TIDMYEW
RNS Number : 9457S
Yew Grove REIT PLC
22 March 2021
22 March 2021
Yew Grove REIT plc
(the "Company" or, together with its subsidiaries, the
"Group")
Results for the year ended 31 December 2020
The Company is today reporting its audited condensed
consolidated results for the year ended 31 December 2020 (the
"Period").
Strategic Highlights
-- Portfolio investment properties independently valued on 31
December 2020 at EUR141.9 million, reflecting an annualised rent
roll of EUR10.9 million at Period end.
-- 100% rent collections for both Q4 2020 and Q1 2021.
-- Quarterly dividend payments continued with total dividends
per ordinary share of 5.15 cents declared from 2020 earnings.
-- Purchased six further buildings during the Period for EUR25.3 million.
-- Asset management has enhanced the Company's property
portfolio and revenue, 40,000 square feet of office vacancy being
let in early July 2020 and 20,000 square feet the day after the
Period end.
-- Significant pipeline of potential acquisitions in excess of EUR100 million identified.
Financial Highlights
-- Net Asset Value ("NAV") per ordinary share was 100.03 cents
as at 31 December 2020 (31 December 2019: 98.52 cents).
-- Portfolio valuation on 31 December 2020 of EUR141.9 million
(31 December 2019: EUR115.8 million).
-- Period end valuation shows an increase of EUR3.3 million or
2.5% in like for like value (value of properties owned at year end
compared to the aggregate of their 2019 year end valuation and the
price of 2020 property purchases).
-- Annualised rent roll of EUR10.9 million at Period end (31
December 2019: EUR8.9 million), increasing to EUR11.3 million from
1 January 2021.
-- Period net revenues were EUR10.6 million, including EUR0.15
million of lease surrender premium payments. Excluding lease
surrender premium payments, this shows an increase of 41% on
2019.
-- Expenses were stable at EUR3.1 million (2019 EUR3.0 million)
while the portfolio grew 22.6%.
-- EPRA earnings per share ("EPS") of 5.49 cents, 94% declared as dividends.
-- Dividends of 5.15 cents per share declared from Period earnings.
-- Target LTV increased from 25% to 40% following the EGM in Q3
2020. Credit facility drawings increased from EUR20.8 million to
EUR38.6 million over the Period, leaving additional undrawn
headroom of EUR15.0 million as at 31 December 2020.
Portfolio Highlights
The Group's properties as at the Period end benefit from
attractive leases:
-- Strong tenant covenants: 66% FDI, 26% Government and other
state bodies, 4% large enterprises and 4% SME by rent roll.
-- Gross yield at fair value of 7.7%, with a gross reversionary
yield of 8.7% (7.7% and 8.7% respectively as at 31 December
2019).
-- Reversionary rent roll of EUR12.4 million.
-- Weighted average unexpired lease term of 4.1 years to break and 7.2 years to expiry.
Jonathan Laredo, Chief Executive Officer, commented:
"For more than a year we have all had to come to terms with the
effect of the pandemic on everyday life. Normal social interactions
have been curtailed, working, shopping, travel, visiting friends
and family have all been affected in a way that is unprecedented in
most of our lifetimes. Despite this, and despite the challenges
this presented to our business, we have managed to grow our
portfolio, reduce vacancy, increase the rent roll and improve our
profitability and begin the process of greening our portfolio. I am
proud of the efforts put in by everyone who works for Yew Grove and
I am pleased that the results presented today are a validation of
our strategy and the investments made so far.
"The Company has continued to perform well and the management
team is ambitious and focused on growth. We continue to evaluate a
pipeline of accretive investment opportunities and are exploring a
range of funding options in that regard, including potentially
raising equity."
MAR information
This announcement is released by Yew Grove REIT plc and contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and
is disclosed in accordance with the company's obligations under
Article 17 of MAR.
For further information contact:
Yew Grove REIT plc +353 1 485 3950
Jonathan Laredo, Chief Executive
Officer
Charles Peach, Chief Financial
Officer
Michael Gibbons, Chief Investment
Officer
Goodbody Stockbrokers UC +353 1 667 0400
Joint Broker & Euronext Growth
Advisor
David Kearney, John Flynn, Edel O'Reilly, Ronan Bransfield
Liberum Capital Limited
Joint Broker & Nomad +44 20 3100 2000
Richard Crawley, Jamie Richards
IFC Advisory Limited +44 203 934 6630
Financial PR yewgrovereit@investor-focus.co.uk
Tim Metcalfe, Graham Herring
Notes to editors
Yew Grove REIT plc, quoted on the London Stock Exchange's AIM
market and on the Euronext Growth Market in Dublin, is an Irish
commercial real estate company invested in a diversified portfolio
of Irish commercial property. Yew Grove has a particular focus on
well-tenanted commercial real estate assets comprising of office
and industrial assets outside of Dublin's Central Business
District.
Yew Grove's highly experienced team has a proven track record in
commercial property investment and asset management in Ireland and
internationally and is focused on delivering results. Its
investment approach is strategic, not speculative, principally on
assets that are let, pre-let or to be let after refurbishment.
Shareholders are provided with stable, long-term income from a
diverse portfolio of commercial property comprising well-tenanted
real estate in strategic centres let to Irish government entities
and other state bodies, IDA Ireland supported and other FDI
companies, and larger corporates.
Chair's Statement
Activity
The year 2020 was a year few of us will forget and one in which
commercial considerations were secondary to the global tragedy
created by the COVID-19 pandemic. Despite this, I am pleased that
the Company made progress across a number of its key objectives.
Whilst operating in a challenging environment and remotely, through
a stop-start economy, the Company has managed to improve the
quality of its portfolio of properties, maintain the quality of its
tenant base, maintain collections at industry peer leading levels
and pay a progressive quarterly dividend to its shareholders.
The disruption of the financial markets meant that the share
issuance we had hoped to complete in the first half of 2020 was no
longer possible and, as such, our share programme expired. Our
shareholders approved a one-year extension for a full 100 million
share issuance programme in May 2020.
For most of the year the Company's focus was on asset
management, working with our tenants to ensure that those buildings
that were unoccupied were secured and that protocols were in place
to ensure that the buildings that were still being used would be
safe for all occupiers. The health and welfare of our staff,
tenants and suppliers remains a key priority for the Company as we
navigate through this pandemic. As announced last year, the equity
that was raised in late 2019 was invested in February 2020 through
the acquisition of the properties at Millennium Park in Naas along
with a debt facility from Allied Irish Banks, p.l.c. ("AIB").
The disruption to normal activity meant that a number of asset
management projects were unavoidably delayed. Vacant properties
remained unoccupied for longer than expected, many rent reviews and
re-gears took longer than normal and the property market was
effectively halted for most of the second and third quarters of the
year, which delayed the sale of our non-core properties. The effect
of the Government mandated lockdowns meant that our non-food retail
tenants (approximately 2% of the rent roll) suffered a closure of
their businesses and a cessation of all income. We worked with
those tenants to help bridge that financial stress with the result
that our collections in the second, third and the fourth quarter
continued to be very strong at just below 100%.
Notwithstanding all of this we were successful in selling
another of the four remaining non-core properties as well as a
smaller property which was vacant following a lease surrender
negotiated earlier in the year. We also succeeded in letting the
vacant property at Millennium Park in Naas and completed a lease on
the first floor of our vacant Cork Airport property. These sales
and lettings reduced our net vacancy to under 7%(1) and increased
the rent roll to EUR10.9[1] million by year end.
As the property markets began to reopen in the final quarter,
the pipeline of potential investments grew and it became more
important to increase our capital available for investment. At an
extraordinary general meeting ("EGM") in September 2020, our
shareholders approved a proposal to increase our targeted leverage
to 40% from 25%. In late December 2020, an amended facility to
effect the increase in targeted leverage was agreed with AIB.
Sustainability was a major focus for the business in 2020 with
the roll out of a long-term building improvement programme across
our portfolio. I look forward to this being a continued future
focus as we work with our occupiers to make the buildings not only
better places to work but also, as importantly, reduce their
environmental footprint.
Board
I would like to thank each member of the Board for their
commitment during the year and I look forward to working with them
for the benefit of the Company and its shareholders. The Board are
responsible for creating and maintaining the Company's strong
culture and collegiate values and ensuring these are understood and
shared by all employees and with all of our business
relationships.
Management, Colleagues and Shareholders
On behalf of the Board, I would like to thank the management
team and our colleagues for their continued hard work and energy
over the past year. It has been a busy and demanding year and
continues to be as the Company grows in 2021. Our success will be
driven by the dedication and commitment of this team.
Finally, to our shareholders for their confidence and
commitment, we look forward to continuing to expand our business
and to continue to return value to our shareholders.
[1] Prior to year end, the Cork Airport property letting was
agreed which started on 1 January 2021. This increased the
annualised rent roll to EUR11.3 million and reduced vacancy to 4.1%
the day after year end.
Chief Executive Officer's Statement
I am pleased to report the results for the Company for the year
ended 31 December 2020.
In 2020, we had to focus on asset management rather than capital
growth. Our contracted rent roll increased from EUR8.9 million at
31 December 2019 to EUR10.9[2] million at year end. The increase
reflects the completion of the acquisition at Millennium Park in
Naas and effective asset management in letting vacancy and
capturing reversion through rent reviews and lease re-gears.
The gross yield at fair value (the return that the Company earns
from its contracted rent at current valuation) was 7.7% at 31
December 2019 and, despite the positive effects of the year end
valuation, the gross yield remains 7.7% at this year end. The
portfolio is still reversionary, with our external valuer, Lisney
Limited ("Lisney" or the "Valuer"), estimating the reversionary
yield at 8.7% (circa EUR12.4 million) which will continue to
underpin distributions to our shareholders.
The exigencies of the financial markets meant that we were
unable to issue shares during 2020 and thus were unable to take
advantage of our operational leverage. Our cost base is relatively
static and a growth in market capitalisation will increase revenue
at a far faster rate than costs, thereby increasing profitability
available to our shareholders by way of distribution. I hope that
some of this value can be captured during 2021 as we make use of
the increased facility from our lender, AIB, although some of that
benefit will be absorbed by the costs of moving our listing from
the junior Euronext Growth market of Euronext Dublin to the Main
Securities Market of Euronext Dublin, as required under the Irish
real estate investment trust ("REIT") legislation. I also hope that
if market conditions permit we can take advantage of the share
issuance programme and issue more shares before June 2021.
Dividends
I am pleased that, despite all of the challenges during 2020,
the Company maintained its quarterly dividend and increased the
payment each quarter. The dividend for the final quarter (1.40
cents per share declared after the year end) brings the dividend
declared for the period, fully covered by EPRA earnings, to 5.15
cents per share. The dividend is underpinned by a high-quality rent
roll and effective asset management that has reduced vacancy. We
expect more disposals of non-core assets (smaller properties
purchased as a part of the seed portfolio at the Company's initial
public offering ("IPO") in June 2018) and the capture of increasing
reversion as rent reviews, which were delayed during 2020, are
agreed this year.
