Tritax EuroBox plc Annual Report 2022
Strong platform
optimising performance
Annual Report 2022
Strategic report
1 Our Strategic Framework
2 Highlights 2022
4 Chairman’s Statement
6 Our Portfolio
10 Our Investment Proposition
12 CEO’s Q&A
14 Our Market
18 Our Business Model
20 Our Objectives and Strategy
21 Stakeholder Engagement and Section 172
24 Key Performance Indicators
26 EPRA Performance Measures
28 ESG Overview
30 ESG Progress Summary
36 Manager’s Report
42 Financial Review
44 Principal Risks and Uncertainties
51 Task Force on Climate-Related
FinancialDisclosures
59 Going Concern and Viability Statement
Governance
60 Chairman’s Governance Overview
62 Board of Directors
64 Key Representatives of the Manager
66 Key Activities of the Board
67 Application of Code
69 Board Leadership and Company Purpose
72 Stakeholder Engagement
74 Division of Responsibilities
78 Nomination Committee Report
82 Audit, Risk and Internal Control
84 Audit & Risk Committee Report
88 Management Engagement Committee
Report
91 Directors’ Remuneration Report
94 Directors’ Report
96 Statement of Directors’ Responsibilities
Financial statements
97 Independent Auditor’s Report
104 Group Statement of Comprehensive Income
105 Group Statement of Financial Position
106 Group Statement of Changes inEquity
107 Group Cash Flow Statement
108 Notes to the Consolidated Accounts
128 Company Balance Sheet
129 Company Statement of Changes in Equity
130 Notes to the Company Accounts
134 Notes to the EPRA and Other Key
Performance Indicators (Unaudited)
137 Glossary of Terms
140 Company Information
Specialists in European
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 properties.
Our properties are highly sustainable, offer robust and inflation-linked income
Our purpose
Our purpose is to open up new futures in sustainable commercial
realestate, creating compelling opportunities for our stakeholders and
giving the world’s most ambitious companies the space to succeed.
Our Manager
The Company’s Manager, Tritax Management LLP, specialises in
investing in mission-critical supply chain real assets, aligned with the
structural trends shaping the future economy, including digitisation,
automation, urbanisation and green energy. It has deep expertise
inthesector, built up over more than 25 years.
The Manager has assembled a full-service European logistics
assetmanagement capability for the Company, including specialist
on-the-ground asset and property managers, with strong market
standings inthe Continental European logistics sector.
Annual Report 2022 Tritax EuroBox plc 1
STRATEGIC REPORT
Our Strategic Framework
Strong platform –
optimising performance
The value we create
By following our business model and successfully implementing our strategy, we create value for all our stakeholders.
Customers
The space tosucceed
Society
Jobs, tax revenues
andonline shopping
Environment
Reduced impactthrough
sustainable investment
Shareholders
Attractive dividends
andTotal Returns
Lenders
Interest payments
backedby secure
cashflows
Our business model
Our business model supports our purpose through our focus
on investing in the most modern, best located and most
sustainable logistics properties. These meet the needs of
growing and ambitious companies, both now and in the future.
Source high-quality
investments
Buy and sell for value
Develop ona
risk-controlled basis
Proactively
andresponsibly
manage assets
Our strategy
Our strategy is to create value at the point of acquisition and
throughout the lifecycle of the asset, through careful asset
selection, proactive asset management and a dedicated focus
onESG underpinned by appropriate financing. The objective
ofthis strategy is to produce robust income streams and
attractive returns over the long term.
Investment strategy Asset management
strategy
ESG strategy Financing strategy
Read more about our business model on pages 18 and 19
Read more about our stakeholders on pages 21 to 23
Read more about our strategy on page 20
Tritax EuroBox plc Annual Report 20222
STRATEGIC REPORT
Highlights 2022
Increasing contractual
visibility on income growth
Increase in rental income and cost efficiencies
supporting future earnings growth and
dividendcover
• 31.9% increase in rental income to €57.9 million, reflecting 4.0% like-for-like
rental growth, asset management activity and acquisitions
• Adjusted EPRA Cost Ratio of 29.5%; financial year 2023 ratio expected
tobec.25%, driven by expected future income growth and estimated
€2.1millionannual savings from reduced management fee
• Adjusted EPS of 4.24 cents, down 8.0%, primarily due to timing of
deployment of prior year equity raise
• Dividend per share of 5.00 cents, covered in the quarter ended
30September 2022 and expected to be fully covered for the
financialyear2023
Resilient investment portfolio let to strong
customers on long-term inflation linked leases
• Portfolio value of €1,765.6 million, up 37.8% (FY2021: €1,281.4 million),
primarily driven byacquisitions in the period
• 5.6% like-for-like capital growth reflecting H1 2022 increase of 8.1%
offsetby 2.3% decrease in H2 2022
• 9.5% (€7.1 million) portfolio reversion driven by like-for-like estimated rental
value growth of 8.2%
• 97% of occupational leases subject to annual increases of which 82.6%
linked to inflation
• 99.7% occupancy and significant income visibility with 8.0 years WAULT
1,765.6
1,281.4
837. 9
Portfolio value (€m)
2
€1,765.6m
+37.8%
2022
2021
2020
1.32
1.31
1.19
IFRS NAV per share (€)
€1.32
+0.8%
2022
2021
2020
35.2
13.3
41.1
Loan to value (“LTV”) ratio (%)
3
35.2%
+21.9 pts
2022
2021
2020
5.00
5.00
4.40
Dividend per share (cents)
5.00 cents
No change
2022
2021
2020
57. 9
43.9
36.0
Rental income (€m)
€57.9m
+31.9%
2022
2021
2020
7.28
19.59
10.60
Basic IFRS EPS (cents)
7.28 cents
-62.8%
2022
2021
2020
Financial
Adjusted Earnings Per Share (“Adjusted EPS”)
1
4.24 cents
-8.0%
4.24
4.61
4.16
2022
2021
2020
EPRA Net Tangible Assets per share (€)
€1.38
+2.2%
1.35
1.38
1.22
2022
2021
2020
Total Return (%)
6.0%
-8.3 pts
14.3
11.0
2022
2021
2020
6.0
Annual Report 2022 Tritax EuroBox plc 3
STRATEGIC REPORT
Operational activity reinforcing portfolio resilience
and ESG performance
• Acquired nine high-quality, sustainable assets at a net initial yield
of3.7%,adding €20.2 million p.a. to the annual rent and benefiting from
11.2%reversion (€2.2 million)
• Development schemes totalling 31,200 sqm fully let producing €1.4 million
ofannual rental income
• Four new leases signed totalling €5.1 million of annual rent, an increase of
€0.8million (+18%) above previous rent or guarantees
• Awarded five Green Stars and “Leader in Sustainability for European
Industrial Distribution Warehouse Listed Sector” by GRESB, the global ESG
benchmark for real estate
Robust balance sheet with low and capped cost
ofdebt – earliest maturity in Q4 2025
• Issued placement of €200 million, at an average coupon of 1.37% and
average maturity of nine years
• 100% of debt with fixed rates or caps, with a maximum average cost
ofdebtof 1.46%
• 4.5 years’ weighted maturity with earliest refinancing in Q4 2025
• €239 million of available liquidity from undrawn debt facilities at year end
• Significant covenant headroom with LTV of 35% and interest cover
of3.9xcompared to covenant levels of 65% and 1.5x respectively
1 See note 12 to the financial statements for reconciliation.
2 Valuation under IFRS (excluding rental guarantees).
3 As per KPI definition.
4 Including rental guarantee and licence fee.
5 Adjusted for vacancy.
6 Including licence fee income and rental guarantees,
excludingexceptionallease surrender in Hammersbach.
74.3
53.4
40.7
Contracted annual rent
4
(€m)
€74.3m
+39.1%
2022
2021
2020
4.0
2.4
0.5
Like-for-like rental growth
5
(%)
4.0%
+1.6 pt s
2022
2021
2020
100
100
100
Rent collection (%)
100%
No change
2022
2021
2020
8.0
9.3
9.1
Weighted Average Unexpired Lease Term
8.0 years
-1.3 years
2022
2021
2020
0.3
3.3
5.4
EPRA vacancy rate (%)
0.3%
-3.0 pts
2022
2021
2020
29.5
28.5
27. 8
Adjusted EPRA Cost Ratio
6
(%)
29.5%
+1.0 pts
2022
2021
2020
11.9
5.4
8.2
4.0
3.2
Operational
Maximum average cost of debt (%)
1.46%
-0.44 pts
Like-for-like valuation growth (%)
5.6%
-6.3 pts
Like-for-like estimated rental value growth (%)
8.2%
+4.2 pts
1.46
1.90
2.30
2022
2021
2020
2022 2022
2021 2021
2020 2020
5.6
Read more about our strategy on page20
Read more about our investment proposition onpages 10 and 11
Read more about our ESG onpages 28 to 35
Tritax EuroBox plc Annual Report 20224
STRATEGIC REPORT
Chairman’s Statement
Delivering resilience
Robert Orr
Independent Chairman
The Company made good progress in 2022 with implementing its
investment strategy, including completing the deployment of capital
from the prior year’s equity raise and continuing to extract value
fromthe existing portfolio through active asset management and
development. All investment, asset management and development
activity has been fully aligned with our ESG strategy which has
beenreflected in an improved overall ESG performance.
Strategic progress
Since IPO in 2018, we have focused on constructing a portfolio of
best-in-class, modern logistics assets that are mission critical to our
customers, and concentrated in key locations in Western Europe’s
major supply chain corridors. At the year end, 99.7% of the portfolio
was income producing and 97% of our leases included an element of
annual uplifts. These efficient portfolio characteristics generate a
secure and growing income stream that supports our policy of
providing an attractive dividend to Shareholders.
During the year we further enhanced the portfolio, deploying €533 million
into a mix of core, value-add and development opportunities, the
majority of which offer the potential to improve future rental levels.
Interms of development projects, we continue to carefully manage
risk by funding pre-let schemes, seeking rent guarantees on speculative
developments and agreeing fixed-price contracts with leading
developers, giving us certainty of project cost and delivery at a
timeof material shortages and elevated build cost inflation.
We made good progress with our asset management plans during
the year, including handing over the major extension at Barcelona
post year end and agreeing four new green leases, further diversifying
our customer base. In addition, the portfolio has inherent opportunities
to create further income and value through lease extensions, lettings,
reversions and additional development on unutilised plots of land.
These initiatives will continue to drive earnings growth as they
cometo fruition.
ESG is deeply integrated in our investment philosophy and our
approach to asset management. In recognition of our continued
focus in this important area, we were pleased to achieve a further
increase in our GRESB score, which now stands at 88 out of 100
compared to 82 in 2021 (GRESB average = 74; GRESB peer group
average = 79). We were awarded five stars and designated as Leader
in ESG for European Industrial Distribution Warehouse ListedSector.
We were also awarded EPRA Gold Level certification for ESG
reporting best practice in the first year of inclusion in the EPRA
Sustainability Best Practices Recommendations.
Post year end, we agreed an amendment to the Investment
Management Agreement with the Manager, which included a
reduction in the management fee (backdated to August 2022).
Further details are contained in the Manager’s Report. Thiswillenable
significant cost savings to accrue to the Company and consequently
will benefit earnings and the EPRA Cost Ratio and will contribute to
an expected covered dividend position going forward.
Annual Report 2022 Tritax EuroBox plc 5
STRATEGIC REPORT
“ Reduced costs and income growth
will support the move to a fully
covered dividend in 2023.”
Financial performance
The portfolio was valued at €1.77 billion at the year end (+37.8% on
previous year), generating like-for-like capital and ERV growth of 5.6%
and 8.2% respectively. The Company’s EPRA NAV per share
increased by 2.2%.
We declared quarterly dividends totalling 5 cents per share in respect
of the year, in line with the prior year.
This performance contributed to a Total Return of 6% (2021: 14.3%),
against our long-term average target of 9%. The decrease compared
to last year is the result of a softening in capital values in the second
half of the financial year.
For the full year, the total dividend represented 84.8% of Adjusted EPS.
The trajectory in dividend cover is positive, with the dividend fully
covered in the final quarter of the 2022 financial year. The full impact
of this year’s activities and the completion of further rent enhancing
initiatives over the course of the next 12 months, combined with the
reduction to the Manager’s fee and rigorous focus on costs, mean that
we believe we can achieve a fully covered dividend for full year 2023.
The Company benefits from a variety of debt sources, including bank
facilities, a Green Bond and our first private placement, which we
issued during the year. The interest on this debt is either fixed or
capped and none of the facilities mature before Q4 2025. The year-end
LTV was 35% or 41% including all our current funding commitments.
Governance
We were delighted to welcome Sarah Whitney as a Non-Executive
Director with effect from 14 February 2022. Sarah was also appointed
as a member of the Audit and Management Engagement Committees.
Following a review of the Board and Committee composition, we are also
pleased to announce that Sarah Whitney will succeed Keith Mansfield
as Senior Independent Director (“SID”) with effect from 6 December.
Keith will continue as Chair of the Audit & Risk Committee.
Sarah brings over 35 years of senior executive experience advising
international and UK organisations and boards on strategy, corporate
finance, and real estate and economic development matters, as well
as complementary non-executive expertise.
In September 2022, Nick Preston stepped down as Fund Manager
ofthe Company, with Phil Redding appointed in his place. Phil
wasthe Manager’s Director of Investment Strategy prior to his
appointment. He is highly experienced in the sector, with deep
knowledge of Continental European markets gained during 25 years
at SEGRO plc. Nick was instrumental in establishing the Company
and, on behalf of the Board, I thank him for his valuable contribution.
The Board and Company held its annual strategy meeting in
September to discuss the macroeconomic backdrop and ensure the
Company’s approach remains relevant now, and for the future. The
Company has a high-quality portfolio of assets, let to a diverse and
strong customer base, and has significant balance sheet headroom.
The conclusion of this exercise confirmed that the Board believes the
Company has the right strategy and foundations in place to continue
delivering for our Shareholders.
The Board is pleased that it meets the targets set out in the FTSE
Women Leaders Review (which follows the Hampton-Alexander
Review) and we are committed to meeting the targets set out in the
Parker Review at the appropriate opportunity.
For further information on the Company’s governance activities
please refer to pages 60 to 96 in the Governance Report.
Outlook
Following a strong first half for European logistics markets in 2022,
the macroeconomic backdrop changed significantly in the second
half with the European Central Bank responding to the elevated
levelsof inflation with a series of aggressive interest rate hikes. The
knock-on impact of rising bond yields and debt costs, together with
the increased likelihood of European economies experiencing a
period of slower growth, has not yet been fully transmitted into real
estate markets, with the scale and duration of adjustments to pricing
and growth still uncertain.
We believe the structural tailwinds positively impacting the European
logistics sector, particularly the growth of internet retail, remain in
place and other demand drivers, such as the need for supply chain
resilience and buildings that support ESG objectives, will continue
tocreate additional sources of demand. Low vacancy rates and
constrained supply of land also serve to underpin occupational
market fundamentals.
However, we are cognisant of the recent declines in investment transaction
volumes and evidence of a softening in asset pricing and we remain
attentive to the potential risk of weaker occupational markets.
In these more uncertain times, the quality of our portfolio together
with the strength ofour balance sheet combine to provide the
Company with the resilience and resources to navigate more volatile
market conditions. In addition, theembedded indexation, reversion
and asset management opportunities in the portfolio provide the
ability to grow income andcreate value throughout the market cycle.
The actions taken this year to reduce costs, together with the full year
impacts of new investments, indexation and the completion of the
Mango extension, will also provide positive momentum to earnings,
help lower the cost ratio and support a fully covered dividend for the
next financial year.
Although we are taking a more cautious stance in terms of our
outlook for market conditions, the Company remains well positioned
for the future with a resilient portfolio and strong balance sheet
enabling us to navigate a more uncertain macroeconomic backdrop.
Robert Orr
Independent Chairman
5 December 2022
Tritax EuroBox plc Annual Report 20226
STRATEGIC REPORT
Our Portfolio
A portfolio of prime,
well-located assets
Our assets:
• are in established logistics hubs, close to large population centres and with limited land supply;
• have good transport links and are close to other infrastructure hubs;
• are large, modern and adaptable, with strong ESG credentials; and
• have a sufficient supply of power, data connectivity and access to a nearby pool of labour.
Key highlights
Modern
85%
of the portfolio by area hasbeen
built in the last 10 years
Long term
71%
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
92%
of the portfolio by floor area
is covered by Green Building
Certifications or EPCs
Portfolio value by investment category
€1.77bn
portfolio value
17%
Development
83%
Stabilised
11%
Pre-let
forward
funding
5%
Speculative
forward
funding
1%
Redevelopment
Annual Report 2022 Tritax EuroBox plc 7
STRATEGIC REPORT
Diversified by customer and sector
36
customers across
24
investment assets
Pharma
2%
Retail in store and online
22%
Retail online
18%
3P logistics
22%
Other
9%
Manufacturing
11%
Retail in store
7%
Food and beverage
9%
Piacenza
Milan
Bern
Munich
Budapest
Luxembourg
Paris
Lisbon
Madrid
Gothenburg
Malmö
Hamburg
Bremen
Barcelona
1
Rome
Frankfurt
Stockholm
Antwerp
Rotterdam
Hanover
Berlin
Dortmund
Lodz
Warsaw
Prague
Brussels
Paris
Luxembourg
12
3
6
9
19
22
13
18
8
14
57
2
16
18
10
21
11
15
23
17
Turin
Milan
Piacenza
Milan
Bern
Munich
Budapest
Luxembourg
Paris
Lisbon
Madrid
Gothenburg
Malmö
Hamburg
Bremen
Barcelona
1
Rome
Frankfurt
Stockholm
Antwerp
Rotterdam
Hanover
Berlin
Dortmund
Warsaw
Prague
Brussels
Paris
Luxembourg
12
3
6
9
19
22
13
18
8
14
57
2
16
18
10
21
Lodz
11
15
23
17
Turin
Milan
Ideally
placed to
meet
consumer
demand
Our assets are located in
established logistics hubs,
close to large sources
ofconsumption and
population centres and
where the supply of land is
also constrained. They have
strong ESG credentials, as
well as operational capacity
in key areas such asthe
supply of power, data
connectivity and access
toavailablelabour.
Population within
two-hourdrive (average)
12.5m
Connected
to key supply
chain routes
Logistics space is
fundamental to successfully
fulfilling e-commerce sales
and companies require
large, flexible, modern, and
well-located properties to
rapidly and efficiently deliver
orders and manage returns.
Our assets facilitate this
requirement by being
located in established
distribution corridors,
having excellent transport
links and being close to
other mission-critical supply
chain infrastructure.
Number of ports
16
Our Portfolio continued
Our locations Population within a two-hour drive (m)
Italy
2 Rome
16 Settimo Torinese
18 Piacenza
6.4
8.7
13.2
Poland
11 Strykow
7.1
Spain
1 Barcelona
6.0
n
Germany 45%
n
Italy 12%
n
Belgium 11%
n
Spain 11%
n
Netherlands 10%
n
Sweden 7%
n
Poland 4%
Country allocation (by rental income)
at 30 September 2022
Germany
6 Bochum
9 Bremen
19 Bönen
22 Dormagen
13 Geiselwind
18 Gelsenkirchen
8 Hammersbach
14 Lich
5 Peine
7 Wunstorf
21.7
9.4
11.6
11.8
7.7
9.5
7.7
19.3
21.7
22.1
Sweden
15 Gothenburg
23 Malmö
17 Rosersberg I & II
1.7
3.8
3.1
The Netherlands
10 Breda
21 Roosendaal
20.5
20.6
Belgium
4 Bornem
12 Nivelles
3 Rumst
18.6
19.3
15.0
STRATEGIC REPORT
8 Tritax EuroBox plc Annual Report 2022
Piacenza
Milan
Bern
Munich
Budapest
Luxembourg
Paris
Lisbon
Madrid
Gothenburg
Malmö
Hamburg
Bremen
Barcelona
1
Rome
Frankfurt
Stockholm
Antwerp
Rotterdam
Hanover
Berlin
Dortmund
Lodz
Warsaw
Prague
Brussels
Paris
Luxembourg
12
3
6
9
19
22
13
18
8
14
57
2
16
18
10
21
11
15
23
17
Turin
Milan
Piacenza
Milan
Bern
Munich
Budapest
Luxembourg
Paris
Lisbon
Madrid
Gothenburg
Malmö
Hamburg
Bremen
Barcelona
1
Rome
Frankfurt
Stockholm
Antwerp
Rotterdam
Hanover
Berlin
Dortmund
Warsaw
Prague
Brussels
Paris
Luxembourg
12
3
6
9
19
22
13
18
8
14
57
2
16
18
10
21
Lodz
11
15
23
17
Turin
Milan
STRATEGIC REPORT
Ports
Locations
Cities
Map key
Population density
(persons per square kilometre)
>20
>10
>5
>1
>0.5
Place
1
Main supply
chain routes
Main highways
Main railways
9Annual Report 2022 Tritax EuroBox plc
Tritax EuroBox plc Annual Report 202210
STRATEGIC REPORT
Our Investment Proposition
Our investment proposition is compelling and enduring and we remain
well placed to create value for our Shareholders over the long term.
We operate in an attractive market
Our market is characterised by strong occupier demand, a
limited supply of available space and high barriers to developing
new assets in prime locations. These favourable market dynamics
are supporting rental growth and improvements in lease terms.
We have deep expertise in the logistics market
Our Manager has specialised in logistics real estate for more
than 25 years and continues to add expert resources to its team,
which we can draw on. Tritax Management LLP is part of abrdn,
a major global investment company, giving us access to an even
greater depth of expertise, knowledge and perspectives.
Strong relationships with developers enable
ustosecure high-quality, sought after assets
Our developer relationships give us first refusal on an off-market
basis to a pipeline of the highest quality new assets. Thisenables
us to strengthen the portfolio’s quality and resilience at attractive
entry points while providing us with additional opportunities to
grow income and value.
Powerful long-term trends sustain enduring
occupierdemand
Demand for large scale logistics assets is underpinned by strong
structural drivers as customers look to fulfil their e-commerce
sales, secure economies of scale and efficiencies and add
resilience to their supply chains. The long-term strategic nature
of these investments enables customers to better withstand
short-term volatility.
Well placed for delivering
long-term value
Annual Report 2022 Tritax EuroBox plc 11
STRATEGIC REPORT
Asset management underpins further
value creation
There are numerous opportunities embedded in our portfolio
tocreate further value through, for example, leasing unoccupied
space, accelerating the capture of rental revisions and developing
new buildings or extensions on unused or adjacentland.
ESG is fully integrated into our model and across
the asset lifecycle
Being responsible is central to our purpose. We work in
collaboration with stakeholders to create positive change and
value for our customers, their staff and our other stakeholders.
Our portfolio offers attractive, secure and
inflation-linked income and opportunities
forcapital growth
We have constructed an outstanding portfolio of large, modern
and flexible assets in prime logistics locations across Europe.
Thisgenerates a robust income stream with built-in compounding
through the indexation provisions in our leases. Our portfolio
produces both a reliable and growing income and the ability to
capture capital growth that supports an attractive dividend and
Total Return to our Shareholders over the long term.
“ Our portfolio produces both a reliable
and growing source of income and the
ability to capture capital growth that
supports our strategy of delivering an
attractive dividend and Total Return
Tritax EuroBox plc Annual Report 202212
STRATEGIC REPORT
A platform for resilient
CEO’s Q&A
Phil Redding
CEO for Tritax EuroBox plc
“ The structural trends driving
underpin our confidence in
driving income growth as we
invest with discipline and
optimise performance from
Q: You have recently been appointed CEO for
TritaxEuroBox plc. Can you tell us a bit about
yourbackground and experience?
I have been working in the European logistics markets for over 30years,
involved in all aspects of managing, leasing and transacting industrial
property across different market cycles. Most recently, Iwas Chief
Investment Officer at SEGRO plc, where I was responsible for the
development and implementation of the pan-European investment
strategy. I joined Tritax in November 2020 as Director of Investment
Strategy providing strategic advice to EuroBox and the other
Tritaxfunds.
Q: What are your initial impressions of
TritaxEuroBox and the portfolio?
While I have been involved in EuroBox since I joined Tritax, I have
nowhad the opportunity to visit more of the assets and meet our
customers and partners. This has further underlined to me the
inherent quality of the portfolio.
Concentrated in key distribution corridors across Continental Europe,
these assets are modern and sustainable and on long leases to a
strong roster of customers, with annual rent increases primarily linked
toinflation.
In addition, the portfolio has the potential to add value and grow
income through asset management and development activities.
Thisprovides an attractive mix of opportunities.
The portfolio reflects the Company’s disciplined approach to capital
allocation and its commitment to ESG, which is reinforced by the
strong balance sheet. This combination of a high-quality portfolio and
a strong financial foundation provides resilience which I believe puts
the business in a solid position as we move into 2023.
Q: What is your view on the Company’s approach
toESG?
I believe that ESG must be fully integrated into the decision-making
processes, as a primary consideration rather than an afterthought.
Tritax EuroBox has operated in this way for a number of years and its
approach and performance are now being widely recognised in the
industry. In 2022 EuroBox achieved a GRESB score of 88/100, well
above the peer group average of 79, as well as being awarded EPRA
Gold level certification.
This is testament to the huge strides the business has made in this
crucial area but we will continue to look for ways to improve and
invest in initiatives to further strengthen our credentials. Importantly,
this includes continuing to work collaboratively with our customers to
find solutions that support their ESG objectives. This means not only
reducing their environmental impact, but also creating spaces that
promote wellbeing and help to attract and retain talent.
I am really encouraged by these ongoing initiatives and further
progress here is a key objective for the team in 2023.
Annual Report 2022 Tritax EuroBox plc 13
STRATEGIC REPORT
Q: Market conditions have changed significantly
over the last six months; what do you think this
might mean for capital values?
As we approach the end of the year, it is quite clear that the
macroeconomic picture is very different to what we were experiencing
at the start of 2022.
In the second half of the year, rapidly rising interest rates, bond yields
and debt costs have all impacted investor sentiment with transaction
volumes falling and asset prices softening. The exact impact of these
changing markets conditions is difficult to predict, but I would expect
capital values to weaken further over the first half of next year.
That said, it is worth remembering that the positive structural drivers
and strong occupational market fundamentals mean the sector is in
arobust position to withstand these more turbulent market conditions.
In addition, the resilience provided by Tritax EuroBox’s high-quality
portfolio, embedded income growth potential and strong financial
position will serve to insulate the business from these macro headwinds.
Q: What is happening in the occupational market
and what are you hearing from your customers?
Occupier market conditions remain healthy. We are seeing continued
demand, with very low vacancies and insufficient supply further
supporting rental growth.
My conversations with customers reinforce this position, with many
recognising that creating efficient and resilient distribution networks,
that meet their ESG objectives, remains of critical importance to
theirsuccess.
I recognise that in the short term the wider economic backdrop
islikely to lead to demand and rental growth slowing from the very
highlevels of late. But I remain confident that the business is well
positioned to benefit from the positive, long-term structural drivers
and strong market fundamentals that will continue to support the
sector for some time to come.
Q: Will the changing market conditions lead
toachange in the EuroBox strategy?
I fundamentally believe that the current strategy – seeking to
producea reliable and growing income stream, from the ownership
ofmission-critical assets, located near large centres of population
alongimportant distribution corridors – remains right for our business.
The Board and I regularly review our strategy to ensure it remains
aligned to both changing market conditions and longer-term trends.
We believe that the strategy underpins our objective of generating
secure and growing levels of income to support the delivery of
attractive dividends and Total Return for our Shareholders over
thelong term.
Q: What are your priorities in the year ahead?
My focus, and that of the Board, will always be to operate as
efficiently as possible to ensure that we are delivering on our key
objectives for Shareholders. Since taking over the leadership of the
business, two key operational objectives stood out: lowering the cost
ratio and covering the dividend. Considerable progress has been
made on both these priorities.
The revised Investment Management Agreement between theBoard
and the Manager will reduce costs significantly and directly feed
through into a lower cost ratio. In addition, the full impact of our
portfolio activities, as well as indexation uplifts, will flow through into
rental income more meaningfully as we move into 2023. The
combination of lower costs and increasing rental income will support
our objective of covering the dividend.
There is more work to be done but I am confident that the business
will continue to make progress on both these key objectives during
the year ahead.
Tritax EuroBox plc Annual Report 202214
STRATEGIC REPORT
Our Market
Market
fundamentals
remain supportive
Our market is characterised by strong occupier demand,
limited supply of available space and high barriers
favourable market dynamics are supporting rental
growth and improvements in lease terms.
Powerful long-term trends are fuelling
occupierdemand
Demand for large scale logistics assets is underpinned by strong
structural drivers as occupiers look to fulfil their e-commerce sales,
secure economies of scale and efficiencies and add resilience to their
supply chains.
Multi-year trend of online adoption remains upwards
While year-on-year growth rates and the speed of online adoption
across Continental Europe will vary, the multi-year trend remains
upwards. We expect to see further growth in the future with
e-commerce as a percentage of retail sales expected to grow
topotentially reach 30% by 2030.
Annual Report 2022 Tritax EuroBox plc 15
STRATEGIC REPORT
Strong rental growth across core
Continental European markets
The European logistics market continues to see a wide range of
different businesses demanding warehouse space. This is reflected
in the Tritax EuroBox Summer 2022 Occupier Survey
1
, which showed
that 89% of respondents expected to occupy the same or more
space over the next three years.
The primary structural trends driving this long-term demand are:
• the growth of e-commerce, requiring companies to redefine
theirsupply chain which often involves having large and highly
automated logistics facilities, close to major population centres
andstrong transport links;
• the need to optimise, reinforce and de-risk supply chains,
toensure their efficiency and resilience to external shocks; and
• the growing necessity for businesses to operate from sustainable
properties that will remain fit for purpose for years to come.
Global events such as the pandemic and heightened geopolitical risk
have accelerated these trends in recent years.
Warehouse space is fundamental to successfully fulfilling
e-commerce sales as companies require large, flexible, modern, and
well-located properties to rapidly and efficiently deliver orders and
manage returns. While year-on-year growth rates and the speed of
online adoption across Europe will vary, the multi-year trend remains
upwards. We expect to see further growth in the future with
e-commerce as a percentage of retail sales expected to grow from
16% in 2021 to 20% in 2026
2
and reach 30% by 2030
3
.
Supply chains used to be optimised for efficiency, productivity, and
cost, but resilience is now equally critical. Companies are adopting
the latest supply chain planning tools, reviewing manufacturing
locations and transportation networks, and holding more critical
stock closer to customers and end users. Our Tritax EuroBox
Occupier Survey showed that 38% of respondents expect to hold
more stock over the next three years
1
. These changes may cause
companies to redesign parts of their supply chains, and in doing so,
create demand for new buildings. We believe this will favour newer,
well-located and technically capable buildings of the type we own.
The sustainability of their properties is increasingly at the forefront
ofoccupiers’ thinking. In addition to reducing their environmental
impacts, occupiers want a workspace that promotes employee
wellbeing to help them attract and retain staff. Energy generation and
use are also in focus. Roof-mounted solar PV is increasingly desirable
and by occupying assets built with state-of-the-art design and
materials, incorporating low-carbon technologies and energy
efficiencies, occupiers can further minimise their environmental
footprint. Demand for clean energy will also increase as companies
decarbonise their transportation. This will place new pressures on
warehouse sites, such as generating clean energy and providing
charging points.
Real estate market fundamentals
Strong levels of take-up
We continued to see strong demand for warehouse space during
the12-months to September 2022
4
. Belgium, Germany, Italy, Poland,
and Spain all experienced record levels of take-up across the period.
Take-up in Germany totalled 8.4m sqm, up 6% on a like-for-like
basis
5
. With vacancy rates in many markets at or close to record
lows, occupiers have been left with a limited number of options
through which to satisfy new logistics requirements.
Demand continues to emerge from a wide variety of sources
including more traditional distribution-led requirements, as well
astomeet e-commerce needs. We are also seeing companies
supplement their distribution facilities with buffer buildings, to ensure
the end-to-end supply chain continues to function independent of
any external shock. Eurostat data showed inventory in Europe
increased by €171 billion across H1 2022
6
.
In the short term, the economic environment and its impact on
consumer demand could affect leasing decisions. The extent to
which this impacts the market will be determined by the depth and
length of any economic slowdown. At the same time, we believe the
logistics market will be somewhat insulated by several factors; tight
market conditions, planning/zoning constraints, build costs, and debt
availability will likely limit new supply. The tightness of markets and
mission-critical nature of many logistics buildings will make occupiers
hesitant to give up space and, in the context of the wider business,
occupational costs are not excessive. Supply chain reinvention,
e-commerce trends and the focus on ESG are also multi-year trends
around which companies make long-term investment decisions.
