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Tritax EuroBox plc Annual Report 2023
Delivering on our
strategicpriorities
Annual Report 2023
Occupier demand for logistics assets in our markets
continues to be driven by long-term structural trends,
primarily the growth of e-commerce, the need to
optimise,automate and de-risk supply chains, and
the growing necessity for businesses to operate from
sustainable buildings.
Our high-quality portfolio of properties is highly
sustainable, offers predictable and predominantly
inflation-linked income and has opportunities for
capital growth through active asset management.
Theseattributes underpin our ability to generate
attractivereturns for Shareholders over the long term.
The Manager, Tritax Management LLP, has assembled
afull-service, pan-European capability for the Company,
combining in-house leadership and strategic expertise
with close partnerships with leading European developers
and asset managers.
The Manager comprises a skilled, diverse team of real
estate professionals with expertise across investment,
asset management, development, finance, business
analysis, research and communications. This is
supplemented with specialist, on-the-ground developers,
and asset and property managers with strong market
standings in the Continental European logistics sector.
Specialists in European
logistics real estate
Tritax EuroBox plc invests in and manages a well-diversified portfolio
of Continental European logistics real estate. These assets fulfil crucial
roles in logistics and distribution supply chains, and are located in
established logistics markets near major population centres across core
Continental European countries.
Strategic report
1 Delivering on our strategic priorities
2 Chairman’s Statement
6 Overview
8 Strategic Framework
9 Markets and trends
12 Portfolio
14 Business Model
15 Strategy
16 Investment Case
17 Manager’s Report
24 Key Performance Indicators
26 EPRA performance measures
28 Stakeholder Engagement and Section 172
30 ESG Overview
32 ESG Progress Summary
38 Financial Review
41 Manager’s Q&A
44 Principal Risks and Uncertainties
52 Task Force on Climate-Related
FinancialDisclosures (TCFD) Report
63 Going Concern and Viability Statement
Governance
64 Chairman’s Governance Overview
66 Board of Directors
68 Key Representatives of the Manager
70 Key Activities of the Board
71 Application of Code
73 Board Leadership and Company Purpose
76 Stakeholder Engagement
78 Division of Responsibilities
82 Nomination Committee Report
86 Audit, Risk and Internal Control
88 Audit & Risk Committee Report
92 Management Engagement Committee Report
95 EBOX ESG Committee Report
96 Q&A with Eva-Lotta Sjöstedt
97 Directors’ Remuneration Report
100 Directors’ Report
102 Statement of Directors’ Responsibilities
Financial statements
103 Independent Auditor’s Report
110 Group Statement of Comprehensive Income
111 Group Statement of Financial Position
112 Group Statement of Changes inEquity
113 Group Cash Flow Statement
114 Notes to the Consolidated Accounts
134 Company Balance Sheet
135 Company Statement of Changes in Equity
136 Notes to the Company Accounts
142 Notes to the EPRA and Other Key Performance
Indicators (Unaudited)
145 Glossary of Terms
148 Company Information
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 1
Delivering on our strategic priorities
Rental income growth and cost efficiencies supporting
higher Adjusted Earnings and a covered dividend
– Rental income of €68.1 million, up 17.6%, reflecting the full-year effect
of prior year acquisitions, rent indexations, asset management and
development activity.
– Like-for-like
4
rental growth was 4.5% (7.8% including new income from
theBarcelona and Strykow extensions).
– Adjusted EPRA Cost Ratio
5
of 24.2% (FY22: 29.5%), in line with our
target range of 20–25%, benefiting from higher income and lower
management fee.
– Adjusted EPS of 5.51 cents, up 30%.
– Dividend per share of 5.00 cents was 110% covered by Adjusted EPS for
thefull year.
Investment portfolio let to strong customers on
long-term, inflation-linked leases
– Portfolio value
2
of €1,561.9 million (FY22: €1,765.6 million), with 12-month
like-for-like reduction of 14.5% primarily due to significant outward yield
shift across the sector, partly offset by rental growth. H2 FY23 valuation
decline of 0.3%.
– Despite a good operational performance, the fall in portfolio value led to a
decline in NTA to €1.02 (FY22: €1.38) and a negative Total Return of 22.5%
(FY22: 6.0%).
– Portfolio reversion of 17.6% or €13.4 million, reflecting a like-for-like
increase in portfolio ERV of 6.5%.
– 97% of leases subject to annual rental increases, with 81% linked to inflation.
– Increase in EPRA vacancy rate to 5.5% (FY22: 0.3%) reflecting the
completion of speculative forward fundings in Sweden and Italy, and a
lease expiry in Poland, partially offset by new lettings.
Dividend cover
110.2%
FY22: 84.8%
Loan to value (LTV) ratio
3
46.4%
FY22: 35.2%
Dividend per share
5.00
cents
FY22: 5.00 cents
EPRA Net Tangible Assets (NTA) per
share
€1.02
FY22: €1.38
Rental income
€68.1m
FY22: €57.9 million
Basic EPS
(27.68)
cents
FY22: 7.28 cents
Adjusted Earnings Per Share (Adjusted EPS)
1
5.51
cents
FY22: 4.24 cents
Portfolio value
2
€1,561.9m
FY22: €1,765.6 million
Total Return
(22.5)%
FY22: 6.0%
Overview of the year
1. See note 12 to the financial statements for reconciliation.
2. Valuation under IFRS (excluding rental guarantees), this includes assets
held for sale.
3. As per KPI definition.
4. Excluding extensions on existing buildings. Including extensions,
like-for-like rental growth was 7.8%.
5. Including licence fee income and rental guarantees.
6. Contracted rent, on an annualised basis, at the reporting date. Including
rental guarantees and licence fee.
Asset management, indexation and development
adding €6.3 million to annualised rental income
6
– Completed two pre-let developments and four speculative forward
fundings, adding 224,763 sqm of new space.
– Completed a 109,083 sqm extension in Barcelona, adding €2.3 million
to annual rent, and commenced an 8,841 sqm extension in Poland,
increasing the annual rent by €0.5 million.
– Commenced a 23,000 sqm speculative development in Oberhausen,
Germany; completion targeted for July 2024.
– Signed three new leases totalling €4.3 million of annual rent, an increase
of€0.6 million above previous rent or guarantees.
– Sales of asset in Hammersbach in August for c.€65 million and, post period
end, two assets in Bochum and Malmö for c.€47 million and c.€28 million
respectively. All three were either broadly in line or above book value, and
aligned with our stated disposal strategy.
– Ongoing integration of ESG objectives into operational business, including
completion of two solar PV installations, adding a total of 2.8 MW to the
portfolio, with a further six projects in progress.
Robust balance sheet with low cost of debt
– 100% of debt with fixed rates or caps, with an average cost of debt of
1.30% for FY23.
– 3.5-year weighted maturity, with earliest refinancing in Q4 2025.
– €172.5 million of undrawn debt facilities as at year end.
– Loan to value (LTV) ratio
3
of 46.4% remains higher than we would like,
with the disposal proceeds offset by the portfolio valuation decline,
development capital expenditure and other working capital effects.
– Covenant headroom with LTV ratio
3
of 46.4% and interest cover of 4.8x,
versus covenants of 65% and 1.5x.
– Taking into account the post-period-end disposals at Bochum and Malmö,
the pro-forma LTV decreases to 44.0%.
e See pages 24-25 for full details and definitions of our performance measures
Tritax EuroBox plc Annual Report 20232
Chairman’s Statement
Good progress on delivering
our strategic priorities
“ Over the past 12 months we
have made good progress
on delivering the strategic
priorities we outlined a
year ago. Rental income has
increased by 17.6% and our
Adjusted EPRA Cost Ratio
at 24.2% is now within our
target range. This improved
operational performance has
led to a 30.0% increase in
Adjusted Earnings and the
dividend 110.2% covered for
the full year. In addition, we
expect our ongoing disposal
programme to reduce our loan
to value ratio towards our
preferred percentage range in
the low 40s in theyear ahead.”
Robert Orr
Independent Chairman
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 3
Supportive structural trends throughout our
five-year history
The past year marked the fifth anniversary of Tritax EuroBox plc,
afive-year period that has seen consistently supportive underlying
occupier market fundamentals against, more recently, a significant
change in economic and investment market conditions.
Since its IPO in 2018, the combination of positive structural demand
drivers and the constrained supply of modern warehouse space has
generated strong rental growth across European logistics markets.
These strong market fundamentals attracted considerable amounts
of capital into the sector, further encouraged by supportive debt
markets, leading to a corresponding decline in property yields and
increase in capital values.
More recently, in response to central banks sharply raising interest
rates to combat higher levels of inflation, property yields have
shifted upwards to reflect the higher cost of capital, with asset
values subsequently falling. Following an extended period of benign
economic conditions, these fluctuations are a reminder that real
estate markets are inherently cyclical in nature.
Despite these market swings, the Company’s strategy – and its
delivery – has remained consistent. Over the past five years, we have
focused on assembling a portfolio of best-in-class, modern logistics
assets that are mission-critical to our customers, with leading ESG
credentials, and concentrated in major distribution corridors in key
European markets.
Our approach, based on the ownership and management of
a stabilised portfolio of core assets, with a carefully managed
exposure to value-add and development risk, enables the Company
to deliver income growth consistently through the economic cycle.
Our high-quality portfolio remains well placed
tocapitalise on structural drivers
The portfolio is now valued at €1.56 billion with a rent roll of
€76.3 million and home to 35 customers, including multi-national
organisations such as Mango, Amazon, Puma and Lidl. The assets
are let on primarily long-term leases with annual uplifts linked
to inflation, generating predictable and regular growth in rental
income, which serves to support the fully covered dividend paid
toShareholders.
We remain of the view that the positive tailwinds from structural
demand drivers will continue to benefit the Company for some time
to come. The impact of increasing online shopping penetration, the
need to build greater resilience into supply chains, and the aim of
reducing the environmental impact of distribution operations will
continue to generate strong demand for high-quality, sustainable
warehouse space. The portfolio remains well positioned to benefit
from these trends.
That said, we are also cognisant of the changing market context
and the challenges this presents. While the central focus of our
strategy remains constant, aimed at harnessing these supportive,
long-term structural drivers, we have adapted our priorities to ensure
the business remains appropriately positioned in this alteredand
evolving environment.
Over the past 12 months the Company has focused on capturing the
income growth opportunities embedded within the existing portfolio,
improving operational efficiency, growing earnings to deliver a covered
dividend, and taking action to maintain a strong balance sheet
position through selected disposals, which have been broadly in line
with valuations. During the period, good progress has been made on
these priorities and we remain on track to achieve our objectives.
Financial performance driven by good progress on
our strategic priorities
Rental income increased to €68.1 million per annum (FY22: €57.9 million)
and like-for-like rental growth was 4.5% (7.8% if new income from
completed extensions is included). The Company also continued
to benefit from the revised Investment Management Agreement
that reduced the Manager fees payable by the Company, with the
Adjusted EPRA Cost Ratio declining to 24.2% from 29.5% over the
year. These activities contributed to a 30.0% increase in Adjusted
EPS to 5.51 cents (FY22:4.24 cents).
We declared quarterly dividends totalling 5.00 cents per share for
the period, in line with the previous year. The dividend was 110.2%
covered by Adjusted EPS.
Did you know?
Bönen, Germany
4,000 QR codes have been
embedded in the floor of the
six units. These codes form the
guidance system which enables the
warehouse’s 140 robots to navigate
around the facility, automating the
process by which inventory is moved
and stored within the building.
Tritax EuroBox plc Annual Report 20234
Financial performance driven by good progress on
our strategic priorities continued
However, the Company continues to be affected by the decline in
asset values that is impacting the entire European logistics sector.
The portfolio was independently valued by CBRE at €1,561.9 million
at the period end (FY22: €1,765.6 million), representing a like-for-like
valuation reduction of 14.5% for the full year. Signs of stabilisation
are emerging, with a deceleration in the rate of decline from a
reduction of 14.7% in H1 to a fall of 0.3% in H2. This resulted in
EPRA NTA per share of €1.02, down 26% (FY22: €1.38).
One of the key priorities of the business is to maintain balance
sheet strength. Earlier in the year we commenced a programme of
planned disposals to lower the Company’s leverage and in August
announced the sale of an asset in Hammersbach (Germany) for
c.€65 million. Post period end, we announced the sales of assets
in Bochum (Germany) for c.€47 million and in Malmö (Sweden) for
c.€28 million. Bochum was broadly in line with valuation and Malmö
was significantly ahead. These transactions brought gross sales
signed so far to c.€139 million.
However, the LTV of 46.4% (pro forma 44.0% post the Bochum and
Malmö disposals) remains above where we would like it to be at this
point in the cycle. This is due to the lower portfolio valuation, capital
expenditure on developments and movements in working capital
offsetting the benefit of the sales proceeds. Further disposals are
planned in the months ahead.
The Company continues to benefit from a low average cost of debt
of 1.30% due to the fixed or capped rates on all its borrowings and is
not exposed to any near-term refinancings. In the medium term, the
Company expects to refinance the RCF and the bond ahead of their
respective maturities in October 2025 and June 2026.
Advancement of our ESG strategy and solar
PVinstallations
During the year, we have made good progress with our ESG
strategy, with several initiatives announced over the past 12 months.
At the Interim Results in May we launched our new ESG targets.
These include an accelerated commitment to achieve net zero
carbon across all aspects of our business by 2040, rather than the
previously stated 2050 target.
Our targets, which will be reviewed annually, will help drive further
improvement for the benefit of our stakeholders and help us to keep
pace with the evolving regulatory and market environment. This
will ensure our approach is evidence- and data-led, and that we
accurately measure and disclose our impact.
We have increased the renewable electricity generated by solar
schemes on our assets, with our portfolio’s generating capacity
now 10.3 MW across arrays on eight buildings. We have made good
progress on our plans to increase this further over the coming year,
with applications submitted to commence schemes on three further
assets, which would add an extra c.9 MW of capacity. In addition,
there are three other projects in the pipeline.
As previously reported, we held the first meeting of our ESG Board
Committee, chaired by the Board ESG Champion, Eva-Lotta Sjöstedt.
This provides a dedicated forum for the Board and representatives
of the Manager to oversee and review the progress in delivering
ourESGobjectives.
Also reported earlier in the year, we reviewed the Board and
Committee composition and announced Sarah Whitney’s appointment
as Senior Independent Director (SID) with effect from 6December
2022. Sarah has taken on the role from Keith Mansfield, who
continues to make an important contribution as a Non-Executive
Director and Chair of the Audit & Risk Committee.
In February 2023, the Management Engagement Committee
approved the appointment of CBRE as the Company’s independent
valuer, replacing JLL. The position had been held by JLL since
the Company’s IPO in 2018 and the Board felt a rotation of this
important role was appropriate at this time.
Outlook
The past 12 months have been characterised by a challenging
geo-political and macro-economic backdrop. This has adversely
impacted property investment markets and occupier sentiment
across Europe. However, inflation in Continental Europe is now on a
downward trajectory and interest rates are forecast to have peaked.
This increased visibility is leading to signs of stabilisation in asset
values, as demonstrated by the marginal fall in our portfolio valuation
over the second half of the financial year and recently completed
disposals broadly in line with book values.
While we expect investors to remain cautious and transaction
volumes relatively low in the near term, we anticipate the positive
structural drivers and strong market fundamentals of the logistics
sector will support investor appetite and liquidity as we move
through 2024.
In addition, while take-up of warehouse buildings has fallen over the
past nine months, the availability of modern, sustainable logistics
space remains low and the potential for a material supply increase
limited. We expect these dynamics to keep vacancy rates at low
levels and support positive rental growth, albeit at more normalised
levels versus the very high rates seen recently.
The Board remains confident that the high-quality portfolio and
strong customer base means the Company is well placed to benefit
from the structural tailwinds and favourable underlying market
dynamics that will continue to support the performance of the
European logistics sector.
Despite the challenging market environment during the past year,
the Company has delivered good progress on the strategic priorities
set out 12 months ago. The Board continues to believe the focus on
driving earnings, paying a fully covered dividend, and maintaining
balance sheet strength through the ongoing programme of
disposals, remains appropriate and will deliver value to Shareholders
in the long term.
Robert Orr
Independent Chairman
4 December 2023
Adjusted Earnings Per Share (Adjusted EPS)
1
5.51 cents
+30.0%
Dividend per share
5.00 cents
No change
Chairman’s Statement continued
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 5
Barcelona, Spain
The Barcelona logistics market is
one of the strongest in Europe, with
deep tenant demand and a severely
constrained supply of vacant
buildings and development land.
This asset was initially acquired
with 189,726 sqm of space.
Thishas since been expanded
by an additional 109,083 sqm in
collaboration with the customer,
Mango, to support its growth and
service ambitions.
Gelsenkirchen, Germany
Redevelopment of a brownfield site
within the attractive Rhine-Ruhr
metropolitan region, comprising a
16,633 sqm building of three units
on a24,409 sqm plot.
Tritax EuroBox plc Annual Report 20236
A strong platform for growth
Overview
Strategic framework
Our purpose frames our commitment to being a sustainable business and how we deliver value for Stakeholders
Market and trends
Structural drivers continue to support the occupier market, which has constrained supply and low vacancy rates
Business model
Our differentiated approach enables us to capture market
opportunities and deliver performance for all ourstakeholders
Portfolio
In constructing our modern, high-quality portfolio, which generates
high-quality income across seven countries, we have favoured
locations and assets with the following characteristics:
Assets
Locations
Densely
populated
Existing
hubs
Mission
critical
Limited
supply
Modern &
sustainable
Adaptable Secure
income
Growth
potential
Market
insight
Recycle
capital
Enhance ESG
performance
e More
information
on page 14
e More information on pages 12–13
Strategy ESG targets Stakeholders
Actions
Our purpose
e More information on page 8
Multi-year sector impacts
Demand factors
1. Enhancing e-commerce capabilities
2. Creating resilient supply chains
3. Reducing environmental impact of operations
Barriers to developing new supply
1. Limited availability of land
2. Difficulty securing planning consents
3. Increased finance and construction costs
Favourable market dynamics are expected to help logistics real estate remain a compelling area for investment.
Structural trends
Global
digitalisation
E-commerce
Urbanisation
Supply chain
evolution
ESG
Emergence
ofcircular
economy
Proactive
portfolio
andasset
management
Source
high-quality
assets
T
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M
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a
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STRATEGIC REPORT
7Tritax EuroBox plc Annual Report 2023
Strategic priorities
Our clear strategic priorities frame
howweareoptimising performance
e More information on page 15
Investment case
We believe there are four simple and compelling reasons to invest in Tritax EuroBox
e More information on page 16
Key Performance Indicators (KPIs)
The KPIs we use to track our strategic progress are:
1. Structural
markettrends
Structural market trends,
characterised by strong
occupier demand, limited
supply of available space and
high barriers to developing
new assets in prime locations
2. Prime portfolio
Core, stabilised portfolio
leased to a strong customer
base, with leading ESG
performance and embedded
opportunities to add value
over the long term
3. Specialist manager
Agile, specialist manager
witha proven track record
anddisciplined approach
tocapital allocation, who
canact quickly to capture
value-enhancing opportunities
4. Through-cycle
performance
Predictable income
performance through the
cycle, supporting the delivery
of a fully covered dividend,
which can grow over time
1. Dividend per share
2. Total Return
3. Basic Net Asset Value (NAV)
4. Adjusted Earnings Per Share (Adjusted EPS)
e More information on pages 24-25
5. Loan to value (LTV) ratio
6. Weighted Average Unexpired Lease Term (WAULT)
7. Dividend cover
8. Interest cover
9. Like-for-like rental growth
Enhance
Distribute
Grow Reinforce
Grow
Capture
income growth
opportunities
Enhance
Improve
operational
efficiencies
Distribute
Drive earnings and
support dividend
Reinforce
Maintain balance
sheet strength
Tritax EuroBox plc Annual Report 20238
Strategic Framework
Strategy
Our objective is to create value
throughout the lifecycle of our assets,
specifically by producing secure and
predictable income streams and
attractive returns over the long term.
This is in line with our overarching
aim of providing our Shareholders
with growth in earnings and a fully
covered dividend. We seek to do this
via our strategy of disciplined capital
allocation and proactive ESG-led
asset management, with our approach
underpinned by appropriate financing.
e Read more about our strategy
onpage 15
ESG targets
Robust ESG performance is
important to who we are and what we
represent and is embedded across
the investment lifecycle. We have
created an ambitious ESG strategy
comprising targets across four areas
– sustainable buildings; climate and
carbon; nature and wellbeing; and
social value – aimed at driving social,
environmental and economic value
for our customers, partners, investors
and the wider society.
e Read more about our ESG targets,
strategy and initiatives onpages 23
and 30
Stakeholders
In collaboration with our suppliers
and partners, wehave supported
the growth of many of ourcustomers
across our Continental European
markets, facilitating increased
employment and regeneration
of local environments as well as
delivering income to Shareholders.
e Read more about our stakeholders
onpages 28 and 29
Actions
Our actions this year have demonstrated good, tangible progress of the delivery of our strategic priorities, as well as further
advancement of our ESG performance. Combined, this has enabled us to deliver on a range of aims and objectives for our various
stakeholders.
Purpose
Our purpose is to open up new futures in sustainable commercial real estate, creating compelling
opportunities for our stakeholders and giving the world’s most ambitious companies the space to
succeed. This translates into action through the combination of our strategy, our ESG targets and
ourfocus on delivering performance for our diverse range of stakeholders.
Our strong platform has in-built
capability to grow income and
create value over thelong term
Our purpose frames our commitment to being a sustainable
business and how we deliver value for our stakeholders.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 9
Markets and trends
Structural drivers continue to
support the occupier market
Our market is characterised by strong occupier demand, limited
supply of available space in core markets and high barriers to
developing new assets in prime locations. These favourable
market dynamics are supporting rental growth, with vacancy rates
remaining low.
Multi-year sector impacts
Demand factors
1. Enhancing e-commerce capabilities
2. Creating resilient supply chains
3. Reducing environmental impact of operations
Barriers to developing new supply
1. Availability of land
2. Difficulty securing planning consents
3. Increased finance and construction costs
Favourable market dynamics are expected to help logistics real estate remain a
compelling area for investment.
Structural trends
Global
digitalisation
E-commerce Urbanisation Supply chain
evolution
ESG Emergence of
circular economy
Good rental growth across core
Continental European markets
Structural trends such as digitalisation and online retail growth are
being amplified by growing urbanisation. In tandem, supply chains
are evolving as organisations seek improved resilience andreliability,
and demands for sustainability are increasing, drivenby shifting
stakeholder and societal expectations, including the emergence
of circular economies. These themes are continuing toshape the
demand-supply dynamics of the logistics sector.
Long-term demand drivers
Global events such as the Covid-19 pandemic and recent
heightened geopolitical risk have accelerated demand in the
short term. Over the longer term, demand is being driven by three
underlying factors:
1) Growth of e-commerce:
Warehouse space is fundamental to
both successfully fulfilling e-commerce sales and doing so at
a cost that allows companies to operate profitably. Companies
typically require large, flexible, modern and well-located properties
to deliver orders and manage returns rapidly and efficiently.
2) Creating resilient supply chains:
Companies are reinforcing their
supply chains to ensure their efficiency and resilience to external
shocks. Measures used to do this include adopting the latest
supply chain planning tools; reviewing manufacturing locations
and transportation networks; and holding more critical stock
closer to customers and end-users.
3) Drive towards more sustainable real estate and operations:
Companies are looking for their logistics real estate to help meet
their ESG objectives. In addition to reducing their environmental
impacts – through incorporating clean energy generation, low-carbon
technologies, and energy efficiencies – occupiers want a workspace
that promotes employee wellbeing to help them attract and
retain staff. Meanwhile, decarbonising transportation has driven
increased demand for features such as EV charging points.
We believe these trends will continue to favour the modern,
high-quality and well-located buildings we own.
Tritax EuroBox plc Annual Report 202310
Markets and trends continued
Good rental growth across core
Continental European markets continued
High barriers to development in prime markets
The availability of logistics space in many prime sub-markets
continues to be limited, and the barriers to developing new
warehouses in attractive locations remain high. These barriers include:
1) Availability of land:
Sourcing new sites for assets continues
to become more difficult. 95%
1
of developers highlight it as an
issue, up from 76% in 2022.
2) Difficulty securing planning consents:
Developers are also
finding it increasingly difficult to obtain permission to develop
land. 83% underlined the length of the zoning/permit process
as an important restriction, while 82% note that increased ESG
requirements are an important issue when seeking permission
for a development
1
.
3) Increased finance and construction costs:
Raw material and
labour cost inflation has eased, but development costs overall
remain elevated. Increased finance costs are a further burden
that negatively impact potential development profitability.
Real estate market fundamentals and
investment markets
Take-up has moderated across Europeanmarkets
2023 has seen a healthy level of demand for warehouse space
across Europe despite the challenging macroeconomic backdrop.
Take-up for the 12 months to Q3 2023 totalled 20.7 million sqm,
down 24% year-on-year but in line with pre-Covid-19 levels
2
. The
demand adjustment seen this year reflects a normalisation to more
typical, pre-pandemic levels of activity.
The uncertain market environment has impacted occupier
decision-making, as evidenced by the 2023 Savills/EuroBox
European Logistics Real Estate Census. Rising costs remain a
keyconcern and 39% of respondents suggested they have scaled
back or delayed decisions by one to two years. Leasing volumes
also continue to be impacted by ongoing constraints around the
availability of well-located, high-quality logistics buildings.
Figure 1: European logistics take up by market,
2015–Q3 2023
2015 2016 2017 2018 2019 2020 2021 2022
Q1-Q3
2023
30
25
20
15
10
5
0
million sqm
Despite these challenges, a wide range of occupiers continue
to commit to new logistics buildings. Retailer, e-commerce and
manufacturing companies all continued to evolve their warehouse
network and 3PLs have been particularly active in the year. 3PLs
continue to lease properties to satisfy demand driven by their customers’
outsourcing logistics requirements and need to hold higher levels of
buffer stock
3
, as well as new business opportunities such as facilitating
the return, repair and reuse of goods. Our letting at Dormagen, Germany,
was evidence of the latter, where the occupier is using our building
to process returns and repairs of household appliances.
Supply remains constrained in core markets
Development completions slowed to 17.6 million sqm in the
12months to Q3 2023, down from 19.5 million sqm in the year
to Q32022. Completions have dropped particularly sharply in
Germany, where year-on-year new supply is down 30% and
completions are below pre-pandemic levels
2
.
The limited availability of land, particularly for very large sites, and
challenges associated with securing planning are especially evident
across many of Europe’s core logistics sub-markets. For example,
inthe Netherlands less than 50% of new supply in the last 12 months
has been delivered into its nine principal sub-markets
2
.
While pockets of excess speculative development have emerged,
these are typically outside of the main logistics hubs where availability
remains very low. Furthermore, the supply pipeline across Europe
continues to reduce as developers reassess opportunities in light
of the evolving market environment and higher cost of capital.
Looking ahead, this is likely to continue the mismatch between
available supply and occupier requirements in many of the best
locations. These requirements include a heightened focus on ESG
features, energy efficiency and generation, and the technical building
features required to operate more efficient, productive and resilient
supply chains.
Figure 2: European logistics completions by market,
2017–Q3 2023
2017 2018 2019 2020 2021 2022
Q1–Q3
2023
20
15
10
5
0
million sqm
Source: CBRE.
Source: CBRE.
Yield increase across all our markets since
March2023
0-40 bps
Yield increase across Germany, Netherlands
andFrance since March 2023
0-10 bps
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 11
8
7
6
5
4
3
2
1
0
1. Savills/Tritax EuroBox European Logistics Real Estate Census 2023.
2. CBRE.
3. JLL, European logistics market update, Q2 2023.
4.
Based on a straight average of rents in the leading sub-market in each of
Germany, France, the Netherlands, Belgium, Italy, Spain, Sweden and Poland.
Low vacancy in many core logistics markets
continues to support rentalgrowth
Pan-European vacancy remains low by historical standards at
just 3.6%
2
. An increasingly diverse picture is, however, beginning
to emerge. While vacancy has ticked up at an aggregate level, it
remains below 3%
2
in countries such as Germany, the Netherlands,
and Belgium. Furthermore, many core logistics sub-markets have
vacancy levels below the national average, which continues to
limit the options for occupiers looking for new space in the most
attractive markets.
A combination of healthy demand and still-constrained supply in the
best locations has contributed to further rental traction in many sub-
markets across Europe. Prime headline rents have risen by 8% on
average
4
and, across the year, almost every major sub-market has
experienced rental growth
While the near-term outlook will continue to be impacted by the
volatile macroeconomic backdrop, we believe the ongoing structural
trends underpinning demand and supply barriers in the best locations
will lead to attractive levels of rental growth in our markets over the
medium term.
Stabilisation of capital markets through the second
half of the year
Transaction activity totalled €11.7 billion in Q1-Q3 2023, down 58%
2
versus the same period in 2022. That said, quarterly deal volumes
have remained relatively flat through 2023
2
despite central
banks
continuing to raise interest rates, further impacting the
cost of capital.
Lower logistics deal volumes also reflect the trend across the wider
real estate market, which continues to adjust to the higher cost of
capital and return requirements that currently exists. Logistics real
estate accounted for 19% of all real estate deal volumes year to date
which is consistent with recent years, and up significantly from pre-
Covid-19 levels which were typically around 12%
2
.
Investment volumes (LHS)
Note: Includes Belgium, the Czech Republic, France, Germany, Hungary,
Italy,the Netherlands, Poland, Romania, Slovakia and Spain.
Source: CBRE.
Prime yield (RHS)
A steady flow of transactions continues to provide pricing discovery,
but many buildings have reversionary potential because of the healthy
recent rental growth, which leases have often failed to fully capture.
Pricing for these assets may therefore not directly reflect the market
values reported by CBRE and others which are a best estimate for a
prime, rack-rented building.
Prime yields, as reported by CBRE have adjusted higher over the
past 18 months but recent quarters have seen increasing signs of
stabilisation. Since March 2023, yields have moved out by 10bps or
fewer in Germany, the Netherlands, and France. Peripheral markets
have seen yields shift by between 20bps and 40bps over the
same period.
The rapid adjustment in yields has helped keep logistics real estate
pricing broadly in line with other asset classes and prices have stabilised
over recent quarters. While the near-term outlook will continue to be
heavily influenced by the macro trends that currently dominate, we
continue to believe logistics real estate remains a compelling area
forinvestment.
Figure 4: European logistics investment volumes
andpricing, 2015–Q3 2023
2015 2016 2017 2018 2019 2020 2021 2022
Q1-Q3
2023
40
35
30
25
20
15
10
5
0
€ billion
Vacancy (LHS) Rental growth (RHS)
4
Figure 3: European logistics rent index and vacancy,
2015–Q3 2023
%
Index
Q1 2015 = 100
10
8
6
4
2
0
140
130
120
110
100
90
Calculated using unweighted averages.
Source: CBRE.
Q1 15
Q3 15
Q1 16
Q3 16
Q1 17
Q3 17
Q1 18
Q3 18
Q1 19
Q3 19
Q1 20
Q3 20
Q1 21
Q3 21
Q1 22
Q3 22
Q1 23
Q3 23
%
Did you know?
Dormagen, Germany
The appliance refurbishment facility
repairs 7,200 washing machines
a year, considerably reducing the
annual volume of white goods sent
for disposal.
Tritax EuroBox plc Annual Report 202312
Portfolio
A portfolio of high-quality,
sustainable assetswith strong
income characteristics
Our portfolio strategy is based on a long-term investment
approach aimed at generating income-orientated returns and
capturing capital growth over time. We seek to deliver this by
combining disciplined capital allocation and proactive asset
management, together with enhancing ESG performance.
High-quality asset characteristics, with occupancy of 95%
Strong income characteristics, with rent collection of 100%
Age
Customer
Size
Lease duration
ESG credentials
Lease review
0–5 years
5–10 years
>10 year s
0–5 years
5–10 years
>10 year s
CPI uncapped
CPI (cap/other)
Fixed
None
<50,000 sqm
50,000–100,000 sqm
>100,000 sqm
EPC rating & green building certification
EPC rating
Green building certification
Unrated
Mango
Amazon
Puma
Lidl
Wayfair
Action Logistics
Rhenus
Cummins
Clipper
OVS
Other
11%
35%
31%
34%
65%
24%
14%
35%
24%
45%
35%
6%
41%
14%
9%
8%
8%
8%
6%
6%
5%
4%
29%
3%
3%
16%
29%
52%
Our assets have an average building age of 5.5 years, an average size of 66,000 sqm and strong ESG credentials.
Our buildings are leased to strong customers, have an average WAULT of 9.6 years and are predominantly index-linked.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 13
Passing rent by customer segment Passing rent by country
3PL
Retail in-store &online
Retail online
Retail in-store
Food & beverage
Manufacturing
Pharma
Other
Solar
Germany
Spain
Italy
Netherlands
Belgium
Poland
Sweden
25%
2%
1%
1%
5%
6%
11%
22%
12%
10%
13%
6%
21%
14%
9%
43%
Key highlights
Modern
89%
of the portfolio by area hasbeen
built in the past 10 years
Long term
76%
of the portfolio income is secured
for more than five years
Growing
97%
of leases by income are subject to
an element of annual uplifts
Sustainable
86%
of the portfolio income is generated
from assets with an EPC rating, a
Green Building certification or both
Country Location Area (sqm)
1 Belgium Bornem 45,850
2 Belgium Nivelles 35,847
3 Belgium Rumst 97,636
4 Germany Bochum 37,047
5 Germany Bönen 63,753
6 Germany Bremen 57,537
7 Germany Dormagen 36,434
8 Germany Geiselwind 70,353
9 Germany Gelsenkirchen 16,633
10 Germany Lich 94,429
11 Germany Oberhausen 23,243
12 Germany Peine 92,735
13 Germany Wunstorf 16,423
14 Italy Piacenza 47,668
15 Italy Rome 158,373
16 Italy Settimo Torinese 28,287
17 Netherlands Breda 46,021
18 Netherlands Roosendaal 112,018
19 Poland Strykow 102,400
20 Spain Barcelona 298,809
21 Sweden Gothenburg 28,903
22 Sweden Malmö 24,698
23 Sweden Rosersberg 31,013
Madrid
20
Barcelona
Milan
Kraków
Gothenburg
Stockholm
Nice
Montpellier
Rome
Gibraltar
16
14
15
Ports
Major Airports
Population density
(persons per square kilometre)
>20
>10
>5
>1
>0.5
<0.5
Main highways
Main railways
5
13
6
8
9
11
7
4
10
17
18
19
23
21
22
132
12
Copenhagen
Malmö
Berlin
Hamburg
Zeebrugge
Frankfurt
Brussels
Antwerp
Luxembourg
Amsterdam
Rotterdam
Dűsseldorf
Paris
Tritax EuroBox plc Annual Report 202314
Business Model
A strong platform for success
Our business model underpins our ability to capitalise
on market opportunities and deliver value for all our
stakeholders over the long term.
The Manager
The Manager’s sector specialism comes from many years of experience in
the European real estate market as well as an agile, entrepreneurial culture
which enables the Company to move quickly to pursue new and emerging
opportunities. The Manager’s expertise and reputation makes the company
an attractive partner for occupiers and counterparty in asset transactions.
Developer and asset manager relationships
The relationships with our development and asset management partners are key
advantages for the Company. They give the Company access to competitively priced,
high-quality investment opportunities in core European logistics
countries and enhance our local expertise and customer engagement
in the markets in which we operate.
Market
insight
Recycle
capital
Source
high-quality
assets
Enhance ESG
performance
Market insight
Our in-depth market knowledge
frames our analysis of the major
structural trends which underpin
occupier and investor demand
for high-quality logistics assets.
This proprietary expertise allows
the Company to appropriately
position the business to enable
it to capitalise on the long-term
growth potential.
Source high-
quality assets
We strictly apply agreed criteria
to ensure new investments are
aligned with our investment
strategy and portfolio objectives.
We seek to acquire assets through
the relationships with our developer
and asset manager partners or,
on an off-market basis, through
our extensive network of key
market contacts.
Proactive portfolio
and asset
management
We carefully align exposure
to higher-risk value-add and
development activities to external
market conditions to appropriately
position the portfolio through
the cycle. Weseek to capture
embedded income growth
opportunities and reversions
via an innovative and proactive
approach to asset enhancement
initiatives, such as lease re-gears,
letting vacant space and
constructing new extensions for
our customers.
Enhance ESG
performance
We collaborate with our
customers to adapt and
upgrade their facilities. This
helps improve operational
efficiency and enhance ESG
performance. This partnership
approach helps our customers
achieve their own ESG priorities
and cost economies. It enables us
to future-proof the performance
of our assets and generate new
income while protecting the
environment and benefitting
communities.
Recycle capital
We apply a long-term investment
approach and acquire assets
with the intention of holding them
over a long-term investment
horizon. However, we undertake
an asset-by-asset review on a
regular basis to identify recycling
opportunities to capture gains
where asset plans have been
successfully completed, to
maintain portfolio performance
and to provide funds to reinvest
into new opportunities that will
enhance overall portfolio returns.
How we generate value
How we generate returns
We aim to generate income orientated returns with the potential for capital growth over the long term. We do this predominantly through the long-term leases agreed with our
customers, with 97% of our income subject to annual increases and over 80% linked to local CPIindices. We seek to generate value through our capital recycling activities, by
crystallising value on exit and reinvesting into higher returning opportunities, and through our assetmanagement programme, by undertaking value-enhancing initiatives such as
lease re-gears, lettings and new development.
Proactive
portfolio
and asset
management
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 15
Strategy
Our clear strategic priorities
underpin our approach
Grow Enhance Distribute Reinforce
– Increased rental income across
the portfolio by 17.6%, as a
result of prior year acquisitions,
indexation, asset management
and development activity.
– Completed two pre-let
developments as well as four
speculative forward fundings,
totalling nearly 224,763 sqm.
– Completed an extension in
Barcelona (Spain) of 109,083
sqm and commenced another of
8,841 sqm in Strykow (Poland),
as well as a speculative
23,243 sqm development in
Oberhausen (Germany).
– Signed three new leases
across Germany and Italy
during the period, with a total
income of €4.3 million.
– Completed two solar
installations during the period,
adding a total of 2.8 MW to
the portfolio, with a further six
projects in collaboration with
customers in process.
– Reduced the Adjusted EPRA
Cost Ratio to 24.2% in FY23
(FY22: 29.5%). The performance
improved in the second half, with
an Adjusted EPRA Cost Ratio
of 22.8% in the six months to
September 2023. The ambition
is to remain in our target range
of 20–25%.
– Further enhanced ESG
credentials of the portfolio
through asset management,
including schemes to enhance
biodiversity and green space.
– Generated FY23 dividend of
5.00cents, which is 110.2%
covered for the year. This is
the result of higher income
(development completions,
assetmanagement and
indexation) and lower
costs (mainly reduced
management fees).
– Minimum of 85% of Adjusted
Earnings paid out each year,
with Q1–Q3 dividends steady
and a dividend review carried
out for Q4.
– Maintained focus on
disciplined capital
allocationwhen considering
investment decisions.
– Disposed of asset in
Hammersbach in August
for c.€65 million and, post
period end, asset in Bochum
for c.€47 million and asset
in Malmö for c.€28 million,
with the first two broadly in
line with book value, and
the latter above book value,
and all three aligned with our
stated disposal programme
of at least €150 million.
Link to relevantKPIs
2
3
4
7
9
Link to relevantKPIs
4 7 8
Link to relevantKPIs
1
2
4
7
Link to relevantKPIs
3
5
6
8
Grow
Capture
income growth
opportunities
Enhance
Improve
operational
efficiencies
Distribute
Drive earnings and
support dividend
Reinforce
Maintain balance
sheet strength
Key Performance Indicators
1. Dividend per share
2. Total Return
3. Basic Net Asset Value (NAV)
4. Adjusted Earnings
5. Loan to value (LTV) ratio
6. Weighted Average Unexpired
LeaseTerm (WAULT)
7. Dividend cover
8. Interest cover
9. Like-for-like rentalgrowth
How we enable our strategy
We have made good progress
on delivering our strategy
during the year.
Our strategy comprises four 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 forward earnings
per share and deliver a fully covered dividend for the year; and to
underpin these activities by maintaining a strong balance sheet position.
e Read more on page 8
16 Tritax EuroBox plc Annual Report 2023
Investment Case
A compelling investment
proposition
We believe there are four simple and compelling reasons
toinvest in Tritax EuroBox.
1. Structural market trends
Long-term supportive structural drivers and favourable market
dynamics, characterised by strong occupier demand, limited
supply of available space and high barriers to developing new
assets in prime locations.
2. Prime portfolio
Core, stabilised portfolio leased to a strong customer base, with
leading ESG performance and embedded opportunities to add
value over the long term.
3. Specialist manager
Agile, specialist manager with a proven track record and
disciplined approach to capital allocation, who can act quickly to
capture value-enhancing opportunities.
4. Through-cycle performance
Predictable income performance through the cycle, supporting
the delivery of a fully covered dividend, which can grow over time.
In summary, our markets are supported by long-term structural drivers and underpinned by favourable demand and supply dynamics.
We have used our expertise as a specialist fund manager and proven track record in the European logistics sector, to curate a
high-quality portfolio which has strong income characteristics and the in-built potential to grow income and add further value.
Thislong-term investment approach produces a predictable income performance, which supports our central business goal of delivering
afully covered dividend to our Shareholders, which can grow over time.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 17
Manager’s Report
A year of progress in
challenging conditions
Phil Redding
CEO for Tritax EuroBox plc
“ We have made good progressondelivering
our strategicpriorities, despite the more
challenging macro-economic and property
market backdrop.”
Portfolio value
€1,561.9
million
FY22: €1,765.6 million
Rental income
€68.1
million
FY22: €57.9 million
Tritax EuroBox plc Annual Report 202318
Manager’s Report continued
Over the past 12 months, the Company has made good progress
on delivering these strategic priorities despite the more challenging
macro-economic and property market backdrop experienced in
Continental Europe throughout the period.
During the year, the effect of sharply higher interest rates continued
to impact investment markets in the form of increased yields, lower
asset values and subdued transaction volumes. Most of the value
adjustments were experienced in the first half of the financial year,
with the modest declines in the second half reflecting the relatively
rapid adjustments already taken and greater visibility emerging in
themacro-economic environment.
In contrast to previous property cycles, occupational market
fundamentals have remained robust, with most markets characterised
by low levels of available modern warehouse space. While occupiers
have become more cautious in response to the challenging economic
conditions, the sector continues to be supported by long-term structural
drivers, low vacancy rates and a limited pipeline of supply.
The high-quality nature of our assets has enabled the Company to
navigate these tougher market conditions. The property portfolio
we have curated provides resilience through the market cycle and
delivers income growth over the long term. This resilience and
income growth potential are produced by combining high-quality
assets (modern buildings with excellent ESG credentials, located in
sought-after distribution hubs and corridors), with attractive income
characteristics (let on long leases to strong customers with annual
rental uplifts linked to inflation).
Delivering on our strategic priorities
The focus over the past 12 months has been on driving improvements
in operational performance, with a key part of this being the capture
of income growth opportunities embedded within the existing
property portfolio. During the period we successfully completed
several initiatives across a broad spectrum of asset management,
development and leasing activities, which delivered both new
income growth and enhanced capital values.
Over the year, the in-house team, in conjunction with our locally
based asset management and development partners, secured
€3.6 million per annum of new rental income, which also positively
impacted corresponding asset valuations. The in-built uplifts from
the index-linked and fixed uplift structures of our leases produced
€2.3 million of new rental income, and represented a significant
driver of growth in annualised rental income, which increased to
€76.3 million (FY22:€74.3 million). The like-for-like increase in rental
income was4.5% (7.8% including the extensions in Barcelona
and Strykow).
We have also delivered enhancements in operational efficiency,
including the full-year impact of the revised Investment Management
Agreement, effective from August 2022. These improvements contributed
to a reduction in the Adjusted EPRA Cost Ratio to 24.2% from 29.5%
in the prior year. Our Adjusted EPRA Cost Ratio is now in line with
our pan-European peers and within our target range of 20–25%.
Wecontinue to pursue opportunities to reduce the cost base to
enable us to move towards our longer-term aspiration of being at
thelower end of this range.
The combination of higher rental income and lower operational
costs, together with full-year contributions from the completion of
building extensions and developments, resulted in a 30.0% increase
in Adjusted Earnings Per Share to 5.51 cents. The Company has
declared quarterly dividends totalling 5.00 cents in the period, resulting
in dividend cover of 110.2% and the delivery of a fully covered
dividend for the year.
At the start of the financial year, 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 forward
earnings per share and deliver a fully covered dividend for the
year; and to underpin these activities by maintaining a strong
balance sheet position.
Dormagen, Germany
Air-source heat pumps provide the heating for the
36,434 sqm, three-unit building. The pumps deliver
warm air via wing-shaped blades mounted on the
internal rafters which support the roof.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 19
Underpinning these priorities is our objective to maintain a strong
balance sheet position, encompassing the appropriate management
of our cost of debt, available liquidity and metrics including LTV and
net debt/EBITDA.
The Company continues to benefit from a low average cost of
debt of 1.30%, maintained through fixed and capped rates, no
refinancings until Q4 2025 and €172.5 million of undrawn facilities
in its RCF. In addition, there remains significant headroom to LTV
ratio and interest cover ratio (ICR) covenants in the Company’s debt
agreements.
In response to the elevated LTV ratio reported in our Interim Results
announcement in May, we outlined a disposal programme aimed at
generating proceeds of at least €150 million over 12–18 months.
The recycled capital would be used to lower debt levels, fund
opportunities within the existing portfolio and maintain our
investment grade credit rating.
We announced the first sale in this disposal programme in August,
comprising a modern warehouse building in Hammersbach, near
Frankfurt in Germany, for c.€65 million, which was broadly in line
with book value. However, at 46.4% the LTV ratio remains higher
than we would like, with the beneficial impact of the disposal being
offset by a decline in the portfolio valuation, development capital
expenditure and working capital movements.
Post period end, we also announced the disposal of a second asset
in Germany, at Bochum, for c.€47 million and an asset in Sweden, at
Malmö, for c.€28 million. These brought the cumulative total gross
sale proceeds from the disposals to c.€139 million, decreasing the
pro forma LTV ratio to 44.0% and showing further progress against
our target. We aim to lower the LTV ratio towards our preferred
percentage range in the low 40s over 6 to 12 months through our
ongoing programme of disposals.
In the medium term, 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 lower than the current amount, albeit at a higher rate to reflect a
likely higher interest rate environment.
Valuation performance
The sharp increase in interest rates and higher cost of capital has
led to a rapid adjustment in asset values over the past 12–18 months
and continues to affect investor sentiment and transaction volumes
across the European logistics sector. However, strong underlying
structural drivers, supportive market fundamentals and rebased
asset pricing are attracting investors back to the sector, with
investment activity and asset values showing signs of stabilisation.
Did you know?
Oberhausen, Germany
The warehouse base will contain
11,000m
3
of reused stone material –
allrecovered during the dismantling
of the previous building on the
site. This is equivalent to over four
Olympic-size swimming pools and
has dramatically reduced waste
materials, transportation costs and CO
2
emissions from delivery of materials.
The Company’s portfolio valuation declines have reflected these market
trends, with an increase in property yields first manifesting in the
second half of FY22, a greater impact seen in the first half of FY23,
followed by a more modest adjustment at the latest valuation date at
the end of September 2023.
The property portfolio was valued by the Company’s independent
valuer, CBRE, at €1,561.9 million as at 30 September 2023 compared
with €1,765.6 million at 30 September 2022. The valuation declined
by 14.5% on a like-for-like basis during the period, driven by the outward
yield shift across the portfolio partly offset by asset management gains
and rental growth. This included a decline of 0.3% in the second
half as signs of stabilisation emerged. As at 30 September 2023, the
portfolio net initial yield was 4.4% (30 September 2022: 3.8%), with
the equivalent yield at 4.9% (30 September 2022: 3.9%).
In contrast to the weaker investment markets, the continued strength
of occupier markets is reflected in like-for-like rental growth of 4.5%
(7.8% including the Barcelona and Strykow extensions) and ERV
growth of 6.5% over the year, continuing the positive momentum
seen in the prior year.
Like-for-like estimated rental value
(ERV) growth
6.5%
FY22: 8.2%
Dividend cover
110.2%
FY22: 84.8%
Tritax EuroBox plc Annual Report 202320
Valuation performance continued
As at 30 September 2023, the portfolio’s ERV (which is the rent the
valuer estimates the portfolio should generate if all buildings were
leased at current market levels) was €84.5 million (30 September 2022:
€81.2 million). As a result, the portfolio reversion has increased to
€13.4 million or 17.6% (30 September 2022: €7.1 million or 9.5%),
and the reversionary yield has increased to 5.3% from 4.2% on
30September 2022.
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 all 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 year end, the portfolio comprised 23 high-quality warehouse
assets, diversified by location, building size and customer sector,
plus one building under construction and one plot of land. The
assets are modern, with 89% 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 65%
of the portfolio in excess of 50,000 sqm (the average size being
66,000 sqm).
Manager’s Report continued
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. Typically, but not
in all
cases, rental guarantees will be 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.
99%
FY23
FY22
Stabilised vs development
93%
1%
2%
Stabilised Pre-let development Speculative development
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 9.6 years (FY22: 9.3 years) and the Weighted
Average Unexpired Lease Term to the first break was 7.9 years
(FY22:8.0 years).
24% 41%35%
33%38%
29%
FY23
FY22
Lease duration
0 –5 y ea r s >10 years
5 –10 years
ii) To a high-quality customer base
Across the portfolio, the Company has 35 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.
5%
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 21
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
in-house 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drive 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 or reduce balance sheet leverage.
