81)
Change in fair value during the period3 (47.75) 1.53 (46.22)
Foreign exchange movement during the period 0.51 - 0.51
As at 31 March 2024 1,406.94 24.20 1,431.14
(Audited) Investment Investment properties Investment properties
properties completed under Total
construction
€m €m €m
As at 1 October 2022 1,543.87 221.73 1765.60
Acquisition of properties(1) 1.13 7.05 8.18
Additions to investment properties 2.42 142.42 144.84
Transfer from investment properties under construction to investment 339.87 (339.87) -
properties
Investment property transferred to asset held for sale (49.30) - (49.30)
Disposal of investment property (65.70) - (65.70)
License fees and rental guarantees recognised (3.21) - (3.21)
Fixed rental uplift and tenant lease incentives2 4.64 - 4.64
Amortisation on rental uplift and tenant lease incentives2 (1.49) - (1.49)
Change in fair value during the period3 (271.79) (13.64) (285.43)
Foreign exchange movement during the period (5.58) - (5.58)
As at 30 September 2023 1,494.86 17.69 1,512.55
(1 ) Included acquisition costs of €nil million (30 September
2023: €0.64 million).
(2) This balance arises as a result of the IFRS treatment of leases
with fixed or minimum rental uplifts and rent free periods, which requires the
recognition of rental income on a straight line basis over the lease term. The
amount as at 31 March 2024 was €13.99 million (30 September 2023: €13.30
million). The difference between this and cash receipts changes the carrying
value of the property against which revaluations are measured (also see note
4).
(3) Included in the fair value change in the period were unrealised
gains of €11.73 million (30 September 2023: €6.16 million) and unrealised
losses of €57.95 million (30 September 2023: €291.59 million).
31 March 2024 30 September 2023
€m €m
Investment properties and assets held for sale 1,464.76 1,561.85
Rental guarantee held in separate receivable 0.80 2.90
Total external valuation of investment properties 1,465.56 1,564.75
As at 31 March 2024, the Group had the following capital commitments in
relation to its development assets totalling €12.0 million (30 September
2023: €22.9 million):
· Oberhausen €12.0 million
These costs are not provided for in the Statement of Financial Position.
Capital commitments represent costs to bring the asset to completion under the
developer's funding agreements, which include the developer's margin.
Valuation and real estate risks
There is risk to the fair value of real estate assets that are part of the
portfolio of the Group, comprising variation in the yields that the market
attributes to the real estate investments and the market income that may be
earned.
Real estate investments can be impacted adversely by external factors such as
the general economic climate, supply and demand dynamics in the market,
climate risks, competition and increase in operating costs.
Besides asset specific characteristics, general market circumstances affect
the value and income from investment properties such as the cost of regulatory
requirements related to investment properties, interest rate levels and the
availability of financing.
The Manager of the Group has implemented a portfolio strategy with the aim to
mitigate the above stated real estate risks. Through diversification in
regions, risk categories and customers, it is expected to lower the risk
profile of the portfolio.
With respect to new investments, the Manager will be targeting specific
investment categories based on the Group's investment objective and
restrictions. Because such investments may be made over a substantial period
of time, the Group faces the risk of interest rate fluctuations in case of
leveraging these investments and adverse changes in the real estate markets.
Fair value hierarchy
The Group considers that all of its investment properties and investment
properties under construction fall within Level 3 of the fair value hierarchy
as defined by IFRS 13. There have been no transfers between Level 1 and Level
2 during any of the periods, nor have there been any transfers between Level 2
and Level 3 during any of the periods.
The valuations have been prepared on the basis of Market Value ("MV"), which
is defined in the RICS Valuation Standards, as:
"The estimated amount for which a property should exchange on the date of
valuation between a willing buyer and a willing seller in an arm's length
transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion."
MV as defined in the RICS Valuation Standards is the equivalent of fair value
under IFRS.