European logistics take-up by market, 2015–Q3 2022
20162015 2017 2018 2019 2020
2021 Q1–Q3
2022
Germany France Netherlands Belgium Italy Spain Poland
30,000
25,000
20,000
15,000
10,000
5,000
0
’000 sqm
Source: CBRE.
Tritax EuroBox plc Annual Report 202216
STRATEGIC REPORT
Our Market continued
Real estate market fundamentals
continued
Supply remains constrained
Completions of new space increased to 19.2m sqm in the 12-months
to Q3 2022, up from 15.2m sqm a year earlier
5
. New buildings are
frequently the only route occupiers can use to find space and as a
result, these developments have been rapidly absorbed and have
notincreased overall vacancy (see below).
The availability of modern, vacant buildings remains low across
ourcore European markets. There are also a limited number of
undeveloped sites available in these markets that can accommodate
the very largest logistic facilities, and municipalities are often reluctant
to zone land for the construction of assets of this scale. As a
consequence, companies looking for very large new logistics facilities
have few choices. In addition, developing new buildings has become
increasingly challenging during 2022 as financing costs, cost-price
inflation and land and power availability have all become further
barriers to development. Against this backdrop, we expect
development activity to slow in 2023, which will be a positive
influence for marketfundamentals.
Vacancy
National vacancy rates are at or close to record lows. Vacancy rates
in many core logistics sub-markets are often even lower. Barcelona,
for example, has a vacancy rate of 3.9% (Spain: 5.6%) and in the A12/
E19 corridor in Belgium just 0.1% of space is vacant (Belgium: 1.5%)
5
.
Rental growth
Prime headline rents have increased across all our eight core European
markets in the 12-months to Q3 2022 with many sub-markets seeing
double digit rental growth. Growth has also become more widespread
with markets in peripheral countries such as Poland and Sweden
seeing strong increases in the period
5
.
The market environment has helped logistics asset owners to
selectively improve lease terms, as well as rental levels. This is an
important development in Europe, given high inflation. One particular
benefit has been the ability to agree new leases that more fully
capture inflation, rather than having caps included.
1 Source: 2022 European real estate logistics census.
2 Source: Morgan Stanley, Global Ecommerce Growth Forecast, 2022.
3 Source: Eurocommerce, European E-Commerce Report, 2022.
4 European data used in this report considers the following markets: Belgium, France, Germany, Italy, the Netherlands, Poland, Spain, and Sweden, unless
otherwisestated.
5 Source: CBRE.
6 Source: Eurostat.
7 Data includes transaction volumes in the Czech Republic, Hungary, Romania, and Slovakia as well as our eight core markets. Source: CBRE.
European logistics completions and take-up,
2017–Q3 2021
2017 2018 2019 2020 2021 Q1–Q3
2022
Take-up Completions
11%
21,164
21,442
20,365
21,354
27,573
19,371
12,283
14,555
14,425
15,132
17, 22 5
13,519
10%
Vacancy (%) – LHS Rent – RHS
European logistics rent index and vacancy,
2015–Q3 2022
Q1 2015
Q3 2015
Q1 2016
Q3 2016
Q1 2017
Q3 2017
Q1 2018
Q3 2018
Q1 2019
Q3 2019
Q1 2020
Q3 2020
Q1 2021
Q3 2021
Q1 2022
Q3 2022
%
Index
Q4 2014 = 100
10
8
6
4
2
0
140
130
120
110
100
90
Calculated using unweighted averages.
Source: CBRE.
Annual Report 2022 Tritax EuroBox plc 17
STRATEGIC REPORT
Capital markets
This year, the investment environment for all asset classes has shifted
in response to central banks raising rates to address the inflationary
environment. Debt costs have increased as a result, impacting the
returns available to investors on leveraged acquisitions. Wider capital
market conditions have also shifted, with logistics yields increasing
through the second half of the year.
Real estate transactions have slowed since Q2 2022 but total
industrial/logistics transaction volumes across our core European
markets were €42 billion for the 12-months to September 2022, up
32% on the previous year
7
. Limited recent activity is making price
discovery challenging. CBRE prime market yields for September 2022
have typically moved out by 35–60bps from their Q1–Q2 2022 lows
5
.
Reported yields are CBRE’s best estimate for a prime, rack-rented
building in each market. However, 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 “market” levels, as there may be scope for
additional income growth.
While global capital markets remain volatile, real estate pricing
willcontinue to be impacted by the macro drivers that currently
dominate. In the medium term, however, we believe that logistics real
estate remains a compelling area for investment. High-quality real
estate forms the backbone of the global economy and logistics real
estate is one sub-sector that is central to this premise.
2010 2011 2012 2013 2014 2015 2016 2 017 2018 2019 2020 2021 Q1–Q3
2022
Investment volumes
European logistics investment volumes,
2010–Q32022
€bn
%
8
7
6
5
4
3
2
1
0
Note: Includes Belgium, the Czech Republic, France,
Germany, Hungary, Italy, the Netherlands, Poland,
Romania, Slovakia and Spain.
Source: CBRE.
Prime yield (RHS)
40
35
30
20
15
10
5
0
Tritax EuroBox plc Annual Report 202218
STRATEGIC REPORT
Our Business Model
Our business model supports our purpose through our focus on
investing in the most modern, best located and most sustainable
logistics properties. These meet the needs of our growing and
Our target markets are shown in the map on pages 8 and 9.
We aim to deliver consistent returns to Shareholders over the
medium to long term, through investing in properties that
Our advantages
The Manager
The Manager’s logistics sector specialism provides
exceptional focus and understanding of the dynamics
of the sector. It benefits from a deep pool of resource
with many years of combined experience in the
European logistics real estate market, providing
Shareholders with unrivalled execution capability.
TheManager’s expertise and reputation make us an
attractive partner for occupiers and for sellers looking
to dispose of their assets.
The Manager’s skills include sourcing and acquisition
of assets; asset management, in conjunction with our
retained asset managers, to unlock value from assets;
development; portfolio construction and management;
implementation of hold/sell strategies; and disposals.
Layered throughout these disciplines is market-leading
in-house tax, legal and accounting knowledge.
Developer relationships
The relationships with our development and asset
management partners are key advantages for us.
Theygive us access to competitively priced,
high-quality investment opportunities in the key
Europeanlogistics markets.
As well as these relationships, the Manager has a
widecontact base of other investors, developers and
occupiers in the market, which also provide reliable
and attractive investment opportunities.
How we create value
Source high-quality investments
The Manager uses its experience and relationships to acquire properties
which are not being openly marketed, thereby reducing competition. Our
portfolio can be expanded further by extending properties and building on
our existing sites, enabling investment at more advantageous returns than
available in the open market.
Buy and sell for value
Before acquiring an asset, the Manager assesses its alignment with
ourinvestment approach (see page 20) and with the existing portfolio,
toensure appropriate diversification and avoid concentration of risk.
We intend to hold assets for the long term. However, we regularly
undertake a rigorous, asset by asset portfolio review in order to identify
value-add and recycling opportunities to maintain portfolio performance.
Develop on a risk-controlled basis
We may invest in forward funded developments, which have been pre-let
to a customer. This enables us to invest in brand new, environmentally
friendly buildings leased to institutional grade customers on long leases.
We can also acquire land zoned for logistics use, either as part of an asset
acquisition or as a discrete parcel of land. This allows us to capture a
greater share of the development profit.
Proactively and responsibly manageassets
The Manager works with our customers to maximise the building’s
usefulness to their operations and to adapt it as their needs change.
ESG is at the heart of this approach, helping to future-proof our assets and
ensure they generate long-term returns for Shareholders, while protecting
the environment and benefiting local communities.
Annual Report 2022 Tritax EuroBox plc 19
STRATEGIC REPORT
The value we create
For our customers
Our customers benefit from large, modern, flexible, sustainable and
well-located logistics space, owned by a landlord who is an expert in the
sector and committed to understanding and supporting their operations in
the long term.
For society
Our assets are integral to the surrounding communities. They support local
employment and generate tax revenues which support local and national
government spending. Our assets also facilitate online shopping and the
rapid delivery of goods, supporting choice in modern lifestyles.
For the environment
Our approach to sustainability (see page 28) aims to transition our portfolio
to net zero carbon, while enhancing biodiversity on our sites.
For Shareholders
We look to pay a progressive, secure and sustainable dividend and
generate capital growth. Our dividend and Total Return targets are set out
on page 24.
For lenders
Our lenders benefit from having interest serviced from regular and stable
cash flows, generated by financially strong customers occupying top
quality real estate.
How we generate returns
A large proportion of our Total Return is generated
from the rents which our customers are contracted
to pay to us under multi-year lease contracts. 97%
ofour leases receive rental uplifts each year and
capture market rental growth through asset
management. Around two-thirds of our rental
payments are received monthly in advance, with
theremainder being received quarterly in advance,
meaning our highly visible revenue converts quickly
into cash.
We aim to manage the business as efficiently as
possible and to maintain an appropriate cost base in
the context of running a multi-jurisdictional property
portfolio. A number of our costs are partially or
largely fixed, which will result in increasing
profitability as the portfolio expands. The lower
Investment Management Agreement fee agreed
between the Board and the Manager, in part,
reflected the passing to the Company of an element
ofthe economies of scale benefits captured as
theportfolio has grown in scale.
This growth in income is directly converted into
increases in capital values. Additional capital
growthmay come through asset management, our
acquisition processes and development activities,
as well as yield compression across the market.
Tritax EuroBox plc Annual Report 202220
STRATEGIC REPORT
A strategy
for value creation
Implementing our strategy
We made good progress with our strategy during the year, as summarised below.
FurtherinformationcanbefoundintheManager’sReport – see page 36.
Investment Asset
management
ESG Financing
Progress in 2022
Continued to strategically deploy
capital into high-quality acquisitions.
Acquired nine income-producing
assets and development projects
in core Western European markets.
Total consideration of €533 million,
at yields between 3.3% and 5.4%.
Progress in 2022
Successfully let development
schemes at Bornem, Belgium, in
March 2022. Completion and letting
of development at Strykow, Poland,
in April 2022.
Progressed Barcelona extension,
reaching practical completion after
the year end.
Four new leases signed in the year:
the vacant units at Nivelles, Belgium,
and Gelsenkirchen, Germany; the
development atBornem; and relet the
asset at Hammersbach, Germany.
These new leases added €5.1 million
of contracted rent, an increase of
€0.8m, 18% above previous rent or
guarantees.
Continued to capture rental growth
through the indexation provisions in
the leases.
Progress in 2022
Assets acquired in the year fully
aligned with ESG objectives.
Further enhanced ESG credentials
of the portfolio through asset
management, including schemes to
enhance biodiversity and
greenspace.
Improved GRESB score to 88/100
and five Green Stars.
Progress in 2022
Issued debut private placement
of €200 million senior unsecured
notes, with a weighted average
coupon of 1.368% and a
weighted average maturity of
nineyears at drawdown.
Senior unsecured credit rating
upgraded from BBB- to BBB.
Future focus
Maintain focus on disciplined
capital allocation when
considering all investment
decisions in more challenging
market conditions.
Continue to look for opportunities
to dispose of assets where we
have completed our value creation
plans, to recycle the capital into
higher-returning opportunities.
Future focus
Create value during construction
and leasing of committed
development projects.
Seek to accelerate capture
ofthereversionary potential
intheportfolio.
Add value through new
development and extension
projects on currently unused
landinthe portfolio.
Future focus
Integrate ESG performance criteria
across our entire investment process
– due diligence, development, asset
management and end of life.
Align our portfolio with the Paris
Agreement
decarbonisation pathways
and ensure
that our portfolio is
resilient to the
changing climate and
makes a positive
contribution to global
net zero targets.
Protect and enhance nature across
our portfolio and work with our
customers to ensure that our buildings
enhance the wellbeing of people
inside and outside the buildings.
Ensure that our investments deliver
measurable impact to communities and
people across our operating footprint.
Future focus
Continue to conservatively
manage the LTV and to extend
the average maturity of debt.
Annual Report 2022 Tritax EuroBox plc 21
STRATEGIC REPORT
Stakeholder Engagement and Section 172
our stakeholders
By considering the Company’s purpose and values, together with
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 doesnot have any employees;
• the need to foster the Company’s business relationships
withsuppliers, customers, partners and others;
• the impact of the Company’s operations on the community
andenvironment;
• the Company’s reputation for high standards of
businessconduct;and
• the need to act fairly as between members of the Company.
The table below indicates where the relevant information
isinthis Annual Report that demonstrates how we act in
accordancewith the requirements of Section 172.
Further information on how we have engaged with our key
stakeholders and considered their interests during the last
reportingperiod can be found on pages 69 to 71.
Our stakeholders
The Manager and its employees
Our Shareholders
Our suppliers
Our customers
Our lenders
Government, regulators
Our communities
Read more on pages 70 to 73
Section 172 matter Further information incorporated into this statement byreference
Long term
Our Market pages 14 to 17
Our Business Model pages 18 and 19
Manager’s Report pages 36 to 41
Key Board Decisions pages 72 and 73
Investors
Strategic Report pages 1 to 59
Key Board Decisions pages 72 and 73
Governance Report pages 60 to 96
Employees
Pages 23,64and 70
Community and environment
Strategic Report pages 10 and 11, 28 to 34 and 51 to 58
Manager’s Report pages 36 to 41
ESG pages 28 to 35
Key Board Decisions pages 72 and 73
Suppliers
Strategic Report pages 1 to 59
Manager’s Report pages 36 to 41
Key Board Decisions pages 72 and 73
High business conduct
Stakeholder Engagement pages 21 to 23 and 70 to 73
Strategic Report pages 1 to 59
Tritax EuroBox plc Annual Report 202222
STRATEGIC REPORT
Our Shareholders
What they care about
Delivering sustainable, profitable growth over the longer term.
Our investors take a keen interest and place a very 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
fromtheBoard and the Manager
• Wrote to Shareholders and 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
andstrategy remain in line with expectations
Further information
• Business model pages 18 and 19
• Board leadership and Company purpose pages 69 to 71
• Key decisions of the Board 2022 pages 72 and 73
Stakeholder Engagement and Section 172 continued
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, whenable
• Site visits
• Review of published data, such as annual accounts, trading updates
and analysts’ reports to identify mutually beneficial opportunities
• Greater discussion over cash flow and rental collection
inthecurrent 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
andresources
• Greater clarity for the business on rent collection
• Strengthening of business relationships
• Appointment of dedicated asset manager
Further information
• Manager’s Report pages 36 to 41
• ESG section pages 28 to 35
Annual Report 2022 Tritax EuroBox plc 23
STRATEGIC REPORT
The Manager and its employees
What they care about
The long-term success of the Company is of key importance
totheManager. 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 ahigh priority
for the Manager. The Board and the Manager maintain a positive
andtransparent 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 operationalimpact
• Formalising hybrid working
• Employee social events
Further information
• Manager’s Report pages 36 to 41
• Key decisions of the Board 2022 pages 72 and 73
• Division of responsibilities pages 74 to 77
• Management Engagement Committee Report pages 88 to 90
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 levelagreements at a
competitive fee.
How we engage
• Invited key suppliers to attend Board and Committeemeetings
• Informal, one-to-one virtual meetings
• Review of supplier performance by the Management
EngagementCommittee
• 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, levelsofservice
• Appointment of Kekst as the Company’s communication agency
• Appointment of Barclays as joint corporate brokers
• Retender of Langham Hall (Depositary Services)
Further information
• Key decisions of the Board 2022 pages 72 and 73
• Management Engagement Committee Report pages88 to 90
Tritax EuroBox plc Annual Report 202224
STRATEGIC REPORT
Measuring our
performance
Set out below are the key performance indicators
we use to track our strategic progress.
1. Dividend per share
Dividends paid to Shareholders and declared
in relation to the period.
2. Total Return
(“TR”)
TR measures the change in the EPRA Net
Tangible Assets (“EPRA NTA”) over the
period plus dividends paid.
3. Basic Net Asset Value
Net asset value in IFRS GAAP.
Comments
The dividend reflects our ability to deliver a
growing income stream from our portfolio
andis a key element of our Total Return.
Our policy is to pay an attractive and progressive
dividend, with the intent to pay out 90–100%
ofour Adjusted Earnings each year, with a
minimum payout of 85% of Adjusted Earnings.
Comments
TR measures the ultimate outcome of our
strategy, which is to create value for our
Shareholders through our portfolio and to
deliver a secure and growing income
stream. The Company’s medium-term TR
target set at IPO is 9% per annum, by
reference to the IPO issueprice.
Comments
Basic Net Asset Value measures the
netvalue of the Company under IFRS.
Key Performance Indicators
5.00 cents
2021: 5.00 cents
5.00 cents
5.00 cents
4.40 cents
2022
2021
2020
6.0%
2021: 14.3%
6.0%
14.3%
11.0%
2022
2021
2020
€1,065.8m
2021: €1,053.5m
€1,065.8m
€1,053.5m
€503.9m
2022
2021
2020
Annual Report 2022 Tritax EuroBox plc 25
STRATEGIC REPORT
7. Dividend cover
The dividend cover helps to indicate how
sustainable a dividend is. It measures the
proportion of dividends supported by
AdjustedEarnings.
8. Interest cover
The ratio of net property income to
theinterest incurred in the period.
9. Like-for-like
Like-for-like rental growth compares
thegrowth of the rental income of the
portfolio that has been consistently in
operation and not under development
during the two full preceding periods.
Comments
We expect the dividend to be fully covered
forFY23.
Comments
Interest cover is a measure of a Company’s
ability to meet its interest payments.
Comments
This measures the Company’s ability to
grow its rental income over time. Rental
growth will not be linear during the hold
period, with different mechanisms in
eachlease agreement.
84.8%
80.2%
94.4%
84.8%
2021: 80.2%
2022
2021
2020
6.62 times
6.28 times
4.63 times
6.62 times
2021: 6.28 times
2022
2021
2020
4.0%
2.4%
4.0%
2021: 2.4%
2022
2021
2020
4. Adjusted Earnings
EPRA Earnings, adjusted to include licence
fees receivable on forwarded funded
development assets and for other
earningsnot supported by cash flows.
See note 12 to the financialstatements
5. Loan to value ratio
(“LTV”)
The proportion of our gross asset value that
is funded by net borrowings (excluding cash).
6. Weighted Average
Unexpired Lease Term
(“WAULT”)
The average unexpired lease term of the
property portfolio, weighted by annual
passing rents.
Comments
Adjusted Earnings is a performance measure
used by the Board to assess our ability to
generate cash earnings from our portfolio,
which ultimately underpins our
dividendpayments.
Comments
The LTV measures the prudence of our
financing strategy, balancing the additional
returns and portfolio diversification that
come with using debt against the need to
successfully manage risk. The Company will
maintain a conservative level of aggregate
borrowings, with a medium-term target of
45% of gross asset value and a maximum
limit of 50% (in each case, calculated at the
time of borrowing).
Comments
The WAULT is a key measure of the quality
of our portfolio. Long lease terms underpin
the security of our income stream. The
Company seeks to maintain a WAULT of
greater than five years across the portfolio,
in accordance with typical lease lengths in
Continental Europe.
€34.2m
2021: €24.7m
€34.2m
€24.7m
€17.6m
2022
2021
2020
35.2%
2021:13.3%
35.2%
13.3%
41.1%
2022
2021
2020
8.0 years
2021: 9.3 years
8.0 years
9.3 years
9.1 years
2022
2021
2020
0.5%
Tritax EuroBox plc Annual Report 202226
STRATEGIC REPORT
The table below shows additional performance measures, calculated in accordance
with the Best Practices Recommendations of the European Public Real Estate
Association (“EPRA”). We provide these measures to aid comparison with other
European real estate businesses. For a full reconciliation of the new EPRA NAV
measures, see the Notes to the EPRA and Other Key Performance Indicators.
EPRA Performance Measures
1. EPRA Net Reinstatement
Value (“EPRA NRV”)
Basic NAV adjusted for mark-to-market
valuation of derivatives, deferred tax and
transaction costs (real estate transfer tax
andpurchaser’s costs).
2. EPRA Net Tangible
Assets (“EPRA NTA”)
Basic NAV adjusted to remove the fair
values of financial instruments and
deferredtaxes (this excludes
transactioncosts).
3. EPRA Net Disposal
Value (“EPRA NDV”)
Equivalent to IFRS NAV, as this includes
thefair values of financial instruments
anddeferred taxes.
Comments
A key measure to highlight the value ofnet
assets on a long-term basis. Themetric
reflects what would be needed to recreate
thecurrent portfolio of the Company.
Comments
Assumes that entities buy and sell assets,
thereby crystallising certain levels of
unavoidable deferred tax.
Comments
Represents the Shareholders’ value under
adisposal scenario, where deferred tax,
financial instruments and certain other
adjustments are calculated to the full extent
of their liability, net of any resulting tax.
€1,194.7m
€1,147. 4m
€550.5m
€1,194.7m
20 21: € 1,147.4m
2022
2021
2020
€1,111.0m
€1,086.5m
€516.3m
€1,111.0m
2021: €1,086.5m
2022
2021
2020
€1,065.8m
€1,053.5m
€503.9m
€1,065.8m
2021: €1,053.5m
2022
2021
2020
Annual Report 2022 Tritax EuroBox plc 27
STRATEGIC REPORT
4. EPRA Earnings
Earnings from operational activities.
5. 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.
6. EPRA topped-up NIY
This measure incorporates an adjustment
tothe EPRA NIY in respect of the expiration
of rent-free periods (or other unexpired
lease incentives such as discounted
rentperiods and step rents).
Comments
A key measure of the Company’s
underlyingresults and an indication of the
extent to which current dividend payments
aresupported by earnings.
Comments
This measure should make it easier
forinvestors to judge how the valuations
ofportfolios compare.
Comments
This measure should make it easier
forinvestors to judge how the valuations
ofportfolios compare.
€20.9m
€14.7m
€13.8m
€20.9m
2021: €14.7m
2022
2021
2020
3.6%
3.7%
4.4%
3.6%
2021: 3.7%
2022
2021
2020
3.7%
3.8%
4.6%
3.7%
2021: 3.8%
2022
2021
2020
7. EPRA vacancy rate
Estimated market rental value (“ERV”)
ofvacant space divided by ERV of the
wholeportfolio.
8. EPRA Cost Ratio
Administrative and operating costs
(inclusive of vacant property costs)
dividedby gross rental income.
9. Adjusted EPRA
EPRA Cost Ratio adjusted for
non-operational items.
Comments
A “pure” (%) measure of investment property
space that is vacant, based onERV, and
includes rental guarantees.
Comments
A key measure to enable meaningful
measurement of the changes in a
company’s operating costs.
Comments
This ratio includes licence fee income and
rental guarantees and excludes exceptional
items of a capital nature.
0.3%
3.3%
5.4%
0.3%
2021: 3.3%
2022
2021
2020
41.3% 29.5%
30.5% 28.5%
31.3% N/A
41.3%
2021: 30.5%
29.5%
2021: 28.5%
2022 2022
2021 2021
2020 2020
Tritax EuroBox plc Annual Report 202228
ESG Overview
ESG is fully integrated
into our model and
across the asset lifecycle
Our ESG ambition
Being responsible is central to our purpose. Our ambition is
collaboration to create positive change and value in the long term
Our ESG strategy
In support of this ambition, we follow a sustainability strategy which is
aligned with five of the UN Sustainable DevelopmentGoals (“SDGs”):
Healthy and sustainable buildings
Ensure and demonstrate the resilience of ourassets.
SDG 11: Sustainable Cities and Communities
SDG 9: Industry, Innovation and Infrastructure
Energy and carbon
Achieve a net zero carbon portfolio.
SDG 13: Climate Action
Nature and wellbeing
Enhance biodiversity across the
Company’sportfolio.
SDG 15: Life on Land
Socio-economic impact
Create a positive socio-economic impact through
ourinvestment.
SDG 8: Decent Work and Economic Growth
Each of these goals is supported by objectives and targets
we aim to achieve by 2023.
Our ESG credentials
• 92% of the portfolio by floor area is covered by Green Building
Certifications orEnergy Performance Certificates (“EPCs”)
• 100% of EPCs outperform their best practice benchmarks
• 6.74 MW of on-site solar PV operational across our portfolio
with 20 MW in feasibility pipeline
• GRESB score of 88/100, five Green Stars and Regional Listed
Sector Leader Europe
• World Green Building Council’s Advancing Net Zero Carbon
Commitment signatory – confirms our commitment to achieving
net zero carbon for our direct activities by 2030 andfor all direct
and indirect activities by 2050
• EPRA Gold certification – EPRA Sustainability Best Practices
Recommendations
• Task Force on Climate-Related Financial Disclosures (“TCFD”)
aligned – portfolio-wide climate risk analysis and disclosure in
accordance with TCFD recommendations
• CRREM aligned – portfolio-wide carbon risk analysis utilising
CRREM decarbonisation pathways
• Our Manager is ISO 14001 accredited
STRATEGIC REPORT
Annual Report 2022 Tritax EuroBox plc 29
STRATEGIC REPORT
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
andwellbeing 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
atour 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 60 to 96 for more information).
During FY22, our activities included:
• continuing public disclosure of our integrated policies and
procedures, to provide transparency about our approach; and
• achieving EPRA Gold certification for reporting best practice,
in our first year of inclusion in the EPRA Sustainability Best
Practices Recommendations.
Environment
Our approach to the environment includes management
ofenergy performance and carbon emissions.
We continued to make good progress with our environmental
initiatives during 2022, including:
• renewable energy: continuing development of integrated solarand
electric vehicle charging schemes across our assets, in partnership
with occupiers. Using smart and low-carbon infrastructure to
deliver efficient buildings which are fitfor the future;
• climate change: completing a physical climate risk analysis
acrossthe portfolio and undertaking our first TCFD analysis
anddisclosure. The majority of standing assets are considered to
have a low likelihood of climate hazards. We continue to integrate
climate risk mitigation across the asset lifecycle and are building
the TCFD analysis into our asset management plans;
• net zero carbon: completing a Carbon Risk Real Estate Monitor
(“CRREM”) analysis for all assets, to assess and deliver
alignment of our net zero targets with the Paris Agreement
pathways; and
• benchmarks: achieving five Green Stars and Sector Leader in
GRESB ratings. Continuing to deliver transparent ESGperformance.
Tritax EuroBox plc Annual Report 202230
ESG Progress Summary
STRATEGIC REPORT
We continue to successfully implement
Our key objectives are:
1. integrating ESG performance criteria across our entire investment
process – due diligence, development, asset management
andend of life;
2. aligning our portfolio with the Paris Agreement decarbonisation
pathways andensuring 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 ourcustomers to ensure that our buildings enhance
the wellbeing of people inside and outside the buildings;
4. ensuring that our investments deliver measurable impact
tocommunities 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 2023:
Commitment Objective 2023 target 2022 plan Activity in 2022
Healthy and
sustainable
buildings
Ensure and
demonstrate
theresilience
ofourassets
Embed ESG into investment practices and ensure
anynew acquisitions and investments align with
ESGinvestment principles
Ensure all acquisitions and standing investments align
with ESG investment principles
Use green finance to support sustainable growth
fortheGroup
Ensure all acquisitions meet our ESG investment standards All acquisitions have followed our due diligence process, which
includes the ESG criteria agreed with our ESG Committee
Published our Green Bond Allocation and Impact Report
Leading ESG ratings Maintain five Green Stars in GRESB Target five Green Stars Achieved a five Green Star rating and Sector Leader for GRESB
andEPRA Gold for inaugural Sustainability Best Practices
Recommendations submission
Agree green leases with customers Incorporate green lease clauses into all new leases Target green leases with new acquisitions Four new green leases implemented during the year
Ensure all new assets in the portfolio have a
GreenBuilding Certification
All new acquisitions to have or achieve a minimum
ofBREEAM Very Good or equivalent
Increase Green Building Certification coverage to 100% of portfolio Made two standing asset acquisitions: Piacenza has a BREEAM
In-Use Very Good and a BREEAM In-Use Excellent rating and we
are awaiting DGNB Gold for Gelsenkirchen
We also achieved DGNB Gold for Lich and are awaiting a BREEAM
In-Use rating forBornem
Ensure all new developments have
GreenBuildingCertification
All projects to meet the Sustainable Construction Brief
which is currently under development
Explore opportunities for low-carbon design for new developments All developments are contracted to achieve a Green Building
Certification (incorporating sustainable materials). We are continuing
to review and develop our baseline specification
Ensure the highest standards to protect health and safety Standardise procurement processes Work with supplier partners to ensure health and safety systems
andpolicies are in place, to maintain high standards
As part of our standard bestpractice property management,
ourteams work with supplier partners to ensure health and safety
standards are adhered to. We are embedding global minimum
standards in ourprocurement process, setting good practice for
diversity, equity and inclusion, environment and health and safety
clauses tobe incorporated in all new supply contracts. Adoption of
this is at varying stages bycountry and we have a roadmap to align
our practice in all major markets
Demonstrate strong customerengagement Improve satisfaction score Conduct a new customer satisfaction survey Customer satisfaction survey conducted, as well as anEU logistics
propertycensus
Annual Report 2022 Tritax EuroBox plc 31
STRATEGIC REPORT
ESG progress summary
The tables below show our progress against each of the detailed ESG targets we have set for 2023:
Commitment Objective 2023 target 2022 plan Activity in 2022
Healthy and
sustainable
buildings
Ensure and
demonstrate
theresilience
ofourassets
Embed ESG into investment practices and ensure
anynew acquisitions and investments align with
ESGinvestment principles
Ensure all acquisitions and standing investments align
with ESG investment principles
Use green finance to support sustainable growth
fortheGroup
Ensure all acquisitions meet our ESG investment standards All acquisitions have followed our due diligence process, which
includes the ESG criteria agreed with our ESG Committee
Published our Green Bond Allocation and Impact Report
Leading ESG ratings Maintain five Green Stars in GRESB Target five Green Stars Achieved a five Green Star rating and Sector Leader for GRESB
andEPRA Gold for inaugural Sustainability Best Practices
Recommendations submission
Agree green leases with customers Incorporate green lease clauses into all new leases Target green leases with new acquisitions Four new green leases implemented during the year
Ensure all new assets in the portfolio have a
GreenBuilding Certification
All new acquisitions to have or achieve a minimum
ofBREEAM Very Good or equivalent
Increase Green Building Certification coverage to 100% of portfolio Made two standing asset acquisitions: Piacenza has a BREEAM
In-Use Very Good and a BREEAM In-Use Excellent rating and we
are awaiting DGNB Gold for Gelsenkirchen
We also achieved DGNB Gold for Lich and are awaiting a BREEAM
In-Use rating forBornem
Ensure all new developments have
GreenBuildingCertification
All projects to meet the Sustainable Construction Brief
which is currently under development
Explore opportunities for low-carbon design for new developments All developments are contracted to achieve a Green Building
Certification (incorporating sustainable materials). We are continuing
to review and develop our baseline specification
Ensure the highest standards to protect health and safety Standardise procurement processes Work with supplier partners to ensure health and safety systems
andpolicies are in place, to maintain high standards
As part of our standard bestpractice property management,
ourteams work with supplier partners to ensure health and safety
standards are adhered to. We are embedding global minimum
standards in ourprocurement process, setting good practice for
diversity, equity and inclusion, environment and health and safety
clauses tobe incorporated in all new supply contracts. Adoption of
this is at varying stages bycountry and we have a roadmap to align
our practice in all major markets
Demonstrate strong customerengagement Improve satisfaction score Conduct a new customer satisfaction survey Customer satisfaction survey conducted, as well as anEU logistics
propertycensus
Tritax EuroBox plc Annual Report 202232
ESG Progress Summary continued
STRATEGIC REPORT
Commitment Objective 2023 target 2022 plan Activity in 2022
Energy
andcarbon
Achieve net zero
carbon across the
whole portfolio
(including Scope 3
customer emissions)
by 2050, in line with
the 1.5°C warming
pathways set out in
the Paris Agreement
Ensure all assets perform better than their country best
practice EPC benchmark
Ensure all assets have LED lighting and building
management systems, wherefeasible
Ensure new acquisitions’ energy use per m
2
performs better than
thebest practice country benchmark
All assets have continued to perform above their country best
practice EPC benchmark
Install all feasible on-site renewable energyopportunities Continue to install renewable energy generation projects,
where feasible
Install solar PV at four assets Operational solar installed in six assets, representing 6.74 MW of
installed capacity, with eight assets in the feasibility pipeline with
thepotential to deliver 20 MW
Retrofit assets/facilitate low-carbon operations
forcustomers in line with 1.5°C pathways
Assess the assets that need investment to achieve 1.5°C
pathways and develop action plans to retrofit assets
toalign with 1.5°C pathway
Identify net zero carbon pathway plans for assets that do not align
with the 1.5°C pathway
Full carbon risk analysis undertaken across entire portfolio using
CRREM platform to facilitate the Paris Agreement pathway alignment
for all assets
Align with TCFD recommendations, to ensure assets are
resilient to physical climate changerisks
Full TCFD disclosure Conduct scenario analysis to quantify the potential risks of different
global warming scenarios on the assets in the portfolio
Completed climate risk analysis for TCFD disclosures. The analysis
is being incorporated into our operational business model and asset
management planning
Socio-economic
impact
Create a positive
socio-economic
impact through
ourinvestment
Continue to support The Mission to Seafarers Support The Mission to Seafarers until 2024 Fund The Mission to Seafarers with €25,000, to purchase and run
aminibus in Myanmar to support seafarers to get vaccinated and
provide critical supplies
The minibus has been funded as part of the continuing support
ofthecharity
Invest in local community causes through the
LocalCommunity Investment Fund
Support local community causes in alignment
withcustomers
Continue to invest in local community causes important to our
customers, with a focus on supporting communities where there
arenew acquisitions
Beekeeping lessons on site for Passo Corese High School students
Nature and
wellbeing
Enhance
biodiversity on the
Company’s portfolio
Enhance biodiversity on assets – bee hives, pollinating
meadows and green space
Implement at least one biodiversity, climate and wellbeing
measure on each asset
Install a further three measures During Q3 2022 we re-planted the entire external area of the Mango
estate at Barcelona. The current area is overgrown and unplanted.