Annual lease uplift
52%
FY23
FY22
54% 26%
29% 16%
3%
3%
17%
CPI uncapped CPI (cap/other) Fixed None
iv) With structurally low vacancies
The EPRA vacancy at the period end was 5.5% (FY22: 0.3%). This
increase was the result of the completion of two speculative forward
fundings at Rosersberg (Sweden) and Settimo Torinese (Italy) that
remain unlet (but covered by rental guarantees), and the take-
back of 22,213 sqm at Strykow. This was partially offset by lettings
at Dormagen (Germany) and half of the development in Settimo
Torinese (Italy).
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.
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.
Customers
14%
11%
9%
9%
8%
8%
8% 8%
7%
6%
8%
FY23
FY22
41%
45%
6%
6% 6%
Mango
Amazon
Puma
Lidl
Wayfair
Action Logistics
Rhenus
Other
35%
28%
FY23
FY22
ESG credentials
45%
52%
5%
14%
15%
EPC rating and green building
certification
EPC rating
Green building certification
Unrated
6%
Tritax EuroBox plc Annual Report 202322
Delivering our portfolio objectives
We set ourselves four key portfolio objectives for the year:
1. Capture income growth opportunities embedded in the existingportfolio.
2. Complete ongoing development projects and de-risk rental guarantees by securing new customers for unlet space.
3. Commence a disposal programme to maintain our balance sheet strength, and recycle proceeds into reducing debt levels and funding
existing opportunities within the portfolio.
4. Progress agreements with our customers and secure necessary permits to enable the installation of roof-mounted PV panels on
selected assets.
We have made good progress over the period on all these objectives.
Objective 1: Capture income growth
We have successfully completed several asset management initiatives during the period, including:
Asset, location
Asset management
initiative Detail
Barcelona,
Spain
Extension Completion of a 109,083 sqm extension in November 2022, which has increased annualised rental
income by €2.3 million.
Strykow, Poland Extension and
lease re-gear
Commencement of a new extension for our customer Arvato, together with an 11-year re-gear ofits
existing lease. The extension was completed at a yield on cost of 7.2%, increasing the annualised
rental income by €0.5 million upon completion.
Dormagen,
Germany
Letting Completion of a new 10-year lease to GXO at a rent 17.8% ahead of the underwritten rental
guarantee, converting the rental guarantee into a lease and increasing the annualised rental income
by an additional €0.5 million.
Settimo
Torinese, Italy
Letting Letting of unit one of the 28,287 sqm speculatively developed asset, with rent in line with ERV and
consistent with the development funding underwrite. The six-year green lease to an Italian logistics
specialist includes a further six-year extension option and includes annually reviewed inflation-linked uplifts.
Bochum,
Germany
Letting Letting of unit three at the four-unit prime asset to a German specialist catering equipment company,
with a seven-year lease 35% above the current passing rent
Objective 2: Complete development projects and de-risk rental guarantees
We made good progress with the development programme during the period, completing six forward-funded developments, totalling 224,763 sqm
and producing €14.6 million per annum in rental income (€11.2 million leased to customers and €3.4 million subject to rental guarantees).
Asset, location Portfolio activity Detail
Roosendaal, the
Netherlands
Development
completion
(pre-let)
The second and third units (Phase 1B and 2) totalling 65,276 sqm of this forward funded
development pre-let to Lidl completed in December 2022 and February 2023 respectively.
Theunitsgenerate annualised rental income of €3.2 million.
Rosersberg I,
Sweden
Development
completion
(speculative)
Completed the speculative forward funding development of 13,181 sqm in January 2023, producing
annualised rental income of €1.1 million through a rental guarantee, which expires in February 2024.
We are in discussion with potential tenants at rents above the levels of the rental guarantees.
Dormagen,
Germany
Development
completion
(speculative)
Completed speculative forward funding of 36,434 sqm in March 2023, with a 10-year lease signed with
GXO in early May, 17.8% ahead of the underwritten rental guarantee.
Settimo
Torinese, Italy
Development
completion
(speculative)
Practical completion reached in June 2023 of this speculative forward funding of 28,287 sqm, with
half the space leased to an Italian logistics specialist in August 2023. The total scheme has an ERV
of€1.3 million.
Bönen,
Germany
Development
completion
(pre-let)
Practical completion reached in June 2023 of this forward funded development of 63,753 sqm,
pre-let to Rhenus at an annualised rent of €4.3 million.
Rosersberg II,
Sweden
Development
completion
(speculative)
Practical completion reached in July 2023 of this 17,832 sqm speculative forward funding,
producingannualised rental income of €1.6 million through a rental guarantee, which expires in
August 2024.
Oberhausen,
Germany
Construction
commenced
(speculative)
Construction commenced on this two-unit, 23,243 sqm speculative forward funding in July 2023,
which has the potential for rental income of €2.0 million when fully let. Practical completion is targeted
for Q3 2024 and we are targeting a DGNB Platinum certification.
The Company owns two further land plots with potential for building extensions at Wunstorf, Germany, where the existing building can be
extended by 10,000 sqm, and at Geiselwind, Germany, where capacity exists for a 42,000 sqm extension.
Manager’s Report continued
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 23
Objective 3: Commence disposal programme and
recycle proceeds
In the Interim Results announcement in May we outlined our intention
to undertake asset disposals of at least €150 million over the following
12–18 month period to reduce the Company’s debt levels and to
fund existing opportunities from within the portfolio. Further to this,
and in line with our bi-annual portfolio review process, in August we
announced the disposal of an asset in Hammersbach (Germany) for
c.€65 million. This reflected a net initial yield of 4.45%, broadly in line
with the book valuation of the property, and represented a good first
step in our disposal programme.
Post period end, we announced the sale of a second asset, in
Bochum (Germany), for c.€47 million, reflecting a net initial yield of
4.88%. We also announced the sale of an asset in Malmö for c.€28
million. The sale of the three assets generated gross sale proceeds of
c.€139 million, with further sales expected during 2024.
Objective 4: Increase the solar PV generating
capacity of the portfolio
During the year, we continued to progress initiatives to increase the
generation of renewable energy by the installation of roof-mounted
solar panels on our assets. We increased the solar PV generating
capacity of our portfolio to 10.3 MW (FY22: 7.5 MW), with rooftop
solar arrays now installed on eight of our assets.
In addition, we have made applications to commence schemes on
three assets in Germany and are in negotiations with the customers
to agree newPurchasing Power Agreements (PPAs) for those projects.
These assets have been chosen due to their large roof areas, long
unexpired lease terms, sufficient roof load-bearing capacity and
positive, ongoing discussions with the respective customers. The
forecast installation of these projects is Q3 2024 and would add a
further c.9 MW to our portfolio’s generating capacity, taking the total
level to over 19 MW.
The intention is to maintain a rolling programme of feasibility studies
to support a phased delivery of installations, in collaboration
with our customers. Our aspiration is to install two to three solar
schemes each year as we look to enhance the portfolio and support
customers with their energy requirements and ESG ambitions.
Evolving our ESG strategy
At the heart of our asset management approach is our commitment
to an ambitious ESG strategy. This comprises targets across four
areas, comprising sustainable buildings; climate and carbon; nature
and wellbeing; and social value. These are aimed at driving social,
environmental and economic value for our customers, partners,
investors and the wider society.
In 2020 we set a range of ESG targets for the period 2020–2023.
One of our key priorities for 2022 was to establish a clear baseline
from which to launch our new updated ESG targets. These targets
reflect our four principal ambitions for the ESG performance of the
Company which are summarised as:
1. Our ESG strategy and performance criteria to fundamentally
underpin the investment philosophy of the Company.
2. Our portfolio and our assets to be net zero carbon.
3. Our portfolio to have a positive impact on our climate and
thenatural world.
4. The social value which our portfolio delivers to make a
meaningful difference to people and communities across
ourgeographies.
Most notable within these targets is an enhanced commitment
to achieve net zero carbon (as defined by the UK Green Building
Council) across all aspects of our business by 2040, rather than
our previously stated 2050 target. These targets will be reviewed
annually against our KPIs and updated as required.
2023 ESG targets and KPIs
Theme Target KPI
Sustainable
buildings
– 100% of all asset due diligence uses Tritax ESG due
diligence framework
– % utilisation of enhanced ESG due diligence framework
– Produce and implement low-carbon baseline
development specification on all new projects
– Production and % utilisation of low-carbon specification
– % of circularity certified materials
– % of projects undertaking a whole-life
performance analysis
Climate
andcarbon
– Produce and disclose updated net zero
carbon pathway:
– Scope 1 and scope 2 – 2025
– Scope 3 (construction) – 2030
– Scope 3 (remainder of material emissions) – 2040
– Annual review of pathway and emissions
– % carbon risk incorporated into each asset
management plan
– 1.5°C Paris decarbonisation pathway alignment
– Science-Based Targets initiative (SBTi) alignment
(orequivalent)
– Integrate physical climate risk mitigation across
investment lifecycle
– % climate risk incorporation into each asset
management plan
– Portfolio TCFD alignment
Nature and
wellbeing
– Year-on-year annual increase in biodiversity for
standing assets
– % increase in biodiversity against 2022 baseline
– Year-on-year increased provision of wellbeing
enhancements to developments and standing assets
– % increase in provision against 2022 baseline
Social value – Publish community investment structure
– Further integrate ESG criteria into supply chain
procurement processes – upstream and downstream
– Set-up and operation of community
investment structure
– % utilisation of due diligence framework for suppliers
– Continue support for the Company’s main charity – Level of financial and non-financial contributions
Please see pages 32-34 for further detail on progress against our ESG targets and KPIs.
Tritax EuroBox plc Annual Report 202324
Key Performance Indicators
Measuring our performance
Set out below are the Key Performance Indicators we use
to track our strategic progress.
€795.6 million
€1,065.8 million
€1,053.5 million
-22.5%
14.3%
How we measure it
Dividends paid to Shareholders and
declared in relation to the period.
Our progress in FY23
Our policy is to pay an attractive and
progressive dividend, with a minimum
payout of 85% of Adjusted Earnings.
While keeping the dividend per share
unchanged from the prior year, the earnings
growth from the business supported the
dividend being fully covered for the year.
How we measure it
EPRA earnings, adjusted to include licence
fees and rental guarantees receivable on
forward funded development assets and for
other earnings not supported by cash flows.
Our progress in FY23
Adjusted Earnings increased by 30% in
the year, reflecting the full-year impact
on rental income from acquisitions in
the prior year and a 10% decrease in
administrative expenses.
How we measure it
The proportion of our gross asset
value that is funded by net borrowings
(excluding cash).
Our progress in FY23
The lower portfolio valuation, ongoing
capital expenditure and working capital
movements largely offset the benefit of
the sales proceeds from the disposal
programme. The Company remains
comfortably below the LTV ratio covenant
of 65%. (Including the disposals of Bochum
and Malmö, the pro forma LTV is 44.0%.
1. Dividend per share
5.00
cents
4. Adjusted Earnings
€44.5
million
5. Loan to value (LTV) ratio
46.4%
5.00 cents
€44.5 million 46.4%
5.00 cents
€34.2 million 35.2%
5.00 cents
€24.7 million 13.3%
FY23
FY23 FY23
FY23 FY23
FY22
FY22 FY22
FY22 FY22
FY21
FY21 FY21
FY21 FY21
How we measure it
Total Return (TR) measures the change in
the EPRA Net Tangible Assets (EPRA NTA)
over the period plus dividends paid.
Our progress in FY23
The return calculated from the dividends
paid has been more than offset by the
decline in valuation, which was driven
by inflation and the resulting impacts
oninterest rates.
2. Total Return
(TR)
(22.5)%
How we measure it
Net asset value in IFRS GAAP.
Our progress in FY23
Inflation and the resulting impacts on
interest rates have been the key drivers
of this valuation movement, which could
not be fully offset by strong market rental
growth and indexation.
3. Basic Net Asset Value (NAV)
€795.6
million
Bönen, Germany
Redevelopment of a brownfield site, comprising
six units within a c.66,000 sqm building situated
in the Rhine-Ruhr metropolitan region – one of
themost important logistics hubs in Europe.
6.0%
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 25
4.5%
3.6%
FY23
FY22
FY21 2.4%
8. Interest cover
4.8x
9. Like-for-like rentalgrowth
4.5%
7. Dividend cover
110.2%
FY23
FY22
FY21
6. Weighted Average Unexpired
LeaseTerm (WAULT)
7.9
years
How we measure it
The portfolio average of the remaining
number of years, weighted by annual
passing rents, until the sooner of the lease
expiry or the customer’s break option.
Our progress in FY23
The Company has maintained a WAULT of
greater than five years across the portfolio,
in accordance with typical lease lengths in
Continental Europe. The WAULT to expiry is
9.6 years.
7.9 ye ars
8.0 years
9.3 years
110.2%
84.8%
80.2%
FY23
FY22
FY21
How we measure it
Adjusted Earnings as a proportion of the
dividend declared for the financial period.
Our progress in FY23
The 30% growth in Adjusted Earnings,
combined with maintaining a dividend per
share of 5.00 cents, drove an increase in
dividend cover to 110.2%.
4.8x
4.2x
4.6x
FY23
FY22
FY21
How we measure it
The ratio of consolidated earnings before
interest and taxation to consolidated
net finance costs in respect of any
measurement period.
The definition, and calculation method, of
interest cover ratio has changed during
the year aligning banking covenants and
reporting. See Notes to EPRA and Other
Key Performance Indicators for calculation.
Comparatives for FY22 and FY21 were 6.6x
and 6.3x using the previous definition.
Our progress in FY23
The Company remains comfortably above
its interest cover ratio covenant of 1.5x.
How we measure it
Like-for-like rental growth (excluding
extensions; including extensions: 7.8%)
compares the growth of the rental income
of the portfolio that has been consistently
in operation and not under development
during the two full preceding periods.*
Our progress in FY23
Solid rental growth in the period was
driven by our asset management initiatives
andindexation.
Measured against
ourstrategy
We clearly link each of our KPIs to
ourfourstrategic priorities.
e More information on page 15
Grow
Capture
income growth
opportunities
Enhance
Improve
operational
efficiencies
Distribute
Drive earnings and
support dividend
Reinforce
Maintain balance
sheet strength
* The definition, and calculation method,
oflike-for-like growth has changed
during the year, moving to be in line with
the industry standard definition, which
excludes extensions. The comparative for
FY22 using the previous basis was 4.0%.
There were no extensions in FY21.
Tritax EuroBox plc Annual Report 202326
EPRA performance measures
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 LTV measure, see the Notes to the
EPRA and Other Key Performance Indicators.
Basic NAV adjusted for mark-to-market
valuation of derivatives, deferred tax and
transaction costs (real estate transfer tax
andpurchaser’s costs).
Comments
A key measure to highlight the value ofnet
assets on a long-term basis. Themetric
reflects what would be needed to recreate
thecurrent portfolio of the Company.
Earnings from operational activities.
Comments
A key measure of the Company’s
underlyingresults and an indication of the
extent to which current dividend payments
aresupported by earnings.
Basic NAV adjusted to remove the
fair values of financial instruments
and deferredtaxes (this excludes
transactioncosts).
Comments
Assumes that entities buy and sell assets,
thereby crystallising certain levels of
unavoidable deferred tax.
Annualised rental income based on the
cash rents passing at the balance sheet
date, less non-recoverable property operating
expenses, divided by the market value of
the property, increased with (estimated)
purchaser’s costs.
Comments
This measure should make it easier for
investors to judge how the valuations of
portfolios compare.
Equivalent to IFRS NAV, as this includes
thefair values of financial instruments
anddeferred taxes.
Comments
Represents the Shareholders’ value under
adisposal scenario, where deferred tax,
financial instruments and certain other
adjustments are calculated to the full extent
of their liability, net of any resulting tax.
This measure incorporates an adjustment
tothe EPRA NIY in respect of the expiration
of rent-free periods (or other unexpired
lease incentives such as discounted
rentperiods and step rents).
Comments
This measure should make it easier
forinvestors to judge how the valuations
ofportfolios compare.
1. EPRA Net Reinvestment Value
(EPRANRV)
€903.0
million
4. EPRA Earnings
€45.7
million
2. EPRA Net Tangible Assets
(EPRANTA)
€820.6
million
5. EPRA Net Initial Yield (NIY)
4.2%
3. EPRA Net Disposal Value (EPRANDV)
€795.6
million
6. EPRA topped-up NIY
4.3%
€903.0 million
€45.7 million
€820.6 million
4.2%
€795.6 million
4.3%
€1,194.7 million
€20.9 million
€1,111.0 million
3.6%
€1,065.8 million
3.7%
€1,147.4 million
€14.7 million
€1,086.5 million
3.7%
€1,053.5 million
3.8%
FY23
FY23
FY23
FY23
FY23
FY23
FY22
FY22
FY22
FY22
FY22
FY22
FY21
FY21
FY21
FY21
FY21
FY21
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 27
Estimated market rental value (“ERV”)
ofvacant space divided by ERV of the
whole portfolio.
Comments
A “pure” (%) measure of investment
property space that is vacant, based on
ERV, and includes rental guarantees.
Administrative and operating costs
(inclusiveof vacant property costs)
dividedby gross rental income.
Comments
A key measure to enable meaningful
measurement of the changes in a
company’s operating costs.
EPRA Cost Ratio adjusted for
non-operational items.
Comments
This ratio includes licence fee income and
rental guarantees and excludes exceptional
items of a capital nature. See Notes to
the EPRA and Other Key Performance
Indicators for further details.
7. EPRA vacancy rate
5.5%
8. EPRA Cost Ratio
27.4%
9. Adjusted EPRA CostRatio
24.2%
5.5% 27.4% 24.2%
0.3% 41.3% 29.5%
3.3% 30.5% 28.5%
FY23 FY23 FY23
FY22 FY22 FY22
The proportion of our gross asset value that
is funded by net borrowings (incorporating
net payables).
Comments
The EPRA LTV introduces a consistent
and comparable metric for the sector,
with the aim to assess the gearing of
the shareholder equity within a real
estate company.
10. EPRA loan to value (LTV) ratio
46.3%
46.3%
35.6%
FY23
FY22
FY21 FY21 FY21
Roosendaal,
theNetherlands
112,018 sqm building of two
units is well positioned in the
West-Noord-Brabant area,
with connections to the ports
of Rotterdam, Antwerp and
Amsterdam and linkages with
three major highways and a train
station with high-speed rail.
Bornem, Belgium
45,850 sqm development, strategically situated in the main Belgian logistics corridor
between Brussels and Antwerp, with links to the Port of Antwerp, which is the second
largest port on the continent and known locally as the “gateway to Europe”.
Tritax EuroBox plc Annual Report 202328
Stakeholder Engagement and Section 172
Understanding ourstakeholders
Section 172 statement
The Directors have had regard for the matters
set out in Section 172(1) (a)–(f) of the Companies
Act 2006 when performing their duty under
Section 172. The Directors consider that they
have acted in good faith in the way that would
be most likely to promote the success of the
Company for the benefit of its members as
a whole, and in doing so have considered
(amongst other matters):
– the likely consequences of any decision inthe
long-term;
– the interest of the Manager and its
employees, as the Company doesnot have
any employees;
– the need to foster the Company’s business
relationships withsuppliers, customers,
partners and others;
– the impact of the Company’s operations on
thecommunity andenvironment;
– the Company’s reputation for high standards
ofbusinessconduct;and
– the need to act fairly as between members
ofthe Company.
The table below indicates where the relevant
information isinthis Annual Report that
demonstrates how we act in accordancewith
the requirements of Section 172.
Further information on how we have engaged
with our key stakeholders and considered their
interests during the last reportingperiod can
befound on pages 74 to 77.
Section 172 matter Further information incorporated into this statement byreference
Long term
e Markets and trends pages 9 to 11
e Our Business Model page 14
e Manager’s Report pages 17 to 23
e Key Board Decisions pages 76 and 77
Investors
e Strategic Report pages 1 to 63
e Key Board Decisions pages 76 and 77
e Governance Report pages 64 to 102
Employees
e Pages 29and 68
Community and environment
e Strategic Report page 21
e Manager’s Report pages 17 to 23
e ESG pages 30 to 37
e Key Board Decisions pages 76 and 77
Suppliers
e Strategic Report pages 1 to 63
e Manager’s Report pages 17 to 23
e Key Board Decisions pages 76 and 77
High business conduct
e Stakeholder Engagement pages 28 to 29 and 76 to 77
e Strategic Report pages 1 to 63
Our Shareholders
What they care about
Delivering sustainable, profitable growth over
thelonger term.
Our investors take a keen interest and place a
high level of importance on strong corporate
governance, as well as a transparent reporting
framework and the ESG objectives of the Company.
How we engage
– Regular market updates on strategy
andperformance
– Meetings with the Board and the Manager
toaid understanding and decision-making
– Roadshows
– Quarterly update reports to the Board from
Investor Relations
– Annual General Meeting
– Meetings held between Shareholders and key
personnel fromtheBoard and the Manager
– Offered meetings with the Chairman and SID
Topics
– Strategic plans and long-term value
and returns
– Governance
– ESG
– Assets
– Macroeconomic environment
Impact on business decisions
– Deployment of capital
– Engagement with key representatives to
ensureour purpose andstrategy remain in
linewith expectations
Further information
– Business model page 14
– Board leadership and Company purpose
pages 73 to 75
– Key decisions of the Board 2023
pages 76 and 77
Our stakeholders
Our
Shareholders
Our
customers
The Manager
and its
employees
Our suppliers Our lenders Government,
regulators
andlocal
councils
Our
communities
e Read more on pages 76 to 77
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 29
The Manager and
itsemployees
What they care about
The long-term success of the Company is of key
importance totheManager. In order to achieve
this, as well as establishing and maintaining
lasting relationships, the Manager places a
high degree of importance on the wellbeing
and satisfaction of its employees. Being able
toattract and retain high-calibre talent and then
support those individuals in their professional
development is ahigh priority for the Manager.
The Board and the Manager maintain a positive
andtransparent relationship to ensure alignment
of values and business objectives.
How we engage
– Quarterly reporting and presenting
to the Board
– External Board evaluations
– Informal meetings including Board lunches
– Professional and executive
developmentprogrammes
– Reviewed results of employee surveys
– Charity events
Topics
– Employee satisfaction and resourcing
– Remote working and staff wellbeing
– Business updates
Impact on business decisions
– Updated software and systems for
remote working
– Continued workforce productivity with
minimaloperationalimpact
– Formalising hybrid working
– Employee social events
Further information
– Manager’s Report pages 17 to 23
– Key decisions of the Board 2023
pages 76 and 77
– Division of Responsibilities pages 78 to 81
– Management Engagement Committee Report
pages 92 to 94
Our suppliers
What they care about
Our suppliers care about having collaborative
and transparent working relationships with us,
including responsive communication and being
able to deliver to their service levelagreements at
a competitive fee.
How we engage
– Invited key suppliers to attend Board and
Committeemeetings
– Informal, one-to-one virtual meetings
– Review of supplier performance by the
Management EngagementCommittee
– Externally facilitated adviser reports
– Approved the modern slavery and human
trafficking policy
Topics
– Service levels and annual performance
– Fee structure
– Relationship management
– Processes and procedures
Impact on business decisions
– Continued good, and in some cases
exceptional, levelsofservice
– Retender of JLL (Company’s valuer)
Further information
– Key decisions of the Board 2023
pages 76 and 77
– Management Engagement Committee Report
pages92 to 94
Our customers
What they care about
Quality assets, including buildings with strong
EPC, BREEAM and ESG ratings, and value for
money in terms of their total occupational costs
that enables them to succeed. A knowledgeable
and committed landlord that supports their
strategy, with a mindset to facilitate their
growth ambitions. Our customers want efficient
supply chain logistics and access to economic
labourpools.
How we engage
– Regular face-to-face meetings both virtual
and on site
– Site visits
– Review of published data, such as annual
accounts, trading updates and analysts’
reports, to identify mutually beneficial
opportunities
– More regular discussion over cash flow and
rental collection inthecurrent climate
– Stakeholder surveys
– Engagement on “green” initiatives
– Ensured buildings comply with the necessary
safety regulations and insurance
– Liaison with customers in respect of
insuranceprocurement
Topics
– ESG initiatives
– Treasury management
– Supporting e-commerce initiatives
– Operational efficiencies
Impact on business decisions
– Payment plans and rent deferrals to help
manage cash flow andresources
– Greater clarity for the business on
rentcollection
– Strengthening of business relationships
– Appointment of dedicated asset manager
Further information
– Manager’s Report pages 17 to 23
– ESG section pages 30 to 37
Did you know?
Gelsenkirchen, Germany
One of the units in the building, let to
Netceed, contains 10,896 kilometres
of glass fibre ducting. This is greater
than the distance between our head
office in London and Singapore.
Tritax EuroBox plc Annual Report 202330
ESG Overview
ESG is fully integrated into
our model and across the
investment lifecycle
Our ESG strategy
In support of this ambition, we follow an ESG strategy which is
aligned with five of the United Nations Sustainable Development
Goals (UN SDGs):
Sustainable buildings
Aiming to demonstrate our ESG strategy and performance
criteria fundamentally underpin the investment philosophy
of the Company.
SDG 11: Sustainable Cities and Communities
SDG 9: Industry, Innovation and Infrastructure
Climate and carbon
Working towards our portfolio and our assets being net
zero carbon.
SDG 13: Climate Action
Nature and wellbeing
Seeking for our portfolio to have a positive impact on our
climate and the natural world.
SDG 15: Life on Land
Social value
Striving for the social value which our portfolio delivers to
make a meaningful difference to people and communities.
SDG 8: Decent Work and Economic Growth
FY23 in review
– Updated Company ESG targets, including accelerated
netzero targets
– 86% of the portfolio income is generated from assets with an
Energy Performance Certificate (EPC) rating, a Green Building
certification or both
– 92% of occupier energy data collected during FY23
– Enhanced customer collaboration leading to 10.3 MW of
combined on-site solar PV capacity across our portfolio
withc.9MW in the near-term pipeline
– GRESB score of 84/100 and four Green Stars
– Inaugural CDP submission completed
– World Green Building Council’s Advancing Net Zero Carbon
Commitment signatory
– EPRA Sustainability Best Practice Recommendations (sBPR)
Gold Award
– Task Force on Climate-Related Financial Disclosures (TCFD) aligned
– CRREM aligned – portfolio-wide carbon risk analysis utilising
CRREM decarbonisation pathways
– The Manager is ISO 14001 accredited
Our ESG ambition is to invest in and manage a portfolio of assets that are attractive to
customers today and for the future, resilient to a changing physical climate and aligned
with a low-carbon economy.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 31
Social
We look to create positive socio-economic impact, both through
the day-to-day operation of our business and through carefully
chosen partnerships with relevant organisations. Our social value
creation includes our approach to managing nature and wellbeing at
our assets.
Our key activities during the year included:
– continued financial contribution to
The Mission to Seafarers
charity,
which supports the 1.5 million men and women working at sea
tosupport the global supply chain and logistics network used by
our customers;
– ongoing asset-level community engagement, in partnership with
customers; and
– further enhancements to support biodiversity and wellbeing at our
assets, such as replanting external areas and developing external
amenity areas for people to use.
Governance
Our environmental and socio-economic activities are underpinned
by robust governance, both in relation to sustainability issues and
more broadly (see the Corporate Governance section on pages 64
to 102, and the TCFD disclosure on page 52 for more information).
During FY23, our activities included:
– the first meeting of the ESG Board Committee;
– continuing public disclosure of our integrated policies and
procedures, to provide transparency about our approach;
– continued incorporation of sustainability-related clauses into
newleases; and
– participating in established ESG benchmarks:
– retained EPRA sBPR Gold Award;
– increased ISS ESG rating from C to C+;
– completed the Company’s inaugural CDP submission
to align with market best practice and in response to
investor demands;
– continued engagement with Sustainalytics to update
theCompany’s ESG risk rating; and
– achieved four Green Stars in GRESB ratings.
Environment
Our approach to managing environmental impact and leveraging
opportunities which are material to the Company’s business includes
a focus on reducing greenhouse gas emissions associated with
the portfolio, increasing asset resilience and improving energy
performance in collaboration with our customers.
We continued to make good progress with our environmental
initiatives during FY23, including:
– renewable energy: continuing to develop integrated solar
and electric vehicle charging schemes across our assets, in
partnership with occupiers, and using smart and low-carbon
infrastructure to deliver efficient buildings which are fit for the future;
– climate change: updating the portfolio physical climate risk analysis
and undertaking our second TCFD disclosure (see page 52).
Themajority of standing assets are considered to have a low
exposure to climate hazards, while none of our assets is deemed
as being vulnerable to physical climate risks. We continue to
integrate climate risk mitigation across the investment lifecycle
and into our asset management plans; and
– net zero carbon: completing a revision of the Company’s net zero
targets to reflect its ambition to align its operations and assets
with a low-carbon economy by 2040.
Tritax EuroBox plc Annual Report 202332
ESG Progress Summary
Continued successful
implementation of our
ESGstrategy
Our key objectives are:
1. integrating ESG performance criteria across our entire
investment process – due diligence, development, asset
management and end of life;
2. aligning our portfolio with the Paris Agreement decarbonisation
pathways and ensuring that our portfolio is resilient to the
changing climate and makes a positive contribution to global
netzero targets;
3. protecting and enhancing nature across our portfolio and
working with our customers to ensure that our buildings
enhance the wellbeing of people inside and outside the
buildings; and
4. ensuring that our investments deliver measurable impact to
communities and people across our operating footprint.
More information can be found in our ESG progress summary below.
ESG progress summary
The tables below show our progress against each of the detailed ESG targets we have set for FY23:
ESG pillar Target KPI FY23 progress
1. Sustainable buildings
This year, the Company did not acquire any
new buildings but completed the purchase
of the land plot in Oberhausen. Further, the
Manager updated its ESG due diligence
framework to ensure material ESG risks are
managed, and opportunities are leveraged.
The emphasis was particularly on assessing
physical climate and transition (carbon)
risks and opportunities.
The Company engaged with a third party
to assess all assets without a Green
Building Certificate against the BREEAM
In-Use certification scheme. This analysis
concluded that all assets in the portfolio
could achieve a BREEAM In-Use Very
Good rating for total capital expenditures
of around €500k. In addition, all three new
leases signed during the financial year
included green clauses.
On ESG benchmarks, the Company
retained its EPRA sBPR Gold Award and
improved its ISS ESG score from a C to a
C+, maintaining its Prime status. Inaddition,
the Company has a Sustainalytics low risk
rating, with a score of 14.1, and achieved
a GRESB score of 84/100, giving it four
Green Stars. The Company also completed
its inaugural CDPsubmission.
– 100% of all asset due
diligence uses Tritax ESG
due diligence framework
– % utilisation of
enhanced ESG due
diligence framework
The Company did not
purchase any buildings
during the financial year. We
commenced the development
of the Oberhausen asset,
for which we are targeting a
DGNB Platinum certification. In
addition, the Manager revised
its due diligence processes to
ensure ESG factors, including
climate risks, are systematically
considered pre-acquisition.
– Produce and implement
low-carbon baseline
development specification
on all new projects
– Production and % utilisation
of low-carbon specification
– % of circularity
certified materials
– % of projects
undertaking a whole-life
performance analysis
The Company engaged
a third-party consultant
to measure the embodied
carbon associated with its
forward-funded developments
in Rosersberg (Sweden) and
Oberhausen (Germany).
The reduction to a GRESB
score of 84/100 (FY22: 88/100)
was due to an increase in
energy consumption. The
Company is seeking to mitigate
this through its renewable
energy and customer
engagement programme.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 33
ESG pillar Target KPI FY23 progress
2. Climate and carbon
EuroBox updated its net zero targets earlier
this year to reflect its ambition and drive
towards a low-carbon economy. The three
targets focus on three different dimensions
of its emissions: direct emissions (scope
1 and 2), emissions related to its forward
funding of new developments and operational
emissions from our customers.
The Company modelled the operational
emissions pathway of its assets until
2040 (its net zero target date), taking into
account projected improvements to the
assets – including solar PV and energy
efficiency measures – and our customers’
own emissions reduction ambitions.
We continued to install electric vehicle
charging points in collaboration with our
customers, with new chargers being
installed in our assets in Bornem and
Rumst in Belgium, and Strykow in Poland.
Produce and disclose
updated net zero
carbon pathway:
– Scope 1 and
scope 2 – 2025
– Scope 3
(construction) – 2030
– Scope 3 (remainder of
material emissions) – 2040
– Annual review of pathway
and emissions
– % carbon risk incorporated
into each asset
management plan
– 1.5°C Paris decarbonisation
pathway alignment
– Science-Based Targets
initiative (SBTi) alignment
(or equivalent)
The Company finalised and
disclosed its updated net
zero targets and is integrating
emissions’ reduction across
the portfolio.
We are continuously
reviewing changes in market
best practice, including
evolutions in the SBTi building
sector guidance.
– Integrate physical climate
risk mitigation across
investment lifecycle
– % climate risk incorporated
into each asset
management plan
– Portfolio TCFD alignment
The Company updated
its portfolio-wide physical
climate risk assessment, and
conducted a vulnerability
assessment on assets
exposed to natural hazards.
See updated climate
disclosures in the TCFD
section (page 52).
Did you know?
Rumst, Belgium
To support and enhance the
biodiversity around the asset, and
in the local environment beyond,
the warehouse at Rumst has four
beehives and a flower meadow, and
the customer’s branded sign has
been recreated using agreen wall.
Tritax EuroBox plc Annual Report 202334
ESG Progress Summary continued
ESG progress summary continued
ESG pillar Target KPI FY23 progress
3. Nature and wellbeing
Nature
We continue to work with our asset
and property managers to identify
biodiversity enhancements on an asset
level basis. During the year, the Company
and its customers continued to pursue
landscaping and biodiversity initiatives to
support nature and staff wellbeing. This
included several biodiversity improvements
made to our Rumst and Strykow assets,
including the addition of beehives, bat
boxes, a flower meadow and a green wall.
Wellbeing
The Company conducted its third annual
European Real Estate Logistics Census in
collaboration with Analytiqa and Savills,
which highlighted occupiers’ focus on ESG
provisions. This included the importance of
providing staff with good, basic amenities
as competition for labour is high. We
continue to engage with customers to
understand how staff wellbeing provisions
are evolving to ensure our assets provide
occupiers with workspaces that are
attractive to potentialemployees.
– Year-on-year annual
increase in biodiversity for
standing assets
– % increase in biodiversity
against 2022 baseline
Baseline data collection
methodology agreed.
Implemented biodiversity
improvement measures on
several assets including in
Belgium and Poland.
New developments:
continued enhancement
of ESG development
specification,
including integration of
biodiversity measures.
– Year-on-year increased
provision of wellbeing
enhancements to
developments and
standing assets
– % increase in provision
against 2022 baseline
Assessed all buildings
currently without a green
building certification against the
BREEAM In-Use certification
scheme, including the Health
& Wellbeing criteria.
Increasing customer
engagement, primarily
through site visits.
New electric vehicle (EV)
charging stations installed at
three assets.
4. Social value
During the year, the Company sought
to embed social value into its corporate
and management activities to ensure
better oversight and accountability. The
Manager has continued its work to develop
a structure to oversee the allocation and
funding of community initiatives and
charities, which will support the Company
and its customers in delivering social value
to local communities.
In addition, we have continued to engage
with customers to better understand the
social value initiatives that they are actively
involved in and identify where we could
provide further support.
– Publish community
investment structure
which seeks to maximise
the Company’s
social impact
– Further integrate ESG
criteria into supply chain
procurement processes,
both for upstream and
downstream
– Set-up and operation
of community
investment structure
– % utilisation of due
diligence framework
for supplier
The Manager is developing
a community investment
structure to oversee the
social value workstream.
The Manager undertook
a review of the property
management agreement, with
key focus on ESG services.
– Continue support for the
Company’s main charity
– Level of financial and
non-financial contributions
The Company donated
£25,000 to The Mission
to Seafarers – continuing
the Company’s three-year
partnership with the charity.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 35
Supporting The Mission to Seafarers
The Company has continued
to support The Mission to
Seafarers for a third year running.
The charity is instrumental in
supporting seafarers, who play
a key role in the global logistics
supply chain.
Supported by our financial donation during the year, the charity has
been able to undertake the following activities:
– In November 2022, the charity delivered a SafeTalk suicide
alertness course at its centre in Schiedam, Rotterdam. It was free
for all staff and representatives of local welfare organisations that
support seafarers across the port.
– The Rotterdam centre has been refurbished to include high speed
internet and is now a place where local businesses, community
and welfare charities can meet, to helpimprove the welfare of
seafarers visiting the port.
– Planning has now been approved for a sensory garden
development in Rotterdam, which will give seafarers a space
where they can seek refuge and comfort for the short periods
theyare in the port.
Tritax EuroBox plc Annual Report 202336
ESG Progress Summary continued
Energy and Greenhouse Gas Report
Quantification and reporting methodology
The greenhouse gas (GHG) emissions data were prepared in
alignment with the GHG Protocol for the period from October 2022
to September 2023. The GHG emissions were calculated using the
2023 emission conversion factors published by the Department for
Environment, Food and Rural Affairs (“DEFRA”) and the Department
for Energy Security and Net Zero (“DESNZ”), and the 2022 European
emissions factors for production and residual mix published by the
Association of Issuing Bodies (“AIB”).
The monthly purchased fuel and energy consumption data is
collected by the Company from utility billing information and
compiled on an annual basis. In allocating emissions between
landlord and occupier, we follow the methodology outlined in
“Accounting and Reporting of GHG Emissions from Real Estate
Operations – Technical Guidance for the Financial Industry”
published in March 2023 by GRESB, PCAF and CRREM, which
states that landlord-procured energy for sites where the occupier
has operational control should sit within the landlord’s Scope 3
downstream leased assets category. Our Scope 1 and 2 GHG
emissions therefore relate to energy use within common areas of
theassets for which the Company procures the utilities.
Organisational boundary and reporting scopes
This is the third year of the Company reporting our GHG emissions
in line with Streamlined Energy and Carbon Reporting (SECR).
Table1.2 summarises our Scope 1 and 2 greenhouse gas emissions
for the 2022/2023 financial year. The Company’s base year
is 2021/2022, which was chosen as it is representative of the
Company’s typical operations.
The Company has adopted the Operational Control Approach to
organisational boundary to align with other GHG emissions reporting
commitments. Previously, scope 3 data across the categories of
Business Travel, Downstream Leased Assets and Purchased Goods
& Services have all been voluntarily reported for the Company as
part of our SECR submission. This year, our approach to accounting
for these emissions has been revised to better reflect the guidance
of the GRESB, PCAF and CRREM Technical Guidance document
referred to above. The emissions previously reported for the Company
under the Scope 3 categories of Business Travel and some Purchased
Goods & Services are properly the emissions of the Company’s
Manager, Tritax Management LLP (the “Manager”).
Going forward, the Manager shall be treated as a supplier to the
Company for the purposes of GHG emissions accounting and will
thus fall under Scope 3 Purchased Goods & Services.
Full data on emissions from downstream leased assets was not
available at the time of report preparation due to the time required to
collect our occupiers’ energy consumption. These emissions, along
with the Manager’s recalculated emissions, will be disclosed inthe
Company’s EPRA-aligned Sustainability Report, to be released
during FY24.
Table 1.1 Energy consumption (kWh)
Activity (kWh) FY23
Restated information for
baseline year
FY22
1
Total EU energy consumption (relating to scope 1 and 2 emissions) 679,155 99,822
Table 1.2 Greenhouse gas emissions (tCO
2
e)
Activity (tCO
2
e)
Year
FY23
Restated information for
baseline year
FY22
Scope 1 – combustion of fuels
— —
Scope 2 – location-based purchased energy 40 32
Scope 2 – market-based purchased energy 2 —
Total location-based emissions (scope 1 and 2) 40 32
Total market-based emissions (scope 1 and 2) 2 —
Intensity measurements
Table 1.3 Intensity ratios
Year
FY23
Baseline year
FY22
tCO
2
e (gross scope 1 and 2 location-based) per €m revenue 0.58 0.55
1 In this disclosure we restate the previous year’s energy consumption and emissions due to a revised approach, whereby the emissions of the Manager fall
within the Company’s Scope 3 rather than scope 1 and 2. Previously stated total EU energy consumption was stated as 87,860,573 kWh; scope 1 and 2
emissions were stated as 0 tCO
2
e and 8 tCO
2
e respectively, and the intensity ratio was stated as 0.24 tCO
2
e per € million of revenue.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 37
Energy performance and energy
efficiencymeasures
There has been an increase in scope 1 and 2 emissions for this
reporting year compared to the previous year. This is due to the
acquisition of new assets in Sweden, where the operational control
of the asset has remained with the Company for the duration of the
reporting period. This means energy consumption is designated as
being under the Company’s control and emissions are categorised
as scope 1 and 2. We have mitigated the emissions associated
with the additional energy consumption through the procurement
of renewable energy. This has enabled the Company to keep
emissions low.
The Company has implemented several measures to reduce its
energy consumption and emissions, and those of its occupiers,
during 2023, including:
– the installation of electric vehicle charging stations on the Bornem,
Rumst and Strykow assets;
– the installation of solar panels on the Barcelona asset by
Mango; and
– the preparation of an Embodied Carbon assessment for the
Rosersberg and Oberhausen developments.
The Company’s revised emissions reduction targets can be found
inthe ESG section of the Annual Report (page 33).
External assurance
The Company works with its third-party property manager to collect
and aggregate energy consumption data across its portfolio, while
CBRE has been appointed to calculate Scope 1 and 2 emissions
and prepare this Energy and Greenhouse Gas Report.
Tritax EuroBox plc Annual Report 202338
Financial Review
Good progress
onourobjectives
Adjusted EPRA Cost Ratio
1
24.2%
FY22: 29.5%
Average cost of debt
1.30%
FY22: 1.22%
What we said we would do
A year ago, we highlighted three key financial objectives:
1) cover the dividend;
2) reduce the Adjusted EPRA Cost Ratio; and
3) manage leverage and maintain a robust balance sheet.
What we achieved
The dividend is 110.2% covered for the financial year, an increase
from 84.8% in FY22. This was the result of higher income,
driven by development completions, asset management and
indexation, together with lower costs, primarily from a reduction in
management fees.
The Adjusted EPRA Cost Ratio
1
has reduced to 24.2% for FY23
from 29.5% in FY22. The ratio improved through the year, with an
Adjusted EPRA Cost Ratio
1
of 22.8% in the six months to September
2023. Our aim is to remain in our target range of 20–25%.
Despite a solid start to our programme of disposals, the LTV ratio
2
has increased to 46.4% as at 30 September 2023 and remains higher
than we would like at this point of the cycle. The increase was a result
of valuation declines, ongoing development expenditure and
movements in working capital, offsetting the sale proceeds.
Post period-end, we have made further good progress with our
disposal programme, which has generated gross proceeds of
c.€139m to date including the disposals of Bochum for c.€47 million
and Malmö for c.€28 million. Taking account of the Bochum and Malmö
disposals, the pro forma LTV ratio
2
is 44.0%. Further disposals have
been identified and we remain confident of achieving our target LTV
percentage of low 40s over the next 6 to 12 months.
What to expect next
We will look to maintain a covered dividend and the Adjusted EPRA
Cost Ratio
1
within the 20–25% range.
We will seek additional disposals to reduce debt and deliver a lower
LTV ratio
2
, showing a trajectory towards our preferred level. In the
medium term, we expect to refinance the RCF and the bond ahead
of their respective maturities in October 2025 and June 2026.
Mehdi Bourassi
CFO for Tritax EuroBox plc
“Wehavemadematerial
advancesonourfinancial
objectives,withthe
dividend now covered
andourAdjustedEPRA
CostRatioreduced,and
weremaincommitted
tomaintainingarobust
balancesheet.”
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 39
Portfolio valuation
The portfolio was independently valued by CBRE as at
30September 2023, in accordance with the RICS Valuation – Global
Standards. The portfolio’s total value
3
at the year end was €1,561.9 million
(30 September 2022: €1,765.6 million), reflecting a like-for-like valuation
decrease of 14.5%, including a decline of 0.3% in the second half.
The Valuation NEY increased by 100 bps over the past 12 months
and 10 bps over the past six months, with this outward yield shift
only partially offset by like-for-like ERV growth of 6.5% over the year.
Financial results
Income
Rental income for the year was €68.1 million (FY22: €57.9 million),
up 17.6%. The growth was primarily the result of acquisitions during
2022, rent indexations and our asset management initiatives, including
the Mango extension in Barcelona. On a 12-month like-for-like basis,
total annualised rental income was 4.5% higher (or 7.8% higher when
including the Barcelona and Strykow extensions).
As at 30 September 2023, the annualised rental income
4
was
€76.3million (FY22: €74.3 million), including €3.4 million annualised
rental guarantees. With the recent completion of most of our developments
,
we expect the share of rental guarantees as a percentage of total
income to decrease materially in 2024, with most of these rental
guarantees converted into IFRS income as customers take
occupation of available warehouse space and leases commence.
The EPRA Cost Ratio for the financial year (inclusive of vacancy cost)
was 27.4% (FY22: 41.3%). The Adjusted EPRA Cost Ratio was 24.2%
(FY22: 29.5%), including rental guarantees received.
The lower cost ratio was primarily the result of the change in the
Investment Management Agreement last year, that lowered the fee
payable by the Company to the Manager. This was implemented on
6 October 2022, and backdated to be effective from 1 August 2022.
IMA fees – effective 1 August 2022
NAV Value Fee
<€1 billion 1.00%
>€1 billion 0.75%
IMA fees – previously
NAV Value Fee
<€0.5 billion 1.30%
>€0.5 billion ≤€2 billion 1.15%
>€2 billion 1.00%
The total cost of debt (net of income earned on interest rate derivatives)
for the year was €10.1 million (FY22: €8.7 million), reflecting an
attractive average cost of debt of 1.30% (FY22: 1.22%). This is the
result of all debt facilities during the year being fixed or hedged, with
no refinancing maturities before Q4 2025.
Post period end, we renewed some of our interest rate caps expiring
in October 2023. We bought a €40 million portion with a two-year
maturity co-terminus with the remaining term of the RCF and a €40
million portion to match our short-term RCF requirement pending
the full execution of the disposal programme. Reflecting current
financing conditions, the weighted average strike price of these caps
is 2.72% (previously 0.65%). Looking ahead to FY24, we expect the
total cost of debt to be in the range of 1.25% and 1.50%, subject to
drawdowns on the RCF.
The Group made a consolidated loss before tax for the period,
of €243.0 million (FY22: gain of €76.6 million), primarily due to the
decrease in the portfolio valuation, as outlined above.
The income taxation charge for the year was 2.5% (FY22: 2.3%).
The charge is primarily 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 the 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.
Adjusted EPRA Cost Ratio (%)
1
FY20
27.6%
FY21
28.5%
FY22
29.5%
FY23
24.2%
Portfolio value (€m)
FY19 FY20 FY21 FY22 FY23
691.7
839.3
1,281.4
1,765.6
1,561.9
Retail income (€m)
FY19
24.5
FY20
36.0
FY21
43.9
FY22
57.9
FY23
68.1
1. Including licence fee income and rental guarantees.
2. As per KPI definition.
3. Valuation under IFRS (excluding rental guarantees).
4. Including licence fee income and rental guarantees.
5. See note 12 to the financial statements for reconciliation.
Costs
The Company’s operating and administrative costs were €16.4 million
(FY22: €18.2 million), which primarily comprised:
– the Management Fee payable to the Manager of €5.5 million
(FY22:€7.9 million);
– the Company’s running costs, including accounting, tax and audit; and
– the Directors’ fees.
Tritax EuroBox plc Annual Report 202340
Financial Reviewcontinued
Post-period-end activity
On 29 November 2023, the Company agreed a lease at its two-unit
asset in Settimo Torinese, Italy.
On 30 November 2023, the Company exchanged on the sale of
its asset at Bochum, Germany, and the redevelopment site at
Malmö, Sweden.
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 AIFMD and has appointed the Manager as its AIFM. The
Manager is authorised and regulated by the Financial Conduct
Authority as a full scope AIFM.
Dividends
The Company has declared the following dividends in respect
of theyear:
Declared
Amount
per share In respect of Paid/to be paid
9 February 2023 1.25 cents
1 October to 31 December 2022
14 March 2023
18 May 2023 1.25 cents 1 January to 31 March 2023 23 June 2023
8 August 2023 1.25 cents 1 April to 30 June 2023 8 September 2023
5 December
2023 1.25 cents 1 July to 30 September 2023 12 January 2024
The total dividend for the year was 5.00 cents per share or €40.3 million
(FY22: €40.3 million) and was 110.2% covered by Adjusted Earnings
(FY22:84.8%).
Mehdi Bourassi
CFO for Tritax EuroBox plc
4 December 2023
Financial results continued
Earnings Per Share
Basic Earnings Per Share for the year was negative 27.68 cents
(FY22: 7.28 cents), with the decrease versus the prior year reflecting
the adverse valuation movement through FY23. EPRA EPS, which
excludes valuation movements, was 5.66 cents (FY22: 2.58 cents).
Adjusted Earnings, which include rental guarantees, were €44.5 million
(FY22: €34.2 million), resulting in Adjusted EPS of 5.51 cents
(FY22: 4.24 cents). More information about the calculation of basic,
EPRA and Adjusted EPS can be found in note 12 to the Financial
Statements on page 122.
Net assets
The IFRS NAV per share at the year end was €0.99 (30 September
2022: €1.32). The EPRA NTA per share at the year end was €1.02
(30 September 2022: €1.38). The Board recognises the 42%
discount to EPRA NTA, as at 30 September 2023. The valuation of
investment property is the main driver of the EPRA NTA, 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 year end, the Company had total debt drawn of €777 million.