Review of activity
During the year, the Company completed the purchase of six
buildings in Millennium Park in Naas and sold a vacant building on
Holly Avenue in South Dublin and one of our non-core properties on
the outskirts of South West Dublin. Both sales achieved a net gain
which in aggregate was EUR0.1 million and 5.0% over the June 2020
valuation.
Our plans to raise equity during the year were derailed by the
pandemic and the sharp sell-off across the capital markets in the
second quarter. While equity markets did stabilise later in the
year it was decided that an equity issue was not a viable option
especially because many property vendors put sale plans on hold
until the fourth quarter of the year.
The Company focused on rolling out its Environment,
Sustainability and Governance ("ESG") strategy and asset
management. Both were affected by lockdowns, which delayed or
prevented travel and kept most of our offices empty, but
notwithstanding the brake on activity I am pleased to say we have
made credible progress on both fronts. Despite the pandemic, the
results of our asset management have helped the business to an
excellent performance. Our principal focus was on rent collection,
continuing the sale of non-core properties, filling vacancy and
re-underwriting the potential pipeline in the markets in which we
operate to ensure that our operating assumptions and strategy were
still fit for purpose.
As a result of that focus and the excellent quality of our
tenant base, rent collections held up very well and stand
comparison with the best in the European property market and
particularly with any company that has substantial exposure to
offices. While our ability to let vacant space was negatively
affected by the pandemic, we succeeded in signing a number of new
leases and reducing vacancy from 14.3% post the acquisition of the
Millennium Park portfolio to 6.9% at year end. We also managed to
complete the sale of another non-core building in December. At year
end we were engaged in a number of rent reviews and re-gear
discussions, with progress slow as most counterparties and advisers
continued to work from home.
However, I am confident that as these rent reviews and re-gears
are completed the benefits of an increased rent roll and extended
WAULT across our portfolio will continue to feed through to an
improved balance sheet and profit and loss account.
Post balance sheet events
The Company has from admission, on 8 June 2018, been quoted on
the AIM market of the London Stock Exchange and the Euronext Growth
market in Dublin. Under the REIT rules, the Company has until May
2021 to list its shares on the main market of a recognised stock
exchange in an EU member state in order to retain its REIT status.
Given that the Revenue Commissioners are vested with authority to
exercise their discretion to extend that deadline, earlier in the
year the Company approached the Revenue Commissioners to discuss an
extension of that deadline to 31 May 2022 in order that the Company
can better manage the commitments before it. The Revenue
Commissioners confirmed that, based on the specific circumstances,
they are agreeable to such an extension. Notwithstanding that
agreement, the Board has instructed the Company to complete a
listing on the Main Securities Market of Euronext Dublin in the
first half of 2021. The Company has selected advisers and delivered
a first draft of its prospectus to the Central Bank of Ireland on 9
February 2021. The Company will continue to retain its quote on the
AIM market of the London Stock Exchange.
On 1 January 2021, the Company's previously agreed letting of
20,268 sq. ft. (the first floor) of Unit 2600, Cork Airport
Business Park to Alter Domus Fund Services Ireland Limited ("Alter
Domus") along with 79 car parking spaces took effect.
On 4 February 2021, the Company held an EGM at which the
resolutions intended to facilitate the migration of the Company's
participating securities from the CREST System to the central
securities depository system operated by Euroclear Bank SA/NV and
to make certain changes to the Company's Articles of Association
were duly passed by shareholders.
On 23 February 2021, the Company declared the payment of an
interim dividend for the fourth quarter of 2020 ended 31 December
2020 of EUR1,562,011 for 1.40 cents per share. This will be paid to
shareholders on 7 April 2021.
On 25 February 2021, the Company announced that it had agreed a
new lease for the entirety of the Gateway Three building on East
Wall Road in Dublin to the Electricity Supply Board ("ESB")
group.
On 18 March 2021, an agreement was made to finance the
construction of an adjoining building to its currently owned
Building C at the IDA Business and Technology Park at Athlone,
Westmeath, which the tenant has agreed to lease on completion. The
Company has established a 100% owned subsidiary, Yew Grove HoldCo
One Limited, for this purpose.
Property Valuation
Despite the difficulties and uncertainties created by COVID-19 I
am pleased to say that the value of the portfolio held up well. Our
properties have increased in value over the year (after accounting
for capital expenditure) by EUR3.4 million, which exceeds the costs
of acquiring the Millennium Park portfolio (approximately EUR2.1
million), and has helped increase our fully diluted EPRA Net
Tangible Assets ("EPRA NTA").
I have set out some detail on the portfolio performance by asset
type to shed more light on how our properties performed in 2020 and
give some insight for future performance in 2021 and beyond.
The portfolio can be analysed into office buildings, industrial
buildings and the four remaining non-core properties (three legacy
smaller mixed-use buildings and the retail units in the Bridge
Centre in Tullamore):
a) Industrial buildings:
Our industrial buildings appreciated by 5.5% over the year,
showing a valuation improvement in both halves of the year. Given
some of the impressive increases seen in the UK and elsewhere in
Europe and the increasingly small levels of vacancy in all but the
smallest and oldest buildings across the country, the Irish market
consensus is that 2021 will see a further increase in both rents
and values in this sector and I fully concur with that view.
b) Office buildings:
Our office portfolio also increased in value, by some 1.9%.
However, this raw number does not tell the full story:
i. our buildings in Cork (at the Airport Business Park and in
Mallow) and in Millennium Park in Naas benefited from our asset
management in letting vacancy and improving Estimated Rental Value
("ERV") through new lease agreements, which saw the value of those
properties increase by 6.3%.
ii. across most of the rest of the office portfolio, valuations
were broadly unchanged from last year (increasing by 0.04%) and
2021 will be a pivotal year for this part of our activity as I
expect the positive effects of the Company's active asset
management to continue feeding through to valuations (driven
predominantly by positive rent reviews and re-gears than letting of
vacant space) and I am also positive on the future of the office,
especially in regional Ireland.
c) Non-core buildings:
The unsold non-core properties in aggregate fell in value by
0.8%, almost entirely because of the write down of retail units and
despite new leases being signed in the Bridge Centre in July and
Listowel in November 2020. During the second half of 2020 we sold
two smaller industrial units, each at a profit relative to their
mid-year valuations although at a loss of EUR162,000 to the value
shown in December 2019.
As Ireland recovers from the COVID-19 pandemic the future of the
suburban and regional office should become clearer. In my view, the
combination of strong fundamentals, low net vacancy for the sort of
offices required by larger companies and government bodies and
existing rents, which largely are still below the level required to
trigger new construction, will continue to see a market in which
rents rise. This combined with institutional buyers increasingly
looking for secure sources of income in a world where interest
rates are expected to remain lower for longer will help to keep
discount rates at their current levels and possibly drive some
tightening. In summary, I am confident that once through the worst
of COVID-19 we will see our office valuations increase.
Finance
Despite the lack of capital growth, the Company's income and
balance sheet have proved resilient. Rental income grew to EUR10.9
million from EUR9.9 million (an increase of 9.6%), reflecting the
increased size of the estate. Against this administration costs
were tightly managed. The costs attributable to running the Company
rose from EUR3.0 million to EUR3.1 million (an increase of 2.8%)
while the portfolio grew by 23%. This included a fall in total
employment costs of 9.6% despite two additional employees being
hired during 2020. As is reflected in the financial analysis below,
our portfolio has grown in value by 22.6% over the year, our
contracted rent roll has grown by 22.5% and our reversionary rent
roll has grown by 22.9%. I am pleased that despite the headwinds of
a global pandemic the Company has maintained its positive
momentum.
The overall impact of the year's performance resulted in an EPRA
EPS of 5.49 cents per share on a fully diluted basis, as compared
with last year's performance of 7.02 cents per share by the same
measure. The reason for the apparent relative under performance is
explained by the distorting effect of EUR2.0 million lease
surrender income earned in 2019 (which accounted for earnings of
1.86 cents per share). The underlying 2020 performance and increase
over 2019 (after adjusting for the surrender income) was creditable
considering the challenges created by the pandemic and I look
forward to building on this in 2021.
At year end, the Company had debt facility drawings of EUR38.6
million and cash and cash equivalents of
EUR10.4 million, giving a loan to value ("LTV") of 27.2% and a
net debt LTV of 19.8%. Our shareholders approved an increase in the
targeted LTV from 25% to 40% on 30 September 2020 and a new
facility was negotiated and agreed with AIB in late December and,
as such, the loan balances and the LTV are likely to increase
during 2021.
The positive valuations described above meant that the Group's
fully diluted NAV increased from 98.41 cents per share in December
2019 and 97.22 cents per share in June 2020 to 99.77 cents per
share at year end. The Company also declared progressive quarterly
dividends which, together with the final dividend of 1.40 cents per
share will mean that shareholders will have received 5.15 cents per
share from 2020 earnings.
Irish Commercial Real Estate Market
The Irish Commercial Real Estate ("CRE") market was, like all
property markets, hugely affected by the pandemic. After a record
first quarter, commercial activity almost ground to a halt as the
Government locked down the country in an attempt to control the
spread of infection. The lack of international travel for most of
the year meant that transactions (investments, lettings, new
construction) which depended on advisers or executives flying into
Ireland to complete due diligence on properties or portfolios had
to be delayed or abandoned. The almost universal move by office
workers to work from home challenged the orthodoxy on the
importance and/or necessity of offices, particularly city centre
offices. Most fundamentally, the pandemic accelerated trends that
were already evident in the wider economy, such as the move to a
digital economy. For those sectors in which the Company is active
(office and industrial) we saw divergent shifts.
Industrial
Notwithstanding the difficulties of operating within a partially
closed economy, the industrial sector saw one of its busiest years.
Take up in Dublin was almost 3% up on 2019, with the fourth quarter
having the highest quarterly take up over 5 years. Prime rents rose
during the year to over EUR10.50 per sq. ft. and vacancy fell to an
almost unprecedented 2%[3]. The global focus on industrial property
saw prices increase and yields compress to 4.7% in the year[4].
Forecasts for 2021 are for more rent increases and further yield
compression.
This story is not unique to the Dublin market. Both Cork and
Limerick also recorded banner years, with only Galway, where the
lack of new construction and suitable vacancy continued to depress
activity, recording a quiet year. In Cork take up was on a run rate
to be the best year since 2005 with the vacancy rate falling to
3.5% of which only 23% is grade A(5) . The market is described as
suffering an acute shortage of space with only two sites of greater
than 50,000 sq. ft available and the only new construction
currently being design and build. In Limerick gross vacancy is
running at 6.5% which is the lowest for a number of years, with
only 24% of that being grade A and more than 50% of the total
vacant space reserved. Again, there is an acute shortage of large
high quality space, and while there has been some speculative
development in Shannon, all of that is now reserved. Take up in
Galway has been muted, largely because of the lack of any available
space. There is only one building of greater than 50,000 sq. ft.
available to rent and despite the delivery of one new building in
Parkmore, vacancy rates stand at 5.3% of which 45% is Grade
A.[5]
Office
The office market by contrast was negatively affected by
COVID-19, although our views of the future of the office are rosier
than one might expect just looking at headlines. Take up in the
Dublin market was down almost 47% on 2019. The impact of the
pandemic on occupier activity is made manifest when one sees that
over 60% of that take up occurred within the first quarter of the
year. Even though the fourth quarter saw a revival of activity it
was still the lowest fourth quarter number in a decade. Whilst the
overall numbers were terrible, almost 37% of all activity occurred
in the suburbs, although the suburbs accounted for only 30% of the
fourth quarter letting. Overall vacancy across the city has risen
to 9.1%, with city centre standing at 8.5%, grade A at 7.5% and
suburban vacancy rising to 10.2% principally concentrated in the
south eastern and western suburbs(4) .