The new planting programme will be of great benefit to neighbouring
owner VGP, which has a bee farm on the roof of one of its nearby
units. It will reintroduce native plant species and improve
surrounding biodiversity
At Bornem we implemented an additional green area
Invest in sustainable transport
(EV, cycling and walkability)
Install EV charging points and cycle facilities,
wherefeasible
Install a further four EV charging points and cycle facilities Cycle path installed outside of the Nivelles asset
Expansion of bicycle shed in Rumst, adding vertical garden
At Bornem 28 EV charging points were installed and inefficient
lighting was replaced with LED lighting
ESG progress summary continued
Annual Report 2022 Tritax EuroBox plc 33
STRATEGIC REPORT
Commitment Objective 2023 target 2022 plan Activity in 2022
Energy
andcarbon
Achieve net zero
carbon across the
whole portfolio
(including Scope 3
customer emissions)
by 2050, in line with
the 1.5°C warming
pathways set out in
the Paris Agreement
Ensure all assets perform better than their country best
practice EPC benchmark
Ensure all assets have LED lighting and building
management systems, wherefeasible
Ensure new acquisitions’ energy use per m
2
performs better than
thebest practice country benchmark
All assets have continued to perform above their country best
practice EPC benchmark
Install all feasible on-site renewable energyopportunities Continue to install renewable energy generation projects,
where feasible
Install solar PV at four assets Operational solar installed in six assets, representing 6.74 MW of
installed capacity, with eight assets in the feasibility pipeline with
thepotential to deliver 20 MW
Retrofit assets/facilitate low-carbon operations
forcustomers in line with 1.5°C pathways
Assess the assets that need investment to achieve 1.5°C
pathways and develop action plans to retrofit assets
toalign with 1.5°C pathway
Identify net zero carbon pathway plans for assets that do not align
with the 1.5°C pathway
Full carbon risk analysis undertaken across entire portfolio using
CRREM platform to facilitate the Paris Agreement pathway alignment
for all assets
Align with TCFD recommendations, to ensure assets are
resilient to physical climate changerisks
Full TCFD disclosure Conduct scenario analysis to quantify the potential risks of different
global warming scenarios on the assets in the portfolio
Completed climate risk analysis for TCFD disclosures. The analysis
is being incorporated into our operational business model and asset
management planning
Socio-economic
impact
Create a positive
socio-economic
impact through
ourinvestment
Continue to support The Mission to Seafarers Support The Mission to Seafarers until 2024 Fund The Mission to Seafarers with €25,000, to purchase and run
aminibus in Myanmar to support seafarers to get vaccinated and
provide critical supplies
The minibus has been funded as part of the continuing support
ofthecharity
Invest in local community causes through the
LocalCommunity Investment Fund
Support local community causes in alignment
withcustomers
Continue to invest in local community causes important to our
customers, with a focus on supporting communities where there
arenew acquisitions
Beekeeping lessons on site for Passo Corese High School students
Nature and
wellbeing
Enhance
biodiversity on the
Company’s portfolio
Enhance biodiversity on assets – bee hives, pollinating
meadows and green space
Implement at least one biodiversity, climate and wellbeing
measure on each asset
Install a further three measures During Q3 2022 we re-planted the entire external area of the Mango
estate at Barcelona. The current area is overgrown and unplanted.
The new planting programme will be of great benefit to neighbouring
owner VGP, which has a bee farm on the roof of one of its nearby
units. It will reintroduce native plant species and improve
surrounding biodiversity
At Bornem we implemented an additional green area
Invest in sustainable transport
(EV, cycling and walkability)
Install EV charging points and cycle facilities,
wherefeasible
Install a further four EV charging points and cycle facilities Cycle path installed outside of the Nivelles asset
Expansion of bicycle shed in Rumst, adding vertical garden
At Bornem 28 EV charging points were installed and inefficient
lighting was replaced with LED lighting
Tritax EuroBox plc Annual Report 202234
ESG Progress Summary continued
STRATEGIC REPORT
Energy and greenhouse gas report
The Company has appointed Carbon Footprint Limited (“CFP”), a leading carbon and energy management company, to independently assess
its greenhouse gas (“GHG”) emissions in accordance with the UK Government’s Environmental Reporting Guidelines including Streamlined
Energy and Carbon Reporting (“SECR”) guidance.
The GHG emissions have been assessed following the ISO 14064-1:2018 standard and have used the 2022 emission conversion factors published
by the Department for Environment, Food and Rural Affairs (“Defra”) and the Department for Business, Energy & Industrial Strategy(“BEIS”).
Theassessment follows the location-based approach for assessing Scope 2 emissions from electricity usage. The level of control could not be
determined in this assessment due to complex relationships. For completeness all operations have been included; ahead of the nextassessment
this will be determined.
The table below summarises the GHG emissions for reporting year: 1 October 2021 to 30 September 2022. This is the first year CFP has
calculated the Company’s emissions, and this will set the baseline for future assessments. The Company has re-baselined for the financial
year ended 30 September 2022 due to a significant improvement in data accuracy.
Activity
New baseline
year 2021/2022
Previous
baseline
year 2020/2021
1
Total UK energy consumption (kWh)
2
39,770 —
Total EU energy consumption (kWh)
2, 3
87,860,573 70,720,941
Gross location-based emissions (tCO
2
e)
Scope 1 0 205
Scope 2 8 1,256
Scope 3
3, 4
24,291 30,286
Total emissions (Scope 1, 2 and 3) 24,299 31,747
Emissions per person (tCO
2
e)
5
759.32 —
Intensity ratio: tCO
2
e (gross Scope 1 and 2 location based) per €m revenue 0.24 —
Intensity ratio: downstream leased assets (location based) Scope 3 kgCO
2
e per sqm
per year
16.92 —
1 The 2020/2021 SECR assessment was not completed by Carbon Footprint Ltd and was completed by Tritax Management LLP. The Company has
re-baselined for the financial year ended 30 September 2022 due to a significant improvement in data accuracy.
2 The total energy consumption does not include energy from flying.
3 2021 figures restated to rectify an accounting error. Previous total EU energy consumption was stated at 8,144,000 kWh and Scope 3 emissions were stated
at2,338,073 tCO
2
e.
4 Based on 51% of site data collected in 2022.
5 Persons who work on behalf of the Company.
STRATEGIC REPORT
35Annual Report 2022 Tritax EuroBox plc
“ We have strengthened our
portfolio and delivered value
whilst also improving ESG
performance across the Group.”
Tritax EuroBox plc Annual Report 202236
STRATEGIC REPORT
Our approach to investment
and portfolio management
Manager’s Report
Phil Redding
CEO for Tritax EuroBox plc
“ We have continued to strengthen
the portfolio and extract value
from the existing assets, while
further improving the Company’s
ESG performance.”
Annual Report 2022 Tritax EuroBox plc 37
STRATEGIC REPORT
Our strategy is to create value at the point of acquisition and
throughout the lifecycle of the asset, by intelligent stock selection
andproactive asset management. This strategy is underpinned
byadisciplined approach to capital allocation, a commitment
toESGand appropriate financing.
We will continue to construct a portfolio which is diversified by
geography and customer, that generates a secure level of inflation-
linked income, as well as containing opportunities to capture capital
growth. This will in turn support the dividend and Total Returns the
Company is targeting.
The Company’s Investment Policy determines the type of assets we
want to acquire. We also make strategic choices about the countries
we want to invest in, recognising that European logistics is not a
single market and that there is considerable variation between
countries and in the type and quality of logistics properties available.
Our investment criteria
Our approach to stock selection is described in our investment
policywhich governs our acquisition strategy. We focus on large,
high-quality logistics assets which are typically:
• well located in established distribution hubs, within or close
todensely populated areas;
• in locations with limited supply that are likely to benefit from
structural changes in occupational demand;
• fulfilling a key part of the occupiers’ logistics and distribution
supply chain; and
• benefiting from index-linked leases.
When reviewing potential acquisitions, we also consider:
• transport connectivity, the availability of labour and operational
considerations such as power supply and dataconnectivity;
• the physical characteristics of the building, including its ESG
credentials, configuration, layout and flexibility
for a wide range of occupiers;
• the duration of the lease, potential for future rental growth,
and the ability to capture this growth;
• the customer’s financial strength, the capital expenditure the
customer has committed to the asset, and the role the asset
willplay in the customer’s operations; and
• the potential for asset management and value-adding initiatives
during and at the end of the lease term.
A modern, diversified and resilient portfolio
At the year end, the portfolio comprised 24 assets, which were well
diversified by building size and occupier, and situated in the core
European countries of Belgium, Germany, Italy, the Netherlands,
Poland, Spain and Sweden. These assets are key to our customer
partners’ logistics and distribution supply chain needs, and have
thefollowing characteristics:
• modern, with 85% of the portfolio having been built in the last
tenyears, helping to ensure that the buildings meet the latest
operational and ESG needs of occupiers;
• large, with 65% of the portfolio assets being in excess of 50,000
sqm and an average size of 60,000 sqm;
• sustainable, with 92% of the standing assets by floor area
covered by Green Building Certifications or Energy Performance
Certificates;
• secure income, with around 75% of the Company’s 36 customers
being multi-billion Euro businesses, including someofthe world’s
best-known companies;
• inflation protection, with 97% of the Company’s rental income
including annual uplifts, 54% benefiting from uncapped CPI
linkage, and 14% benefiting from indexation which is fixed;
• embedded income growth, potential to capture 9.5%
(€7.1million) reversion potential across the portfolio through
assetmanagement; and
• long leases, resulting in a WAULT at the year end of 8 years;
theunexpired lease terms at the year end ranged up to 24 years.
Tritax EuroBox plc Annual Report 202238
STRATEGIC REPORT
The Company made good progress with all elements of its strategy during the year, as set out below.
Expanding our high-quality portfolio
The Company’s investment strategy is focused on creating a portfolio that provides a balanced exposure to core, stabilised assets with a
managed exposure to value-add situations, which have the potential for higher returns. The investments made during the year reflect this
approach and included income-producing investment acquisitions, pre-let development fundings, speculative development fundings and
development projects. All the acquisitions are fully aligned with our ESG strategy and also provide the opportunity to meet or exceed our
targets through integration with our existing asset management plans.
Date Location
Acquisition price
and NIY Acquisition detail Rent Strategic rationale
Stabilised assets
Oct 2021
Gelsenkirchen, North
Rhine Westphalia,
Germany
Close to Essen, in the most
populous state in Germany
Acquired for
€32.2million
atanNIYof 3.7%
• Asset comprising three
newly built units, totalling
16,632 sqm. One of the
three units was vacant, with
a rental guarantee in place.
This unit was let in
September 2022
In place rents
of€76 per sqm
Rental
guarantee at
€69 per sqm
• Strong rental growth potential
due to location
• Expect to let unit at elevated
rent due to constrained
localsupply
Nov 2021
Piacenza, Emilia-
Romagna, Italy
Major logistics hub, close
toPiacenza to the south
ofMilan
Acquired for
€49.7million
atanNIY of 3.7%
• 47,800 sqm asset with
strong ESG credentials,
letto an Italian fashion
brand as its European
distributionhub
Average of
€44per sqm,
which is below
prevailing
headline rents
of€47 per sqm
• Stabilised asset in
stronglocation
• Leased off low rents
Pre-let development funding
Nov 2021
Bönen, North Rhine
Westphalia, Germany
Located in the densely
populated economic
heartland of Germany
Acquired for
€117.9million
atanNIY of 3.5%
• Agreed to acquire land and
fund development of a
66,065 sqm building
• Asset pre-let for 15 years
toa leading global
logisticsprovider
Leased at
€62per sqm
• Strong rental growth potential,
due to premium logistics
location
Feb 2022
Roosendaal,
NorthBrabant,
theNetherlands
Prime logistics location in
theSouthern Netherlands
Acquired for
€144.3million
atanNIY of 3.5%
• Agreement to forward fund
113,179 sqm development,
which will be developed in
three phases, divided into
three units
• All three units have been
pre-let to Lidl Logistics BV,
on a single lease expiring in
November 2027
Rent reflects
alow rate
of€45 per sqm,
relative to the
local market
rental levels
ofover €50
persqm
• Long-term lease to leading
foodretailer
• Potential to capture further
expected rental increases,
withrent review allowing rent
toincrease to the prevailing
open-market level if the
customer extends lease in 2027
Manager’s Report continued
Annual Report 2022 Tritax EuroBox plc 39
STRATEGIC REPORT
Date Location
Acquisition price
and NIY Acquisition detail Rent Strategic rationale
Speculative development funding
Nov 2021
Settimo Torinese, Turin,
Piedmont, Italy
Adjacent to the A4
Turin-Trieste motorway,
eastof Turin
Acquired for
€24.4million
atanNIYof 4.7%
• Speculative forward funding
agreement for a highly
specified and sustainable
28,291 sqm logistics
warehouse
Subject to
12-month rental
guarantee from
completion
(expected in Q4
2022), based
ona rate of
€45persqm
• Transaction reflects an
attractive NIY which is accretive
to the portfolio
• Expect to lease building swiftly
during construction at or in
excess of ERV
• Ability to control leasing in rising
rental market
Nov 2021 Rosersberg I, Stockholm,
Sweden
Established logistics hub,
north of Stockholm and
adjacent to Arlanda
International Airport
Acquired for
SEK284 million
(€27.9million)
atanNIY of 4.2%
• Acquired first plot of land at
Rosersberg, to fund the
speculative development of
a 13,181 sqm prime
sustainable logistics asset
Subject to
12-month rental
guarantee from
completion,
based on a
€84per sqm
rental guarantee
• Strong and strategic location
• Expect to lease the asset
quickly and ahead of the
underwritten rental levels
Jan 2022 Rosersberg II,
Stockholm,Sweden
Immediately adjacent to site
acquired in November 2021
Acquired for
SEK402 million
(€39.4 million)
atanNIY of 4.0%
• Acquired second plot of
land at Rosersberg, to fund
the speculative development
of a 17,832 sqm prime
sustainable logistics asset
Subject to
12-month rental
guarantee from
completion,
based on a
€77per sqm
rental guarantee
• Strong and strategic location
• Expect to lease the asset
quickly and ahead of the
underwritten rental levels
Mar 2022 Dormagen, North Rhine
Westphalia, Germany
Between Düsseldorf
andCologne
Acquired for
€76.4million
Reflects an NIY of
3.3%, based on the
rental guarantee
income
• Speculative forward funding
of a new 36,437 sqm
logistics asset
18-month rental
guarantee from
the developer,
at €69 per sqm
Market rental
value of circa
€71 per sqm
• Market rental levels are
expected to exceed the
rentalguarantee, giving
theopportunity to capture
valueonleasing
Income-producing land bank with redevelopment potential
Apr 2022 Malmö, Skåne, Sweden
Located between Malmö’s
two major ring roads, to the
south of the city centre
Acquired for
SEK223 million
(€21.4 million) at
anNIY of 5.4%
• Speculative brownfield
redevelopment scheme,
totalling 95,000 sqm of
development land
• Atria Group will occupy
theexisting site, paying
rentof SEK 13 million
(€1.25million) pa
• Redevelopment to
commence in early 2024,
with completion targeted
in2025
Aggregate
post-
development
rental value
expected to be
>SEK 46 million
(€4.4 million) pa
• Redevelopment scheme
provides access to future
development profits
• Attractive income yield during
the pre-development phase
• Significant upside potential,
with value of final scheme
expected to reflect a high
margin above site and
construction costs
Actively managing the portfolio
We undertake a rigorous bottom-up review of all our assets on a
bi-annual basis to determine the optimum value-maximising strategy
for each property and gain visibility on expected returns. This process
also informs our recycling strategy by highlighting those assets
where, for example, we have completed our asset management
planand maximised the value creation potential of the asset.
In addition, we undertake a top-down review to ensure the portfolio
ispositioned appropriately to benefit from the positive structural
drivers and underlying market fundamentals that continue to impact
the Continental European logistics sector. This process also informs
the recycling strategy, for example, by identifying markets where
performance is expected to decline or where we have a sub-scale
market position and gaining sufficient scale in an appropriate
timescale will be challenging.
Tritax EuroBox plc Annual Report 202240
STRATEGIC REPORT
Manager’s Report continued
Asset management and development activities:
capturing embedded value
The strategic tilt towards a greater exposure to value-add and
development assets announced a year ago is bearing fruit and
isproviding us with additional opportunities to unlock value from
theportfolio.
To create and successfully implement our asset management
strategies requires us to have close relationships with and a deep
understanding of our customer partners and their businesses and
objectives. This is achieved through multiple interactions from within
the in-house asset management team, through our external asset
management partners and by way of specific initiatives such as our
annual customer satisfaction survey.
Examples of our activities during the last year included the following:
Completed development
• Bornem, Belgium. During the year, we completed this
speculative scheme on the previously vacant land and agreed
anine-year lease to an online grocery retailer (see below). The
development was completed at a yield on cost of 7.0% and the
total profit of €7 million gave an attractive profit on cost of 70%.
Speculative developments
At the year end, the Company had four forward funded speculative
developments, as described below:
• Rosersberg I, Stockholm, Sweden. We received a building
permit for the 13,000 sqm phase 1 facility in December 2021 and
construction began in February 2022, with practical completion
expected in December 2022. Discussions are under way with
potential occupiers, with letting agents appointed.
• Rosersberg II, Stockholm, Sweden. The building permit for
the18,000 sqm second phase was received in May 2022 and
construction began in June 2022, with practical completion
expected in June 2023. Discussions are under way with potential
occupiers.
• Settimo Torinese, Turin, Italy. Construction of this 28,000 sqm
asset is ongoing with practical completion revised from Q4 2022
tothe beginning of Q2 2023. The marketing campaign to identify
occupiers is progressing.
• Malmö, Sweden. Planning and design work is progressing well
and the application for a building permit is targeted for Q1 2023.
We continue to engage with the wider development team and
leasing agents to firm up on potential scheme designs.
Post-year-end planned developments
• Oberhausen, Germany. The developer is completing the process
of obtaining the final permit for this 23,000 sqm logistics project,
which will enable the Company to acquire the site; this is forecast
to be by the end of 2022. Development is planned to commence in
August 2023 with practical completion of the scheme anticipated
to be in August 2024.
Pre-let developments
The Company had two pre-let forward funded developments under
construction at the year end:
• Bönen, Germany. Demolition and ground works completed in the
first half of the year and building construction began in April 2022.
Practical completion of the scheme is targeted for June 2023.
• Roosendaal, the Netherlands. The first phase is complete and
income producing, with construction of the remaining two phases
on schedule for completion in April 2023.
Completed extension developments
• Barcelona, Spain. Construction of the 94,000 sqm extension
was completed, on budget, in November 2022. This new extension
will be incorporated into the existing lease, which runs until
December 2046. The Company financed the construction of the
project at a yield on cost of 8.8% based onacapital commitment
of €31.5 million.
• Strykow, Poland. Construction of the 16,000 sqm extension
reached practical completion in April 2022, with the lease running
for five years at a headline rent of €647,427 per annum after an
initial rent-free period. The lease includes standard green clauses
and annual indexation.
Potential extension developments
The Company has several land plots with development potential.
These plots are zoned for logistics but would require additional
permits to enable development to commence.
• Wunstorf, Germany. The building has the capacity to be
extended by 10,000 sqm. We continue to discuss proposals
withour customer, Havi.
• Geiselwind, Germany. This asset is Puma’s global logistics
centre. We are in discussions with Puma on a 42,000 sqm
extension, which the Company would fund, and an associated
lease extension.
• Rome, Italy. The local authority has granted a building permit
toconstruct further mezzanine extensions within this Amazon
distribution centre.
• Rumst, Belgium. This European distribution hub for Cummins Inc has
a plot of land which could accommodate a 14,000 sqm development.
• Strykow, Poland. There is a further contiguous plot of land that
could accommodate an additional extension of 9,000 sqm to the
existing building. We are in discussions with an existing customer
about expansion plans and a potential lease regear.
Annual Report 2022 Tritax EuroBox plc 41
STRATEGIC REPORT
Growing income through indexation
The structure of rent review provisions within the majority of leases
allows the portfolio to deliver inherent year-on-year rental growth.
Rental uplifts are either indexed to local inflation measures or fixed at
an agreed rate, with these increases most commonly being effected
on an annual basis. 54% of the Company’s occupational leases are
exposed to uncapped indexation with 29% capped or other and 14%
fixed. These review structures thereby offer considerable inflation
protection and regular uplifts in income that support the Company’s
aim of providing an attractive and growing dividend to Shareholders.
Growing income through leasing
• Nivelles, Belgium. In November 2021, the Company agreed a
new nine-year lease on the vacant unit 2 to Associated Retail SA
trading as Match Supermarkets, a leading Belgian convenience
supermarket group. The initial rent reflects a headline rent of
€47.30 per sqm (€794,000 per annum), which on a net effective
basis is 8% above the rental level for unit 1 that was leased in
October 2020. The rent will be subject to annual uplifts in line with
the Belgian Healthcare Index. The scheme is now fully let.
• Bornem, Belgium. In March 2022, the Company signed a
nine-year lease to an online grocery retailer on the recently
developed 14,935 sqm unit. The warehouse rent of €48 per sqm
(€716,880 per annum) is 7% above the agreed rental guarantee
and 17% above the previous letting of the adjacent building signed
in March 2019. The lease includes break options in years three and
six and annual indexation to the Belgian Healthcare Index.
• Hammersbach, Frankfurt, Germany. The Company agreed
anew lease on this 43,000 sqm building to B+S GmbH Logistik,
aleading German third-party logistics provider. The seven-year
lease has a five-year customer extension option, at a rent of €69 per
sqm (€3,056,999 per annum) on the warehouse space, an increase
of 24% on the previous rent. In addition, as part of the transaction
other lease terms have been improved including moving the
indexation provision to capture 100% of CPI annually and including
a market rent review if B+S exercises the extension option at the
end of the fifth year.
• Gelsenkirchen, Germany. The Company agreed a five-year
lease on this 7,045 sqm unit to ETC Group, a new customer, at
awarehouse rent of €73 per sqm (€514,595 per annum). This is 6%
above the rental guarantee level. The new lease contains an
indexation provision of 100% of CPI annually and the inclusion
ofstandard green clauses.
Implementing our ESG strategy
The new additions to the portfolio during the year have further
enhanced the portfolio’s already strong ESG credentials. In particular:
• Gelsenkirchen, Bönen and Dormagen: These brownfield sites
will be redeveloped with the aim of achieving DGNB Gold standard.
• Settimo Torinese: The asset will be developed to BREEAM Very
Good standard.
• Piacenza: The two units have BREEAM In-Use Very Good and
BREEAM In-Use Excellent ratings, respectively, and a roof-
mounted photovoltaic system.
• Rosersberg I and II: The developments are targeting a minimum
of BREEAM Very Good and will include energy saving initiatives
and staff wellbeing measures.
• Roosendaal: The scheme is aiming for a BREEAM Very Good
certification and incorporates ESG initiatives that provide social
and environmental benefits for staff and the locality.
• Malmö: The development will target a minimum certification
ofBREEAM Very Good.
We continue to investigate and implement solar renewable energy
projects across our portfolio. We have ten solar energy projects
implemented, at Rome, Bornem (x3), Rumst (x2), Piacenza, Breda
and Nivelles (x2). Eight more projects are in the feasibility pipeline,
including adding PV panels to the building extension at Barcelona.
Our existing solar projects are generating approximately 6.74 MW of
green electricity. The next phase of projects in our feasibility pipeline
has the capacity to generate 20 MW of solar energy.
We aim to include green lease clauses in all new leases. The four
leases listed adjacent all included our standard green lease terms.
These ensure the customer partner is committed to using the
building in a sustainable way, for example by sharing data with us on
energy, water consumption, waste management and recycling. There
are now nine green leases across the portfolio, representing 18% of
the portfolio by income.
Our TCFD and CRREM analysis has now given us the baseline data
from which to further develop our asset management plans in relation
to the mitigation of climate and carbon risk across our portfolio.
At Bornem, we contributed €42,000 towards increasing the external
green areas by 240 sqm, installing a new bicycle storage facility and
additional wellbeing facilities for visiting truck drivers. In return, we
secured longer income by negotiating the removal of a customer
break option in the lease.
We collaborate with our customer partners to manage and enhance
biodiversity. Shortly after the year end, we began replanting the entire
external area at the Barcelona asset, in conjunction with our
customer, Mango, and neighbouring owner, VGP. The project will
reintroduce native plant species, improve biodiversity and benefit
aneighbouring bee farm.
In addition to asset-level community engagement, we have a
corporate charity initiative with The Mission to Seafarers, which
supports the 1.5 million people working at sea, as part of the global
supply chain and logistics network. The Company is working with the
charity to develop a long-term partnership to support social value
and made €22,000 of funding available in October 2021 to purchase
a minibus to help transport workers and crucial supplies.
Further improving our ESG ratings
The successful implementation of our ESG strategy has resulted in
usconsistently improving scores for the Company in key external
benchmarks. We were pleased to achieve a further increase in
ourGRESB score, which now stands at 88 (GRESB average = 74;
GRESB peer group average = 79). We were awarded five Green Stars
and designated as Leader in ESG for European Industrial Distribution
Warehouse Listed Sector.
During the year, we were awarded EPRA Gold Level certification
forESG best practice in the first year of inclusion in the EPRA
Sustainability Best Practices Recommendations.
In 2022, third-party specialist consultants undertook climate scenario
risk modelling work across the whole portfolio and our management
reporting and due diligence enabled strong assurance that all risks
had already been considered, mitigation works completed and
appropriate insuranceprovisions are in place. Regular property
inspections by our property management team also enables
first-hand checks and reporting.
Tritax EuroBox plc Annual Report 202242
Mehdi Bourassi
CFO for Tritax EuroBox plc
STRATEGIC REPORT
Financial Review
Throughout the year, we witnessed continued strong occupational
market conditions. The estimated rental value of the portfolio, which
is the rent the portfolio should generate if all buildings were leased at
current market levels, increased by 8.2% on a like-for-like basis over
the year, and 2.7% since March 2022. This resulted in the portfolio’s
overall reversionary potential – the potential uplift from current rental
levels – increasing to 9.5%.
Financial results
Rental income
Rental income for the year was €57.9 million (2021: €43.9 million), up
31.9%. The growth was primarily the result of portfolio growth from
the equity raise in September 2021, as well as the benefit of rental
indexation and our asset management initiatives. On a like-for-like
basis against September 2021, rental income was 4.0% higher. As at
30 September 2022, the annualised rental income was €74.3 million
(30September 2021: €53.4 million).
The Company’s operating and administrative costs were €18.2 million
(2021: €12.2 million), which primarily comprised:
• the management fee payable to the Manager of €7.9 million
(2021:€5.5 million);
• the Company’s running costs, including accounting, tax and audit; and
• the Directors’ fees.
On 6 October 2022, the Company and the Manager announced
anumber of proposed changes to the Investment Management
Agreement (“IMA”), which were subsequently approved by Shareholders
at a general meeting on 25 October 2022. The amendments include
a revised basis for calculating the management fee, which has been
backdated to 1 August 2022. Prior to 1 August 2022, the
management fee was calculated as follows:
NAV
Annual management fee
(percentage of IFRS NAV)
Up to and including €500 million 1.30%
Above €500 million and up to
and including €2 billion 1.15%
Above €2 billion 1.00%
The revised basis for calculating the management fee is as follows:
NAV
Annual management fee
(percentage of IFRS NAV)
Up to and including €1 billion 1.00%
Above €1 billion 0.75%
In addition, property management services procured by the Manager
will now be reinvoiced directly to the Company and, hence, fees
relating to such services will be paid by the Company. The revised
IMA results in meaningful savings for the Company, which in a full
financial year we estimate at €2.1 million, based on the 30 September
2022 net asset value, which was the last available NAV prior to the
announcement of the change.
The EPRA Cost Ratio for the financial year (inclusive of vacancy cost)
was 41.3% (2021: 30.5%). The Adjusted EPRA Cost Ratio was 29.5%
(2021: 28.5%) which excludes the lease surrender payment at
Portfolio valuation
The portfolio was independently valued by JLL as at 30 September 2022,
in accordance with the RICS Valuation – Global Standards. Theportfolio’s
total value at the year end was €1,765.6 million (30September 2021:
€1,281.4 million), with a like-for-like valuation increase of 5.6% during the
year. The first six months of the financial year were marked by continuous
yield improvement driving strong valuation growth. However, inflation and
macro-uncertainties have forced central banks to tighten liquidity around
the globe, leading to a marked increase in risk-free rates, and financing
cost. This had the effect of reversing the property yield curve, with a
like-for-like 29bps yield increase in the valuation of our portfolio between
March and September. The Board recognises the 52% share price
discount to EPRA NTA, as at 30 September 2022. The valuation of
investment property is the main driver of the EPRA NTA, and was
determined by JLL 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.
Strong balance sheet and
visibility on income growth
Annual Report 2022 Tritax EuroBox plc 43
STRATEGIC REPORT
Debt financing
During the year, the Company raised its debut private placement of
€200 million senior unsecured notes, from institutional investors. The
notes comprise three tranches with a weighted average coupon of
1.37% and a weighted average maturity of nine years at drawdown.
The funds were drawn in January 2022.
The three tranches comprise:
• €100 million at a fixed coupon of 1.22%, with 7-year maturity;
• €50 million at a fixed coupon of 1.45%, with 10-year maturity; and
• €50 million at a fixed coupon of 1.59%, with 12-year maturity.
On 10 March 2022, the Company announced that Fitch Ratings
Limited had upgraded its senior unsecured rating to BBB from BBB-.
Fitch also affirmed the Company’s Long-Term Issuer Default Rating at
BBB- with stable outlook.
At the year end, the Company had total debt drawn of €11 million.
This resulted in an LTV ratio of 35.2% (30 September 2021: 13.3%),
with €239 million available undrawn debt. Taking into account the
Company’s capital commitments on its development and asset
management projects, the proforma LTV increases to 40.6%. The
Company’s financing is well insulated from rising interest rates in the
short term, with no maturities before Q4 2025, 73% of its total debt
capacity fixed, and the part floating benefiting from interest rate caps
limiting the rise in Euribor to 0.65%. These interest rate caps are
maturing in October 2023.
Post-period-end activity
On 6 October 2022, the Company announced the proposed changes
to the IMA, as discussed above.
Related party transactions
Transactions with related parties included the management fee paid
to the Manager, the Directors’ fees, and certain acquisitions the
Company made from two of its main development and asset
management partners, Dietz AG and Logistics Capital Partners
(DietzAG and Logistics Capital Partners were deemed related parties
under Listing Rules).
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.
Mehdi Bourassi
CFO for Tritax EuroBox plc
5 December 2022
Hammersbach and includes rental guarantees. With the deployment of
proceeds from our September 2021 equity raise into income-producing
assets, the portfolio is expected to generate greater income for the
full year; combined with a lower cost base, we expect the cost ratio
to decrease materially and stabilise at a percentage in the mid-20s.
The total cost of debt for the year was €8.7 million (2021: €7.1 million),
reflecting an attractive average cost of debt of 1.2% (2021: 1.9%). This
is the result of new debt entered into in the last 18 months (see debt
financing below). Looking forward to FY23, the maximum average run
rate cost of debt is 1.46%. Interest cover for the year was 6.6 times
(2021: 6.3 times).