The following descriptions and definitions relating to valuation techniques
and key unobservable inputs made in determining fair values are as follows:
Valuation techniques
Investment properties completed: income approach
The income method (or income approach) quantifies the net present value of
future benefits associated with the ownership of the asset by totalling the
current tenancy of the property, followed by the market rent on lease expiry,
capitalised at an appropriate yield. The methodology is based on a direct
capitalisation model where the lease-based income has been capitalised with an
all-risk yield in perpetuity. The choice of this methodology represents the
likely basis of analysis to be used by a potential purchaser for this type of
property (income producing).
Investment properties under construction: residual approach
The residual approach for properties under construction takes the expected
valuation of the finished property using the income approach and deducts
forecast costs to complete the development and an allowance for developer's
profit.
Unobservable input: estimated rental value ("ERV")
ERV is dependent upon a number of variables in relation to the Group's
property. These include: size, building specification and location. At 31
March 2024 the range was between €34.00 ‑ €94.00 per square metre, per
annum (30 September 2023: €33.00 - €104.00 per square metre, per annum).
The Group has not disclosed the weighted average ERV due to the large
dispersion of these caused by the different markets that the properties are
located in.
Unobservable input: yield
Yield is dependent on the tenant, lease length and the other variables listed
above for ERV. At 31 March 2024, the weighted average net initial yield for
standing assets was 4.65% and the range was between 2.16% and 5.77% (30
September 2023: average net initial yield was 4.43% and the range was between
3.56% and 5.70%). Implicit in the yield is the valuer's consideration of
climate risks.
Yield and ERV are not necessarily independent variables. It is possible a
change in one assumption may result in an offsetting change to the other but
equally the change in both assumptions may increase the impact on valuation.
Sensitivities of measurement of significant unobservable inputs
As set out within significant accounting estimates and judgements above, the
Group's property portfolio valuation is open to estimation uncertainty and is
inherently subjective in nature. At the balance sheet date, when the property
portfolio was valued, the Group considered the range used below, in the
sensitivity analysis, to be appropriate as at that date as in a stabilised
logistics market, the ranges used represent reasonable possible changes in
unobservable inputs.
As a result, the following sensitivity analysis has been prepared for
investment properties and assets held for sale:
-0.25%yield €m +0.25% yield -5% ERV +5% ERV
€m
€m
€m
(Decrease)/increase in the fair value of investment properties as at 31 March 77.76 (69.93) (50.92) 51.17
2023
(Decrease)/increase in the fair value of investment properties as at 30 85.45 (76.19) (52.79) 53.08
September 2023
The CBRE valuation includes deductions for transaction costs that would be
incurred by a hypothetical purchaser at the valuation date. These costs
include Real Estate Transfer Tax ("RETT") equivalent to stamp duty except for
properties in Belgium, Italy, Poland and Sweden. In Italy, this is due to the
structure of an Investment Management Company ("SGR"). In Belgium, Poland and
Sweden, the local valuation practice is to exclude such costs given the
prevalence of corporate rather than asset transactions in these markets.
10. Asset held for sale
31 March 30 September
2024 2023
(unaudited) (audited)
€m €m
Asset held for sale 33.62 49.30
Asset held for sale relates to an investment property for which there was
Investment Committee approval to dispose of at the period-end date, and the
intention is to dispose of the asset, which is highly probable to be disposed
of within 12 months.
11. Trade and other receivables
Non-current trade and other receivables 31 March 30 September
2024 2023
(unaudited) (audited)
€m €m
Cash in public institutions 1.76 1.76
The cash in public institutions is a deposit of €1.76 million given by the
tenant for the property in Barcelona, Spain.
Current trade and other receivables 31 March 30 September 2023
2024 (audited)
(unaudited) €m
€m
Trade receivables 1.28 1.77
Prepayments, accrued income and other receivables 10.46 28.89
VAT receivable* 1.97 2.97
13.71 33.63
* VAT receivable includes VAT on capital expenditure across the developments
and a reclaim on the purchase of a property in Italy €0.04 million (30
September 2023: €0.93 million).