Whilst prime rents have softened, suburban rents stayed broadly
where they were at the beginning of the year. Investment activity
was muted. Total investment spend was EUR3.6 billion for the year,
substantially down from 2019. Of that circa EUR1.4 billion was in
offices. Despite the lack of transactions there was little effect
on discount rates with city centre prices unaffected and prime
yields unchanged at 4%.
Regional markets were similarly affected. There is speculative
development in Galway and Cork but after a flurry of activity over
the past couple of years, there is nothing further in Limerick. In
Cork city centre, development continues apace with work beginning
on the second phase of Navigation Square, and the imminent
completion of Horgan's Quay and Penrose Dock. Those developments
will have added almost 600,000 sq. ft. of prime office space to a
market which historically has had annual take up of less than half
of that. However, the developments have driven new and increased
demand from those multi-nationals and other large occupiers which
had seen Cork as a natural site for business but one which was too
constrained by the available floorplates of high quality offices.
Overall net vacancy rates have increased to 12.2% on a gross basis
but after taking account for reservations and pre-signed
transactions net vacancy sits at 8.4%(5) . Both prime and suburban
rents saw small upticks during the year and early indications are
that the city centre, with effective rents of EUR30 to EUR35, is
proving a draw, not only to tenants who need large, high quality
space, but as importantly to larger institutional investors.
In Limerick the positive momentum of the past two years was
slowed by the effective shutdown but notwithstanding the slowdown
in take up, availability fell by 29% from 2019. Gross vacancy stood
at 9.9% with net vacancy at just below 6.6% and only half of the
available space of the grade A standard. The vacancy rate is one of
the lowest on record. Unlike Galway and Cork, there is no
development currently in Limerick City or in Shannon, but forward
development plans suggest that if the market returns to normality
then that would be kick started.
In Galway take up has been very low, but this is more to do with
the lack of vacancy in large floor plates than a moribund occupier
market. The vacancy rate of 4.9% and the acute shortage of
available space, with less than 100,000 sq. ft. of grade A quality
space available means that it is difficult for businesses to expand
and has hampered Galway's ability to attract new foreign direct
investment ("FDI") which require office space(5) . This has, after
many years, been addressed. The construction at Bonham Quay and
Crown Plaza are the first major new developments outside of the
Parkmore IDA park. Early indications are that both are proving very
attractive to tenants and on delivery should help reignite the
office take up in Galway which has stagnated over the past few
years.
Sustainability
2020 was the first full year in which the Company rolled out its
ESG strategy. In summary, some of our activities were affected by
COVID-19, most especially in our planned interactions with local
communities in the areas of the country where we have properties,
but the Company still made significant strides in assessing the
impact its buildings have on the environment and has started a
multiyear plan to reduce that impact, including working with
tenants to understand better how we can jointly improve the
environmental impacts of the buildings we own and they occupy and
to improve the common areas of, and external spaces associated
with, those buildings for the benefit of all occupants.
Outlook
The Irish economy, driven by the resilient FDI sectors such as
life sciences and technology, has been one of the best performing
globally even as the domestic economy suffered a worse slow down
than most in Europe. As the country emerges from lockdown it is
likely that the recovery will be sharp and the continued
performance of the key FDI sectors should produce yet another
strong year despite the headwinds that will be generated by
Brexit.
Even with the complications caused by travel bans and market
shutdowns the IDA Ireland still managed to generate almost as many
foreign direct investments in 2020 as in 2019 and with the easing
of lockdowns, which will begin between spring and late summer 2021,
we should expect an acceleration of demand.
I expect the industrial sector to have another excellent year
with the principal issue being the availability of quality stock
and an increase in build and design across the country. In offices,
the market will be slow until a clear and timetabled route out of
lockdowns can be mapped. However, that is just a question of time.
In my view, there is no doubt that the office has a future, but as
employers and employees include the flexibility to work both in an
office and from home, it will be different from its past. In our
markets I expect a greater stratification of offices into those
seen as attractive and deserving of a premium and those which are
acceptable but will trade back from the very best. Because the ERVs
on our offices still sit well below the levels which would trigger
new development (and even further below the levels required for
premium builds) and because appropriate space is still in short
supply, I expect our office rents to keep rising.
The Company will continue to focus on growing its capital and
portfolio and will focus activity on those parts of the industrial
and office markets which we believe will generate the optimal mix
between yield and value growth that will continue to enhance
distributions to our shareholders and the strength of the balance
sheet underpinning their investments.
2 Prior to year end a lease was agreed for part of our Cork
Airport building which started on 1 January 2021. This increased
the annualised rent roll to EUR11.3 million and vacancy to 4.1% the
day after year end.
(3) CBRE Dublin Industrial Logistics and MarketView Q4 2020
4 Dublin Office MarketView Q4 2020
(5) Cushman And Wakefield MarketBeat Q3 2020
Financial Review
In the context of a property company in a year of pandemic, our
results for the year were positive. Our debt facility was increased
by 84% and the property portfolio by 23%. Group net assets grew
from EUR109.9 million to EUR111.6 million at year end, rental
income grew from EUR9.9 million (EUR7.9 million excluding lease
surrender) to EUR11.4 million[6] and administrative costs remained
controlled at EUR3.1 million when compared with EUR3.0 million in
2019. Our total expense ratio ("TER") fell from 3.7% in 2020 to
2.9% in the year.
Net Asset Value
The net assets of the Group increased by EUR1.7 million, a rise
of 1.5% over the year. The Company increased its available debt
facility by EUR24.5 million to EUR53.6 million, which was partially
deployed on a further EUR25.3 million of property assets. Valuation
gains on the Group's portfolio over the year were EUR1.2 million,
inclusive of property purchase costs of EUR2.1 million incurred on
acquisitions. The vast majority of the net rental income was
distributed to shareholders as quarterly property income
distributions.
Income statement
Net rental income for the year was EUR10.7 million, with the
contracted rent roll rising by EUR2.0 million. The strong rental
collections throughout the year supported the Company's decision to
increase its LTV target, which was approved by shareholders in
September 2020. A comparison of contracted rent roll for properties
owned on 31 December 2019 with 31 December 2020 shows an increase
of 22.5% while contracted rent roll on properties bought during the
year rose by 40%, the majority of which was due to the leasing of
vacancy at Millennium Park. As mentioned below in the Portfolio
Review, there were lease events which increased the income from
some of the Company's properties, and with our reversionary
portfolio we expect further increases over the coming years.
Administrative expenses over the year were EUR3.1 million. There
were two additional hires: one in order to internalise the
Company's company secretarial function which was previously
provided by an external provider, and another to provide analytical
property support. The Company Secretary internalisation was
completed this year, and the Company will look at continuing to
internalise other roles currently provided by third parties in the
future if they offer control and cost benefits.
Dividends
Following last year's initiation of quarterly dividends,
dividends paid in the year were 4.79 cents per share, a fall of
1.88 cents per share on the dividend paid in 2019 (0.02 cents per
share when the 2019 special dividend is excluded) and fully covered
by EPRA earnings. The Company has had a quarterly dividend schedule
in place since March 2019 and continues to target distributing its
EPRA earnings to shareholders in this manner if prudent and legally
permissible. Dividends were paid throughout the year.
Investment properties
The property portfolio value was EUR141.9 million at 31 December
2020, up from EUR115.8 million the prior year. Realised and
unrealised gains on the property portfolio were EUR1.3 million for
the year (notwithstanding the costs of property purchases), which
includes the gain on sale on two of our smaller properties. Capital
expenditure not recharged to tenants was EUR0.1 million. As at 31
December 2020, the portfolio had 25 properties, with an average
value of EUR5.7 million. The remaining smaller legacy non-core
properties that were a part of the IPO seed portfolio will be
marketed over the coming year and the proceeds redeployed in more
institutional properties.
Borrowings
Over the year the Company amended its revolving debt facility
with AIB, increasing it by 84% from EUR29.1 million to EUR53.6
million, and the drawn amount increased from EUR20.8 million to
EUR38.6 million over the year. Net debt at the end of the year was
EUR28.2 million. The Company's shareholders approved increasing the
Company's target LTV from 25% to 40% at EGM in September 2020,
following which the debt facility was extended and amended. The
maturity was extended from December 2020 to December 2024,
extendible by a further year, and the margin is reduced for periods
when the LTV is below 35%. The interest coverage covenants remain
consistent but the REIT Cost Cover covenant has been removed. As at
31 December 2020, the Company had undrawn facilities of EUR15.0
million. The LTV increased from 18.0% to 27.2% over the year and is
expected to rise again as pipeline assets are purchased. The
Company remained fully compliant with its facility covenants
throughout the year.
Liquidity
The Company has maintained strong reserves throughout the year,
finishing the year with cash of
EUR10.4 million and EUR15.0 million of available debt
facilities. The majority of this is expected to be applied in the
purchase of further properties, the Company's property pipeline
being a multiple of this amount.
Share capital
The Company received agreement from its shareholders in May 2020
for a one year extension, 100 million share issuance programme,
which has yet to be accessed. Shares in issuance remained at 111.6
million.
[1] Prior to year end a lease for part of our Cork Airport
building was agreed which started on 1 January 2021. This increased
the annualized rent roll to EUR11.3 million and vacancy to 4.1% the
day after year end.
Portfolio Review
Portfolio characteristics at a glance:
31 Dec 2020 31 Dec 2019 1 Jan 2021*
Contracted
rent roll EUR10.9m EUR8.9m EUR11.3m
------------------- ------------------- -------------------
Portfolio ERV EUR12.4m EUR10.1m EUR12.4m
------------------- ------------------- -------------------
Portfolio value EUR141.9m EUR115.8m EUR141.9m
------------------- ------------------- -------------------
Gross yield
at fair value 7.7% 7.7% 7.9%
------------------- ------------------- -------------------
Gross reversionary
yield 8.7% 8.7% 8.7%
------------------- ------------------- -------------------
Number of properties 25 23 25
------------------- ------------------- -------------------
WAULT to Break/Lease 4.1/7.2 years 4.6/8.1 years 4.2/7.5 years
end
------------------- ------------------- -------------------
Vacancy by
ERV 6.9% 7.7% 4.1%
------------------- ------------------- -------------------
-- Portfolio increase via acquisitions from EUR115.8 million to
EUR141.9 million at 31 December 2020: a 23% increase.
-- Two buildings were sold in 2020 (Value EUR2.2 million).