Profit before tax for the period was €76.6 million (2021: €129.0 million),
including the gain on revaluation of the investment properties of
€49.9 million (2021: €106.5 million).
The current income taxation charge for the year was 2.3% of the
Company’s net property income.
The taxation 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 acquires 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.
The Company’s EPS measures for the year reflect some short-term
dilution from the September 2021 equity issue, as we invested the
proceeds in income-generating assets throughout the year.
Basic EPS for the year were 7.28 cents (2021: 19.59 cents)
decreasing from the prior year due to significant valuation uplift in
2021. EPRA EPS, which primarily excludes the valuation movement,
were 2.58 cents (2021: 2.75 cents).
Adjusted Earnings for the year were €34.2 million (2021: €24.7 million),
resulting in Adjusted EPS of 4.24 cents (2021: 4.61 cents). Annualising
the EPS generated in the quarter ended 30 September 2022, the EPS
are 5.04 cents. More information about the calculation of basic, EPRA
and Adjusted EPS can be found in note 12 to the financial statements.
Net assets
The IFRS NAV per share at the year end was €1.32 (30 September
2021: €1.31). Information on EPRA’s net asset valuation metrics can
be found in the EPRA Performance Measures section.
Dividends
The Company has declared the following dividends in respect of theyear:
Declared Amount per share In respect of Paid/to be paid
10 February 2022 1.25 cents 1 October to 31 December 2021 14 March 2022
17 May 2022 1.25 cents 1 January to 31 March 2022 24 June 2022
9 August 2022 1.25 cents 1 April to 30 June 2022 9 September 2022
6 December 2022 1.25 cents 1 July to 30 September 2022 13 January 2023
The total dividend for the year was 5.0 cents per share or €40.3 million (2021: €30.7 million) and was 84.8% covered by Adjusted Earnings
(2021: 80.2%). It was fully covered by Adjusted Earnings in the quarter ended 30 September 2022. We expect the dividend to be fully covered
in FY23, as discussed in the Chairman’s Statement.
Tritax EuroBox plc Annual Report 202244
STRATEGIC REPORT
Principal Risks and Uncertainties
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 three times 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 these reviews, the Board has not identified or been advised
ofany failings or weaknesses which it has determined to be material.
Board
Audit &
Risk Committee
TM LLP Executive Committee
TM LLP Risk Committee
Reporting and escalation
Direction and oversight
Our approach to
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 our 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
Group’s success. Risk management ensures a defined approach
to decision making that decreases uncertainty surrounding
value for Shareholders.
Annual Report 2022 Tritax EuroBox plc 45
STRATEGIC REPORT
Covid-19 risks
1. The Covid-19 pandemic
severely impacting the global
economy and financial
market may cause loss
totheCompany.
Property risks
2. Customers may default.
3. The value of the property
portfolio may fluctuate.
4. Portfolio growth may slow.
5. Lack of diversification may
amplify local risks.
6. Development activities may
not be profitable.
Operational risks
7. The Company is reliant on
the continuing services
provided by the Manager.
8. Insurance at appropriate
premiums may not be
available.
Financial risks
9. Interest rates may fluctuate.
10. Debt funding at appropriate
rates may not be available.
11. Debt covenants may be
breached.
Taxation risks
12. A change in the Company’s
investment trust status
maycause loss.
13. Changes to local tax
legislation in countries in
which theCompany is
invested may cause loss.
Political risks
14. General political and/or
economic uncertainty may
disruptthe Company’s
business.
15. Rising energy prices may
impact the overall economy
and our customers.
ESG risks
16. ESG risks and inability
tocapitalise on the
opportunities could lead
toloss of competitive
advantage, higher vacancies
and higher operating costs
for the Company andits
customers.
17. The Company’s data may
beexposed to cyber attack.
Risk appetite
We have a specific Investment Policy, which we adhere to and
forwhich the Board has overall responsibility.
Our risk appetite is low and, in particular, we do not undertake any
fully speculative development. 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
tomaturity on our debt of four years, all 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 left) illustrates our assessment of the impact and
probability of the principal risks identified, the rationale for which
iscontained 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
aresult, 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
butare not restricted to climate change, ESG and technological
advancement. The Audit & Risk Committee has also considered
emerging risks following Covid-19 such as changes in the regulatory
environment or tax regimes as a result of the pandemic.
Low Medium High
Low Medium High
2
1
13
10
11
12
3
4
15
8
7 17
6
16
14
5
9
Probability
Impact
Tritax EuroBox plc Annual Report 202246
STRATEGIC REPORT
Principal Risks and Uncertainties continued
COVID-19 RISKS
1. The Covid-19 pandemic severely impacting the global economy and financial market may cause loss to the Company
Probability Impact Mitigation
Low Low
The global economy and financial markets have been
impacted by the Covid-19 pandemic. This has had an
adverse effect on the magnitude and/or likelihood of several
of the principal risks, with the following potential
consequences:
• A potential impact on the short-term operations of the
business due to staff working remotely or potential
absences because of the virus. This includes the
operation of both our asset managers and customers
whose staff could be at a health and safety risk through
the continued operation of the warehouses. There is also
an increased risk in cyber crime due to remote working.
• An overall reduction in revenue due to the default of one
or more of our customer partners, which could affect our
ability to pay dividends to Shareholders and/or lead to a
breach in our banking covenants.
• Customers requesting rent deferrals and therefore
impacting the capacity of the Company to pay target
dividend in the current period.
• An adverse change in our property valuations which may
lead to a decrease in our Net Asset Value and affect our
ability to meet our target returns. The significant volatility in
equity markets could cause a decrease in the share price,
potentially causing a breach in banking covenants, which
may force us to sell assets to repay loan commitments.
Health and safety guidelines have been issued by the
Manager of the Company, our asset managers and
customers to all employees to ensure they are in a safe
working environment and that they are aware of all relative
symptoms of the virus. All staff conducted checks to confirm
they were able to work from home remotely to safeguard the
undisrupted continued operation of the business and
training has been undertaken by all employees to make
them aware of the potential increased risk of cyber crime.
Over the previous 36 months the Company has collected
100% of contracted rents.
PROPERTY RISKS
2. Customers may default
Probability Impact Mitigation
Low to
medium
Low to medium
The default of one or more of the Company’s customer
partners would reduce revenue from the relevant asset(s).
There may be a continuing reduction in revenues until we
find a suitable replacement customer, which may affect
ourability to pay dividends to Shareholders and/or lead
toabreach in our banking covenants.
The Company selects assets with strong property
fundamentals (location close to population centres, access
to infrastructure and energy supply), which should be
attractive to other customers if the current customer partner
fails. In addition, while we focus on customer partners with
strong financial covenants, we also negotiate various
guarantees or deposits, to enable the Company to cover
income while looking for a new customer.
While there is no restriction on the Group’s exposure to any one
customer partner, the Company’s Investment Policy requires
the Company to deliver a high-quality, diversified portfolio.
3. The value of the property portfolio may fluctuate
Probability Impact Mitigation
Medium 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, leading
to, among other things, 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 our Net Asset Value and affect the
Company’s ability to meet the relevant target returns. 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 2022, our property portfolio was 97%
cash generating from leases, and rental guarantees, with
long unexpired weighted average lease terms of eight 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 we focus on the best
locations, where land supply is tight, and undertake
significant due diligence using the services of relevant third
parties, we believe these factors reduce the risk of
significant adverse property valuation movements.
Annual Report 2022 Tritax EuroBox plc 47
STRATEGIC REPORT
PROPERTY RISKS continued
4. Portfolio growth may slow
Probability Impact Mitigation
High Medium
The fundamentals of the prime logistics locations in
Continental Europe mean that the availability of land suitable
for large logistics properties is limited. In addition, the Big
Box sector currently attracts a lot of new investors. This
results in acquisition yields that are currently at record lows.
This may restrict the Company’s ability to secure suitable
logistics real estate assets in targeted countries in
Continental Europe, in order to grow our portfolio while
maintaining our target returns.
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. Our reliability,
experience and speed of execution give us an edge over
many other potential investors.
5. Lack of diversification may amplify local risks
Probability Impact Mitigation
Low Low
The Company’s Investment Policy does not include
restrictions relating to the Group’s exposure to individual
assets or customer partners 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
toweaker overall portfolio performance, both in terms
ofrevenue generation and value.
The Company Investment Policy requires us to deliver
ahigh-quality, diversified portfolio of assets. While the
Company adopts a “bottom up” approach in the selection
ofreal estate investments, it also considers the impact on
theconcentration 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.
Over the past 18 months, the Company has increased
significantly the size of the portfolio (by number of assets
and number of customers) and entered the Nordics. This led
to a significant improvement in portfolio diversification and
lower exposure to single customers/buildings/countries.
6. Development activities may not be profitable
Probability Impact Mitigation
Medium to
high
Low to 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
ofdevelopment assets, as contractors are likely to pass
onthe increased costs.
Furthermore, there are supply chain issues across
Europedue to the rising costs and the macro environment
which can lead to delays in supplies being delivered to
complete developments.
If any of the risks associated with the Company’s
developments materialised, this could reduce the value
ofthese assets and our portfolio.
As at 30 September 2022 there are six forward funded
developments in the portfolio. The risks associated with
forward funded projects is significantly reduced, as the
developer takes on a significant amount of construction risk
and the risk of cost overruns (through a fixed price contract).
Funds for forward funded 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.
Tritax EuroBox plc Annual Report 202248
STRATEGIC REPORT
Principal Risks and Uncertainties continued
OPERATIONAL RISKS
7. The Company is reliant on the continuing services provided by the Manager
Probability Impact Mitigation
Low High
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 Group’s performance, to a large extent,
depends on the Manager’s abilities 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 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
than24 months’ written notice.
The Management Engagement Committee monitors and
regularly reviews the Manager’s performance, including
theperformance of the key third-party service providers
tothe Group. In addition, the Board meets regularly
withtheManager to ensure it maintains a positive
workingrelationship.
8. Insurance at appropriate premiums may not be available
Probability Impact Mitigation
Low to
medium
High
The Company relies on the Manager’s experience in
sourcing insurance in order to ensure assets are covered
tothe adequate level.
Through both the impacts of Covid-19 and the dynamics of the
insurance market, it has become harder to secure insurance for
the Company’s assets at appropriate pricing levels.
The rising cost of insurance may impact upon Shareholder
returns. In an extreme 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 2022;
this cover is in place until October 2023.
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.
Annual Report 2022 Tritax EuroBox plc 49
STRATEGIC REPORT
FINANCIAL RISKS
9. Interest rates may fluctuate, and debt funding at appropriate level may not be available
Probability Impact Mitigation
High Medium
Interest on our Revolving Credit Facility (“RCF”) is payable
based on a margin over Euribor. Any adverse movement in
Euribor could affect our profitability and ability to pay
dividends to Shareholders.
The cost of raising new debt, or refinancing existing debt
may rise, impacting the Earnings Per Share and what is
distributed to Shareholders as dividends.
Currently, 73% of total debt is subject to a fixed coupon.
Thedebt which is not subject to a fixed coupon (RCF) isfully
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
ofdrawn 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
andwill take active steps to mitigate the rising cost of
interest where possible.
10. The Euro may fluctuate against other currencies of countries in which the Company operates
Probability Impact Mitigation
Medium Low
The Company operates in the Nordics, exposing the
Company to foreign currency (“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,
willvary 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 is received in SEK and is subject
toFX when streaming cash up to the PLC.
Sweden currently represents a small value of the total
portfolio, limiting the potential impact of FX movement
onthe portfolio.
The Company has conducted a thorough assessment of
possible hedging strategies and their effectiveness and
impact on the Company. We 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.
11. Debt covenants may be breached
Probability Impact Mitigation
Low to
medium
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
our covenants have a soft breach feature, which enables the
Manager to act and remedy in case of breach.
TAXATION RISKS
12. A change in the Company’s investment trust status may cause loss
Probability Impact Mitigation
Low to
medium
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 we monitor
strict adherence to the relevant regulations. The Company
has also engaged top-tier third-party tax advisers to help
monitor our compliance requirements.
13. Changes to local tax legislation in countries in which the Company is invested may cause loss
Probability Impact Mitigation
Medium Low
A change in local taxation status or tax legislation in any of
the countries we invest 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 top-tier third-party providers to advise of
any tax changes in every country in which the Company
invests in too. In addition, the Company has been structured
on a conservative basis, with reasonable internal debt ratios,
in line with international transfer pricing requirements.
Tritax EuroBox plc Annual Report 202250
STRATEGIC REPORT
POLITICAL RISKS
14. General political and/or economic uncertainty may disrupt the Company’s business
Probability Impact Mitigation
High Medium to high
Political and economic uncertainty can lead to weakened
economic growth which can lead to reduced demand for
logistics warehouse and/or have an impact on the
Group’scustomers.
The current geo-political uncertainties in Europe have led
tosevere disruption to energy and supply chains, leading
tosignificant 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 currently has no Ukrainian or Russian
customers or asset exposure.
It has a single asset in Poland, 400km away from the
Ukrainian border and representing less than 3% of the
Company’s total income.
15. Rising energy prices may impact the overall economy and our customers
Probability Impact Mitigation
High 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 to have reduced
profitability, reducing the affordability of rent, and in the
worst case leading to the inability to continue to operate.
The Company is actively monitoring the geo-political
situation, and ready to take action if necessary.
A very limited number of the Company’s customers are
exposed to heavy industry, where cost of energy plays
asignificant 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.
Finally, the Company is actively reviewing the energy ratings
of the assets. The Company aims to ensure these are as
efficient as possible.
ESG RISKS
16. ESG risks and inability to capitalise on the opportunities could lead to loss of competitive advantage, higher vacancies and higher
operating costs for the Company and its customers
Probability Impact Mitigation
High Medium
The World Economic Forum (“WEF”) listed ESG risks as
fourout of seven of its top risks in 2021.
There are several ESG risks potentially impacting the
Company. Climate change and biodiversity loss are the
principal environmental risks affecting the Company’s
long-term ability to operate in its markets; the ability for the
Company’s customers to source and retain the right labour
skills and mitigating modern slavery in the Company’s
supply chains are the key social risks; and the ability to be
transparent and agile in managing the evolving governance
risks, such as diversity and human capital management.
The Company’s sustainability strategy addresses all the key
risks for the Company in its operations. It provides guidance
to the Board and Manager to reduce ESG risks to create
value for all its stakeholders, including investing in more
ESGfocused assets and delivering lower operating costs
forcustomers and more secure returns for investors.
The Company ensures the assets that are invested in arewell
located for labour supply and the Company isdeveloping
initiatives to support local employment opportunities.
The Board of Directors and the Manager have undertaken
ESG training to ensure they have the right awareness and
skills to manage ESG risks and opportunities.
CYBER RISKS
17. The Company’s data may be exposed to cyber attack
Probability Impact Mitigation
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.
Many cyber attacks and phishing attempts are very basic in
nature and are easily identified by the Manager in the course
of daily business. 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
theextent possible.
Principal Risks and Uncertainties continued
Annual Report 2022 Tritax EuroBox plc 51
STRATEGIC REPORT
This year, the Company has voluntarily made its first climate-related
financial disclosure following the recommendations of the Task Force
on Climate-Related Financial Disclosures (“TCFD”). These disclosures
are consistent with TCFD recommendations and the Company is
working towards full alignment with the recommendations in
subsequent years, which will continue to support the Company
inmitigating risk for investors and achieving its own climate goals.
All climate-related financial disclosures can be found below, following
the TCFD’s four pillars – governance, strategy, risk management, and
metrics and targets. Where disclosures do not currently fully align
with the TCFD recommendations, we provide a rationale for why, and
outline the steps being taken to make consistent disclosures in the
future in the relevant sections below.
Governance
Describe the Board’s oversight of climate-related
risks and opportunities
The Board agreed a three-year sustainability strategy and framework
inJanuary 2020, which encompassed key ESG goals and metrics.
Climate-related risks were ranked as one of the most material ESG
issues for the Company. This was determined through a materiality
exercise undertaken by a third party and included engagement with
the Board and Tritax Management LLP (the “Manager”).
The Board receives updates from the Manager’s ESG Director
(the“ESG Director”) at every Board meeting, which occurs at least
quarterly. At these Board meetings, emerging climate change-related
risks and opportunities are discussed as well as relevant briefings
provided, such as market updates, regulatory updates, and investor
and analyst feedback. Initiative progress reports are also provided,
and include updates on the ESG programme, including ESG rating
submissions, Green Building Certifications, green finance and climate
transition planning, as well as renewable energy opportunities and
carbon risk analysis. The Board demonstrated its commitment to
ESG issues by launching a specialised Green Bond issued in June
2021, which focuses on investments aligned with our Green Finance
Framework. The Manager’s Green Finance Committee approves the
allocation of the Green Bond funds and an update is provided to the
Board periodically.
Through regular reporting by the ESG Director and ESG Champion
tothe Board, in addition to dedicated training, 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. The Manager’s ESG Committee
isresponsible for monitoring trends, developments, risks and
opportunities in relation to climate-related issues and any material
changes are ultimately reported up to the Board. The Board has
determined Eva-Lotta Sjöstedt, Non-Executive Director of the
Company, as the “ESG Champion”. Eva-Lotta regularly meets with
the ESG Director to discuss ESG issues including climate-related
risks facing the Company and reports back to the wider Board
asnecessary.
In order to ensure dedicated time is spent by the Board on ESG, the
Board also established an EBOX ESG Committee in December 2022
which will meet twice a year to review the ESG strategy, receive
updates and monitor progress against targets. The Board and the
Manager have undertaken ESG Investment, TCFD and Carbon
Reporting training to support their understanding of climate change
and other ESG risks and opportunities to aid the appraisal ofthese
issues in overseeing the Company’s activities.
Describe management’s role in assessing and
managing climate-related risks and opportunities
The Manager’s ESG Committee is responsible for the delivery of the
ESG strategy, including climate change and its associated risks and
opportunities. The ESG Committee is jointly chaired by the Manager’s
Chief Operating Officer (“COO”), Henry Franklin, and Head of Asset
Management, Petrina Austin, who are ultimately responsible for
climate change monitoring and reporting amongst the management
team. The ESG Director, Alan Somerville, is an integral member of
theCommittee with onward reporting to the Company’s Board and
tothe Manager’s Executive Committee. The Executive Committee
subsequently reports up to the Company’s Audit & Risk Committee
which ultimately reports to the Board.
The ESG Director is responsible for the assessment and management
ofclimate-related risks and opportunities on a day-to-day basis, where
appropriate engaging internal stakeholders or external parties to support
this effort. Monitoring of climate change issues is supplemented by
executive briefings from specialist consultants such as CEN-ESG.
Climate-related risks and opportunities are embedded into the
Manager’s investment processes through technical due diligence
assessments undertaken on each asset by specialised property
consultants, which inform the investment decisions of the business.
Any specific risks and opportunities relating to climate change, such
as flooding or solar capabilities, are raised with the relevant asset
manager and reported to the Investment Committee, through
Investment Committee and Acquisitions Reports. As part of the
TCFDworkstream, CBRE has also analysed the carbon risk
performance of individual assets using the Carbon Risk Real Estate
Monitor (“CRREM”) tool, and this will be undertaken for any new
assets going forward. The Head of Asset Management ensures
that,overall, any material risks are considered for the Company.
Management reporting and mitigation works are an ongoing process
with the business also putting appropriate insurance provisions in
place. Regular property inspections by the property management
team alsoenable first-hand checks and reporting.
Task Force on Climate-Related Financial Disclosures (“TCFD”) Report
Tritax EuroBox plc Annual Report 202252
STRATEGIC REPORT
Strategy
Describe the climate-related risks and opportunities the organisation has identified over the short,
mediumand long term
Climate change is inherently uncertain and early planning for adaptation reduces the vulnerability to climate change and allows for the creation
of appropriate responses to tackle the problem at the right time. By considering potential risks on short, medium and long-term time horizons
we have been better able to understand the likely spread of physical climate risk across the portfolio and identify shorter-term actions that can
feed into our traditional decision-making timescales but also prepare us for dealing with longer-term risks that may manifest. Whilst these risks
may not materialise whilst an asset is part of the EuroBox portfolio, it is anticipated that markets will increasingly begin to price in climate risk
over asset lifetimes. The climate resilience assessment considered three scenarios, in line with the recommendations set out in the TCFD:
RCP2.6 which represents a 2°C or lower scenario, RCP4.5 which aligns with the commitments made by countries as part of their nationally
determined contributions (“NDCs”) at the Conference of the Parties held in Paris in 2015 (“COP21”) and RCP8.5 which represents the current
worst-case scenario should net zero targets not be met.
The time horizons selected (short – 2030, medium – 2050 and long – 2100) are based on the profile of risks associated with real estate asset
lifecycles over circa 60 years. Our long-term time horizon is not included in our transition risk and opportunity assessment at this time due
tothe difficulty and uncertainties associated with forecasting transition-related issues at these timescales. In contrast, climate response
toatmospheric carbon levels can be modelled with a greater degree of certainty, albeit with significant potential error.
Risk was assessed based on the likelihood of the climate hazard occurring and the vulnerability of the asset to the climate event. A portfolio level
assessment was completed for the entire portfolio to identify the material risks to be incorporated into investment decisions and a more detailed
asset level assessment has been undertaken to consider individual vulnerability of the assets to future changes in climate. Determination of
physical risks having a material financial impact on the Company was undertaken by taking into account climate hazard and asset vulnerability
andconsulting asset managers to determine the cost associated with reducing vulnerability through capital resilience improvements.
The medium-term risks based on an intermediate scenario (RCP4.5) are presented below. The assessment shows that flood risk, heavy
precipitation events and drought are considered most material to the Tritax EuroBox portfolio. Fire and heat stress are considered a lower
riskto the business in the medium term. Sea level rise does not pose a material risk to the Tritax EuroBox portfolio until the end of the century.
CHRONIC/ACUTE CLIMATE HAZARD HIGH RISK MODERATE RISK LOW RISK
Acute Flood risk Bremen, Germany (two units)
Bornem, Belgium (three units)
All other locations
Chronic Sea level rise None None All other locations
Acute Fire weather None Rome, Italy; Piacenza, Italy
(two units)
All other locations
Chronic Drought stress Barcelona, Spain Rome, Italy; Hammersbach,
Germany; Nivelles, Belgium
(two units); Lich, Germany;
Settimo Torinese, Italy;
Piacenza, Italy (two units)
All other locations
Chronic Heat stress None Barcelona, Spain; Rome,
Italy; Settimo Torinese,
Italy; Piacenza, Italy
(twounits)
All other locations
Chronic Precipitation stress
(heavyrainfall)
Settimo Torinese, Italy
(oneasset)
Barcelona, Spain; Settimo,
Italy; Piacenza, Italy (two units)
All other locations
The Company has also conducted a transition risk assessment of the portfolio, using our net zero target date for Scope 1 and 2 emissions
(2030) and the year 2050 as short and medium-term time horizons for the analysis. Our assessment of climate-related opportunities also
usesthese time horizons. The assessment uses a decarbonisation scenario in line with 1.5°C of warming by 2100 (as explained above,
although this is our long-term time horizon for physical risk, we do not use 2100 as a time horizon in the assessment of transition risk due to
uncertainty), as this represents a conservative estimate of transition risk – a more ambitious decarbonisation scenario will mean higher risks
associated with the shift to a low-carbon economy. Assets identified as being at risk of stranding – whereby energy upgrades become
financially unviable due to regulation and market conditions – have been identified to allow the Company to manage risks appropriately.
Determination of transition risks and opportunities having a material financial impact on the Company was undertaken in consultation with
theESG Director and CBRE, which undertook the transition risk assessment. Currently this approach is qualitative – future disclosure will
aimtoinclude a quantitative approach to the characterisation of material financial impact of transition risk and opportunity.
STRANDING RISK
LEVEL STRANDING DATE RANGE HIGH RISK
High 2019–2029 Rome, Rumst, Wunstorf, Strykow, Bornem, Gothenburg (one unit)
Medium 2030–2040 Gothenburg (one unit), Strykow
Low 2041–2050 All other locations
TCFD Report continued
Annual Report 2022 Tritax EuroBox plc 53
STRATEGIC REPORT
Describe the impact of climate-related risks and opportunities on the organisation’s businesses,
strategyand financial planning
Climate change is a critical risk. In response we have set a target to achieve net zero carbon for our areas of direct control by 2030.
Wearefocused on reducing our carbon footprint, using energy more efficiently to make our assets more resilient in the long term,
andreducing operating costs for our customers.
Given the growing importance of understanding the risks and opportunities climate change has on the Company’s business strategy, the
Company has utilised industry tools and frameworks to assess the potential risks that climate change may pose on the business. It has
assessed potential investment risks using the Carbon Risk Real Estate Monitor (“CRREM”) tool and undertaken a physical climate risk analysis
inline with the TCFD recommendations.
With an increased focus on engaging and working with our customers, we have been able to map our full carbon footprint. As customers have
operational control, the landlords’ operational emissions are negligible in comparison to emissions from customer operations. This year the
Company has taken several steps to support its net zero carbon objective, such as investment into renewable energy.
The portfolio-wide assessments of physical and transition risks and opportunities summarised in this report will inform the organisation’s
financial planning in the next reporting period; these assessments will be carried out at regular intervals to ensure risk identification remains
current and can be integrated into our planning processes.
Table 1 Climate-related physical risks
CHRONIC/ACUTE CLIMATE HAZARD TIME HORIZON
RISKS TO TRITAX
EUROBOX PORTFOLIO FINANCIAL IMPACTS PLANNING AND STRATEGY
Acute Flood risk, heavy
rainfall events
(precipitation
stress), drought
stress
Short to
mediumterm
Flooding of assets
and need for
increased flood
protection and
drainage measures
Increased
maintenance and
repair costs
Negative impacts
onasset valuations
Cost of repairing
assets, increased
maintenance and
building costs
Increased insurance
costs from growing
flood risk
Loss of value
ofbuildings
Mitigation measures for
floodand drought risks are
incorporated into the design
ofplanned developments
including raising assets above
ground level, surface runoff
measures and inclusion of
rainwater harvesting
equipment
Financial appraisals of
acquisitions, refurbishments
and development include
mitigations to physical climate
risks, including flood risk
assessments for all new
investments
Chronic Heat stress Medium term Increased investment
in cooling
requirements
Reduced thermal
comfort of staff
leading to lower
levels of wellbeing
and productivity
ofworkforce
Higher operating
costs for customers
from increased
cooling demand
Cost of additional
cooling requirements
Upgrading cooling
equipment
Developments are designed
tomaximise adaptation to
extreme heat, including
building orientation, shading
and passive and active
ventilation systems
Mitigation is also included in
refurbishments to increase
shading externally and reflect
heat, including reflective paint
and construction of canopies
for shading
Sea level rise Long term Risk of flooding from
sea level rise was
identified at the two
assets located in
Breda by the end of
the century. Flooding
could result in
building damage;
however, given the
uncertainty
surrounding future
projections of sea
level, it is unlikely
thatimpacts will
materialise in
theshort term
The long-term risk of
sea level rise may
result in increased
insurance costs for
the assets over the
long term and could
result in stranded
assets should the sea
level rise increase
more quickly that
projected
Financial appraisals of
acquisitions, refurbishments
and development include
mitigations to physical climate
risks, including flood risk
assessments for all new
investments
Tritax EuroBox plc Annual Report 202254
STRATEGIC REPORT
Strategy continued
Describe the impact of climate-related risks and opportunities on the organisation’s businesses,
strategyand financial planning continued
Table 2 – Climate-related transition risks
TYPE OF RISK CLIMATE RISK POTENTIAL RISKS TO TRITAX EUROBOX PORTFOLIO POTENTIAL FINANCIAL IMPACTS
Policy and legal Carbon pricing Pricing of GHG emissions Direct cost associated with
emissionspricing
Policy and legal Reporting
compliance
Various new reporting requirements for companies and
financial organisations introduced within the EU and UK
Risk of litigation/enforcement action for non-compliant
disclosures and incorrect information
Increased costs associated with
reporting and data gathering
Increased costs resulting from fines
andjudgements
Policy and legal Asset
performance
compliance
Assets become stranded and unlettable due
tochanging energy efficiency regulation
Upgrading of existing assets in order to comply with
increasingly stringent national and regional energy
performance standards
Higher development costs for new buildings to construct
to more stringent energy performance standards
Cost of procuring low-carbon materials for
developments and refurbishments due to regulation
onembodied carbon limits
Write-offs and early retirement
ofexisting assets
Increased capital costs for development
and refurbishment
Increased costs resulting from fines
andjudgements
Market Energy costs Higher energy costs over the short to medium term due
to shift to renewables and electrification requiring energy
efficiency upgrades to assets
Energy market volatility leading to challenges in cost
planning and occupier wariness
Increased capital costs
Increased operating costs
Market Decarbonisation
of logistics sector
High transition costs to logistics occupiers increasing
pressure on cost of occupation
Increased localisation of production and distribution
ofgoods to reduce transport emissions
Reduced revenue
Reduced rental growth
Market Occupier
behaviour
Prospective occupiers have higher energy performance
requirements due to their own energy costs, regulation
affecting their sectors and customer demand for net
zero business operations
Increased capital costs
Write-offs and early retirement
ofexisting assets
Market Growth of green
finance
Investors place stricter requirements on asset managers
Access to capital becomes increasingly contingent
onsustainability performance
Increased cost of capital
Increased costs associated with
reporting and data gathering
TCFD Report continued
Annual Report 2022 Tritax EuroBox plc 55
STRATEGIC REPORT
Table 3 Climate-related opportunities
CLIMATE-RELATED
OPPORTUNITIES POTENTIAL OPPORTUNITIES TO BUSINESS POTENTIAL FINANCIAL IMPACTS
Resource
efficiency
Use of more efficient production and distribution processes
Use of recycling
Move to more efficient buildings
Reduced water usage and consumption
Upfront costs of retrofitting existing assets
Cost savings from lower water consumption
Reduced occupational costs
Lower maintenance and repair costs
Lower compliance costs
Energy source Use of lower emissions sources of energy
Use of supportive policy incentives
Use of new technologies
Shift toward decentralised energy generation
Increased energy security and resilience
Greater visibility of asset performance
Changes to energy costs associated with transition
tolower emissions sources of energy
Upfront costs of installing new technology
Products and
services
Development of climate adaptation and insurance
risksolutions
Ability to diversify business activities
Change in market demand for services due to
climate-related risks or opportunities shifting
consumerpreferences
Reduce revenues from operational disruption
Changes to revenue from sales of services
Markets Access to new markets
Use of public sector incentives
Access to new assets and locations
Retention and enhancement of Shareholder relationships
– alignment with ESG objectives
New opportunities to align capital deployment with climate
change mitigation can be captured through underwriting
or financing green initiatives and infrastructure through
green finance instruments (e.g. low emission energy
production and energy efficiency)
ESG investors – new source of investment
Green debt/green finance/green bonds – new sources
ofcapital
Increased revenue through access to assets in
newgeographies
Increased diversification of financial assets (e.g. green
bonds and infrastructure)
Defensive play against negative impact on value/liquidity
Positive play – green buildings vs brown buildings – capital
and rental growth
Resilience Participation in renewable energy programmes and
adoption of energy efficiency measures
Improving efficiency and adaptive capacity of fixed assets
Increased market valuation through resilience planning
(e.g. land and buildings)
Increased reliability to operate under various conditions
(e.g. energy efficiency measures)
Tritax EuroBox plc Annual Report 202256
STRATEGIC REPORT
Describe the resilience of the organisation’s strategy, taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
The physical climate risk analysis has used three scenarios to assess the impact of physical climate risks across the Tritax EuroBox portfolio
tothe end of the century. The scenarios used were as follows:
• RCP8.5: a high emissions scenario, consistent with a future with no policy changes to reduce emissions and characterised by increasing
GHG concentrations and a temperature increase of around 4°C relative to the pre-industrial period (1850–1900);
• RCP4.5: an intermediate emissions scenario, consistent with relatively ambitious emissions reduction, that likely overshoots the Paris
Agreement temperature target of 1.5°C/2°C relative to the pre-industrial period (1850–1900); and
• RCP2.6: a moderate scenario that sees emissions peak early on in the 21st century and then decline after. This scenario assumes a
warming of less than 2°C by the end of the century.
These scenarios were selected as they are based on internationally recognised datasets and consider the potential physical risks of a
changing climate and transition to a net zero economy. We believe that they provide good coverage across all possible future scenarios,
allowing us to understand the range of physical impacts that may occur and align with the recommendations of the TCFD which states that
more than one scenario should be considered, one of which should be aligned with the Paris Agreement.