This resulted in an LTV ratio of 46.4% (30 September 2022: 35.2%),
with €172.5 million available undrawn debt. Taking into account the
recently announced disposals at Bochum and Malmö, the pro forma
LTV ratio decreases to 44.0%. Further disposals are planned during
2024 to reduce the LTV towards our preferred level of low 40s.
The Company’s financing is insulated from any near-term increases
in interest rates, with no maturities before Q4 2025 and 100% of its
current total drawn debt either fixed or benefiting from interest rate
caps limiting the rise in Euribor to 2.72%.
Debt facility maturity profile (€ million committed)
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
RCF Green bond Bilateral private placement
500
100
50
50
250
Adjusted Earnings Per Share (cents)
FY19 FY20 FY21 FY22 FY23
3.25
4.16
4.61
4.24
5.51
Dividend per share (cents)
FY19 FY20 FY21 FY22 FY23
3.40
4.40
5.00 5.00 5.00
Dividend cover
FY19 FY20 FY21 FY22 FY23
85%
94%
80%
85%
110%
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 41
Manager’sQ&A
Currenttopics
TheManager’sexperiencedteamdiscussessomeofthe
ongoingsectorthemesaswellastheareasof
focusforthebusiness.
The Tritax EuroBox team
Left to right:
James Charlesworth –
Director,Asset Management;
Minu Kidia – Director, Commercial
and Reporting Finance;
Mehdi Bourassi – CFO;
Phil Redding – CEO;
Mehtab Rauf – Associate
Director, Financial Control
andTreasury;
Alina Iorgulescu –
Director,Investment;
Charles Chalkly –
Director,Investor Relations;
Maddy Marsden –
InvestmentAssociate; and
Will Richardson – Fund Controller.
Whatareyourexpectationsforrental
growthoverthenext12months?
Positive structural drivers and favourable market fundamentals
will continue to support rental growth over the next 12 months.
However, increasing occupier caution in light of the more challenging
economic conditions is likely to lead to decision-making taking longer
and requirements being delayed. Take-up is therefore likely to decline
in the short term and levels of rental growth may moderate from the
exceptionally high levels seen over the past few years.
Whatwillbethemostexcitingaspect
oftheCompany’sESGjourneyinthe
yearahead?
We look forward to working with our customers to deliver real impact
as we implement our plans to lower the energy intensity of our
portfolio. A central part of this plan is to deliver material growth in
the renewable electricity generating capacity of our assets. We have
recently submitted applications for three solar schemes which will
approximately double our capacity to over 19 MW. This investment
will support the resilience of our buildings and our customers’
operations. Like us, many of our customers have ambitious ESG
objectives and we are excited to help achieve these goals.
Whatareyourprioritiesintermsof
capitalallocation?
A key priority is to maintain a robust balance sheet. In the Interim
Results statement we announced the start of the disposal
programme of at least €150 million to enable the LTV to be lowered
to within our preferred percentage range of low 40s within 12 to
18 months from that announcement. We also indicated we would
use some of the disposal proceeds to fund attractive opportunities
we have within the existing portfolio, but only on the basis these
projects generated appropriate returns. We remain conscious
that the funding of internal projects will need to look compelling
against other alternative uses of capital and therefore the bar to new
investment is set appropriately high.
Doyouthinkvaluesaregoingtomove
significantlyin2024?
There are many factors which could influence the direction of values
over 2024, including geopolitical and macro-economic risks, which
are currently elevated. Values have adjusted rapidly in response to
higher interest rates, with positive structural drivers and strong
market fundamentals in the logistics sector remaining attractive to
investors. We expect investment volumes to improve as we move
through 2024, with visibility on transaction levels leading to greater
stability of asset values.
Tritax EuroBox plc Annual Report 202342
Manager’sQ&Acontinued
Alina Iorgulescu
Director
– Investment
Areyouseeinganychangesincustomer
behaviour,particularlyregardingany
evidenceofreducedtake-up?
Leasing activity continues to moderate from the very high take-up
levels witnessed over the last few years. A recent survey undertaken
by the Company alongside Savillls showed more caution from
occupiers, reflected in 39% indicating a scaling back or delay to
expansion plans by one to two years. Importantly, only a very small
percentage stated requirements were being permanently cancelled.
Occupiers still cite the need to improve e-commerce capabilities,
build resilience into their supply chains and reduce the environmental
impact of their operations as on-going key objectives, with these
structural drivers likely to support occupier demand over the
years to come.
As a result, there continues to be a good level of demand for
high-quality, sustainable buildings located in established distribution
hubs, with limited availability. The letting of our recent development
at Dormagen is a good example of this. The building attracted a
high level of interest from a range of occupiers during construction,
ultimately resulting in a deal being agreed with a leading logistics
operator during the final stages of construction and signed five
weeks after practical completion. The letting was 17.8% above the
rental guarantee level, increasing the annualised rental income by
€0.5 million.
HowimportantisESGtoyourcustomers?
ESG has become increasingly important to our occupiers, both
from the perspective of delivering their own sustainability goals
and in terms of improving operational resilience and efficiency.
The latter moving more into focus in the context of rising and
more volatile energy prices together with the greater efficiencies
that can be derived from the use of renewable power sources and
energy storage. This trend is clearly demonstrated in the recent
occupier survey undertaken by the Company, with 45% of occupiers
indicating they have implemented measures to improve energy
efficiency over the past 12 months and 51% of occupiers rating
renewable energy generation and storage as their top ESG priority
for the year ahead.
“Webelievethisdisciplinedand
methodicalapproachnotonly
maintainsportfolioperformance
butalsoensureswecontinueto
beoptimallypositionedinour
selectedmarkets.”
Haveyouseenanincreaseinthesupply
ofbuildings?
While recent occupier caution has led to a moderation in take-up, the
supply of new buildings has also fallen. This is partly in response to
weaker demand but also increases in construction and finance costs
impacting the viability of some development projects, particularly
where land was acquired at elevated market prices. The result of this
falling take-up and decrease in new building supply is that vacancy
rates remain at historically low levels.
WhatisyourpreferredLTVrange?
At this stage of the market cycle, we would like to reduce the LTV
ratio to the low 40s. Our announced disposal programme to sell at
least €150 million is aimed at supporting this objective as we move
through 2024.
Howdoyouselectyourassetsfordisposal?
Our asset disposal decisions are firmly rooted in our long-term
strategy of continuously enhancing the performance of our portfolio.
To achieve this, we undertake a rigorous portfolio review process
twice a year comprising a top-down asset allocation analysis and a
bottom-up asset by asset review. For example, where asset plans have
been completed and value maximised, or where forecast sustainability
performance is not aligned with our portfolio objectives, these
assets are identified for disposal, with the capital recycled into
higher returning opportunities or used to reduce debt levels. We
believe this disciplined and methodical approach not only maintains
portfolio performance but also ensures we continue to be optimally
positioned in our selected markets.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 43
Minu Kidia
Director – Commercial and Reporting Finance
Howwillthedividendand/ordividend
coverbeimpactedbydisposals?Howdo
theyaffectthedividendcovertarget?
We have said that lowering the LTV ratio is a strategic priority for
the Company and disposal proceeds will primarily be used for this
purpose. The payment of a covered dividend is also an important
priority for the Company and remains a key corporate objective.
Reducing the LTV through asset disposals will have an impact on
our total earnings. However, our high-quality portfolio, let on long
term, predominantly inflation-linked leases to strong customers,
provides us with good visibility of portfolio rental growth and we
therefore expect the dividend to remain fully covered in FY24.
Arecustomershavingdifficultykeeping
upwiththeirrent?
We own a diverse portfolio of assets, with the buildings typically
leased to large multinational customers from a broad range of
business sectors. While we have delivered 100% rent collection
going back to the IPO in 2018, the team remains vigilant given
the current uncertain economic environment. Both directly and in
conjunction with our asset management partners, we frequently
engage with our customers to understand their business and
assist them in their logistics needs. Although we are aware the
recent period of higher inflation has caused rents to increase quite
sharply in some jurisdictions, we have received no indication from
our customers of any difficulties in paying their rent. It should be
remembered that the rent element of total occupational costs is
relatively small compared to other expenses such as transportation
and therefore paying a higher rent for a warehouse in the right
location remains the most efficient choice.
Whatareyournear-term
refinancingneeds?
The Company has no debt maturities before Q4 2025 and is
insulated from higher rates in the short term, with 100% of the
drawn debt benefiting from fixed interest rates. In the medium term,
the bond refinancing in 2026 is the most significant maturity. We
continue to carefully monitor the market and evolution of the interest
rate environment to enable us, in due course, to adopt the most
appropriate financing strategy.
Whatareyourprioritiesfortheyearahead?
We have made good progress with our strategic priorities set out
12months ago, but there is still more to do. Our near-term priorities
will continue to focus on: capturing income and value from within
the existing portfolio; improving operational efficiencies to lower
the cost ratio; driving earnings to provide a covered dividend to our
Shareholders; and maintaining a robust balance sheet through the
further disposal of assets identified for sale.
“Weownadiverseportfolioofassets,
withthebuildingstypicallyleasedto
largemultinationalcustomersfroma
broadrangeofbusinesssectors.While
wehavedelivered100%rentcollection
goingbacktotheIPOin2018,theteam
remainsvigilantgiventhecurrent
uncertaineconomicenvironment.”
“TheCompanyhasnodebtmaturities
beforeQ42025andiswellinsulated
fromhigherratesintheshort
term,with100%ofthedrawndebt
benefittingfromfixedinterest.”
Will Richardson
Fund Controller
Tritax EuroBox plc Annual Report 202344
PrincipalRisksandUncertainties
Approachto
riskmanagement
TheBoardhasoverallresponsibilityforriskmanagement
andinternalcontrols,withtheAudit&RiskCommittee
reviewingtheeffectivenessoftheriskmanagement
processonitsbehalf.
We aim to operate in a low-risk environment, focusing on the
Continental European logistics real estate sector to deliver an
attractive capital return and secure income for Shareholders.
TheBoard recognises that effective risk management is key to the
Group’s success. Risk management ensures a defined approach to
decision making that decreases uncertainty surrounding anticipated
outcomes, balanced against the objective of creating value
forShareholders.
Approach to managing risk
Our risk management process is designed to identify, evaluate,
understand and mitigate (rather than eliminate) the significant risks
we face. The process can, therefore, only provide reasonable, and
not absolute, assurance. As an investment company, we outsource
key services to the Manager, the Administrator and other service
providers, and rely on their systems and controls. The Manager has
established its own Risk Committee which ensures consistency and
transfer of best practice in reporting, monitoring and controlling risk.
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 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.
Board
Audit &
Risk Committee
TM LLP Executive Committee
TM LLP Risk Committee
Reporting and escalation
Direction and oversight
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 45
Risk appetite
We have a specific Investment Policy, which we adhere to and
forwhich the Board has overall responsibility.
We have high-quality customer partners, with a portfolio of modern
buildings and one of the longest unexpired lease terms in the sector,
coupled with an average term tomaturity on our debt of 3.5 years,
all fixed or subject to interest rate derivative caps.
Principal risks and uncertainties
Further details of our principal risks and uncertainties are set out
below. They have the potential to affect our business materially,
either favourably or unfavourably. Some risks are currently unknown,
while others that we currently regard as immaterial, and have therefore
not included here, may turn out to be material in the future. The Board
also continually reviews and assesses emerging risks, and has a
process in place to decide their inclusion as principal risks.
Principal risks
The matrix (top right) illustrates our assessment of the impact and
probability of the principal risks identified, the rationale for which
iscontained within the commentary for each risk category.
Emerging risks
As well as the principal risks, the Directors have identified a number of
emerging risks which are considered as part of the formal risk review.
Emerging risks encompass those that are rapidly evolving, for which
the probability or severity is not yet fully understood. As aresult, any
appropriate mitigations are also still evolving; however, these emerging
risks are not considered to pose a material threat to the Company in
the short term. These emerging risks are raised as part of the biannual
risk assessment where the effects on the Group are considered. The
emerging risks that could impact the Company’s performance cover
a range of subjects which include butare not restricted to climate
change, ESG and technological advancement.
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.
Low Medium High
Low Medium High
2
1
13
10
11
12
3
4
15
8
7
17
2120
6
16
18 19
14
5
9
Probability
Impact
Key risks
Tritax EuroBox plc Annual Report 202346
PrincipalRisksandUncertaintiescontinued
Property
1. Customers may default
Probability Risk appetite Impact Mitigation
Low to
medium
Medium Low to medium
The default of one or more of the Company’s
customers would immediately reduce revenue from
the relevant asset. If the customer cannot remedy
the default, there may be a continuing reduction
in revenue until a suitable replacement customer
is found.
Such a scenario could significantly affect the
Company’s rental income, cash flow, occupancy
rate of the portfolio, and EPRA Earnings and may
affect our ability to pay dividends to Shareholders
and/or lead to a breach in banking covenants.
The Company selects assets with strong
fundamentals (location close to population centres,
access to infrastructure and energy supply), which
should be attractive to other customers if the current
customer defaults.
In addition, while the Company focuses on
customers with strong financial covenants, it also
aims to negotiate various guarantees or deposits, to
enable the Company to cover income while looking
for a new customer.
The Company reviews rent collections on a monthly
basis to ensure arrears are addressed as swiftly as
possible. Proactively monitoring the rental income
ensures any issues are flagged early on in order to
mitigate any potential customer default’s impact.
While there is no restriction on the Company’s
exposure to any one customer, the Company’s
Investment Policy requires the Company to deliver
ahigh-quality, diversified portfolio.
2. The value of the property portfolio may experience adverse change
Probability Risk appetite Impact Mitigation
High Medium
tohigh
High
Property valuation is inherently subjective
and uncertain, and the appraised value of the
Company’s properties may not accurately reflect
thecurrent or future value of the Group’s assets.
In addition, the Company’s due diligence may not
identify all risks and liabilities in respect of a property
acquired. Any such instances could lead to an adverse
change in the future valuation of that asset.
An adverse change in the Company’s property
valuation may lead to a decrease in the Net Asset
Value and affect the Company’s performance.
Inanextreme scenario, it could also lead to a
breach of the Company’s banking covenants,
whichmay force the Company to sell assets to
repay loan commitments.
As at 30 September 2023, the Company’s property
portfolio was 98.9% cash generating from leases,
and rental guarantees, with long unexpired
weighted average lease terms of 7.9 years and a
strong customer partner base. 97% of leases (by
income) include rent uplifts (with different features
ineach country).
Combined with the fact that the Company focuses
on the best locations, where land supply is tight,
and undertakes significant due diligence using the
services of relevant third parties, the Company
believes these factors reduce the risk of significant
adverse property valuation movements.
3. Portfolio growth may slow
Probability Risk appetite Impact Mitigation
Medium Medium Medium
The fundamentals of the prime logistics locations in
Continental Europe mean that the availability of land
suitable for large logistics properties is limited.
This may restrict the Company’s ability to secure
suitable logistics real estate assets in targeted
countries in Continental Europe, in order to grow
theportfolio while maintaining its performance.
The Company’s business model is based on
undertaking predominantly off-market transactions,
sourced through the Manager’s network of contacts
across Europe, and through the Company’s
partnership with local development companies.
The Manager has also developed strong relationships
with several vendors and customers in the industry.
The Company’s reliability, experience and speed
ofexecution gives an edge over many other
potential investors.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 47
Property continued
4. Lack of diversification may amplify local risks
Probability Risk appetite Impact Mitigation
Low Medium Low
The Company’s Investment Policy does not include
restrictions relating to the Group’s exposure to
individual assets or customers and includes only
limited restrictions relating to the Company’s
exposure to individual countries. Significant
economic and/or political changes affecting a
country the Group has invested in, or the Eurozone,
generally, could have an adverse impact on the
income derived from investments within said country
and, hence, on the valuation of those assets. This
could lead to weaker overall portfolio performance,
both in terms of revenue generation and value.
The Company Investment Policy requires us to
deliver a high-quality, diversified portfolio of assets.
While the Company adopts a “bottom-up” approach
in the selection of real estate investments, it also
considers the impact on the concentration of risk
within the portfolio, including the Group’s exposure
to any single country (considering its economic
and political stability) at the time of investment.
Specifically, the Investment Policy restricts our
ability to invest more than 20% of Gross Assets
(inaggregate) in Austria, the Czech Republic,
Portugal and Slovakia.
5. Development activities may not be profitable
Probability Risk appetite Impact Mitigation
Medium
tohigh
Medium Medium
Any forward funded developments are likely to
involve a higher degree of risk than is associated with
standing investments. This could include general
construction risks, delays in the development or the
development not being completed, cost overruns or
developer/contractor default.
In particular, inflation will impact the costs of material
and supplies. This passes directly into the cost of
construction of development assets, as contractors
are likely to pass on the increased costs.
If any of the risks associated with the Company’s
developments materialised, this could reduce the
value of these assets and its portfolio.
Developments, upon completion, may not be
leased. Resultantly, there is the risk of vacancy and
ultimately adverse impact on valuation of the asset.
As at 30 September 2023, the Company had one
live development in its portfolio. The risks associated
to forward funded projects are significantly reduced,
as the developer takes on a significant amount of
construction risk and bears the risk of cost overruns
(through a fixed price contract).
Funds for developments remain with the Company
and are only released to the developer on a controlled
basis, subject to milestones as assessed by the
Company’s independent project monitoring surveyors.
To address leasing risks, the Company typically
negotiates rental guarantees from the completion
developments.
6. The product may not appeal to customers or investors
Probability Risk appetite Impact Mitigation
Low Low Medium
If the Company held assets that lacked appeal to
customers, then there’s the risk of vacancy and a
loss of revenue, which may impact the cash flow of
the Company and may affect its ability to distribute
dividends to its Shareholders.
Lack of appeal to investors may adversely impact
the portfolio’s liquidity which may result in the
portfolio’s valuation being negatively impacted.
An adverse movement in the Company’s portfolio
valuation may lead to a decrease in the Net Asset
Value and affect the Company’s performance.
The Company selects assets with strong
fundamentals through rigorous appraisals with
its Investment Committee ahead of any purchase
or development. Criteria includes locations close
to population centres, access to infrastructure,
size and flexibility to appeal to a wide range of
potentialcustomers.
In addition, the ESG credentials of assets
areregularly assessed. This ensures the ESG
specifications of the assets remain in line with
theexpectation of both customers and investors.
Tritax EuroBox plc Annual Report 202348
PrincipalRisksandUncertaintiescontinued
Property continued
7. Getting the market cycle wrong, leading to wrong investment, divestment, and/or leasing decisions
Probability Risk appetite Impact Mitigation
Medium
tohigh
Low High
The Company may carry out investment or leasing
decisions at the wrong time in the market cycle,
leading to under-performance of its assets and
possible loss on its investments. It could also
result in misallocation of capital, leading to an
inappropriate level of leverage.
The Company has a team of experience real estate
professionals who actively monitor the markets and
assess the situation in the cycle.
All investment, divestment and leasing decisions
are supported by rigorous appraisal from the
Company’s Investment Committee which evaluates
the rationale of each respective decision.
8. Inappropriate portfolio construct
Probability Risk appetite Impact Mitigation
Medium Low Medium
The Company’s portfolio composition may be
inappropriate, which may result in an under-performance
of the property portfolio, and higher than desired
exposure to certain risks. In particular, the Company
might get overexposed to specific geographies
and/or development activity.
The Company Investment Policy requires to deliver
a high-quality, diversified portfolio of assets. Whilst
the Company adopts a “bottom up” approach in the
selection of real estate investments, it also considers
concentration risk within the portfolio.
Operational
9. The performance of the Manager and/or third-party suppliers may not be adequate
Probability Risk appetite Impact Mitigation
Low Low Low to medium
The Company continues to rely on the Manager’s
services and its reputation in the property market,
as well as the performance and reputation of
the asset managers appointed by the Manager
(currently LCP, Dietz and NCAP).
As a result, the Company’s performance, to a large
extent, depends on the Manager’s ability to source
adequate assets, and to actively manage these
assets, relying on the local knowledge of the asset
manager, where necessary.
Termination of the Investment Management
Agreement (IMA) would severely affect our ability to
manage our operations and may have a negative
impact on the Company’s share price.
Unless there is a default, either party may terminate
the Investment Management Agreement by giving
not less than 24 months’ written notice. Significant
notice periods are in place for other third-party
supplier contracts.
The Management Engagement Committee monitors
and regularly reviews the Manager’s performance,
including the performance of the key third-party
service providers to the Company. In addition, the
Board meets regularly with the Manager to ensure
itmaintains a positive working relationship.
10. Insurance at appropriate premiums may not be available
Probability Risk appetite Impact Mitigation
Low to
medium
Low High
The Company relies on the Manager’s experience
in sourcing insurance in order to ensure assets
are covered to the adequate level. Through the
dynamics of the insurance market, it has become
harder to secure insurance for the Company’s
assets at appropriate pricing levels.
In a downside scenario, the Company may not be
able to insure its assets at all which would create
significant financial and operational risk.
The Manager uses an established broker in order
to secure insurance for the Company’s assets. The
broker has relationships with a range of insurers
which supports both the ability to source insurance,
and the competitiveness of pricing.
The most recent renewal was completed in October
2023. This cover is in place until October 2024.
The Manager uses a block policy which covers all
of the assets under its management, and therefore
insures a significant scale of assets which assists in
competitive pricing.
If insurance was unobtainable for a particular
asset, there may be opportunity for the Manager
toobtain cover on a limited cover basis or potentially
the Customer may be able to procure the
insurance cover.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 49
Financial
11. Debt funding at appropriate levels may not be available
Probability Risk appetite Impact Mitigation
Medium Low Medium
Interest on our Revolving Credit Facility (“RCF”)
is payable based on a margin over Euribor. Any
adverse movement in Euribor could affect cash
flows, earnings, and the Company’s ability to pay
dividends to Shareholders.
The cost of raising new debt, or refinancing existing
debt, may rise which would impact earnings
adversely and resultantly lessen the amount
available to distribute to shareholders as dividends.
Currently, 73.7% of total debt is subject to a fixed
coupon. The drawn debt which is not subject to
a fixed coupon (RCF), is fully covered by interest
rate caps.
The Company has entered into interest rate
derivatives to hedge the direct exposure to
movements in Euribor. These derivatives cap
the exposure to the level to which Euribor can
rise. TheCompany aims to minimise the level
of unhedged debt whilst also considering the
averagelevel of drawn down RCF.
There is no debt maturing before October 2025,
therefore limiting the short-term impact of refinancing.
The Company is actively monitoring interest rate
options and will take active steps to mitigate the
rising cost of interest where possible.
12. The Euro may fluctuate against other currencies of countries in which the Company operates
Probability Risk appetite Impact Mitigation
Medium Medium Low
The Company operates in Sweden, exposing the
Company to foreign exchange (FX) movements
between EUR and SEK.
The Company is exposed to three distinct FX risks:
a) The cost to complete a development, agreed in
SEK, will vary as the FX rates move. Variation in
actual costs may render developments unprofitable.
b) The Euro value of the net assets of the Swedish
assets will fluctuate subject to FX rates.
c) The rental income received in SEK is subject to
FXmovements.
At present, Sweden represents a small value of the
total portfolio, limiting the potential impacts of FX
movement on the portfolio.
The Company has conducted a thorough assessment
of possible hedging strategies and their effectiveness
and impact on the Company. The Company take steps
to translate any known cash flows on developments
into the functional currency at the appropriate time,
to mitigate risk of fluctuation and varying costs.
The Company continues to carefully monitor the size
of the exposure to SEK and will execute hedging
strategies at the appropriate time.
13. The leverage level and target range may not be appropriate
Probability Risk appetite Impact Mitigation
Medium Low Medium
An inappropriate leverage level may result in a riskier
environment for the Company, with an increase to
the financing costs, less available liquidity, and an
adverse impact on credit rating. This may lead to
lower earnings and dividend, and a breach of the
debt covenants leading to an adverse impact on the
Company’s NAV.
The Company undertakes regular modelling and
stress tests are applied to the portfolio. These
outcomes are discussed between the finance and
investment teams with preventative and corrective
actions implemented as required.
The LTV range which the Company targets is well
below the covenant, which mitigates the reach
of a breach.
14. Debt covenants may be breached
Probability Risk appetite Impact Mitigation
Low to
medium
Low Medium
If the Company was unable to operate within the
respective debt covenants, this could lead to a
default and the debt funding being recalled. This
may result in the Company selling assets to repay
loan commitments.
The Company continually monitors debt covenant
compliance and performs stress tests. The Company
has significant headroom before there is a risk of
a breach and its covenants have a soft breach
feature, which enables the Company to take
remediation actions.
Tritax EuroBox plc Annual Report 202350
PrincipalRisksandUncertaintiescontinued
Taxation
15. A change in the Company’s investment trust status may cause loss
Probability Risk appetite Impact Mitigation
Low to
medium
Low Medium
If the Company fails to maintain approval as an
Investment Trust, its income and gains will be
subject to UK corporation tax and it will be unable
todesignate dividends as interest distributions.
The Board is ultimately responsible for ensuring
the Company adheres to the UK Investment Trust
regime, and the Company monitors strict adherence
to the relevant regulations. The Company has also
engaged top-tier third-party tax advisers to help
monitor our compliance requirements.
16. Changes to local tax legislation in countries in which the Company is invested may cause loss
Probability Risk appetite Impact Mitigation
Medium Low Low
A change in local taxation status or tax legislation
in any of the countries the Company invests in may
lead to increased taxation of the Group and have
a negative impact on the Company’s profits and
returns to Shareholders.
The Board relies on the Manager to periodically
review of any anticipated tax legislation changes
inwhich the Company invests.
In addition, the Company has been structured
on a conservative basis, with reasonable internal
debt ratios, in line with international transfer
pricingrequirements.
Any prospective amendments to tax legislation are
announced in advance, enabling the Company to
take action where appropriate.
Political and market
17. General political and/or economic uncertainty may disrupt the Company’s ability to execute its strategy
Probability Risk appetite Impact Mitigation
Medium to
high
Low Medium to high
Political and economic uncertainty can lead to
weakened economic growth which can lead to
reduced demand for logistics warehouses and/or
have an impact on the Company’s customers.
The current geo-political uncertainties in Europe
have led to severe disruption to energy and supply
chains, leading to significant inflation across
the economy.
The Company currently has Investment Properties
in seven different countries within the EU. The
diversification reduces the risk of significant political
and/or economic uncertainties materially impacting
the Company.
The Company monitors geopolitical events and
remains alert to any associated or anticipated
economic impacts.
18. Rising energy prices may impact the overall economy and our customers
Probability Risk appetite Impact Mitigation
High Low Medium
A rise in energy costs can lead to a contraction of
the economy, hence reducing the overall demand
for logistics assets, reducing potential rental growth.
It can also lead to the Company’s customer having
reduced profitability, reducing the affordability of
rent, and in the worst case leading to the inability
tocontinue to operate.
Inflationary pressures combined with threats to
energy security, emanating from Russia’s invasion
of Ukraine, have resulted in ongoing energy price
increases. The impact of sustained price increases
may result in reduced demand for logistics assets,
as customers and potential customers look to cut
operational costs. Long-term energy price increases
would likely result in a contractionary effect on the
European economy.
The impact of sustained price increases may
result in reduced demand for logistics assets and
would likely result in a contractionary effect on the
European economy.
A very limited number of the Company’s customers
are exposed to heavy industry, where cost of energy
plays a significant role.
The Company performs a customer covenant
assessment on a regular basis, to ensure that the
credit quality of the portfolio remains very good,
and that rent payments are in line with the relevant
contractual obligations.
The Company actively reviews the energy ratings of
the portfolio’s assets, with the aim of ensuring that
these are as efficient as possible.
The Company continues to monitor, both the
geopolitical and macroeconomic landscapes,
inorder to act proactively where necessary.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 51
ESG
19. Physical and transition risks from climate change
Probability Risk appetite Impact Mitigation
High Low Medium
The Company’s property portfolio is subject to the
risk of physical damage as a result of climate-related
factors such as flood risk and rising temperatures.
Transition risks include the risk that less energy
efficient and more carbon intensive buildings do
not perform as well as those with the highest ESG
credentials because institutional investors focus
their capital towards more resilient buildings.
ESG requirements are likely to increase over time
and therefore the impact of a failure to comply with
regulatory standards has the potential to affect the
performance of the Company in the future.
The Manager operates with a dedicated ESG
team as well as an ESG Committee which take
operational responsibility for the Company’s
ESG matters. The Manager regularly reports to
the Board, which has its own dedicated ESG
Committee, including monitoring progress against
the Company’s stated ESG targets and providing
updates on future initiatives.
ESG performance is embedded across our
investment lifecycle with ESG-related risks
integrated into its due diligence process when
purchasing assets and for new developments.
The Company is also confident that its, internal
procedures and insurance cover adequately
mitigatethese ESG risks.
The Company measures and reports annually on its
key ESG performance metrics to demonstrate how it
manages ESG risks.
The Company discloses its approach to climate risk
management using the TCFD recommendations,
which included a third-party climate change risk
assessment using scenario analysis, and narrative
around how we are integrating the outcomes into
our asset and property management activities.
Other
20. The Company’s data may be exposed to cyber attack
Probability Risk appetite Impact Mitigation
Low Low High
Cyber attacks are becoming increasingly
sophisticated and have been more prevalent
in recent years. The use of IT is integral to the
Company’s operations and a successful cyber
attack could limit the Company’s ability to operate.
Additionally, at times in the reporting cycle the
Company holds material and not yet publicly
disclosed information.
Any cyber attack could have financial, operational
and reputational impacts on the Company.
All staff of the Manager and Board are regularly
going through training covering cyber risk.
Additionally, the Manager has obtained cyber
control accreditations, ensuring all cyber risk is
mitigated to the extent possible.
21. Lack of corporate governance and/or lack of compliance with laws and regulations
Probability Risk appetite Impact Mitigation
Low Low High
Insufficient corporate governance and compliance
with relevant laws and regulations would result
in chiefly financial and reputational damage.
Reputationally any errors may lead to an inability
to execute the strategy of the Company. Financial
penalties would ultimately impact the cash flow
of the Company and may affect our ability to pay
dividends to Shareholders.
The Manager employs trained professionals, all of
which are either qualified or part qualified company
secretaries, with considerable amount of experience
in premium listed companies. The secretariat team
has access to both internal and external legal
resource to ensure compliance on more technical
listed matters. The Company has international
subsidiaries, and the secretariat has established
effective controls with corporate service providers
to ensure compliance and governance matters are
adhered to.
Tritax EuroBox plc Annual Report 202352
TaskForceonClimate-RelatedFinancialDisclosures(TCFD)Report
Managingclimate-related
risksandopportunities
We have voluntarily prepared our second annual climate-related financial
disclosure this year, in accordance with the recommendations of
the Task Force on Climate-Related Financial Disclosures (TCFD).
Where our disclosures do not currently fully align with the TCFD
recommendations, we provide a rationale for why and outline the
steps being taken to achieve full alignment in the future.
We are continually looking to move our sustainability-related
disclosures forward to reflect evolving best practice as well as
evolving expectations from our stakeholders. This includes reviewing
any possible upcoming reporting requirements under the UK
Sustainability Disclosure Standards. This will ensure that we are
well-positioned to meet sustainability reporting requirements once
they become mandatory for the Company.
This disclosure provides an update on last year’s report and
highlights the Company’s progress over the past 12 months and
keymilestones achieved.
This report has been developed on a “best efforts” basis,
reflecting the 2021 Annex to the TCFD Recommendations.
Specifically, it follows the guidance for all sectors (section C) and
the supplemental guidance for asset managers (part 3, section
D). The Company will continue to strengthen its alignment with the
TCFD recommendations in coming years, with a specific focus on
strengthening material Scope3 emissions reporting and highlighting
further climate metrics in the future. All climate-related financial
disclosures can be found below, following the TCFD’s four pillars:
governance, strategy, risk management, and metrics and targets.
Thematic area Recommended disclosure Consistency notes Page reference
Governance Describe the Board’s oversight of climate-related risks
andopportunities.
Consistent Page 53
Describe management’s role in assessing and managing
climate-related risks and opportunities.
Consistent Page 53
Strategy
Describe the climate-related risks and opportunities the organisation
has identified over the short, medium and long term.
Consistent Page 54
Describe the impact of climate-related risks and opportunities on
theorganisation’s business, strategy and financial planning.
Consistent
Qualitative approach
completed; quantitative
approach being developed
to assess impact on our
financial planning
Page 54
Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a
2°C lower scenario.
Consistent Page 59
Risk management
Describe the organisation’s processes for identifying and assessing
climate-related risks.
Consistent Page 60
Describe the organisation’s processes for managing
climate-related risks.
Consistent Page 61
Describe how processes for identifying, assessing and managing
climate-related risks are integrated into the organisation’s overall
riskmanagement.
Consistent Page 61
Metrics and
targets
Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its strategy
andrisk management process.
Consistent Page 62
Disclose Scope 1, Scope 2 and, if appropriate, Scope 3
greenhousegas (GHG) emissions and the related risks.
Partially Consistent
Full disclosure of
downstream leased
assets emissions will be
released during the next
financial year
Page 62
Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets.
Consistent Page 62
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 53
Governance
a) Describe the Board’s oversight of climate‑related
risks and opportunities
b) Describe management’s role in assessing and
managing climate‑related risks and opportunities
The Board is responsible for setting the ESG strategy of the
Company and is ultimately responsible for overseeing the
Company’s climate-related risks and opportunities. Tritax
Management LLP (the “Manager”) identified climate change as
a top ESG issue for the Company, based on an ESG materiality
assessment it undertook in 2020. Today, climate change remains
a principal risk to the business (found on page 51). In 2023, we
made significant progress in implementing our new ESG strategy,
as evidenced by the actions described in the ESG section (see
page 33), which includes setting the new Net Zero Carbon (“NZC”)
pathway of the Company.
Board members receive reports from the Manager’s ESG Director,
Alan Somerville, at every quarterly Board meeting. These quarterly
sessions discuss relevant market, regulatory, investor and
analyst feedback, and also provide updates on the delivery of the
Company’s ESG programme, such as ESG rating submissions,
Green Building Certifications, green finance, climate transition
planning, renewable energy opportunities, and physical climate
risk and carbon risk analysis. The ESG Director also meets with the
Board’s designated “ESG Champion”, Eva-Lotta Sjöstedt, every
month to discuss market trends and progress.
The Board demonstrated its commitment to ESG-related issues and
topics by establishing a dedicated Company ESG Board Committee
in 2022 to ensure that climate change amongst other ESG topics
are discussed in sufficient detail at Board level. The ESG Committee
is chaired by the Board’s ESG Champion and comprises all Board
members as well as selected representatives from the Manager.
TheCommittee meets every six months to discuss ESG-related
topics relevant to the Company’s business and its sector and
monitors the Company’s performance against targets.
The Head of Asset Management, Petrina Austin, who chairs the
Manager’s ESG Committee, and the Manager’s Chief Operating
Officer, Henry Franklin, are ultimately responsible for monitoring
and reporting on climate change amongst the management team.
The ESG Director is an integral member of the Manager’s ESG
Committee, which reports to the Manager’s Executive Committee.
The Executive Committee then reports to the Company’s Audit
&Risk Committee, which ultimately reports to the Board.
The Manager’s ESG Director and ESG Analyst are responsible
forthe assessment, management and reporting of climate-related
risks and opportunities on a day-to-day basis, where appropriate
engaging internal stakeholders (e.g. investment professionals, asset
managers, etc.) or external parties (third-party consultants, etc.)
tosupport this effort.
More information on governance structures and Committees
associated with the management of climate-related risks and
opportunities can be found in Figure 6 and Table 10.
Did you know?
Breda, the Netherlands
The building’s rooftop solar
array comprises 15,000 solar PV
panels. These fuel its 3.0 MW
solar scheme, which is large
enough to fulfil the electricity
needs of 2,400 households.
Governance of climate‑related risks and opportunities
The Board
Sets the ESG
strategy of the
Company and
has oversight of
climate-related
strategy and
performance
against key goals
and targets.
Audit & Risk
Committee
Monitors
climate-related
risks and
opportunities and
other emerging
climate risks.
ESG
Committee
Oversees and
advises the
Board on the
effectiveness of
the Company’s
ESG strategy.
TMLLP Executive
Committee
Jointly responsible
for preparing the
ESG strategy,
implementation and
priorities including
climate-related strategy.
TMLLP
Investment
Committee
Ensures capital
expenditure is in
line with climate-
related strategy
and targets.
TMLLP Risk
Committee
Conducts
horizon scanning
of emerging
climate-
related risks.
TMLLP ESG
Committee
Jointly responsible
for preparing the
ESG strategy,
implementation
and priorities
including climate-
related strategy.
The Board
Audit & Risk Committee EBOX ESG Committee
TMLLP Risk Committee TMLLP ESG Committee
TMLLP Investment CommitteeTMLLP Executive Committee
Tritax EuroBox plc Annual Report 202354
TaskForceonClimate-RelatedFinancialDisclosures(TCFD)Reportcontinued
Governance continued
Governance of climate‑related risks and opportunities continued
Committee Hierarchy Responsibility Frequency
Tritax EuroBox plc
Board
Board The Board considers climate-related issues when reviewing and guiding strategy, risk
management policies, annual budget and business plans. In addition, climate-related
issues areconsidered when setting performance objectives within the Manager.
Quarterly
EBOX ESG
Committee
Board The Committee reviews the ESG strategy, receives updates and monitors progress
against targetsbefore onward reporting to the Board.
Biannually
ESG Committee Manager Tritax Management’s ESG Director provides quarterly updates to the Board on
emerging climate change risks and opportunities, as well as relevant market,
regulatory, investor and analyst feedback. The updates also include progress on the
ESG programme, such as ESG rating submissions, Green Building Certifications,
green finance, climate transition planning, renewable energy opportunities, and
carbon risk analysis.
Quarterly
Audit & Risk
Committee
Board The Committee monitors climate-related risks and opportunities and other emerging
climate risks.
Six times per
annum
Investment
Committee
Manager The Committee ensures capital expenditure is in line with climate-related strategy and
targets.
Monthly
Executive
Committee
Manager Jointly responsible for preparing the ESG strategy, implementation and priorities
including climate-related strategy.
Monthly
Finally, all the Manager’s employees, up to the senior leadership level, have one ESG performance target against which their annual
performance is assessed. These may include climate-related objectives as appropriate. This helps to encourage and monitor progress
towards sustainability targets across the Manager’s business. In addition, all employees were invited to attend two knowledge sharing
sessions from external ESG real estate experts on the impact of ESG factors on asset valuations, asset liquidity and market transactions.
Staffcan request additional ESG-focused training as part of their annual training allowance.
Please see pages 78–81 for further detail on the division of responsibilities of the Board, the Manager and the Company’s committees.
Strategy
a) Describe the climate‑related risks and opportunities the organisation has identified overthe short,
medium and long term
b) Describe the impact of climate‑related risks and opportunities on the organisation’s businesses,
strategyand financial planning
We understand the importance of managing climate-related risks and leveraging opportunities for the sustainability of our business, and we
believe that our strategic direction reflects this. We have identified the climate-related factors that may materially impact our operations and
financial performance over the short, medium, and long term (defined in tables 1 and 2, and figure 5). This updated disclosure aims to provide
our stakeholders with a comprehensive overview of these risks and opportunities, ensuring transparency and fostering a proactive approach
towards net zero and climate resilience.
Physical risk
Last year, we completed a physical climate risk analysis using the Munich RE Climate Risk Platform to identify our portfolio’s exposure to acute
and chronic physical risks by geography. This analysis used three climate scenarios based on Representative Concentration Pathways (RCPs)
across four time horizons, as outlined in Table 2 and further detailed in Table 3 on page 55.
Table 2: Climate time horizons
Time horizons Explanation for the choice of timeframe
Current Present day datasets provide a baseline level of risk exposure across our portfolio
2030s
Acute risks which may need to be addressed in the near term (e.g. extreme weather events such as flooding from rivers or heavy rainfall)
2050s
Represents a possible future for the lifetime of assets within our portfolio (based on 60-year design life) and allows us to better
understand whether an asset will require actions to mitigate and adapt to changing climate (both acute and chronic)
2100s Understanding of longer-term changes in climate to inform long-term investment decision making
We then integrated our physical climate analysis into our strategic planning, considering climate-related risks and opportunities across three
business time horizons. Figure 5 illustrates the interaction between our climate risk and strategic time horizons.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 55
Table 3: Business time horizons
Time horizons Explanation for the choice of timeframe
Short term – up to 1 year Aligned with going concern
Medium term – from 2 to 5
years
Aligned with viability period used for the Company’s medium-term business plans and individual asset
performance analysis
Long term – from 6 to 15 years Aligned with the usual hold period, WAULT and average lease term on new buildings
Today 2025 2050 2075 2100
Business time horizons
Climate time horizons
Short term
(1 year)
Medium term
(2–5 years)
Long term
(6-15 years)
Short term
Medium term
Long term
Figure 5: Interplay between business and climate time horizons
Climate-related risks and opportunities remain important for the Company’s strategy, both now and in the future. This year, we progressed
our physical risk analysis. Where assets were identified to have a high exposure to a climate hazard, we completed a risk and vulnerability
assessment to look at the impact of the hazard occurring at the site. Approximately 6% of our portfolio, assets located in Germany and Italy,
were considered to be highly exposed to climate hazards, while all these assets were deemed to be resilient to future climate change based
on existing mitigation measures in place. Carrying out a qualitative risk and vulnerability assessment has enabled us to calculate the impact
level for different climate hazards; these impact levels are presented in the table below. We identified physical risks with a material financial
impact by considering climate hazards, asset vulnerability and the cost of reducing vulnerability through capital resilience improvements.
Table 4: Physical climate risks
Impact level
Level of impact:
Low Moderate High
Physical risk Short term Medium term Long term Financial impact Management
Acute risks
River flooding RCP 8.5
RCP 4.5
There are several possible financial
impacts that the Company could incur,
including the cost of repairing assets
damaged by water ingress, increased
insurance costs from growing flood
risk and loss of value of buildings. The
measures that the Company has in place
will limit the impact to all development and
standing assets should the hazard occur.
The financial impact above and beyond
existing budgets for flood mitigation is
therefore low.
Mitigation measures for flood risks
areincorporated into the design of
planned developments.
Financial appraisals are undertaken
for≈all new investments.
Heavy rainfall
events
RCP 8.5
RCP 4.5
Drought stress RCP 8.5
RCP 4.5
Most of our assets do not require water
intensive activities and therefore impacts
from drought are limited. Assets that are
exposed to possible drought stress have
measures in place to minimise water
consumption. As a result, the financial
impact to our business from drought is
considered to be minimal.
Water saving measures can be found in
our assets exposed to drought stress.
As part of our planned development
projects, mitigation measures for
drought risks are incorporated into
design to minimise any possible
impactsfrom drought events.
Tritax EuroBox plc Annual Report 202356
TaskForceonClimate-RelatedFinancialDisclosures(TCFD)Reportcontinued
Impact level
Level of impact:
Low Moderate High
Physical risk Short term Medium term Long term Financial impact Management
Heat stress RCP 8.5
RCP 4.5
Our planned development projects
incorporate measures to minimise the
potential impacts of high temperatures
and ensure thermal comfort during the
operational phase of the building. The
costs associated with these measures are
factored into our development process
and not considered to present a material
financial risk to our business.
Developments are designed to maximise
adaptation to extreme heat, including
building orientation, shading and passive
and active ventilation systems.
Existing assets located in areas with
proposed high heat stress have been
fitted with measures to mitigate the
impact from high temperatures and
extreme heat events.
Chronic risks
Sea level rise RCP 8.5
RCP 4.5
The impacts from sea level rise are
not considered to materialise within
the Company’s business strategy time
horizons and therefore the financial
impacts related to sea level rise over
the short, medium and long term are
considered minimal.
Financial appraisals of acquisitions,
refurbishments and developments
include mitigations to physical climate
risks, including flood risk assessments.
Transition risk
We have updated our portfolio’s transition risk assessment to focus on the most material risks to the business and to highlight our mitigation
efforts. Last year we conducted a CRREM analysis to understand stranding risk, and partnered with external advisers to further assess how
our climate-related transition risks could manifest over time. This year we have conducted a qualitative climate assessment to understand
how transition risks could manifest in an Orderly Below 2°C Scenario. This assessment evaluated the likelihood and impact of transition risks
to identify the relative materiality of each climate risk and opportunity to the Company. As all assets are located in the European Union, it is
assumed that the transition risks identified will materialise across the portfolio.
Table 5: Transition climate risks
Risk level
Level of impact:
Low Moderate High
Type of risk Short term Medium term Long term Financial impact Management
Policy and legal
Carbon pricing Carbon pricing mechanisms are not
expected to be introduced, or impact
the Company’s direct emissions in the
short term.
Introduction of more stringent policies
couldsee carbon pricing impact the
Company indirectly over the medium to
long term by negatively affecting occupier
demand for emissions-intensive assets.
The Company has updated its net zero
targets to make them more ambitious
and make its assets more resilient to any
carbon pricing shocks which may occur
in the medium to long term.
Reporting
compliance
Increased costs associated with reporting
and data gathering.
Increased costs resulting from
regulatorypenalties for non-compliance.
Damage to the Company’s reputation
andinvestor confidence.
As the Company already monitors compliance
and reporting risk, the risk level is deemed low.
The Company allocates sufficient
budget for sustainability compliance
andreporting, and its advisers
(includinglegal counsel) provide
advice on upcoming regulations
and their expected impacts. This is
reviewed annually.
Strategycontinued
b) Describe the impact of climate‑related risks and opportunities on the organisation’s businesses, strategy
and financial planning continued
Physical risk continued
Table 4: Physical climate risks continued
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 57
Risk level
Level of impact:
Low Moderate High
Type of risk Short term Medium term Long term Financial impact Management
Asset
performance
compliance
Write-offs and early retirement of
existing assets.
Increased capital costs for development
andrefurbishment.
Increased costs resulting from fines
andjudgements.
Decreased property values if assets
fail tomeet energy efficiency and
sustainabilitystandards.
The Company’s failure to meet energy
efficiency and sustainability standards
could have an impact on the business,
butthis is partially mitigated by its ongoing
focus on EPC and GBC performance.
The Company engaged a third-party
consultant to assess all standing assets
against the BREEAM In-Use certification
scheme. This assessment concluded
that all assets not yet certified could
achieve BREEAM In-Use Very Good for
total capex of less than €500k.
The Company is also reviewing
the evolving energy performance
requirements of the jurisdictions in
whichit invests on a regular basis.
Market
Occupier
behaviour
Increased capital costs.
Negative impact on asset value and liquidity.
The risk is deemed moderate as changes
in occupier behaviour could affect rental
revenue and property values, and affect
the Company’s ability to achieve its net
zero targets.
The Company has a well-diversified
occupier base, with many of them
already setting their own emissions
reduction targets.
We continue to engage with current and
potential occupiers to better understand
their current energy use and future
energy and emissions requirements.
Growth of
green finance
Green finance could provide opportunities
for portfolio diversification and access to
new capital sources. This could manifest
in the medium to long term as more
green finance mechanisms are likely to
be introduced, with increasingly stringent
sustainability criteria.
The Company issued a green
bond in 2021.
The Manager’s Green Finance
sub-committee meets on an ad hoc
basis to review the evolving green
finance landscape and shares insights
with the Manager’s ESG Committee
andthe Company.
Strategycontinued
b) Describe the impact of climate‑related risks and opportunities on the organisation’s businesses, strategy
and financial planning continued
Physical risk continued
Table 5: Transition climate risks continued
Tritax EuroBox plc Annual Report 202358
TaskForceonClimate-RelatedFinancialDisclosures(TCFD)Reportcontinued
Strategycontinued
b) Describe the impact of climate‑related risks and opportunities on the organisation’s businesses, strategy
and financial planning continued
Transition risk continued
We have also identified several climate-related opportunities that may be material to the Company’s business, which are outlined in Table 6.
Table 6: Climate-related opportunities
Climate‑related
opportunities
Level of opportunity
Level of opportunity:
Low Moderate High
Short term
Medium
term Long term Financial impact Management
Resource
Efficiency
Cost savings from lower water and
energyconsumption.
Reduced occupational costs.
Tritax EuroBox plc’s own environmental
footprint is minimal compared to its portfolio,
which explains why this opportunity could
have a minimal impact if it was realised.
We continue to explore ways to
automate data collection to improve
monitoring of energy consumption.
Decarbonisation
of logistics
sector and
access to
newmarkets
Logistics sector tenants could be willing
to pay more for energy efficient assets,
leading to increased rental costs and
asset value.
Access to new markets.
Use of public sector incentives.
Access to new assets and locations.
Retention and enhancement of
Shareholderrelationships.
Given that logistics sector clients make
up a significant portion of the Company’s
client base, the impact of these clients’
willingness to pay a premium for greener
assets could be moderate.
The Company continues to look
for new market opportunities to
capitalise on investor demand for
greener products.
Energy source Changes to energy costs associated with
transition to lower emissions sources
of energy.
Shift toward decentralised energy generation.
Increased energy security and resilience.
As we continue to target renewable
electricity sources, including six new
solar installations in 2022, we feel this
opportunity is likely to materialise.
We will continue to procure green
electricity for our operations and
encourage our customers to do the
same. We also incorporate green
clauses into new leases, engaging
with occupiers to install solar PV on
buildings.
Products
andservices
Development of climate adaptation and
insurance risk solutions.
Ability to diversify business activities.
Change in market demand for services
dueto climate-related risks or opportunities
shifting consumer preferences.
The Company’s focus on Green Building
Certification and EPC performance
positions it to capitalise on the growing
demand for sustainable commercial
real estate.
We will keep improving portfolio
coverage of GBCs so we continue to
offer sustainable logistics spaces.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 59
Climate‑related
opportunities
Level of opportunity
Level of opportunity:
Low Moderate High
Short term
Medium
term Long term Financial impact Management
Resilience Holding climate-resilient assets presents
various opportunities for our business.