-- Portfolio Location: 53% (2019: 42%) of contracted rent roll
generated by buildings within the Dublin catchment area.
-- Portfolio Quality: 96% (2019: 96%) of contracted rent roll
secured by Government, FDI and Large Enterprise tenants.
-- Sectoral Exposure: 76% (67%) of contracted rent roll
generated from office, 19% (2019: 26%) from industrial and 5%
(2019: 7%) from non-core portfolio. 36% of rent roll in Life
Sciences, 26% Government & 17% Finance & Business
Services.
(*) 1 January 2021 figures include the Alter Domus lease at Unit
2600 Cork Airport, 1/1/2021
Property Type Location Value Contracted Gross Reversionary Gross WAULT WAULT Portfolio
(EUR'000) Rent Yield Rent Roll Reversionary to to lease Vacancy
Roll at (EUR'000) Yield lease end
(EUR'000) Fair break (years)
Value (years)
1 One Gateway Office Dublin 19,300 1,306 6.8% 1,495 7.7% 1.6 2.7 0.4%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
North
2 Letterkenny Office West 15,670 1,437 9.2% 1,458 9.3% 7.3 7.3 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Three
3 Gateway Office Dublin 14,540 913 6.3% 1,181 8.1% 1.0 1.0 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
4 Teleflex Office Midlands 11,580 948 8.2% 851 7.3% 7.8 10.7 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Birch
House Dublin
5 MP Office Catchment 8,200 697 8.5% 697 8.5% 9.5 14.5 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Unit 2600,
Cork
6 Airport[7] Office Cork 6,950 0 0.0% 689 9.9% - - 100.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Chestnut
House Dublin
7 MP Office Catchment 6,200 507 8.2% 576 9.3% 2.9 2.9 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
IDA Athlone
Block
8 B Industrial Midlands 6,075 530 8.7% 530 8.7% 2.2 12.2 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
IDA Athlone
9 Unit B2 Industrial Midlands 5,550 483 8.7% 483 8.7% 2.7 13.7 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Ashtown
Gate Block
10 C Office Dublin 4,990 395 7.9% 396 7.9% 3.2 4.9 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Ashtown
Gate Block
11 B Office Dublin 4,780 405 8.5% 374 7.8% 2.1 8.4 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
IDA
Waterford
Block South
12 A Office East 4,150 353 8.5% 424 10.2% 2.6 14.0 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
IDA Athlone
Block
13 A Industrial Midlands 3,640 270 7.4% 313 8.6% 4.9 8.0 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Hazel
House Dublin
14 MP Office Catchment 3,460 341 9.8% 335 9.7% 2.8 4.4 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Willow
House Dublin
15 MP Office Catchment 3,300 222 6.7% 316 9.6% 3.7 4.8 18.6%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Ash House Dublin
16 MP Office Catchment 3,270 326 10.0% 331 10.1% 0.5 5.5 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
IDA Athlone
Block
17 C Industrial Midlands 3,215 280 8.7% 253 7.9% 3.8 8.8 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Airways
18 Unit 8 Industrial Dublin 3,100 160 5.2% 291 9.4% 5.1 10.1 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Blackwater
19 House Office Cork 2,860 235 8.2% 343 12.0% 3.7 3.7 29.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Airways
20 Unit 7 Industrial Dublin 2,760 160 5.8% 258 9.4% 4.5 9.5 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Beech
House Dublin
21 MP Office Catchment 2,170 222 10.2% 221 10.2% 1.6 6.7 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Unit L2 Dublin
22 Toughers Industrial Catchment 1,930 170 8.8% 211 10.9% 2.1 2.1 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Old Mill Mixed South
23 Lane Use West 1,690 247 14.6% 159 9.4% 5.7 8.0 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Bridge
24 Centre Retail Midlands 1,625 209 12.9% 161 9.9% 7.1 8.4 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Canal Mixed
25 House Use Midlands 920 107 11.6% 55 6.0% 6.0 6.0 0.0%
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
Total 141,925 10,922 7.7% 12,403 8.7% 4.1 7.2 6.9%(1)
------------ ----------- ---------- ---------- ----------- ------ ------------- ------------- ---------------- --------------------- ----------
[1] Prior to year end a lease for part of our Cork Airport
building was agreed which started on 1 January 2021. This increased
the annualized rent roll to EUR11.3 million and vacancy to 4.1% the
day after year end.
At year end, the Company's property portfolio had 25 properties
throughout Ireland. Lisney as external valuer valued the portfolio
at EUR141.9 million as at 31 December 2020 (2019: EUR115.8
million), reflecting a gross yield at fair value of 7.7% (2019:
7.7%) and gross reversionary yield of 8.7% (2019: 8.7%).
Company Portfolio Objectives & Policy
The Company's investment strategy is to invest in and manage a
diversified portfolio of industrial and office property assets in
its target geographical market securing high quality income from
quality tenant covenants.
The investment objectives are constrained by the following risk
limits:
-- No single property shall exceed 25% capital value of the total assets.
-- Income receivable from one tenant (except Government) shall
not exceed 35% of the total rental income.
-- At least 90% of the Company's assets will be invested in
office and industrial assets and the REIT will not invest in the
residential, retail, or service assets.
-- No more than 20% of the total assets of the Company may be
invested in properties outside its geographic target market.
-- The Company will not engage in speculative development,
however, it will consider financing construction against pre-lets
and/or agreements to lease to meet current tenants' expansionary
plans.
Investment Activity 2020
The COVID-19 pandemic and national lockdowns have had a major
impact on investment activity across the portfolio in 2020.
However, the Company completed the purchase of six office buildings
at Millennium Park, Naas and sold two of its non-core assets in the
year.
Millennium Park
The acquisition of a portfolio of six office buildings at
Millennium Park in Naas was completed in February 2020 at a
purchase price of EUR25.3 million, which represented a net initial
yield of 5.80% after accounting for purchase costs.
The portfolio is a part of the Millennium Park, Naas
development, situated approximately 40 minutes' drive from both
Dublin City Centre and Dublin Airport. At the time of exchange, it
was expected to benefit from the upgrade of the M7 motorway and
significantly improved access from the new M7 interchange at
Millennium Park. That interchange was completed during 2020.
The portfolio has 141,000 sq. ft. of modern offices over six
buildings, as well as circa 770 car parking spaces and a six-acre
greenfield site. All six of the office buildings are tenanted by
multinationals, large Irish enterprises and governmental bodies.
The combined leases at acquisition had a weighted average unexpired
lease term (WAULT) to break of approximately 2.5 years and to lease
expiry of approximately five years. Through asset management we
have managed to increase these to 4.5 years and 7.5 years
respectfully. The annual rent roll for the portfolio at purchase
was circa EUR1.6 million and by the end of 2020 this had grown to
EUR2.3 million.
Non-Core Property Disposals
During 2020, the Company continued to divest its non-core
properties and disposed of one of these assets together with a
smaller industrial unit which had become vacant during the
year.
The Company agreed the surrender of a lease at 13 Holly Avenue,
Stillorgan Industrial Estate, Dublin. This industrial building of
16,990 sq. ft. was one of two inter-connected buildings (the other
half was under separate ownership) which was solely occupied by
DiaSorin Ireland Limited (an Italian biotech multinational that had
been acquired by the American Standard Group) ("DiaSorin"). Under a
surrender agreement, DiaSorin paid a sum in lieu of all rent due
for the residual term of the lease and a further agreed amount for
dilapidations. The property, which was fitted as a high
specification med-tech industrial space, was sold with vacant
possession in November 2020 for EUR1.46 million, In addition to the
sale value, the Company received a further EUR426,603 in
dilapidations and surrender premium from the surrender negotiations
outlined earlier.
The Company also sold Units F4 & F5 at Centrepoint Business
Park, Clondalkin, County Dublin, for EUR950,000. The transaction,
which completed in early December, sold at 11% ahead of the 30 June
2020 independent valuation.
Portfolio
Excepting non-core assets, the portfolio consists of industrial
and office properties, with a high quality tenant base generating a
high yielding income at current valuation levels.
The portfolio has 824,940 sq. ft. of total space. The office
sector represents 60.9% by area of the portfolio (502,705 sq. ft.)
of which approx. 53.5% (268,846 sq. ft.) is located within the
Dublin catchment area.
The industrial sector represents 34.3% by area of the portfolio
(283,056 sq. ft.) of which approx. 43.0% (121,686 sq. ft.) is
located within the Dublin catchment area. The balance (161,370 sq.
ft.) is located within the IDA Business & Technology Park,
Athlone.
The non-core portfolio represents 39,179 sq. ft. or 4.7% of the
portfolio by area and these units are in buildings where retail
tenants are ancillary to the anchor tenants which are government
agencies.
Overall, the vacancy rate of the portfolio by area at year end
was 6.4% or 52,395 sq. ft. primarily from Unit 2600 at Cork Airport
and Blackwater House.
Portfolio Asset Management
Birch House, Millennium Business Park, Naas, Co. Kildare
In July 2020, the Company leased Birch House to Aldi Stores
(Ireland) Ltd. Birch House is a modern three-storey office block
designed by Scott Tallon Walker and has 40,333 sq. ft. of open plan
space constructed around a three-storey atrium. The building is in
the Millennium Business Park, in Naas, County Kildare, where the
Company owns another five buildings, all of which are let. The
lease for the building plus 156 car park spaces is for a
fifteen-year term with a break option at the end of year ten and at
a headline annual rate of EUR16.50 per sq. ft. plus EUR200 per car
park space, equating to an annual rent of EUR696,694 per annum.
Unit 2600 Cork Airport Business Park, Cork
In December 2020, the Company signed a lease for 20,268 sq. ft.
(the first floor) of Unit 2600, Cork Airport Business Park to Alter
Domus including 79 car parking spaces. The lease, which is for a
fifteen-year term beginning 1 January 2021, with a break option at
the end of year five and year ten, was agreed at a headline rate of
EUR16.50 per sq. ft. with a separate licence for 79 car spaces at a
rent of EUR200 per car space per annum. The lease facilitates Alter
Domus' ongoing expansion of their Cork operations and will generate
an annual combined rent of EUR350,000 for the Company.
Block A, IDA Waterford Business & Technology Park,
Waterford
Also, in December 2020, the Company consented to a tenant's
request to exercise an option to renew the lease of the
second-floor office suite (9,777 sq. ft.) within Block A, IDA
Waterford Business & Technology Park, Holycross, Waterford. The
tenant, SE2 Information Services Limited ("SE2"), has been in
occupation since 2015 and opted for a further five-year term
(including an option to break at the end of the third year) with a
2% uplift in annual rent.
Unit A, IDA Business & Technology Park, Athlone, Co.
Meath
The Company also agreed to the partial surrender and re-letting
of 10,540 sq. ft. of first floor space within Unit A, IDA Business
and Technology Park Athlone. The building had been wholly let to
Signature Orthopaedics Europe Limited (a subsidiary of an
Australian med-tech company) and the surrendered space has been
leased to KCI Manufacturing Unlimited Company (a subsidiary of 3M)
("KCI"). The tenant, KCI, already occupies Buildings B1 and B2
which are adjacent to this building and thee new letting satisfies
KCI's immediate expansion plans. The lease was for a five-year
term, which is coterminous with KCI's other leases in B1 and B2.