Transition risks have been assessed using CRREM’s 1.5°C scenario, aligned with warming of less than 1.5°C by the end of the century.
Although this transition risk assessment tool also offers a 2°C scenario for use, a 1.5°C scenario will identify the greatest risks and allow
foraconservative degree of planning in this regard, ensuring maximum resilience of the portfolio to transition risk.
Detail of the analytical methods, outputs and sensitivities is provided in the Risk Management section of this disclosure.
Following this year’s assessment of physical and climate risks to the portfolio, we will continuously update and revise our Company strategy
inline with developing risks and opportunities, and continue to assess risks under a range of global warming scenarios and other contextual
developments. We intend to develop our approach to strategic resilience further in subsequent disclosures.
Risk management
Describe the organisation’s processes for identifying and assessing climate-related risks
The Company has worked with CBRE ESG Consulting to identify and assess the relative significance of physical and transitional climate-
related risks. The Board and the Manager were updated on key findings of the TCFD and CRREM analysis. As part of the Annual Report
process the Audit & Risk Committee evaluated the impacts on financial and strategic planning and will look to further embed this process
overthe next reporting period.
The sections below set out the process for completing the physical and transition risk assessments respectively.
Physical risk
A climate risk analysis has been completed to assess the short, medium and longer-term physical risks for the Tritax EuroBox portfolio.
Theassessment was based on three climate scenarios across three time horizons as mentioned above.
The following risk terminology has been used in the assessment. Risk has been defined as the potential for adverse consequences of a
climate-related hazard on the lives, livelihoods, health and wellbeing, ecosystems, assets, services and infrastructure. It results from the
interaction between vulnerability of an affected system, its exposure over time, the climate-related hazard and the likelihood of its occurrence.
For this assessment hazard has been defined as the potential occurrence of a natural or human-induced event that may cause the loss of life,
injury, damage or loss of property, infrastructure, livelihoods, services ecosystems or environmental resources. Vulnerability is defined as the
propensity of an asset to be damaged or undergo a period of downtime due to having been adversely affected by a climate event. This is
based on the risk definition defined in the International Panel of Climate Change (“IPCC”) report.
1
The portfolio level risk analysis has used the likelihood of the climate hazard and the severity of the impacts of the Tritax EuroBox assets in
terms of their ability to remain operational under adverse conditions. The portfolio level assessment was not asset specific and focused on
thematerial risks. The potential climate-related risks on the business have been identified including potential financial risks. The Munich Re
riskplatform has been used to inform the likelihood assessment and expert judgement has been used to inform the vulnerability assessment.
TCFD Report continued
Annual Report 2022 Tritax EuroBox plc 57
STRATEGIC REPORT
Transition risk
A portfolio transition risk assessment has been carried out, using energy consumption and carbon emission information for Tritax EuroBox
assets to assess the alignment of the portfolio with the decarbonisation pathways outlined by the CRREM tool, funded by EU Horizons and the
Laudes Foundation. The assessment has been based on data gathered for the REIT’s 2021 GRESB submission, with data covering the
2020–2021 financial year.
The CRREM analysis considers the CRREM 1.5°C pathway for alignment and a time horizon to 2050, whilst also considering an intermediate
net zero date of 2030 in line with the Company’s goals for Scope 1 and 2 emissions. Risk associated with this portfolio transition risk assessment
is therefore stranding risk, defined by CRREM as the risk of owning or managing an asset “that will not meet future energy efficiency standards
and whose energy upgrade will not be financially viable. The market participant may face a situation where properties do not meet future market
expectations and therefore will be exposed to write-downs”.
Sector and country-specific pathways have been used to assess pathway alignment, and risk has been considered for both energy use and
carbon emissions, with high-priority assets identified which represent significant absolute emissions and also have high normalised emissions
(per m
2
) – also referred to as Energy Use Intensity (“EUI”).
Describe the organisation’s processes for managing climate-related risks
The Board recognises the importance of identifying and monitoring climate-related risks, which feature on our principal risk register. The Audit
& Risk Committee formally considers and assesses the risks that may be relevant to the Company on a bi-annual 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 also
reviewed and assessed by key representatives including the Manager’s Executive Committee on an ad hoc basis. During 2023, the Board will
focus further on the prioritisation of climate-related risks and opportunities and look to quantify the financial impact.
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
property management team and other relevant specialists.
Going forward, the Company will undertake asset level transition and physical risk audits in order to further prioritise climate-related risks
identified at the portfolio level, covering asset vulnerability, net zero potential and associated capital costs. Climate risk management and
mitigation strategies will be incorporated in the asset Sustainability Action Plans (“SAPs”). Progress against SAPs will be reviewed each year
bythe asset managers and the ESG Director, and reported back to the Board by the ESG Director.
Describe how processes for identifying, assessing and managing climate-related risks are integrated
intothe organisation’s overall risk management
The Manager reviews and updates the Company’s risk matrix on a bi-annual 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 impact funds under
management, including the Company.
The Audit & Risk Committee has embedded climate reporting into its risk management by determining ESG risk as a key risk of the Company.
In addition, climate-related risks and opportunities are embedded into the Company’s investment strategy and are considered at each
investment, divestment or asset management initiative. These opportunities and risks are then reported up to the Board through the Quarterly
Asset Management Report, as well as any ad hoc Investment Committee or Acquisitions Reports on a specific project.
Acquisitions are subject to ESG due diligence assessments which inform the members of the Investment Committee of any climate-related
risks, such as flooding, to inform the investment decisions on climate-related risks. 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 and property management ensures that any material risks are considered for the Fund.
For further details on the Company’s risk management please refer to pages 44 to 50.
Tritax EuroBox plc Annual Report 202258
STRATEGIC REPORT
Metrics and targets
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line
withits strategy and risk management process
The Company employs a holistic set of metrics in order to assess climate-related risks and opportunities, in line with the recommendations
ofthe TCFD. These metrics are outlined 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.
Metric category Metric Historical performance Current performance Target set
GHG emissions Absolute Scope 1 GHG emissions Page 34 Page 34 Page 32
Absolute Scope 2 GHG emissions Page 34 Page 34 Page 32
Absolute Scope 3 GHG emissions Page 34 Page 34 Page 32
Weighted average GHG intensity (per €m
revenue), Scope 1 and 2 landlord and
customer
Not available Page 34 Page 32
Portfolio GHG intensity, Scope 1 and 2
landlord and customer (per sqm per year)
Not available Page 34 Page 32
Transition risks % of assets by number performing above
country best practice EPC benchmark
Page 33 Page 33 Page 32
Climate-related
opportunities
Renewable energy capacity installed (MW) Not available Page 33 Page 32
GRESB rating Page 4 Page 28 Page 30
Number of leases incorporating green
lease clauses agreed in the FY
Not available Page 41 Page 30
% of assets by floor area with Tritax
minimum Green Building Certifications or
EPC ratings
Not available Page 28 Page 31 (Green
Building Certifications)
Page 33 (EPC rating)
Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the
relatedrisks
See the energy and greenhouse gas report available on page 34 for Scope 1, Scope 2 and Scope 3 emissions.
Describe the targets used by the organisation to manage climate-related risks and opportunities
andperformance against targets
Targets can be found reported in the table above alongside the relevant metric to allow progress to be assessed against the target over time.
TCFD Report continued
Annual Report 2022 Tritax EuroBox plc 59
STRATEGIC REPORT
The Group’s cash balance as at 30 September 2022 was €90.18 million.
It also had undrawn amounts under its debt facilities of a further
€207million at the reporting date. Of the Group’s total facilities
(RCF,Green Bond and USPP), €250 million mature in 2025, €500 million
in2026, €100 millionin 2029, €50 million in 2032 and €50 million in 2034.
The Group currently has substantial headroom against its borrowing
covenants, with an LTV of 35% as at 30 September 2022 against
aborrowing covenant limit of 65%. The Group’s borrowings are
unsecured, providing it with a deeper pool of liquidity and with
moreflexibility 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
theopinion that the going concern basis adopted in preparing
theAnnual 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
2027. This was previously considered over a three-year period.
The period for this assessment is the same five-year time horizon
ascovered 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.
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
acombination of those risks. The principal risks summarise those
matters that could have a significant impact on the Group’s ability
toremain 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
fiveyear period to September 2027.
The Group’s financial forecast includes sensitivities including yield
expansion, resulting in property valuation fall and the impact of
cashflows and covenant compliance. This forecast has been
furthersensitised for the following scenarios:
1) the combined impact of three key customers defaulting without
replacement and a 12-month delay in letting properties under
development, along with a significant increase in Euribor; and
2) additional yield expansion resulting in further property valuation
falls and the impact on debt covenants.
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 2027.
The Strategic Report was approved by the Board and signed on
itsbehalf by:
Robert Orr
Chairman
5 December 2022
Going Concern and Viability Statement
Chairman’s Governance Overview
Promoting long-term
sustainable success
Robert Orr
Chairman
Governance highlights for
2021/2022
• Conducted a comprehensive internally facilitated Board
evaluation exercise. Further details on page 80.
• Conducted a retender of the corporate broker services,
resulting in the appointment of Barclays as Joint Corporate
Broker and Financial Adviser alongside our existing Joint
Corporate Broker and Financial Adviser, Jefferies, and Joint
Financial Adviser, Akur. Further details on page 73.
• Conducted an in-depth strategic review of the business
at the strategy meeting held on 6 September 2022.
Furtherdetails on page 69.
• Shareholder approval given on the amended Investment
Management Agreement (“IMA”) on 25 October 2022.
Furtherdetails on page 71.
• Complied with all of the principles and provisions of
the 2019AIC Code applicable to the Company. Please
seepages67 and 68.
• 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
50 and 82 and 83.
• Further developed and enhanced the Board’s composition
and succession planning with the appointment of Sarah
Whitney. Further details on page 77.
• Further enhanced processes and procedures across
the business and its supply chain in compliance with the
Modern Slavery Act 2015 and published our fourth annual
statement on our website. Please see page 83.
• Embedded the ESG strategy framework and established
adedicated EBOX ESG Committee. Further details on page 51.
• Entered the FTSE 250 in October 2021.
This report seeks to demonstrate and explain
the core governance-related processes and
procedures that are in place and highlights
Strong and effective corporate governance has been at the core
ofour 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
thecontinuing progress of the Company going forward.
Board priorities
This has been a busy year for the Board, with a number of changes
made to the composition of the Board including the appointment
of Sarah Whitney as a new Non-Executive Director in February
2022 and her appointment as Senior Independent Director (“SID”)
in December 2022, as well as a refresh of the Board Committee
memberships. During the period, the Board completed the review of
the IMA and undertook a corporate broker retender and established
a dedicated EBOX ESG Committee (post year end). The Company’s
strategy meeting was held off site in September of this year and
provided an opportunity to focus on strategy, opportunities and
market outlook outside of the routine considerations of the Board.
The Board worked closely with the Manager to identify ways to both
reduce costs and to ensure that the Company had the right skills
and resources in place to deliver returns to Shareholders over the
long term. This resulted in the agreement to amend the terms of the
Investment Management Agreement, for which we voluntarily sought,
and were pleased to receive, Shareholder approval in October 2022.
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.
In September 2022, Nick Preston stepped down as Fund Manager
and was replaced by Phil Redding. Nick has been instrumental in
the establishment of the Company and the creation of a high-quality,
resilient portfolio of prime logistics assets across Continental Europe.
My fellow Board members and I thank him for his contribution and wish
him the best in his future endeavours. Phil joined Tritax in November
2020 as Director of Investment Strategy, providing strategic investment
advice across the four flagship Tritax funds. Hisextensive experience
in the industrial and logistics sector, his deep knowledge of Continental
European markets, and the insights gained from his 25-year career
at SEGRO, make him ideally suited to take on the leadership role at
EuroBox and continue the delivery of our strategy.
We continued to make good progress on our ESG strategy, including
improved collection of ESG data and ESG integration across the
asset lifecycle. We also undertook our first TCFD analysis and
continued to align the carbon performance of the portfolio with the
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202260
Paris Agreement decarbonisation pathways. Post year end the Board
established a dedicated ESG Committee which will meet twice a year
to enable greater time and focus for the Board to consider its ESG
strategy. The ESG Committee will report to the Board and provide
recommendations on all ESG initiatives and support the continued
work of the Manager’s own ESG Committee. Eva-Lotta Sjöstedt
will chair the new EBOX ESG Committee and continue to be our
“ESG Champion”. Eva-Lotta will continue to engage directly with
the Manager’s ESG Director on various sustainability topic For more
information on steps the Group is taking in relation to climate change
please refer to pages 28 to 35 and 51 to 58.
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 2021 the Nomination Committee reviewed
the Board and Committee composition and recommended the Board
commence a search for a new Director. This search resulted in the
appointment of Sarah Whitney on 14 February 2022. For further
details regarding the recruitment process please refer to pages 72
and 79 in the Nomination Committee Report.
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. This year’s training included
asession on Supply Chains and EU Construction.
As a Board, we continue to benefit from our professional
development programme, further details of which can be found
onpages 66 and 79.
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.
We work closely with the Manager to identify areas for improvement
and best practice which promotes an open and collaborative culture.
This year, we reviewed a number of our policies and procedures,
including refreshing the Diversity and Inclusion Policy, Share Dealing
Code and the Non-Audit Services Policy.
We also regularly engage with the Company’s advisers, Jefferies,
Barclays and Akur, 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”). Post the easing of Covid-19-related
restrictions, we are pleased to conduct Shareholder meetings in
person, further details of which can be found on page 95.
The Board undertook two asset tours during the period. In April 2022
we visited assets in Benelux, including Roosendaal and Breda in the
Netherlands, and Rumst, Bornem and Nivelles in Belgium. Furthermore
in July 2022 we visited assets in Hammersbach, Geiselwind and Lich
in Germany.
Outlook for 2022/2023
Looking ahead, the Board is focused on achieving its key strategic
priorities as agreed at the strategy meeting this year, as well as working
towards achieving compliance with the recently published Listing Rules
in relation to diversity targets, as appropriate. We will also continue to
monitor our governance arrangements to ensure thatthey are aligned
with FTSE 250 best practice.
Robert Orr
Chairman
5 December 2022
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
toinvestment 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 Corporate Governance
Code (the “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
ofthe 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.
For further details please see pages 67 and 68.
Annual Report 2022 Tritax EuroBox plc 61
CORPORATE GOVERNANCE
Board of Directors
The right leadership
N
M
E
Keith Mansfield
Non-Executive Director
Appointed 5 June 2018
Tenure 4 years 6 months
Relevant skills and experience
• Chartered accountant with extensive
experience of leading significant
internationaltransactions
• Partner at PricewaterhouseCoopers (“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
oftheAudit 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
N
E
M
A
Robert Orr MRICS BSc
Chairman
Appointed 5 June 2018
Tenure 4 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
(LewisTrust Group)
• IC Member of ESAS Holding
Sarah Whitney BSc FCA
Senior Independent Director
Appointed 14 February 2022
Tenure 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
complementary 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 (now Cushman & Wakefield)
• Executive Director and Member of UK Board
atCBRE
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.
• Trustee and Chair of the Investment Committee
of The Canal & River Trust (pro bono)
• Non-Executive Director of Bellway plc
• Treasurer and Member of Council of
University College London (pro bono)
M
E
A
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202262
Eva-Lotta Sjöstedt
Independent Non-Executive Director
Appointed 10 December 2019
Tenure 3 years
Relevant skills and experience
• Global senior executive with an in-depth
knowledge of global retail, supply chain
anddigital 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
ofIKEA’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
N
E
M
A
M
N
E
Audit & Risk Committee
Management Engagement Committee
Nomination Committee
EBOX ESG Committee
Chair
Taco de Groot MRE MRICS
Independent Non-Executive Director
Appointed 5 June 2018
Tenure 4 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
investmentcompanies
Significant previous external experience
• One of the founding partners of M7 Real
Estate LLP in the UK
• One of the founding partners of GPT/
Halverton LLP, Heston Real Estate B.V.
andRubens Capital Partners
• CEO of Cortona Holdings BV, Amsterdam
• CEO of Vastned Retail NV, a European
retail property company listed on
EuronextAmsterdam
• Non-Executive Director of EPP NV, a real
estate investment company that operates
throughout Poland
Principal external appointments
• 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
• Adviser at E22 Capital, a US residential real
estate investment company
M
A
E
Annual Report 2022 Tritax EuroBox plc 63
CORPORATE GOVERNANCE
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 Tritax Group in 2020.
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 – the “Manager”
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 – the “Manager”
Relevant skills and experience
Petrina joined Tritax in 2007 and 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 – the “Manager”
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 in 2008.
To read more about our colleagues pleasego
to tritaxeurobox.co.uk/about/people-and-
culture/
Tritax provides a dedicated
team of property experts
Tritax Management LLP (the “Manager”)
actsas 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.
O
I
R
G
Executive Committee
Investment Committee
Operations Committee
Risk Committee
E
EX
ESG Committee
Green Finance Committee
Chair
EX EX
I G
E
IEX
RO OIE G I
I
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202264
Male 60%
Female 40%
Board gender split
Non-Executive Director tenure
Board relevant
The Board has a complementary
rangeof skills which are relevant
totheGroup’s medium and
longer-termobjectives.
The Board considers Keith Mansfield to have
recent and relevant financial expertise to chair
the Audit & Risk Committee.
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
1 2 3 4 5
EBOX ESG
Committee
I
n
d
e
p
e
n
d
e
n
t
o
v
e
r
s
i
g
h
t
a
n
d
r
i
g
o
r
o
u
s
c
h
a
l
l
e
n
g
e
Board of Directors
Manager has delegated
authority to these
Committees
M
a
n
a
g
e
r
Annual Report 2022 Tritax EuroBox plc 65
CORPORATE GOVERNANCE
Post-year-end events
• Declared an interim dividend of 1.25 cents per share, in respect of the three months to 30 September 2022
• Agreed action plan following the external Board and Committee evaluation
• Held General Meeting to approve the IMA amendments and signed IMA in October 2022
• Established the ESG Committee of the Board in November 2022
• Approved the Annual Report and Accounts 2022
For the key investment, operational and financial activities please see pages 1 to 59
Key activities
of the Board
October–December 2021
• Approved the Annual Report
and Accounts 2021
• Declared an interim dividend
of 1.25 cents per share, in
respect of the three months
to30 September 2021
• Introduction to European
Construction Board
training session
• €200 million debut private
placement debt issue
• Inclusion in the FTSE 250
• General Meeting held on
10December 2021 to approve
related party transactions for
the Gelsenkirchen, Bönen and
German Propco Guarantor
Amendment Proposals
July–September 2022
• Board tour of German
assets and Board meeting
held off site
• Strategy meeting
• Conducted a retender
of the corporate broker
services, resulting in the
appointment of Barclays as
Joint Corporate Broker and
Financial Adviser alongside
its existing Joint Corporate
Broker and Financial Adviser,
Jefferies, and Joint Financial
Adviser, Akur
• 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
to30 June 2022
• Negotiated and agreed
amendments to the IMA
• Appointment of Phil Redding
as CEO for Tritax EuroBox plc
April–June 2022
• Approved the Interim
Report 2022
• Declared an interim dividend
of 1.25 cents per share, in
respect of the three months
to31 March 2022
• Benelux Board asset tour
• Board information session
on Supply Chains with DHL –
Voice of the Occupier
• General Meeting held on
13April 2022 to approve
related party transaction
forthe Dormagen proposal
• Undertook an in-depth
ESG review
January–March 2022
• Held the Company’s Annual
General Meeting
• Declared an interim dividend
of 1.25 cents per share, in
respect of the three months
to31 December 2021
• Board information session
on European Supply
Chains with CBRE
• Fitch upgrade on its
senior unsecured rating to
BBB from BBB-
• Conducted performance
review of the Company’s
key suppliers
• Appointed Sarah Whitney as
Non-Executive Director and
updated composition of the
Board Committees
• General Meeting held on
11 March 2022 to approve
related party transaction for
the Roosendaal proposal
Key Activities of the Board
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202266
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
theCodes. 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 59
• Board Leadership and Company Purpose pages 69 to 71
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 59
• Board Leadership and Company Purpose pages 69 to 71
• Division of Responsibilities pages 74 to 76
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 50
• Section 172 Statement pages 21 to 23
• Audit, Risk and Internal Control pages 82 and 83
• Audit & Risk Committee Report pages 84 to 87
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.
• Stakeholders pages 21 to 23, 72 and 73
• Section 172 Statement pages 21 to 23
• Shareholder Relations page 69 to 73
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 69 to 71
• Division of Responsibilities pages 74 to 76
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 74 to 76
• Composition, Succession and Evaluation pages 62 to 64
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 69 to 71
• Division of Responsibilities pages 74 to 76
• Audit & Risk Committee Report pages 84 to 87
• Management Engagement Committee Report pages 88 to 90
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 69
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, cognitive and personal strengths.
• Nomination Committee Report pages 78 to 81
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 62 to 64
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 78 to 81
Annual Report 2022 Tritax EuroBox plc 67
CORPORATE GOVERNANCE
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
andnarrative statements.
• Audit, Risk and Internal Control pages 82 and 83
• Audit & Risk Committee Report pages 84 to 87
Principle N. The board should present a fair, balanced and
understandable assessment of the company’s position and prospects.
• Going Concern page 59
• Statement of Directors’ Responsibilities page 96
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 50
• Viability Statement page 59
• Audit, Risk and Internal Control pages 82 and 83
• Audit & Risk Committee Report pages 84 to 87
• Notes to the Financial Statements pages 108 to 127
Remuneration
Principle P. Remuneration policies and practices should be designed
tosupport strategy and promote long-term sustainable success.
• Board Leadership and Company Purpose pages 69 to 71
• Directors’ Remuneration Report pages 91 to 93
• Management Engagement Report pages 88 to 90
Principle Q. A formal and transparent procedure for developing policy
onremuneration should be established. No director should be involved
indeciding their own remuneration outcome.
• Directors’ Remuneration Report pages 91 to 93
Principle R. Directors should exercise independent judgement and
discretion when authorising remuneration outcomes, taking account
ofcompany and individual performance, and wider circumstances.
• Directors’ Remuneration Report pages 91 to 93
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
inthe preparation of the Annual Report is appropriate.
Further details are set out on page 59
ofthe Strategic Report.
Viability Statement The Board is of the opinion that the Viability Statement adopted
inthe preparation of the Annual Report is appropriate.
Further details are set out on page 59
ofthe Strategic Report.
Annual review of systems
ofrisk 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,
Riskand Internal Controls on pages 82
and 83 of this Governance Report.
Robust assessment of
theCompany’s emerging
and principal risks to the
business model, future
performance, solvency and
liquidity of theCompany
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
50 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
befoundon pages 74 to 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, to be in the best interests of
the Company.
Further details are set out in the
Management Engagement Committee
Report on pages 88 to 90.
Section 172 The Directors have considered the requirements of Section 172
when making strategic decisions.
Further details are set out on pages 21
to 23 of the Strategic Report.
TCFD The Directors have early adopted reporting on the
TCFDrequirements.
Further details are set out on pages 51
to 58 of the Strategic Report.
Application of Code continued
Application of AIC Code Principles continued
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202268
Board Leadership and Company Purpose
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. 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,
which is set out on this page. Although the Board does not approve
investment proposals or decisions, as this is a matter delegated
to the Manager, the Board is kept fully informed and notified of
investment proposals/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 it discusses the Company’s
immediate and long-term strategy, and holds ad hoc meetings to
consider specific issues facing the Company, the market generally
and its stakeholders.
A typical Board agenda includes:
• a review of investments, divestments and asset
managementinitiatives;
• 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
andstakeholder 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,
includingthe 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
ratederivatives;
• overseeing treasury functions and managing the Company’s
capital structure;
• reviewing and monitoring the Manager’s ongoing compliance
withthe 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.
Off site strategy meeting – September 2022
The strategy meeting provides an opportunity to step
awayfrom the routine corporate calendar and spend more
time reflecting on strategy, the wider business, and the
macroeconomic environment. The Board spent a day off site.
The Manager, in association with the Company’s advisers,
prepared a full suite of papers covering a wide range of topics,
including peer benchmarking, costs and ESG in order to
ensure the Directors were fully briefed in advance. During the
strategy session, the Board focused on a select number of
papers to ensure that each strategic area received a more
detailed focus. The Board initially received a presentation on
the market outlook. The presentation focused on the
Manager’s in-house view on European economic and logistics
real estate markets over a five-year forward-looking period
andprovided the market forecasts that formed the basis of
theassumptions incorporated in the Medium Term Plan.
Subsequently, the Board considered (i) the peer analysis,
buyside perspectives of the current Shareholder register and
analysis on the investor opportunity; (ii) the Medium Term Plan;
and (iii) ESG strategy. The Board then reviewed all papers and
short listed certain topics from the strategic papers to consider
in the meeting. The Board also reviewed the merits and
drawbacks of conducting a share buyback during the session.
The outcome of the strategy meeting resulted in asetof key
actions for the business to take forward.
Further details of the Company’s strategy can be found
onpage20 of the Strategic Report
Annual Report 2022 Tritax EuroBox plc 69
CORPORATE GOVERNANCE
Culture
The Board promotes open dialogue and frequent, honest and
opencommunication 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
toCompany 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
hasbeen 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, in particular now that we have joined the
FTSE 250. 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.
Regular roadshows, conferences, webinars and ongoing ad hoc
meetings upon request have enabled the Manager to listen to and
understand the views of Shareholders and other stakeholders and
to share those views with the Board. The Board is committed to
maintaining open channels of communication with Shareholders. In
January 2022, the Chairman and SID held a governance roadshow
with 20 investors where a number of key themes were discussed
including capital allocation, the alignment of management structure
and strategy with Shareholders and the evolution of the Company’s
ESG objectives. The Manager also held a number of roadshows
with Rothschild and Santander in line with the Board’s strategy of
broadening the universe of banks through which the Company is
able to access prospective investors, in particular in markets outside
of the UK. During the IMA review period, the Manager met with a
number of investors to gather feedback on the proposed changes.
In addition, the investor relations team met with approximately
20 of the largest Shareholders to undertake a perception study
to gauge focus themes and key areas of questioning across the
logistics space and also invited the top 20 investors to meet with
Phil Redding following his appointment as CEO for the Company
inSeptember 2022.
Further details of the Company’s engagement with our other key
stakeholders can be found on pages 72 and 73 and in our Section 172
Statement on pages 21 to 23
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 21 to 23 and
pages 72 and 73.
Site visits
There is continued demand from Shareholders and
prospective investors to visit our assets and development
sites. In June 2022, the Manager hosted a site visit with
analysts and investors to the two largest German assets within
the portfolio, Geiselwind and Lich. The visits provided an
opportunity for discussions with occupiers and management
team and reinforced the Company’s investment case in terms
of the demand for large, well-located, modern buildings with
a high level of automation and environmental and social
criteria. Attendees also received a detailed update on the
German logistics market and had the opportunity to meet
the Company’s German asset manager, Dietz, which was
well received by analysts and investors alike. In July 2022,
the Manager conducted a similar trip with the Board to visit
Hammersbach, Geiselwind and Lich in Germany.
In September 2022, the Manager also hosted a site visit
with analysts and investors in the Benelux region, visiting
the Company’s assets in Roosendaal, Breda and Bornem.
The visit provided an opportunity for attendees to meet LCP
(one of the Company’s asset managers) and Phil Redding,
in his capacity as CEO for Tritax EuroBox plc, as well as
customers and other members of the management team.
Thetrip demonstrated the advantages of well-located modern
warehouses and reiterated the key supply/demand dynamic
which has fuelled the significant rental growth in the area.
Board Leadership and Company Purpose continued
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202270
ESG
Managing ESG 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 asset lifecycle and has
been incorporated as a service in the amended IMA signed and
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 will oversee and monitor
the performance and execution of the Company’s ESG strategy and
set the Company policy. It will receive updates and recommendations
from the Manager’s LLP’s ESG Committee relating to the Company’s
ESG strategy, including monitoring progress and performance
against the agreed ESG strategy framework, as well as key ESG
metrics and targets. The Committee will also receive 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 Company received a GRESB score of 88/100
with five Green Stars and designation as Sector Leader. The Board
also approved the continued funding of a charity partnership with
The Mission to Seafarers. Please see page 29 for more details on
sustainability activities during the year. The Company has made
a commitment to achieve net zero carbon for its direct activities
by 2030 and for its total Scope 3 emissions by 2050. For further
information on how the Company reports against TCFD please
seepage 61.
The Board ESG Champion, Eva-Lotta Sjöstedt, meets regularly with
the Manager’s ESG Director to discuss progress of the sustainability
strategy and have deep dives into key ESG issues relevant for the
Board. This year, key matters discussed included:
• data management and how the Company can improve collection
of ESG data to to continue the process of ESG integration across
the asset lifecycle;
• managing climate risk across the portfolio in line with the TCFD
recommendations; and
• aligning the carbon performance of the portfolio with the Paris
Agreement decarbonisation pathways.
In 2023, climate change and decarbonisation will be a continued
focus for the Company. Integrating the TCFD and CRREM analysis
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 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 Senior Independent Director 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 were encouraged to ask questions or
raise matters of concern by emailing the Company Secretary.
The Chairman and the Senior Independent Director 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 four General Meetings during the period. The
meeting held on 10 December 2021 was to consider and approve
the related party transactions relating to the Gelsenkirchen Proposal,
Bönen Proposal and German Propco Guarantor Amendment
Proposal. The Company agreed the acquisition price of €32 million
with Dietz FNL Investment GmbH and Dietz Aktiengesellschaft for the
Gelsenkirchen transaction and €117.9 million with Dietz FNL Investment
GmbH and Dietz Aktiengesellschaft for the Bönen transaction.
The meeting held on 8 March 2022 was to consider and approve the
related party transaction relating to the Roosendaal Proposal. The
Company agreed the acquisition price of €144.26 million with LCP
Holdco Belgium B.V for the Roosendaal transaction.
The meeting held on 13 April 2022 was to consider and approve the
related party transactions relating to the Dormagen Proposal. The
Company agreed the acquisition price of €76.4 million with Dietz FNL.
5 Grundbesitz GmbH for the Dormagen transaction.
The meeting held on 25 October 2022 was to consider and approve
the IMA amendments. The Board was delighted that all of these
meetings could be held as open meetings where Shareholders were
able to attend in person, following the lifting of the Covid-19-related
Government restrictions.
The Company also completed the acquisition of the Settimo Torinese
on 29 November 2021 following approval of the related party transaction
in August 2021. The Company agreed the acquisition price of
€24.39million with LCP Services UK Limited.
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
quarterly 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.
Annual Report 2022 Tritax EuroBox plc 71
CORPORATE GOVERNANCE
Stakeholder Engagement
NED appointment
One of the key areas highlighted by the external Board evaluation in
2021 was succession planning for financial expertise, as the Board
only had one member who had the recent and relevant financial
expertise to chair the Audit & Risk Committee. With that in mind,
during the Nomination Committee’s annual review of the Board
structure, skills and experience it identified the need to appoint a new
Non-Executive Director. The Committee then agreed a candidate
profile in order to support the search and ensure that all Directors
were aligned in what candidate they were looking for. The Committee
was also mindful of the need to increase diversity of gender and
ethnicity. The Committee agreed to consider a first time NED with
the right skill set as well as a candidate without a professional
background in the real estate/logistics sector. The Committee was
also keen to ensure that the recruitment process would attract
high-quality and diverse candidates. The Committee decided to
appoint recruitment agent Nurole Limited (“Nurole”) to undertake the
recruitment search as it was felt that Nurole’s recruitment processes
would aide in attracting a wider pool of candidates as it combined
traditional recruitment processes with a digital platform. The
Committee worked closely with Nurole to prepare the Role Profile.
Further details on the process can be found below and within the
Nomination Committee Report onpages 78 to 81.
Key skill set and attributes identified by
the Committee
Essential
• Broad business experience (gained as a senior executive or
non-executive of a FTSE 100/250 board or equivalent) or a
firsttime NED with the right skills and experience
• Finance experience, such as chairing the audit committee or a
first time NED who has held a senior finance position in a FTSE
100/250 company or equivalent
• Strategic thinker, and could be from a non-property background
• Ability to build a strong and trusting relationship with the Board
members and the Manager
• Understanding of corporate governance within a listed
companyenvironment
• Independence of mind with the ability to provide appropriate,
constructive challenge as well as the ability to listen, engage
andinfluence
Desirable
• Candidate with experience of digital/technological change
withina business
• Understanding or experience of the property market
• Understanding of the complexities around working with
anexternal Manager
How were stakeholders’ views taken
into account?