They provide confidence to Shareholders
that asset values will be maintained which
strengthens our relationship with them.
The Company could benefit from charging
green premia on assets resilient to
physical hazards.
The Company’s commitment to
designing climate-resilient buildings
and ensuring mitigation measures
are integrated into existing assets will
help support the materialisation of this
opportunity in the coming years.
We focus on reducing our assets’ carbon footprint, using energy
more efficiently to make them more resilient, and reducing operating
costs for our customers. We have aligned our strategy with a
lower-carbon economy and developed a new range of ESG targets,
including our new net zero targets, as outlined on page 23. To
achieve these emissions reduction targets, we have identified the
three following areas of work:
1. reducing operational emissions in collaboration with our
customers, through initiatives such as solar PV installation,
energyefficiency measures and electrification of heating;
2. reducing the carbon emissions of our development activity in
collaboration with third-party developers and occupiers; and
3. ensuring that all potential acquisitions of standing assets are
assessed against the Manager’s ESG due diligence framework,
which assesses physical climate risk and transition (carbon) risk
amongst other ESG elements.
By engaging with our customers, we have been able to improve our
understanding of operational carbon related to our portfolio through
increased asset-level data coverage. We have increased our data
coverage to almost 100% of our portfolio for operational carbon
and started to measure and collect embodied carbon performance
data on new developments. As customers have operational control,
the Company’s operational emissions are negligible in comparison
to emissions from customer operations. This year, we have taken
several steps to support our net zero carbon objective, such as
investing in renewable energy.
Case study 1: Renewable energy
This year, the Company completed a 109,000m
2
extension of its asset in Barcelona, in collaboration with the occupier (Mango).
Aspartof this development activity, we installed 2.08 MW of solar PV capacity to the asset for on-site consumption by the occupier
oroff-site export through the electricity grid. This installation will contribute to reducing the emissions intensity of the building and help
theCompany and the occupier achieve their respective net zero targets.
c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate‑related scenarios, including a 2°C or
lowerscenario
Our climate analysis builds on work conducted over previous years
to evaluate our climate-related risks and opportunities. We have built
upon our physical climate assessment to incorporate vulnerability
assessments of more assets to obtain a clearer picture of our
organisational resilience to physical climate risks.
We have expanded our assessment of transition risks and
climate-related opportunities to identify which risks are most likely
to materialise. This is a qualitative exercise calculating the likelihood
and impact of each risk. The risks have been reported as overall
impact to the business. With the help of third-party advisers,
we have qualitatively assessed our exposure to these risks and
opportunities, and we will continue to build on this work in the
coming years.
The scenarios considered within our climate assessments are
outlined below.
Table 7: Climate scenarios considered
Physical risk scenarios Transition risk scenarios
Three scenarios were selected to assess the Company’s resilience
to a range of possible futures.
One scenario was selected to assess the Company’s resilience to the
transition towards a ‘Paris-aligned’ world.
RCP 8.5 A high-emissions scenario with no policy changes,
increasing GHG concentrations, and a temperature
increase of around 4°C.
Network for
Greening the
Financial System
(NGFS) ‘Orderly
Below 2°C’ Scenario
The Orderly Below 2C Scenario is a plausible
pathway to limiting global warming to below
2°C. It assumes that climate policies are
introduced early and become gradually more
stringent, allowing transition risks to be
subdued. Moderate technological change and
carbon removal are also expected.
RCP 4.5 An intermediate emissions scenario with relatively
ambitious emissions reduction, likely overshooting
the Paris Agreement temperature target.
RCP 2.5 A moderate scenario with emissions peaking early
in the 21st century and declining after, assuming a
warming of less than 2°C.
Table 6: Climate-related opportunities continued
Tritax EuroBox plc Annual Report 202360
TaskForceonClimate-RelatedFinancialDisclosures(TCFD)Reportcontinued
Strategycontinued
c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate‑related scenarios, including a 2°C or
lowerscenario continued
In the last 12 months, we have set out several actions to increase
our resilience to the transition risks we identified as part of last year’s
TCFD reporting. These actions are set out below:
– developed a new set of ESG targets, including more ambitious
netzero targets;
– completed a review of our due diligence process to ensure that
physical and transition risks are considered pre-investment and
therefore minimise the impact of buying assets that may be at risk
of stranding in future; and
– continued to drive climate-related asset management initiatives,
including incorporating green clauses into all new leases, engaging
with occupiers to install solar PV on buildings and identifying
ways to automate data sharing for improved monitoring of energy
consumption (and thereby GHG emissions) of our assets.
The actions we have taken over the last 12 months demonstrate
theCompany’s willingness and ambition to align its operations with
a lower-carbon and more resilient economy.
Riskmanagement
a) Describe the organisation’s processes for
identifying and assessing climate‑related risks
Tritax EuroBox plc has recognised ESG as a material risk to its
business which incorporates the consideration of climate-related
risk. Over the last two years, we have worked with CBRE to further
assess the relative significance of physical and transition climate-related
risks to our portfolio using the processes set out below.
Our risk management starts by undertaking comprehensive due
diligence of both physical and transition risks by assessing the level
of risk prior to acquisition. For assets under ownership, we adopt the
following steps to identify, assess, manage and mitigate risks as set
out in the table below.
Last year, the Board and the Manager were updated on key findings
of the TCFD and CRREM analysis and will be annually updated on
any changes as our climate-related risk analysis evolves. As part of
the Annual Report process, the Audit & Risk Committee evaluate the
impacts on financial and strategic planning, integrating any changes
to climate-related risks where revised data is available.
Table 8: Physical and transition risk management and mitigation process
Physical risk Transition risk
Risk identification In 2021, we completed a physical climate risk analysis
using the Munich RE platform to understand the exposure
of our portfolio to physical climate hazards over the 21st
century for three possible futures (RCP 2.6, RCP 4.5
and RCP 8.5). This included review of the frequency and
magnitude of climate hazards such as flooding, high
temperatures and drought stress and how they might
impact our assets and operations (see the material risks
identified in the Strategy section).
A portfolio transition risk assessment has been carried out
in 2022, using energy consumption and carbon emission
information for Tritax EuroBox plc assets to assess
the alignment of the portfolio with the decarbonisation
pathways outlined by the CRREM tool.
In 2023, we worked with external advisers to deepen
our understanding of transition risks and their potential
impact and timeframes on our business by undertaking a
qualitative transition risk assessment.
Risk assessment This year we have continued to collect asset-level
information about the resilience of our assets. For all
assets that were identified to have a high exposure to
one or more climate hazards, we have engaged with our
asset managers to gather evidence of existing adaptation
measures. This feeds into our risk assessment to identify
potential impacts to our assets under management.
The CRREM analysis considers the CRREM 1.5°C pathway
for alignment and a time horizon to 2050, with an intermediate
net zero date of 2030 in line with the Company’s medium-term
time horizon. High-risk assets identified as part of this CRREM
analysis reflects potential stranding risk across the portfolio.
High-priority assets have been identified based on total
absolute emissions, carbon use intensity, heat fuel type, EPC
information and occupier profile.
We used the NGFS Orderly Below 2°C Scenario to guide
our qualitative transition risk assessment to identify how
aligned the Company is with a Paris-aligned scenario.
Risk management Climate risk management and mitigation strategies
continue to be incorporated into the asset management
plans in conjunction with the Head and Director of Asset
Management. Progress against the asset management
plans is reviewed each year by the asset managers and ESG
teams and reported back to the Board by the ESG Director.
This year we have carried out work to develop, review and
update the Company’s Net Zero Carbon Pathway. This
review resulted in the release of a set of more ambitious
net zero targets and of the Company’s operational
emissions reduction pathway.
Risk mitigation Actions in our asset-level Sustainability Action Plans
(SAPs) help to mitigate our physical climate risks. The
SAPs set out an implementation plan for integrating
climate-resilient measures into existing assets including
retrofitting low flow water fixtures and fittings and
developing nature-based solutions. Implementation
of these actions will result in a reduction of the impact
caused by acute or chronic climate hazards in the future.
By carrying out decarbonisation activities in collaboration
with our customers, such as increasing renewable energy
generation and reducing reliance on fossil fuels, the
potential impacts from possible transition risks described in
the Strategy section (page 56) will be significantly reduced.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 61
b) Describe the organisation’s processes for
managing climate‑related risks
Our Audit & Risk Committee formally considers and assesses the
risks that may be relevant to the Company on a biannual basis
as reported by the Manager’s Executive Committee. The risks
highlight the potential impact on the Company along with any mitigating
factors. The risks are reviewed and assessed by key representatives
including the Manager’s Executive Committee on an ad hoc basis.
Ownership and management of all risks is assigned to relevant
members of the Manager who are responsible for ensuring the
operating effectiveness of the internal control systems and for
implementing key risk mitigation plans. Assessment of climate-related
risks and opportunities is embedded within our investment and asset
management strategies for acquisitions and major capital expenditures,
as outlined in our acquisition and development requirements. Risks
identified at the asset level are communicated to asset managers by
the ESG team, the property management team and other relevant
specialists, including third-party consultants.
New acquisitions and
forward funding
Forward funding for
new developments
Ownership stage
– Our ESG due diligence process included an assessment of transition and physical climate risks.
– Assessment of physical climate risks is undertaken during the design phase and adaptation measures
are integrated into design where required.
– Our new construction requirements also include alignment with green building and operational energy
performance certifications as well as lifecycle analysis to mitigate carbon emissions through design and
operation of the development.
– We undertake several steps through ownership to maximise resilience and minimise emissions.
These include:
– an annual review of our climate-related risks and identification of adaptation and mitigation measures
– integration of adaptation and mitigation measures into our ongoing maintenance plans; and
– identification of opportunities to minimise emissions across our portfolio, including implementation
of solar PV.
Board oversight
– The Board recognises the importance of identifying and
monitoring climate-related risks.
– These risks are reported to the Board through the Quarterly
Asset Management Report and reviewed bi-annually by the
ESGCommittee.
– Once acquired, as part of
annual insurance renewal,
an assessment of the
physical climate change
risks of the assets within
the portfolio are assessed
and the results are shared
with the Partners. The
Partner responsible
for asset management
ensures that any material
risks are considered
for the Fund.
Entity risk management
– The Audit & Risk Committee has embedded climate reporting
into its risk management by determining ESG risk as a key risk
ofthe Company.
– Climate-related risks are embedded into the Company’s
wider risk management framework which contributes towards
investment decisions made by the Investment Committee.
Climate risk identification
– The Manager reviews and updates the Company’s risk matrix on
a biannual basis and reports up to the Audit & Risk Committee,
which includes principal and emerging risks.
– The Manager has also established a Risk Committee which
conducts periodic horizon scanning for new risks which may
impacts funds under management including the Company.
– In addition, all acquisitions undergo a due diligence
assessmentto inform members of the Investment
Committeeabout climate-related risks.
The Board
Investment
Committee
Audit &
Risk
Committee
Climate risk
e For further details on the Company’s risk management please refer
to pages 44–51
c) Describe how processes for identifying, assessing and managing climate‑related risks are integrated
into the organisation’s overall risk management
Figure 7: Integration of climate risk into our risk management process
Figure 6: Process for managing our climate-related risks
Tritax EuroBox plc Annual Report 202362
TaskForceonClimate-RelatedFinancialDisclosures(TCFD)Reportcontinued
Metricsandtargets
a) Disclose the metrics used by the organisation to
assess climate‑related risks and opportunities in
line with its strategy and risk management process
b) Disclose scope 1, scope 2 and, if appropriate,
scope 3 greenhouse gas (GHG) emissions and
the relatedrisks
c) Describe the targets used by the organisation to
manage climate‑related risks and opportunities
and performance against targets
The Company employs a holistic set of metrics to assess
climate-related risks and opportunities, in line with the
recommendations of the TCFD. Our energy consumption,
greenhouse gas emissions and associated targets can be found
in the Energy and Greenhouse Gas Report (see page 36). Further
metrics used to track our climate-related targets are presented in
thetable below. Note that, at the present time, reporting against
some of these metrics is in development; where this is the case,
this is clearly noted. For other metrics, both current and past
years’ performance is reported where possible along with the
accompanying targets.
Table 9: Climate-related metrics and targets
Metric category Metric FY21 FY22 FY23 Year-on-year target
Transition risks % of the portfolio income
generated from assets with an
EPC rating, a Green Building
certification or both
Not available 85% 86% Increase coverage
of portfolio by EPC
or green building
certification to 100%
Physical risks % of assets in the portfolio
screened for physical
climate hazards
Not reported 100% 100%
Ensure a climate
risk and vulnerability
assessment is
undertaken for all
assets which are
exposed to physical
climate risks
% of assets in the portfolio which
are recorded as having a high
exposure to climate hazard
Not reported 5% 6%
% of assets in the portfolio
that are resilient to future
climate change
1
Not reported Not reported 100%
Climate-related
opportunities
Renewable energy capacity
installed (MW)
Not available 7.5 M W 10.3 MW Increase on-site solar
PV capacity installed
across the portfolio
where technically and
economically feasible.
Number of leases incorporating
green lease clauses
agreed in the FY
Not available Nine green leases
across the portfolio,
representing
18% of the
portfolio by income
All three new
leases signed
incorporated
green clauses
Incorporate green
lease clauses into all
new leases
1 Note: This value is based on the total number of assets that recorded a high exposure to physical climate hazards in the screening assessment.
STRATEGIC REPORT
Tritax EuroBox plc Annual Report 2023 63
The Group’s cash balance as at 30 September 2023 was
€52.31million. It also had undrawn amounts under its debt facilities
of a further €172.5 million at the reporting date. Of the Group’s total
facilities (RCF,Green Bond and USPP), €250 million mature in 2025,
€500 million in2026, €100 millionin 2029, €50 million in 2032 and
€50 million in 2034.
The Group currently has substantial headroom against its borrowing
covenants, with an LTV of 46.4% as at 30 September 2023 against
aborrowing covenant limit of 65%. The Group’s borrowings are
unsecured, providing it with a deeper pool of liquidity and with
moreflexibility over its arrangements.
The Group also benefits from a secure income stream from leases
with long average unexpired terms, which are not overly reliant on
any one customer. This diversification mitigates the risk of customer
default. As a result, the Directors believe that the Group is well
placed to manage its current and future financial commitments
andother business risks.
Having reviewed the Group’s cash flow forecasts, which show that
liabilities can be met as they fall due, the Directors believe that there
are currently no material uncertainties in relation to the Group’s
ability to continue for a period of at least 12 months from the date
of approval of the financial statements. The Board is, therefore,
of theopinion that the going concern basis adopted in preparing
theAnnual Report is appropriate.
Assessment of viability
The period over which the Directors consider it feasible and
appropriate to report on the Group’s viability is the five-year
periodto September 2028.
The period for this assessment is the same five-year time horizon
ascovered by the Group’s financial forecasts and plans. This is
considered to be the optimum balance given the age of the Group
as well as the long-term nature of investment in property. The Directors
confirm that they have no reason to expect any change in the
Group’s viability immediately following the period assessed.
Within the five-year financial forecasts, the Group expects to
refinance the RCF and Bond ahead of their maturities in October
2025 and June 2026 respectively. With the ongoing disposal
programme, theexpectation is for the refinanced total to be less
than the current nominal amount, albeit at a higher rate to reflect the
current interest rate environment.
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. The principal risks summarise those
matters that could have a significant impact on the Group’s ability
toremain in operation and meet its current obligations.
While the principal risks assessed by the Directors could affect
theGroup’s business model, the Directors do not consider that they
have a reasonable likelihood of impacting the Group’s viability over
the five-year period to September 2028.
The forecasts were sensitised, individually and in aggregate,
forthefollowing scenarios:
1) the combined impact of four key customers defaulting without
replacement, combined with a 12-month delay in letting
properties under development;
2) yield expansion resulting in further property valuation falls
andthe impact on debt covenants; and
3) worsening macroeconomic environment resulting in increasing
debt costs and inability to execute disposals.
Viability Statement
The Directors confirm that they have carried out a robust assessment
of the principal risks facing the Group, including those that would
threaten its business model, future performance, solvency or liquidity.
Having considered the forecast cash flows and covenant compliance,
and the impact of the sensitivities in combination, the Directors
confirm that they have a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities as
they fall due over the five-year period of their assessment to
September 2028.
The Strategic Report was approved by the Board and signed
onitsbehalf by:
Robert Orr
Independent Chairman
4 December 2023
GoingConcernandViabilityStatement
Tritax EuroBox plc Annual Report 202364
Chairman’s Governance Overview
“ Strong corporate governance
iskey to our long-term success.”
This report seeks to demonstrate
and explain the core governance-
related processes and procedures
that are in place and highlights
the key governance actions
which have taken place during
the period.
Strong and effective corporate governance has been at the core of
our business since the Company’s launch in 2018 and the Board
continues to believe that sound corporate governance plays a
key role in shaping the long-term success of the Company. The
Board’s culture encourages open, honest and robust debate within
a challenging yet supportive environment. We believe this remains
integral to the continuing progress of the Company going forward.
Board priorities
This has been another productive year for the Board. On
6December 2022, the Company announced the appointment
ofSarah Whitney as the Senior Independent Director (“SID”).
TheSID role was held by Keith Mansfield, who remains on the
Board as a Non-Executive Director and as Chair of the Audit &
RiskCommittee. The Board also announced the establishment
ofthe EBOX ESG Committee chaired by Eva-Lotta Sjöstedt.
We continued to make good progress on our ESG strategy,
includingimproved collection of ESG data and ESG integration
across the investment lifecycle. The EBOX ESG Committee meets
twice a year to enable greater time and focus on the Company’s
ESG strategy and targets and reports to the Board providing
recommendations on all ESG initiatives, supporting the continued
work of the Manager’s own ESG Committee. Eva-Lotta Sjöstedt
continues to be our “ESG Champion”. For more information on steps
the Group is taking in relation to climate changeplease refer to
pages 30 to 37 and 52 to 62.
Throughout the period, the Board continued to implement the
agreed strategy of crystallising value and recycling proceeds into
reducing leverage andfunding existing portfolio opportunities.
The Board worked closely with the Manager to identify ways to
reduce costs; ensure that the Company has the right resources in
place to deliver returns to Shareholders over the long term; and to
ensure it receives added value from the services it procures. This
resulted in the agreement to amend the terms of the Investment
Management Agreement (“IMA”) and I ampleased to report that in
October 2022 the amended terms of the IMA received Shareholder
Robert Orr
Independent Chairman
Governance highlights for 2022/2023
– Conducted an internally facilitated Board evaluation
exercise. Further details on page 84.
– Appointed Sarah Whitney as SID.
– Oversaw the process for the appointment of a new valuer in
time for the 31 March 2023 interim valuation.
– Implemented the agreed strategy of crystallising value and
recycling proceeds into reducing leverage and funding
existing portfolio opportunities.
– Shareholder approval given on the amended Investment
Management Agreement (“IMA”) on 25 October 2022.
– Complied with all of the Principles and Provisions of the
2019 AIC Code applicable to the Company. Please see
pages 71 and 72.
– Met all of the requirements set out in the Financial
Reporting Council’s Guidance on Risk, Internal Control
and Related Financial and Business Reporting. Please see
pages 44 to 51 and 86 and 87.
– Further enhanced processes and procedures across
the business and its supply chain in compliance with the
Modern Slavery Act 2015 and published our fifth annual
statement on our website. Please see page 87.
– Embedded the ESG strategy framework, updated ESG
targets and established a dedicated EBOX ESG Committee.
Further details on page 95.
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 65
approval. The revised IMA supports the delivery of the Company’s
strategic objectives and our key short-term priorities of reducing
costs and providing for improved dividend cover.
Following the appointment of Phil Redding, as Fund Manager in
September 2022, the Board has provided Phil with all the necessary
support in his leadership role at the Company to continue the
delivery of our strategy.
I am pleased report that following a robust process the Board
appointed CBRE as the Company's new valuer to undertake the
31March 2023 interim valuation. Further details on the valuer
retender decision can be found on page 77.
Board and Committee composition
The Company has a strong and fully independent Board with a diverse
range of skills and extensive European real estate and supply chain
experience. During the period, the Nomination Committee reviewed
the Board and Committee composition and recommended no further
changes. In line with the Board’s Diversity and Inclusion Policy, I am
pleased to report that at least 40% of Board Directors are female
with at least one of the senior positions being held by a female. In
this case, the SID role is held by Sarah Whitney. Inrespect of the
target to have one individual on the Board from an ethnic minority
background, the Board agreed to address this point as and when
avacancy on the Board arises.
Board development
The Board continues to receive regular updates and briefings on
corporate governance as well as wider regulatory changes within
the market to ensure we are fully conversant with and comply with
all applicable laws and regulations. In addition to specific training to
support the Board’s strategic priorities, as at the date of the report,
the Directors received training sessions on Cyber Security and on
European Power Infrastructure and Opportunities.
Board engagement
We believe that our positive engagement and working relationship
with the Manager is key to enhancing the Company’s governance
arrangements and ensuring that they are robust and fit for purpose.
During the period, both the Manager and Board have worked closely
to identify areas for improvement and best practice which promotes
an open and collaborative culture. This was affirmed in the internally
facilitated Board evaluation exercise.
We also regularly engage with the Company’s advisers to discuss
investor feedback they have received and/or gauge their views on
corporate strategy and performance. We provide investors with
regular updates on significant business events, specifically financial
performance and investment activity, through announcements via
the Regulatory News Service of the London Stock Exchange (“RNS”).
The Board is committed to maintaining an open dialogue with Shareholders
and in January 2023 the Company held a governance roadshow
with investors. Please refer to page 74 for more information on the
Company’s approach to its relationship with Shareholders.
Outlook for 2023/2024
The Board will continue to work alongside the Manager to implement
the agreed strategic priorities and build upon the significant enhancements
made in respect of ESG matters. Regarding its governance arrangements,
the Board will continue to seek alignment with best practice and will
monitor its compliance with the Listing Rules in relation to Diversity
Targets, as appropriate.
Robert Orr
Independent Chairman
4 December 2023
Statement of compliance
The Board of Tritax EuroBox plc has considered the Principles and
Provisions of the 2019 AIC Code of Corporate Governance (the “AIC Code”).
The AIC Code addresses the Principles and Provisions set out in the UK
Corporate Governance Code (the “UK Code”) and sets out additional
provisions on issues that are of specific relevance to investment companies.
The Board considers that reporting against the Principles and Provisions of
the AIC Code, which has been endorsed by the Financial Reporting Council,
provides more relevant information to Shareholders, and by reporting
against the AIC Code, the Company is meeting its obligations under the
2018 UK Code and associated disclosure requirements under paragraph
9.8.6 of the Listing Rules.
The Company has fully complied with the Principles and Provisions of the
AIC Code throughout the period.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adapts the Principles
andProvisions set out in the UK Code to make them relevant for
investmentcompanies.
e For further details please see pages 71 and 72.
Tritax EuroBox plc Annual Report 202366
Board of Directors
The right leadership
Keith Mansfield
Independent Non-Executive Director
Appointed 5 June 2018
Tenure 5 years 6 months
Relevant skills and experience
– Chartered accountant with extensive
experience of leading significant
international transactions
– Partner at PwC, where he developed a
specialisation in the real estate industry,
serving as regional Chairman of PwC in
London for seven years
Significant previous external experience
– Partner at PwC for 22 years
– Non-Executive Director and Chairman of
theAudit Committee of Tarsus Group plc
Principal external appointments
– Chairman of Albemarle Fairoaks Airport Limited
– Non-Executive Director and Chairman of the
Audit Committee of Motorpoint Group plc
– Senior Independent Director and
Chairof the Audit Committee of
Digital9Infrastructure plc
– Non-Executive Director of Martins
Investment Holdings Ltd, Martins
Development Holdings Ltd and
MartinsFinancial Holdings Ltd
Robert Orr MRICS BSc
Independent Chairman
Appointed 5 June 2018
Tenure 5 years 6 months
Relevant skills and experience
– Extensive board experience at a strategic
and operational level in the real estate
industry, most significantly as JLL Inc.’s
European CEO and currently as a
Non-Executive Director of M&G
EuropeanProperty Fund SICAV
– Chartered surveyor with an in-depth
knowledge of the real estate industry, in
particular the European real estate markets
– Founded the International Capital Group
for JLL in 2005, establishing strong
relationships with international investors
seeking real estate investment opportunities
Significant previous external experience
– JLL Inc.’s European CEO
– Non-Executive Director of RDI REIT P.L.C.
– Non-Executive Director of Tishman Speyer
Properties UK Limited
– Senior Adviser to Canaccord Genuity Limited
Principal external appointments
– Non-Executive Director of M&G European
Property Fund SICAV and Non-Executive
Manager of M&G Real Estate Funds
Management S.a.r.l.
– Chairman of the advisory board of APCOA
Parking Holdings GmbH
– Member of the Investment Advisory
Committees of EQT Real Estate
– Senior Adviser to Blue Coast Capital
(LewisTrust Group)
– Investment Committee Member of
ESASHolding
Sarah Whitney BSc FCA
Senior Independent Director
Appointed 14 February 2022
Tenure 1 year 10 months
Relevant skills and experience
– Fellow of the Institute of Chartered
Accountants with an extensive career
advising boards on strategy, corporate
finance, and real estate-related matters,
inboth senior executive roles and
non-executive roles
Significant previous external experience
– Non-Executive Director of St Modwen
Properties PLC
– Partner, Corporate Finance at PwC
– Head of the Consulting & Research
business at DTZ Holdings PLC (now
Cushman & Wakefield)
– Executive Director heading the Government
& Infrastructure team at CBRE
Principal external appointments
– Chair of the Audit Committee of JPMorgan
Global Growth & Income PLC
– Chair of the Supervisory Board of BBGI
Global Infrastructure S.A.
– Senior Independent Director of Bellway plc
– Non-Executive Director of the Skipton
Building Society and Chair of Connells
Group Limited (a subsidiary of Skipton
Building Society)
E E EN M NM A MA
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 67
Eva-Lotta Sjöstedt
Independent Non-Executive Director
Appointed 10 December 2019
Tenure 4 years
Relevant skills and experience
– Global senior executive with an in-depth
knowledge of global retail, supply chain
anddigital transformation strategy
Significant previous external experience
– CEO of Georg Jensen, a Scandinavian
luxury jewellery and home design brand
– CEO of Karstadt, a German premium luxury
department store chain
– Various senior roles at IKEA, the Swedish
home furnishing brand, over a 10-year
period including:
– Deputy Global Retail Manager,
responsible for the development
and implementation ofIKEA’s global
omnichannel strategy
– CEO of IKEA Holland
– Deputy Retail Manager at IKEA Japan,
responsible for developing and growing
the IKEA brand across Japan
Principal external appointments
– Supervisory Board Member at METRO AG,
a leading international wholesale and food
service company
– Non-Executive Director of Elisa Corporation,
a telecommunications company registered
on the Nasdaq Helsinki
– Founder and Senior Adviser of KUNO
Leadership Community
– Independent Non-Executive Director of
Alliance Pharma plc, an AIM listed company
Taco de Groot MRE MRICS
Independent Non-Executive Director
Appointed 5 June 2018
Tenure 5 years 6 months
Relevant skills and experience
– Chartered surveyor with significant
experience in the real estate and investment
funds markets
– Experienced Non-Executive Director, CEO and
Partner across a number of pan-European real
estate and investment companies
Significant previous external experience
– One of the founding partners of M7 Real
Estate LLP in the UK
– CEO of Vastned Retail NV, a European
retail property company listed on
EuronextAmsterdam
– One of the founding partners of GPT/Halverton
LLP, Heston Real Estate B.V. and Rubens
Capital Partners
– CEO of Cortona Holdings BV, Amsterdam
– Non-Executive Director of EPP NV, a real
estate investment company that operates
throughout Poland
Principal external appointments
– Adviser at E22 Capital, a US residential
realestate investment company
– CEO of UrbanInterest, a large family
business with a real estate portfolio of
residential, office and retail assets
– Visiting Lecturer at the University of
Amsterdam and Hogeschool of Rotterdam
– Non-Executive Director of Brack Capital
Properties, a company incorporated in
the Netherlands and listed on the Tel-Aviv
StockExchange
A
Audit & Risk Committee
M
Management Engagement Committee
N
Nomination Committee
E
EBOX ESG Committee
Chair
E EM NA M
Tritax EuroBox plc Annual Report 202368
EX
Executive Committee
I
Investment Committee
O
Operations Committee
R
Risk Committee
E
ESG Committee
G
Green Finance Committee
Chair
Key Representatives of the Manager
Phil Redding
CEO for Tritax EuroBox plc
Relevant skills and experience
Phil is responsible for leading the Group’s
fund management function and has overall
responsibility for the provision of strategic
investment advice to the Group. He is Chairman
of the Investment and Executive Committees.
Phil started his career at King & Co (now JLL)
where he qualified as a chartered surveyor in its
Industrial Agency and Development division in
1992. In 1995, Phil joined SEGRO plc holding a
number of management positions before becoming
Chief Investment Officer and member of the
Board in 2013. Phil joined the Tritax Group in
2020 and became a partner in 2021.
Mehdi Bourassi
CFO for Tritax EuroBox plc
Relevant skills and experience
Mehdi is responsible for all aspects of the Group’s
finance and corporate reporting. Mehdi joined
the Tritax Group in May 2019. Mehdi has over
10years’ experience in pan-European real estate
finance, including roles for PwC Luxembourg,
Abu Dhabi Investment Authority and Savills
Investment Management. Mehdi holds an MSc in
Management from IESEG School of Management
and an MBA from London Business School.
James Dunlop
CEO – Investment,
Tritax Management LLP
Relevant skills and experience
James is responsible for identifying, sourcing
and structuring suitable investment assets for the
Company. James started his career at Weatherall
Green and Smith (now BNP Paribas Real Estate)
where he qualified as a chartered surveyor in its
Investment Development and Agency division in
1991. In 2000, James formed SG Commercial,
then became a partner in the Tritax Group in 2005.
Petrina Austin
Head of Asset Management,
Tritax Management LLP
Relevant skills and experience
Petrina joined the Tritax Group in 2007, then
became a partner of the Tritax Group in 2017.
She is responsible for the Group’s asset and
property management service, incorporating
ESG and insurance functions. She has developed
the capabilities of the team to extend the skills
in logistics and industrial operations, integrating
ESG and power considerations into analysis.
Henry Franklin
Chief Operating Officer,
Tritax Management LLP
Relevant skills and experience
Henry is responsible for tax, legal and compliance
activities, working closely with the Board,
management team and external advisers to
ensure the robustness of the tax and legal
structure. Henry is a qualified solicitor who
completed his articles with Ashurst LLP in 2001,
qualifying as a charteredtax adviser in 2004
before moving toFladgate LLP in 2005. Henry
joined the Tritax Group as a partner in 2008.
Tritax Management LLP (the “Manager”)
actsas the Company’s Alternative Investment
Fund Manager (“AIFM”) for thepurposes of
the Alternative Investment Fund Manager
Directive (“AIFMD”) and assuch the Board
has delegated authority to the Manager to
conduct portfolio and risk management
services on behalf of the Company. Whilst
the Manager has the ultimate responsibility
to make the final decision over portfolio
and risk management services, the Board
actively discusses potential investments
and divestments with the Manager and
ensures ongoing compliance with the
Company’s
Investment Policy and Investment
Objectives.
This complies with the European
Securities and Markets Authority (“ESMA”)
guidelines published on 13 August 2013
in respect ofthe AIFMD and ensures that
the Companycontinues to adopt best
governance practice.
e To read more about our colleagues
pleasegoto tritaxeurobox.co.uk/about/
people-and-culture/
EX EX
OI G
E
IEX
RO OIE G I
I
A dedicated team
Tritax provides a dedicated team of property experts
tomanage EuroBox.
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 69
Male
Female
60%
40%
Board gender split
Non-Executive Director tenure
Board relevant
sectorexperience
The Board has a complementary range
of skills which are relevant totheGroup’s
medium and longer-termobjectives.
The Board considers Keith Mansfield to have
recent and relevant financial expertise to chair
the Audit & Risk Committee. Sarah Whitney,
who is also a member of the Audit & Risk
Committee, is also a fellow of the Institute of
Chartered Accountants.
Financial
Property
Retail
ESG
Logistics
Governance/PLC
E-commerce
Risk management
Strategy
Our corporate governance structure
Green Finance
Committee
Disclosure
Committee
ESG
Committee
Operations
Committee
Executive
Committee
Investment
Committee
Audit & Risk
Committee
Nomination
Committee
Management
Engagement
Committee
Risk
Committee
Years
Board member
3
1
1
EBOX ESG
Committee
I
n
d
e
p
e
n
d
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n
t
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v
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r
s
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g
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t
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r
i
g
o
r
o
u
s
c
h
a
l
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e
Board of Directors
Manager has delegated
authority to these
Committees
M
a
n
a
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1 2 3 4 5 6
Tritax EuroBox plc Annual Report 202370
Post-year-end events
– Declared an interim dividend of 1.25 cents per share, in respect of the three months to 30 September 2023
– Agreed action plan following the internal Board and Committee evaluation
– Directors’ training session on European Power Infrastructure and Opportunities
– Approved the Annual Report and Accounts 2023
– Exchanged contracts for the sale of assets in Bochum and Malmö
e For the key investment, operational and financial activities please see pages 1 to 63
Key activities of the Board
October–December 2022
– Approved the Annual Report and Accounts 2022
– Declared an interim dividend of 1.25 cents per share, in respect
ofthe three months to30 September 2022
– General Meeting held on 25October 2022 to approve the proposed
amendments to the Investment Management Agreement between
the Company and Tritax Management LLP
– Appointed Sarah Whitney as SID
– Created the EBOX ESG Committee
July–September 2023
– Conducted an internal Board and Committee evaluation
– Conducted performance review of the Manager
– Declared an interim dividend of 1.25 cents per share, in respect
ofthe three months to30 June 2023
– Strategy Meeting held off-site
– Exchanged contracts for the sale of asset in Hammersbach
April–June 2023
– Approved the Interim Report 2023
– Declared an interim dividend of 1.25 cents per share, in respect
ofthe three months to31 March 2023
– Directors’ training session on Cyber Security
January–March 2023
– Held the Company’s Annual General Meeting
– Declared an interim dividend of 1.25 cents per share, in respect
ofthe three months to31 December 2022
– Conducted a performance review of the Company’s key suppliers
– Held governance roadshow with Investors
– Appointed new valuer, CBRE
Key Activities of the Board
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 71
Application of Code
Application of AIC Code Principles
The AIC Code and the underlying UK Code have placed increased emphasis on “comply and explain” with regard to the Principles of the
Codes. Our explanations of how we have applied the main Principles of the AIC Code can be found below.
Board leadership and purpose
Principle A. A successful company is led by an effective board, whose
role is to promote the long-term sustainable success of the company,
generating value for shareholders and contributing to wider society.
– Strategic Report pages 1 to 63
– Board Leadership and Company Purpose pages 73 to 75
– EBOX ESG Committee Report page 95
Principle B. The board should establish the company’s purpose, values and
strategy, and satisfy itself that these and its culture are aligned. All directors
must act with integrity, lead by example and promote the desired culture.
– Strategic Report pages 1 to 63
– Board Leadership and Company Purpose pages 73 to 75
– Division of Responsibilities pages 78 to 80
Principle C. The board should ensure that the necessary resources are in
place for the company to meet its objectives and measure performance
against them. The board should also establish a framework of prudent
and effective controls, which enable risk to be assessed and managed.
– Principal Risks and Uncertainties pages 44 to 51
– Section 172 Statement pages 28 to 29
– Audit, Risk and Internal Control pages 36 to 37
– Audit & Risk Committee Report pages 80 to 91
Principle D. In order for the company to meet its responsibilities to
shareholders and stakeholders, the board should ensure effective
engagement with, and encourage participation from, these parties
– Section 172 Statement page 28
– Shareholder Relations page 74
Division of responsibilities
Principle F. The chair leads the board and is responsible for its overall
effectiveness in directing the company. They should demonstrate
objective judgement throughout their tenure and promote a culture of
openness and debate. In addition, the chair facilitates constructive board
relations and the effective contribution of all non-executive directors, and
ensures that directors receive accurate, timely and clear information.
– Board Leadership and Company Purpose pages 73 to 75
– Division of Responsibilities pages 78 to 80
Principle G. The board should consist of an appropriate combination of
directors (and, in particular, independent non-executive directors) such
that no one individual or small group of individuals dominates the board’s
decision making.
– Division of Responsibilities pages 78 to 80
– Composition, Succession and Evaluation pages 66 to 67
Principle H. Non-executive directors should have sufficient time to meet
their board responsibilities. They should provide constructive challenge
and strategic guidance, offer specialist advice and hold third-party service
providers to account.
– Board Leadership and Company Purpose pages 73 to 75
– Division of Responsibilities pages 78 to 80
– Audit & Risk Committee Report pages 80 to 91
– Management Engagement Committee Report pages 92 to 94
Principle I. The board, supported by the company secretary, should
ensure that it has the policies, processes, information, time and
resourcesit needs in order to function effectively and efficiently.
– How we govern the Company page 73
Composition, succession and evaluation
Principle J. Appointments to the board should be subject to a formal, rigorous
and transparent procedure, and an effective succession plan should be
maintained. Both appointments and succession plans should be based on
merit and objective criteria and, within this context, should promote diversity of
gender, social and ethnic backgrounds and cognitive and personal strengths.
– Nomination Committee Report pages 82 to 85
Principle K. The board and its committees should have a combination of
skills, experience and knowledge. Consideration should be given to the length
of service of the board as a whole and membership regularly refreshed.
– Board Biographies pages 66 to 67
Principle L. Annual evaluation of the board should consider its
composition, diversity and how effectively members work together to
achieve objectives. Individual evaluation should demonstrate whether
each director continues to contribute effectively.
– Nomination Committee Report pages 82 to 85
Tritax EuroBox plc Annual Report 202372
Audit, risk and internal control
Principle M. The board should establish formal and transparent policies
and procedures to ensure the independence and effectiveness of
external audit functions and satisfy itself on the integrity of financial
andnarrative statements.
– Audit, Risk and Internal Control pages 86 to 87
– Audit & Risk Committee Report pages 88 to 91
Principle N. The board should present a fair, balanced and
understandable assessment of the company’s position and prospects.
– Going Concern page 63
– Statement of Directors’ Responsibilities page 102
Principle O. The board should establish procedures to manage risk,
oversee the internal control framework, and determine the nature and
extent of the principal risks the company is willing to take in order to
achieve its long-term strategic objectives.
– Principal Risks and Uncertainties pages 44 to 51
– Viability Statement page 63
– Audit, Risk and Internal Control pages 86 to 87
– Audit & Risk Committee Report pages 88 to 91
– EBOX ESG Committee Report page 95
– Notes to the Financial Statements pages 114 to 133
Remuneration
Principle P. Remuneration policies and practices should be designed
tosupport strategy and promote long-term sustainable success.
– Board Leadership and Company Purpose pages 73 to 75
– Directors’ Remuneration Report pages 97 to 99
– Management Engagement Report pages 92 to 94
Principle Q. A formal and transparent procedure for developing policy
onremuneration should be established. No director should be involved
indeciding their own remuneration outcome.
– Directors’ Remuneration Report pages 97 to 99
Principle R. Directors should exercise independent judgement and
discretion when authorising remuneration outcomes, taking account
ofcompany and individual performance, and wider circumstances.
– Directors’ Remuneration Report pages 97 to 99
Key Board statements
Requirement Board statement Where to find further information
Going concern basis The Board is of the opinion that the going concern basis adopted in
the preparation of the Annual Report is appropriate.
Further details are set out on page 63
ofthe Strategic Report.
Viability Statement The Board is of the opinion that the Viability Statement adopted in
the preparation of the Annual Report is appropriate.
Further details are set out on page 63
ofthe Strategic Report.
Annual review of systems
ofrisk management and
internal control
A continuing process for identifying, evaluating and managing the
risks the Company faces has been established and the Board has
reviewed the effectiveness of the internal control systems.
Further details are set out in Audit, Risk
and Internal Control on pages 86 to 87
of this Governance Report.
Robust assessment of
theCompany’s emerging
and principal risks to the
business model, future
performance, solvency and
liquidity of theCompany
The Audit & Risk Committee and the Board undertake a full risk
review twice a year where all the emerging and principal risks and
uncertainties facing the Company and the Group are considered.
Further details can be found in Principal
Risks and Uncertainties on pages 44 to
51 of the Strategic Report.
Fair, balanced and
understandable
The Directors confirm that to the best of their knowledge the
Annual Report and Accounts taken as a whole is fair, balanced
and understandable and provides the information necessary for
Shareholders to assess the Company’s performance, business
model and strategy.
Further details of the fair, balanced and
understandable statement can be found
on page 96.
Appointment of
the Manager
The Directors consider the continuing appointment of the Manager
on the terms agreed in the Investment Management Agreement
dated 14 June 2018, as amended from time to time, to be in the
best interests of the Company.
Further details are set out in the
Management Engagement Committee
Report on pages 92 to 94.
Section 172 The Directors have considered the requirements of Section 172
when making strategic decisions.
Further details are set out on pages 28
to 29 of the Strategic Report.
TCFD The Directors have reported on the TCFDrequirements. Further details are set out on pages 52
to 62 of the Strategic Report.
Application of Code continued
Application of AIC Code Principles continued
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 73
Board Leadership and Company Purpose
The Board and the Manager work closely together to maintain
thehighest standards of corporate governance, which is central
toevery Board decision.
The Company’s purpose is to open up new futures in sustainable
commercial real estate, creating compelling opportunities for our
stakeholders and giving the world’s most ambitious companies
the space to succeed. In order to achieve this, the Board has
determined the Company’s Investment Objectives and Investment
Policy. The Board has overall responsibility for the Company’s
activities, including reviewing investment activity, performance,
business conduct and strategy, in compliance with the principles
ofgood corporate governance. The Board has delegated the
day-to-day operational aspects of running the Company to the
Manager and approved a schedule of matters reserved for its
consideration and approval. Although the Board does not formally
approve investment or divestment proposals or decisions, as this is
a matter delegated to the Manager, the Board is kept fully informed
and notified of investment or divestment proposals and decisions
to enable the Directors to undertake their responsibilities and
dutiesappropriately.
As well as regular Board meetings, the Board also meets for
dedicated strategy meetings, in which the Company’s immediate,
medium and long-term strategy is discussed, and holds ad hoc
meetings to consider specific issues, the market generally and
itsstakeholders.
Implementing the Company’s Investment Strategy
The Board is fully committed to implementing its investment strategy, including crystallising value in the portfolio and recycling
proceeds. On 9 August 2023, the Company announced that it had successfully exchanged contracts for the sale of its warehouse asset
in Hammersbach, Germany, for a price of €64.6 million to a leading pan-European real estate investment manager. The sale price was
broadly in line with the valuation as at 31 March 2023. The disposal of Hammersbach represented an important step in the Company’s
sales programme. The completion of the sale supports the Company’s strategy of crystallising value and recycling proceeds into
reducing leverage and funding existing portfolio opportunities. The sale to a leading pan-European real estate investor highlights the
attractiveness of the properties in our portfolio, and evidences the continued investor interest and market stabilisation for high-quality
logistics assets. This provides the Board with confidence to complete further disposals as we continue to recycle capital within our business
How we govern the Company
The Board is responsible for promoting the long-term sustainable
success of the Company and generating value for its Shareholders
and other stakeholders through effective leadership.
A typical Board agenda includes:
– a review of investments, divestments and asset
managementinitiatives;
– an update on investment performance and opportunities available
in the market and how they fit within the Company’s strategy;
– a report on the property and wider market;
– a review of the Company’s financial performance;
– a review of the Company’s financial forecast, cash flow and ability
to meet targets;
– an update on investor relations, including Shareholder and
stakeholder relations;
– an update on the Company’s capital market activity;
– regulatory, compliance and/or corporate governance updates;
– an update on ESG strategy and targets;
– a bi-annual risk management review; and
– a marketing and communications update.
Board reserved matters include:
– reviewing and approving Board composition and powers,
including the appointment of Directors;
– approving and implementing the Company’s strategy;
– approving the budget, financial plans and annual and interim
financial reports;
– approving the dividend policy;
– reviewing property valuations and valuations of its interest
ratederivatives;
– overseeing treasury functions and managing the Company’s
capital structure;
– reviewing and monitoring the Manager’s ongoing compliance
withthe Company’s Investment Objectives and Investment Policy;
– overseeing the services provided by the Manager and, in
conjunction with the Manager, the Company’s principal service
providers; and
– reviewing and approving all compliance and governance matters.
Tritax EuroBox plc Annual Report 202374
UK
Continental Europe
North America
Middle East & Africa
Asia & Australasia
Finance
Portfolio
Valuation
Property markets
Management and strategy
ESG
Shares
32%
26%
13%
12%
6%
5%
5%
51%
20%
15%
12%
2%
Culture
The Board promotes open dialogue and frequent, honest and open
communication between the Manager and other key providers and advisers
to the Company. Whilst the Company is externally managed, the Board
is confident that the culture within the Manager is aligned with that
of the Board. The Board believes that its positive engagement and
working relationship with the Manager helps the business achieve
its objectives by creating an open and collaborative culture, whilst
allowing for constructive challenge. The Non-Executive Directors
meet regularly with members of the Manager outside of Board
meetings to discuss various key issues relating to Company matters.
The Company’s success is based upon the effective implementation
of its strategy by the Manager and third-party providers under the
leadership of the Board. The Board’s culture provides a forum for
constructive and robust debate, and the Board believes that this
hasbeen fundamental to the success of the Company to date.
Relations with Shareholders and other stakeholders
A supportive and growing base of informed Shareholders is vital to
the Company’s business. During the year the Board and Manager,
together with the Company’s Joint Brokers, Barclays and Jefferies,
continued to be in regular contact with existing Shareholders and
prospective new investors in the UK, Continental Europe, North
America, South Africa and the Middle East.
Board Leadership and Company Purpose continued
Regular roadshows, conferences, webinars and ongoing ad hoc
meetings have enabled the Manager to listen to and understand
the views of Shareholders and other stakeholders and to share
those views with the Board. As part of the Board’s commitment to
maintaining open channels of communication with Shareholders, in
January 2023, the Chairman and SID held a governance roadshow
with investors. Across the schedule of meetings, the key themes
discussed included capital allocation, the alignment of management
structure and the reduced Manager’s fee, the continuing macroeconomic
uncertainty, the appointment of Phil Redding as the CEO and the
progress of the Company’s ESG strategy.
As well as tracking time spent discussing topics during investor
meetings (represented below), the investor relations team sought
feedback from the institutions met during the year. Topics which
continued to be important to Shareholders included: reducing leverage,
demonstrating a track record of delivering like-for-like rental growth,
ongoing market dynamics, the speed and magnitude of yield shifts
and valuation changes, portfolio and asset management initiatives,
including enhancing ESG performance.
e Further details of the Company’s engagement with our other key
stakeholders can be found in our Section 172 Statement on pages 28
to29
We believe that regular engagement with our stakeholders is fundamental
to understanding their views. The stakeholder engagement section aims
to highlight how we engage with our key stakeholders, why they
are important to us and the impact they have on our business and
therefore the long-term success of the Company, which we believe
helps to demonstrate the Board’s duties under Section 172; for
further detail please see pages 28 to 29.
ESG
Managing ESG factors is core to how we do business. Being
responsible is central to our purpose. ESG performance is fully
integrated into our business model and across the investment
lifecycle and was incorporated as a service in the amended IMA
approved in October 2022. In 2019, the Manager established an
ESG Committee which regularly reports to and engages with the
Board on its sustainability activities. In December 2022, the Board
established a dedicated EBOX ESG Committee which oversees
and monitors the performance and execution of the Company’s
ESG strategy and sets the Company policy. It receives updates
andrecommendations from the Manager’s ESG Committee relating
to the Company’s ESG strategy, including monitoring progress
and performance against the agreed ESG strategy framework, the
company’s ESG targets, as well as key ESG metrics and targets.
The Committee also receives information on key ESG initiatives and
actions to improve the ESG performance of the Company.
During the period, the Board monitored the performance of our ESG
strategy, and undertook a number of in-depth ESG strategy review
sessions. The Board also approved the Company’s updated ESG
targets, which were disclosed in the interim results presentation.
Please see page 30 for more details on ESG activities during the
year. The Company has made a commitment to achieve net zero
carbon for its direct activities by 2025 and for its total Scope 3
emissions by 2040. For further information on how the Company
manages climate-related risks and opportunities, please see the
TCFD Report on pages 52-62.
The Chair of the EBOX ESG Committee, Eva-Lotta Sjöstedt, meets
regularly with the Manager’s ESG Director to discuss progress of
Geographical composition of investors met
(October 2022 – September 2023)
Split of meeting time discussions by topic
(October 2022 – September 2023)
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 75
Strykow, Poland
At acquisition, this asset comprised
two buildings which have subsequently
been extended twice, first by 16,222
sqm in 2022 and by a further 8,841
sqm in 2023.
the ESG strategy and have deep dives into key ESG issues relevant
for the EBOX ESG Committee and the Board. This year, key matters
discussed included:
– data management and how the Company can improve collection
of ESG data to continue the process of ESG integration across the
investment lifecycle;
– managing physical climate risk across the portfolio in line with
theTCFD recommendations; and
– setting and delivering on the Company’s revised net zero targets.
In 2024, climate change and decarbonisation and other ESG
targets will be a continued focus for the Company. Integrating the
physical and transition risk assessments undertaken into our asset
management plans is a priority.