The carrying value of trade and other receivables classified at amortised cost
approximates fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables.
To measure expected credit losses on a collective basis, trade receivables are
grouped based on similar credit risk and ageing.
The expected loss rates are based on the Group's historical credit losses
experienced over the period prior to the period end. The historical loss rates
are then adjusted for current and forward-looking information on macroeconomic
factors affecting the Group's customers. Both the expected credit loss
provision and the incurred loss provision in the current and prior period are
immaterial.
No reasonably possible changes in the assumptions underpinning the expected
credit loss provision would give rise to a material expected credit loss.
12. Loans and borrowings
As at 31 March 2024, 73.7% (30 September 2023: 73.7%) of the Group's debt
facilities are fixed term with 26.3% floating term (30 September 2023: 26.3%).
The LTV across all drawn debt was 44.46% against a limit of 65% in the debt
documentation. The Group has been in compliance with all of the financial
covenants of the Group's bank facilities as applicable throughout the period.
The Group had available headroom of €250 million under its bank borrowings
(30 September 2023: €172.5 million).
Any associated fees in arranging the loan and borrowings that are unamortised
as at the period end are offset against amounts drawn on the facilities as
shown in the table below:
31 March 30 September 2023
2024 (audited)
(unaudited) €m
€m
Bank borrowings at the beginning of the year 76.25 9.11
Bank borrowings drawn in the year - 126.00
Bank borrowings repaid in the year (77.50) (59.50)
Loan issue costs paid - (0.01)
Non-cash amortisation of loan issue costs 0.30 0.65
Reclass unamortised loan issue costs to/(from) prepayments 0.95 -
Non-current liabilities: borrowings - 76.25
31 March 30 September 2023
2024 (audited)
(unaudited) €m
€m
0.95% Green Bonds 2026 500.00 500.00
1.216% USPP 2029 100.00 100.00
1.449% USPP 2032 50.00 50.00
1.590% USPP 2034 50.00 50.00
Less: unamortised costs on loan notes (5.17) (6.15)
Non-current liabilities: loans notes 694.83 693.85
31 March 2024 (unaudited)
Maturity of loans and borrowings
Drawn €m Undrawn Total debt available
€m
€m
Repayable between one and two years - 250.00 250.00
Repayable between two and three years 500.00 - 500.00
Repayable between three and four years - - -
Repayable between four and five years - - -
Repayable in over five years 200.00 - 200.00
700.00 250.00 950.00
Set out below is a comparison by class of the carrying amounts and the fair
value of the Group's financial instruments:
Book Value Fair Value Book Value Fair Value
31 March 31 March 30 September 30 September
2024 2024 2023 2023
€m €m €m €m
Bank borrowings: RCF - - 77.50 77.50
0.950% Green Bonds 2026 500.00 460.85 500.00 440.30
1.216% USPP 2029 100.00 93.54 100.00 91.85
1.449% USPP 2032 50.00 45.42 50.00 44.37
1.590% USPP 2034 50.00 44.69 50.00 43.52
Total borrowings and loan notes 700.00 644.5 777.50 697.54
The fair value of financial liabilities traded on active liquid markets,
including the 0.95% Green Bonds 2026, 1.216% USPP 2029, 1.449% USPP 2032 and
1.590% USPP 2034, are determined with reference to the quoted market prices.
The financial liabilities are considered to be Level 1 and Level 2 fair value
measure. The fair value of the financial liabilities at Level 1 was €460.85
million (30 September 2023: €440.30 million) and Level 2 was €183.65
million (30 September 2023: €179.74).
13. Other liabilities
The Group's properties in Germany are held in subsidiaries in which the Group
holds 94.9% or 89.9% of the shares. As part of the purchase agreements, the
Group issued put options to the minority shareholders. The options are
exercisable ten years after acquisition and would require the Group to acquire
all shares held by the minority shareholder at the then market value. Prior to
the option date the Group has guaranteed a fixed dividend to the minority
shareholder. If this is not met by the subsidiary, then the Company is
required to settle this obligation.