Active engagement on particular
topics and receiving letters
from stewardship directors
ofinstitutional investors
Feedback from proxy agencies
andresearch of their voting policies
Recommendations of the FTSE
Women Leaders Review (formerly
Hampton-Alexander Review)
andParker Review
Impact – what actions were taken as
a result of this engagement/taking
concerns into account?
Enhanced Board recruitment
process utilising technology to
widen the pool of candidates
Greater flexibility around candidates’
skill sets, such as considering a
first time NED or candidates from
abroader professional background
Long-term effects of the decision?
Enhanced Board
recruitment process
Strengthened composition of the
Board and diversified thinking
Refreshment of the Board’s
Committee composition
Stakeholders considered
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202272
Broker retender
The Board agreed to review the Company’s broker services as
part of an exercise to review the Company’s advisory line-up four
years since IPO. The Management Engagement Committee led the
retender process, and established a dedicated Sub-Committee to
work alongside the Manager and Akur, the Company’s independent
financial adviser, which led the Request for Proposals (“RFP”) and
pitches stage. The incumbent brokers, along with five alternative
providers, submitted proposals. The Sub-Committee reviewed
the RFP submissions, and completed a Broker Ranking Matrix,
summarising areas of assessment with a “score” out of five, with
a view to creating an initial ranking of candidates’ suitability. The
Sub-Committee then short-listed three new candidates to present
their credentials, alongside the two incumbents. All candidates were
asked to focus their presentations on the following key areas:
• What is the investor perception of the Company?
• What is your view on the Company’s existing strategy? Please
detail your advice around the strategic direction of the Company
inparticular with reference to the Company’s growth strategy.
• What high conviction advice would you give the Company in terms
of actions it should take in order to improve performance and drive
an improvement in Total Shareholder Return? Please consider
specific advice around what order of priority these actions should
be taken and over what timeframe.
• What next steps would you propose to the Company in order
tobroaden and deepen its Shareholder register?
The incumbent brokers were asked to focus on the following
additional area:
• Over the four years since IPO, what do you feel has gone well,
ornot so well in your relationship with the Company? What steps
would you recommend to improve or change this?
The scoring matrix was added to, allowing the Sub-Committee to
additionally score on the points raised above, as well as an additional
field of “chemistry”. Following the presentations a detailed discussion
ensued, weighing up the strengths and weaknesses of the different
parties. The recommendation to the Board was that a combination
of retaining Jefferies and appointing Barclays would provide the
optimum mix of advice.
How were stakeholders’
views taken into account?
Feedback from Shareholders
and analysts
Feedback from the Manager and its
employees through Board meetings
and informal discussions
Long-term effects of the decision?
Opportunity to review feedback
from all candidates and key areas of
focus within the Company’s control
were identified
Impact – what actions were taken
as a result of this engagement/taking
concerns into account?
Broker services were retendered
Rigorous and fair retender process
Other key decisions of the Board
• IMA review
• Establishment of EBOX ESG Committee
• Appointment of SID
• Approval of related party transactions
• €200 million debt placement
Stakeholders considered
Annual Report 2022 Tritax EuroBox plc 73
CORPORATE GOVERNANCE
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.
To read more see pages 1 to 59
Chairman
Role 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
viewsof Shareholders and other stakeholders, and demonstrates
objectivejudgement.
• Promoting a culture of openness and debate.
Senior Independent Director
Role and responsibilities
• Acting as a sounding board for the Chairman and a trusted intermediary
forother Directors.
• Available to discuss with Shareholders any concerns that cannot be
resolved through the normal channels ofcommunication 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.
To read more see pages 36 to 41
The Manager
Role and responsibilities
• Making the final decisions in respect of investments and divestments.
• Financial management.
• Asset management.
• Investor relations.
To read more see pages 36 to 41
Company Secretariat and Compliance
Role 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 Committee. 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.
To read more see pages 74 to 77
Audit & Risk Committee
• Reviewing the integrity of the Group’s financial statements
andanysignificant 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
andGoingConcernStatements.
To read more see pages 84 to 87
Nomination Committee
• Reviewing the Board composition and assessing whether the balance of
skills, experience, knowledge, diversity and independence is appropriate
toenable the Board to operate effectively.
• Managing succession planning and ensuring that the Directors receive
necessary training.
• Board and Committee evaluations.
To read more see pages 78 to 81
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 retenders and new supplier appointments.
To read more see pages 88 to 90
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 theManager.
EBOX ESG Committee
• Chaired by Eva-Lotta Sjöstedt and comprises the full Board.
• 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
andmaking recommendations to the Board.
To read more see pages 51, 61 and 71
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 activity of the Company and making
recommendations to the Board as necessary.
Investment Committee
• Chaired by Phil Redding, comprising Mehdi Bourassi, Henry Franklin,
James Dunlop, Petrina Austin and Colin Godfrey.
• Reviewing and recommending investments and divestments.
• Taking a lead on overall portfolio management (including asset
management) with oversight from the Board.
ESG Committee
• Chaired by Henry Franklin, comprising various members of the Manager.
• Overseeing CSR and sustainability matters.
• Reviewing and making recommendations to the Manager and the
Company’s Board, regarding progress on integrating environmental, social
and governance (“ESG”) factors into business strategy and decision making.
• Overseeing the Manager’s policies in terms of performance, communication
and engagement on CSR 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 various members of the Manager.
• Reviewing the risks that the Manager faces in its operations
andimplementing procedures to mitigate such risks.
• Overseeing the risk assessments made by the Company and other funds to
ensure consistency and to ensure the Company is alerted to any new risks
of the Manager.
Green Finance Committee
(Sub-Committee of the CSR Committee)
• Chaired by the Manager’s CFO, comprising members of
theManager’s finance team and a member of the Manager’s asset
management team.
• Reviewing the Green Portfolio of the Company to confirm that the
assets and projects included in the Green Portfolio meet the criteria
set out.
• Approving the Annual Green Finance Report ahead of circulation
toinvestors.
• Monitoring evolution of the capital markets in terms of disclosure
andreporting in order to be in line with market best practices.
Operations Committee
• Chaired by Henry Franklin.
• Oversight of internal controls of Tritax Management LLP and statutory
audit process.
• Approval of all Tritax Management LLP policies and procedures.
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202274
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.
To read more see pages 1 to 59
Chairman
Role 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
viewsof Shareholders and other stakeholders, and demonstrates
objectivejudgement.
• Promoting a culture of openness and debate.
Senior Independent Director
Role and responsibilities
• Acting as a sounding board for the Chairman and a trusted intermediary
forother Directors.
• Available to discuss with Shareholders any concerns that cannot be
resolved through the normal channels ofcommunication 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.
To read more see pages 36 to 41
The Manager
Role and responsibilities
• Making the final decisions in respect of investments and divestments.
• Financial management.
• Asset management.
• Investor relations.
To read more see pages 36 to 41
Company Secretariat and Compliance
Role 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 Committee. 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.
To read more see pages 74 to 77
Audit & Risk Committee
• Reviewing the integrity of the Group’s financial statements
andanysignificant 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
andGoingConcernStatements.
To read more see pages 84 to 87
Nomination Committee
• Reviewing the Board composition and assessing whether the balance of
skills, experience, knowledge, diversity and independence is appropriate
toenable the Board to operate effectively.
• Managing succession planning and ensuring that the Directors receive
necessary training.
• Board and Committee evaluations.
To read more see pages 78 to 81
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 retenders and new supplier appointments.
To read more see pages 88 to 90
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 theManager.
EBOX ESG Committee
• Chaired by Eva-Lotta Sjöstedt and comprises the full Board.
• 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
andmaking recommendations to the Board.
To read more see pages 51, 61 and 71
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 activity of the Company and making
recommendations to the Board as necessary.
Investment Committee
• Chaired by Phil Redding, comprising Mehdi Bourassi, Henry Franklin,
James Dunlop, Petrina Austin and Colin Godfrey.
• Reviewing and recommending investments and divestments.
• Taking a lead on overall portfolio management (including asset
management) with oversight from the Board.
ESG Committee
• Chaired by Henry Franklin, comprising various members of the Manager.
• Overseeing CSR and sustainability matters.
• Reviewing and making recommendations to the Manager and the
Company’s Board, regarding progress on integrating environmental, social
and governance (“ESG”) factors into business strategy and decision making.
• Overseeing the Manager’s policies in terms of performance, communication
and engagement on CSR 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 various members of the Manager.
• Reviewing the risks that the Manager faces in its operations
andimplementing procedures to mitigate such risks.
• Overseeing the risk assessments made by the Company and other funds to
ensure consistency and to ensure the Company is alerted to any new risks
of the Manager.
Green Finance Committee
(Sub-Committee of the CSR Committee)
• Chaired by the Manager’s CFO, comprising members of
theManager’s finance team and a member of the Manager’s asset
management team.
• Reviewing the Green Portfolio of the Company to confirm that the
assets and projects included in the Green Portfolio meet the criteria
set out.
• Approving the Annual Green Finance Report ahead of circulation
toinvestors.
• Monitoring evolution of the capital markets in terms of disclosure
andreporting in order to be in line with market best practices.
Operations Committee
• Chaired by Henry Franklin.
• Oversight of internal controls of Tritax Management LLP and statutory
audit process.
• Approval of all Tritax Management LLP policies and procedures.
Annual Report 2022 Tritax EuroBox plc 75
CORPORATE GOVERNANCE
Division of Responsibilities continued
The Chairman and the Senior Independent Director
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 76. The Chairman has been in post for four 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 62 and the Company
website. The Board believes he continues to dedicate sufficient time
to his chairmanship of the Company.
Keith Mansfield was the SID for the period. Keith and the other
Directors met during the year, without the Chairman, to appraise
hisperformance. In December 2022, Sarah Whitney was appointed
as SID. For further information on the role of the SID, please refer
tothe Company’s website.
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, 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
inmind wider stakeholder interests.
Directors’ biographies are set out on pages 62 and 63. 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 9February 2023.
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 2022 are included in the Directors’
Remuneration Report on page 91.
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 eight scheduled Board meetings including
a strategy meeting, plus six further ad hoc meetings which dealt
with transactional and other specific events such as related party
transactions and the broker retender.
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,
particularly representatives from Jefferies, Barclays, Akur and
Ashurst LLP (the “legal adviser”).
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
hasa direct or indirect interest that may conflict with the interests
ofthe 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
inrespect of the relevant business.
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202276
Board reporting
Following the initial July 2021 workshop with Board Intelligence
(“BI”) to review the Board and Committee packs, Board
Intelligence provided recommendations on how Board
papers could be further improved to align to BI’s best in
class reporting template. Clearer and more concise reports
were implemented across the business which has helped to
further refine and focus Board reporting. During the period this
work continued with further refinement of template reports,
including the addition of a stakeholder impact section and
new employees of the Manager undertook the BI workshop.
The Manager continues to work with BI to develop further
efficiencies in corporate reporting and utilise the knowledge
and resources of the BI offering.
Attendance at Board and Committee meetings
during the year ended 30 September 2022
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 tomeet
theircommitments.
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 6/7 4/4
Audit & Risk Committee N/A 7/7 7/7 3/3 4/4
Management
Engagement Committee 2/2 2/2 2/2 2/2 1/1
Nomination Committee 2/2 2/2 1/1 1/1 N/A
Strategy meeting 1/1 1/1 1/1 1/1 1/1
* Sarah Whitney was appointed to the Board effective 14 February 2022.
The Committee membership was refreshed following Sarah Whitney’s
appointment to the Board.
Q&A with Sarah Whitney,
Non-Executive Director
What were the key components of your induction?
As part of my induction, I was invited to meet with all members of
the Board and several of the key representatives of the Manager
including the Company Secretary, CEO, CFO, Head of Asset
Management and ESG Director, amongst others. I also met with the
Company’s key advisers and was updated on key workstreams and
projects. The Secretariat prepared a comprehensive induction pack
which included previous minutes, governance agreements, insurance
documentation, policies, the AIC Code, Terms of References,
information on listing and disclosure and transparency rules as
well as organisation charts and other constitutional documents.
The meetings, pre-reading and asset visit to Benelux allowed me
to develop a detailed understanding of the business in preparation
forthe first round of Board and Committee meetings.
How did the induction prepare you to discharge
yourduties?
During my meetings with key personnel from within the business,
Iwas provided with a clear overview of the Company’s purpose and
strategy as well as views and thoughts on the priorities, challenges,
and opportunities facing the Company over the coming period. The
induction allowed me to get to grips with the nuances of an externally
managed Company, the key stakeholders and the governance and
controls framework in which the business operates. The induction
provided an important foundation, which has helped me build further
knowledge of the sector and has supported detailed discussions and
relationship building with both my fellow Board members and the
Manager since my appointment in February 2022.
What did I learn from my induction?
Throughout the induction process, I was able to develop a greater
understanding of the quality and diversity of the Company’s portfolio,
as well as learning about the breadth of tenants and geographical
spread of the assets. Through discussions with the Manager, it has
reinforced the value and importance of providing high-quality asset
management. It is evident that ESG remains crucial to the business
model and there is a clear focus by management on the importance
of meeting those ESG obligations for both the Company and
customers alike.
Annual Report 2022 Tritax EuroBox plc 77
CORPORATE GOVERNANCE
Nomination Committee Report
Robert Orr
Chair of the Nomination Committee
“ Succession planning and
addressing Board diversity
will be the key focus for
Dear Shareholders,
I am pleased to present the Nomination Committee Report for
theyear ended 30 September 2022. The Nomination Committee’s
focus during the period was on reviewing the Board’s composition,
succession planning and Board evaluation output. We were pleased
to welcome Sarah Whitney to the Board on 14 February 2022,
following a rigorous recruitment process, further details of which
canbe found on page 5.
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
fortwoscheduled 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, 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
Boardevaluation.
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
ofeach Director and implement succession planning accordingly.
Board diversity and inclusion
The Board was pleased to meet the recommendations set out in the
FTSE Women Leaders Review (which follows the Hampton-Alexander
Review) during the period and is mindful of the Parker Review targets
and recognises that this has become an area of even greater focus
for the Company since entering the FTSE 250. As at the date of this
report the Board consisted of two female and three male Directors,
meaning we have achieved the 40% female Board representation
requirement. 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 will include a statement in its Annual Report
confirming whether such Diversity Targets are achieved and, if not,
will provide an explanation as to why they have not been achieved.
The Board is not looking to appoint an additional Director at this
Membership
Robert Orr (Chair)
Taco de Groot (until 14 February 2022)
Eva-Lotta Sjöstedt (from 14 February 2022)
Keith Mansfield
For full details on Committee attendance please refer to page 77
Key areas of focus in 2021/2022:
• the size, structure and composition of the Board;
• succession planning, including the appointment of Sarah
Whitney to the Board;
• Board and Committee performance evaluation;
• the proposal for re-election of the Directors at the AGM which
we plan to hold on 9 February 2023; and
• refresh of the Board Diversity and Inclusion Policy.
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202278
time due to the size and corporate structure of the Company, but is
mindful of the new Listing Rule regulations and will consider these
requirements during the next recruitment process. 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
Company’s Diversity and Inclusion Policy. The Policy was refreshed
in September 2022 to take into account the new Listing Rule
Diversity Targets. We believe that the Board has a balance of skills,
qualifications and experience which are relevant to the Company.
TheCompany believes in the value and importance of cognitive
diversity in the boardroom.
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. During the period, the Board received regular training
on corporate governance developments and financial regulatory
changes and held training sessions on European Construction and
Supply Chains. The Board also received formal training sessions and
updates from the Company’s external service providers as well as the
Manager’s Head of Research and ESG Director.
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.
For further information on training completed throughout the period
please refer to page 66.
Committee evaluation
The overall performance of the Nomination Committee was rated
highly, particularly its performance in reviewing the composition
of the Board. Board diversity continues to be an area of
development for 2023.
Outlook for 2022/2023
We will continue to monitor and evaluate Board composition to
ensure that the Board has the right balance of skills, experience
andknowledge to carry out its duties.
Robert Orr
Chair of the Nomination Committee
5 December 2022
1.
Agreed essential and desired competencies of a successful candidate
in the form of a Candidate Profile and liaised with Nurole to prepare
theRole Profile.
4.
The Directors, as well as key representatives of the Manager, met
with each candidate, followed by a thorough assessment of each
candidateinterviewed.
2.
Nurole’s platform notified all members who wanted to hear about roles
like ours and members could recommend other great candidates from
their own networks. The team at Nurole also reached out to suitable
candidates not on the platform.
5.
Following a rigorous interview process, Sarah Whitney was appointed
with effect from 14 February 2022.
3.
Candidates submitted detailed evidence against each of the required
competencies. Nurole then created a long-list for the Committee’s
review. The Committee approved a short-list of candidates who were
invited to interview.
6.
Bespoke NED Induction Programme created for Sarah. Further details
ofthis can be found on page 77.
Overview of recruitment process
Annual Report 2022 Tritax EuroBox plc 79
CORPORATE GOVERNANCE
Nomination Committee Report continued
Board performance and evaluation
The Board’s policy is to carry out an evaluation of the Board,
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, supported in part
byBoard Intelligence.
Actions from the evaluation
As part of the Board evaluation and strategy session a set of key actions were agreed by the Board and Manager to support the refinement
of the ESG, portfolio and asset management and communication strategies, in addition to supporting the delivery of our key short-term
priorities including reducing costs and providing for an improved dividend cover.
The Board will also focus on monitoring the skills and diversity of the Board with a view to meeting the expectations of the Parker
Review by the end of 2024 and in its wider Board succession planning.
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. This year we also included
some further questions around the specific strategic priorities
of the Board and Company. Please see below for the Board
evaluation process.
Secretariat and Chairman discussed
the key focus andpurpose of
the evaluation
Submissions were coordinated by
Board Intelligence intoadraft Report
Secretariat and Chairman agreed
the questions
Secretariat and Board Intelligence
finalised Report whichwaspresented
at a Board meeting
Questions were uploaded
intoanonline questionnaire
byBoardIntelligence
Secretariat formulated some key
actions fortheBoardto monitor
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202280
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 for
the first time this year 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.
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
theCompany’s strategic priorities.
The Board recognised the need to increase female
representation on the Board as well as succession planning
for an additional financial expert. As part of the recruitment
search in 2022, we appointed Sarah Whitney, who is a fellow
of the Institute of Chartered Accountants with an extensive
career advising boards on strategy, corporate finance and
real estate matters. In addition, the Board will take steps to
increase its ethnic diversity in future appointments. As at
thedate of this report, 40% of the Board are 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 Company continues to review
its Diversity and Inclusion Policy, as well as its training
and development programme to ensure an inclusive and
well-balanced Board.
Actions to help us get there
During the period, the Company engaged Nurole to assist in the NED recruitment search which widened the pool of potential
candidates from different genders, ethnicities and socio-economic backgrounds. The Committee also refreshed and expanded the
Board Diversity and Inclusion Policy in line with Listing Rule recommendations. The Committee will continue to monitor the skills
and diversity of the Board and endeavour to meet the expectations of the Parker Review by the end of 2024 and in its wider Board
succession planning.
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, who are 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 Directors Questionnaire.
Annual Report 2022 Tritax EuroBox plc 81
CORPORATE GOVERNANCE
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 44 to 50 of the Strategic Report.
The Audit & Risk Committee reviewed the principal and emerging
business risks of the Company on behalf of the Board, as described
on pages 82 and 83.
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 and Compliance also assists with
the discharge of the Manager’s obligations in accordance with
the AIFMD.
Risk management and internal controls review
andprocesses
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 44 to 50.
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 September 2022.
The Company is managed externally by the Manager. All payments
ofCompany 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 83. 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.
Inaddition 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 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 50 for more
details on emerging and principal risks.
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202282
The Manager also reports to the Board twice a year over 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
andcontrolling risk. The Manager also maintains a risk register,
where perceived risks and associated actions are recorded, and
thisis regularly shared with the Board for approval. For further
detailsof the Manager’s Risk Committee please refer to page 75.
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
interests and anti-money laundering which is provided through
ThistleInitiatives Limited.
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. 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 shareholding 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 2022 our work included
the review of nine investment property acquisitions, four
property income dividends, two management share issues
and one third-party borrowing (note purchase). 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
5 December 2022
Langham Hall UK Depositary LLP is a limited liability
partnership registered in England and Wales
(withregisterednumber OC388007).
Annual Report 2022 Tritax EuroBox plc 83
CORPORATE GOVERNANCE
Audit & Risk Committee Report
Keith Mansfield
Chair of the Audit & Risk Committee
Dear Shareholders,
I am pleased to present the Audit & Risk Committee Report
fortheyear ended 30 September 2022.
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 were pleased to welcome Sarah Whitney to
the Committee during the period and believe she will be a valuable
addition to the Board.
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.
Iam 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 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.
Assuch, we consider 67% of the Committee to have significant
financial experience. Further details of each Director’s experience
canbe found in the biographies on pages 62 and 63.
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 independent valuer,
JLL, as part of the interim review and year-end audit processes.
Membership
Keith Mansfield (Chair)
Taco De Groot
Eva-Lotta Sjöstedt (until 14 February 2022)
Sarah Whitney (from 14 February 2022)
For full details on Committee attendance please refer to page 77
Key areas of focus in 2021/2022:
• reviewed and recommended to the Board that the Annual
Report 2021 and Interim Accounts 2022 be approved;
• 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;
• 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 independent valuer
and challenged the assumptions used by the valuer in
preparing the valuation;
• reviewed and considered the basis of the Viability
andGoingConcern Statements made by the Directors;
• reviewed and monitored the Company’s relationship
withits Auditor;
• reported to the Board on how the Committee discharged
itsresponsibilities;
• evaluated the Company’s key climate-related risks
inpreparation for TCFD reporting;
• oversight of ESEF reporting;
• monitored development of the BEIS audit reform;
• reviewed the accounting and reporting implications
ofchanges in standards or best practice; and
• monitored the impact of Covid-19 on the performance
oftheCompany and its stakeholders.
“ We are pleased to have reported
on the Task Force on Climate-
Related Financial Disclosures
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202284
AstheCommittee Chair, Ihave 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 formalCommittee meetings.
The Company agreed a new private placement of €200 million senior
unsecured notes in December 2021 which was used to assist in
the acquisition of further investment opportunities and deployed
in conjunction with the €250 million of new equity raised by the
Company in September 2021. The Company has allocated over
90% of the proceeds from the Green Bond issuance in June 2021
to eligible green initiatives. The Company reported against this for
the first time in June 2022 and the full report can be found on the
Company’s website. The Company also instructed PwC to provide an
independent limited assurance report in accordance with ISAE 3000
which can also be found on the Company’s website.
Task Force on Climate-Related Financial
Disclosures (“TCFD”)
We welcome the Task Force on Climate-Related Financial Disclosures
(“TCFD”) as a vital step in increasing stakeholders’ and companies’
focus on climate change. The Company has engaged CBRE ESG
Consulting, to assist in our scenario planning and embedding climate
risk into our current risk framework. The Manager’s Executive
Committee conducts the initial review into the Company’s risks
including climate-related risks and reports up to the Committee
which maintains overall responsibility for climate risks facing the
business and advises the Board accordingly. Please refer to pages
51 to 58 for our 2022 TCFD disclosure.
ESEF
The Committee has been kept abreast on the new requirement to
prepare the Company’s consolidated financial statements in digital
form under the European Single Format regulatory standard (“ESEF
RTS”). The Company has appointed Arkk, a qualified provider, for the
preparation of the Annual Report for the first time in 2022.
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
instandards or best practice;
• evaluated the Company’s key climate-related risks in preparation
for TCFD reporting;
• monitored the impact of Covid-19 on the performance of the
Company and its customers; 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.
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 nine acquisitions in the
period, all were considered to be asset acquisitions.
Valuation of property portfolio
The property portfolio is independently valued by JLL biannually.
Following production of the draft valuation by JLL, the Manager
meets with JLL to discuss and challenge various elements of the
property valuation, if necessary. The Auditor, in fulfilling its function
asindependent Auditor to the Company, also meets with JLL 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 JLL to discuss the property valuations.
The Group has property assets valued at approximately €1.77billion
as explained in note 14 to the financial statements; JLL has
independently valued the properties applying the principles of both
IAS 40 “Investment Property” and IFRS 13 “Fair Value Measurement”.
The Committee met with the valuer in April and October 2022, 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 JLL and have concluded
thatboth valuations are appropriate.
Annual Report 2022 Tritax EuroBox plc 85
CORPORATE GOVERNANCE
Fair, balanced and understandable
financialstatements
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 2021, 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
2022, 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.
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. During the period, the Manager carried out
an internal controls review on behalf of the Company which was
undertaken by an independent financial controller from an alternative
Tritax fund. The scope of the review involved ensuring payments
were being paid in line with budgets, a review into signatory lists
and reviewers and a review to see if all paid invoices had been paid
and uploaded correctly. The review highlighted no major issues and
a couple of minor procedural points were to be documented. The
findings were reported to the Committee in the November Audit &
Risk Committee meeting.
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 four 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 with a mandatory audit
firm retender after ten years. 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
andMarkets Authority’s Order in the year.
Audit & Risk Committee Report continued
Audit process
1.
Planning
meeting
3.
Challenge
4.
Ongoing
review
2.
Scope
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,
whereappropriate, continues to challenge and seek comfort
fromthe Auditor over those areas which drive audit quality.
4. Ongoing review
We meet with the Auditor again just prior to the conclusion
ofthe review or audit to consider, challenge and evaluate
itsfindings in depth.
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202286
Non-audit services
The Committee has adopted a Non-Audit Services Policy which
was refreshed during the year to ensure appropriate controls around
identifying any non-audit services being provided by KPMG on new
entities. We also took the opportunity to refresh the policy in line with
best practice, using KPMG’s specimen policy as a template. As a
general rule, it is not expected that the Auditor will be engaged for
non-audit services other than to review the half year report. In limited
circumstances, it may be appropriate to use the Auditor for permitted
non-audit services subject to prior approval by the Committee above
a certain threshold.
The Company paid £65k in fees to the Auditor for non-audit services
during 2022. These fees are set out in the table below.
Work undertaken Rationale for using external Auditor
2022
fee (£)
Interim Review Work is normally performed
by an external Auditor 65,000
Total 65,000
Non-audit 10%
Audit 90%
Ratio of audit to
non-audit services
Non-audit fees as a percentage of total fees paid to KPMG for the
financial year to 30 September 2022 were 10% (2021: 22.7%). 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.
Outlook for 2022/2023
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.
TheCommittee will also continue to monitor the developments in
theaudit reform and continue to embed climate reporting into the
riskmanagement framework.
Keith Mansfield
Chair of the Audit & Risk Committee
5 December 2022
Annual Report 2022 Tritax EuroBox plc 87
CORPORATE GOVERNANCE
Management Engagement Committee Report
Taco De Groot
Chair of the Management Engagement Committee
Dear Shareholders,
I am pleased to present the Management Engagement Committee
Report which covers the period to 30 September 2022. During the
period, the Committee reviewed the Manager’s performance, as well
as its key suppliers, in line with the framework established in the
prior year.
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 retender 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, and whether additional services were provided over and
above that ofthe previous year. The Committee is also responsible
for overseeing any amendments to the Investment Management
Agreement (“IMA”). During the review period, the Committee focused
on reviewing and updating the IMA and the broker retender. We met
for two scheduled meetings in the year ended 30 September 2022.
I also met independently with representatives of the Manager and
the Company Secretary to discuss the framework, management
ofsuppliers and assessment of the Manager’s performance.
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.
During the period the Committee agreed to review and retender
the Company’s corporate broker services which resulted in the
appointment of Barclays as joint corporate broker. For further details
please refer to the key decisions of the Board on pages 72 and 73.
In addition, the Company retendered the Company’s depositary
services and appointed Kekst CNC as the Company’s corporate
communications agency.
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 other than those outlined above. 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.
Details of the Company’s performance during the period are set out
in the Strategic Report on pages 2 and 24 to 27.
Membership
Taco De Groot (Chair)
Robert Orr
Keith Mansfield
Eva-Lotta Sjöstedt
Sarah Whitney (from 14 February 2022)
For full details on Committee attendance please refer to page 77
Key areas of focus in 2021/2022:
• embedding the framework of future Committee reporting;
• annual review of each service provider to ensure the quality
ofservice and value for money;
• comprehensive review of the Manager’s performance;
• IMA review; and
• broker retender.
“ We were delighted to finalise
the review of the IMA and
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202288
Depositary tender
In August 2022, the incumbent depositary provider was
tendered to benchmark the fees and level of service currently
being provided. The services have not been tendered since
the Company’s IPO in 2018. The Manager undertook the
tender on behalf of the Committee given the close working
relationship and invited five providers including the incumbent
to submit proposals for the provision of depositary services
and Annex IV reporting. Following an initial review, a shortlist
of providers was invited to present to certain representatives
of the Manager including representatives from the finance and
secretariat teams. Following the pitch presentations, it was
decided to retain Langham Hall. The Committee believes that
the key outcomes of the tender include additional controls
andprocesses, reduced costs and improved performance
andefficiencies.
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 an ESG Director, Head of
People Development, Director of Marketing and Communications
anddedicated Asset Manager.
IMA terms review
During the period, the Board worked closely with the Manager to
identify ways to both reduce costs and to ensure that the Company
had the right skills and resources in place to deliver returns to
Shareholders over the long term. A key element of this was the
renegotiation of the terms of the Investment Management Agreement
(“IMA”). The Manager provided a proposal for the Committee’s review.
• The Committee met without the Manager present and received
advice from the Company’s advisers.
• A number of formal and informal meetings were held to negotiate
the terms with the Manager.
As a result of the negotiations, the key changes to the IMA are:
• A reduction in the base management fee to 1.00% on Net Asset
Value (“NAV”) up to €1 billion and 0.75% on NAV above €1 billion.
• Property management services procured by the Manager will now
be reinvoiced directly to the Company and, hence, fees relating
tosuch services will be paid by the Company.
• The amended fee was back-dated becoming effective from
1August 2022.
• The Manager will continue to apply 10% of the management fee to
the purchase of Company shares and allocate those shares to the
Manager’s Partners, its staff and abrdn. The Manager is restricted
from selling for 12 months following their purchase.
• The provision of ESG services is now enshrined in the IMA.
• A new 18-month fixed term effective from the date of the General
Meeting after which the Company would have a two-year
rolling notice.
The IMA still contains provisions allowing the parties to terminate
without notice in certain circumstances which include material breach
and/or loss of key personnel. The revised IMA supports the delivery
of the Company’s strategic objectives and will support the delivery
of our key short-term priorities of reducing costs and providing for an
improved dividend cover through a net reduction in the fees payable
by the Company under the IMA. Based on the last reported NAV at
30 September 2022, the changes would result in a net c.€2.1million
reduction in the annual costs to the Company.
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.
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”) (see
below for further detail). 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, Ordinary 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.
Annual Report 2022 Tritax EuroBox plc 89
CORPORATE GOVERNANCE
Management fee continued
On 17 December 2021, the Manager purchased 50,000 Ordinary
Shares in the market and the Company issued a further 110,606
Ordinary Shares to the Manager (which were allocated to the
Manager’s Partners, its staff and abrdn following its acquisition of
60% interest in the Manager in April 2021) in respect of the net cash
amount, relating to the six-month period to 30September 2021.
The purchase price was 110.60 pence per Ordinary Share and the
issue price was 111.00 pence per Ordinary Share, respectively,
compared to the prevailing and latest published NAV of €1.31per
Ordinary Share.
On 17 May 2022, the Manager purchased Ordinary Shares in the
market and allocated 213,043 to the Manager’s Partners and its staff
and abrdn in respect of the net cash amount, relating to the six-month
period to 31 March 2022. The purchase price was 98.3 pence per
Ordinary Share.
Following the purchase of Ordinary Shares, the Manager had the
following beneficial interests as at 5 December 2022:
PDMR or person closely associated
Number
of Ordinary
Shares held*
Percentage of
issued share
capital*
Colin Godfrey 365,644 0.0453%
James Dunlop 365,643 0.0453%
Henry Franklin 245,619 0.0304%
Phil Redding 17,674 0.0022%
Petrina Austin 37,202 0.0046%
Tritax Management LLP — —
Partners and staff of Tritax
Management LLP
1
292,473 0.0363%
Total 1,324,255 0.1641%
1 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
30September and 5 December 2022.
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.
Itregulates 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 the 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 89. 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 renegotiation
of the IMA between the Manager and the Company.
Outlook for 2021/2022
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
5 December 2022
Management Engagement Committee Report continued
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202290
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. No remuneration decisions have taken place in the year. The Directors’ remuneration is disclosed below. The Remuneration
Report and Remuneration Policy will be presented at the AGM on 9 February 2023 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 13 February 2020 and will be presented for approval at the Company’s AGM in 2023. The Remuneration Policy, if approved, shall take
effect from the end of that meeting.