The agreed rent of EUR9.29 per sq. ft. is at current market value
producing a 25% uplift to the Signature Orthopaedics Europe Limited
rent for the surrendered space.
The Bridge Centre, Tullamore
In July 2020, the Company agreed a new lease for the vacant Unit
24 in the Bridge Centre, Tullamore. The space is a prime 750 sq.
ft. ground floor unit with main square frontage. The lease to EBS
d.a.c. is for a ten-year term with a break at the end of year five.
The annual rent of EUR33.33 per sq. ft. is in line with our pre
COVID-19 estimate of ERV of prime space within the Bridge
Centre.
Two further leases, both in this same shopping centre were also
agreed. The first, to An Post, is an extension to their current
lease for Units 23 and 23a. These comprise a prime 2,260 sq. ft.
unit to the front of the Bridge Centre with offices on first floor
level. The lease was agreed at EUR28.53 per sq. ft. for a ten-year
term. The second new lease for Unit 11 (1,193 sq. ft.) was agreed
with Byron Distribution Limited, again for a ten-year term and at
EUR27.07 per sq. ft. All the Company's units at the Bridge Centre
are now fully let. These units in the Bridge Centre produce an
average rent of EUR25.65 per sq. ft. with a WAULT to break and
expiry of approximately seven and eight years respectfully.
Asset Management
In addition to these new leases, six rent reviews were triggered
in 2020. A rent review agreed at Millennium Park in Naas set a
headline rent of EUR17.75 per sq. ft. A further review at Block A
Waterford added a combined EUR70,000 rent to the portfolio,
equating to a 0.6% increase for the Company that will take effect
in 2021. Negotiations of four further rent reviews from 2020 are
ongoing.
The Company agreed a re-gear of the OPW lease for 12,290 sq.ft.
of office space at our property in Old Mill Lane, Listowel. The
re-gear removed the July 2022 break option, extending the lease to
July 2027 in exchange for a circa EUR4 per sq.ft. reduction in
rent.
Several break options which crystalised during 2020 were not
exercised despite the impact of the pandemic. A number of extension
options were exercised, including the ESB in Gateway One and
Gateway Three and SE2 in Waterford (as mentioned above). The
combined effect of these events has helped to preserve the WAULT on
the portfolio.
Principal Risks and Uncertainties
The Company's Board has overall responsibility for the
establishment and oversight of the Company's risk management
framework to ensure that its strategy can be successfully
implemented. The Audit Committee is responsible for developing and
monitoring the Company's risk management policies, as set out in
the governance statement. Risk management policies are established
to identify and analyse the risks and emerging risks faced by the
Company, to set appropriate risk limits and controls and to monitor
risks and adherence to limits. All of these policies are regularly
reviewed in order to reflect changes in market conditions and the
Company's activities.
The Company's risk register, reviewed by the Audit Committee,
records key risks and emerging risks across the Company's current
and future investment, operations, information technology,
governance, economic and strategic areas of activity. Emerging
risks that have required new entries on the register in 2020 have
been indicated with * in the tables below. The register assesses
the likelihood and impact of risks as well as their direction in
order to monitor progress in managing and mitigating them. A
register of material errors and breaches is also maintained and no
material breaches were noted during the financial year.
The Board
The Board has overall responsibility for maintaining and
monitoring the Group's systems for risk management and internal
control. The Board reviews and approves the risk appetite of the
Company.
The Audit Committee
The Board has charged the Audit Committee with reviewing the
adequacy and effectiveness of the Company's internal control
(including financial control) and risk management systems. The
Audit Committee assesses management's risk measurement and
control.
Executive Management
Executive management have day to day responsibility for ensuring
the Board's strategy with regards to risk management, measurement
and reporting is implemented. In addition, they identify and
provide assessment of current and future risks the Company may face
for the Board's review.
Internal Audit
The Audit Committee considers the nature, scale, complexity and
range of operations of the Company.
The internal finance team maintains internal control processes,
disaster recovery processes and a business continuity programme
which is reviewed on a regular basis. Based on the Committee's
assessment of the foregoing controls within the Company, combined
with the current size of the Company, the Audit Committee has
recommended to the Board that it does not believe it is necessary
to establish an internal audit function at this time. The Board
concurs with the Audit Committee's recommendation not to establish
an internal audit function for the Company at this time. The Audit
Committee will continue to review this position annually and make
appropriate recommendations to the Board.
The Company's assets are primarily office and industrial
commercial properties in Ireland. The principal risks it therefore
faces are related to the Irish commercial property market in
general, the Company's operating environment and individual
properties and tenants. The Board has carried out a robust
assessment of the principal risks and sets out below the principal
risks and uncertainties that the Company is exposed to and that may
impact performance in the coming financial year. The Company
proactively identifies, assesses, monitors and manages these risks.
Some risks are not yet known and some that are not currently deemed
material may turn out to be material in the future. The material
risks and uncertainties identified, along with their strategic
impact on the business and mitigating factors, have been
outlined.
Risk Grouping Risks Mitigants Commentary Covid momentum
Strategic Inappropriate
Strategy . The Board reviews The low retail The COVID-19 Stable
* the Company's exposure, high pandemic has
The cyclicality strategy annually rent collection required the
of the property and considers and leasing Company to
market or investor whether any activity in monitor both
and tenant change may 2020 have helped shareholder
demands may be needed in the Company's interest in
change, requiring the light of performance. the Company,
the Company current or Changes in tenants' interest
to modify its forecast market office usage in the Company's
strategy to conditions. post COVID-19, properties
mitigate an The Board has changing occupier and the collection
adverse impact property, requirements and valuation
on shareholder financial need to be performance
returns. markets and closely monitored. of the Company's
accounting properties
professionals closely.
to advise on The Board has
strategy changes reviewed stressed
in their specific scenarios to
areas. ensure the
Company's strategy
remains valid
in adversity.
Reputational Stable
damage* The Company The Executive The Board is
The Company's has a strong management aware that
ability to system of internal view decisions following the
attract high controls and made from the pandemic the
calibre staff the Audit perspective Company and
and service Committee of all stakeholders its comparables
providers, reviews compliance as required will be reviewed
protect itself and internal under the UK in the light
from malicious controls. The Code to understand of their
actions (fraud, Company has how the Company performance
cybercrime) increased its might be viewed (financial,
and maintain efforts on by others. social and
its regulatory communicating environmental)
standing may its performance under testing
be challenged and intentions times, providing
by reputationally with current an opportunity
damaging news and future to enhance
or events. shareholders the Company's
as well as reputation.
other
stakeholders.
A formal PR
plan has been
implemented
to ensure the
Company is
not misunderstood
and has a platform
from which
to respond
to reputationally
damaging news.
Inappropriate Stable
capital structure. The Company's The Company's
The Company property assets collections
is financed are valued and property
by equity and independently value relative
debt and is with oversight stability have
reliant on from the Valuation demonstrated
compliance Committee. the financing
with its debt The Board reviews in 2020 to
covenants and the Company's be appropriate.
ability to debt covenant Following Board
raise further compliance and shareholder
equity capital at each quarterly approval the
for its operational Board meeting Company's target
activity. and reviews LTV was increased
financial from 25% to
forecasts 40% in Q3,
of the Company's allowing the
performance. Company to
The Audit continue to
Committee execute on
and the Board its pipeline
review the while the equity
Company's going capital markets
concern status have been closed
and expected in 2020.
shareholder The Company
returns, including has conducted
cash and financing meetings with
sensitivities. current and
The Company's potential
shareholders shareholders
approved a to ascertain
100 million the future
share issuance support for
program in equity capital
H2. The Board raising when
has reviewed markets open.
the company's
equity capital
raising plans
for 2021 to
allow the Company
the best
opportunity
for continuing
its growth.
Inability to Increasing
grow the Company The Company The Board see The rebalancing
Lack of growth has received the growth of the economy
in the Company's agreement at of the Company in response
equity might EGM to raise via raising to the pandemic
prevent further a further 100 further equity will play a
liquidity or million shares capital as significant
additional before May key to the part in determining
shareholder 2021 and has Company's success. the chief drivers
participation consulted with of equity interest.
in the Company's its brokers Until clear
shares, making to establish sight of the
them less a plan to access pandemic
attractive. the capital stabilising
If the Company markets when or receding
does not grow, they are is available,
its operational attractive the markets
leverage (it for the Company. may remain
could grow The Board has closed and
substantially reviewed the the rebalancing
without a Company's register may be more
proportionate in order to severe.
increase in ensure equity
administrative capital providers
costs) would that are
be wasted. under-represented
are a focus
for marketing
the Company's
shares.
Reliance on Increasing
incorrect A formal due A number of The lower
information diligence and the Company's investment
and analysis proposal process properties and leasing
.* is required are multi-tenanted activity in
Decisions made for all purchases, or grouped, 2020 has led
on poor or sales, significant allowing the to less
flawed information, asset management Company more transactional
weak due diligence and tenant accurate evidence for
or inappropriate leasing. data-points decision making.
advice could The Company from first-hand
lead to reputational maintains an evidence of
and financial independent leasing and
loss. record of property asset management
transactional terms from
and leasing its own tenants.
information
to provide
market comparisons
for potential
actions.
All decisions
above require
Investment
Committee
approval,
with Board
approval required
for particular
decisions.
Economic Weakening Economy Increasing
A weakening The REIT's The Company The length
national economy tenants are undergoes frequent and severity
puts pressure mostly Government forecasting, of the pandemic
on rents and and foreign scenario will be the
tenants, reduces direct investment, forecasting key driver
the availability reducing reliance and stress of immediate
of debt financing on the local testing to economic stress.
and brings economy. The understand This will continue
more onerous REIT assets the potential to be led by
debt financing are judged impact of capital, the timing
terms. Fewer on the levels economic and and efficacy
buyers for of local vacancy. portfolio changes. of immunity
the REIT's The REITs assets The economic measures and
properties. are mostly indicators local restrictions
in areas of to date have on movement.
low net vacancy shown that
where pressure while the local
on rentals economy has
is upward, been badly
providing some economically
protection affected in
against falling 2020, the FDI
rents. Targeted sector has
properties continued to
are majority grow, albeit
tenanted by at a reduced
stronger tenants pace.
with demand
and businesses
not just dependant
on the local
economy.
Weak FDI demand Stable
Risk of falling The Company's The Company
demand from acquisition follows FDI
Foreign Direct policy requires flows closely,
Investment alternative and the Board's
tenants. use planning. Chair has direct
The Company FDI experience
monitors and as a recent
aims to understand and senior
Foreign Direct member of IDA
Investment Ireland.
trends in advance.
Interest rates Stable
Debt facility The Company The increase
margins and will seek to in government
costs may increase. mitigate the support for
Interest rate impact of interest financing through
risk may increase. rate rises the pandemic
on any future has helped
debt facility. to keep current
The Company's and expected
finance manual interest rates
includes lower.
mitigating
policies for
hedging interest
rate risk.