14. Derivative financial instruments
To mitigate the interest rate risk that arises as a result of entering into
variable rate loans, a number of interest rate caps have been taken out in
respect of the Group's variable rate debt to cap the rate to which three-month
Euribor can rise. €20m of caps expire in April 2024, a further €20m expire
in July 2024, with the final €40m expiring in October 2025.
On 18 October 2023 the Group purchased interest rate caps with a notional
value of €55m with various expiry dates as detailed in the table below.
On 19 October 2023 interest rate caps with a notional value of €125m
expired, and a further €25m of interest rate caps commenced which had been
purchased in the previous financial year.
The table below details the interest rate caps at the current period end.
Nominal CAP rate Start date End date
€25m 2.50% 19/10/2023 19/10/2025
€15m 3.00% 18/10/2023 18/10/2025
€20m 2.75% 18/10/2023 18/04/2024
€20m 2.75% 18/10/2023 18/07/2024
The weighted average capped rate, excluding any margin payable, for the Group
as at the period end was 2.72%. There was a premium payable of €0.59m
towards securing the interest rate caps in both periods.
31 March 30 September
2024 2023
(unaudited) (audited)
€m €m
Interest rate derivatives valuation brought forward 1.05 4.43
Interest cap premium paid 0.59 0.53
Realised loss on derivative - (0.49)
Disposal of interest rate cap/Cap break receipt - (1.32)
Amortisation of derivative financial instruments (0.43) (0.40)
Fair value movement (0.55) (1.70)
Non-current assets: interest rate derivatives carried forward 0.66 1.05
The interest rate derivatives are marked to market by the relevant
counterparty banks on a quarterly basis in accordance with IFRS 9. Any
movement in the mark-to-market values of the derivatives are taken to the
Group profit or loss.
As at the period end date the total proportion of debt hedged via interest
rate derivatives equated to 100% (30 September 2023: 100%).
Fair value hierarchy
The fair value of the Group's interest rate derivatives is recorded in the
Group Statement of Financial Position and is determined by forming an
expectation that interest rates will exceed strike rates and discounting these
future cash flows at the prevailing market rates as at the period end. This
valuation technique falls within Level 2 of the fair value hierarchy, as
defined by IFRS 13. The valuation was provided by the counterparty to the
derivatives. There have been no transfers between Level 1 and Level 2 during
any of the periods, nor have there been any transfers between Level 2 and
Level 3 during any of the periods.
15. Financial risk management
Financial instruments
The Group's principal financial assets and liabilities are those that arise
directly from its operations: trade and other receivables, trade and other
payables and cash held at bank. The Group's other principal financial assets
and liabilities are loan notes, bank borrowings and interest rate derivatives,
the main purpose of which is to finance the acquisition and development of the
Group's investment property portfolio and hedge against the risk of interest
rates rising. The book value of the Group's financial instruments approximates
their fair value at the end of the period.
Risk management
The Group is exposed to market risk (including interest rate risk) and credit
risk. The Board of Directors oversees the management of these risks. The Board
of Directors reviews and agrees policies for managing each of these risks that
are summarised below.
Market risk
Market risk is the risk that the fair values of financial instruments will
fluctuate because of changes in market prices. The financial instruments held
by the Group that are affected by market risk are principally the Group's cash
balances and bank borrowings along with interest rate derivatives entered into
to mitigate interest rate risk.
The Group monitors its interest rate exposure on a regular basis. A
sensitivity analysis was performed to ascertain the impact on the Group Cash
Flow Statement and net assets based on nominal borrowings at the period end.