The Directors are entitled to their annual fee and reasonable expenses. No element of the Directors’ remuneration is performance related,
nordoes 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. There were no
revisions to the policy during the period.
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.
External adviser
The Board has access to sufficient resources to discharge its duties.
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 5 Dec 2022 Notice period
Robert Orr 5 June 2021 5 June 2024 18 months 3 months
Keith Mansfield 5 June 2021 5 June 2024 18 months 3 months
Taco De Groot 5 June 2021 5 June 2024 18 months 3 months
Eva-Lotta Sjöstedt* 10 December 2022 10 December 2025 36 months 3 months
Sarah Whitney 14 February 2022 14 February 2025 26 months 3 months
* Eva-Lotta Sjöstedt’s renewal was approved on 5 December and will expire on 10 December 2025.
The fees and expenses paid to the Directors in the year to 30 September 2022, 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 2022 totalled £15,561 (2021: £2,118). No other remuneration was paid or payable during the year to
any Director. There have been no payments to past Directors.
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
2022 2021 2022 2021 2022 2021 2022 2021 Directors
Director (£) (£) (£) (£) (£) (£) (£) (£) remuneration
Robert Orr 70,000 70,000 2,676 — 874 1,447 73,550 71,447 0.00%
Keith Mansfield 50,000* 46,250 1,792 — 1,940 384 53,732 46,634 7.50%
Taco De Groot 45,000 * 41,250 1,945 — — — 46,945 41,250 8.33%
Eva-Lotta
Sjöstedt 45,000* 41,250 1,391 — 3,552 286 49,943 41,536 8.33%
Sarah Whitney
1
28,154 — 1,391 — — — 29,545 — 100%
Total 238,154 198,750 9,195 — 6,366 2,117 253,715 200,867 —
* Increase due to the updated NED fee as at 1 July 2021, which was pro-rated for the 2021 period.
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 year. The above table is presented in Sterling.
Annual Report 2022 Tritax EuroBox plc 91
CORPORATE GOVERNANCE
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
AGMsheld on 13 February 2020 and 10 February 2022, respectively. The voting on the respective resolutions was as shown below:
Resolution For %* Against %
Votes
withheld
Directors’ Remuneration Policy
1
100.00% 0% 1,455
Directors’ Remuneration Report
2
99.97% 0.03% 71,109
* Including votes in favour and discretion.
1 Voting as at AGM held 13 February 2020.
2 Voting as at AGM held 10 February 2022.
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.
Directors’ Remuneration Report continued
-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
May 21
Jan 22
Jan 21
Sep 21
Jul 22
Sep 22
EBOX LN Equity = GBP
EPRA Index = EUR
FTSE SmallCap
FTSE RE Index
FTSE All-Share
EPRA Index = GBP
FTSE 250
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202292
Directors’ shareholdings (audited)
There is no requirement for the Directors of the Company to own shares in the Company. As at 5 December 2022, the Directors and their
persons closely associated held the shareholdings listed below.
Dividends
received
Percentage 30 September
Number of of issued 2022
Director shares held* share capital €
Robert Orr 192,560 0.024% 4,714
Keith Mansfield 290,000 0.036% 14,500
Taco De Groot 42,000 0.005% 2,100
Eva-Lotta Sjöstedt 6,900 0.001% 345
Sarah Whitney 32,248 0.004% 403
* Includes shareholdings of Directors and persons closely associated (as defined by the EU Market Abuse Regulation). The shareholdings of these Directors
arenot significant and, therefore, do not compromise their independence.
Relative importance of spend on pay (audited)
2022 2021 Change
€m €m %
Directors’ remuneration* 0.32 0.24 33.33%
Investment management fees* 11.86 7.88 50.51%
Dividends paid to Shareholders 40.34 25.30 59.45%
* 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
Chairman
5 December 2022
Annual Report 2022 Tritax EuroBox plc 93
CORPORATE GOVERNANCE
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 2022.
The Directors’ Report and the Strategic Report comprise the
“Management Report” for the purposes of Disclosure Guidance
andTransparency Rule 4.1.5R.
Statutory information contained elsewhere
intheAnnual Report
Information required to be part of this Directors’ Report can be found
elsewhere in the Annual Report and is incorporated into this report
byreference, as indicated in the relevant section.
Information Location in Annual Report
Directors Pages 62 and 63
Section 172 Pages 21 to 23
Business relationships Pages 1 to 59
Directors’ interest in shares Page 93
Future developments of the Company Page 20
Financial instruments Note 4.4. on page 110
Corporate Governance Statement Pages 60, 67 and 68
Going concern and viability Page 59
Disclosure of information to Auditor Page 95
Share capital Page 94
TCFD Page 51
SECR reporting Page 34
Incorporation by reference
The Governance Report (pages 60 to 96 of this Annual Report and
Accounts for the year ended 30 September 2022) is incorporated
byreference 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 104.
The following interim dividends amounting to, in aggregate, 5.00
pence per Ordinary Share, were declared in respect of the year
ended 30 September 2022.
On 10 February 2022, we declared an interim dividend in respect of
the period from 1 October 2021 to 31 December 2021 of 1.25 cents
per Ordinary Share, paid on 14 March 2022 to Shareholders on the
register on 18 February 2022.
On 17 May 2022, we declared an interim dividend in respect of
the period from 1 January 2022 to 31 March 2022 of 1.25 cents
per Ordinary Share, paid on 24 June 2022 to Shareholders on the
register on 27 May 2022.
On 9 August 2022, we declared an interim dividend in respect of the
period from 1 April 2022 to 30 June 2022 of 1.25 cents per Ordinary
Share, paid on 9 September 2022 to Shareholders on the register on
19 August 2022.
A fourth interim dividend in respect of the three months ended
30September 2022 of 1.25 cents per Ordinary Share will be declared
on 6 December 2022, payable on 13 January 2023.
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
On 17 December 2021, the Company issued 110,606 Ordinary
Shares at a price of 111 pence per Ordinary Share in accordance
with the Investment Management Agreement between the Company
and the Manager.
As at 5 December 2022, there were 806,803,984 Ordinary
Shares in issue.
Number
Gross
proceeds
€
Balance at the start of the year 806,696,378 N/A
Shares issued in accordance with
the terms of the Investment
Management Agreement 110,606 N/A
Balance at the end of the year 806,803,984 N/A
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
arestriction on shares, to prevent the Company or the Manager
breaching any law or regulation.
The Company is not aware of any agreements between holders
ofsecurities that may result in restrictions on transferring securities
inthe 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 14 November 2022, 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 14 November 2022, the issued share capital
remained the same as at 30September 2022 with 806,803,984
shares in issue.
Shareholder name 14 November 2022 %
Aviva Investors 66,880,024 8.29
CCLA Investment Management 41,870,050 5.19
BlackRock 33,550,207 4.16
EFG Harris Allday, stockbrokers 29,154,294 3.61
Evelyn Partners 27,338,887 3.39
Close Brothers Asset Management 26,943,370 3.34
Fidelity International 25,264,163 3.13
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202294
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
forthe financial year ending 30 September 2023.
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 88 to 90.
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 114.
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 9 February 2023.
This report was approved by the Board on 5 December 2022.
Tritax Management LLP
Company Secretary
5 December 2022
Company registration number: 11367705
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.
Powers in relation to the Company issuing its shares
At the AGM held on 10 February 2022, 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
forcash 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 2021 AGM. These authorities expire at the next AGM on 9
February 2023 or 15 months after the date of the previous AGM.
Change of control
Under the Group’s financing facilities, any change of control at
the borrower or immediate Parent Company level may trigger
arepayment of the outstanding amounts to the lending banks
orinstitutions.
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
pages78 to 81.
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.
Annual Report 2022 Tritax EuroBox plc 95
CORPORATE GOVERNANCE
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
beenprepared 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
TDESEF 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
Chairman
5 December 2022
CORPORATE GOVERNANCE
Tritax EuroBox plc Annual Report 202296
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 97
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 2022 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 note 2 to 4 and note 1 of the Group and Company 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 30 September 2022
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 committee.
We were first appointed as auditor by the directors on 11 December 2018. The period of total uninterrupted engagement is for the four
financial years ended 30 September 2022. 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
€18.80m (2021: €12.28m)
1% (2021: 0.75%) of total Group assets
Coverage 100% (2021: 100%) of total Group assets
Key audit matters vs 2021
Recurring risks Group: Valuation of investment properties
Parent: Recoverability of investment in subsidiaries and amounts receivable
from Group companies
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 (unchanged from 2021), 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
thatopinion, and we do not provide a separate opinion on these matters.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 202298
Independent Auditor’s Report continued
To the members of Tritax EuroBox plc
2. Key audit matters: our assessment of risks of material misstatement continued
The risk Our response
Valuation of
investment
properties
(Group)
€1,765.60
million (2021:
€1,281.38 million)
Refer to page 85
(Audit Committee
Report), page 110
(accounting policy)
and pages 117
to 120 (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, Jones
Lang LaSalle (“JLL”), and held at fair value at the
balance sheet date.
The fair value includes subjective selection
of assumptions, most significantly the
estimated rental value and theyield. 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, including
the price paid by the Group for properties in the
current year, 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
has increased given the current macro
economicenvironment. Transaction yields
versus cost ofdebt gap have narrowed,
causing parts of themarket to slow down. High
inflation, fallingconsumer confidence, rising
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
thesensitivity 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 JLL’s objectivity,
professional qualifications and experience through discussions
with them and analysing their valuation report;
• Methodology choice: We critically assessed the
methodologies used by the valuer by considering whether
thevaluation report is 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, value of individual properties, movements in yield
rates, country specific risks and an analysis of tenancies. With
the assistance of our own property valuation specialist, we held
discussions with JLL 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 properties under development, we
assessed the progress of the development and evaluated
assumptions over future construction costs, by agreeing them
toconstruction contracts and management’s project appraisals.
• We assessed the terms of the development agreements,
andhow the associated costs of development were
considered by the valuers.
• We evaluated the Manager’s assessment of the financial
strength of the developers against the latest available financial
information and performed inquires with the developers.
• 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 (2021: acceptable)
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 99
The risk Our response
Recoverability
ofinvestment
insubsidiaries
and amounts
receivable from
Group companies
(Parent)
€1,525.40 million
(2021:
€1,093.14 million)
Refer to page 85
(Audit and Risk
Committee Report),
page 130 (accounting
policy) and pages
131 and 132 (financial
disclosures).
Low risk, high value
The carrying amount of the Parent Company’s
investment in and amounts receivable from
its subsidiaries represents 98.08% (2021:
78.75%) of the Parent Company’s total assets.
The recoverability does not a have high risk
of significant misstatement and is not subject
to significant judgement. However, due to the
materiality of the investment and receivable in
the context of the Parent Company financial
statements, this is the area that had the
greatest effect on our Parent Company audit.
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. We assessed 100% of group receivables to
identify, with reference to the relevant subsidiaries’ draft balance
sheet, whether they have a positive net asset value and therefore
coverage of the debt owed.
Our results
• We found the recoverability of investment in subsidiaries and
amounts receivable from Group companies and the related
impairment charge to be acceptable (2021: acceptable)
3. Our application of materiality and an overview
ofthe scope of our audit
Materiality for the Group financial statements as a whole was
set at €18.80 million (2021:€12.28 million), determined with
reference to abenchmark of total Group assets of €1,894.92million
(2021:€1,629.81 million), of which it represents 1% (2021: 0.75%).
In the prior year, the percentage applied to our benchmark for both
the Group and parent company reflected changes in the Group
and Parent’s debt and capital structure in the year and the large
cash surplus not yet deployed for operational purposes. We have
increased the percentage applied to our benchmark this year to
reflect stabilisation of these matters.
In addition, we applied materiality of €1.51 million (2021:€1.25 million)
to these specificcomponents 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 €15.55million(2021:€10.43 million), determined with
reference to a benchmark of Company total assets of €1,555.16 million
(2021:€1,396.32 million), of which it represents 1% (2021: 0.75%).
Performance materiality was set at 65% (2021: 65%) of materiality
for the financial statements as a whole, which equates to €12.2
million (2021: €7.98 million) for the Group and €10.11 million (2021:
€6.78 million) for the parent company. 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 theprior period.
We agreed to report to the Audit Committee any corrected or uncorrected
identified misstatements exceeding €0.94 million (2021: €0.61 million) or
€0.10 million (2021: €0.10 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
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022100
Total Group assets
€1,894.92m (2021: €1,629.81m)
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
asthe key valuation assumptions and estimates may be impacted
byclimate 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
51 to 58, 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.
Group revenue Group profit before tax Group total assets
Group Materiality
€18.80m (2021:€12.28m)
€18.80m
Whole financial
statements materiality (2021:€12.28m)
€12.2m
Whole financial statements performance materiality (2021:€7.98m)
€1.51m
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:€1.25m)
€0.94m
Misstatements reported to the Audit Committee (2021:€0.61m)
Total Group assets
Group materiality
Full scope for group audit purposes 2022
Full scope for group audit purposes 2021
100%
(2021 100%)
100
100
100%
(2021 100%)
100
100
100%
(2021 100%)
100
100
3. Our application of materiality and an overview ofthe scope of our audit continued
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 101
5. Going concern
The Directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Company or
the Group or to cease their operations, and as they have concluded
that the Company’s and the Group’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
• Inflationary pressures and rising interest ratesand the impact on
operational and development 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
tothe 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 page43
is materially consistent with the financial statements and our
auditknowledge.
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
unexpectedrelationships
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
theprocessing of journal entries and other adjustments.
We performed procedures including:
• Substantively testing all material post-closing entries. Based on the
results of our risk assessment procedures and understanding of
the process and the segregation of duties between the Directors,
the Administrator and the Group’s Investment Manager, no further
high-risk journal entries or other adjustments were identified.
• 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
We communicated identified laws and regulations throughout
ourteam 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.
Full scope for group audit purposes 2022
Full scope for group audit purposes 2021
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022102
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
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, regulatory capital and liquidity 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.
We discussed with the Audit Committee matters related to actual
orsuspected breaches of laws or regulations, for which disclosure
isnot necessary, and considered any implications for our audit.
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 the Going concern and viability
statement page 59 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 59 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 judgments
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.
Independent Auditor’s Report continued
To the members of Tritax EuroBox plc
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 103
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
ouraudit 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,
andhow 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
onwhich we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
inour 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 96,
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,
orhave 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
thebasis of the financial statements.
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 and EU ESEF Regulation.
This auditor’s report provides no assurance over whether the annual
financial report has been prepared in accordance with those formats.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
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,
inaccordance 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
6 December 2022
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022104
Group Statement of Comprehensive Income
For the year ended 30 September 2022
Note
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Rental income 6 57.89 43.89
Service charge income 6 10.14 7.03
Other income 6 0.70 0.55
Gross property income 6 68.73 51.47
Direct property costs 7 (16.53 ) (8.75 )
Net property income 52.20 42.72
Fair value gain on investment properties 14 49.94 106.46
Gain on disposal of investment property — 7.33
Administrative and other expenses 8 (18.18 ) (12.22 )
Operating profit 83.96 144.29
Net finance expense 10 (12.07 ) (14.54 )
Effect of foreign exchange differences 8 0.20 (0.70 )
Changes in fair value and realised loss on interest rate derivatives 20 4.55 (0.05 )
Profit before taxation 76.64 129.00
Taxation 11 (17.87 ) (24.23 )
Profit for the year 58.77 104.77
Other comprehensive income
Foreign currency translation differences – foreign operations (6.30 ) 0.06
Total comprehensive income for the year attributable to the Shareholders 52.47 104.83
Earnings Per Share (“EPS”) (expressed in cents per share)
EPS – basic and diluted 12 7.28 19.59
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 105
Group Statement of Financial Position
As at 30 September 2022
Note
30 September
2022
€m
30 September
2021
€m
Non-current assets
Investment properties 14 1,765.60 1,281.38
Derivative financial instruments 20 4.43 0.05
Trade and other receivables 15 1.17 1.17
Deferred tax assets 11 2.11 0.24
Total non-current assets 1,773.31 1,282.84
Current assets
Trade and other receivables 15 31.43 17.24
Cash and cash equivalents 16 90.18 329.73
Total current assets 121.61 346.97
Total assets 1,894.92 1,629.81
Current liabilities
Trade and other payables 17 (38.80 ) (21.92 )
Income tax liability (0.60 ) (0.22 )
Total current liabilities (39.40 ) (22.14 )
Non-current liabilities
Trade and other payables 17 (1.29 ) (1.40 )
Loan notes and borrowings 18 (701.07 ) (492.17 )
Deferred tax liabilities 11 (51.74 ) (33.30 )
Other liabilities 19 (33.62 ) (25.19 )
Customer deposit 23 (2.05 ) (2.11 )
Total non-current liabilities (789.77 ) (554.17 )
Total liabilities (829.17 ) (576.31 )
Net assets 1,065.75 1,053.50
Equity
Share capital 24 8.07 8.07
Share premium reserve 597.58 597.46
Translation reserve (6.24 ) 0.06
Retained earnings 466.34 447.91
Total equity 1,065.75 1,053.50
Net Asset Value (“NAV”) per share (expressed in Euro per share)
Basic NAV 25 1.32 1.31
EPRA NTA 25 1.38 1.35
The financial statements were approved by the Board of Directors on 5 December 2022 and signed on its behalf by:
Robert Orr
Chairman
Company registration number: 11367705
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022106
Group Statement of Changes in Equity
For the year ended 30 September 2022
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 24 — 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
Note
Share
capital
€m
Share
premium
€m
Translation
reserve
€m
Retained
earnings
€m
Total
€m
At 1 October 2020 4.23 131.24 — 368.44 503.91
Net profit for the year — — — 104.77 104.77
Other comprehensive income — — 0.06 — 0.06
Total comprehensive income — — 0.06 104.77 104.83
Contributions and distributions:
New share capital subscribed 24 3.84 476.14 — — 479.98
Associated share issue costs — (9.92 ) — — (9.92 )
Dividends paid 13 — — — (25.30 ) (25.30 )
Total contributions and distributions 3.84 466.22 — (25.30 ) 444.76
At 30 September 2021 8.07 597.46 0.06 447.91 1,053.50
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 107
Group Cash Flow Statement
For the year ended 30 September 2022
Note
For the
year ended
30 September
2022
€m
For the
year ended
30 September
2021
€m
Cash flows from operating activities
Profit for the year 58.77 104.77
Gain on disposal of investment property — (7.33 )
Changes in fair value of investment properties 14 (49.94 ) (106.46 )
Changes in fair value of interest rate derivatives 20 (4.38 ) 0.05
Tax expense 11 17.87 24.23
Net finance expense 10 12.07 14.54
Spreading of customer lease incentives 6 (2.45 ) 0.46
Amortisation of capital contribution and lease commissions 6 0.54 (1.01 )
(Increase)/decrease in trade and other receivables (24.30 ) (4.07 )
Increase/(decrease) in trade and other payables 15.06 3.61
Increase in other liabilities 8.37 5.27
Cash generated from operations 31.61 34.06
Tax paid (0.92 ) (3.77 )
Net cash flow generated from operating activities 30.69 30.29
Investing activities
Purchase of investment properties (288.41 ) (366.47 )
Disposal of investment properties — 64.30
Disposal of assets held for sale — —
Improvements to investment properties and development expenditure (144.79 ) (17.83 )
Rental guarantees and developer licence fees received 8.74 2.81
Net cash flow used in investing activities (424.46 ) (317.19 )
Financing activities
Net proceeds from issue of Ordinary Share capital 0.12 470.06
Loans received 18 206.48 676.45
Loans repaid 18 — (524.00 )
Finance expense paid (8.96 ) (5.76 )
Dividends paid to equity holders 13 (40.34 ) (25.30 )
Net cash flow generated from financing activities 157.30 591.45
Net movement in cash and cash equivalents for the year (236.47 ) 304.55
Cash and cash equivalents at start of the year 16 329.73 24.44
Unrealised foreign exchange gains (3.08 ) 0.74
Cash and cash equivalents at end of the year 90.18 329.73
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022108
Notes to the Consolidated Accounts
1. Corporate information
The consolidated financial statements of the Group for the year ended 30 September 2022 comprise the results of Tritax EuroBox plc
(“theCompany”) and its subsidiaries (together “the Group”) and were approved by the Board for issue on 5 December 2022. The Company
is a public limited company incorporated and domiciled in England and Wales
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 25.
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. The Group’s financial forecast include sensitivities
including yield expansion, resulting in property valuation fall and the impact of cash flows and covenant compliance. This forecast has been
further sensitised for the following scenarios:
1) the combined impact of three key tenants defaulting without replacement, a 12-month delay in letting properties under development,
alongwith a significant increase in Euribor; and
2) additional yield expansion resulting in further property valuation falls and the impact on debt covenants.
The Group’s cash balance at 30 September 2022 was €90.18 million. It also had undrawn amounts under its unsecured Revolving Credit
Facility (“RCF”) of a further €207 million at the date of approval of these financial statements. 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 loan
includes financial covenants for loan to value (“LTV”), interest cover ratio (“ICR”) and gearing. These covenants have been complied with
throughout theyear 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 35% against the limit of 65%. LTV would breach 65% if the
valuation of the Group’s investment properties were to decrease by 45.9%, based on the latest valuation.
The gearing covenant is measured quarterly based on consolidated total net borrowings to consolidated Shareholders’ funds. Based on
themost recent reporting the Group retained headroom against the covenant limit, reporting 58% against the limit of 150%.
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. Based on the most recent
reporting, the Group was not in breach of covenant minimum, reporting 3.85 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
theyfall 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
thereported 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
oftheasset or liability affected in future periods.
Annual Report 2022 Tritax EuroBox plc 109
FINANCIAL STATEMENTS
3. Significant accounting judgements, estimates and assumptions continued
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.
In the current and prior periods all acquisitions were accounted for as asset acquisitions as in all acquisitions substantially all of the fair value
ofthe gross assets acquired were 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.
Thevaluation 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
30September 2022.
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
ofComprehensive 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
ofthe Italian REIF regime. The Company has control to replace Savills with another operator and therefore considers the investment to be
asubsidiary 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.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022110
Notes to the Consolidated Accounts continued
4. Summary of significant accounting policies continued
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,
andproperty 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.
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, it is available for immediate sale 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.
Annual Report 2022 Tritax EuroBox plc 111
FINANCIAL STATEMENTS
4. Summary of significant accounting policies continued
4.4. Financial instruments continued
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
underthe 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.
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,
thisisdeferred 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
intheGroup 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
berecognised in the Group profit or loss.
4.8.2. Service charges and other income
Income arising from expenses recharged to customers is recognised in the period in which the compensation becomes receivable.
Servicecharge and insurance premiums and other such receipts are included in the gross property income gross of the related costs,
astheDirectors consider that the Group acts as principal in this respect.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022112
Notes to the Consolidated Accounts continued
4. Summary of significant accounting policies continued
4.9. Finance income
Finance income is recognised as interest accrues on cash balances and short-term deposits held by the Group. Interest charged to
acustomer 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. Ta xation
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
beexempt 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.
Thecurrent income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the balance sheet
inthecountries 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)
ofassets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are
notrecognised 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.
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
taxisthen 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
aredetermined 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
thefinancial 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
arereported 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
anyexchange component of that gain and loss is also recognised directly to equity.
Annual Report 2022 Tritax EuroBox plc 113
FINANCIAL STATEMENTS
5. Standards in issue
5.1. Standards in issue and effective from 1 October 2021
IFRS Phase 2 amendments for interest rate benchmark (“IBOR”) reform provide a practical expedient to account for changes in the basis for
determining contractual cash flows of financial assets and financial liabilities as a result of IBOR reform. Under the practical expedient, entities
will account for these changes by updating the effective interest rate without the recognition of an immediate gain or loss. This practical
expedient applies only to such a change and only to the extent that it is necessary as a direct consequence of interest rate benchmark reform,
and the new basis is economically equivalent to the previous basis.
There was no material effect from the adoption of the above and other amendments to IFRS effective in the year. They have no impact on 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.
6. Gross property income
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Rental income 55.98 41.58
Spreading of customer incentives 2.45 2.62
Amortisation of capital contribution and lease commission (0.54) (0.31)
Gross rental income 57.89 43.89
Service charges recoverable 10.14 7.03
Other income 0.70 0.55
Gross property income 68.73 51.47
The Group derives property income from the following countries:
Gross property income (€m) Belgium Germany Spain Italy Poland
The
Netherlands Sweden Total
30 September 2022 7.98 28.34 10.77 8.95 6.18 4.00 2.51 68.73
30 September 2021 6.27 19.32 9.30 7.06 6.77 2.19 0.56 51.47
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 2022 64.98 63.74 60.27 55.65 53.22 262.64 560.50
30 September 2021 50.43 51.25 47.63 44.58 40.91 290.29 525.09
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 are two customers representing more than 10% of rental income during the year (2021: two customers). As of 30 September 2022,
onecustomer represented more than 10% of passing rent (2021: four customers).
7. Direct property costs
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Service charge expense 10.49 7.41
Other expenses 1.74 1.34
Lease surrender payment
1
4.30 —
Total property expenses 16.53 8.75
1 Payment to terminate existing lease.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022114
Notes to the Consolidated Accounts continued
8. Administrative and other expenses
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Investment management fees
1
11.86 7.88
Directors’ remuneration (note 9) 0.32 0.24
Auditor’s fees:
Fees payable for the audit of the Company’s accounts 0.51 0.49
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 0.12 0.12
Total Auditor’s fee 0.70 0.68
Corporate administration fees 1.80 1.17
Regulatory fees 0.12 0.09
Legal and professional fees 2.03 1.27
Marketing and promotional fees 0.70 0.59
Other administrative costs 0.65 0.30
Total administrative and other expenses 18.18 12.22
1 Investment management fees include fees payable to Tritax Management LLP for €7.88 million (30 September 2021: €5.46 million (see note 26)). The remaining
€3.98 million (2021: €2.42 million) were paid to asset managers and property managers.
The effect of foreign exchange differences for the year ended 30 September 2022 consists of unrealised foreign exchange currency loss
of €0.28 million and offset by realised foreign exchange currency gain of €0.08 million (2021: unrealised foreign exchange currency loss of
€0.74million and offset by realised foreign exchange currency gain of €0.04 million).
Fees relating to the share issuances have been treated as share issue expenses and offset against share premium. The transaction costs
related to the loans and borrowings have been treated as part of the arrangement fees for issuing the debt, of which €nil relates to the fee
payable to the Auditor for non-audit services (2021: €0.07 million). The fees in relation to the acquisition of assets have been capitalised into
the cost of the respective assets.
9. Directors’ remuneration
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Directors’ fees 0.21 0.22
Employer’s National Insurance 0.11 0.02
Total Directors’ remuneration 0.32 0.24
A summary of the Directors’ emoluments, including the disclosures required by the Companies Act 2006, is set out in the Directors’
Remuneration Report.
Personnel
During the current and prior periods under review the Company did not have any personnel, besides the Directors of the Company.
10. Finance expense
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Interest payable on loans and bank borrowings 6.76 5.24
Commitment fees payable on bank borrowings 1.13 1.56
Fair value movement on remeasurement of put option 0.90 4.93
Bank fees 0.80 0.32
One-off cost of bank loans 0.05 0.02
Amortisation of loan arrangement fees 2.43 2.47
Total finance expense 12.07 14.54
The total interest payable on financial liabilities carried at amortised cost comprises interest and commitment fees payable on bank borrowings
of €7.89 million (30 September 2021: €6.80 million), of which €nil was capitalised in both periods, and amortisation of loan arrangement fees
of €2.43 million (30 September 2021: €2.47 million), of which €2.40 million (30 September 2021: €8.92 million) of the loan agreement fees was
capitalised into the loan in the year (see note 18).
Annual Report 2022 Tritax EuroBox plc 115
FINANCIAL STATEMENTS
11. Taxation
a) Tax charge in the Group Statement of Comprehensive Income
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Current taxation:
UK taxation — —
Overseas taxation – current year
1
1.19 3.58
Overseas taxation – prior year adjustment — 0.11
Deferred taxation:
UK taxation — —
Overseas taxation 16.68 20.54
Total tax charge 17.87 24.23
1 2021 includes the capital gains tax on disposal of investment properties for €3.05 million.
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 will increase 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
2022
€m
Year ended
30 September
2021
€m
Profit before taxation 76.64 129.00
Theoretical tax at UK corporation tax rate of 19% (30 September 2021: 19%) 14.56 24.50
Losses where no deferred taxes have been recognised 2.52 1.92
Impact of different tax rates on foreign jurisdictions 2.50 0.14
Expenses not deductible for tax purposes 0.99 (1.47)
Impact of UK interest distributions from the Investment Trust (2.65) (0.97)
Prior year adjustment to current tax (0.05) 0.11
Total 17.87 24.23
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Deferred tax assets:
Differences between tax and property revaluation 1.64 0.01
Tax losses carried forward 0.47 0.23
Other — —
Total 2.11 0.24
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Deferred tax liabilities:
Differences between tax and property revaluation 51.74 33.30
Other — —
Total 51.74 33.30
The amount of unutilised tax losses and tax credits for which no deferred tax asset is recognised in the profit and loss account was
€9.6million (2021: €6.12 million).
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022116
Notes to the Consolidated Accounts continued
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 2022 and 2021, 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 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 20) (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 19) 0.05
Rental guarantee receipts and developer’s licence fee excluded from property income –
settled via cash
2
8.74
Lease surrender payment
4
4.30
Adjusted EPS 34.21 806,779 4.24
For the year ended 30 September 2021
Net profit
attributable
to Ordinary
Shareholders
€m
Weighted
average
number of
Ordinary Shares
1
‘000
Earnings
Per Share
cents
Basic EPS 104.83 535,145 19.59
Adjustments to remove:
Deferred tax charge (note 11) 23.62
Changes in fair value of investment properties (note 14) (106.46)
Changes in fair value of interest rate derivatives (note 20) 0.05
Gain on disposal of investment property (7.33)
EPRA EPS 14.71 535,145 2.75
Adjustments to (exclude)/include:
Rental income recognised in respect of fixed uplifts (2.31)
Rental income deferred
3
1.60
Amortisation of loan arrangement fees 2.47
Unrealised foreign exchange currency loss 0.68
Fair value movement on remeasurement of put option (note 19) 4.32
Rental guarantee receipts excluded from property income – settled via cash
2
2.90
Rental guarantee receipts excluded from property income – settled via contracted liability
settlement
2
0.28
Adjusted EPS 24.65 535,145 4.61
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 Covid-19 rent deferral was received in full in 2021.
4 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.
Annual Report 2022 Tritax EuroBox plc 117
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; and
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.
13. Dividends paid
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Final dividend in respect of year ended 30 September 2021
at 1.25 cents per Ordinary Share (30 September 2020: 1.10 cents) 10.08 4.65
First interim dividend in respect of year ended 30 September 2022
at 1.25 cents per Ordinary Share (30 September 2021: 1.25 cents) 10.08 5.28
Second interim dividend in respect of year ended 30 September 2022
at 1.25 cents per Ordinary Share (30 September 2021: 1.25 cents) 10.09 7.68
Third interim dividend in respect of year ended 30 September 2022
at 1.25 cents per Ordinary Share (30 September 2021: 1.25 cents) 10.09 7.69
Total dividends paid 40.34 25.30
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 6 December 2022 the Directors of the Company declared a fourth interim dividend in respect of the period from 1 July 2022 to 30 September 2022
of 1.25 cents per Ordinary Share, which will be payable on or around 13 January 2023 to Shareholders on the register on 16 December 2022.
Out of €40.34 million (30 September 2021: €30.73 million) dividends declared for the year, €8.79 million (30 September 2021: €6.04 million)
isdesignated as interest distribution.
14. Investment properties
The Group’s investment property has been valued at fair value by Jones Lang LaSalle Limited (“JLL”), an accredited independent valuer with
a recognised and relevant professional qualification and with recent experience in the locations and categories of the investment properties
being valued. The valuations have been prepared in accordance with the RICS Valuation – Global Standards January 2022 (the “Red Book”)
and incorporate the recommendations of the International Valuation Standards which are consistent with the principles set out in IFRS 13.
Informing its opinion, JLL makes a series of assumptions, which are typically market related, such as yields and expected rental values,
andare 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 €124,800 (period ended 30 September 2021: €75,400). The fee is
notcontingent 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).