Regulatory Brexit Increasing
As the impact The key risk The negotiation
of the Brexit areas by sector of the Brexit
agreement is (agriculture, agreement has
felt the land food manufacture) shown that
bridge across are avoided its impact
the UK to mainland in the REIT may lead to
Europe may portfolio. a number of
become increasingly Tenants are significantly
expensive for assessed on different outcomes.
tenants. the volume The Company
of their sales continues to
to the UK or watch this
supplies from closely with
the UK at rental a view increasingly
or acquisition, on the medium
and by their term and long-term
use of the impacts.
land bridge
across the
UK to mainland
Europe. Targeted
properties
are majority
tenanted by
stronger tenants.
Taxation management Stable
and reform The Company's The Board has
The Company finance team reviewed the
is required demonstrates impact of forward
to comply with the Group's looking expected
local taxation compliance and increasingly
laws, EU securities with the REIT stressed
legislation rules to the projections
and the Companies Board quarterly. on the Company's
Act 2014, all The Amendments compliance.
of which may introduced The increased
be amended. to the 2019 cost of the
Finance Act pandemic may
have ensured later place
the Board have a heavier taxation
continued to burden on the
take advice Company.
on the potential
taxation changes
from the Company's
advisors. The
Company is
a participatory
member of EPRA
and management
attend industry
briefings.
Taxation planning* The Company Increasing
Emerging risk The Company has started
the Company has been granted the process
may attract up to a year's of listing
a tax charge extension for it shares on
if not listed the listing the Main Securities
on the main requirement, Market of Euronext
market of an dependent on Dublin with
EU Member State its situation. a view of completing
recognised The Company this in H1
exchange within is planning 2021.
3 years of to list on
May 2018. an EU main
board as soon
as is practical.
Property Company asset Increasing
valuation The Company This risk has The pandemic
Property assets has a separate increased through has led to
outside the Valuation the pandemic, valuers
Dublin Central Committee as fewer investment occasionally
Business District to ensure the and leasing being unable
may lack recent most capable transactions to inspect
comparable valuers are have occurred. buildings,
transactions used. The and appending
or benchmarks, Valuation material
resulting in Committee can uncertainty
misleading change the clauses to
valuations. valuer and their valuations.
use more than
one valuer
for the portfolio.
The property
team keep a
record of
comparables
from acquisition
to share with
the valuer.
Property Stable
concentration The Company's The Company The pandemic's
(excessive investment has sought impact has
exposure) committee reviews to maintain led to a
Aggregation each asset diversity across significant
of property individually its portfolio divergence
location, tenant, and against since IPO, of returns
building use the aggregated and any future across sectors
and tenant portfolio on growth would and industries
sectors may purchase or seek to further and the risk
expose the later significant enhance this. remains elevated,
Company to capital with some sectors
increased risk. expenditure. facing a more
The Company challenging
seeks to maintain backdrop for
a suitably the next few
diverse portfolio years.
of properties
and tenants,
paying regard
to the tenant's
credit quality.
Significant
purchases,
lease amendments
or capital
expenditure
are matters
reserved for
the Board.
Tenant behaviour Stable
pattern Tenants' covenant The Company The Company's
(collections) strength and has been encouraged rent collections
Risk that the prior rental by the collections process has
Company's current performance to date, been refined
or future tenants is reviewed particularly throughout
fail to make at purchase, when compared the pandemic,
payments due the property with the broader which has found
in a full or management market as it the Company's
timely manner, group conduct has shown the tenant strategy
which could regular tenant benefits of to be highly
affect the meetings and a strong credit effective.
Company's dividends. tenant financial focus on tenants
reviews. From and counterparties
the onset of as well as
the COVID-19 beneficial
pandemic the relationships
Company has with its tenants.
been monitoring
collections
on a daily
basis around
rent payment
dates, reporting
on collections
and monitoring
any changes
in tenant payment
behaviour.
Tenant property Increasing
use* The Company While few decisions
The COVID-19 contacted all have been made
pandemic may tenants to by tenants
change current ascertain their and there is
and future current and little consensus
tenants' workplace expected use in the market
requirements. of leased on future office
properties. use the Company
A number of will continue
tenants' employees to support
have been working its tenants
from home, continued best
the future use of its
continuation properties.
of which is
uncertain,
as is the use
of a more regional
'hub and spoke'
approach to
office working.
Poor execution Stable
of development Prior to The Company 2020 re-furbishment
or re-furbishment re-furbishment, does relatively has, while
projects the CIO will little development, light, been
The risk that propose a and only with delayed by
development re-furbishment strict cost the movement
or refurbishment plan in accordance and risk management and work
is under budgeted, with the parameters. restrictions
overly lengthy Acquisition imposed by
or inappropriate. policy for Government
approval. in response
Contractors to the pandemic.
are engaged
in accordance
with the Company's
outsourcing
policy which
requires competing
bids, pre-set
timelines and
budgets to
identify failings
and replace
contractors
if necessary.
Ineffective Increasing
asset management The property The lack of The different
Failing to management equity capital opinions of
manage the group establish raising in market participants
Company's property early, on-going 2020 has increased on the future
assets could relationships the Company's path of the
lead to increased with tenants focus on its pandemic and
vacancy, longer to understand asset management its impact
void periods their and interactions on tenant space
and lower rental accommodation with existing and building
yields. needs. Each tenants. requirements
property has have required
an asset the Company
management to be flexible
plan to ensure with its short
the tenant and longer
and Company term asset
work together management
in this regard. plans.
Asset management
is reported
weekly on all
properties
to the Executive
Directors.
Operational Loss of key Reducing
staff. The Board and The Company Efforts are
The Company Company's has had no made to support
relies upon remuneration turnover of employees'
a small team policy is designed employees in safety and
to implement to incentivise its life, and well-being
its strategy performance in 2020 expanded through the
and run all and be aligned the LTIP scheme COVID-19 pandemic.
day to day with shareholders' to additional
operations. interests. employees.
Loss of employees, All employees
or inability report to a
to recruit Board member
suitable employees to provide
could result frequent feedback
in poor decision to the Executive
making and Directors and
underperformance. Board.
Business Increasing
interruption. The Company The Company
Events outside is a flexible has been tested
of the Company's employer, having by the COVID-19
control may had employees pandemic.
harm the working from All employees
operational, the office can work remotely,
strategic and or at home the Company's
financial goals since IPO. collections
of the Company. The Company have improved
has a daily throughout
confirmation the year and
on each employee's valuations
operational have been stable.
effectiveness. Travel restrictions
The Company's have slowed
IT systems some asset
(corporate, management
property and due diligence
management, processes.
financial The Company
reporting) can continue
have been to operate
implemented independently
with remote of its offices,
and multiple demonstrated
users in mind by an office
and have performed move in Q3.
throughout
the pandemic.
Cyber-attack* Increasing
Theft or denial The Company The Company
of the Company's maintains a has increased
data and management de-centralised cyber-security
systems. hardware approach, awareness training
with suitable for all employees
back-up to and hardened
prevent other areas
irretrievable of security
corruption while remote
of data. The working is
Company seeks prevalent.
to maintain
strong security
around its
data.
Environmental Sustainability Stable
Emerging risk The Company All refurbishment
that the Company's has established projects include
assets and an executive environmental
operating or Sustainability considerations
economic model Policy and to ensure buildings
may be adversely Sustainability are maintained
affected by committee to to current
legislative ensure standards
or sustainability environmental Building management
requirements. risks are systems are
identified being agreed
and mitigated. with most tenants
The Company to monitor
measures and and respond
manages its to energy usage.
properties'
environmental
impact directly.
The property
management
group review
each property
to ensure this
is affected.
Climate change Increasing
Failure to The Company's Climate change
respond sustainability is now considered
appropriately committee reviews to be a principal
and sufficiently these risks risk given
to climate to adapt the its increasing
change makes Company's importance
the Company's portfolio to all stakeholders
buildings less to address and the impact
attractive tenant and of real estate
and may not stakeholder on the environment.
meet the Company's requirements.
shareholders
expectations.