Annual General Meeting (“AGM”)
The Company’s Annual General Meetings provide us with a valuable
opportunity to engage with our Shareholders on governance and
strategy. All of the Directors usually attend the AGM and we make
ourselves available to answer Shareholders’ questions at all general
meetings of the Company and are contactable as necessary. The
Chairman also makes himself available outside of these meetings
to speak to Shareholders. The SID is available for Shareholders to
contact if other channels of communication with the Company are
not available or are inappropriate.
We encourage Shareholders to attend and vote at the AGM and take
the opportunity to engage with the Board. The Board considers it
important that Shareholders continue to have opportunities to engage
with them and Shareholders are encouraged to ask questions or
raise matters of concern by emailing the Company Secretary.
The Chairman and the SID as well as other Directors can be contacted
by emailing the Company Secretary on cosec@eurobox.co.uk, who will
pass the communication directly to the relevant person, or by post at
the Company’s registered office.
General Meetings
The Company held one General Meeting during the period. The
meeting held on 25 October 2022 was to consider and approve
theIMA amendments.
Public communications
The Company ensures that any price sensitive information is
released to all Shareholders at the same time and in accordance
with regulatory requirements. All Company announcements which
are released through the London Stock Exchange are also made
available on the Company’s website. The website also holds the
semi-annual fact sheets, share price and dividend information,
investor presentations, the Key Information Document required by
PRIIPS regulations and the Annual and Interim Reports which are
available for download. The Company’s Annual and Interim Reports
are dispatched in hard copy to Shareholders upon request.
Tritax EuroBox plc Annual Report 202376
Stakeholder Engagement
Key decisions ofthe Board
Delegated Authorities
The Board is committed to continuously reviewing its policies and
procedures with a view to making key enhancements to seek
to ensure the operations of the business run as efficiently and
effectively as possible. One area of focus for the Board during the
year was to ensure that the Manager was appropriately empowered
to undertake the necessary day to day running of the business on
behalf of the Board. As part of this focus, it was important for the
Board to ensure that the necessary controls framework was also
reviewed to ensure consistency and good practice.
Accordingly, the Secretariat led a project in order to create
and embed a delegated authorities matrix within the business.
The Secretariat engaged with key representatives from the
Manager and the Board to create a matrix which reflected the
existing agreeddelegations, in particular the Board reserved
mattersandtheoverarching delegation to the Manager.
The purpose of the document was to create a user friendly
document for the Manager, Board and external advisers to use
whilst consolidating the existingauthorities which are contained in a
number of key corporate documents of the Company in line with best
practice of the FTSE 350. The Board approved the delegated authorities
matrix in July 2023, which helped to clarify and strengthen the
existing governance and internalcontrols framework.
During 2024, the Board will monitor the effectiveness of
the delegated authorities matrix and consult the necessary
stakeholdersas part of this process.
How were stakeholders’ views
taken into account?
Active engagement with the
Manager on current processes
Input from external stakeholders
Impact – what actions were taken as
a result of this engagement/taking
concerns into account?
Developed a matrix which was fit
for purpose and user friendly
Long-term effects of the decision?
Enhanced and clearer delegated
authorities and decision making
Further strengthened the
governance framework of
the Company
Stakeholders considered
The Manager
and its
employees
Our
customers
Our suppliers
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 77
Valuer retender
The Board agreed to review the Company’s valuer given that it had
been appointed at the Company’s IPO in 2018 and it was deemed
good governance practice to rotate the lead valuer and/or firm of
valuers on a periodic basis. A comprehensive Request for Proposals
(“RFP”) was prepared and CBRE, Cushman & Wakefield and Savills
were invited to tender for the valuation contract alongside the incumbent,
JLL. Savills withdrew from the process due to a conflict of interest
in Italy where Savills IM is appointed as Fund Manager for the local
SGR ownership vehicle. It was the strong preference of the Manager
not to carve out the Italian portfolio from the scope of the valuation
instruction. Prior to including CBRE within the tender, the Manager
and Board considered CBRE’s current appointment to undertake
property management and accounting services for the Company
and the existing instruction for CBRE to undertake valuation services
for Tritax Big Box REIT plc.
The Manager considered thefollowing factors:
– over-reliance on CBRE as a service provider (from the Company’s
perspective); and
– potential conflicts of interest (from CBRE’s perspective).
The Board decided that neither of these factors precluded CBRE
from being considered for the valuer position for the Company.
A key objective of the process was to have the new appointment in
place to be able to undertake the 31 March 2023 interim valuation.
As such, an accelerated process was undertaken by which RFP’s
were received and follow-up interviews with preferred parties were
arranged. The basis of the evaluation was structured around the
following key criteria:
– experience of individual team members;
– pan-European network of local offices/teams;
– valuation department client roster;
– investment department relevant market transaction volumes;
– process / coordination;
– application of technology;
– additional “value-add” services; and
– fee levels and contract term.
The review team completed a valuer ranking matrix, summarising
areas of assessment with a “score” out of five, with a view to
creating an initial ranking of candidates’ suitability.
Following the presentations a detailed discussion ensued,
weighingup the strengths and weaknesses of the different parties.
The recommendation to the Board was that CBRE be appointed as
the Company’s independent valuers going forward.
How were stakeholders’
views taken into account?
Feedback from the Board
and Manager
Long-term effects of the decision?
Ensured good governance
practice for the appointment of
theCompany’s valuer
Confidence gained in the
robust governance and control
procedures around the selection
ofpreferred suppliers
Impact – what actions were taken
as a result of this engagement/
taking concerns into account?
Valuer services were retendered
Rigorous and fair retender process
Stakeholders considered
The Manager
and its
employees
Our suppliers
Tritax EuroBox plc Annual Report 202378
Division of Responsibilities
The Board
The Board is responsible for promoting the long-term
sustainable success of the Company, working towards
strategic objectives and generating value for Shareholders
andother stakeholders.
e To read more see pages 1 to 63
Chairman
Key roles and responsibilities
– Responsible for the leadership and effectiveness of the Board and for
setting the Board agenda.
– Ensuring effective communication so that the Board is aware of the
viewsof Shareholders and other stakeholders, and demonstrates
objectivejudgement.
– Promoting a culture of openness and debate.
Senior Independent Director
Key roles and responsibilities
– Acting as a sounding board for the Chairman and a trusted intermediary for
other Directors.
– Available to discuss with Shareholders any concerns that cannot be
resolved through the normal channels of communication with the Chairman.
– Leading the other Directors in evaluating the performance of the Chairman.
The Manager
Day-to-day running of the Company has been delegated
to Tritax Management LLP. Phil Redding, as CEO for the
Company, Mehdi Bourassi, as CFO for the Company,
HenryFranklin, as COO of the Manager, and James Dunlop,
asCEO of Investments, oversee the Manager’s relationship
withthe Company.
e To read more see pages 17 to 23
The Manager
Key roles and responsibilities
– Making the final decisions in respect of investments and divestments.
– Financial management.
– Asset management.
– Investor relations.
– ESG.
Company Secretariat and Compliance
Key roles and responsibilities
– Overseeing the Company’s governance structure and managing
the Company’s regulatory compliance.
– Administering the Group’s subsidiaries.
Board Committees
The Board has delegated some of its responsibilities to
its four formal Committees: the Nomination, Audit & Risk,
Management Engagement and EBOX ESG Committees.
TheBoard has also established a Disclosure Committee which
meets as and when required. The Company ensures that all of
the Board Committees have sufficient resources and skills to
carry out their obligations.
These Committees are each chaired by a different
Non-Executive Director and have their own Terms of Reference
which can be found on the Company’s website (or copies are
available on request from the Company Secretary).
The Terms of Reference are reviewed as necessary by the
Board as a whole. The Company Secretary acts as secretary
to these Committees and each Committee Chair reports the
outcome of the meetings to the Board.
e To read more see pages 78 to 80
Audit & Risk Committee
– Reviewing the integrity of the Group’s financial statements and any
significant financial reporting judgements.
– Reviewing and monitoring the relationship with the Auditor.
– Reviewing the Administrator’s (CBRE) internal controls.
– Overseeing the Company’s risk management process.
– Advising the Board on whether the Annual Report and Accounts
providesafair, balanced and understandable view of the Company’s
performance, position and strategy.
– Considering and reviewing the Company’s Viability and Going
ConcernStatements.
e To read more see pages 88 to 91
Nomination Committee
– Reviewing the Board composition and assessing whether the balance of
skills, experience, knowledge, diversity and independence is appropriate
toenable the Board to operate effectively.
– Managing succession planning and ensuring that the Directors receive
necessary training.
– Board and Committee evaluations.
– Reviewing the annual and interim property valuations.
e To read more see pages 82 to 85
Management Engagement Committee
– Reviewing the main suppliers including the Manager, the Brokers, the Joint
Financial Advisers, the Valuer and the Registrar to ensure that the Company
is receiving a high level of performance along with value for money.
– Overseeing re-tenders and new supplier appointments.
– Reviewing the performance of the Manager.
e To read more see 92 to 94
Disclosure Committee
– Identifying inside information and maintaining disclosure registers in the
form of insider lists.
– Determining whether delayed disclosure is appropriate on a case-by-case
basis and liaising with the FCA as necessary.
– Supervising and overseeing the preparation of disclosures to the market.
– Chaired by Robert Orr and comprises various members of the Manager.
EBOX ESG Committee
– Overseeing and advising the Board on the effectiveness of the
Company’s ESG strategy.
– Monitoring the Company’s ESG performance.
– Overseeing ESG targets and key metrics.
– Advising the Board on appropriateness of ESG-related policies.
– Receiving updates and reviewing current and emerging ESG trends.
– Receiving recommendations from the Manager’s ESG Committee
and making recommendations to the Board.
e To read more see page 95
Manager Committees
The Manager has delegated some of its responsibility to five
Committees: the Executive, Investment, Risk, Operations and
ESG Committees. The ESG Committee has also established a
Sub-Committee, the Green Finance Committee, further to the
issuance of the Company’s Green Bond.
Executive Committee
– Chaired by Phil Redding, comprising Mehdi Bourassi, the Assistant Fund
Managers, the IR Director and the Asset Manager.
– Oversight of the Group as a whole and is responsible for reviewing the
corporate and capital strategy and ESG activities of the Company.
– Make recommendations to the Board as necessary.
Investment Committee
– Chaired by Phil Redding, comprising Mehdi Bourassi, COO of the Manager,
CEO of Investments, Head of Asset Management and CEO for Tritax
BigBox REIT Plc.
– Taking into account an array of factors including ESG, review and
recommend investments and divestments.
– Taking a lead on overall portfolio management (including asset
management) with oversight from the Board.
ESG Committee
– Chaired by Petrina Austin, comprising various members of the Manager,
including the ESG Director.
– Overseeing ESG and sustainability matters.
– Reviewing and making recommendations to the Manager’s Executive
Committee and the Company’s Board, regarding progress on integrating
ESG factors into business strategy and decision making.
– Overseeing the Manager’s policies in terms of performance, communication
and engagement on ESG and sustainability matters, to ensure the Manager
is effective in meeting its social and regulatory requirements and achieving
its objective of being a socially responsible corporate entity.
Risk Committee
– Chaired by Henry Franklin, comprising the Chief Financial Officer of the
Manager and Head of Risk and Compliance of the Manager.
– Responsible for identifying, recording and measuring risks to the Manager‘s
Executive Committee and implementing controls to mitigate such risks.
– Overseeing the risk assessments made by the Company as well as other
real estate funds to amplify the focus on risk and to ensure the Company
isalerted to any new risks of the Manager.
Green Finance Committee
(Sub-Committee of the ESG Committee)
– Chaired by the Manager’s CFO, comprising members of
theManager’s finance and asset management teams.
– Reviewing the Green Portfolio of the Company to confirm that the
assets and projects included in the Green Portfolio meet the criteria
set out in the Framework.
– Approving the Annual Green Finance Report ahead of circulation
toinvestors.
– Monitoring evolution of the capital markets in terms of disclosure
andreporting in order to be in line with market best practice.
Operations Committee
– Chaired by Henry Franklin and comprising various members
oftheManager.
– Oversight of internal controls of Tritax Management LLP and
statutory audit process.
– Approval of all Tritax Management LLP policies and procedures.
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 79
The Board
The Board is responsible for promoting the long-term
sustainable success of the Company, working towards
strategic objectives and generating value for Shareholders
andother stakeholders.
e To read more see pages 1 to 63
Chairman
Key roles and responsibilities
– Responsible for the leadership and effectiveness of the Board and for
setting the Board agenda.
– Ensuring effective communication so that the Board is aware of the
viewsof Shareholders and other stakeholders, and demonstrates
objectivejudgement.
– Promoting a culture of openness and debate.
Senior Independent Director
Key roles and responsibilities
– Acting as a sounding board for the Chairman and a trusted intermediary for
other Directors.
– Available to discuss with Shareholders any concerns that cannot be
resolved through the normal channels of communication with the Chairman.
– Leading the other Directors in evaluating the performance of the Chairman.
The Manager
Day-to-day running of the Company has been delegated
to Tritax Management LLP. Phil Redding, as CEO for the
Company, Mehdi Bourassi, as CFO for the Company,
HenryFranklin, as COO of the Manager, and James Dunlop,
asCEO of Investments, oversee the Manager’s relationship
withthe Company.
e To read more see pages 17 to 23
The Manager
Key roles and responsibilities
– Making the final decisions in respect of investments and divestments.
– Financial management.
– Asset management.
– Investor relations.
– ESG.
Company Secretariat and Compliance
Key roles and responsibilities
– Overseeing the Company’s governance structure and managing
the Company’s regulatory compliance.
– Administering the Group’s subsidiaries.
Board Committees
The Board has delegated some of its responsibilities to
its four formal Committees: the Nomination, Audit & Risk,
Management Engagement and EBOX ESG Committees.
TheBoard has also established a Disclosure Committee which
meets as and when required. The Company ensures that all of
the Board Committees have sufficient resources and skills to
carry out their obligations.
These Committees are each chaired by a different
Non-Executive Director and have their own Terms of Reference
which can be found on the Company’s website (or copies are
available on request from the Company Secretary).
The Terms of Reference are reviewed as necessary by the
Board as a whole. The Company Secretary acts as secretary
to these Committees and each Committee Chair reports the
outcome of the meetings to the Board.
e To read more see pages 78 to 80
Audit & Risk Committee
– Reviewing the integrity of the Group’s financial statements and any
significant financial reporting judgements.
– Reviewing and monitoring the relationship with the Auditor.
– Reviewing the Administrator’s (CBRE) internal controls.
– Overseeing the Company’s risk management process.
– Advising the Board on whether the Annual Report and Accounts
providesafair, balanced and understandable view of the Company’s
performance, position and strategy.
– Considering and reviewing the Company’s Viability and Going
ConcernStatements.
e To read more see pages 88 to 91
Nomination Committee
– Reviewing the Board composition and assessing whether the balance of
skills, experience, knowledge, diversity and independence is appropriate
toenable the Board to operate effectively.
– Managing succession planning and ensuring that the Directors receive
necessary training.
– Board and Committee evaluations.
– Reviewing the annual and interim property valuations.
e To read more see pages 82 to 85
Management Engagement Committee
– Reviewing the main suppliers including the Manager, the Brokers, the Joint
Financial Advisers, the Valuer and the Registrar to ensure that the Company
is receiving a high level of performance along with value for money.
– Overseeing re-tenders and new supplier appointments.
– Reviewing the performance of the Manager.
e To read more see 92 to 94
Disclosure Committee
– Identifying inside information and maintaining disclosure registers in the
form of insider lists.
– Determining whether delayed disclosure is appropriate on a case-by-case
basis and liaising with the FCA as necessary.
– Supervising and overseeing the preparation of disclosures to the market.
– Chaired by Robert Orr and comprises various members of the Manager.
EBOX ESG Committee
– Overseeing and advising the Board on the effectiveness of the
Company’s ESG strategy.
– Monitoring the Company’s ESG performance.
– Overseeing ESG targets and key metrics.
– Advising the Board on appropriateness of ESG-related policies.
– Receiving updates and reviewing current and emerging ESG trends.
– Receiving recommendations from the Manager’s ESG Committee
and making recommendations to the Board.
e To read more see page 95
Manager Committees
The Manager has delegated some of its responsibility to five
Committees: the Executive, Investment, Risk, Operations and
ESG Committees. The ESG Committee has also established a
Sub-Committee, the Green Finance Committee, further to the
issuance of the Company’s Green Bond.
Executive Committee
– Chaired by Phil Redding, comprising Mehdi Bourassi, the Assistant Fund
Managers, the IR Director and the Asset Manager.
– Oversight of the Group as a whole and is responsible for reviewing the
corporate and capital strategy and ESG activities of the Company.
– Make recommendations to the Board as necessary.
Investment Committee
– Chaired by Phil Redding, comprising Mehdi Bourassi, COO of the Manager,
CEO of Investments, Head of Asset Management and CEO for Tritax
BigBox REIT Plc.
– Taking into account an array of factors including ESG, review and
recommend investments and divestments.
– Taking a lead on overall portfolio management (including asset
management) with oversight from the Board.
ESG Committee
– Chaired by Petrina Austin, comprising various members of the Manager,
including the ESG Director.
– Overseeing ESG and sustainability matters.
– Reviewing and making recommendations to the Manager’s Executive
Committee and the Company’s Board, regarding progress on integrating
ESG factors into business strategy and decision making.
– Overseeing the Manager’s policies in terms of performance, communication
and engagement on ESG and sustainability matters, to ensure the Manager
is effective in meeting its social and regulatory requirements and achieving
its objective of being a socially responsible corporate entity.
Risk Committee
– Chaired by Henry Franklin, comprising the Chief Financial Officer of the
Manager and Head of Risk and Compliance of the Manager.
– Responsible for identifying, recording and measuring risks to the Manager‘s
Executive Committee and implementing controls to mitigate such risks.
– Overseeing the risk assessments made by the Company as well as other
real estate funds to amplify the focus on risk and to ensure the Company
isalerted to any new risks of the Manager.
Green Finance Committee
(Sub-Committee of the ESG Committee)
– Chaired by the Manager’s CFO, comprising members of
theManager’s finance and asset management teams.
– Reviewing the Green Portfolio of the Company to confirm that the
assets and projects included in the Green Portfolio meet the criteria
set out in the Framework.
– Approving the Annual Green Finance Report ahead of circulation
toinvestors.
– Monitoring evolution of the capital markets in terms of disclosure
andreporting in order to be in line with market best practice.
Operations Committee
– Chaired by Henry Franklin and comprising various members
oftheManager.
– Oversight of internal controls of Tritax Management LLP and
statutory audit process.
– Approval of all Tritax Management LLP policies and procedures.
Tritax EuroBox plc Annual Report 202380
Division of Responsibilities continued
The Chairman and the SID
Our Chairman, Robert Orr, has no relationships that may create a
conflict of interest between his interest and those of Shareholders or
the Manager.
As we are subject to the AIC Code, there is no requirement for a
limitation on the length of tenure of the Chairman, as approved by
the FRC. However, we recognise that there is a significant body of
opinion that tenure should be limited to nine years and bear this in
mind in our succession planning. The Board has adopted a Policy
on Tenure and Re-election; for more information, please refer to
page82. The Chairman has been in post for five and a half years
since IPO. The Chairman’s other significant commitments include
being a Non-Executive Director of M&G Property Fund SICAV and
Chairman on the Advisory Board of APCOA Parking Holdings. For the
Chairman’s full biography please refer to page 66 and the Company
website. The Board believes he continues to dedicate sufficient time
to his chairmanship of the Company.
In December 2022, Sarah Whitney was appointed as the Senior
Independent Director (“SID”). The principal role of the SID is to
support the Chairman and to act as an intermediary for the other
Non-Executive Directors. The SID is available for Shareholders to
contact if other channels of communication with the Company are
not available or are inappropriate. The SID leads the oversight of the
Chairman as part of the Board evaluation exercise.
The Board and its Committees
The Board currently consists of five Non-Executive Directors, all
independent of the Manager. We believe that the Board is well
balanced and possesses a sufficient breadth of skills, variety of
backgrounds, and relevant experience and knowledge to ensure
it functions effectively and promotes the long-term sustainable
success of the Company, whilst generating Shareholder value and
keeping in mind wider stakeholder interests.
Directors’ biographies are set out on pages 66 and 67. In
accordance with the requirements of the AIC Code, all of the
Directors will stand for re-election at the Company’s AGM which we
plan to hold on 14February 2024.
We have not established a Remuneration Committee as the Board
has no Executive Directors and the Company has no employees.
The Board as a whole is responsible for reviewing the scale and
structure of the Directors’ remuneration. Details of the Directors’
remuneration for the year ended 30 September 2023 are included
inthe Directors’ Remuneration Report on page 97.
The Board establishes Sub-Committees to take operational
responsibility on specific matters either following “in principle”
approval from or with subsequent ratification by the Board.
TheseSub-Committees ensure that key matters are dealt with
efficiently by the Director(s) and representatives of the Manager
bestqualified for the specific role.
Board meetings
During the period we held seven scheduled Board meetings, plus
four further ad hoc meetings which dealt with specific events. In
addition, the Board held a dedicated strategy meeting.
The Board meetings follow a formal agenda, which is approved by
the Chairman and circulated by the Company Secretary in advance
of the meeting to all Directors and other attendees. At each Board
meeting, every agenda item is considered against the Company’s
strategy, its Investment Objectives, its Investment Policy and the
Directors’ duties.
The Board is kept fully informed of potential investment opportunities,
along with wider property market intelligence, through a comprehensive
set of Board papers prepared by the Manager prior to each meeting.
Included within this pack are the investment reports prepared by the
Manager’s Investment Committee for each acquisition and asset
management opportunity. Representatives of the Manager are
invited to attend the Board meetings, as are representatives of the
Company’s other advisers as required.
Outside the Board meetings, the Manager shares recommendations
around investment opportunities and keeps the Directors fully informed
on the progress of transactions. The Board also has full access to
the management team and the company secretarial team at all times
to discuss any specific matters outside of formal meetings.
Conflicts of interest
Each Director has a duty to avoid a situation in which he or she has
a direct or indirect interest that may conflict with the interests of
the Company.
The Board may authorise any potential conflicts, where appropriate,
in accordance with the Articles of Association. Where a potential
conflict of interest arises, a Director will declare their interest at the
relevant Board meeting and not participate in the decision making in
respect of the relevant business.
Attendance at Board and Committee meetings
during the year ended 30 September 2023
All Directors are expected to devote sufficient time to the Company’s
affairs to fulfil their duties as Directors and to attend all scheduled
meetings of the Board and of the Committees on which they serve.
Where Directors are unable to attend a meeting, they will provide
their comments on the Board papers received in advance of the
meeting to the Chairman, who will share such input with the rest of
the Board and the Manager. The Nomination Committee is satisfied
that all the Directors, including the Chairman, have sufficient time to
meet theircommitments.
The table below sets out the Board and Committee attendance
at scheduled meetings during the year. During this period the
absences shown were as a result of changes to the Board
membership or pre-planned commitments.
Robert
Orr
Keith
Mansfield
Taco de
Groot
Eva-Lotta
Sjöstedt
Sarah
Whitney
Board 7/7 7/7 7/7 7/7 6/7
Audit & Risk Committee N/A 7/7 7/7 N/A 7/7
Management
Engagement Committee 2/2 2/2 2/2 2/2 2/2
Nomination Committee 2/2 2/2 N/A 2/2 N/A
EBOX ESG Committee 2/2 2/2 2/2 2/2 2/2
Strategy meeting 1/1 1/1 1/1 1/1 1/1
GOVERNANCEGOVERNANCE
Tritax EuroBox plc Annual Report 2023 81
“ The Board is kept fully informed
of potential investment
opportunities, along with wider
property market intelligence,
through a comprehensive set of
Board papers prepared by the
Manager prior to each meeting.”
Tritax EuroBox plc Annual Report 202382
Nomination Committee Report
Dear Shareholders,
I am pleased to present the Nomination Committee Report for
theyear ended 30 September 2023. The Nomination Committee’s
focus during the period was on reviewing the Board’s composition,
diversity targets (“Diversity Targets”), succession planning and Board
evaluation output.
The Committee’s role is to review the size, structure and composition
of the Board, including succession planning, and to ensure that it
has the right mix of skills, experience and knowledge to enable the
Company to fulfil its strategic objectives. The Committee is also
responsible for making recommendations for new appointments
to the Board and for reviewing the performance and terms of
engagement for the existing Directors. The Committee operates
within defined Terms of Reference which are available on the
Company’s website or from the Company Secretary. We met fortwo
scheduled meetings during the period.
Policy on Tenure and Succession Planning
The Board has implemented a Policy on Tenure and Re-election,
and in accordance with the provisions of the AIC Code, all the
Directors will offer themselves for re-election at each AGM. We
considered the ongoing independence of each of the Directors, and
their respective skills, experience and time commitment, as well as any
other external appointments held by the Directors. We believe that
each Director has contributed significantly to the Board during the
year. Following the advice of the Committee and in line with the AIC
Code, the Board will recommend the re-election of each Director at
the forthcoming AGM.
Directors are appointed for an initial period of three years and
their performance is evaluated at least annually during the Board
performance evaluation.
In accordance with the principles of the AIC Code, we do not
consider it necessary to replace a Director after a predetermined
period of tenure. We are, however, mindful of the circumstances of
each Director and implement succession planning accordingly.
Membership
Robert Orr (Chair)
Keith Mansfield
Eva-Lotta Sjöstedt
e For full details on Committee attendance please refer to page 80
Key areas of focus in 2022/2023:
– the size, structure and composition of the Board;
– succession planning;
– Board and Committee performance evaluation;
– the proposal for re-election of the Directors at the AGM
which we plan to hold on 14 February 2024; and
– review of the Board Diversity and Inclusion Policy.
Robert Orr
Chair of the Nomination Committee
“ The Board has the right balance
of skills, qualifications and
experience which are relevant
for the Company.”
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 83
Board diversity and inclusion
The Board meets the recommendations set out in the FTSE Women
Leaders Review and is mindful of the Parker Review targets and
recognises that this has become an area of even greater focus for
the Company.
The Board places great emphasis on ensuring that its own
membership reflects diversity in its broadest sense and intends
to use all reasonable endeavours to comply with the Diversity
Targets. The Company does not have any employees. In respect of
appointments to the Board, we consider that each candidate should
be appointed on merit to ensure that the best candidate for the
role is appointed each time. We support diversity and inclusion at
Board level and encourage candidates from all ethnic, gender and
educational backgrounds. What is important to us is professional
achievement and the ability to be a successful Director based on the
individual’s skill set and experience.
Qualifications are considered when appropriate to ensure
compliance with regulation such as in relation to appointments to the
Audit & Risk Committee, where we consider that Keith Mansfield and
Sarah Whitney have significant financial experience. We regularly
review the Board’s Diversity and Inclusion Policy. Webelieve that
the Board has a balance of skills, qualifications and experience
which are relevant to the Company. The Company believes in the
value and importance of cognitive diversity in theboardroom. The
Board Diversity and Inclusion Policy can be found on the Company’s
website at https://www.tritaxeurobox.co.uk/about/governance/.
Board Diversity Targets
Objective Progress as at 30 September 2023
At least 40% of
individuals on the
Board to be female
Objective met: The Board consists
of two female directors and three male
Directors.
At least one of the
Senior Positions on
the Board to be held
by a female
Objective met: The Company considers
the SID and the Chairman to be the
only applicable senior roles. The SID
is a female.
At least one individual
on the Board to be
from a minority ethnic
background (as
defined by the Office
for National Statistics
(“ONS”) excluding
those listed by the
ONS as coming
from a white ethnic
background)
Objective not met: The Board is not
looking to appoint an additional Director
at this time due to the size and corporate
structure of the Company, but is mindful
of the Listing Rule requirements and
will consider these during the next
recruitment process.
Director training programme
We recognise that it is essential to keep abreast of regulatory and
compliance requirements including ESG-related issues. All new
Directors are provided with a tailored induction programme on
appointment which includes an induction pack, and meetings with
the Company’s key advisers and key representatives of the Manager.
In addition, a bespoke training programme is agreed and arranged
each year.
As at the date of this report, the Board received formal training
sessions on Cyber Security and European Power Infrastructure
and Opportunities. The Board receives regular updates and/or
briefings on corporate governance, ESG matters and general
industry and market trends. As part of the internal Board evaluation,
the Committee will work with the Manager to further enhance the
Board’s trainingprogramme.
In addition to the bespoke training programme, each Director
is expected to maintain their individual professional skills and is
responsible for identifying any training needs to help them ensure
that they maintain the requisite knowledge to be able to consider
and understand the Company’s responsibilities, business and
strategy. All Directors have access to the advice and services of
the Company Secretary, who manages the Company’s governance
procedures, and the Manager. The Directors are also entitled to
take independent advice at the Company’s reasonable expense
at any time.
e For further information on training completed throughout the period
please refer to page 65
Committee evaluation
The overall performance of the Nomination Committee was rated
highly, particularly its performance in reviewing the outcomes of the
2022 board evaluation.
Outlook for 2023/2024
We will continue to monitor and evaluate Board composition to
ensure that the Board has the right balance of skills, experience and
knowledge to carry out its duties. Board diversity continues to be an
area that will be monitored during 2024.
Robert Orr
Chair of the Nomination Committee
4 December 2023
Tritax EuroBox plc Annual Report 202384
Nomination Committee Report continued
Board performance and evaluation
The Board’s policy is to carry out an evaluation of the Board, and its Committees and the performance of individual Directors every year.
For the period 2020/2021 an external evaluator was engaged by the Board to undertake an external review. This year, we undertook
aninternal evaluation.
The main areas considered during the evaluation remained the same as the prior period: individual skill sets and performance; Board
structure and membership; strategy; operations; and Board and Committee meetings and questions around the specific strategic
priorities of the Board and Company. Please see below for the Board evaluation process.
Actions from the evaluation
As part of the Board evaluation a set of key actions were agreed by the Board and Manager to enhance the level of information provided
to the Board; to focus the Board’s attention on medium to long term strategic priorities and to develop an ongoing training plan to cover
areas such as risk management and customer behaviour.
The Board through its Nomination Committee will also focus on monitoring the skills and diversity of the Board with a view to meeting the
expectations of the Parker Review at its next Non-Executive Director appointment and on its wider Board succession planning.
Secretariat and Chairman discussed
the key focus and purpose of the
evaluation
Submissions were coordinated by
the Secretariat into a draft report
Secretariat and Chairman agreed
the questions
Questions were uploaded into an
online platform by the Secretariat
Secretariat finalised report which
was presented at a Board meeting
Secretariat formulated some key
actions for the Board to monitor
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 85
Roadmap to diversity
Identifying what we need
The Board places great emphasis on ensuring that its own
membership reflects diversity in its broadest sense. The Board
intends to use all reasonable endeavours to comply with the
Diversity Targets. The Company has included a statement in its
Annual Report confirming whether such Diversity Targets are
achieved and, if not, will provide an explanation as to why such
Diversity Targets have not been achieved.
Furthermore, the Board supports the recommendations set out
in the Parker Review in respect of ethnic diversity and the Board
and the Nomination Committee intend to use all reasonable
endeavours to comply with the voluntary targets. The Committee
will continue to monitor the skills and diversity of the Board and
endeavour to meet the expectations of the Parker Review at its
next Non-Executive Director appointment and in its wider Board
succession planning.
Recognising what we have
The Nomination Committee continually reviews the Directors’
skills matrix ensuring that the Board and its Committees maintain
the necessary skills to deliver the Company’s strategic priorities.
The Board recognises the need to increase ethnic representation
on the Board and will use all reasonable endeavours to comply
with the Diversity Targets for future appointments. As at the
date of this report, 40% of the Board are female. The Company
considers the SID to be a senior position in accordance with the
Listing Rules. As at the date of this report, the SID is a female.
The Board will endeavour to meet the recommendations of
the Parker Review in conjunction with the Board’s strategic
requirements and it also recognises its broader diversity in
terms of sector experience, nationality, culture and professional
expertise. The Board regularly reviews its Diversity and Inclusion
Policy, as well as its training and development programme to
ensure an inclusive and well-balanced Board.
The Board is of the opinion that there is a direct link between the
benefits of achieving diversity in allowing the Board to maintain the
necessary skills to deliver the Company’s strategic objectives.
Table for reporting on gender identity or sex
Number
of Board
members
Percentage
of Board
Number
of senior
positions
Men 3 60% 1
Women 2 40% 1
Other categories — 0% —
Not specified/prefer not to say — 0% —
Table for reporting on ethnic background
Number
of Board
members
Percentage
of Board
Number
of senior
positions
White British or other White (including minority White groups) 5 100% 2
Mixed/multiple ethnic groups — 0% —
Asian/Asian British — 0% —
Black/African/Caribbean/Black British — 0% —
Other ethnic group, including Arab — 0% —
Not specified/prefer not to say — 0% —
In accordance with the Listing Rules, as an externally managed investment company we consider these rules inapplicable as we do not have
any executive management, including the roles of CEO or CFO, as Directors of the Company. The Company considers the SID and Chairman
to be the only applicable senior roles within the business and have reported against these in the table above.
How we collected data
On appointment to the Board the Directors are asked to complete a New Director’s Questionnaire.
Tritax EuroBox plc Annual Report 202386
Audit, Risk and Internal Control
The Board is responsible for delivering robust and sustainable value
to its Shareholders and wider stakeholders by setting and working
towards strategic objectives. In order to do so we undertake robust
assessments of the risks which the Group faces and ensure controls
and mitigations are in place to manage those risks. The Company’s
key risks are set out on pages 45 to 51 of the Strategic Report.
The Audit & Risk Committee reviewed the principal and emerging
business risks of the Company on behalf of the Board.
The Board and Audit & Risk Committee regularly review the financial
position of the Company and perform an assessment of any risks
in relation to the Company’s business model, the Group’s future
performance, liquidity and solvency, as well as any risks relating
to specific or proposed investments and customers or initiatives
relating to assets. To facilitate this process, the Manager produces
financial reports, which include the latest management accounts, a
review and report on the Company’s financial forecast, a report on
proposed and existing investment and asset management initiatives,
substantiation of any dividend payments and a general update on
the financial health of the Company.
As the Company’s AIFM, the Manager is subject to reporting and
ongoing compliance under the AIFMD. As part of this regulatory
process, Langham Hall UK Depositary LLP has been retained by the
Company and is responsible for cash monitoring, asset verification
and oversight of the Company and the Manager. Langham Hall UK
Depositary LLP reports quarterly to the Board and the Manager.
The Manager’s Head of Risk & Compliance also assists with the
discharge of the Manager’s obligations in accordance with the AIFMD.
Risk management and internal controls review
andprocesses
The Company’s internal control and risk management systems
and processes are designed to identify, manage and mitigate the
financial, operational and compliance risks that are inherent to the
Group and safeguard the Group’s assets. These safeguards and
systems in place are designed to manage (rather than eliminate)
the risk of failure to achieve business objectives and can only
provide reasonable, but not absolute, assurance against material
misstatement or loss.
The Board and the Manager have, together, reviewed all financial
performance and results notifications. Non-financial internal
controls include the systems of operational and compliance
controls maintained by the Company’s administrator, CBRE
(the“Administrator”), and by the Manager in relation to the
Company’s business, as well as the management of key risks
referred to in the Strategic Report on pages 1 to 63.
The Board has contractually delegated responsibility for administrative
and accounting services to the Administrator and for company
secretarial services to the Manager. These entities have their own
internal control systems relating to these matters, which we have
reviewed as part of the Company’s Financial Position and Prospects
Procedures document, which was reviewed, updated and approved
in October 2023.
The Company is managed externally by the Manager. All payments
of Company funds are authorised by the Manager in accordance
with the duties delegated to it pursuant to the terms of the Investment
Management Agreement (“IMA”) and in accordance with the provisions
of the AIFMD. The Manager instructs the Administrator to make the
duly authorised payment and Langham Hall UK Depositary LLP,
as part of its role as Depositary, reviews each material payment
in relation to the specific test areas as mentioned in the report on
page 87. We consider that the internal controls in place and the
function undertaken by Langham Hall UK Depositary LLP make it
unnecessary for the Company to employ an internal audit function.
In addition to this, the Administrator has its own internal audit performed
on an annual basis by KPMG, from which the Company reviews any
findings. The audit for the period did not raise any significant findings
to discuss.
In accordance with the AIC Code, the Board has established a
continuing process for identifying, evaluating and managing the
risks the Company faces and has reviewed the effectiveness of
theinternal control systems.
This includes reviewing reports from the Auditor (details of which
are included in the Audit & Risk Committee Report), regular reports
from the Manager and the Company Secretary (outlining corporate
activity within the Group and the Company’s compliance with the
AIC Code) and proposed future initiatives relating to the Company’s
governance and compliance framework. We also review the formal
risk assessment conducted by the Audit & Risk Committee twice a
year. Further, we actively consider investment/divestment opportunities,
asset management initiatives, debt and equity fundraisings and
other financial matters against the requirements of the Company’s
Investment Objectives and Investment Policy.
The Audit & Risk Committee also conducts a robust assessment
of the emerging and principal risks to the business model, future
performance, solvency and liquidity of the Company at least twice a
year and reports its findings to the Board. The Manager is asked to
analyse and report on the risks which the Company may encounter
on specific transactions including, for example, an adverse decision
regarding the development of an asset at the planning stages or a
sudden change in market conditions before the launch of an equity
raise or debt issue. The Audit & Risk Committee then considers
each risk in turn, probing the Manager’s assumptions and analysing
whether the risk factors attributed to each individual risk are fair and
accurate, and the effect of any mitigating factors. The Audit & Risk
Committee also considers this as part of its biannual risk review and
at each strategy meeting and challenges the Manager to actively
review the risks it includes. Please see pages 44 to 51 for more
details on emerging and principal risks.
The Manager also reports to the Board twice a year on the Company’s
longer-term viability, which includes financial sensitivities and stress
testing of the business to ensure that the adoption of the going
concern is appropriate.
The Manager established a Risk Committee which ensures
consistency and transfer of best practice in reporting, monitoring
and controlling risk. The Manager also maintains a risk register,
where perceived risks and associated actions are recorded, and this
is regularly shared with the Board for approval. For further details of
the Manager’s Risk Committee please refer to page 79.
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 87
Anti-bribery and corruption
The Board has a zero tolerance policy towards bribery and corruption
and is committed to carrying out business fairly, honestly and openly.
In considering the Bribery Act 2010, at the date of this report, the
Board had assessed the perceived risks to the Company arising
from bribery and corruption and identified aspects of the business
which may be improved to mitigate such risks. The Manager actively
reviews and monitors perceived risks. The Board has overall responsibility
for managing anti-bribery and corruption but has delegated day-to-day
responsibility for anti-bribery and corruption to the Head of Risk
and Compliance within the Manager, who reports up to the Board
periodically. There have been no instances of bribery and corruption
in the period.
Employees of the Manager are required to undertake certain
e-training on anti-bribery and other topics such as conflicts
of interest and anti-money laundering which is provided by
Access Learning.
Modern slavery and human trafficking policy
The Group is committed to maintaining the highest standards of
ethical behaviour and expects the same of its business partners.
Slavery and human trafficking are entirely incompatible with the
Group’s business ethics.
We recognise that the real estate and construction sectors rank
highly for modern slavery risks. We believe that every effort should
be made to eliminate slavery and human trafficking from the Group’s
supply chain. We seek to mitigate the Group’s exposure by engaging
with reputable professional service firms, which adhere to the
Modern Slavery Act 2015.
We also regularly request formal governance information from the
Group’s suppliers, to enable ongoing monitoring of business and
supply chain risk, and conduct due diligence and risk assessment
on potential new suppliers.
This year, we have reviewed our processes and incorporated
requests for details of suppliers’ modern slavery policies in our
contract procurement process. Our property and asset managers
undertake on-site inspections, which enables us to check supplier
practices, and this is recorded in the inspection proforma. We will
continue to monitor and collaborate with the Group’s suppliers,
customers and developers, to ensure that they have systems and
controls that reduce the risk of facilitating modern slavery and
human trafficking.
Depositary Report
Established in 2013, Langham Hall UK Depositary LLP is an
FCA regulated firm that works in conjunction with the Manager
and the Company to act as depositary. Consisting exclusively
of qualified and trainee accountants and alternative specialists,
the entity safe keeps assets of US $115 billion and we deploy our
services to over 175 alternative investment funds across various
jurisdictions worldwide. Our role as depositary primarily involves
oversight of the control environment of the Company, in line with
the requirements of the Alternative Investment Fund Managers
Directive (“AIFMD”).
Our cash monitoring activity provides oversight of all the Company
held bank accounts with specific testing of bank transactions
triggered by share issues, property income distributions via
dividend payments, acquisitions and third-party financing. We
review whether cash transactions are appropriately authorised
and timely. The objective of our asset verification process is to
perform a review of the legal title of all properties held by the
Company, and shareholdings of special purpose vehicles beneath
the Company. We test whether on an ongoing basis the Company
is being operated by the Manager in line with the Company’s
prospectus, and the internal control environment of the Manager.
This includes a review of the Company’s and its subsidiaries’
decision papers and minutes.
We work with the Manager in discharging our duties, holding
formal meetings with senior staff on a quarterly basis, and submit
quarterly reports to the Manager and the Company, which are
then presented to the Board of Directors, setting out our work
performed and the corresponding findings for the period.
In the financial year to 30 September 2023 our work included
the review of one investment property acquisition, four property
income dividends and one investment property disposal. Based
on the work performed during this period, we confirm that no
issues came to our attention to indicate that controls are not
operating appropriately.
Joe Hime
Head of UK
For and on behalf of
Langham Hall UK Depositary LLP, London, UK
4 December 2023
Langham Hall UK Depositary LLP is a limited liability partnership
registered in England and Wales (withregisterednumber OC388007).
Tritax EuroBox plc Annual Report 202388
Audit & Risk Committee Report
Membership
Keith Mansfield (Chair)
Taco de Groot
Sarah Whitney
e For full details on Committee attendance please refer to page 80
Key areas of focus in 2022/2023:
– reviewed and recommended to the Board that the Annual
Report 2022 and Interim Accounts 2023 be approved;
– assessed the matters raised by the FRC on the 2022
Annual Report;
– monitored the integrity of the financial statements of the
Company and any formal announcements relating to the
Company’s financial performance and reviewed any significant
financial reporting judgements contained in them;
– monitored the effectiveness of the Group’s assessment of
risk to ensure actions are being taken to mitigate the Group’s
exposure to risk;
– conducted a risk review;
– reviewed the robustness of the Company’s internal financial
controls and reviewed the efficiency of the internal control and
risk management systems used by the Company;
– assessed the quality of the annual and interim property
valuations prepared by the Company’s newly appointed
independent valuer and challenged the assumptions used by
the valuer in preparing the valuation;
– reviewed and considered the basis of the Viability and Going
Concern Statements made by the Directors;
– reviewed and monitored the Company’s relationship with
its Auditor;
– reported to the Board on how the Committee discharged
itsresponsibilities;
– reviewed the accounting and reporting implications of changes
in standards or best practice;
– evaluated the Company’s key climate-related risks as part of
the TCFD reporting;
– maintained ESEF reporting; and
– monitored development of the BEIS audit reform.
Keith Mansfield
Chair of the Audit & Risk Committee
“ Significant enhancements
have been implemented in
respect of the Company’s risk
management framework.”
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 89
Dear Shareholders,
I am pleased to present the Audit & Risk Committee Report for the
year ended 30 September 2023.
The Audit & Risk Committee’s role is to oversee the Company’s
financial reporting process, including the risk management and
internal financial controls in place within the Manager, the valuation
of the property portfolio, the Group’s compliance with accepted
accounting standards and other regulatory requirements as well as
the activities of the Auditor.
The Board maintains ultimate control and we report to it on a regular
basis on how we have discharged our responsibilities. We operate
within defined Terms of Reference which are available on the
Company’s website and on request from the Company Secretary.
All Audit & Risk Committee members are independent Non-Executive
Directors of the Company, not connected to the Manager or the
Auditor. The Committee believes that its members have the right
balance of skills and experience to be able to function effectively.
I am an ACA registered accountant with the Institute of Chartered
Accountants in England and Wales, and have extensive, recent
and relevant financial experience gained in my previous role as
Partner at PwC where I developed a specialism in the real estate
industry, serving as regional Chairman of PwC in London for seven
years. Sarah Whitney is also a fellow of the Institute of Chartered
Accountants with an extensive career advising boards on strategy,
corporate finance and real estate matters.
The Committee considers Sarah Whitney and me to be industry
experts given our financial backgrounds. As such, we consider 67%
of the Committee to have significant financial experience. Further
details of each Director’s experience can be found in the biographies
on pages 66 and 67.
We met for seven scheduled meetings during the period, following
the Company’s corporate calendar, which ensures that the meetings
are aligned to the Company’s financial reporting timetable. The
Company Secretary ensures that the meetings are of sufficient
length to allow the Committee to consider all important matters and
the Committee is satisfied that it receives full information in a timely
manner to allow it to fulfil its obligations.
These meetings are attended by the Committee members, as well
as representatives of the Manager, the Company Secretary and the
Auditor, KPMG LLP, and, on occasion, the Company’s Chairman.
We also met with the Auditor without any representative of the
Manager present.
The Committee also met with the Company’s newly appointed
independent valuer, CBRE, as part of the interim review and year-end
audit processes. As the Committee Chair, I have had regular
communications with the Company Secretary, the CFO for the
Company and the Auditor. In addition, the Committee has discussions
throughout the year outside of the formal Committee meetings.
The Committee reviewed the contents of the FRC letter in respect
of the 2022 Annual Report, and worked with the Manager to
implement their recommendations for the 2023 Annual Report,
where appropriate. The FRC letter provides no assurance that the
annual report and accounts are correct in all material respects. The
FRC’s role is not to verify the information provided but to consider
compliance with reporting requirements.
Following the Green Bond issuance in June 2021, the Company
instructed PwC to provide an independent limited assurance report
in accordance with ISAE 3000 in June 2022. A similar exercise
was undertaken in June 2023 and the full report together with
PwC’s independent limited assurance report can be found on the
Company’s website.
Risk management
During the period the Committee instructed BDO to perform a risk
review. In conjunction with the Manager, the engagement was to
enhance the Company’s approach to risk management. BDO has
reported back with an initial set of recommendations which have
been agreed by the Committee:
– establish a principal risk register aligned to strategic objectives –
now completed;
– establish a formal risk appetite statement to guide strategic risk
decision-making; and
– define and embed relevant risk indicators which inform Board
andManagement.
BDO have recommended a further set of recommendations to
further enhance the Company’s risk management. In 2024 both the
Board and the Committee will consider these recommendations and
if applicable monitor their implementation.
Financial reporting and significant judgements:
– monitored the effectiveness of the Group’s assessment of
risk to ensure actions are being taken to mitigate the Group’s
exposure to risk;
– reviewed the robustness of the Company’s internal financial
controls and the efficiency of the internal control and risk
management systems used by the Company;
– assessed the quality of the annual and interim property valuations
prepared by the Company’s independent valuer and challenged
the assumptions used by the valuer in preparing the valuation;
– reviewed and considered the basis of the Viability and Going
Concern Statements made by the Directors;
– reviewed and monitored the Company’s relationship with
its Auditor;
– reviewed the accounting and reporting implications of changes
instandards or best practice;
– evaluated the Company’s key climate-related risks as part of the
TCFD reporting; and
– monitored the integrity of the financial information published in
the Interim and Annual Reports and considered whether suitable
and appropriate estimates and judgements have been made
in respect of areas which could have a material impact on the
financial statements.
We also considered the processes undertaken by the Manager
toensure that the financial statements are fair, balanced and
understandable. A variety of financial information and reports
wereprepared by the Manager and provided to the Board and
totheCommittee over the course of the year. These included
budgets, periodic re-forecasting following acquisitions or
corporateactivity, papers to support raising of additional
financeandgeneral compliance.
Task Force on Climate-Related Financial
Disclosures (“TCFD”)
Building on our first TCFD disclosure in the 2022 Annual Report,
Iam pleased to note that working alongside the Manager, the
Committee reviewed the Company’s climate risks facing the
business and advised the Board accordingly. ESG Consulting Group
at CBRE Limited assisted the Company with the TCFD reporting.
Please refer to pages 52 to 62 for our 2023 TCFD disclosure.
ESEF
I can confirm that the Company’s consolidated financial statements
have been prepared in a digital form under the European Single
Format regulatory standard ("ESEF RTS").
Tritax EuroBox plc Annual Report 202390
Audit process
1. Planning meeting
We meet with the Auditor and the Manager before the
preparation of each of the interim and annual results, to plan
and discuss the scope of the audit or review as appropriate,
and challenge where necessary to ensure its rigour.
2. Scope
At these meetings the Auditor prepares a detailed audit or
review plan which is discussed and questioned by us and
the Manager to ensure that all areas of the business are
appropriately reviewed and that the materiality thresholds are
set at the appropriate level, which varies depending on the
matter in question.
3. Challenge
We discuss with the Auditor its views over significant
riskareas and why it considers these to be risk areas.
TheCommittee, where appropriate, continues to challenge
and seek comfort from the Auditor over those areas which
drive audit quality.
4. Ongoing review
We meet with the Auditor again just prior to the conclusion
of the review or audit to consider, challenge and evaluate its
findings in depth.
Audit & Risk Committee Report continued
Business combinations
At the time of acquiring a subsidiary that owns investment properties,
the Group considers whether each acquisition represents the
acquisition of a business or the acquisition of anasset. Where an
acquisition is judged not to be the acquisition of a business, it is
not treated as a business combination. Of the one acquisition in the
period, this was considered to be an asset acquisition.
Newly appointed independent valuer
During the period, the Company announced the appointment of
CBRE as the independent valuer. I am pleased to report that the
Committee worked constructively with both the Manager and CBRE
in determining the valuation of the Company’s property portfolio as
at 31 March 2023 and 30 September 2023.