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022118
Notes to the Consolidated Accounts continued
14. Investment properties continued
During the year, the following investment properties were acquired:
Location Date acquired
Settimo, Italy
1
25 November 2021
Piacenza, Italy
1
29 November 2021
Rosersberg, Sweden 30 November 2021
Gelsenkirchen, Germany 14 December 2021
Bönen, Germany 14 December 2021
Rosersberg II, Sweden 14 January 2022
Roosendaal, Netherlands 11 March 2022
Dormagen, Germany 26 April 2022
Malmö, Sweden 26 April 2022
1 Acquired based on an asset deal.
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
3
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
1
5.66 — 5.66
Amortisation of rental uplift and customer lease incentives
1
(1.35) — (1.35)
Change in fair value during the year
2
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
Investment
properties
completed
€m
Investment
properties
under construction
€m
Investment
properties
Total
€m
At 1 October 2020 837.90 — 837.90
Acquisition of properties 372.56 — 372.56
Additions to investment properties 1.10 19.81 20.91
Transfer from investment properties to investment properties under construction (8.10) 8.10 —
Transfer from investment properties under construction to investment properties 10.19 (10.19) —
Licence fees and rental guarantees received (2.49) — (2.49)
Fixed rental uplift and customer lease incentives
1
3.82 — 3.82
Amortisation of rental uplift and customer lease incentives
1
(0.81) — (0.81)
Disposal of properties (56.97) — (56.97)
Change in fair value during the year
2
100.15 6.31 106.46
As at 30 September 2021 1,257.35 24.03 1,281.38
1 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
ofrental income on a straight-line basis over the lease term. The amount as at 30 September 2022 was €10.94 million (30 September 2021: €7.67 million).
Thedifference between this and cash receipts changes the carrying value of the property against which revaluations are measured (also see note 6).
2 Included in the fair value change in the year were unrealised gains of €93.08 million (30 September 2021: €107.34 million) and unrealised losses
of€43.14million (30 September 2021: €0.88 million).
3 This includes acquisition costs of €13.81 million (30 September 2021: €3.69 million).
30 September
2022
€m
30 September
2021
€m
Investment properties in Balance Sheet 1,765.60 1,281.38
Rental guarantee held in separate receivable 6.93 1.20
Total external valuation of investment properties 1,772.53 1,282.58
Annual Report 2022 Tritax EuroBox plc 119
FINANCIAL STATEMENTS
14. Investment properties continued
As at 30 September 2022, the Group had €123.7 million of outstanding capital commitments in relation to its forward funded development
assets (30 September 2021: €32.4 million):
• Roosendaal €30.0 million;
• Dormagen €18.7 million;
• Bönen €34.9 million;
• Rosersberg I €3.9 million;
• Rosersberg II €22.7 million; and
• Settimo €13.5 million.
These costs are not provided for in the Statement of Financial Position. Capital commitments represent costs to bring the asset to completion
under the developer’s funding agreements which include the developer’s margin.
Valuation 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
costof 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
inregions, 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. While the Group is negotiating to acquire further properties, there is no guarantee that these properties will form part
of the portfolio of the Group.
With respect to new investments, management will be targeting specific investment categories based on the Group’s investment objective
andrestrictions. 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
anytransfers 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’slength 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,
except for the investment properties in Italy which were valued by adopting an income approach with a discounted cash flow ("DCF")
methodology analysis. 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.
At30September 2022, the range was between €44 and €94 per square metre, per annum (2021: €41 and €88).
Unobservable input: yield
Yield is dependent on the customer, lease length and the other variables listed above for ERV. At 30 September 2022, the average yield
for standing assets was 3.94% and the range was between 3.28% and 4.89% (2021: 3.33% and 7.00%). 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
theother but equally the change in both assumptions may increase the impact on valuation.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022120
Notes to the Consolidated Accounts continued
14. Investment properties continued
Valuation techniques continued
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 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 2022 115.14 (102.22) (45.74) 48.97
Increase/(decrease) in the fair value of investment properties as at 30
September 2021 82.16 (72.68) (27.57) 26.28
The JLL valuation includes deductions for transaction costs that would be incurred by a hypothetical purchaser at the valuation date. These
costs include Real Estate Transfer Tax (“RETT”) equivalent to stamp duty except for properties in Belgium, Italy and Sweden. In Italy, this is
due to the structure of an Investment Management Company (“SGR”). In Belgium and Sweden, the local valuation practice is to exclude such
costs given the prevalence of corporate rather than asset transactions in these markets.
15. Trade and other receivables
Non-current trade and other receivables
30 September
2022
€m
30 September
2021
€m
Cash in public institutions 1.17 1.17
The cash in public institutions is a deposit of €1.17 million given by the customer for the property in Barcelona, Spain.
Current trade and other receivables
30 September
2022
€m
30 September
2021
€m
Trade receivables 1.34 1.45
Prepayments, accrued income and other receivables 18.61 12.28
VAT receivable
1
11.48 3.51
31.43 17.24
1 VAT receivable includes VAT on capital expenditure across the developments and a reclaim on the purchase of the property in Italy of €1 million
(30September2021: €2 million).
The following table sets out the ageing of trade receivables as at 30 September 2022:
Past due but not impaired
30 September
2022
€m
30 September
2021
€m
<30 days 0.92 1.16
30–60 days — —
60–90 days 0.02 —
90 days+ 0.40 0.29
Total 1.34 1.45
Past due and impaired — —
Total 1.34 1.45
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade
receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and ageing.
The expected loss rates are based on the Group’s historical credit losses experienced over the period prior to the period end. The historical
loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group’s customers. Both the
expected credit loss provision and the incurred loss provision in the current and prior period are immaterial.
No reasonably possible changes in the assumptions underpinning the expected credit loss provision would give rise to a material expected
credit loss.
Annual Report 2022 Tritax EuroBox plc 121
FINANCIAL STATEMENTS
16. Cash and cash equivalents
30 September
2022
€m
30 September
2021
€m
Cash and cash equivalents 90.18 329.73
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 2022 was €24.40 million (30 September 2021: €3.33 million). At the year
end, the Group has two money market deposits, €2 million maturing on 25 October 2022 and €3 million maturing on 25November 2022.
17. Trade and other payables
Non-current trade and other payables
30 September
2022
€m
30 September
2021
€m
Other payables 1.29 1.40
Current trade and other payables
30 September
2022
€m
30 September
2021
€m
Trade and other payables 7.44 3.31
Bank loan interest payable 2.40 1.78
Deferred income 2.97 1.73
Accruals 25.99 14.39
VAT liability — 0.71
38.80 21.92
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
18. Loan notes and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured
atamortised cost. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 21.
30 September
2022
€m
30 September
2021
€m
Bank borrowings 9.11 —
Loan notes 691.96 492.17
Non-current liabilities: loans and borrowings 701.07 492.17
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. On 22 December 2021 €58.82 million of the RCF transferred from
HSBC UK Bank to Banco Santander. On 4 January 2022 the termination date of this part of the facility was extended from October 2023 to
October 2025.
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 58.9 19 October 2025
Banco de Sabadell 14.8 19 October 2025
Total RCF 250.0
On 1 December 2021 the Group had secured €200 million US private placement debt which is split into three tranches below:
€100 million with 7-year maturity and a coupon of 1.216%, €50 million with 10-year maturity and a coupon of 1.449%, and €50 million with
12-year maturity and a coupon of 1.590%. The debt was drawn down on 15 January 2022.
As at 30 September 2022, 73.7% (2021: 67%) of the Group’s debt facilities are fixed term with 26.3% floating term (2021: 33%). The weighted
average term to maturity of the Group’s debt as at the year end is 4.5 years (30 September 2021: 4.4 years). The LTV across all drawn debt
was 35% against a target of 45%.
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.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022122
Notes to the Consolidated Accounts continued
18. Loan notes and borrowings continued
Any associated fees in arranging the loan and borrowings that are unamortised as at the year end are offset against amounts drawn
onthefacilities as shown in the table below:
Bank borrowings drawn
30 September
2022
€m
30 September
2021
€m
Bank borrowings at the beginning of the year — 340.63
Bank borrowings drawn in the year 11.00 180.00
Bank borrowings repaid in the year — (524.00)
Loan issue costs paid (0.45) (0.63)
Non-cash amortisation of loan issue costs 0.55 2.01
Reclass unamortised loan issue costs to/(from) prepayments (1.99) 1.99
Non-current liabilities: borrowings 9.11 —
Loan notes
30 September
2022
€m
30 September
2021
€m
Green Bond 500.00 500.00
1.216% USPP 2029 100.00 —
1.449% USPP 2032 50.00 —
1.590% USPP 2034 50.00 —
Less: unamortised costs on loan notes (8.04) (7.83)
Non-current liabilities: loan notes 691.96 492.17
A summary of the drawn and undrawn loans and bank borrowings in the year is shown below:
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
30 September 2021
Drawn
€m
Undrawn
€m
Total debt
available
€m
Repayable between one and two years — — —
Repayable between two and three years — 58.82 58.82
Repayable between three and four years — — —
Repayable between four and five years 500.00 191.18 691.18
Repayable in over five years — — —
500.00 250.00 750.00
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
inthefinancial statements:
Book value
30 September
2022
€m
Fair value
30 September
2022
€m
Book value
30 September
2021
€m
Fair value
30 September
2021
€m
Bank borrowings: RCF 11.00 11.00 — —
Loan notes: 0.95% Green Bonds 2026 500.00 422.55 500.00 506.60
1.216% USPP 2029 100.00 91.81 — —
1.449% USPP 2032 50.00 44.75 — —
1.590% USPP 2034 50.00 44.14 — —
Loan notes and borrowings 711.00 614.25 500.00 506.60
The fair value of financial liabilities traded on active liquid markets, including the 0.95% Green Bonds 2026, 1.216% USPP 2029, 1.449% USPP
2032 and 1.590% USPP 2034, are determined with reference to the quoted market prices. The financial liabilities are considered to be a Level
1 and Level 2 fair value measure. The fair value of the financial liabilities at Level 1 was €422.55 million (30 September 2021: €506.6 million)
andLevel 2 was €180.70 million (2021: €nil).
Annual Report 2022 Tritax EuroBox plc 123
FINANCIAL STATEMENTS
19. Other liabilities
30 September
2022
€m
30 September
2021
€m
Balance at the beginning of the year 25.19 8.89
Addition 8.38 11.98
Repayments (0.85) (0.61)
Fair value movements on measurement of put option 0.90 4.93
Balance at the end of the year 33.62 25.19
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
Dietz Logistik 33. Grundbesitz GmbH 89.9 12 November 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
20. 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
inrespect of the Group’s variable rate debt to cap the rate to which three-month Euribor can rise. Each cap runs coterminous to the initial term
of the respective loans. The caps expire in October 2023.
During the year the Group disposed of €50 million interest rate cap realising a loss of €0.11 million, in order to match the quantum of the
available RCF. At the current period end, the Group had notional value of interest rate caps of €250 million (2021: €300 million) to act as a
hedge against the €250 million Revolving Credit Facility (see note 18).
The weighted average capped rate, excluding any margin payable, for the Group as at the year end was 0.65% (30 September 2021: 0.67%).
There was no premium payable towards securing the interest rate caps both in the year and at 30 September 2021.
30 September
2022
€m
30 September
2021
€m
Interest rate derivatives valuation brought forward 0.05 0.09
Realised loss on derivative (0.11) —
Disposal of interest rate cap/cap break receipt (0.17) —
Fair value movement 4.66 (0.04)
Non-current assets: interest rate derivatives carried forward 4.43 0.05
The interest rate derivatives are marked to market based on the valuation by the relevant counterparty banks on a quarterly basis
inaccordance 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 debt hedged via interest rate derivatives equated to 100% (30 September 2021: 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.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022124
Notes to the Consolidated Accounts continued
21. 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 €11 million at the year end, 4.4%
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, capping the level of
Euribor 3 months to a maximum of 0.65%. Given the small proportion of total available RCF drawn at the year end, and thehedging in place,
any further movement in interest rates would have limited impact on net assets.
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 2022 170.02 878.41 238.06 227.39 63.82 24.81 181.79 111.70 1,894.92
30 September 2021 142.09 671.60 200.52 147.43 61.22 295.92 62.25 48.78 1,629.81
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 €1.17 million (see note 15), 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
eachclass of financial asset less the collateral held.
Credit risk related to cash deposits
One of the credit risks of the Group arises with the banks and financial institutions. The Board of Directors believes that the credit risk on
short-term deposits and current account cash balances is limited because the counterparties are banks, which are committed lenders to the
Group, with high credit ratings assigned by international credit rating agencies.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and, going forward, the finance charges, principal repayments on its
borrowings and its commitments under forward funded development arrangements (see note 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 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 2022
Loans and borrowings 701.07 752.93 2.06 6.19 8.25 526.43 210.00
Trade and other payables
1
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
Annual Report 2022 Tritax EuroBox plc 125
FINANCIAL STATEMENTS
21. Financial risk management continued
Liquidity risk continued
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 2021
Loans and borrowings 492.17 527.46 1.45 4.35 5.80 515.86 —
Trade and other payables
1
20.88 20.88 19.48 — 1.40 — —
Non-current liabilities 25.19 25.19 — — — — 25.19
Customer deposit 2.11 2.11 — — — — 2.11
540.35 575.64 20.93 4.35 7.20 515.86 27.30
1 Excludes VAT and deferred income as these are not financial liabilities.
Foreign currency risk
Investment
property exposure
Cash and cash
equivalents
exposure
Total
currency exposure
As at 30 September 2022 €m €m €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
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
tofinance its working capital.
As at 30 September 2022 the Group has a cash balance of GBP 8.94 million and PLN 7.97 million, equivalent to €10.18 million and €1.64
million respectively (30 September 2021: GBP 57.49 million and PLN 5.86 million, equivalent to €66.90 million and €1.27 million respectively).
The Group also has a cash balance of SEK 127.44 million, equivalent to €11.72 million as at 30 September 2022 (30 September 2021: SEK
11.94 million, equivalent to €1.18 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
balancesheet 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
theGroup by entering into fixed price contracts with the developers. Letting risk is usually alleviated by entering into pre-let agreements
withcustomers 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.
22. 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 Directors intend that the Group will maintain a conservative level of aggregate borrowings with a medium-term target of 45% of the
Group’s gross assets (with a limit of 50%).
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 35% (30 September 2021: 13%).
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022126
Notes to the Consolidated Accounts continued
23. Customer deposit
Non-current liabilities
30 September
2022
€m
30 September
2021
€m
Balance at the beginning of the year 2.11 1.31
Additions/(repayments) in the year (0.06) 0.80
Balance at the end of the year 2.05 2.11
The balance mainly relates to a cash deposit given by the customer for the property in Barcelona, Spain.
24. Share capital
The share capital relates to amounts subscribed for share capital at its nominal value:
30 September
2022
Number
30 September
2022
€m
30 September
2021
Number
30 September
2021
€m
Issued and fully paid at 1 cent each
Balance at beginning of year – €0.01 Ordinary Shares 806,693,378 8.07 422,727,273 4.23
Shares issued in the year 110,606 – 383,966,105 3.84
Balance at end of year 806,803,984 8.07 806,693,378 8.07
The Group has one class of Ordinary Shares which carry no right to fixed income.
On 17 December 2021, the Group increased its share capital by 110,606 Ordinary Shares for 111.00 pence per Ordinary Share on behalf
of certain members of staff of the Manager. As a result, the Group’s issued share capital increased to 806,803,984 Ordinary Shares with
voting rights.
25. 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
ofthe Parent by the number of Ordinary Shares outstanding at the end of the year. As there are no dilutive instruments outstanding, Basic
NAVper share is shown below:
30 September
2022
€m
30 September
2021
€m
Net assets per Group Statement of Financial Position 1,065.75 1,053.50
Ordinary Shares:
Issued share capital (number) 806,803,984 806,693,378
NAV per share (expressed in Euro per share):
Basic NAV per share 1.32 1.31
The Group has adopted EPRA NTA and EPRA NTA per share metrics as its primary EPRA NAV metric measure, alongside Basic IFRS NAV,
forthe year ended 30 September 2021 onwards. Please refer to the Notes to the EPRA and Other Key Performance Indicators section for
details of all EPRA NAV metrics.
30 September 2022 30 September 2021
EPRA NRV
€m
EPRA NTA
€m
EPRA NDV
€m
EPRA NRV
€m
EPRA NTA
€m
EPRA NDV
€m
NAV attributable to Shareholders 1,065.75 1,065.75 1,065.75 1,053.50 1,053.50 1,053.50
Mark-to-market adjustments of
derivatives (4.43) (4.43) — (0.05) (0.05) —
Deferred tax adjustment 49.63 49.63 — 33.06 33.06 —
Transaction costs
1
83.78 — — 60.84 — —
NAV 1,194.73 1,110.95 1,065.75 1,147.35 1,086.51 1,053.50
NAV per share in Euro 1.48 1.38 1.32 1.42 1.35 1.31
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.
Annual Report 2022 Tritax EuroBox plc 127
FINANCIAL STATEMENTS
26. Transactions with related parties
For the year ended 30 September 2022, 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.
Thefee payable to the Manager for the year ended 30 September 2022 was €7.88 million (2021: €5.46 million). An additional €0.19 million
ofthe investment management fee was capitalised during the year (2021: €nil).
The total amount outstanding at the year end relating to the Investment Management Agreement was €1.99 million (2021: €1.51 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 Nick Preston, James Dunlop, Henry Franklin, Petrina
Austin and Phil Redding. Nick Preston was considered key management personnel until 21 September 2022.
During the year, the Directors received the following dividends: Robert Orr: €4,714 (2021: €1,220); Keith Mansfield: €14,500 (2021: €14,065);
Taco De Groot: €2,100 (2021: €1,638); Eva-Lotta Sjöstedt: €345 (2021: €308); and Sarah Whitney: €403 (2021: €nil).
During the year, the Members of the Manager received the following dividends: James Dunlop: €16,348 (2021: €9,136); Henry Franklin: €10,144
(2021: €6,184); Petrina Austin: €1,816 (2021: €1,462); Nick Preston: €7,585 (2021: €4,908); and Phil Redding: €681 (2021: €38).
On 17 December 2021 the Manager acquired in the market 50,000 Ordinary Shares at 110.60 pence per share and the Company issued
tothe Manager 110,606 new Ordinary Shares at a price of 111.00 pence per share on behalf of certain members of staff of the Manager.
On 17 May 2022 the Manager acquired in the market 213,043 Ordinary Shares at 98.30 pence per share on behalf of certain members of
staffof the Manager.
27. 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 €141.10 million, on a lease which ends in 85.5 years. A peppercorn rent
ispaid and hence the associated lease liability and right-of-use asset are immaterial.
28. Subsequent events
On 6 October 2022, the Group announced that it is proposing to amend its Investment Management Agreement (“IMA”) with
TritaxManagement LLP (the “Manager”). The proposal was passed by Shareholders during a General Meeting on 25 October 2022.
The key change was a reduction in the base management fee to 1.00% on Net Asset Value (“NAV”) up to €1 billion and 0.75% on NAV
above€1 billion. This proposed fee has been back-dated, becoming effective from 1 August 2022. Based on the latest reported NAV,
at30September 2022, the proposed changes would result in an estimated €2.1 million reduction to the annual cost to the Group.
There were no other significant events occurring after the reporting period, but before the financial statements were authorised for issue.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022128
Company Balance Sheet
Company registration number 11367705
Note
At 30 September
2022
€m
At 30 September
2021
€m
Non-current assets
Derivative financial instruments 4.43 0.05
Trade and other receivables 5 854.03 634.93
Investment in subsidiaries 4 671.37 458.21
Total non-current assets 1,529.83 1,093.19
Current assets
Trade and other receivables 5 8.86 13.55
Cash held at bank 6 16.47 291.56
Total current assets 25.33 305.11
Total assets 1,555.16 1,398.3
Current liabilities
Trade and other payables 7 (5.81) (6.18)
Income tax liability — —
Total current liabilities (5.81) (6.18)
Non-current liabilities
Loans and borrowings 8 (701.07) (492.17)
Total non-current liabilities (701.07) (492.17)
Total liabilities (706.88) (498.35)
Total net assets 848.28 899.95
Equity
Share capital 9 8.07 8.07
Share premium reserve 597.58 597.46
Retained earnings 242.63 294.42
Total equity 848.28 899.95
The Company has taken advantage of the exemption allowed under Section 408 of the Companies Act 2006 and has not presented its
ownprofit and loss account in the financial statements. The loss attributable to the Parent Company for the year ended 30 September 2022
amounted to €11.45 million (2021: profit €7.21 million).
The financial statements were approved by the Board of Directors on 5 December 2022 and signed on its behalf by:
Robert Orr
Director
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 129
Company Statement of Changes in Equity
For the year ended 30 September 2022
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 income — — (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
Share capital Share premium Retained earnings Total
Note €m €m €m €m
At 1 October 2020 4.23 131.24 312.51 447.98
Net profit for the year — — 7.21 7.21
Total comprehensive income — — 7.21 7.21
Contributions and distributions:
New share capital subscribed 3.84 476.14 — 479.98
Associated share issue costs — (9.92) — (9.92)
Dividends paid 3 — — (25.30) (25.30)
At 30 September 2021 8.07 597.46 294.42 899.95
1 See note 24 of the Group accounts.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022130
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
inthe 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
forimpairment is determined by comparing the carrying value of the subsidiary, at the reporting date, against the recoverable amounts.
Therecoverable 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,
heldin 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.
2. Taxation
30 September
2022
€m
30 September
2021
€m
UK corporate tax — —
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.
The UK corporation tax rate for the financial year is 19%. Accordingly, this rate has been applied in the measurement of the Company’s tax
liability at 30 September 2022.
3. Dividends paid
Please refer to note 13 of the Group accounts.
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 131
4. Investment in subsidiaries
30 September
2022
€m
30 September
2021
€m
At the beginning of the year 458.21 316.32
Increase in investments via share purchase 239.76 166.52
Disposals in the year — (23.43)
Impairment in the year
1
(26.60) (1.20)
At the end of the year 671.37 458.21
1 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;
seenote 14 of the Group financial statements for further detail.
The Company has the following subsidiary undertakings as at 30 September 2022:
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 (formerly known
as Tritax Eurobox (Netherlands) Propco 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 (formerly known
asTritax Eurobox (Netherlands) Holdco Ltd)
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 11:149) AB Property Investment Sweden 100%*
Tritax EuroBox (Rosersberg II) AB Property Investment Sweden 100%*
Tritax EuroBox (Malmo) Propco AB Property Investment Sweden 100%
Tritax EuroBox (Malmo) Holdco AB Property Investment Sweden 100%
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022132
Notes to the Company Accounts continued
Principal activity Country of incorporation Ownership %
Tritax Eurobox (France) Propco SCI Investment Holding Company France 100%
1
Tritax EuroBox (France) Holdco Limited Investment Holding Company UK 100%
2
Tritax EuroBox (France) Minco Limited Investment Holding Company UK 100%
3
1 These are direct subsidiaries of the Company.
2 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.
3 The subsidiary Tritax EuroBox (Wunstorf) Holdco Limited is exempt from Companies Act 2006 requirements relating to the audit of its individual accounts
byvirtue of Section 479A of the Act as this company has guaranteed these subsidiary companies under Section 479C of the Act.
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: 6 Duke Street St James’s, London SW1Y 6BN, United Kingdom
France entities: 92, Avenue de Wagram, 75017 Paris, France
5. Trade and other receivables
30 September
2022
€m
30 September
2021
€m
Amounts receivable from Group companies 854.03 642.94
Other receivables 8.86 5.54
862.89 648.48
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%–4%. Interest is generally payable quarterly and, therefore,
is classified as current assets.
30 September
2022
€m
30 September
2021
€m
Current assets 8.86 13.55
Non-current assets 854.03 634.93
862.89 648.48
6. Cash held at bank
30 September
2022
€m
30 September
2021
€m
Cash held at bank 16.47 291.56
7. Trade and other payables
30 September
2022
€m
30 September
2021
€m
Trade and other payables 5.57 5.75
Accruals 0.24 0.43
5.81 6.18
8. Loan notes and borrowings
All external borrowings of the Group are held by the Company. Please refer to note 18 of the Group accounts for further details.
4. Investment in subsidiaries continued
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 133
9. Share capital
Please refer to note 24 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
astheCompany’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
2022
€m
30 September
2021
€m
Tritax EuroBox (Bochum) Propco GmbH 0.98 0.98
Tritax EuroBox (Peine) Propco GmbH 2.59 2.64
Dietz Logistik 33. Grundbesitz GmbH 1.27 1.20
Tritax Eurobox (Bremen I) Propco GmbH 0.53 0.53
Tritax Eurobox (Bremen II) Propco GmbH 0.55 0.57
Dietz Logistik 26. Grundbesitz GmbH 2.96 1.48
Dietz Logistik 44. Grundbesitz GmbH 3.37 1.07
Dietz 23. Grundbesitz GmbH 0.75 —
Tritax EuroBox (Gelsenkirchen) Propco GmbH 0.45 —
Dietz FNL 5. Grundbesitz GmbH 0.32 —
13.77 8.47
Below are the amounts owed by the companies which are not wholly owned:
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
Amount owed from Group companies as at 30 September 2021
Less than
one year
€m
More than
one year
€m
Tritax EuroBox (Bochum) Propco GmbH 0.04 24.42
Tritax EuroBox (Peine) Propco GmbH — 64.74
Dietz Logistik 33. Grundbesitz GmbH — 29.10
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
0.04 321.11
For all other related party transactions please refer to note 26 of the Group accounts.
11. Directors’ remuneration
Please refer to note 9 of the Group accounts.
12. Subsequent events
Please refer to note 28 of the Group accounts.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022134
Notes to the EPRA and Other Key Performance Indicators (Unaudited)
1. EPRA Earnings Per Share
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Total comprehensive income (attributable to Shareholders) 58.77 104.83
Adjustments to remove:
Changes in fair value of investment properties (49.94) (106.46)
Deferred tax adjustment 16.68 23.62
Changes in fair value of interest rate derivatives (4.66) 0.05
Gain on disposal of investment property — (7.33)
Profits to calculate EPRA Earnings Per Share 20.85 14.71
Weighted average number of Ordinary Shares 806,779,439 535,144,885
EPRA Earnings Per Share – basic and diluted 2.58 cents 2.75 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,
forthe year ended 30 September 2021 onwards.
30 September 2022 30 September 2021
EPRA NRV
€m
EPRA NTA
€m
EPRA NDV
€m
EPRA NAV
€m
EPRA NNNAV
€m
EPRA NDV
€m
NAV attributable to Shareholders 1,065.75 1,065.75 1,065.75 1,053.50 1,053.50 1,053.50
Mark-to-market adjustments of
derivatives (4.43) (4.43) — (0.05) (0.05) —
Deferred tax adjustment 49.63 49.63 — 33.06 33.06 —
Transaction costs
1
83.78 — — 60.84 — —
NAV 1,194.73 1,110.95 1,065.75 1,147.35 1,086.51 1,053.50
NAV per share in Euro 1.48 1.38 1.32 1.42 1.35 1.31
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
2022
€m
Year ended
30 September
2021
€m
Investment property 1,765.60 1,281.38
Less: development properties (214.89) (24.03)
Completed property portfolio 1,550.71 1,257.35
Allowance for estimated purchaser's costs 83.78 60.84
Gross up completed property portfolio valuation (B) 1,634.49 1,318.19
Annualised passing rental income 61.19 51.06
Property outgoings (2.15) (1.72)
Annualised net rents (A) 59.04 49.34
Notional rent expiration of rent-free periods or other lease incentives 0.94 0.56
Topped up annualised net rents (C) 59.98 49.90
EPRA Net Initial Yield (A/B) 3.61% 3.74%
EPRA Topped Up Net Initial Yield (C/B) 3.67% 3.79%
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 135
4. EPRA vacancy rate
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Annualised estimated rental value of vacant premises 0.19 1.78
Portfolio estimated rental value
1
69.46 53.40
EPRA vacancy rate 0.28% 3.33%
1 Excludes land held for development.
All vacant space is currently covered by rental guarantees.
5. EPRA Cost Ratio and Adjusted EPRA Cost Ratio
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Property operating costs 6.10 1.34
Administration expenses 18.18 12.22
Net service charge costs 0.35 0.38
Other operating income (0.70) (0.55)
Total costs including vacant property costs (A) 23.93 13.39
Vacant property costs (0.35) (0.38)
Total costs excluding vacant property costs (B) 23.58 13.01
Gross rental income – per IFRS (C) 57.89 43.89
Total EPRA Cost Ratio (including vacant property costs) (A/C) 41.34% 30.51%
Total EPRA Cost Ratio (excluding vacant property costs) (B/C) 40.73% 29.64%
Gross rental income including rental guarantee (D) 66.63 47.07
Total Adjusted EPRA Cost Ratio
1
(including vacant property costs) (A/D) 29.46% 28.45%
Total Adjusted EPRA Cost Ratio
1
(excluding vacant property costs) (B/D) 28.94% 27.64%
1 Adjusted for €4.3 million lease surrender payment at Hammersbach – see note 12 of financial statements for further details.
There were no overheads or operating expenses capitalised in the year in line with IFRS (2021: €nil).
6. Capital expenditure
30 September
2022
€m
30 September
2021
€m
Acquisition
1
303.17 372.56
Development
1
144.79 19.81
Investment properties
1
:
Incremental lettable space 6.32 1.10
Customer incentives
2
4.31 3.01
Other material non-allocated types of expenditure
3
6.93 (2.49)
Total 465.52 393.99
1 See note 12 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.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022136
7. Total Return
Year ended
30 September
2022
cents
Year ended
30 September
2021
cents
Opening EPRA NTA 134.69 122.14
Closing EPRA NTA 137.70 134.69
Growth in EPRA NTA 3.01 12.55
Dividends paid 5.00 4.85
Total growth in EPRA NTA plus dividends paid 8.01 17.40
Total Return 5.95% 14.25%
8. Loan to value ("LTV") ratio
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Gross asset value (A) 1,765.60 1,281.38
Borrowings
1
(B) 711.00 500.00
Cash and cash equivalents (C) 90.18 329.73
LTV ((B-C)/A) 35.16% 13.28%
1 Nominal value of borrowings.
9. Dividend cover
Year ended
30 September
2022
€m
Year ended
30 September
2021
€m
Adjusted earnings (A) 34.21 24.65
Dividends paid for the financial year (B) 40.34 30.73
Dividend cover (A/B) 84.80% 80.21%
10. Interest cover
Year ended
30 September
2022
€
Year ended
30 September
2021
€
Net property income (A) 52.20 42.72
Interest payable on loans and bank borrowings (note 10) 6.76 5.24
Commitment fees payable on bank borrowings (note 10) 1.13 1.56
Finance costs (B) 7.89 6.80
Interest cover (A/B) 6.62 6.28
Notes to the EPRA and Other Key Performance Indicators (Unaudited)
continued
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 137
Glossary of Terms
“Adjusted Earnings”
Post-tax earnings attributable to Shareholders, adjusted to include licence
feesreceivable 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
intheAIFMD.
“AIFMD”
Directive 2011/61/EU of the European Parliament and of the Council of
8June2011 on Alternative Investment Fund Managers and, where the
contextrequires, includes references to Commission Delegated Regulation
(EU) No 231/2013 and any applicable local laws implementing the AIFMD
intothe national law of an EEA member state.
“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
ofholding 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
arecognised 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 anddeferred 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.
“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
ofthe whole portfolio.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022138
Glossary of Terms continued
“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
orentities).
“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 returnon
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 theGIA.
“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
tothe 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
capitalappreciation.
“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.
Thisdiffers from interest cover and the amounts used to calculate cannot
bederived 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 bynet 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,
propertyoperating 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
isin operation. Excludes service charge income (which is netted off against
service charge expenses).
“Portfolio”
The overall portfolio of the Company including both the investment
anddevelopment portfolios.
“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,
whichcommits the occupier to sign a lease on practical completion.
“RETT”
Real Estate Transfer Tax – the tax imposed by European states
onthepurchase of land and properties.
FINANCIAL STATEMENTS
Annual Report 2022 Tritax EuroBox plc 139
“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
ineach country.
“Transaction costs”
RETT and purchaser’s costs.
“SGR”
Societa’di Gestione del Risparimo, a regulated Italian investment
managementcompany.
“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
startdate.
“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
thedevelopments at the earlier of commencement of the development or
the balance sheet date plus future development costs and estimated finance
coststo completion.
FINANCIAL STATEMENTS
Tritax EuroBox plc Annual Report 2022140
Company Information
Company Registration Number: 11367705
Incorporated in the United Kingdom
Directors, Management and Advisers
Directors
Robert Orr
Non-Executive 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
280 Bishopsgate
London
EC2M 4AG
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
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
CBP016355
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Tritax EuroBox plc Annual Report 2022
Tritax EuroBox plc
3rd Floor
6 Duke Street St James’s
London
SW1Y 6BN
www.tritaxeurobox.co.uk