Consolidated Statement of Comprehensive Income
For the financial year ended 31 December 2020
Year ended Year ended
31 December 31 December
2020 2019
EUR EUR
Notes
Total Rental and related income
Rental income 3 11,364,978 9,946,724
Property expenses 4 (712,479) (527,948)
-------------- --------------
Net Rental and related income 10,652,499 9,418,776
Fair value gains/(loss) on investment
properties 5 1,166,063 (768,283)
Realised gain on disposal of
investment properties 5 135,534 123,174
-------------- --------------
Total income after revaluation
gains and losses 11,954,096 8,773,667
Expenditure
Administration expenses 6 (2,880,829) (2,949,241)
Expected credit loss on financial
assets 16 (175,583) -
AIFM fees 7 (75,000) (95,833)
Finance costs 8 (1,814,610) (669,384)
Total expenditure (4,946,022) (3,714,458)
Profit before taxation 7,008,074 5,059,209
Income tax 10 - -
Profit for the financial year 7,008,074 5,059,209
-------------- --------------
Total comprehensive income for
the financial year attributable
to the owners of the Group 7,008,074 5,059,209
============== ==============
EPRA earnings for the year 11 6,136,655 5,704,318
Basic earnings per share (cent) 11 6.28 6.24
Diluted earnings per share (cent) 11 6.26 6.23
EPRA earnings per share 11 5.50 7.03
Diluted EPRA earnings per share 11 5.49 7.02
Consolidated Statement of Financial Position
2020 2019
As at 31 December 2020 Notes EUR EUR
Non-current assets
Investment properties 13 141,925,000 115,790,000
Property, plant & equipment 14 239,416 4,717
Interest in joint venture 15 3,473 3,473
Trade and other receivables 16 793,333 -
--------------- ---------------
142,961,222 115,798,190
Current assets
Trade and other receivables 16 1,076,579 3,527,754
Cash and cash equivalents 17 10,721,464 14,577,461
Total current assets 11,798,043 18,105,215
Total assets 154,759,265 133,903,405
Current liabilities
Trade and other payables 18 (4,724,215) (3,577,657)
Non-current liabilities
Trade and other payables 18 (153,379) -
Borrowings 19 (38,278,594) (20,403,207)
--------------- ---------------
Total liabilities (43,156,188) (23,980,864)
--------------- ---------------
Net assets 111,603,077 109,922,541
=============== ===============
Equity
Share capital 20 1,115,722 1,115,722
Share premium 21 39,409,322 39,409,322
Other reserves 21 293,627 125,222
Retained earnings 21 70,784,406 69,272,275
--------------- ---------------
1
Total equity 111,603,077 109,922,541
=============== ===============
IFRS NAV per ordinary share 12 100.03 98.52
(cents)
12 99.77 98.41
Diluted IFRS NAV per ordinary
share (cents) 12 99.77 98.41
EPRA NTA per ordinary share
(cents)
Consolidated Statement of Changes in Equity
For the financial year ended to 31 December 2020
Share capital Share Retained Other Total
Notes account premium earnings Reserves equity
-------------------
EUR EUR EUR EUR EUR
------------------- ------------- ------------------- ------------------- -------------- ---------- ------------
As at 1 January
2020 1,115,722 39,409,322 69,272,275 125,222 109,922,541
Adjustment to
retained
earnings - - (151,634) - (151,634)
Total
comprehensive
income - - 7,008,074 - 7,008,074
Share based
payments
expense 24 - - - 168,405 168,405
Equity Dividends
paid 22 - - (5,344,309) - (5,344,309)
------------------- ------------------- -------------- ---------- ------------
As at 31 December
2020 1,115,722 39,409,322 70,784,406 293,627 111,603,077
=================== =================== ============== ========== ============
Consolidated Statement of Changes in Equity
For the financial year ended to 31 December 2019
Share capital Share Retained Other Total
Notes account premium earnings Reserves equity
-------------------
EUR EUR EUR EUR EUR
------------------- ------------- ------------------- ------------------- -------------- ---------- ------------
As at 1 January
2019 750,000 4,000,000 70,383,180 - 75,133,180
Total
comprehensive
income - - 5,059,209 - 5,059,209
Ordinary share
capital
issued 365,722 35,409,322 - - 35,775,044
Share issue costs - - (1,026,614) - (1,026,614)
Share based
payments
expense - - - 125,222 125,222
Equity Dividends
paid 22 - - (5,143,500) - (5,143,500)
------------------- ------------------- -------------- ---------- ------------
As at 31 December
2019 1,115,722 39,409,322 69,272,275 125,222 109,922,541
=================== =================== ============== ========== ============
Consolidated Statement of Cash Flow
Notes Year ended Year ended
31 December 31 December
2020 2019
------------- -------------
Cash flows from operating activities
Profit before taxation 7,008,074 5,059,209
Adjustments for:
Depreciation 28,220 858
Fair value (gains)/ losses on investment
properties 5 (1,166,063) 1,552,378
Gain on disposal of investment
property 5 (135,534) (123,174)
Finance costs 8 1,814,610 669,384
(Increase) in trade and other receivables (1,380,439) (2,962,651)
Increase in trade and other payables 733,899 1,069,370
Equity share based payments 24 168,405 125,222
Corporation Tax paid - -
Net cash inflow from operating
activities 7,071,172 5,390,596
Cash flows from investing activities
Purchase of investment properties 13 (24,823,330) (39,546,096)
Development 13 (120,607) (831,283)
Proceeds on disposal of investment
properties 13 2,340,534 1,073,174
Purchase of property, plant and
equipment 14 (13,287) (5,575)
Distribution from fund 280,236 -
------------- -------------
Net cash outflow from investing
activities (22,336,454) (39,309,780)
Cash flows from financing activities
Proceeds from the issue of ordinary
share capital 20 - 35,775,044
Issue costs(1) 21 - (1,026,614)
Proceeds from loans and borrowings 19 17,805,638 14,591,200
Interest paid 19 (1,032,044) (523,219)
Repayment of principal portion
of lease liabilities (20,000) -
Equity dividends paid 22 (5,344,309) (5,143,500)
Net cash inflow from financing
activities 11,409,285 43,672,911
Net (decrease)/increase in cash
and cash equivalents (3,855,997) 9,753,727
Cash and cash equivalents at beginning
of year 14,577,461 4,823,734
------------- -------------
Cash and cash equivalents at the
end of the year 17 10,721,464 14,577,461
============= =============
For the financial year ended 31 December 2020
(1) Issue costs represent the Company's contribution to costs of
issuing ordinary share capital for the financial year.
Company Statement of Financial Position
As at 31 December 2020
2020 2019
EUR EUR
Notes
Non-current assets
Investment properties 13 141,925,000 115,790,000
Property, plant & equipment 14 239,416 4,717
Trade and other receivables 16 793,333 -
--------------- ---------------
142,957,749 115,794,717
Current assets
Trade and other receivables 16 757,218 3,232,119
Cash and cash equivalents 17 10,439,802 14,086,632
Total current assets 11,197,020 17,318,751
Total assets 154,154,769 133,113,468
Current liabilities
Trade and other payables 18 (4,387,245) (3,044,870)
Non-current liabilities
Trade and other payables 18 (153,379) -
Borrowings 19 (38,278,594) (20,403,207)
--------------- ---------------
Total liabilities (42,819,218) (23,448,077)
--------------- ---------------
Net assets 111,335,551 109,665,391
=============== ===============
Equity
Share capital 20 1,115,722 1,115,722
Share premium 21 39,409,322 39,409,322
Other reserves 21 293,627 125,222
Retained earnings 21 70,516,880 69,015,125
--------------- ---------------
Total equity 111,335,551 109,665,391
=============== ===============
IFRS NAV per ordinary share 99.79 98.29
(cents)
99.53 98.18
Diluted IFRS NAV per ordinary
share (cents) 99.53 98.18
EPRA NTA per ordinary share
(cents)
The Company reported a profit of EUR6,846,064 (2019:
EUR5,033,567) for the year ended 31 December 2020.
Company Statement of Changes in Equity
For the financial year to 31 December 2020
Share capital Share Retained Other Total
Notes account premium earnings reserves equity
-------------------
EUR EUR EUR EUR EUR
------------------- ------------- ------------------- ------------------ -------------- ---------- -------------
As at 1 January
2020 1,115,722 39,409,322 69,015,125 125,222 109,665,391
Total
comprehensive
income - - 6,846,064 - 6,846,064
Share based
payments
expense 24 - - - 168,405 168,405
Equity Dividends
paid 22 - - (5,344,309) - (5,344,309)
------------------- ------------------ -------------- ---------- -------------
As at 31 December
2020 1,115,722 39,409,322 70,516,880 293,627 111,335,551
------------------- ------------------ -------------- ---------- -------------
Company Statement of Changes in Equity
For the financial year to 31 December 2019
Share capital Share Retained Other Total
Notes account premium earnings reserves equity
-------------------
EUR EUR EUR EUR EUR
------------------- ------------- ------------------- ------------------- -------------- ---------- ------------
As at 1 January
2019 750,000 4,000,000 70,151,672 - 74,901,672
Total
comprehensive
income - - 5,033,567 - 5,033,567
Ordinary share
capital
issued 365,722 35,409,322 - - 35,775,044
Share issue costs - - (1,026,614) - (1,026,614)
Share based
payments
expense - - - 125,222 125,222
Equity Dividends
paid 22 - - (5,143,500) - (5,143,500)
------------------- ------------------- -------------- ---------- ------------
As at 31 December
2019 1,115,722 39,409,322 69,015,125 125,222 109,665,391
=================== =================== ============== ========== ============
Company Statement of Cash Flow
For the year ended 31 December 2020
Year ended Year ended
31 December 31 December
2020 2019
Notes EUR EUR
-------------- ------------------
Cash flows from operating activities
Profit before taxation 6,846,064 5,033,567
Adjustments for:
Depreciation 28,220 858
Fair value (gains)/losses on
investment properties 5 (1,166,063) 1,552,378
Gain on disposal of investment
property 5 (135,534) (123,174)
Finance costs 8 1,814,610 669,384
(Increase) in trade and other
receivables (1,178,605) (2,703,643)
Increase in trade and other
payables 903,242 770,364
Equity share based payments 24 168,405 125,222
Net cash inflow from operating
activities 7,280,339 5,324,956
Cash flows from investing activities
Purchase of investment properties 13 (24,823,330) (39,546,096)
Development 13 (120,607) (831,283)
Proceeds on disposal of investment
properties 13 2,340,534 1,073,174
Purchase of property plant and
equipment 14 (13,287) (5,575)
Distribution from fund 280,236 34,500
-------------- ------------------
Net cash outflow from investing
activities (22,336,454) (39,275,280)
Cash flows from financing activities
Proceeds from the issue of ordinary
share capital 20 - 35,775,044
Issue costs(1) 21 - (1,026,614)
Proceeds from loans and borrowings 19 17,805,638 14,591,200
Interest paid 19 (1,032,044) (523,219)
Repayment of principal portion
of lease liabilities (20,000) -
Equity dividends 22 (5,344,309) (5,143,500)
Net cash inflow from financing
activities 11,409,285 43,672,911
Net (decrease)/increase in cash
and cash equivalents (3,646,830) 9,722,587
Cash and cash equivalents at
beginning of year 14,086,632 4,364,045
-------------- ------------------
Cash and cash equivalents at
the end of the year 17 10,439,802 14,086,632
============== ==================
(1) Issue costs represent the Company's contribution to costs of
issuing ordinary share capital for the financial year.
Notes to the Consolidated Financial Statements
1. Accounting policies
1.1 General information
Yew Grove REIT plc (the "Company", registered number 623896),
together with entities controlled by the Company (its subsidiaries)
(together the "Group"), is engaged in investing in a diversified
portfolio of Irish commercial property with a view to maximising
its shareholder returns.
The Company is a public limited company, incorporated and
domiciled in Ireland. The registered address of the Company is 1st
Floor, 57 Fitzwilliam Square, Dublin 2.
The ordinary shares of the Company are listed on the Euronext
Growth market (formerly the Enterprise Securities Market) of
Euronext Dublin and the Alternative Investment Market of the London
Stock Exchange.
1.2 Trading period
The consolidated financial statements for the Group and Company
shown herein are for the financial year ended 31 December 2020 with
comparatives for the financial year ended 31 December 2019.
The results are inclusive of the parent company (Yew Grove REIT
plc) and its subsidiary companies controlled by the Company.
1.3 Going concern
Based on financial projections which extend beyond twelve months
from the date of the approval of these financial statements, the
Directors consider that the Group and Company have adequate
resources to continue in operational existence for the foreseeable
future. For this reason, the Directors have concluded that they
should prepare the consolidated and company financial statements on
a going concern basis.
1.4 Basis of preparation
The statements of the Group and Company for the financial year
ended 31 December 2020 have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), as adopted by
the European Union ("EU") and the Companies Act 2014.
The financial statements of the Group and Company have been
prepared on the historical cost basis, except for investment
properties that are measured at fair value.
The financial statements of the Group and Company are presented
in Euro, which is also the functional currency of the Company.
Standards not affecting the reported results and financial
position
The Group and Company applied for the first-time certain
standards and amendments, which are effective for annual periods
beginning on or after 1 January 2020. The Group and Company has not
early adopted any other standard, interpretation or amendment that
has been issued but is not yet effective.
Amendments to IFRS 3: Definition of a Business
The amendment to IFRS 3 Business Combinations clarifies that to
be considered a business, an integrated 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 output. Furthermore, it clarifies that a business can exist
without including all of the inputs and processes needed to create
outputs. These amendments had no impact on the consolidated
financial statements of the Group or Company but may impact future
periods should the Group or Company enter into any business
combinations.
Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark
Reform
The amendments to IFRS 9 and IAS 39 Financial Instruments:
Recognition and Measurement provide a number of reliefs, which
apply to all hedging relationships that are directly affected by
interest rate benchmark reform. A hedging relationship is affected
if the reform gives rise to uncertainty about the timing and/or
amount of benchmark-based cash flows of the hedged item or the
hedging instrument. These amendments have no impact on the
consolidated financial statements of the Group or Company as it
does not have any interest rate hedge relationships.