Valuation of property portfolio
The property portfolio is independently valued by CBRE biannually.
Following production of the draft valuation by CBRE, the Manager
meets with CBRE to discuss and challenge various elements of the
property valuation, if necessary. The Auditor, in fulfilling its function
as independent Auditor to the Company, also meets with CBRE to
discuss and, where necessary, challenge the property valuations.
The Committee and the Board receive a copy of the property
valuation of the portfolio once it has been assessed by the Manager
and meets with CBRE to discuss the property valuations.
The Group has property assets valued at approximately €1.56billion as
explained in note 14 to the financial statements; CBRE has independently
valued the properties applying the principles of both IAS 40 “Investment
Property” and IFRS 13 “Fair Value Measurement”. The Committee met
with CBRE, to discuss and challenge the valuation and to ensure it was
conducted properly and independently and could be fully supported.
We have also reviewed the assumptions underlying the property
valuations and discussed these with the Manager and CBRE and
have concluded that both valuations are appropriate.
Fair, balanced and understandable
financialstatements
The production and audit of the Group’s Annual Report is a
comprehensive process, requiring input from a number of contributors.
To reach a conclusion on whether the Annual Report is fair, balanced
and understandable, as required under the AIC Code, the Board
has requested that the Audit & Risk Committee advises on whether
it considers that the Annual Report fulfils theserequirements. In
outlining our advice, we have considered thefollowing:
– the comprehensive documentation that outlines the controls
in place for the production of the Annual Report, including the
verification processes to confirm the factual content, and the
detailed reviews undertaken at various stages of the production
process by the Manager, the Administrator, the Joint Financial
Advisers, the Auditor and the Audit & Risk Committee, which
areintended to ensure consistency and overall balance;
– controls enforced by the Manager, the Administrator and other
third-party service providers, to ensure complete and accurate
financial records and security of the Company’s assets; and
– the satisfactory ISAE 3402 control report produced by the
Administrator for the year ended 30 September 2023, which
has been reviewed and reported upon by the Administrator’s
external Auditor, to verify the effectiveness of the Administrator’s
internal controls.
As a result of the work performed, we have concluded and
reported to the Board that the Annual Report for the year ended
30 September 2023, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
Shareholders to assess the Company’s performance, business
model and strategy.
1.
Planning
meeting
3.
Challenge
4.
Ongoing
review
2.
Scope
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 91
Gothenburg, Sweden
Situated in the Gothenburg region, which is
regarded as the gateway to the Nordics, the
c.28,900 sqm asset has its own rail loading
facility and is next to the Port of Gothenburg,
a key logistics location in Sweden.
Internal audit
The Company does not have an internal audit function and,
followingan internal risk review, we do not consider it necessary
forthe Company to have one.
External audit
KPMG was appointed as the Company’s external Auditor with
effect from 11 December 2018. KPMG’s reappointment is approved
annually by the Company’s Shareholders at the AGM, and it has
been in place for five years. The Audit Partner and wider team
remained consistent during the period, with David Neale as Lead
Audit Partner and Clason Low as Audit Director. The Auditor formally
confirmed its independence for the period. The Audit Partner is
subject to mandatory rotation every five years and, following the
conclusion of the audit for the year ended 30 September 2023,
David Neale will be rotated, with a mandatory audit firm retender
after ten years. The Committee led by the Chair has commenced the
process to appoint a new Audit Partner. The audit firm is subject to
mandatory rotation after 20 years.
The Committee, having met with key members of the audit team, is
satisfied that KPMG possesses the knowledge of the Company and
continuity of team to produce a detailed, high-quality and in-depth
audit. The Committee considered KPMG’s internal quality control
procedures and found them to be sufficient and all parties continue
to ensure that the audit process is transparent and of good quality.
Please refer to note 8 in the financial statements for a summary of
fees paid to the Auditor.
The Company confirms that it has complied with the Competition
and Markets Authority’s Order in the year.
Non-audit services
The Committee has adopted a Non-Audit Services Policy to ensure
appropriate controls around identifying any non-audit services
being provided by KPMG on new entities. As a general rule, it is
not expected that KPMG will be engaged for non-audit services
other than to review the half year report. In limited circumstances,
it may be appropriate to use KPMG for permitted non-audit
services subject to prior approval by the Committee above a
certainthreshold.
The Company paid £71,500 in fees to the Auditor for non-audit
services during 2023. These fees are set out in the table below.
Work undertaken Rationale for using external Auditor
2023 fee
£
Interim Review Work is normally performed
by an external Auditor
71,500
Total 71,500
Non-audit fees as a percentage of total fees paid to KPMG LLP
forthefinancial year to 30 September 2023 were 12% (2022: 10%).
TheCommittee periodically monitors the ratio to ensure that any
fees for permissible non-audit services do not exceed 70% of the
average audit fees paid in the last three years.
Committee Evaluation
The overall performance of the Audit & Risk Committee was rated
highly, in particular addressing the issues within its remit, led by its
experienced chair.
Outlook for 2023/2024
The Committee will continue to review and assess the work of
the external Auditor, financial reporting, internal control and risk
management systems and the independent property valuations.
TheCommittee will also continue to monitor the developments in
theaudit reform and continue to embed climate reporting into the
risk management framework.
Keith Mansfield
Chair of the Audit & Risk Committee
4 December 2023
Ratio of audit to non-audit services
Non-audit
Audit
12%
88%
Tritax EuroBox plc Annual Report 202392
Management Engagement Committee Report
Membership
Taco de Groot (Chair)
Keith Mansfield
Robert Orr
Eva-Lotta Sjöstedt
Sarah Whitney
e For full details on Committee attendance please refer to page 80
Key areas of focus in 2022/2023:
– annual review of each service provider to ensure the quality
of service and value for money; and
– comprehensive review of the Manager’s performance; and
– valuer re-tender process.
Dear Shareholders,
I am pleased to present the Management Engagement Committee
Report which covers the period to 30 September 2023. During the
period, the Committee reviewed the Manager’s performance, as well
as its key suppliers, in line with the established framework.
The Committee’s role is to review the performance of the Manager
and the Company’s key service providers and, if required, to recommend
the re-tender of their services for consideration by the Board. These
reviews are undertaken on an annual basis, or as relevant, to ensure
that the services provided are in accordance with each supplier’s
terms of engagement, are high quality and represent fair value
for money. We also take note of any added value provided. The
Committee is also responsible for overseeing any amendments to
the Investment Management Agreement (“IMA”). During the review
period, the Committee focused on reviewing the performance of the
Company’s service providers and of the Manager. We met for two
scheduled meetings in the year ended 30 September 2023.
Review of key suppliers
The Manager prepared a Key Supplier Review report. Following a
thorough review, we agreed with the Manager that the performance
of the Company’s current service providers for the past year
continued to be satisfactory, and in several cases exceptional.
We are satisfied that the Company is benefiting from added value in
respect of the services it procures and do not suggest any material
changes to the engagement terms of the Company’s advisers or
service providers. Receipt of the tender schedule does not prevent
the Committee from taking action at an earlier stage if necessary
and in the interests of the Company.
e Details of the Company’s performance during the period are set out in
the Strategic Report on pages 1 to 63
Taco de Groot
Chair of the Management EngagementCommittee
“ We are pleased to have overseen
the valuer re-tender process.”
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 93
Valuer Re-tender
The Committee took the opportunity to rotate the Company’s
independent valuer in accordance with best practice. JLL, the
previous independent valuer had held this position since the
Company’s IPO. Following a rigorous tender process, the Manager
recommended CBRE. The Committee reviewed CBRE’s suitability
and fee proposal to become the independent valuer, and accordingly
CBRE’s appointment was recommended to the Board for approval.
For full details of the re-tender process, please refer to page 77.
The Manager
Under the terms of the IMA and in accordance with the ESMA
guidance, as to the interpretation of the rules under AIFMD, the
Board has delegated the day-to-day responsibility for running
the Company to the Manager. The Manager is responsible for
making investment and divestment decisions in accordance
with the Company’s Investment Policy, asset management of
the existing portfolio, negotiation of debt facilities within the
parameters of the Company’s policy on gearing and liaising with
the Company’s advisers on equity fundraisings. To ensure open
and regular communication between the Manager and the Board,
the Manager is invited to attend all Board meetings to update the
Board on the Company’s portfolio activity and discuss the general
market conditions and the financial performance and strategy of
the Company.
The Board continues to review all investment and divestment
decisions and remains responsible for ensuring that these decisions
are made in accordance with the Company’s Investment Policy.
The Committee also reviews the Manager’s culture and organisational
structure. The Manager increased the number of employees during
the period to ensure that the Company is well served, including the
appointment of the new Director of Investor Relations.
Investment Management Agreement
The Committee is pleased to note that Shareholders approved the
revised IMA at a General Meeting held in October 2022. TheIMA
has an 18-month fixed term effective from the date of theGeneral
Meeting, after which the Company would have a two-year
rolling notice.
The revised IMA reduces costs and ensures that the Company
has the right skills and resources in place to deliver returns to
Shareholders over the long term.
Conflict management
The IMA contains robust conflict provisions and the Manager is not
permitted in any circumstance to manage or advise another fund
with an investment policy, objective and/or strategy similar to that of
the Company or that focuses on distribution and/or logistics assets
in any or all of the countries targeted by the Company. In addition,
the Manager may not acquire any distribution or logistics assets
located in such countries for or on behalf of itself, its affiliates or
any entity other than the Company unless it has consulted with and
obtained the prior written consent of the Board and followed the
procedure specified in the IMA.
The Manager has an Investment Allocation Policy. This policy
exists to ensure fair allocation of assets between funds manged
by the Manager and describes the mechanism to be applied by
the Manager to identify actual or potential conflicts. This policy
is reviewed annually by the Manager and was last reviewed in
April 2023.
Management fee
Under the terms of the IMA, the Manager is entitled to a
management fee in consideration for its services. This is payable in
cash by the Company to the Manager each quarter and is calculated
based on a percentage of the Company’s Net Asset Value (“NAV”).
The fee is payable quarterly in arrears and the Manager is obliged
to apply 10% of the fee in shares of the Company (“Management
Shares”). If the Group buys or sells any assets after the date at which
the relevant NAV is calculated, the NAV is adjusted pro rata for the
net purchase or sale price, less any third-party debt drawn or repaid
whilst remaining capped at NAV.
The management fee as a percentage of NAV is as set out below:
NAV
Annual management
fee percentage
Up to and including €1 billion 1.00%
Above €1 billion 0.75%
On a biannual basis, once the Company’s Basic NAV has been
announced, 10% of the management fee (net of any applicable tax)
for the relevant six-month period will be applied by the Manager in
subscribing for, or acquiring, Shares of the Company (“Management
Shares”). The Manager has agreed not to transfer, dispose of
or grant any options over Management Shares subscribed for
or acquired by the Manager for a period of 12 months following
the date of its subscription for or acquisition of Ordinary Shares
pursuant to these arrangements without the prior written consent
of the Company. All costs in relation to asset management services
(which includes the fees paid to Dietz, LCP and NCAP) are paid by
the Manager from the management fee.
On 6 December 2022, the Manager purchased Ordinary Shares in
the market and allocated 364,637 to the Manager’s Partners and
its staff and abrdn in respect of the net cash amount, relating to the
six-month period to 30 September 2022. The purchase price was
68.19 pence per Ordinary Share. Phil Redding acquired atotal of
100,000 Ordinary Shares in the capital of the Company.
On 18 May 2023, the Manager purchased Ordinary Shares in the
market and allocated 293,120 to the Manager’s Partners and its
staff and abrdn Holdings Limited in respect of the net cash amount,
relating to the six-month period to 31 March 2023. The purchase
price was 68.16pence per Ordinary Share.
Following the purchase of Ordinary Shares, the Manager had the
following beneficial interests as at 4 December 2023:
PDMR or person closely associated
Number
of Ordinary
Shares held*
Percentage of
issued share
capital*
Colin Godfrey 395,871 0.0491%
James Dunlop 395,870 0.0491%
Henry Franklin 265,774 0.0329%
Phil Redding 154,797 0.0192%
Petrina Austin 42,859 0.0053%
Tritax Management LLP — —
abdrn Holdings Limited
1
498,145 0.0062%
Partners and staff of Tritax
Management LLP
2
503,137 0.0062%
Total 2,256,453 0.2797%
1 The figure comprises Ordinary Shares issued to abrdn Holdings Limited,
previously called Aberdeen Asset Management plc, under the terms of the
IMA and it does not include other shares that may have been acquired by
abrdn Holdings Limited.
2 The figure comprises Ordinary Shares issued to partners and staff of
TritaxManagement LLP under the terms of the IMA and at IPO, and does
not include other shares that may have otherwise been acquired by staff.
* Number of Ordinary Shares and percentage of issued share capital as at
30 September and 4 December 2023.
Tritax EuroBox plc Annual Report 202394
AIFM Directive
The AIFMD became part of UK law in 2013, and was amended
in2019 to adjust for the UK withdrawal from the European Union.
Itregulates AIFMs and imposes obligations on managers who
manage Alternative Investment Funds (“AIFs”) in the UK. Marketing
shares in UK AIFs to EU investors now requires separate approval
by the national competent authority in the target EU Member State.
Under the AIFMD, the AIFM must comply with various organisational,
operational and transparency obligations.
The Manager is authorised by the FCA as an AIFM and provides
all relevant investment management and advisory services to the
Company, including regulated activities. The Manager is responsible
for making investment and divestment decisions in respect of the
Company’s assets as part of its regulatory responsibility for the
overall portfolio and risk management of the Company. This is in
linewith published ESMA guidance on the application of the AIFMD.
AIFM remuneration policy applied by the Manager
As a full scope AIFM, the Manager must apply a remuneration policy
in line with its business strategy, objectives, values and interests, as
well as those of the AIFs it manages or its investors. The policy must
include measures to avoid conflicts of interest. This ensures that the
Manager’s Partners have a vested interest in ensuring the Manager
remains financially sound.
The annual fee paid by the Company is based on a percentage of its
NAV, as set out on page 93. In addition, the Manager’s Partners are
required to apply 10% of that fee (net of tax and certain other costs,
as described on the previous page) to the purchase of Management
Shares. Management Shares are subject to a 12-month lock-in period.
This aligns the interests of the Manager’s Partners with the strategy
and interests of the Company and its Shareholders. The Manager’s
Partners are able to allocate a proportion of the Management Shares
to key members of staff, which they have once again done in respect
of both Management Share purchases in the period.
The Manager’s partnership board therefore meets at least
twice a year to discuss the remuneration of its entire staff. Staff
are remunerated in accordance with their seniority, expertise,
professional qualifications, responsibilities and performance.
They are paid salaries in line with market rates and, in profitable
years, awarded a discretionary bonus from a bonus pool worth,
inaggregate, at least 5% of the Manager’s profits. The discretionary
bonus may consist of cash or Ordinary Shares in the Company
allocated to certain members of staff out of the Management
Shares. This means that staff remuneration is predominantly fixed
and the variable element is determined by the Manager’s overall
profitability, rather than the performance of a particular AIF.
The Manager’s Partners are entitled to their partnership share of its
profits and losses. None of the Partners are entitled to additional
partnership drawings that depend on the performance of any AIF
managed by the partnership. The Partner’s remuneration therefore
depends on the Manager’s overall profitability, rather than the
performance of any AIF.
Committee evaluation
The overall performance of the Management Engagement
Committee for the period was positively rated, in particular its
oversight of the performance and retention of key service providers
and of the Manager’s performance.
Outlook for 2023/2024
The Committee will continue to review and assess the performance
of the Manager and key suppliers.
Taco de Groot
Chair of the Management Engagement Committee
4 December 2023
Management Engagement Committee Report continued
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 95
EBOX ESG Committee Report
“ We now have enhanced
oversight over ESG Strategy.”
Membership
Eva-Lotta Sjöstedt (Chair)
Taco de Groot
Keith Mansfield
Robert Orr
Sarah Whitney
e For full details on Committee attendance please refer to page 80
Key areas of focus in 2022/2023:
– establishing the EBOX ESG Committee’s remit and
agreeing reporting procedures;
– progress and delivery of the Company’s updated ESG and
net zero targets;
– the Company’s solar PV investment programme; and
– increasing knowledge and engagement.
Dear Shareholders,
I am pleased to present the inaugural EBOX ESG Committee Report
for the year ended 30 September 2023.
The Committee was constituted by the Board on 5 December 2022
and operates within defined Terms of Reference which are available
on the Company’s website. The purpose of this Committee is to
oversee and advise the Board on the effectiveness of the Company’s
ESG strategy, overseeing its targets and key metrics, and advising
the Board on the appropriateness of its policies.
The Committee is comprised of all five independent Non-Executive
Directors and met twice in the period. The Committee maintains a
dialogue with key individuals involved in the Company’s ESG initiatives,
including the Manager’s ESG Director and its Director of Asset
Management. I am pleased to report that during the period, the
Committee has maintained a constructive dialogue with the Manager
in respect of implementing the Company’s agreed ESG strategy.
The Committee’s remit – one year on
The EBOX ESG Committee was created in recognition of the
growing importance of ESG topics affecting the Company, and
the need for the Directors to have a dedicated forum to discuss
ESG matters.
A year into its existence, the Directors recognise the value of the
Committee. It has allowed its members to have better oversight of
the Company’s strategy at a time when it was reviewing its ESG
targets, including its net zero targets.
Updated ESG targets
The Company disclosed a new set of ESG targets, which the ESG
Committee had reviewed, discussed and agreed with representatives
from the Manager prior to their release.
Environment
The ESG Committee monitored the Company’s progress towards
achieving its targets regarding climate change, decarbonisation,
biodiversity, natural capital. The Manager’s approach to the
integration of climate risk management was also reviewed
bytheESG Committee.
Social
As set out in the EBOX ESG Committee’s Terms of Reference, the
adequacy
of testing and controls of the supply chain risk and compliance
framework
was formally reviewed by the Committee along with
reviewing the Manager’s social impact strategy.
The Committee also reviewed the Company’s investment
andcharitable giving.
Regulation
I am pleased to report that the creation of the EBOX ESG Committee
has provided for enhanced focus on the regulation and legislation
around ESG.
ESG Opportunities
The Committee has focused on the Company’s solar strategy. As at
30 September 2023, the Company has a total of eight assets with
solar schemes, with a total capacity of 10.3 MW. I am pleased to
report that the Manager has maintained focus on this from an Asset
Management perspective and this will remain an area of focus for the
Committee as this is a key component of the Company’s ESG strategy.
Committee evaluation
The overall performance of the Committee for the period was
positively rated, in particular its enhanced focus on overseeing the
Company’s ESG strategy.
Outlook for 2023/2024
The Committee will continue to review and assess the progress
against the Company’s agreed ESG strategy.
Eva-Lotta Sjöstedt
Chair of the EBOX ESG Committee
4 December 2023
Eva-Lotta Sjöstedt
Chair of the EBOX ESG Committee
Tritax EuroBox plc Annual Report 202396
Q&A with Eva-Lotta Sjöstedt
Chair of the EBOX ESG Committee
Why is ESG important to the Company?
As a responsible investor ESG performance is important. In addition,
our stakeholders are making decisions based on ESG performance.
The Board is fully aware that our customers are increasingly making
decisions based on our ESG credentials. The Board also notes that
investors prefer companies such as the Company to have robust
policies and procedures around ESG.
The Board and the Company fully recognise that strong governance
contributes to long-term growth but in a way that is sustainable and
provides for a positive impact. Increasingly the ESG performance of
assets is having an impact on liquidity and value.
What is the Company’s ambition for
NetZero Carbon?
Our ambition is to record, report and reduce the embodied carbon
associated with our developments, and continue to collect and
report on the operational performance data (in relation to energy,
water use and waste) of our customers.
Usage and reductions are now monitored across the portfolio and
reviewed regularly with an annual review of progress against targets.
This progress is formally reviewed annually by the EBOX ESG
Committee.
The Company’s delivery strategy is focused on four key areas:
1. integration of our decarbonisation targets into the asset management
and development management plans for our buildings;
2. working in partnership with our customers;
3. increasing the level of renewable energy across the portfolio
through our solar PV roll-out programme; and
4. increasing the amount and quality of building performance data
to allow best possible analysis.
In tandem with increasing the levels of renewable energy across the
portfolio, we are also actively working with our occupiers to look for
opportunities to remove gas from buildings where it currently exists.
Carbon offsets will be the last resort once all other options have
been explored.
How will the ESG Committee enhance the
Company’s ESG Governance?
The Board established the ESG Committee to ensure that the
Company’s ESG strategy is given more focus and attention.
The ESG Committee will allow for the appropriate scrutiny of
the Company’s policies and procedures around ESG. ESG is an
ever-evolving area of the Company’s business, and the work of
the Committee will ensure that the Company always meets the
applicable standards.
The Company has certain ESG goals and targets, and the role of
the Committee will be to seek to ensure that targets are in place
andappropriately monitored and reported upon.
The Manager’s ESG Director is invited to each Committee meeting
todiscuss progress of the Company’s ESG strategy.
Manager’s asset tour in Germany
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 97
Directors’ Fees – Benchmarking
In line with best governance practice, the Board requested the
Manager conduct a fee benchmarking exercise.
The exercise was facilitated by the Secretariat and compared the
Company with its peer group and additional FTSE 250 companies.
As a result, and following a number of meetings, the following
changes were recommended by the Nomination Committee
and subsequently approved by the Board and took effect from
6December 2022.
– The fee for the Senior Independent Director would be £5,000.
– The fee for the Chair of the Audit & Risk Committee would
increase from £5,000 to £10,000.
– The fee for the Chair of the Management Engagement
Committee would be £5,000.
– The fee for the Chair of the EBOX ESG Committee would
be £5,000.
Directors’ Remuneration Report
Annual statement (audited)
The Company only has Non-Executive Directors and therefore does
not consider it necessary to establish a separate Remuneration
Committee. The Directors’ remuneration is disclosed below. The
Remuneration Report will be presented at the AGM on 14 February
2024 for Shareholder consideration and approval.
Directors’ Remuneration Policy
The Company’s policy is to determine the level of Directors’ fees
with regard to those payable to Non-Executive Directors of the
Company’s peers and the time each Director dedicates to the
Company’s affairs. The Directors’ Remuneration Policy was last
approved at the Company’s AGM on 9 February 2023 as set
out in the Company’s 2022 Annual Report which is available at
https://www.tritaxeurobox.co.uk/investors/
shareholder-information/key-documentation/.
The Directors’ Remuneration Policy will continue to apply for the
three financial years from its approval in February 2023.
The Directors are entitled to their annual fee and reasonable expenses.
No element of the Directors’ remuneration is performance related,
nor does any Director have any entitlement to pensions, share
options or any long term incentive plans from the Company.
Under the Company’s Articles, all Directors are entitled to the
remuneration determined from time to time by the Board.
Where the Board sets its own remuneration, there are inherent
conflicts of interest. However, the Board seeks to minimise these
through appropriate benchmarking by engaging external advisers
where appropriate.
External adviser
The Board has access to sufficient resources to discharge its duties.
The Company did not engage external advisers during the period.
Annual report on remuneration (audited)
Each Director has been appointed pursuant to a Letter of Appointment. All Directors are appointed for a three-year term, subject to
annual re-election at the Company’s AGM, and are paid in Sterling. No Director has a service contract with the Company, nor are any
such contracts proposed. The Directors’ appointments can be terminated in accordance with the notice provisions in the Articles and,
incertaincircumstances, without compensation. The terms of appointment of the Directors are set out in the below table.
Director
Letter of
appointment dated
Expected and actual
date of expiry
Unexpired term
as at 4 Dec 2023 Notice period
Robert Orr 5 June 2021 5 June 2024 6 months 3 months
Keith Mansfield 5 June 2021 5 June 2024 6 months 3 months
Taco de Groot 5 June 2021 5 June 2024 6 months 3 months
Eva-Lotta Sjöstedt 10 December 2022 10 December 2025 24 months 3 months
Sarah Whitney 14 February 2022 14 February 2025 14 months 3 months
The fees and expenses paid to the Directors in the year to 30 September 2023, which have been audited, are set out below. In addition,
each Director is entitled to recover all reasonable expenses incurred in connection with performing his or her duties as a Director. Directors’
expenses for the year to 30 September 2023 totalled £7,577 (2022: £15,561). No other remuneration was paid or payable during the year
toany Director. There have been no payments to past Directors or for loss of office.
Total remuneration (fee)
All non-taxable benefits and
expenses received
All taxable benefits and expenses
received Total fixed remuneration
For the
period ended
30 September
For the
period ended
30 September
For the
period ended
30 September
For the
period ended
30 September
For the
period ended
30 September
For the
period ended
30 September
For the
period ended
30 September
For the
period ended
30 September % change in
2023 2022 2023 2022 2023 2022 2023 2022 Directors
Director £ £ £ £ £ £ £ £ remuneration
Robert Orr 70,000 70,000 — 2,676 648 874 70,648 73,550 (1.96)%
Keith Mansfield 54,115* 50,000 — 1,792 1,529 1,940 55,644 53,732 8.23%
Taco de Groot 49,115* 45,000 — 1,945 219 — 49,334 46,945 9.14%
Eva-Lotta
Sjöstedt 49,115* 45,000 — 1,391 5,181 3,552 54,296 49,943 9.14%
Sarah Whitney
1
49,115* 28,154 — 1,391 — — 49,115 29,545 74.45%
Total 271,460 238,154 — 9,195 7,577 6,366 279,037 253,715 —
* Changes due to the updated NED fee which took effect from 6 December 2022.
1 Sarah Whitney was appointed as a Non-Executive Director on 14 February 2022.
No separate columns are presented for total variable remuneration as this was £nil for the relevant financial year. The above table is presented
in Sterling.
Tritax EuroBox plc Annual Report 202398
Statement of voting at General Meeting
The Company is committed to ongoing Shareholder dialogue and takes an active interest in voting outcomes. If there are substantial votes
against any resolutions, the Company will consult with Shareholders in order to understand the reasons for any such vote. The Company will
provide an update on the views received from Shareholders no later than six months after the meeting and any resulting action will be detailed
in the next Annual Report. Ordinary resolutions require a simple majority of 50% and special resolutions require 75% to be passed.
The Directors’ Remuneration Policy and the Directors’ Remuneration Report were most recently approved by Shareholders at the
Company’sAGM held on 9 February 2023. The voting on the respective resolutions was as shown below:
Resolution For % * Against %
Votes
withheld
Directors’ Remuneration Policy 98.25% 1.75% 63,163
Directors’ Remuneration Report 88.16% 11.84% 80,101
* Including votes in favour and discretion.
Total Shareholder Return
The graph below shows the Total Shareholder Return (as required by company law) of the Company’s Ordinary Shares relative to a return
on a hypothetical holding over the same period in the FTSE SmallCap, the FTSE All-Share, the FTSE All-Share REIT, and the EPRA Nareit
Developed Europe indexes.
%
Total Shareholder Return is the measure of returns provided by the Company to Shareholders reflecting share price movements and assuming
reinvestment of dividends.
-40
-30
-20
-10
0
10
20
30
40
Jul 18
Nov 18
Mar 19
Jul 19
Nov 19
Mar 20
Jul 20
Jul 21
Mar 22
Sep 18
BOXE LN Equity = EUR
Jan 19
May 19
Sep 19
Jan 20
May 20
Sep 20
Mar 21
Nov 21
May 22
Nov 20
Nov 22
May 21
Jan 22
Jan 21
Sep 21
Jul 22
Sep 22
Mar 23
May 23
Jan 23
Jul 23
Sep 23
EBOX LN Equity = GBP
EPRA Index = EUR
FTSE SmallCap
FTSE RE Index
FTSE All-Share
EPRA Index = GBP
FTSE 250
Directors’ Remuneration Report continued
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 99
Directors’ shareholdings (audited)
There is no requirement for the Directors of the Company to own shares in the Company. As at 4 December 2023, the Directors and their
persons closely associated held the shareholdings listed below.
Dividends
received
Percentage 30 September
Number of of issued 2023
Director shares held* share capital €
Robert Orr 201,029 0.025% 9,773
Keith Mansfield 290,000 0.036% 14,500
Taco de Groot 42,000 0.005% 2,100
Eva-Lotta Sjöstedt 6,900 0.001% 245
Sarah Whitney 65,230 0.004% 2,849
* Includes shareholdings of Directors and persons closely associated (as defined by the EU Market Abuse Regulation). The shareholdings of these Directors are
not significant and, therefore, do not compromise their independence.
Relative importance of spend on pay (audited)
2023 2022 Change
€m €m %
Directors’ remuneration* 0.35 0.32 9.38%
Investment management fees* 9.29 11.86 (21.67)%
Dividends paid to Shareholders 40.34 40.34 0%
* For further information, please see notes 8 and 9 of the financial statements.
Other items
The Company maintains Directors’ and Officers’ liability insurance cover, at its expense, on the Directors’ behalf.
As the Company does not have any employees, the Company is not required to produce pay ratio tables.
Robert Orr
Independent Chairman
4 December 2023
Tritax EuroBox plc Annual Report 2023100
Directors’ Report
Introduction
The Directors are pleased to present the Annual Report, including
the Company’s audited financial statements as at, and for the year
ended, 30 September 2023.
The Directors’ Report and the Strategic Report comprise the
“Management Report” for the purposes of Disclosure Guidance
andTransparency Rule 4.1.5R.
Statutory information contained elsewhere
intheAnnual Report
Information required to be part of this Directors’ Report can be
found elsewhere in the Annual Report and is incorporated into this
report by reference, as indicated in the relevant section.
Information Location in Annual Report
Directors Pages 66 and 67
Section 172 Pages 28 to 29
Business relationships Pages 1 to 63
Directors’ interest in shares Page 99
Future developments of the Company Pages 14 and 38
Financial instruments Note 4.4 on page 116
Corporate Governance Statement Pages 60, 67 and 68
Going concern and viability Page 63
Disclosure of information to Auditor Page 101
Share capital Page 100
TCFD Page 52
SECR reporting Page 36
Incorporation by reference
The Governance Report (pages 62 to 102 of this Annual Report and
Accounts for the year ended 30 September 2023) is incorporated
byreference into this Directors’ Report.
Financial results and dividends
The financial results for the year can be found in the Group
Statement of Comprehensive Income on page 110.
The following interim dividends amounting to, in aggregate, 5.00cents
per Ordinary Share, were declared in respect of the year ended
30September 2023.
On 9 February 2023, we declared an interim dividend in respect of
the period from 1 October 2022 to 31 December 2022 of 1.25 cents
per Ordinary Share, paid on 14 March 2023 to Shareholders on the
register on 17 February 2023.
On 18 May 2023, we declared an interim dividend in respect of
the period from 1 January 2023 to 31 March 2023 of 1.25 cents
per Ordinary Share, paid on 23 June 2023 to Shareholders on the
register on 26 May 2023.
On 8 August 2023, we declared an interim dividend in respect of the
period from 1 April 2023 to 30 June 2023 of 1.25 cents per Ordinary
Share, paid on 8 September 2023 to Shareholders on the register
on18 August 2023.
A fourth interim dividend in respect of the three months ended
30September 2023 of 1.25 cents per Ordinary Share will be
declared on 5 December 2023, payable on 12 January 2024.
Political donations
No political donations were made during the year.
Employees
The Group has no employees and therefore no employee share
schemes or policies on equal opportunities and disabilities.
Share capital
As at 4 December 2023, there were 806,803,984 Ordinary Shares in
issue. There were no Ordinary Shares issued during the year.
Restrictions on transfer of securities in the Company
There are no restrictions on the transfer of securities in the
Company, except as a result of:
– the FCA’s Listing Rules, which require certain individuals to have
approval to deal in the Company’s shares; and
– the Company’s Articles of Association, which allow the Board
to decline to register a transfer of shares or otherwise impose a
restriction on shares, to prevent the Company or the Manager
breaching any law or regulation.
The Company is not aware of any agreements between holders of
securities that may result in restrictions on transferring securities in
the Company.
Securities carrying special rights
No person holds securities in the Company carrying special rights
with regard to control of the Company.
Substantial shareholdings
As at 8 November 2023, the Company is aware of the following
substantial shareholdings, which were directly or indirectly interested
in 3% or more of the total voting rights in the Company’s issued
share capital. As at 8 November 2023, the issued share capital
remained the same as at 30 September 2023 with 806,803,984
shares in issue.
Shareholder name 8 November 2023 %
Aviva Investors 65,514,434 8.12
CCLA Investment Management 43,705,691 5.42
BlackRock 36,600,168 4.54
Primonial REIM 33,285,315 4.16
Close Brothers Asset Management 28,858,150 3.58
Amendment of Articles of Association
The Articles may be amended by a special resolution of the
Company’s Shareholders.
Powers of the Directors
The Board will manage the Company’s business and may exercise
all the Company’s powers, subject to the Articles, the Companies
Act and any directions given by the Company by special resolution.
GOVERNANCE
Tritax EuroBox plc Annual Report 2023 101
Powers in relation to the Company issuing its shares
At the AGM held on 9 February 2023, the Directors were granted a
renewed general authority to allot Ordinary Shares in accordance
with Section 551 of the Companies Act 2006 up to an aggregate
nominal amount of €2,689,346. Of those Ordinary Shares, the
Directors were granted authority to issue up to an aggregate nominal
amount of €403,401 (which is equivalent to 5% of the Company’s
issued share capital as at that date) non-pre-emptively and wholly
for cash and authority to issue up to an aggregate nominal amount
of €403,401 to be used only for the purpose of financing (or
refinancing, if the authority is to be used within six months after the
original transaction) a transaction which the Directors determine to
be an acquisition or other capital investment of a kind contemplated
by the Statement of Principles on Disapplying Pre-Emption Rights.
These authorities replaced the equivalent authorities given to the
Directors at the 2022 AGM. These authorities expire at the next
AGM on 14 February 2024 or 15 months after the date of the
previous AGM.
Authority to purchase own shares
At the 2023 AGM Shareholders authorised the Company to make
market purchases of its own shares. The Company has not yet
exercised this authority to date.
Change of control
Under the Group’s financing facilities, any change of control
atthe borrower or immediate parent company level may trigger
a repayment of the outstanding amounts to the lending banks
orinstitutions.
Appointment and replacement of Directors
Details of the process by which Directors can be appointed or
replaced are included in the Nomination Committee Report on
pages 82 to 85.
Disclosure of information to the Auditor
The Directors, who were members of the Board at the time of
approving the Directors’ Report, have confirmed that:
– so far as each Director is aware, there is no relevant audit
information of which the Company’s Auditor is not aware; and
– each Director has taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the Company’s Auditor is
aware of that information.
Events subsequent to the year-end date
For details of events since the year-end date, please refer to note 28
to the consolidated financial statements.
Independent Auditor
KPMG LLP has expressed its willingness to continue as Auditor for
the financial year ending 30 September 2024.
Manager and service providers
The Manager during the year was Tritax Management LLP.
Details of the Manager and the Investment Management Agreement
are set out in the Management Engagement Committee Report on
pages 92 to 94.
Additional information
In accordance with Listing Rule (LR) 9.8.4C R, the only disclosure
requirement required under LR 9.8.4 R is the disclosure of
capitalised interest, which is disclosed in note 10 on page 120.
Annual General Meeting
It is planned for the Company’s AGM to be held at the offices of
Ashurst LLP at London Fruit & Wool Exchange, 1 Duval Square,
London E1 6PW, on 14 February 2024.
This report was approved by the Board on 4 December 2023.
Tritax Management LLP
Company Secretary
4 December 2023
Company registration number: 11367705
Tritax EuroBox plc Annual Report 2023102
Statement of Directors’ Responsibilities
In respect of the Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report and
the Group and Parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. Under that
law they are required to prepare the Group financial statements in
accordance with UK-adopted International Accounting Standards
and applicable law and have elected to prepare the Parent Company
financial statements in accordance with UK accounting standards and
applicable law, including FRS 101 “Reduced Disclosure Framework”.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent Company and
of the Group’s profit or loss for that period. In preparing each of the
Group and Parent Company financial statements, the Directors are
required to:
– select suitable accounting policies and then apply them consistently;
– make judgements and estimates that are reasonable, relevant,
reliable and prudent;
– for the Group financial statements, state whether they have
been prepared in accordance with UK-adopted International
Accounting Standards;
– for the Parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the Parent
Company financial statements;
– assess the Group and Parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern; and
– use the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to cease
operations or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Parent Company and
enable them to ensure that its financial statements comply with the
Companies Act 2006. They are responsible for such internal control
as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due
to fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule
4.1.14R and the requirements of the Irish Stock Exchange, the
financial statements will form part of the annual financial report
prepared using the single electronic reporting format under the
TDESEF Regulation and EU ESEF Regulation. The Auditor’s Report
on these financial statements provides no assurance over the
ESEF format.
Responsibility statement of the Directors in respect
of the annual financial report
We confirm that to the best of our knowledge:
– the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation
taken as a whole; and
– the Strategic Report includes a fair review of the development and
performance of the business and the position of the issuer and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face.
We consider the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Group’s position and
performance, business model and strategy.
Robert Orr
Independent Chairman
4 December 2023
Annual Report 2023 Tritax EuroBox plc 103
FINANCIAL STATEMENTS
Independent Auditor’s Report
To the members of Tritax EuroBox plc
1. Our opinion is unmodified
We have audited the financial statements of Tritax EuroBox plc (“the Company”) for the year ended 30 September 2023 which comprise the
Group Statement of Financial Position, the Group Statement of Comprehensive Income, the Group Statement of Changes in Equity, the Group
Cash Flow Statement, the Company Balance Sheet and the Company Statement of Changes in Equity and the related notes, including the
accounting policies in notes 2 and 4 and note 1 of the Group and Company’s financial statements respectively.
In our opinion:
– the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 30th September 2023
and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
– the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 101
Reduced Disclosure Framework; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are
described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is
consistent with our report to the Audit & Risk Committee.
We were first appointed as auditor by the Directors on 11 December 2018. The period of total uninterrupted engagement is for the five financial
years ended 30 September 2023. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance
with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited
by that standard were provided.
Overview
Materiality: group financial statements as
awhole
€17.1m (2022: €18.8m)
1% (2022: 1%) of total Group assets
Coverage 100% (2022:100%) of total Group assets
Key audit matters vs 2022
Recurring risks Group: Valuation of investment properties and investment properties classified as
Assets Held for Sale ◄►
Parent: Recoverability of investment in subsidiaries
▲
Tritax EuroBox plc Annual Report 2023104
Independent Auditor’s Report continued
To the members of Tritax EuroBox plc
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and
include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had
the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We
summarise below the key audit matters, in decreasing order of audit significance, in arriving at our audit opinion above, together with our key
audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were
addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial
statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate
opinion on these matters.
The risk Our response
Valuation of
investment
properties and
Investment
properties
classified as Assets
Held for Sale
(Group)
Investment Property:
€1,512 million;
(2022:€1,766 million)
Assets Held for Sale:
€49 million (2022: €nil)
Refer to page 90
(Audit and Risk
Committee Report),
page 115 (accounting
policy) and page
pages 123–126
(financial disclosures).
Subjective valuation
Investment properties are the largest balance
in the group financial statements. At the date
of this report, the portfolio comprises 25
properties across Europe which are externally
valued by a qualified independent valuer, CBRE,
and held at fair value at the balance sheet date.
CBRE were engaged as the valuer during the
year. JLL were engaged as the valuer in the
previous period.
The fair value includes subjective selection of
assumptions, most significantly the estimated
rental value and the yield. These key assumptions
will be impacted by a number of factors including
size, building specification, location, the tenant
and lease length.
Whilst comparable market transactions can
provide valuation evidence, the nature of each
property means that a key factor in the property
valuations are the assumptions made by
the valuer.
Valuing investment properties either under
development or with development potential can
be further complicated by the need to assess
the likelihood for planning consent, an allowance
for development and stabilisation risk and
capital expenditure not yet incurred.
There is a risk that these adjustments could be
inappropriate and result in a material difference
in the valuation.
The degree of estimation uncertainty remains
high given the current macro economic environment
.
The narrowed gap between transaction yields
versus cost, high inflation, falling consumer
confidence, high interest rates and increased
debt costs leads to increased investment risk
and, at the same time fewer transactions to
benchmark valuations.
The effect of these matters is that, as part of
our risk assessment, we determined that the
valuation of investments properties has a high
degree of estimation uncertainty, with a potential
range of reasonable outcomes greater than
our materiality for the financial statements as a
whole, and possibly many times that amount.
The financial statements (note 14) disclose the
sensitivity in estimates by the Group.
We performed the tests below rather than seeking to rely on any of
the Group’s controls because the nature of the balance is such that
we would expect to obtain audit evidence primarily through the
detailed procedures described. Our procedures, assisted by our
own property valuation specialist (for procedures 1, 2 and 3), included:
– Valuer’s credentials: We assessed CBRE’s objectivity,
professional qualifications and experience through discussions
with them and analysing their valuation report and the terms of
their engagement;
– Methodology choice: We critically assessed the methodologies
used by the valuer by considering whether the methods adopted
were in accordance with the RICS Valuation – Global Standards
and accounting standards;
– Benchmarking assumptions: We selected a sample of properties
using various criteria including analysis of valuation movements
during the year, value of individual properties, movements in
yield rates and market rents, country specific risks and an
analysis of tenancies. With the assistance of our own property
valuation specialist, we held discussions with CBRE to critically
assess movements in property values for the sample selected.
We evaluated and challenged the key assumptions upon which
these valuations were based, by making a comparison to our
own understanding of the market, comparable evidence relied
on by the valuers and to industry benchmarks.
– Assessing transparency: We considered the adequacy of
the Group’s disclosures about the degree of estimation and
sensitivity to key assumptions made when valuing properties.
– Our additional procedures in respect of properties under
development included
– Test of Details: For all properties under development, we
assessed the progress of the development and evaluated
assumptions over future construction costs, by agreeing them
toconstruction contracts and management’s project appraisals.
– For forward funded contracts, we assessed the terms of the
development agreements, and how the associated costs of
development were considered by the valuers.
– Use of valuation expertise: Using our property valuation
specialist, we critically assessed any adjustments made for
development associated risks with reference to market practice.
Our results
– We found the valuation of investment properties to be
acceptable (2022: acceptable)
Annual Report 2023 Tritax EuroBox plc 105
FINANCIAL STATEMENTS
The risk Our response
Recoverability of
investment in
subsidiaries
(€565.9 million;
2022:€671.4 million)
Refer to page 90
(Audit Committee
Report), page 136
(accounting policy)
and page pages
137-138 (financial
disclosures).
Subjective estimate
The recoverability of the investment in
subsidiaries is substantially driven by the fair
value of the underlying investment properties.
The property valuations have a high degree of
estimation uncertainty, which is assessed as
part of our Group Key Audit Matter.
The risk associated with the recoverability of
the investments has increased during the year
following a fall in the values of the underlying
properties held by the subsidiaries which
underpin the assessment of the recoverability.
The effect of these matters is that, as part of
our risk assessment, we determined that the
recoverability of the investment in subsidiaries
has a high degree of estimation uncertainty,
with a potential range of reasonable outcomes
greater than our materiality for the financial
statements as a whole. The financial statements
(note 4) disclose the sensitivity in estimates
made by the Group.
We performed the tests below rather than seeking to rely on any
of the Group’s controls because the nature of the balance is such
that we would expect to obtain audit evidence primarily through
the detailed procedures described. Our procedures included:
– Tests of detail: We compared the carrying amount of 100% of
investments with the relevant subsidiaries’ draft balance sheet
to identify whether their net assets, being an approximation
of their minimum recoverable amount, were in excess of their
carrying amount.
– Our procedures over the fair value of the underlying investment
properties are described in our Group Key Audit Matter.
– Assessing transparency: We considered the adequacy
of disclosures about the degree of estimation and sensitivity
to key assumptions made assessing the recoverability of
theInvestment.
Our results
– We found the balance of the Company’s investments
in subsidiaries and the related impairment charge to be
acceptable(2022: acceptable)
3. Our application of materiality and an overview
ofthe scope of our audit
Materiality for the Group financial statements as a whole
was set at €17.1 million (2022: €18.8 million), determined with
reference to a benchmark of total Group assets of €1,652 million
(2022:€1,895million), of which it represents 1% (2022: 1%).
In addition, we applied materiality of €2.17 million (2022:€1.51million)
to these specific components of adjusted earnings: invoiced rental
income and income from rental guarantees, direct property costs
(excluding gross service charges), net service charge expenses,
management fees and finance expense from borrowings, for which
we believe misstatements of lesser amounts than materiality for
the financial statements as a whole could be reasonably expected
to influence the Company’s members’ assessment of the financial
performance of the Group.
Materiality for the parent company financial statements as a whole
was set at €14.6 million (2022: €15.5 million), determined with
reference to a benchmark of Company total assets of €1,468 million
(2022: €1,555 million), ofwhich it represents 1% (2022: 1%).
Performance materiality was set at 65% (2022: 65%) of materiality
for the financial statements as a whole, which equates to
€11.1million (2022: €12.2 million) for the Group and €9.5 million
(2021:€10.1million) for the parent company. Specific item
performance materiality was €1.41 million (2022: €0.98 million).
We applied this percentage in our determination of performance
materiality based on the level of identified misstatements and control
deficiencies in the control environment during the prior period.
We agreed to report to the Audit & Risk Committee any corrected
or uncorrected identified misstatements exceeding €0.9 million
(2022:€0.9 million) for the Group, €0.7 million (2022: €0.8 million)
or €0.1 million (2022: €0.1 million) for misstatements relating to
accounts to which the lower materiality was applied, in addition
to other identified misstatements that warranted reporting on
qualitative grounds.
The components within the scope of our work accounted for the
percentages illustrated opposite.
The Group team performed the audit of the Group as if it was a
single aggregated set of financial information. The Group team
performed the parent company audit. The audit was performed
using the materiality and performance materiality levels set out above.
The scope of the audit work performed was fully substantive as we
did not rely upon the Group’s internal control over financial reporting.
2. Key audit matters: our assessment of risks of material misstatement continued
Tritax EuroBox plc Annual Report 2023106
Independent Auditor’s Report continued
To the members of Tritax EuroBox plc
4. The Impact of climate change on our audit
In planning our audit we have considered the potential impacts of
climate change on the Group’s business and its financial statements.
Climate change impacts the Group in a number of ways: through
its own operations (including potential reputational risk associated
with the Group’s delivery of its climate related initiatives), through
its portfolio of investment properties and the greater emphasis on
climate related narrative and disclosure in the Annual Report.
The Group’s main potential exposure to climate change in the
financial statements is primarily through its investment properties
asthe key valuation assumptions and estimates may be impacted
byclimate risks.
As part of our audit we have made enquiries of the Manager
to understand the extent of the potential impact of climate
change risk on the Group’s financial statements and the Group’s
preparedness for this.
We have performed a risk assessment of how the impact of
climate change may affect the financial statements and our audit,
in particular with respect to the valuation of investment properties.
We held discussions with our own climate change professionals to
challenge our risk assessment.
On the basis of the risk assessment procedures performed above,
we concluded that, while climate change poses a risk to the determination
of the valuation of investment properties, as these valuations are
largely based on comparable market evidence we assessed that the
impact of climate change was not a significant risk for our audit nor
does it constitute a key audit matter and did not have any further
impact on the currently identified key audit matters.
We have also read the Group’s disclosure of climate related
information in the front half of the Annual Report as set out on pages
52 to 62, and considered consistency with the financial statements
and our audit knowledge. We have not been engaged to provide
assurance over the accuracy of these disclosures.
Total Group assets
Group materiality
Full scope for group audit purposes 2023
Full scope for group audit purposes 2022
100
100
100%
(2022: 100%)
100%
(2022: 100%)
100%
(2022: 100%)
100 100
100 100
Total Group assets
€1,652m
(2022: €1,895m)
Group revenue Group profit before tax Group total assets
Group Materiality
€17.1m
(2022: €18.8m)
€17.1m
Whole financial statements materiality (2022: €18.80m)
€11.1m
Whole financial statements performance materiality (2022: €12.2m)
€2.2m
Materiality applied to components of adjusted earnings: invoiced rental income
and income from rental guarantees, direct property costs (excluding gross
service charges), net service charge expenses, management fees and finance
expense from borrowings (2021: €1.51m)
€0.9m
Misstatements reported to the Audit & Risk Committee (2022: €0.94m)
3. Our application of materiality and an overview ofthe scope of our audit continued
Annual Report 2023 Tritax EuroBox plc 107
FINANCIAL STATEMENTS
5. Going concern
The Directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of
approval of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s and
Company’s financial resources or ability to continue operations over
the going concern period.
The risks that we considered most likely to adversely affect the
Group’s and Company’s available financial resources over this
period were:
– significant movements in the valuation of investment properties
impacting compliance with covenants;
– default of one or more tenants and reduction in rent collections
impacting cash flow, earnings and covenants; and
– rising interest rates and the impact on financing costs.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
comparing severe, but plausible downside scenarios that could
arise from these risks individually and collectively against the level of
available financial resources and covenants indicated by the Group’s
financial forecasts.
We considered whether the going concern disclosure in note 2 to
the financial statements gives a full and accurate description of the
Directors’ assessment of going concern, including the identified
risks and related sensitivities.
Our conclusions based on this work:
– we consider that the Directors’ use of the going concern basis
of accounting in the preparation of the financial statements
isappropriate;
– we have not identified, and concur with the Directors’ assessment
that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the
Group’s or Company's ability to continue as a going concern for
the going concern period;
– we have nothing material to add or draw attention to in relation
to the Directors’ statement in note 2 to the financial statements
on the use of the going concern basis of accounting with no
material uncertainties that may cast significant doubt over the
Group and Company’s use of that basis for the going concern
period, and we found the going concern disclosure in note 2 to
beacceptable; and
– the related statement under the Listing Rules set out on page 63
ismaterially consistent with the financial statements and our
auditknowledge.