The RCF facility was undrawn by at the period end, with a €250 million
facility available. The RCF benefits from interest rate caps, capping the
level of Euribor 3 months to a maximum of 2.72%. With the hedging in place,
any further movements in interest rates would have limited impact on net
assets if a further drawdown on the RCF is made.
The Group currently operates in eight countries. The current distribution of
total assets is as follows:
Total assets Belgium Germany Spain Italy Poland UK The Netherlands Sweden Total
31 March 2024 (unaudited) 152.89 667.75 203.08 177.72 77.03 8.16 155.60 88.84 1,531.07
30 September 2023 149.24 755.26 214.43 182.97 78.97 4.34 148.28 118.34 1,651.83
(audited)
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations
under a financial instrument or customer contract, leading to a financial
loss. The Group is exposed to credit risks from both its leasing activities
and financing activities, including deposits with banks and financial
institutions.
Credit risk is mitigated by tenants being required to pay rentals in advance
under their lease obligations. The credit quality of the tenant is assessed
based on an extensive credit rating scorecard at the time of entering into a
lease agreement or acquiring a let property. The Group holds collateral by way
of bank deposits totalling €1.76 million (see note 11) and in certain cases
holds bank guarantee letters.
Outstanding trade receivables are regularly monitored. The maximum exposure to
credit risk at the reporting date is the carrying value of each class of
financial asset less the collateral held.
Credit risk related to cash deposits
One of the credit risks of the Group arises with the banks and financial
institutions. The Board of Directors believes that the credit risk on short
term deposits and current account cash balances is limited because the
counterparties are banks, which are committed lenders to the Group, with high
credit ratings assigned by international credit rating agencies.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and,
going forward, the finance charges, principal repayments on its borrowings and
its commitments under forward funded development arrangements (see note 9). It
is the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due, as the majority of the Group's assets are
property investments and are therefore not readily realisable. The Group's
objective is to ensure it has sufficient available funds for its operations
and to fund its capital expenditure. This is achieved by continuous monitoring
of forecast and actual cash flows by management ensuring it has appropriate
levels of cash and available drawings to meet liabilities as they fall due.
Liquidity risk is further managed using an RCF facility of €250m. The RCF is
drawn in short to medium-term tranches of debt which are repayable within 6
months from draw-down. These tranches of debt can be rolled over provided
certain conditions are met, including covenant compliance. The Group considers
that it is highly unlikely it would be unable to exercise its right to
roll-over the debt. This is due to mitigating actions it could take to
maintain compliance with these conditions. The Directors therefore believe
that the Group has the ability to roll-over the drawn RCF amounts when due and
consequently has presented the RCF as a non-current liability. At period end,
in the Loans and Borrowings, there were no amounts of drawn debt relevant to
the RCF (30 September 2023: €76.25 million).
Foreign currency risk
The Group's functional currency is the Euro as the Group operates in
continental Europe. The Group keeps some cash in foreign currency to finance
its working capital. The Group holds investment properties in Sweden, which
transact business denominated in SEK. As such, there is currency exposure
resulting from translating their performance and net assets into the
functional currency, Euros, for each financial period and at each balance
sheet date.
Development risk
Development risk is the exposure that the Group takes in projects where
building is not yet completed. Construction risk is mitigated by the Group by
entering into fixed price contracts with the developers. Letting risk is
usually alleviated by entering into pre-let agreements with customers or
rental guarantees with the developers or vendors.
Taxation risk
Tax laws in these countries may change in the future, representing an increase
in tax risk to the Company.
16. Share capital
The share capital relates to amounts subscribed for share capital at its
nominal value:
Ordinary Shares 31 March 31 March 30 September 30 September
2024 2024 2023 2023
Number €m Number €m
Issued and fully paid at 1 cent each 806,803,984 8.07 806,803,984 8.07
Balance at beginning of period - €0.01 Ordinary Shares
Shares issued in the period - - - -
Balance at end of period 806,803,984 8.07 806,803,984 8.07
The Group has one class of Ordinary Shares which carry no right to fixed
income.