However, as we cannot predict all future events or conditions and
as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the above conclusions are not a guarantee that the Group or the
Company will continue in operation.
6. Fraud and breaches of laws and regulations
– ability to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
– Enquiring of the Directors and the Manager as to the Group’s high
level policies and procedures to prevent and detect fraud and
the Group’s channel for “whistleblowing”, as well as whether they
have knowledge of any actual, suspected or alleged fraud;
– Reading Board and Audit Committee meeting minutes;
– Considering the susceptibility to fraud of payments to the
Investment Manager;
– Assessing the segregation of duties in place between the
Directors, the Administrator and the Group’s Investment
Manager; and
– Using analytical procedures to identify any unusual or unexpected
relationships between financial statement captions
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, we perform procedures to
address the risk of management override of controls, in particular
the risk that management may be in a position to make inappropriate
accounting entries and the risk of bias in accounting estimates and
judgements such as investment property valuations.
We evaluated the design and implementation of the controls over
journal entries and other adjustments and made inquiries of the
Administrator about inappropriate or unusual activity relating to the
processing of journal entries and other adjustments.
We performed procedures including:
– Identifying and selecting certain journal entries made at the end
of the reporting period and post-closing journal entries for testing
and comparing the identified entries to supporting documentation.
– Assessing whether the judgements made in making accounting
estimates are indicative of a potential bias.
On this audit we do not believe there is a fraud risk related to
revenue recognition because the Group’s income primarily arises
from operating lease contracts with fixed, or highly predictable,
periodic payments. We did not identify any additional fraud risks.
Identifying and responding to risks of material misstatement
due to non-compliance with laws andregulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the Directors (as required by auditing standards) and
discussed with the Directors the policies and procedures regarding
compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
Tritax EuroBox plc Annual Report 2023108
Independent Auditor’s Report continued
To the members of Tritax EuroBox plc
6. Fraud and breaches of laws and regulations
– ability to detect continued
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations continued
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting legislation
(including related companies’ legislation), distributable profits, overseas
taxation legislation and its qualification as an Investment Trust under
UK tax legislation, any breach of which could lead to the company
losing various deductions and exemptions from UK corporation
tax. We assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial
statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation. We identified
thefollowing areas as those most likely to have such an effect:
landlord and tenant legislation, property laws and building legislation,
data protection, anti-money laundering, market abuse regulations,
listing rules and certain aspects of company legislation recognising
the financial and regulated nature of the Group’s activities and its
legal form.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
Directors and the Group’s investment manager and inspection of
regulatory and legal correspondence, if any. Therefore, if a breach of
operational regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud orbreaches of
law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements in
the financial statements, even though we have properly planned and
performed our audit in accordance with auditing standards.
For example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial
statements, the less likely the inherently limited procedures required
by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws or regulation.
7. We have nothing to report on the other
information in the Annual Report
The Directors are responsible for the other information presented
in the Annual Report together with the financial statements. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
– we have not identified material misstatements in the strategic
report and the Directors’ report;
– in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
– in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks
and longer-term viability
We are required to perform procedures to identify whether there is a
material inconsistency between the Directors’ disclosures in respect
of emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
– the Directors’ confirmation within the Going concern and
viability statement page 63 that they have carried out a robust
assessment of the emerging and principal risks facing the Group,
including those that would threaten its business model, future
performance, solvency and liquidity;
– the Principal Risks and uncertainties disclosures describing these
risks and how emerging risks are identified, and explaining how
they are being managed and mitigated; and
– the Directors’ explanation in the Going concern and viability
statement of how they have assessed the prospects of the Group,
over what period they have done so and why they considered
that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over
the period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
We are also required to review the Going concern and viability statement,
set out on page 63 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are materially
consistent with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context
of onlythe knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the absence of anything to report on these statements is not a
guarantee as to the Group’s and Company’s longer-term viability.
Annual Report 2023 Tritax EuroBox plc 109
FINANCIAL STATEMENTS
7. We have nothing to report on the other
information in the Annual Report continued
Corporate governance disclosures
We are required to perform procedures to identify whether there is a
material inconsistency between the Directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:
– the Directors’ statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;
– the section of the annual report describing the work of the
Audit Committee, including the significant issues that the Audit
Committee considered in relation to the financial statements,
andhow these issues were addressed; and
– the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions of
the UK Corporate Governance Code specified by the Listing Rules
for our review. We have nothing to report in this respect.
8. We have nothing to report on the other matters
onwhich we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
– adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
– the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are
not made; or
– we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 102,
the Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group
and parent Company’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 they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic decisions
of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an
annual financial report prepared using the single electronic reporting
format specified in the TD ESEF Regulation. This auditor’s report
provides no assurance over whether the annual financial report has
been prepared in accordance with that format.
10. The purpose of our audit work and towhom we
owe our responsibilities
This report is made solely to the Company’s members, as a body,
inaccordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s 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 and the Company’s members,
as a body, for our audit work, for this report, or for the opinions we
have formed.
David Neale (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square London, E14 5GL
4 December 2023
Tritax EuroBox plc Annual Report 2023110
Group Statement of Comprehensive Income
For the year ended 30 September 2023
Note
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Rental income 6 68.07 57.89
Service charge income 6 10.79 10.14
Other income 6 1.03 0.70
Gross property income 6 79.89 68.73
Direct property costs 7 (14.15) (16.53)
Net property income 65.74 52.20
Fair value (loss)/gain on investment properties 14 (285.43) 49.94
Loss on disposal of investment property (2.73) —
Administrative and other expenses 8 (16.35) (18.18)
Operating (loss)/profit (238.77) 83.96
Finance income 10 3.49 —
Finance expense 10 (5.21) (12.07)
Effect of foreign exchange differences 8 (0.29) 0.20
Changes in fair value and realised loss on interest rate derivatives 21 (2.19) 4.55
(Loss)/profit before taxation (242.97) 76.64
Taxation 11 19.61 (17.87)
(Loss)/profit for the year (223.36) 58.77
Other comprehensive income
Foreign currency translation differences – foreign operations (6.43) (6.30)
Total comprehensive (loss)/income for the year attributable to the Shareholders (229.79) 52.47
Earnings Per Share (“EPS”) (expressed in cents per share)
EPS – basic and diluted 12 (27.68) 7.28
Annual Report 2023 Tritax EuroBox plc 111
FINANCIAL STATEMENTS
Group Statement of Financial Position
As at 30 September 2023
Note
30 September
2023
€m
30 September
2022
€m
Non-current assets
Investment properties 14 1,512.55 1,765.60
Derivative financial instruments 21 1.05 4.43
Trade and other receivables 16 1.76 1.17
Deferred tax assets 11 1.23 2.11
Total non-current assets 1,516.59 1,773.31
Current assets
Asset held for sale 15 49.30 —
Trade and other receivables 16 33.63 31.43
Cash and cash equivalents 17 52.31 90.18
Total current assets 135.24 121.61
Total assets 1,651.83 1,894.92
Current liabilities
Trade and other payables 18 (30.21) (38.80)
Income tax liability (1.32) (0.60)
Total current liabilities (31.53) (39.40)
Non-current liabilities
Trade and other payables 18 (1.71) (1.29)
Loan notes and borrowings 19 (770.10) (701.07)
Deferred tax liabilities 11 (27.22) (51.74)
Other liabilities 20 (23.31) (33.62)
Customer deposit 24 (2.34) (2.05)
Total non-current liabilities (824.68) (789.77)
Total liabilities (856.21) (829.17)
Net assets 795.62 1,065.75
Equity
Share capital 25 8.07 8.07
Share premium reserve 597.58 597.58
Translation reserve (12.67) (6.24)
Retained earnings 202.64 466.34
Total equity 795.62 1,065.75
Net Asset Value (“NAV”) per share (expressed in Euro per share)
Basic NAV 26 0.99 1.32
EPRA NTA 26 1.02 1.38
The financial statements were approved by the Board of Directors on 4 December 2023 and signed on its behalf by:
Robert Orr
Independent Chairman
Company registration number: 11367705
Tritax EuroBox plc Annual Report 2023112
Group Statement of Changes in Equity
For the year ended 30 September 2023
Note
Share
capital
€m
Share
premium
€m
Translation
reserve
€m
Retained
earnings
€m
Total
€m
At 1 October 2022 8.07 597.58 (6.24) 466.34 1,065.75
Net loss for the year — — — (223.36) (223.36)
Other comprehensive loss — — (6.43) — (6.43)
Total comprehensive loss — — (6.43) (223.36) (229.79)
Contributions and distributions:
New share capital subscribed 25 — — — — —
Associated share issue costs — — — — —
Dividends paid 13 — — — (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
Note
Share
capital
€m
Share
premium
€m
Translation
reserve
€m
Retained
earnings
€m
Total
€m
At 1 October 2021 8.07 597.46 0.06 447.91 1,053.50
Net profit for the year — — — 58.77 58.77
Other comprehensive income — — (6.30) — (6.30)
Total comprehensive income — — (6.30) 58.77 52.47
Contributions and distributions:
New share capital subscribed 25 — 0.14 — — 0.14
Associated share issue costs — (0.02) — — (0.02)
Dividends paid 13 — — — (40.34) (40.34)
Total contributions and distributions — 0.12 — (40.34) (40.22)
At 30 September 2022 8.07 597.58 (6.24) 466.34 1,065.75
Annual Report 2023 Tritax EuroBox plc 113
FINANCIAL STATEMENTS
Group Cash Flow Statement
For the year ended 30 September 2023
Note
For the
year ended
30 September
2023
€m
For the
year ended
30 September
2022
€m
Cash flows from operating activities
Loss/profit for the year (223.36) 58.77
Result on disposal of investment property 2.73 —
Changes in fair value of investment properties 14 285.43 (49.94)
Changes in value of interest rate derivatives 21 3.91 (4.38)
Tax (credit)/expense 11 (19.61) 17.87
Net finance expense 10 1.72 12.07
Spreading of customer lease incentives 6 (1.67) (2.45)
Amortisation of capital contribution and lease commissions 6 0.95 0.54
(Increase)/decrease in trade and other receivables (3.54) (24.30)
Increase/(decrease) in trade and other payables (8.10) 15.06
Increase/(decrease) in other liabilities (7.78) 8.37
Cash generated from operations 30.68 31.61
Tax paid (3.31) (0.92)
Net cash flow generated from operating activities 27.37 30.69
Investing activities
Purchase of investment properties 14 (25.89) (288.41)
Disposal of investment properties 59.06 —
Disposal of assets held for sale — —
Improvements to investment properties and development expenditure 14 (127.13) (144.79)
Rental guarantees and developer licence fees received 9.20 8.74
Net cash flow used in investing activities (84.76) (424.46)
Financing activities
Net proceeds from issue of Ordinary Share capital — 0.12
Loans received 19 126.00 206.48
Loans repaid 19 (59.50) —
Premium paid for interest rate cap 21 (0.53) —
Finance expense paid (5.23) (8.96)
Dividends paid to equity holders 13 (40.34) (40.34)
Net cash flow generated from financing activities 20.40 157.30
Net movement in cash and cash equivalents for the year (36.99) (236.47)
Cash and cash equivalents at start of the year 17 90.18 329.73
Unrealised foreign exchange gains (0.88) (3.08)
Cash and cash equivalents at end of the year 52.31 90.18
Tritax EuroBox plc Annual Report 2023114
Notes to the Consolidated Accounts
1. Corporate information
The consolidated financial statements of the Group for the year
ended 30 September 2023 comprise the results of Tritax EuroBox
plc (“the Company”) and its subsidiaries (together “the Group”) and
were approved by the Board for issue on 4 December 2023. The
Company is a public limited company incorporated and domiciled
in England and Wales. The registered address of the Company is
disclosed in the Company Information.
The nature of the Group’s operations and its principal activities are
set out in the Strategic Report.
Accounting policies
2. Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards
(UK-adopted IFRS) and the applicable legal requirements of the
Companies Act 2006. The Group’s financial statements have been
prepared on a historical cost basis, as modified for the Group’s
investment properties and interest rate derivatives, which have
been measured at fair value through the Group profit or loss.
The Group has chosen to adopt EPRA (European Public Real Estate
Association – www.epra.com/finance/financial-reporting/guidelines)
best practice guidelines for calculating key metrics such as net
tangible assets (“NTA”) and Earnings Per Share. The Group has
decided to adopt EPRA NTA as its primary EPRA NAV measure.
These are disclosed in notes 12 and 26.
2.1. Going concern
The Directors have prepared cash flow forecasts for the Group
for a period of at least 12 months from the date of approval of the
consolidated financial statements.
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, as detailed in the scenarios below.
1) The combined impact of four key customers defaulting without
replacement, combined with a 12-month delay in letting
properties under development.
2) Yield expansion resulting in further property valuation falls and
the impact on debt covenants.
3) Worsening macroeconomic environment resulting in increasing
debt costs and inability to execute disposals.
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 30 September 2023 was €52.31 million.
It also had undrawn amounts under its unsecured Revolving Credit
Facility (“RCF”) of a further €172.50 million at the date of approval
of these financial statements. Of the Group’s total loans and facilities
(RCF, Green Bond and USPP), €250 million mature in 2025, €500 million
in 2026, €100 million in 2029, €50 million in 2032 and €50 million in
2034. The loan includes financial covenants for loan to value (“LTV”),
interest cover ratio (“ICR”) and gearing. These covenants have been
complied with throughout the year and up to the date of approval of
these financial statements.
The LTV covenant is measured quarterly based on the property
valuation as used in the consolidated financial statements. Based
on the most recent valuation the Group retained headroom against
a covenant limit, reporting 46.4% against the limit of 65%. LTV would
breach 65% if the valuation of the Group’s investment properties
were to decrease by 28.6%, 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 91% against the limit of 150%. Gearing
would breach 150% if the valuation of the Group’s investment
properties were to decrease by 20%, 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.
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 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 (see Notes
to the EPRA and Other Key Performance Indicators).
Based on the most recent reporting, the Group was not in breach
of covenant minimum, reporting 4.81 times which was 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.
3. 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.
3.1. Judgements
In the process of applying the Group’s accounting policies,
management has made the following judgements, which have
the most significant effect on the amounts recognised in the
consolidated financial statements:
Business combinations
The Group acquires subsidiaries that own investment properties.
At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the acquisition
of an asset. Under the Definition of a Business (Amendments to
IFRS 3 “Business Combinations”), to be considered a business an
acquired set of activities and assets must include, at a minimum,
an input and a substantive process that together significantly
contribute to the ability to create outputs. The Group applies the
optional “concentration test” in determining whether an acquisition
is a business combination; where substantially all of the fair value of
gross assets acquired is concentrated in a single asset (or a group of
similar assets), the assets acquired would not represent a business.
Therefore, the Group accounts for an acquisition as a business
combination where an integrated set of activities is acquired in
addition to the property.
Where such acquisitions are not judged to be the acquisition of a
business, they are not treated as business combinations. Rather, the
cost to acquire the corporate entity is allocated between the identifiable
assets and liabilities of the entity based upon their relative fair values
at the acquisition date. Accordingly, no goodwill or additional deferred
tax relating to pre-acquisition property valuation gains arises.
115Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
3. Significant accounting judgements, estimates
and assumptions continued
3.1. Judgements continued
Business combinations continued
In the current and prior periods all acquisitions were accounted
for as asset acquisitions as in all acquisitions substantially all of
the fair value of the gross assets acquired was concentrated in
a single asset.
Segment reporting
The Directors are of the opinion that the Group is engaged in a
single segment business, being the investment in and development
of 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.
3.2. 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 14.
4. Summary of significant accounting policies
4.1. Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
up to 30 September 2023.
Control is achieved when the Company is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee.
For acquisitions not considered business combinations, the cost
of acquisition is allocated to the assets and liabilities acquired
based upon their relative fair values, and no goodwill or deferred
tax is recognised. Non-controlling interests are accounted for in
section 4.5.
For each of the subsidiaries within the Group with non-controlling
interests (see note 4 of the Company financial statements), the
Group has issued put options to the non-controlling interest. The
Group has adopted the anticipated acquisition method under which
the underlying interests of the non-controlling interest are presented
in the Group Statement of Financial Position and the Group
Statement of Comprehensive Income as if they are already acquired
by the Group.
The day-to-day operations of Fondo Minerva Eurobox Italy
are managed by Savills IM (“Savills”) in accordance with the
requirements of the Italian REIF regime. The Company has control
to replace Savills with another operator and therefore considers the
investment to be a subsidiary under IFRS 10.
The results of subsidiaries where control is acquired or disposed
of during the year are included in the Group profit or loss from the
effective date of acquisition or up to the effective date of disposal,
as appropriate. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring the accounting policies
used in line with those of the Group.
All intercompany transactions and balances between Group
companies are eliminated on consolidation. These consolidated
financial statements include the financial statements of the Company and
the subsidiary companies as listed in note 4 of the Company accounts.
4.2. Investment property and investment property
under construction
Investment property comprises completed property that is owned or
held under a lease to earn rentals or for capital appreciation, or both,
and property under development where the Group intends to retain
ownership on completion.
Investment property is recognised when it is probable that the future
economic benefits that are associated with the investment property
will flow to the entity and the cost of the investment property can be
measured reliably. The cost of investment property includes potential
payments under put options granted to non-controlling interests of
subsidiaries which own investment property. Rent guarantees and
top-ups paid by a vendor to the Group to compensate the Group for
vacant space or rent-free periods are treated as part of the cost of
the property acquired and offset the initial purchase consideration.
Such receipts are included in the Group’s Adjusted EPS in note 12.
Transaction costs include transfer taxes, professional fees for legal
and other services and other costs incurred in order to bring the
property to the condition necessary for it to be capable of operating.
Subsequent to initial recognition, investment property is stated at
fair value. Gains or losses arising from changes in the fair values are
included in the Group profit or loss.
Investment properties under construction are financed by the Group
where the Group enters into contracts for both pre-let properties
and speculative development under a funding agreement. All such
contracts specify a fixed amount of consideration. The speculative
development risk is mitigated by having rental guarantees in place
to mitigate this risk. Investment properties under construction
are initially recognised at cost (including any associated costs),
which reflect the Group’s investment in the assets. Development
payments made in line with funding agreements are recognised in
additions. Subsequently, the assets are remeasured to fair value at
each reporting date. The fair value of investment properties under
construction is estimated as the fair value of the completed asset
less any costs still payable in order to complete.
Additions to properties include costs of a capital nature only.
Expenditure is classified as capital when it results in identifiable
future economic benefits, that can be measured reliably, which are
expected to accrue to the Group. All other property expenditure is
expensed in the Group profit or loss as incurred.
The corresponding entry upon recognising lease incentives or
fixed/minimum rental uplifts is made to investment property.
For further details please see accounting policy note 4.8.1.
Investment properties cease to be recognised when they have
been disposed of or withdrawn permanently from use and no future
economic benefit is expected from disposal. The difference between
the net disposal proceeds and the carrying amount of the asset at
the point of disposal is recognised in the Group profit or loss in the
year of retirement or disposal.
116
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
4. Summary of significant accounting policies
continued
4.3. Assets held for sale
A non-current asset or disposal group is classified as held for sale
when the carrying amount will be recovered principally through sale
rather than through continuing use. Four criteria must all be satisfied
to trigger disclosure as an asset held for sale. These are; the asset
is available for immediate sale, it is management's intent to dispose
of the asset, there are active efforts to promote its disposal, and
sale is highly probable within one year. Such assets or disposal
groups are measured at the lower of the carrying amount and fair
value less costs to sell and once classified as held for sale, the asset
is no longer amortised or depreciated. Investment property that is
classified as held for sale is held at fair value.
4.4. Financial instruments
Fair value hierarchy
Level 1: Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that
is
significant to the fair value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level input that
is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
reassessing categorisation at the end of each reporting period.
4.4.1. Financial assets
The Group classifies its financial assets into one of the categories
discussed below, depending on the purpose for which the asset
was acquired. The Group’s accounting policy for each category is
as follows:
Derivative financial instruments
Derivative financial instruments refer to interest rate caps purchased
for hedging purposes which are initially recognised at fair value plus
costs of acquisition and are subsequently measured at fair value.
The Group does not apply hedge accounting and hence the gain
or loss at each fair value remeasurement date is recognised in the
profit or loss.
Amortised cost
The Group’s financial assets measured at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
Consolidated Statement of Financial Position.
These assets arise principally from the provision of goods and
services to customers (e.g. trade receivables), but also incorporate
other types of financial assets where the objective is to hold these
assets in order to collect contractual cash flows which are solely
payments of principal and interest. They are initially recognised
at fair value plus transaction costs that are directly attributable to
their acquisition or issue and are subsequently carried at amortised
cost being the effective interest rate method, less provision
for impairment.
Impairment provisions for current and non-current trade receivables
are recognised based on the simplified approach within IFRS 9 using
a provision matrix in the determination of the lifetime expected credit
losses. During this process the probability of the non-payment of the
trade receivables is assessed. This probability is then multiplied by
the amount of the expected loss arising from default to determine
the lifetime expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss disclosed in the Group
profit or loss. On confirmation that the trade receivable will not
be collectable, the gross carrying value of the asset is written off
against the associated provision.
Cash and cash equivalents include cash in hand, deposits held at
call with banks and other short-term highly liquid investments with
original maturities of three months or less.
4.4.2. Financial liabilities
The Group classifies its financial liabilities as amortised cost.
The Group’s accounting policy for each type of financial liability is
as follows:
Loans and borrowings
Loans and bank borrowings are initially recognised at fair value
net of any transaction costs directly attributable to the issue of
the instrument. Such interest-bearing liabilities are subsequently
measured at amortised cost using the effective interest rate method,
which ensures that any interest expense over the year to repayment
is at a constant rate on the balance of the liability carried in the
Group Statement of Financial Position. For the purposes of each
financial liability, interest expense includes initial transaction costs
and any premium payable on redemption, as well as any interest
or coupon payment while the liability is outstanding.
Extensions of bank borrowings under accordion options in the
original facility agreement are treated as changes in estimated cash
flows under the original financial liability.
Other non-derivative financial liabilities
Non-derivative financial liabilities are recognised initially at the date
that the Group becomes a party to the contractual provisions of the
instrument and are measured initially at fair value less initial direct
costs and subsequently measured at amortised cost. The Group
derecognises a financial liability when its contractual obligations
are discharged or cancelled or expire.
4.5. Put option liabilities
Liabilities for put options held by non-controlling interests are initially
and subsequently recognised at the present value of the exercise
price of the option. This is taken to be the non-controlling interest’s
proportionate share of the current fair value of investment property,
the carrying amount of other net assets plus the present value of
anticipated payments to be made by the Group under dividend
guarantees to the non-controlling interest.
Changes in the carrying amount of the put liability are
recognised within finance expenses in the Group Statement of
Comprehensive Income.
4.6. Forward funded pre-let investments
The Group enters into forward funding development agreements.
For pre-let investments, the Group will enter into a forward funding
agreement with a developer and simultaneously enter into an
agreement for lease with a prospective customer willing to occupy
the building once complete.
During the period between initial investment in a forward funded
agreement and the rent commencement date under the lease, the
Group usually receives licence fee income. Usually this is payable
by the developer to the Group throughout this period and typically
reflects the approximate level of rental income that is expected
to be payable under the lease, as and when practical completion
is reached. IAS 40.20 states that investment property should be
recognised initially at cost, being the consideration paid to acquire
the asset; therefore, such licence fees are deducted from the cost
of the investment and are shown as a receivable.
117Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
4. Summary of significant accounting policies
continued
4.7. Dividends payable to Shareholders
Equity dividends are recognised when they become legally payable.
Interim equity dividends are recognised when paid. Final equity
dividends are recognised when approved by the Shareholders at an
Annual General Meeting.
4.8. Property income
4.8.1. Rental income
Rental income arising from operating leases on investment property
is accounted for on a straight-line basis over the lease term and is
included in gross rental income in the Group profit or loss. The lease
term is the non-cancellable period of the lease. Customer break
clauses are assumed to be exercised unless it is reasonably certain
at inception of the lease that the break will not be exercised.
Customer lease incentives are recognised as an adjustment of
rental revenue on a straight-line basis over the term of the lease.
Included in the straight-line basis are the effects of future fixed or
minimum uplifts. Any contingent rental uplifts are excluded until the
amounts are known. Initial direct costs incurred in negotiating and
arranging an operating lease are recognised as an expense over the
lease term on the same basis as the lease income. Rental income
is invoiced, either monthly or quarterly in advance, and for all rental
income that relates to a future period, this is deferred and appears
within current liabilities on the Group Statement of Financial Position.
Amounts received from customers to terminate leases or to
compensate for dilapidations are recognised in the Group Statement
of Comprehensive Income when the right to receive them arises.
Similarly, amounts paid to customers to terminate leases are
recognised in the Group Statement of Comprehensive Income.
When the Group enters into a forward funded transaction, the
future customer signs an agreement for lease. No rental income
is recognised under the agreement for lease; once practical
completion has taken place and the formal lease is signed, rental
income commences to be recognised in the Group profit or loss.
4.8.2. Service charges and other income
Income from providing services is recognised in the accounting
period in which the services are rendered. Revenue from services is
recognised based on the actual service provided to the end of the
reporting period as a proportion of the total services to be provided
and recognised over time. The Group generally acts as the principal
in service charge transactions as it directly controls the delivery of
the services at the point they are provided to the customer. Where
the Group acts as a principal, service charge income is presented
gross within revenue and service charge expense presented gross
within costs.
4.9. Finance income
Finance income is recognised as interest accrues on cash balances
and short-term deposits held by the Group. Finance income is also
recognised in respect of interest rate derivatives. Interest charged
to a customer on overdue rental income is also recognised within
finance income.
4.10. Finance costs
Finance costs consist of interest and other costs that the Group
incurs in connection with bank and other borrowings, and the
holding of deposits in Euro bank accounts. All interest costs are
expensed to the Group profit or loss in the period in which they
occur on an effective interest basis and all loan issue costs paid are
offset against amounts drawn on the facilities and are amortised
over the term of the facilities.
The Group has elected not to capitalise interest on investment
properties under development.
4.11. Taxation
The Company is approved by HMRC as an investment trust under
Section 1158 of the Corporation Tax Act 2010.
In respect of each accounting period for which the Company
continues to be approved by HMRC as an investment trust, the
Company will be exempt from UK taxation on its capital gains.
The Company is, however, liable to UK corporation tax on its income.
The Company should in practice be exempt from UK corporation tax
on dividend income received, provided that such dividends (whether
from UK or non-UK companies) fall within one of the “exempt
classes” in Part 9A of the CTA 2009. The Company is also able to
elect to take advantage of modified UK tax treatment in respect of
its “qualifying interest income” for an accounting period referred
to as the “streaming” regime. Under regulations made pursuant to
the Finance Act 2009, the Company may designate as an “interest
distribution” all or part of the amount it distributes to Shareholders
as dividends, to the extent that it has “qualifying interest income”
for the accounting period. If the Company designates any dividend
it pays in this manner, it is able to deduct such interest distributions
from its income in calculating its taxable profit for the relevant
accounting period.
The Company’s status as an approved investment trust does not
impact the taxation of its subsidiaries or the Group’s liability to tax
in the other countries in which the Group operates.
Current tax
The tax currently payable is based on taxable profit for the year.
Taxable profit differs from “profit before tax” as reported in the
Consolidated Statement of Comprehensive Income because of
items of income or expense that are taxable or deductible in other
years and items that are never taxable or deductible. The Group’s
current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting year.
Where corporation tax arises in subsidiaries, these amounts are
charged to the Consolidated Statement of Comprehensive Income.
The current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the date of the balance
sheet in the countries where the Group operates.
Deferred tax
Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax assets
are generally recognised for all deductible temporary differences
to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from the initial recognition (other than
in a business combination) of assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit. In
addition, deferred tax liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill.
Deferred tax liabilities and assets are measured at the tax rates that
are expected to apply in the year in which the liability is settled or
the asset realised, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting year.
The rates used in the calculation of deferred tax are in accordance
with legislation where the Group operates.
118
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
4. Summary of significant accounting policies
continued
4.11. Taxation continued
Deferred tax continued
The carrying values of the Group’s investment properties are
assumed to be realised by sale at the end of use. The capital gains
tax rate applied is that which would apply on a direct sale of the
property recorded in the Consolidated Balance Sheet regardless
of whether the Group would structure the sale via the disposal of
the subsidiary holding the asset, to which a different tax rate may
apply. The deferred tax is then calculated based on the respective
temporary differences and tax consequences arising from recovery
through sale.
4.12. Provision
A provision is recognised in the balance sheet when the Group has
a present legal or constructive obligation as a result of a past event,
that can be reliably measured, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a
pre-tax rate that reflects risks specific to the liability.
4.13. Foreign currency translation
The presentation currency of the Company is Euro. Each entity in the
Group determines its own functional currency and items included
in the financial statements of each entity are measured using that
functional currency. All entities in the Group, with the exception of
Sweden, have Euro as the functional currency.
The assets and liabilities of Sweden are translated to the Group’s
presentational currency, Euro, at foreign exchange rates ruling at
the balance sheet date. The revenues and expenses of foreign
operations are translated at an average rate for the year where this
rate approximates to the foreign exchange rates ruling at the dates of
the transactions. Exchange differences arising from this translation
of foreign operations are reported as an item of other comprehensive
income and accumulated in the translation reserve.
Non-monetary assets and liabilities carried at fair value that are
denominated in foreign currencies are translated at the rates
prevailing on the date that the fair value was determined. Gains
and losses arising on exchange are included in the profit or loss for
the year, except for exchange differences arising on non-monetary
assets and liabilities where the changes in fair value are recognised
directly to equity, and any exchange component of that gain and
loss is also recognised directly to equity.
5. Standards in issue
5.1. Standards in issue and effective from 1 October 2022
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.
5.2. 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 2023, and have not been
applied in preparing these financial statements:
– IFRS 17 'Insurance contracts';
– Amendments to IAS 1, ‘Presentation of Financial Statements’,
on classification of liabilities;
– Amendments to IAS 8, ‘Accounting policies, Changes in
Accounting Estimates and Errors’, definition of accounting
estimates;
– Amendments to IAS 1, ‘Presentation of Financial Statements’,
disclosure of accounting policies;
– Amendments to IAS 12 – 'Deferred taxes related to assets and
liabilities arising from a single transaction'; and
– Amendments to IFRS 17 Insurance Contracts: Initial application of
IFRS 17 and IFRS 9 – Comparative Information'.
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.
119Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
6. Gross property income
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Rental income 67.35 55.98
Spreading of customer incentives 1.67 2.45
Amortisation of capital contribution and lease commission (0.95) (0.54)
Gross rental income 68.07 57.89
Service charges recoverable 10.79 10.14
Other income 1.03 0.70
Gross property income 79.89 68.73
The Group derives property income from the following countries:
Gross property income (€m) Belgium Germany Spain Italy Poland
The
Netherlands Sweden Total
30 September 2023 9.00 32.69 10.97 9.85 6.66 7.66 3.06 79.89
30 September 2022 7.98 28.34 10.77 8.95 6.18 4.00 2.51 68.73
The undiscounted future minimum lease payments under non-cancellable operating leases receivable by the Group are as follows:
Less than
1 year
€m
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
€m
Total
€m
30 September 2023 71.41 70.59 64.79 62.51 53.57 284.28 607.15
30 September 2022 64.98 63.74 60.27 55.65 53.22 262.64 560.50
The Group’s investment properties are leased mainly to single customers, some of which have rental securities attached (bank or parent
guarantees, cash deposit), under the terms of a commercial property lease. The majority have rent indexation that are linked to either RPI/CPI
or fixed uplifts.
There is one customer (€9.73 million) representing more than 10% of rental income during the year (2022: two customers €7.75 million and
€6.29 million). As of 30 September 2023, one customer represented more than 10% of passing rent (2022: one customer).
7. Direct property costs
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Service charge expense 11.60 10.49
Other expenses 2.55 1.74
Lease surrender payment
1
— 4.30
Total property expenses 14.15 16.53
1 Payment to terminate existing lease.
120
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
8. Administrative and other expenses
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Investment management fees
1
9.29 11.86
Directors’ remuneration (note 9) 0.35 0.32
Auditor’s fees:
Fees payable for the audit of the Company’s accounts 0.53 0.51
Fees payable for the review of the Company’s interim accounts 0.07 0.07
Fees payable for the audit of the Company’s subsidiaries 0.35 0.12
Total Auditor’s fee 0.95 0.70
Corporate administration fees 1.89 1.80
Regulatory fees 0.11 0.12
Legal and professional fees 2.28 2.03
Marketing and promotional fees 0.93 0.70
Other administrative costs 0.55 0.65
Total administrative and other expenses 16.35 18.18
1 Investment management fees include fees payable to Tritax Management LLP for €5.47 million (30 September 2022: €7.88 million (see note 27)). The remaining
€3.82 million (2022: €3.98 million) was paid to asset managers and property managers.
The effect of foreign exchange differences for the year ended 30 September 2023 consists of an unrealised foreign exchange currency loss
of €0.29 million (2022: unrealised foreign exchange currency gain of €0.28 million and offset by realised foreign exchange currency loss of
€0.08 million).
9. Directors’ remuneration
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Directors’ fees 0.22 0.21
Employer’s National Insurance 0.13 0.11
Total Directors’ remuneration 0.35 0.32
A summary of the Directors’ emoluments, including the disclosures required by the Companies Act 2006, is set out in the Directors’
Remuneration Report (page 97).
Personnel
During the current and prior periods the Company did not have any personnel, besides the Directors of the Company.
10. Finance income and expense
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Interest income on interest rate derivative 3.41 —
Interest received on bank deposits 0.08 —
Total finance income 3.49 —
Interest payable on loans and bank borrowings and other liabilities 11.91 6.76
Commitment fees payable on bank borrowings 0.99 1.13
Present value movement on remeasurement of put option and repayment (10.89) 0.90
Bank fees 0.25 0.80
One-off cost of bank loans — 0.05
Amortisation of loan arrangement fees and derivative financial instrument 2.95 2.43
Total finance expense 5.21 12.07
The total interest payable on financial liabilities carried at amortised cost comprises interest and commitment fees payable on bank borrowings
of €12.90 million (30 September 2022: €7.89 million), of which €nil was capitalised in both periods, and amortisation of loan arrangement fees
of €2.55 million (30 September 2022: €2.43 million), of which €nil million (30 September 2022: €2.40 million) of the loan agreement fees was
capitalised into the loan in the year (see note 19).
The fair value movement on remeasurement of put option 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, for further details see note 20 and accounting policy 4.5.
121Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
11. Taxation
a) Tax charge in the Group Statement of Comprehensive Income
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Current taxation:
UK taxation — —
Overseas taxation – current year (1.71) (1.19)
Overseas taxation – prior year adjustment — —
Deferred taxation:
UK taxation — —
Overseas taxation 21.32 (16.68)
Total tax credit/(charge) 19.61 (17.87)
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 year in accordance with its status as an Investment Trust Company (“ITC”).
In the 3 March 2021 Budget it was announced that, from 1 April 2023, the UK main rate of corporation tax would be increased to 25%.
Given that the Company’s tax charge is €nil, due to its status as an ITC, there is no anticipated consequential effect on the future tax charge.
b) Factors affecting the tax charge for the year
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences are explained below:
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
(Loss)/profit before taxation (242.97) 76.64
Theoretical tax at UK corporation tax rate of blended 22% (30 September 2022: 19%) 53.45 (14.56)
Losses and other differences where no deferred taxes have been recognised (33.68) (2.52)
Impact of different tax rates on foreign jurisdictions (3.28) (2.50)
Expenses not deductible for tax purposes 1.19 (0.99)
Impact of UK interest distributions from the Investment Trust 1.93 2.65
Prior year adjustment to current tax — 0.05
Total tax credit/(charge) 19.61 (17.87)
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Deferred tax assets:
Differences between tax and property revaluation 0.71 1.64
Tax losses carried forward 0.52 0.47
Other — —
Total 1.23 2.11
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Deferred tax liabilities:
Differences between tax and property revaluation 27.22 51.74
Other — —
Total 27.22 51.74
The amount of unutilised tax losses and tax credits for which no deferred tax asset is recognised in the profit and loss account was
€16.1 million (2022: €9.6 million).
122
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
12. Earnings Per Share
Earnings Per Share (“EPS”) amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Group by the
weighted average number of Ordinary Shares in issue during the year. As at 30 September 2023 and 2022, there are no dilutive or potentially
dilutive equity arrangements in existence.
The calculation of EPS is based on the following:
For the year ended 30 September 2023
Net profit
attributable
to Ordinary
Shareholders
€m
Weighted
average
number of
Ordinary Shares
1
‘000
Earnings
Per Share
cents
Basic EPS (223.36) 806,804 (27.68)
Adjustments to remove:
Deferred tax charge/(credit) (note 11) (21.32)
Changes in fair value of investment properties and investment property under construction
(note 14) 285.43
Changes in fair value of interest rate derivatives (note 21) 1.70
Loss on disposal on investment properties 2.73
Loss on disposal of financial derivatives (note 21) 0.49
EPRA EPS 45.67 806,804 5.66
Adjustments to (exclude)/include:
Rental income recognised in respect of fixed uplifts (0.72)
Amortisation of loan arrangement fees 2.55
Unrealised foreign exchange currency loss (note 8) 0.29
Present value movement on remeasurement of put option and repayment (note 20) (10.89)
Rental guarantee receipts and developer’s licence fee excluded from property income
– settled via cash
2
9.20
Finance income from financial derivatives (1.63)
Adjusted EPS 44.47 806,804 5.51
For the year ended 30 September 2022
Net profit
attributable
to Ordinary
Shareholders
€m
Weighted
average
number of
Ordinary Shares
1
‘000
Earnings
Per Share
cents
Basic EPS 58.77 806,779 7.28
Adjustments to remove:
Deferred tax charge and capital gains tax on disposal of investment properties (note 11) 16.68
Changes in fair value of investment properties and investment property under construction
(note 14) (49.94)
Changes in fair value of interest rate derivatives (note 21) (4.66)
EPRA EPS 20.85 806,779 2.58
Adjustments to (exclude)/include:
Rental income recognised in respect of fixed uplifts (1.90)
Amortisation of loan arrangement fees 2.43
Unrealised foreign exchange currency loss (0.26)
Fair value movement on remeasurement of put option (note 20) 0.05
Rental guarantee receipts and developer’s licence fee excluded from property income
– settled via cash
2
8.74
Lease surrender payment
3
4.30
Adjusted EPS 34.21 806,779 4.24
1 Based on the weighted average number of Ordinary Shares in issue throughout the period.
2 This is offset against the cost of investment properties.
3 Capital investment to terminate an existing lease in Hammersbach to harness rental growth resulting in longer-term value to the business – refer to note 7.
123Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
12. Earnings Per Share continued
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;
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; and
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.
13. Dividends paid
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Final dividend in respect of year ended 30 September 2022 at 1.25 cents per Ordinary Share
(30 September 2021: 1.25 cents) 10.08 10.08
First interim dividend in respect of year ended 30 September 2023 at 1.25 cents per Ordinary Share
(30 September 2022: 1.25 cents) 10.09 10.08
Second interim dividend in respect of year ended 30 September 2023 at 1.25 cents per Ordinary Share
(30 September 2022: 1.25 cents) 10.08 10.09
Third interim dividend in respect of year ended 30 September 2023 at 1.25 cents per Ordinary Share
(30 September 2022: 1.25 cents) 10.09 10.09
Total dividends paid 40.34 40.34
Total dividends paid for the year 3.75 cents 3.75 cents
Total dividends unpaid but declared for the year 1.25 cents 1.25 cents
Total dividends declared for the year 5.00 cents 5.00 cents
On 5 December 2023 the Directors of the Company declared a fourth interim dividend in respect of the period from 1 July 2023 to 30
September 2023 of 1.25 cents per Ordinary Share, which will be payable on or around 12 January 2024 to Shareholders on the register on
15 December 2023.
Out of €40.34 million (30 September 2022: €40.34 million) dividends declared for the year, €15.09 million (30 September 2022: €8.79 million)
is designated as interest distribution.
14. 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 prior
year's valuation was carried out by Jones Lang LaSalle. 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.
The total valuation fee incurred by the Group in the year amounts to €132,055 (period ended 30 September 2022: €124,800). The fee is not
contingent on the valuation of the properties.
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.
All acquisitions during the current and prior period have been treated as asset purchases rather than business combinations (see note 3.1).
During the year, the Group acquired land at Oberhausen. The acquisition was finalised on 5 January 2023, shown in the table below under
investment properties under construction.
124
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
14. Investment properties continued
Investment
properties
completed
€m
Investment
properties
under
construction
€m
Investment
properties
total
€m
At 1 October 2022 1,543.87 221.73 1,765.60
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 properties 339.87 (339.87) —
Investment property transferred to asset held for sale (49.30) — (49.30)
Disposal of investment property (65.70) — (65.70)
Licence fees and rental guarantees received (3.21) — (3.21)
Fixed rental uplift and customer lease incentives
2
4.64 — 4.64
Amortisation of rental uplift and customer lease incentives
2
(1.49) — (1.49)
Change in fair value during the year
3
(271.79) (13.64) (285.43)
Foreign exchange movement during the year (5.58) — (5.58)
As at 30 September 2023 1,494.86 17.69 1,512.55
Investment
properties
completed
€m
Investment
properties
under
construction
€m
Investment
properties
total
€m
At 1 October 2021 1,257.35 24.03 1,281.38
Acquisition of properties
1
168.65 134.52 303.17
Additions to investment properties 1.41 143.38 144.79
Transfer from investment properties to investment properties under construction (1.30) 1.30 —
Transfer from investment properties under construction to investment properties 70.17 (70.17) —
Licence fees and rental guarantees received (0.44) (14.31) (14.75)
Fixed rental uplift and customer lease incentives
2
5.66 — 5.66
Amortisation of rental uplift and customer lease incentives
2
(1.35) — (1.35)
Change in fair value during the year
3
46.87 3.07 49.94
Foreign exchange movement during the year (3.15) (0.09) (3.24)
As at 30 September 2022 1,543.87 221.73 1,765.60
1 This includes acquisition costs of €0.64 million (30 September 2022: €13.81 million) and relates to the purchase of land at Oberhausen.
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 30 September 2023 was €13.30 million (30 September 2022: €10.94 million).
The difference between this and cash receipts changes the carrying value of the property against which revaluations are measured (also see note 6).
3 Included in the fair value change in the year were unrealised gains of €6.16 million (30 September 2022: €93.08 million) and unrealised losses of €291.59 million
(30 September 2022: €43.14 million).
30 September
2023
€m
30 September
2022
€m
Investment properties in balance sheet and asset held for sale (see note 15) 1,561.85 1,765.60
Rental guarantee held in separate receivable 2.90 6.93
Total external valuation of investment properties 1,564.75 1,772.53
As at 30 September 2023, the Group had €22.9 million of outstanding capital commitments in relation to its forward funded development
assets (30 September 2022: €123.7 million):
– Stryków €1.8 million; and
– Oberhausen €21.1 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.
125Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
14. Investment properties continued
Valuation risk
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, climates 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 risk. By diversifying
in regions, risk categories and customers, it is expected to lower the
risk profile of the portfolio.
As of the date of this Annual Report, the only investments of the
Group that have been identified consist of the current portfolio as
specified in the Management Report.
With respect to new investments, management 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 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 demand
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
or equivalent
The residual approach or equivalent 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 derived from comparable evidence as identified by the
independent valuer. At 30 September 2023, the range was between
€33 and €104 per square metre, per annum (2022: €44 and €94). The
Group has not disclosed the weighted average ERV due to the large
dispersion of these due to the different markets that the properties
are located in.
Unobservable input: yield
Yield is dependent on the customer, lease length and the other
variables listed above for ERV, derived from comparable evidence
as identified by the independent valuer. At 30 September 2023, the
weighted average yield for standing assets was 4.43% and the range
was between 3.56% and 5.70% (2022: 3.28% and 4.89%). 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 by 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.
126
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
14. Investment properties continued
Valuation techniques continued
Sensitivities of measurement of significant unobservable inputs continued
As a result the following sensitivity analysis has been prepared for investment properties:
-0.25% yield
€m
+0.25% yield
€m
-5% in ERV
€m
+5% in ERV
€m
Increase/(decrease) in the fair value of investment properties as at
30 September 2023 85.45 (76.19) (52.79) 53.08
Increase/(decrease) in the fair value of investment properties
under construction and land as at 30 September 2023 5.05 (4.56) (4.83) 4.83
Increase/(decrease) in the fair value of investment properties as at
30 September 2022 95.69 (84.74) (31.67) 33.82
Increase/(decrease) in the fair value of investment properties under
construction as at 30 September 2022 19.45 (17.48) (14.07) 15.14
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, Poland and Sweden. 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.
15. Asset held for sale
30 September
2023
€m
30 September
2022
€m
Asset held for sale 49.30 —
Asset held for sale relates to an investment property for which there was Investment Committee approval to dispose of at the year-end date,
and the intention is to dispose of the asset, which is highly probable to be disposed of within 12 months. The asset is expected to be disposed
of via a share deal, with the investment in subsidiary balance detailed as a current asset in the parent company financial statements.
16. Trade and other receivables
Non-current trade and other receivables
30 September
2023
€m
30 September
2022
€m
Cash in public institutions 1.76 1.17
The cash in public institutions is a deposit of €1.76 million given by the customer for the property in Barcelona, Spain.
Current trade and other receivables
30 September
2023
€m
30 September
2022
€m
Trade receivables 1.77 1.34
Prepayments, accrued income and other receivables
1
28.89 18.61
VAT receivable
2
2.97 11.48
33.63 31.43
1 Other receivables includes a fitout cost of €6.75 million receivable from a tenant, and two subsidies totalling €11.58 million receivable from KfW, the German
development bank, on recently completed developments (30 September 2022: €nil).
2 VAT receivable includes VAT on capital expenditure across the developments and a reclaim on the purchase of the property in Italy of €0.93 million
(30 September 2022: €1.00 million).
The following table sets out the ageing of trade receivables as at 30 September 2023:
Past due but not impaired
30 September
2023
€m
30 September
2022
€m
<30 days 1.11 0.92
30–60 days — —
60–90 days 0.15 0.02
90 days+ 0.72 0.40
Total 1.98 1.34
Past due and impaired (0.21) —
Total 1.77 1.34
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
127Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
16. Trade and other receivables continued
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 provisions 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.
17. Cash and cash equivalents
30 September
2023
€m
30 September
2022
€m
Cash and cash equivalents 52.31 90.18
At the year-end there are no balances deemed as cash equivalents. All cash held under the Italian subsidiaries fund are subject to local
dividend distribution rules which means that dividends can only be paid twice a year. The amount of cash held in Italy as at 30 September
2023 was €9.23 million (30 September 2022: €24.40 million).
18. Trade and other payables
Non-current trade and other payables
30 September
2023
€m
30 September
2022
€m
Other payables 1.71 1.29
Current trade and other payables
30 September
2023
€m
30 September
2022
€m
Trade and other payables 8.25 7.44
Bank loan interest payable 2.38 2.40
Deferred income 2.54 2.97
Accruals 15.62 25.99
VAT liability 1.42 —
30.21 38.80
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
19. Loan notes and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at
amortised cost. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 22.
30 September
2023
€m
30 September
2022
€m
Bank borrowings 76.25 9.11
Loan notes 693.85 691.96
Non-current liabilities: loans and borrowings 770.10 701.07
The Group has €200 million US private placement debt split into three tranches: €100 million with a coupon of 1.216% maturing in 2029,
€50 million with a coupon of 1.449% maturing in 2032, and €50 million with a coupon of 1.590% maturing in 2034. The 0.95% Green Bond
matures in 2026.
The Group has a long-term Revolving Credit Facility (“RCF”) (see table below). The loan has a margin of 1.2% to 1.9% above the higher of zero
or Euribor, depending on the drawn level and the prevailing LTV ratio.
Facility
€m Maturity date
Banco Santander 58.8 19 October 2025
BNP Paribas 58.8 19 October 2025
Bank of China 58.8 19 October 2025
Bank of America 58.8 19 October 2025
Banco de Sabadell 14.8 19 October 2025
Total RCF 250.0
As at 30 September 2023, 73.7% (2022: 73.7%) of the Group’s debt facilities are fixed term with 26.3% floating term (2022: 26.3%). The weighted
average term to maturity of the Group’s total debt facilities at the year end is 3.5 years (30 September 2022: 4.5 years). The LTV across all
drawn debt was 46.4%.
128
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
19. Loan notes and borrowings continued
The Group has been in compliance with all of the financial covenants of the Group’s loans and borrowings facilities as applicable throughout
the year covered by the financial statements.
Any associated fees in arranging the loan and borrowings that are unamortised as at the year end are offset against amounts drawn on the
facilities as shown in the table below:
Bank borrowings drawn
30 September
2023
€m
30 September
2022
€m
Bank borrowings at the beginning of the year 9.11 —
Bank borrowings drawn in the year 126.00 11.00
Bank borrowings repaid in the year (59.50) —
Loan issue costs paid (0.01) (0.45)
Non-cash amortisation of loan issue costs 0.65 0.55
Reclass unamortised loan issue costs to/(from) prepayments — (1.99)
Non-current liabilities: borrowings 76.25 9.11
Loan notes
30 September
2023
€m
30 September
2022
€m
Green Bond 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 (6.15) (8.04)
Non-current liabilities: loan notes 693.85 691.96
A summary of the drawn and undrawn loans and bank borrowings in the year is shown below:
30 September 2023
Drawn
€m
Undrawn
€m
Total debt
available
€m
Repayable between one and two years — — —
Repayable between two and three years 577.50 172.50 750.00
Repayable between three and four years — — —
Repayable between four and five years — — —
Repayable in over five years 200.00 — 200.00
777.50 172.50 950.00
30 September 2022
Drawn
€m
Undrawn
€m
Total debt
available
€m
Repayable between one and two years — — —
Repayable between two and three years — — —
Repayable between three and four years 511.00 239.00 750.00
Repayable between four and five years — — —
Repayable in over five years 200.00 — 200.00
711.00 239.00 950.00
Set out below is a comparison by class of the carrying amounts and the fair value of the Group’s financial instruments that are carried in the
financial statements:
Book value
30 September
2023
€m
Fair value
30 September
2023
€m
Book value
30 September
2022
€m
Fair value
30 September
2022
€m
Bank borrowings: RCF 77.50 77.50 11.00 11.00
Loan notes: 0.95% Green Bonds 2026 500.00 440.30 500.00 422.55
1.216% USPP 2029 100.00 91.85 100.00 91.81
1.449% USPP 2032 50.00 44.37 50.00 44.75
1.590% USPP 2034 50.00 43.52 50.00 44.14
Loan notes and borrowings 777.50 697.54 711.00 614.25
129Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
19. Loan notes and borrowings continued
The fair value of the 0.95% Green Bonds 2026 is determined with reference to its quoted market price. The fair value of the 1.216% USPP
2029, 1.449% USPP 2032 and 1.590% USPP 2034 is determined by an independent third party. The financial liabilities are considered to be a
Level 1 and Level 2 fair value measure. The fair value of the financial liabilities at Level 1 was €440.30 million (30 September 2022: €422.55
million) and Level 2 was €179.74 million (2022: €180.70 million).
20. Other liabilities
30 September
2023
€m
30 September
2022
€m
Balance at the beginning of the year 33.62 25.19
Addition 3.93 8.38
Repayments (0.97) (0.85)
Disposal (3.35) —
Present value movements on measurement of put option (9.92) 0.90
Balance at the end of the year 23.31 33.62
The Group’s properties in Germany are held in subsidiaries in which the Group holds 94.9% or 89.9% of the shares in those subsidiaries.
As part of the purchase agreements, the Group issued put options to the minority Shareholders. The options are exercisable 10 years after
acquisition and would require the Group to acquire all shares held by the minority Shareholders at the then market value. Prior to the option
date the Group has guaranteed a fixed dividend to the minority Shareholders. If this is not met by the subsidiary, then the Company is required
to settle this obligation.
The options are exercisable as follows:
Companies
Ownership
%
Date of maturity
of option
Tritax EuroBox (Bochum) Propco GmbH 94.9 5 April 2029
Tritax EuroBox (Peine) Propco GmbH 94.9 28 March 2029
Tritax EuroBox (Bremen I) Propco GmbH 89.9 22 February 2030
Tritax EuroBox (Bremen II) Propco GmbH 89.9 22 February 2030
Tritax EuroBox (Gelsenkirchen) Propco GmbH (formerly Dietz Logistik 26. Grundbesitz GmbH) 89.9 31 August 2031
Dietz Logistik 44. Grundbesitz GmbH 89.9 6 November 2031
Dietz 23. Grundbesitz GmbH 89.9 13 December 2031
Dietz FNL 5. Grundbesitz GmbH 89.9 24 April 2032
21. 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.
During the year the Group disposed of €125 million of interest rate caps that were due to expire in October 2023, realising a loss of €0.41 million.
A new €25 million interest rate cap was purchased for €0.53 million, with a start date on 19 October 2023 and expiring on 19 October 2025
which is in line with the maturity of the RCF.
The table below details the interest rate caps at the current period end.
Nominal CAP rate Start date End date
€100m 0.50% 30/11/2018 19/10/2023
€25m 0.75% 28/02/2019 19/10/2023
€25m 2.50% 19/10/2023 19/10/2025
The weighted average capped rate, excluding any margin payable, for the Group as at the year end was 0.55% (30 September 2022: 0.65%).
30 September
2023
€m
30 September
2022
€m
Interest rate derivatives valuation brought forward 4.43 0.05
Purchase of interest rate cap 0.53 —
Realised loss on derivative (0.49) (0.11)
Disposal of interest rate cap/cap break receipt (1.32) (0.17)
Amortisation of derivative financial instrument (0.40) —
Fair value movement (1.70) 4.66
Non-current assets: interest rate derivatives carried forward 1.05 4.43
130
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
21. Derivative financial instruments continued
The interest rate derivatives are marked to market based on the valuation 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 year-end date the total proportion of drawn debt hedged via interest rate derivatives equated to 100% (30 September 2022: 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 year 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.
22. 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 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 that are carried in the financial statements
approximates their fair value at the end of the year.
Risk management
The Group is exposed to market risk (including interest rate risk), credit risk and liquidity 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, which 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 year end. The RCF was drawn by €77.50 million at the year end,
31% of the total €250 million facility. A sensitivity analysis performed to ascertain the impact on the Group Cash Flow Statement and net
assets shows that a 50 basis point decrease or increase in interest rates would result in an increase of €nil or a decrease of €0.06 million to
the interest payable charge, based on the nominal borrowings at the year end. The RCF benefits from interest rate caps, at the year-end,
capping the level of Euribor 3-months to a maximum of 0.65%. On 18th October the RCF benefits from a new set of caps, approximately €80
million, with a cap of 2.72%.
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
30 September 2023 149.24 755.26 214.43 182.97 78.97 4.34 148.28 118.34 1,651.83
30 September 2022 170.02 877.33 238.06 227.39 63.82 24.81 181.79 111.70 1,894.92
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 customers being required to pay rentals in advance under their lease obligations. The credit quality
of the customer 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 16), 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.
131Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
22. Financial risk management continued
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 14). 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.
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. Included within Loans and Borrowings, at 30 September 2023, are amounts drawn-down of €76.25 million
relevant to the RCF (2022: €9.11 million).
The table below summarises the maturity profile of the Group’s financial liabilities, on the amount drawn at the year end, based on contractual
undiscounted payments, including interest charges:
Carrying
amount
€m
Total
cash flows
€m
Less than
3 months
€m
3–12
months
€m
Between
1–2 years
€m
Between
2–5 years
€m
More than
5 years
€m
30 September 2023
Loans and borrowings
1
770.10 815.08 2.40 7.19 9.59 588.98 206.92
Trade and other payables
2
27.96 27.96 26.25 — 1.71 — —
Non-current liabilities 23.31 23.31 — — — — 23.31
Customer deposit 2.34 2.34 — — 0.11 — 2.23
823.71 868.69 28.65 7.19 11.41 588.98 232.46
Carrying
amount
€m
Total
cash flows
€m
Less than
3 months
€m
3–12
months
€m
Between
1–2 years
€m
Between
2–5 years
€m
More than
5 years
€m
30 September 2022
Loans and borrowings
1
701.07 752.93 2.06 6.19 8.25 526.43 210.00
Trade and other payables
2
35.83 35.83 34.54 — 1.29 — —
Non-current liabilities 33.62 33.62 — — — — 33.62
Customer deposit 2.05 2.05 — — 0.47 — 1.58
772.57 824.43 36.60 6.19 10.01 526.43 245.20
1 Included within the between 2 to 5 years disclosure is the €77.5 million nominal value of drawn RCF (2022: €11 million).
2 Excludes VAT and deferred income as these are not financial liabilities.
Foreign currency risk
As at 30 September 2023
Investment
property
exposure
€m
Cash and cash
equivalents
exposure
€m
Total
currency
exposure
€m
Pound Sterling — 0.30 0.30
Zloty — 2.33 2.33
SEK 106.50 9.36 115.86
Total foreign currency 106.50 11.99 118.49
Foreign currency sensitivity
+10% movement
€m
+5% movement
€m
-5% movement
€m
-10% movement
€m
Pound Sterling 0.03 0.01 (0.02) (0.03)
Zloty 0.21 0.11 (0.12) (0.26)
SEK 10.53 5.52 (6.10) (12.87)
As at 30 September 2022
Investment
property
exposure
€m
Cash and cash
equivalents
exposure
€m
Total
currency
exposure
€m
Pound Sterling — 10.19 10.19
Zloty — 1.64 1.64
SEK 9.65 11.71 21.36
Total foreign currency 9.65 23.54 33.19
132
Notes to the Consolidated Accounts continued
Tritax EuroBox plc Annual Report 2023
Foreign currency sensitivity
+10% movement
€m
+5% movement
€m
-5% movement
€m
-10% movement
€m
Pound Sterling 1.13 0.54 (0.49) (0.93)
Zloty 0.18 0.09 (0.08) (0.15)
SEK 2.37 1.12 (1.02) (1.94)
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.
As at 30 September 2023 the Group has a cash balance of GBP 0.26 million and PLN 10.82 million, equivalent to €0.30 million and
€2.33 million respectively (30 September 2022: GBP 8.94 million and PLN 7.97 million, equivalent to €10.18 million and €1.64 million respectively).
The Group also has a cash balance of SEK 108.05 million, equivalent to €9.36 million as at 30 September 2023 (30 September 2022: SEK
127.44 million, equivalent to €11.72 million).
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/general contractors. 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.
23. Capital management
The primary objective of the Group’s capital management is to ensure that it remains a going concern.
The Board, with the assistance of the Investment Manager, monitors and reviews the Group’s capital so as to promote the long-term success
of the business, facilitate expansion and maintain sustainable returns for Shareholders. The Group considers proceeds from share issuances,
bank borrowings and retained earnings as capital. The Group’s policy on borrowings is as set out below:
The level of borrowing will be on a prudent basis for the asset class, and will seek to achieve a low cost of funds.
The Group has complied with all covenants on its borrowings up to the date of this report. The targets mentioned above sit comfortably within the
Group’s covenant levels, which include LTV and interest cover ratio. The Group LTV at the year end was 46.4% (30 September 2022: 35.2%).
24. Customer deposit
Non-current liabilities
30 September
2023
€m
30 September
2022
€m
Balance at the beginning of the year 2.05 2.11
Additions/(repayments) in the year 0.29 (0.06)
Balance at the end of the year 2.34 2.05
The balance mainly relates to a cash deposit given by the customer for the property in Barcelona, Spain.
25. Share capital
The share capital relates to amounts subscribed for share capital at its nominal value:
30 September
2023
Number
30 September
2023
€m
30 September
2022
Number
30 September
2022
€m
Issued and fully paid at 1 cent each
Balance at beginning of year – €0.01 Ordinary Shares 806,803,984 8.07 806,693,378 8.07
Shares issued in the year — — 110,606 —
Balance at end of year 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.
22. Financial risk management continued
Foreign currency risk continued
133Annual Report 2023 Tritax EuroBox plc
FINANCIAL STATEMENTS
26. Net asset value (“NAV”) per share
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 year. As there are no dilutive instruments outstanding, Basic NAV
per share is shown below:
30 September
2023
€m
30 September
2022
€m
Net assets per Group Statement of Financial Position 795.62 1,065.75
Ordinary Shares:
Issued share capital (number) 806,803,984 806,803,984
NAV per share (expressed in Euro per share):
Basic NAV per share 0.99 1.32
30 September 2023 30 September 2022
EPRA NRV
€m
EPRA NTA
€m
EPRA NDV
€m
EPRA NRV
€m
EPRA NTA
€m
EPRA NDV
€m
NAV attributable to Shareholders 795.62 795.62 795.62 1,065.75 1,065.75 1,065.75
Mark-to-market adjustments
of derivatives (1.05) (1.05) — (4.43) (4.43) —
Deferred tax adjustment 25.99 25.99 — 49.63 49.63 —
Transaction costs
1
82.39 — — 83.78 — —
NAV 902.95 820.56 795.62 1,194.73 1,110.95 1,065.75
NAV per share in Euro 1.12 1.02 0.99 1.48 1.38 1.32
1 EPRA NTA and EPRA NDV reflect IFRS values which are net of transaction costs (RETT and purchaser’s costs). Transaction costs are added back when
calculating EPRA NRV.
27. Transactions with related parties
For the year ended 30 September 2023, all Directors and some of the Partners of the Manager are considered key management personnel.
The terms and conditions of the Investment Management Agreement are described in the Management Engagement Committee Report.
The fee payable to the Manager for the year ended 30 September 2023 was €5.47 million (2022: €7.88 million). An additional €0.24 million
of the investment management fee was capitalised during the year (2022: €0.19 million).
The total amount outstanding at the year end relating to the Investment Management Agreement was €1.12 million (2022: €1.99 million).
Details of amounts paid to Directors for their services can be found within the Directors’ Remuneration Report.
The Members of the Manager that are considered as key management personnel are James Dunlop, Henry Franklin, Petrina Austin and
Phil Redding.
During the year, the Directors received the following dividends: Robert Orr: €9,773 (2022: €4,714); Keith Mansfield: €14,500 (2022: €14,500);
Taco De Groot: €2,100 (2022: €2,100); Eva-Lotta Sjöstedt: €245 (2022: €345); and Sarah Whitney: €2,849 (2022: €403).
During the year, the Members of the Manager received the following dividends: James Dunlop: €18,787 (2022: €16,348); Henry Franklin: €7,104
(2022: €10,144); Petrina Austin: €2,079 (2022: €1,816); and Phil Redding: €7,170 (2022: €681).
28. Leases
As lessor
Details of the Group’s leases from customers of its investment property are found in note 6.
As lessee
The Group holds one investment property, with a carrying amount of €113.75 million, on a lease which ends in 84.5 years. A peppercorn rent
is paid and hence the associated lease liability and right-of-use asset are immaterial.
29. Subsequent events
On 29 November 2023, the Group agreed a lease at its two-unit asset in Settimo Torinese, Italy. The new six-year lease has been secured with
the same leading Italian logistics provider which signed a lease for the other unit in August 2023.
On 30 November 2023, the Group successfully exchanged on the sale of the warehouse in Bochum, Germany for a consideration of €46.8m
to a leading pan-European real estate investment manager.
On 30 November 2023, the Group successfully exchanged on the sale of the redevelopment site in Malmö, Sweden for a consideration of
€28.3 million to a data centre owner-occupier.
There were no other significant events occurring after the reporting period, but before the financial statements were authorised for issue.
Tritax EuroBox plc Annual Report 2023134
Company Balance Sheet
Company registration number 11367705
Note
At 30 September
2023
€m
At 30 September
2022
€m
Non-current assets
Derivative financial instruments 1.05 4.43
Trade and other receivables 5 895.41 854.03
Investment in subsidiaries 4 551.68 671.37
Total non-current assets 1,448.14 1,529.83
Current assets
Investment in subsidiaries* 4 14.23 —
Trade and other receivables 5 3.90 8.86
Cash held at bank 6 1.31 16.47
Total current assets 19.44 25.33
Total assets 1,467.58 1,555.16
Current liabilities
Trade and other payables 7 (9.03) (5.81)
Income tax liability — —
Total current liabilities (9.03) (5.81)
Non-current liabilities
Loans and borrowings 8 (770.10) (701.07)
Total non-current liabilities (770.10) (701.07)
Total liabilities (779.13) (706.88)
Total net assets 688.45 848.28
Equity
Share capital 9 8.07 8.07
Share premium reserve 597.58 597.58
Retained earnings 82.80 242.63
Total equity 688.45 848.28
The Company has taken advantage of the exemption allowed under Section 408 of the Companies Act 2006 and has not presented its
own profit and loss account in the financial statements. The loss attributable to the Parent Company for the year ended 30 September 2023
amounted to €119.49 million (2022: loss €11.45 million).
*See note 15 of the Group financial statements, relates to the asset held for sale.
The financial statements were approved by the Board of Directors on 4 December 2023 and signed on its behalf by:
Robert Orr
Director
Annual Report 2023 Tritax EuroBox plc 135
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
For the year ended 30 September 2023
Share capital Share premium Retained earnings Total
Note €m €m €m €m
At 1 October 2022 8.07 597.58 242.63 848.28
Net loss for the year — — (119.49) (119.49)
Total comprehensive loss — — (119.49) (119.49)
Contributions and distributions:
New share capital subscribed — — — —
Associated share issue costs — — — —
Dividends paid 3 — — (40.34) (40.34)
At 30 September 2023 8.07 597.58 82.80 688.45
Share capital Share premium Retained earnings Total
Note €m €m €m €m
At 1 October 2021 8.07 597.46 294.42 899.95
Net loss for the year — — (11.45) (11.45)
Total comprehensive loss — — (11.45) (11.45)
Contributions and distributions:
New share capital subscribed
1
— 0.14 — 0.14
Associated share issue costs — (0.02) — (0.02)
Dividends paid 3 — — (40.34) (40.34)
At 30 September 2022 8.07 597.58 242.63 848.28
1 See note 25 of the Group accounts.
Tritax EuroBox plc Annual Report 2023136
Notes to the Company Accounts
1. Accounting policies
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted
international accounting standards (UK-adopted IFRS), but makes amendments where necessary in order to comply with the Companies Act
2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
Disclosure exemptions adopted
In preparing the financial statements the Company has taken advantage of all applicable disclosure exemptions conferred by FRS 101.
Therefore the financial statements do not include:
– certain comparative information as otherwise required by UK-adopted IFRS;
– certain disclosures regarding the Company’s capital;
– a statement of cash flows and related notes;
– the effect of future accounting standards not yet adopted;
– the disclosure of the remuneration of key management personnel; and
– disclosure of related party transactions with other wholly owned members of the Tritax EuroBox plc Group.
In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures are included in
the Company’s consolidated financial statements. The financial statements do not include certain disclosures in respect of:
– financial instruments; and
– fair value measurement other than certain disclosures required as a result of recording financial instruments at fair value.
Principal accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently
applied to all the periods presented, unless otherwise stated. No newly applicable accounting standards for the current year had any material
impact on the Company.
Currency
The Company financial statements are presented in Euro which is also the Company’s functional currency.
Dividends payable for Shareholders
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends
are recognised when approved by the Shareholders at an Annual General Meeting.
Financial assets and financial liabilities
Please refer to sections 4.4.1 and 4.4.2 of the Summary of significant accounting policies of the Group accounts.
Investment in subsidiaries
The investment in subsidiary companies is included in the Company’s Balance Sheet at cost less provision for impairment. Provision for
impairment is determined by comparing the carrying value of the subsidiary, at the reporting date, against the recoverable amounts. The
recoverable amount is the greater of its value in use and its fair value less costs to sell. The fair value is driven by investment property, held
in the subsidiary, which is measured using fair value hierarchy in accordance with IFRS 13. See note 14 of the Group financial statements for
further details.
Significant accounting judgements, estimates and assumptions
The preparation of the Company’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. There were no significant accounting judgements, estimates or assumptions in preparing the
financial statements.
Annual Report 2023 Tritax EuroBox plc 137
FINANCIAL STATEMENTS
2. Taxation
30 September
2023
€m
30 September
2022
€m
UK corporation tax 0.06 —
In the 3 March 2021 Budget it was announced that, from 1 April 2023, the UK main rate of corporation tax would be increased to 25%. Given
that the Company’s tax charge is €nil, due to its status as an ITC, there is no anticipated consequential effect on the future tax charge.
The tax credit relates to a relief received owing to an overpayment in a previous financial year.
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 year.
3. Dividends paid
Please refer to note 13 of the Group accounts.
4. Investment in subsidiaries
30 September
2023
€m
30 September
2022
€m
At the beginning of the year 671.37 458.21
Increase in investments via share purchase 49.40 239.76
Disposals in the year
1
(19.30) —
Impairment in the year
2
(135.56) (26.60)
At the end of the year 565.91 671.37
The recoverable amount of the impaired investments is €352.74 million (30 September 2022: €208.66 million).
1 This relates to the Hammersbach disposal whereby the subsidiary, Dietz Logistik 33. Grundbesitz GmbH, was divested.
2 Impairments to investment in subsidiaries in the current year have resulted primarily from the reduction in the valuation of investment properties held, the
primary driver of fair value in each subsidiary. Investment property valuation is measured using the fair value hierarchy; see note 14 of the Group financial
statements for further detail. The impairment charge is sensitive to the assumptions used in the valuation of the investment property, see sensitivity table below.
-0.25% yield
€m
+0.25% yield
€m
-5% in ERV
€m
+5% in ERV
€m
Increase/(decrease) in the impairment charge as at
30 September 2023 (50.14) 44.78 31.77 (36.01)
Increase/(decrease) in the impairment charge as at
30 September 2022 (13.41) 35.05 21.15 (10.03)
Tritax EuroBox plc Annual Report 2023138
The Company has the following subsidiary undertakings as at 30 September 2023:
Principal activity Country of incorporation Ownership %
Tritax EuroBox (Spain) Holdco, S.L. Investment Holding Company Spain 100%*
Tritax EuroBox Barcelona SLU Property Investment Spain 100%
Eurobox Italy Holdco Limited Investment Holding Company Jersey 100%*
Fondo Minerva Eurobox Italy** Property Investment Italy 100%
Tritax Eurobox (Belgium) Holdco NV Investment Holding Company Belgium 100%*
Panton Kortenberg Vastgoed NV Property Investment Belgium 100%
Rumst Logistics NV Property Investment Belgium 100%
Rumst Logistics II NV Property Investment Belgium 100%
Rumst Logistics III NV Property Investment Belgium 100%
Pakobo NV Property Investment Belgium 100%
LCP Nivelles DC NV Property Investment Belgium 100%
Tritax EuroBox (Wunstorf) Holdco Limited*** Investment Holding Company United Kingdom 100%*
Tritax EuroBox (Germany) Holdco Limited Investment Holding Company United Kingdom 100%*
Tritax EuroBox (Bochum) Propco GmbH Property Investment Germany 94.9%*
Tritax EuroBox (Peine) Propco GmbH Property Investment Germany 94.9%*
Dietz Logistik 33. Grundbesitz GmbH Property Investment Germany 89.9%*
Tritax EuroBox (Bremen I) Propco GmbH Property Investment Germany 89.9%*
Tritax EuroBox (Bremen II) Propco GmbH Property Investment Germany 89.9%*
Dietz Logistik 26. Grundbesitz GmbH Property Investment Germany 89.9%*
Dietz Logistik 44. Grundbesitz GmbH Property Investment Germany 89.9%*
Tritax EuroBox (Poland) Propco sp. z.o.o. Property Investment Poland 100%*
Tritax EuroBox (Strykow) Propco sp. z o.o. Property Investment Poland 100%*
Tritax EuroBox (Breda) PropCo B.V. Property Investment The Netherlands 100%*
Tritax EuroBox (Oberhausen) Propco B.V. Property Investment The Netherlands 100%*
Tritax EuroBox (Gothenburg) Propco AB Property Investment Sweden 100%*
Tritax EuroBox (Sweden) Holdco Limited Investment Holding Company United Kingdom 100%*
Dietz 23. Grundbesitz GmbH Property Investment Germany 89.9%*
Tritax EuroBox (Gelsenkirchen) Propco GmbH Property Investment Germany 89.9%*
Tritax EuroBox (Hammersbach) FixCo GmbH Property Investment Germany 100%*
Dietz FNL 5. Grundbesitz GmbH Property Investment Germany 89.9%*
Tritax EuroBox (Roosendaal) PropCo B.V. Property Investment The Netherlands 100%*
Tritax EuroBox (Roosendaal) Solar B.V. Property Investment The Netherlands 100%*
Tritax EuroBox (Rosersberg I) AB Property Investment Sweden 100%*
Tritax EuroBox (Rosersberg II) AB Property Investment Sweden 100%*
Tritax EuroBox (Malmö) Propco AB Property Investment Sweden 100%
Tritax EuroBox (Malmö) Holdco AB Property Investment Sweden 100%
Tritax EuroBox (France) Propco SCI Investment Holding Company France 100%*
Tritax EuroBox (France) Holdco Limited Investment Holding Company UK 100%*
Tritax EuroBox (France) Minco Limited Investment Holding Company UK 100%*
* These are direct subsidiaries of the Company.
** The day-to-day operations of Fondo Minerva Eurobox Italy are managed by Savills IM (“Savills”) in accordance with the requirements of the Italian REIF regime.
The Company has the power to replace Savills with another operator and therefore considers the investment to be a subsidiary under IFRS 10.
*** The subsidiary Tritax EuroBox (Wunstorf) Holdco Limited is exempt from Companies Act 2006 requirements relating to the audit of its individual accounts by
virtue of Section 479A of the Act as this company has guaranteed these subsidiary companies under Section 479C of the Act.
Notes to the Company Accounts continued
4. Investment in subsidiaries continued
Annual Report 2023 Tritax EuroBox plc 139
FINANCIAL STATEMENTS
The registered addresses for the subsidiaries across the Group are consistent based on their country of incorporation and are as follows:
Spain entities: Calle Maria Auxiliadora, 5, Local 10, 29602, Marbella, Málaga, Spain
Jersey entities: 26 New Street, St Helier, Jersey JE2 3RA
Italy entities: Savills Investment Management SGR S.p.A., Fondo Minerva, Via San Paolo 7, 20121 Milano, Italy
Belgium entities: Floor 7, Louizalaan 489, 1050 Brussels, Belgium
Germany entities: Darmstädter Straße 246, 64625 Bensheim, Germany, and Eschersheimer Landstraße 14, 603 22 Frankfurt amMain, Germany
Poland entities: Warsaw, ul. Piękna 18, 05-077 Warsaw, Poland
The Netherlands entities: Hoogoorddreef 15, 1101BA Amsterdam, the Netherlands
Sweden entities: c/o Scandinavian Trust AB, Birger Jarlsgatan 12, 114 34 Stockholm, Sweden
United Kingdom entities: 3rd Floor, 6 Duke Street St James’s, London SW1Y 6BN, United Kingdom
France entity: 92, Avenue de Wagram, 75017 Paris, France
5. Trade and other receivables
30 September
2023
€m
30 September
2022
€m
Amounts receivable from Group companies 895.41 854.03
Other receivables 3.90 8.86
899.31 862.89
All amounts receivable from Group companies are documented under term loans with maturity exceeding three years, with an option to
extend for a further five years. All borrowings are unsecured and are charged at 3%–5%. Interest is generally payable quarterly and, therefore,
is classified as current assets.
30 September
2023
€m
30 September
2022
€m
Current assets 3.90 8.86
Non-current assets 895.41 854.03
899.31 862.89
6. Cash held at bank
30 September
2023
€m
30 September
2022
€m
Cash held at bank 1.31 16.47
4. Investment in subsidiaries continued
Tritax EuroBox plc Annual Report 2023140
7. Trade and other payables
30 September
2023
€m
30 September
2022
€m
Trade and other payables 4.33 5.57
Accruals 4.70 0.24
9.03 5.81
8. Loan notes and borrowings
All external borrowings of the Group are held by the Company. Please refer to note 19 of the Group accounts for further details.
9. Share capital
Please refer to note 25 of the Group accounts.
10. Related party transactions
The Company has taken advantage of the exemption not to disclose transactions with other wholly owned members of the Group as the
Company’s own financial statements are presented together with its consolidated financial statements.
Below are the amounts received by the companies which are not wholly owned:
Income received from Group companies
30 September
2023
€m
30 September
2022
€m
Tritax EuroBox (Bochum) Propco GmbH 0.93 0.98
Tritax EuroBox (Peine) Propco GmbH 2.52 2.59
Dietz Logistik 33. Grundbesitz GmbH* 1.24 1.27
Tritax Eurobox (Bremen I) Propco GmbH 0.50 0.53
Tritax Eurobox (Bremen II) Propco GmbH 0.53 0.55
Dietz Logistik 26. Grundbesitz GmbH 2.82 2.96
Dietz Logistik 44. Grundbesitz GmbH 3.27 3.37
Dietz 23. Grundbesitz GmbH 1.93 0.75
Tritax EuroBox (Gelsenkirchen) Propco GmbH 0.56 0.45
Dietz FNL 5. Grundbesitz GmbH 1.51 0.32
15.81 13.77
* This subsidiary was disposed of during the financial year, see note 14 of the Group financial statements.
Below are the amounts owed by the companies which are not wholly owned:
Amount owed from Group companies as at 30 September 2023
Less than
one year
€m
More than
one year
€m
Tritax EuroBox (Bochum) Propco GmbH — 22.92
Tritax EuroBox (Peine) Propco GmbH — 62.24
Tritax Eurobox (Bremen I) Propco GmbH — 12.36
Tritax Eurobox (Bremen II) Propco GmbH — 13.06
Dietz Logistik 26. Grundbesitz GmbH — 84.83
Dietz Logistik 44. Grundbesitz GmbH — 80.20
Dietz 23. Grundbesitz GmbH — 77.04
Tritax EuroBox (Gelsenkirchen) Propco GmbH — 18.35
Dietz FNL 5. Grundbesitz GmbH — 42.52
— 413.52
Notes to the Company Accounts continued
Annual Report 2023 Tritax EuroBox plc 141
FINANCIAL STATEMENTS
10. Related party transactions continued
Amount owed from Group companies as at 30 September 2022
Less than
one year
€m
More than
one year
€m
Tritax EuroBox (Bochum) Propco GmbH — 24.42
Tritax EuroBox (Peine) Propco GmbH — 64.74
Dietz Logistik 33. Grundbesitz GmbH — 35.10
Tritax Eurobox (Bremen I) Propco GmbH — 13.16
Tritax Eurobox (Bremen II) Propco GmbH — 13.86
Dietz Logistik 26. Grundbesitz GmbH — 91.53
Dietz Logistik 44. Grundbesitz GmbH — 84.30
Dietz 23. Grundbesitz GmbH — 41.84
Tritax EuroBox (Gelsenkirchen) Propco GmbH — 18.95
Dietz FNL 5. Grundbesitz GmbH — 28.42
— 416.32
For all other related party transactions please refer to note 27 of the Group accounts.
11. Directors’ remuneration
Please refer to note 9 of the Group accounts.
12. Subsequent events
Please refer to note 29 of the Group accounts.
Tritax EuroBox plc Annual Report 2023142
1. EPRA Earnings Per Share
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Total comprehensive profit/(loss) (attributable to Shareholders) (223.36) 58.77
Adjustments to remove:
Changes in fair value of investment properties 285.43 (49.94)
Deferred tax adjustment (21.32) 16.68
Changes in fair value of interest rate derivatives 1.70 (4.66)
Loss on disposal of investment property 2.73 —
Loss on disposal of interest rate derivative 0.49 —
Profits to calculate EPRA Earnings Per Share 45.67 20.85
Weighted average number of Ordinary Shares 806,803,984 806,779,439
EPRA Earnings Per Share – basic and diluted 5.66 cents 2.58 cents
2. EPRA NAV measures
The Group has adopted EPRA NTA and EPRA NTA per share metrics as its primary EPRA NAV metric measure, alongside Basic IFRS NAV, for
the year ended 30 September 2022 onwards.
30 September 2023 30 September 2022
EPRA NRV
€m
EPRA NTA
€m
EPRA NDV
€m
EPRA NAV
€m
EPRA NTA
€m
EPRA NDV
€m
NAV attributable to Shareholders 795.62 795.62 795.62 1,065.75 1,065.75 1,065.75
Mark-to-market adjustments
ofderivatives (1.05) (1.05) — (4.43) (4.43) —
Deferred tax adjustment 25.99 25.99 — 49.63 49.63 —
Transaction costs
1
82.39 — — 83.78 — —
NAV 902.95 820.56 795.62 1,194.73 1,110.95 1,065.75
NAV per share in Euro 1.12 1.02 0.99 1.48 1.38 1.32
1 EPRA NTA and EPRA NDV reflect IFRS values which are net of transaction costs (RETT and purchaser’s costs). Transaction costs are added back when
calculating EPRA NRV.
3. EPRA Net Initial Yield (“NIY”) and EPRA Topped Up NIY
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Investment property 1,561.85 1,765.60
Less: development properties (17.69) (214.89)
Completed property portfolio 1544.16 1,550.71
Allowance for estimated purchaser’s costs 82.39 83.78
Gross up completed property portfolio valuation (B) 1,626.55 1,634.49
Annualised passing rental income 72.00 61.19
Property outgoings (3.36) (2.15)
Annualised net rents (A) 68.64 59.04
Notional rent expiration of rent-free periods or other lease incentives 0.87 0.94
Topped up annualised net rents (C) 69.51 59.98
EPRA Net Initial Yield (A/B) 4.22% 3.61%
EPRA Topped Up Net Initial Yield (C/B) 4.27% 3.67%
4. EPRA vacancy rate
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Annualised estimated rental value of vacant premises 4.86 0.19
Portfolio estimated rental value
1
87.65 69.46
EPRA vacancy rate 5.54% 0.28%
1 Excludes land held for development.
80% of vacant space is currently covered by rental guarantees.
Notes to the EPRA and Other Key Performance Indicators (Unaudited)
Annual Report 2023 Tritax EuroBox plc 143
FINANCIAL STATEMENTS
5. EPRA Cost Ratio and Adjusted EPRA Cost Ratio
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Property operating costs
1
2.55 6.10
Administrative expenses 16.35 18.18
Net service charge costs 0.81 0.35
Other operating income (1.03) (0.70)
Total costs including vacant property costs (A) 18.68 23.93
Vacant property costs (0.81) (0.35)
Total costs excluding vacant property costs (B) 17.87 23.58
Gross rental income – per IFRS (C) 68.07 57.89
Total EPRA Cost Ratio (including vacant property costs) (A/C) 27.44% 41.34%
Total EPRA Cost Ratio (excluding vacant property costs) (B/C) 26.25% 40.73%
Gross rental income including rental guarantee (D) 77.27 66.63
Total Adjusted EPRA Cost Ratio
1
(including vacant property costs) (A/D) 24.17% 29.46%
Total Adjusted EPRA Cost Ratio
1
(excluding vacant property costs) (B/D) 23.13% 28.94%
1 Prior year adjusted for €4.3 million lease surrender payment at Hammersbach – see note 12 of financial statements for further details.
6. Capital expenditure
30 September
2023
€m
30 September
2022
€m
Acquisition
1
25.89 303.17
Development
1
124.71 144.79
Investment properties
1
:
Incremental lettable space 2.42 6.32
Customer incentives
2
3.15 4.31
Other material non-allocated types of expenditure
3
2.90 6.93
Total 159.07 465.52
1 See note 14 of Group financial statements.
2 Fixed rental uplift and customer lease incentives after adjusting for amortisation on rental uplift and customer lease incentives.
3 Licence fees and rental guarantees.
The Group has no interest in joint ventures.
7. Total Return
Year ended
30 September
2023
cents
Year ended
30 September
2022
cents
Opening EPRA NTA 137.70 134.69
Closing EPRA NTA 101.71 137.70
Increase/(decrease) in EPRA NTA (35.99) 3.01
Dividends paid 5.00 5.00
Total growth in EPRA NTA plus dividends paid (30.99) 8.01
Total Return (22.51)% 5.95%
8. Loan to value (“LTV”) ratio
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Gross asset value (A) 1,561.85 1,765.60
Borrowings
1
(B) 777.50 711.00
Cash and cash equivalents (C) 52.31 90.18
LTV ((B-C)/A) 46.43% 35.16%
1 Nominal value of borrowings.
Tritax EuroBox plc Annual Report 2023144
9. EPRA Loan to value (“LTV”) ratio
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Include:
Borrowings from financial institutions 277.50 211.00
Bond loans 500.00 500.00
Net payables (1.38) 7.97
Exclude:
Cash and cash equivalents 52.31 90.18
Net debt (A): 723.81 628.79
Include:
Investment properties at fair value 1,494.86 1,541.27
Properties held for sale 49.30 —
Properties under development 17.69 224.33
Total property value (B): 1,561.85 1,765.60
EPRA LTV (A/B) 46.34% 35.61%
10. Dividend cover
Year ended
30 September
2023
€m
Year ended
30 September
2022
€m
Adjusted earnings (A) 44.47 34.21
Dividends paid for the financial year (B) 40.34 40.34
Dividend cover (A/B) 110.24% 84.80%
11. Interest cover
Year ended
30 September
2023
€
Year ended
30 September
2022
€
Gross property income (note 6) 79.89 68.73
Direct property costs (note 7) (14.15) (16.53)
Net property income 65.74 52.20
Administrative cost (note 8) (16.35) (18.18)
Repayments (note 20) (0.97) (0.85)
Finance income from financial derivatives (note 12) 1.63 —
EBIT (A) 50.05 33.17
Interest payable 11.91 6.76
Commitment fees 0.99 1.13
Bank fees 0.25 0.80
Repayments (note 20) (0.97) (0.85)
Hedged portion of finance income from financial derivatives (1.78) —
Net finance expense (B) 10.40 7.84
Interest cover (A/B) 4.81 4.23
Notes to the EPRA and Other Key Performance Indicators (Unaudited) continued
Annual Report 2023 Tritax EuroBox plc 145
FINANCIAL STATEMENTS
Glossary of Terms
“Adjusted Earnings”
Post-tax earnings attributable to Shareholders, adjusted to include
licence fees receivable on forward funded development assets and
adjusted for other earnings not supported by cash flows, as further
explained in note 12 in the Group financial statements. “Adjusted
Earnings Per Share” or “Adjusted EPS” on a per share basis.
“Adjusted EPRA Cost Ratio”
Administrative and operating costs (including or excluding costs of
direct vacancy) divided by gross rental income and rental guarantees.
“AIFM”
An Alternative Investment Fund Manager and has the meaning given
in the AIFMD.
“AIFMD”
Directive 2011/61/EU of the European Parliament and of the Council
of 8 June 2011 on Alternative Investment Fund Managers and,
where the context requires, includes references to Commission
Delegated Regulation (EU) No 231/2013 and any applicable local
laws implementing the AIFMD into the national law of an EEA
member state.
“Average cost of debt”
The average cost of debt is the finance costs, less hedged income
from of interest rate derivatives, divided by the weighted borrowings
for the financial year.
“Basic NAV” or “Basic Net Asset Value”
The value, as at any date, of the assets of the Company after
deduction of all liabilities determined in accordance with the
accounting policies adopted by the Company from time to time.
“Big Box”
A “Big Box” property or asset refers to a specific sub-segment
of the logistics sector of the real estate market, relating to very
large logistics warehouses (each with typically over 30,000 sqm
of floor area) with the primary function of holding and distributing
finished goods, either downstream in the supply chain or direct
to consumers, and typically having the following characteristics:
generally a modern constructed building with eaves height
exceeding 12 metres; let on long leases with institutional-grade
customers; annual rental indexation; having a prime geographical
position to allow both efficient stocking (generally with close links to
sea ports or rail freight hubs) and efficient downstream distribution;
and typically with sophisticated automation systems or a highly
bespoke fit out.
“Board”
The Directors of the Company.
“BREEAM”
Building Research Establishment’s Environmental Assessment
Method is a recognised environmental assessment method and
rating system for best practice in sustainable building design,
construction and operation measuring a building’s environmental
performance. A BREEAM assessment evaluates a building’s
specification, design, construction and use, such as energy and
water use, the internal environment (health and wellbeing), pollution,
transport, materials, waste, ecology and management processes.
“Company”
Tritax EuroBox plc (company number 11367705).
“Company Secretary”
The Manager.
“CPI”
Consumer Price Index, a measure that examines the weighted
average of prices of a basket of consumer goods and services,
such as transportation, food and medical care as calculated by
therelevant authority in each country.
“Corporation Tax Act 2010”
The Corporation Tax Act 2010 and any statutory modification or
re-enactment thereof for the time being in force.
“Development pipeline”
The Group’s current programme of developments authorised or in
the course of construction at the balance sheet date, together with
potential schemes not yet commenced on land owned or controlled
by the Group.
“Dietz”
Dietz Asset Management GmbH.
“Directors”
The Directors of the Company as of the date of this report being
Robert Orr, Keith Mansfield, Taco de Groot, Eva-Lotta Sjöstedt and
Sarah Whitney.
“Dividend cover”
Adjusted Earnings as a proportion of the dividend declared for the
financial year.
“EPRA”
European Public Real Estate Association.
“EPRA Cost Ratio”
Administrative and operating costs (including or excluding costs of
direct vacancy) divided by gross rental income, as further described
in EPRA Best Practices Recommendation Guidelines.
“EPRA Earnings”
Earnings from operational activities (which excludes the licence fees
receivable on our forward funded development assets).
“EPRA NAV” or “EPRA Net Asset Value”
The Basic Net Asset Value adjusted to meet EPRA Best Practices
Recommendations Guidelines (2016) requirements by (among other
adjustments) excluding the impact of any fair value adjustments to
debt and related derivatives and other adjustments and reflecting
the diluted number of Ordinary Shares in issue.
“EPRA NDV” or “EPRA Net Disposal Value”
Equivalent to IFRS NAV as this includes the fair values of financial
instruments and deferred taxes.
“EPRA NRV” or “EPRA Net Reinstatement Value”
IFRS NAV adjusted to remove the fair values of financial instruments
and deferred taxes, and include transaction costs.
“EPRA NTA or “EPRA Net Tangible Assets”
IFRS NAV adjusted to remove the fair values of financial instruments
and deferred taxes. This excludes transaction costs.
“EPRA Triple Net Asset Value (“NNNAV”)”
EPRA NAV adjusted to include the fair values of financial
instruments, debt and deferred taxes.
“EPRA Net Initial Yield (“NIY”)”
Annualised rental income based on the cash rents passing at
the balance sheet date, less non-recoverable property operating
expenses, divided by the market value of the property, increased
with (estimated) purchaser’s costs.
Tritax EuroBox plc Annual Report 2023146
“EPRA Topped Up NIY”
This measure incorporates an adjustment to the EPRA NIY in
respect of the expiration of rent-free periods (or other unexpired
lease incentives, such as discounted rent periods and step rents).
“EPRA Vacancy”
Estimated market rental value (“ERV”) of vacant space divided by the
ERV of the whole portfolio.
“Estimated cost to completion”
Costs still to be expended on a development or redevelopment to
practical completion, including attributable interest.
“Estimated rental value (ERV)”
The estimated annual market rental value of lettable space as
determined by the Group’s valuer. This will normally be different from
the rent being paid.
“Euribor”
Euro Interbank Offered Rate, published by the European Money
Markets Institute.
“FCA”
The United Kingdom Financial Conduct Authority (or any successor
entity or entities).
“Forward funded development”
A pre-let forward funded development of a Big Box or other logistics
asset is where the Company invests in an asset which is either ready
for, or in the course of, construction and pre-let to an acceptable
customer. In such circumstances, the Company seeks to negotiate
the receipt of immediate income from the asset, such that the
developer is paying the Company a return on its investment during
the construction phase and prior to the customer commencing
rental payments under the terms of the lease.
“Foundation asset”
Foundation assets provide core, low-risk income. They are usually
let on long leases to customers with excellent covenant strength.
The buildings are usually new or modern and in prime locations,
and the leases have regular rent reviews, either fixed or linked to
inflation indices.
“Gearing”
Net borrowings divided by total Shareholders’ equity excluding
intangible assets and deferred tax provision.
“GIA”
Under the RICS Code of Measuring Practice (6th Edition) the Gross
Internal Area (“GIA”) is the basis of measurement for valuation of
industrial buildings (including ancillary offices) and warehouses: the
area of a building measured to the internal face of the perimeter
walls at each floor level (including the thickness of any internal walls).
All references to building sizes in this document are to the GIA.
“Global Real Estate Sustainability Benchmark
(“GRESB”) Assessment”
GRESB assesses the ESG performance of real estate and
infrastructure portfolios and assets worldwide, providing
standardised and validated data to the capital markets.
“Gross rental income”
Contracted rental income recognised in the period, in the income
statement, including surrender premiums and interest receivable on
finance leases. Lease incentives, initial costs and any contracted
future rental increases are amortised on a straight-line basis over the
lease term.
“Group”
The Company and all of its subsidiary undertakings.
“Growth Covenant asset”
Growth Covenant assets are fundamentally sound assets in good
locations, let to customers perceived to be undervalued at the point
of purchase and who have the potential to improve their financial
strength. These assets offer value enhancement through yield
compression.
“Investment property”
Completed land and buildings held for rental income return and/or
capital appreciation.
“Interest cover”
The ratio of net property income to the interests incurred in
the period.
“Interest cover ratio covenant”
Interest cover ratio covenant refers to the ratio of consolidated EBIT
to consolidated net finance costs in respect of any measurement
period. This differs from interest cover and the amounts used to
calculate cannot be derived from the financial statements of the
Group or Company.
“IPO”
The Company’s initial public offering in July 2018.
“ITC”
Investment Trust Company.
“Logistics Capital Partners” or “LCP”
LCP Services (UK) Limited.
“London Stock Exchange”
London Stock Exchange plc.
“LT V ”
The proportion of gross asset value that is funded by net borrowings
(excluding cash).
“Manager”
Tritax Management LLP (partnership number 0C326500).
“Market rental value”
The annual ERV applied to the current portfolio.
“Net initial yield”
The annual rent from a property divided by the combined total of its
acquisition price and assumed acquisition expenses.
“Net rental income”
Gross rental income less ground rents, service charge expenses,
property operating expenses and any other non-recoverable
expenditure.
“Ordinary Shares”
Ordinary Shares of £0.01 each in the capital of the Company.
“Passing rent”
The annual rental income currently receivable on a property (which
may be more or less than the ERV). Excludes rental income where
a rent-free period is in operation. Excludes service charge income
(which is netted off against service charge expenses).
“Portfolio”
The overall portfolio of the Company including both the investment
and development portfolios.
Glossary of Terms continued
Annual Report 2023 Tritax EuroBox plc 147
FINANCIAL STATEMENTS
“Portfolio value”
The value of the portfolio which includes capital commitments on
forward funded developments and the Group’s share of joint venture
assets (commonly known as a proportionally consolidated basis).
“Pre-let”
A lease signed with an occupier prior to completion of a
development, which commits the occupier to sign a lease on
practical completion.
“RETT”
Real Estate Transfer Tax – the tax imposed by European states on
the purchase of land and properties.
“Revolving Credit Facility” or “RCF”
An unsecured revolving credit facility.
“RPI”
Retail Price Index, an inflationary indicator that measures the change
in the cost of a fixed basket of retail goods as calculated by the
relevant authority in each country.
“Transaction costs”
RETT and purchaser’s costs.
“SGR”
Societa’di Gestione del Risparimo, a regulated Italian investment
management company.
“Shareholders”
The holders of Ordinary Shares in the Company.
“Speculative development”
Where a development has commenced prior to a lease agreement
being signed in relation to that development.
“sqm”
Square metre or square metres, as the context may require.
“Strategic land”
Opportunities identified in strategic land which the Manager believes
will enable the Company to secure, typically, pre-let forward funded
developments in locations which might otherwise attract lower yields
than the Company would want to pay, delivering enhanced returns
but controlling risk.
“Topped up net initial yield”
Net initial yield adjusted to include notional rent in respect of
let properties which are subject to a rent-free period at the
valuation date. This is in accordance with EPRA’s Best Practices
Recommendations.
“Total Return”
Net Total Shareholder Return, being the change in EPRA NTA over
the relevant period plus dividends paid.
“Total Shareholder Return”
A measure of the return based upon share price movement over the
period and assuming reinvestment of dividends.
“Value-add asset”
These assets are typically let to financially strong companies and
offer the chance to grow the assets’ capital value or rental income,
through lease engineering or physical improvements to the property.
“WAULT” or “Weighted Average Unexpired
LeaseTerm”
The average remaining number of years until the sooner of the
lease expiry, or customer break option within the portfolio (including
rental guarantees). In respect of forward funded developments, the
unexpired term from lease start date.
“Yield on cost”
The expected gross yield based on the estimated current market
rental value (“ERV”) of a development when fully let, divided by the
book value of the developments at the earlier of commencement of
the development or the balance sheet date plus future development
costs and estimated finance costs to completion.
Tritax EuroBox plc Annual Report 2023148
Company Information
Company Registration Number: 11367705
Incorporated in the United Kingdom
Directors, Management and Advisers
Directors
Robert Orr
Independent Chairman
Sarah Whitney
Senior Independent Director
Keith Mansfield
Non-Executive Director
Taco de Groot
Non-Executive Director
Eva-Lotta Sjöstedt
Non-Executive Director
Registered Office
6 Duke Street St James’s
London
SW1Y 6BN
United Kingdom
Manager
Tritax Management LLP
280 Bishopsgate
London
EC2M 4AG
United Kingdom
Joint Financial Adviser and Corporate Broker
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
United Kingdom
Joint Financial Adviser and Corporate Broker
Barclays Bank PLC
Churchill Place
London
E14 5HP
United Kingdom
Joint Financial Adviser
Akur Limited
66 St James’s Street
London
SW1A 1NE
United Kingdom
Legal Advisers as to UK law
Ashurst LLP
London Fruit and Wool Exchange
1 Duval Square
London
E1 6PW
United Kingdom
Auditor
KPMG LLP
15 Canada Square
London
E14 5GL
United Kingdom
Company Secretary
Tritax Management LLP
c/o 6 Duke Street St James’s
London
SW1Y 6BN
United Kingdom
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
United Kingdom
Administrator
CBRE
Schiphol Boulevard 281
1118 BH, Schiphol
The Netherlands
Depository
Langham Hall UK Depositary LLP
8th Floor
1 Fleet Place
London
EC4M 7RA
United Kingdom
Bankers
HSBC UK Bank PLC
Level 2
8 Canada Square
London
E14 5HQ
United Kingdom
BNP Paribas Corporate Banking
10 Harewood Avenue
London
NW1 6AA
United Kingdom
Tritax EuroBox plc’s commitment to environmental
stewardship is reflected in this Annual Report, which
has been printed on Revive 100 Silk, which is 100%
post-consumer recycled, FSC
®
certified. This document
was printed by Park Communications using its
environmental print technology, which minimises the
impact of printing on the environment, with 99% of dry
waste diverted from landfill. Both the printer and the
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CBP022395
Tritax EuroBox plc Annual Report 2023
Tritax EuroBox plc
3rd Floor
6 Duke Street St James’s
London
SW1Y 6BN
tritaxeurobox.co.uk