17. Net asset value (NAV) per share
IFRS basic NAV per share is calculated by dividing net assets in the Group
Statement of Financial Position attributable to ordinary equity holders of the
Parent by the number of Ordinary Shares outstanding at the end of the period.
As there are no dilutive instruments outstanding IFRS basic NAV per share is
shown below:
31 March 2024 (unaudited) 30 September 2023
€m
(audited)
€m
Net assets per Group Statement of Financial Position 757.51 795.62
Ordinary Shares:
Issued share capital (number) 806,803,984 806,803,984
NAV per share (expressed in Euro per share)
IFRS basic NAV per share 0.94 0.99
31 March 2024 30 September 2023
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
€m €m €m €m €m €m
NAV attributable to shareholders 757.51 757.51 757.51 795.62 795.62 795.62
Mark-to-market adjustments of derivatives (0.66) (0.66) - (1.05) (1.05) -
Deferred tax adjustment 19.30 19.30 - 25.99 25.99 -
Transaction costs(1) 77.77 - - 82.39 - -
NAV 853.92 776.15 757.51 902.95 820.56 795.62
NAV per share 1.06 0.96 0.94 1.12 1.02 0.99
( )
(1) EPRA NTA and EPRA NDV reflect IFRS values which are net of RETT (real
estate transfer tax). RETT are added back when calculating EPRA NRV.
18. Transactions with related parties
For the period ended 31 March 2024, all Directors and some of the Partners of
the Manager are considered key management personnel. The fee payable to the
Manager for the period to 31 March 2024 was €2.28 million (31 March 2023:
€3.41 million). In the current period €nil of the investment management
fee was capitalised during the period (30 September 2023: €0.24 million).
The total amount outstanding at the period end relating to the Investment
Management Agreement was €1.17 million (30 September 2023: €1.12 million).
The total amounts paid to Directors for their services for the period to 31
March 2024 was €0.2 million (31 March 2023: €0.2 million).
The Members of the Manager that are considered as key management personnel are
Phil Redding, James Dunlop, Henry Franklin, Colin Godfrey and Petrina Austin.
During the period the Directors received the following dividends: Robert Orr:
€5,059 (31 March 2023: €4,836), Keith Mansfield: €7,250 (31 March 2023:
€7,250), Taco De Groot: €1,050 (31 March 2023: €1,050), Eva-Lotta
Sjöstedt: €173 (31 March 2023: €173) and Sarah Whitney: €1,631 (31
March 2023: €1,218).
During the period the Members of the Manager received the following dividends:
Phil Redding €4,295 (31 March 2023: €3,300), James Dunlop: €10,196 (31
March 2023: €9,554), Henry Franklin: €6,844 (31 March 2023: €6,416),
Colin Godfrey €10,196 (31 March 2023: €4,309) and Petrina Austin €1,127
(31 March 2023: €1,007).
19. Subsequent events
On 8 April 2024, the Group agreed a short-term lease with Arvato at its asset
in Strykow, Poland, meaning the building is now fully let.
On 30 April 2024, the Group agreed a new lease and re-gear with an existing
customer, Alcon, at its asset in Bornem, Belgium.
On 13 May 2024 the Group successfully exchanged on the sale of the warehouse
in Gothenburg via a share deal. The disposal was to a leading pan-European
real estate investment manager for consideration of SEK 385 million.
There were no other significant events occurring after the reporting period,
but before the condensed interim financial statements were authorised for
issue.
1 (#_ftnref1) Source: CBRE
2 (#_ftnref2) Source: CBRE. Based on a weighted average vacancy for Germany,
France, the Netherlands, Belgium, Italy, Spain, Sweden, and Poland.
3 (#_ftnref3) Source: CBRE. Based on a straight average of prime headline
rents in the following sub-markets: Munich, Paris Ile-de-France, Amsterdam,
Brussels, Milan, Barcelona, Stockholm, and Warsaw.
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