Amendments to IAS 1 and IAS 8 Definition of Material
The amendments provide a new definition of material that states,
"information is material if omitting, misstating or obscuring it
could reasonably be expected to influence decisions that the
primary users of general purpose financial statements make on the
basis of those financial statements, which provide financial
information about a specific reporting entity." The amendments
clarify that materiality will depend on the nature or magnitude of
information, either individually or in combination with other
information, in the context of the financial statements. A
misstatement of information is material if it could reasonably be
expected to influence decisions made by the primary users. These
amendments had no impact on the consolidated or Company financial
statements of, nor is there expected to be any future impact to the
Group or Company.
Conceptual Framework for Financial Reporting issued on 29 March
2018
The Conceptual Framework is not a standard, and none of the
concepts contained therein override the concepts or requirements in
any standard. The purpose of the Conceptual Framework is to assist
the IASB in developing standards, to help preparers develop
consistent accounting policies where there is no applicable
standard in place and to assist all parties to understand and
interpret the standards. This will affect those entities which
developed their accounting policies based on the Conceptual
Framework. The revised Conceptual Framework includes some new
concepts, updated definitions and recognition criteria for assets
and liabilities and clarifies some important concepts. These
amendments had no impact on the consolidated financial statements
of the Group or Company.
Amendments to IFRS 16 COVID-19 Related Rent Concessions
On 28 May 2020, the IASB issued COVID-19-Related Rent
Concessions - amendment to IFRS 16 Leases. The amendments provide
relief to lessees from applying IFRS 16 guidance on lease
modification accounting for rent concessions arising as a direct
consequence of the COVID-19 pandemic. As a practical expedient, a
lessee may elect not to assess whether a COVID-19 related rent
concession from a lessor is a lease modification. A lessee that
makes this election accounts for any change in lease payments
resulting from the COVID-19 related rent concession the same way it
would account for the change under IFRS 16, if the change were not
a lease modification. The amendment applies to annual reporting
periods beginning on or after 1 June 2020. Earlier application is
permitted. This amendment had no impact on the consolidated
financial statements of the Group or Company.
1.5 Significant accounting judgements, estimates and
assumptions
The preparation of the Group's consolidated financial statements
requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets,
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 assets or liabilities
affected in future periods.
In the process of applying the Company's and Group's accounting
policies, management has made the following judgements, which have
the most significant effect on the amounts recognised in the
Consolidated or Company financial statements:
(a) Significant judgements
The following are the significant judgements, apart from those
involving estimations (which are presented separately below), that
the Directors have made in the process of applying the accounting
policies and that have the most significant effect on the amounts
recognised in the Group and Company financial statements.
Operating lease contracts - the Group as lessor
The Group/Company has acquired investment properties which are
subject to commercial property leases and licences with tenants.
The Group/Company has determined, based on an evaluation of the
terms and conditions of the arrangements, particularly the duration
of the lease terms and minimum lease payments, that it retains all
the significant risks and rewards of ownership of these properties
and so accounts for these leases as operating leases.
Fair value
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
For financial reporting purposes, fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which
inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurements in its
entirety, which are described as follows:
(i) Fair value hierarchy applied
(a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
(b) Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
(c) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(ii) Property is treated as acquired or disposed of when the
significant risks and rewards of ownership have been assumed or
relinquished by the Group/Company. This occurs when:
(a) it is probable that the future economic benefits that are associated with the property will flow to the Group/Company;
(b) there are no material conditions which could affect completion of the acquisition; and
(c) the cost of the investment property can be measured reliably.
(iii) Additions to property consist of construction,
re-development, refurbishment and other directly attributable costs
such as professional fees, expenses and capitalised interest where
applicable.
(iv) Property is initially measured at cost including related
acquisition costs, and subsequently valued by the Group's Valuers
at its respective fair value at each reporting date (30 June and 31
December). The difference between the fair value of a property at
the reporting date and its carrying value prior to the external
valuation is recognised in the Consolidated Statement of
Comprehensive Income as a fair value gain or loss.
(v) Share based payment fair value at grant date is estimated
using a Monte Carlo simulation pricing model, taking into account
the terms and conditions upon which the options are granted.
Control
The IFRS 10 control model focuses on whether the Group has power
over an investee, exposure or rights to variable returns from its
involvement with the investee, and ability to use its power to
affect those returns. In particular, IFRS 10 requires the Group to
consolidate investees that it controls on the basis of de facto
control. In accordance with IFRS 10, the Group's assessment of
control is performed on a continuous basis and the Group reassesses
whether it controls an investee if facts and circumstances indicate
that there are changes to one or more of the elements of the
control model.
(b) Analysis of sources of estimation uncertainty
The key future assumptions, and other key sources of estimation
uncertainty for the reporting period that may have a significant
risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed
below.
Fair value of investment property
The market value of investment property ("property") would
normally be determined by a real estate 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 are
valued on an individual basis.
The valuation of the Group and Company's properties as at 31
December 2020 was completed by Lisney Limited ("Lisney") as
external independent Valuer. Lisney prepared the valuation on the
basis of market value in accordance with the Royal Institution of
Chartered Surveyors ("RICS") Valuation - Global Standards (January
2020). Their valuation was subsequently reviewed by the Valuation
Committee.
The Group and Company's investment properties will next be
valued by the Group's Valuers as at 30 June 2021. The valuers will
continue to use recognised valuation techniques and the principles
of IFRS 13 for the valuation as at 30 June 2021 and 31 December
2021. Refer to note 13 for further disclosure on the recognised
valuation techniques.
The Board's Valuation Committee conducts a detailed review of
each property valuation, the underlying valuation assumptions and
the valuation process used by the valuer to ensure that valuation
assumptions are valid and have been applied as set out below.
Property valuations are complex and involve data which is not
publicity available and a degree of judgement. Each valuation is
based upon key assumptions, particularly estimated rental values
and market-based yields. The valuation approach to on-going
developments and material refurbishments is on a residual basis and
factors such as the assumed timescale, the assumed future
development costs and an appropriate finance and/or discount rate
are used to determine the property value together with market
evidence and recent comparable properties where appropriate.
The Directors are satisfied that the valuations of the Group and
Company's properties are appropriate for inclusion in the
Consolidated and Company financial statements. The fair value of
the Group and Company's properties accurately reflects the
valuation provided by Lisney and no changes to Lisney's valuation
were made by the valuation committee. The valuation is based on the
future cashflows from rental income both for the current lease
period and future estimated rental values, adjusted for expected
void periods and appropriate discount rates.
Calculation of loss allowance
When measuring expecting credit loss ("ECL") the Group/Company
uses reasonable and supportable forward-looking information, which
is based on assumptions for the future movement of different
economic drivers and how these drivers will affect each other. Loss
given default is an estimate of the loss arising on default. It is
based on the difference between the contractual cash flows due and
those that the lender would expect to receive, taking into account
cash flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL.
Probability of default is an estimate of the likelihood of default
over a given time horizon, the calculation of which includes
historical data, assumptions and expectations of future
conditions.
1.6 Rental and related income
The Group's main source of revenue is the leasing and licensing
of properties. Lease and licence revenue is recognised over the
period of the lease or licence contracts. Rental income is
recognised as revenue at the time and amount governed by the lease
or licence in place with the customer.
The Group recognised revenue from the following major
activities:
-- Operating lease income from the Group's investment
properties;
-- License income from licencing of the Group's car park
spaces;
-- Service charge income from contributions received from
tenants relating to property expenses.
Revenue is measured based on the consideration to which the
Group's expects to be entitled in a contract with a customer and
excludes amounts collected on behalf of third parties.
Rental income
The Group receives rental income from tenants under leases
associated with the Group and Company's properties. Rental income
is recognised on a straight-line basis over the term of the
lease.
Where a rent-free period is included as an incentive in a lease
the rental income foregone is allocated evenly over the period from
the first day of the lease to the earlier of termination date of
the lease or first break option of the lease. Where a lease
incentive takes the form of an incentive payment to a tenant the
resultant cost is amortised evenly over the remaining life of the
lease to its earliest termination date. The sum of unamortised
incentives is included in trade and other receivables and is
released over the term of the relevant leases. Lease adjustments
such as rent reviews are included when the rent review or
adjustment has been completed and agreed with the tenant.
License income
License income represents amounts under licences receivable from
tenants associated with the licensing of the Group's car park
spaces. License income is recognised over the term of the license.
License adjustments such as reviews or extensions are included when
the licence review, extension or adjustment has been completed and
agreed with the tenant.
Service charge income
Service charge income from tenants are recognised as revenue in
the period in which the related expenditure is incurred.
Surrender Premium
Where the Group receives a surrender premium from a tenant for
the early termination of a lease, the proceeds, net of any then
agreed costs associated with dilapidation and legal costs relating
to that lease, is recognised in the accounting period in which the
surrender took place.
1.7 Direct lease costs
Direct lease costs incurred in the negotiation and arrangement
of new leases to tenants are initially capitalised and are then
recognised as an expense over the period from the date of the lease
to the earliest termination date of the lease.
1.8 Finance income and finance costs
The Group's finance income and finance costs include interest
income, interest expense, commitment fees and related charges.
Interest income or expense is recognised using the effective
interest method. The effective interest rate is the rate that
exactly discounts estimated future cash receipts (including all
fees and costs paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the debt instrument, or,
where appropriate, a shorter period, to the net carrying amount on
initial recognition.
1.9 Taxation
Income tax expense comprises current and deferred tax. It is
recognised in profit or loss except insofar as it applies to
business combinations or to items recognised in other comprehensive
income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to
tax payable in respect of previous years. Yew Grove REIT plc has
elected for Real Estate Investment Trust ("REIT") status and on 21
May 2018 gave notice to Revenue that it was the principal company
of a group REIT following the acquisition of the entire share
capital of the Yew Tree Investment Fund plc (Dissolved). As a
result, the Group does not pay Irish corporation tax on the profits
and gains from its qualifying rental business in Ireland provided
it meets certain conditions. With certain exceptions, corporation
tax is still payable in the normal way in respect of income and
gains from a Group's residual business that is, its non-property
rental business.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax assets are only recognised where it is
probable that the amounts will be recoverable.
1.10 Leases
The Group and Company lease its head office, other than that
they are not party to any other material leases. The Group and
Company do act as a lessor. Details of the Group's and Company's
accounting policies under IFRS 16 are set out below.
Lease contracts - the Group and Company as lessor
The Group has acquired investment properties which are subject
to commercial property leases with tenants. The Group has
determined, based on an evaluation of the terms and conditions of
these lease arrangements, particularly the duration of the lease
terms and minimum lease payments, that it retains substantially all
of the risks and rewards incidental to ownership of these leased
properties. Income from these leases is recognised on a
straight-line basis, recognition is from the date on which the
company becomes a contractual party to the lease. Any lease
incentives are recognised over the life of the lease. A lease is
derecognised at the termination of the lease or when the company is
no longer a contractual party to the lease.
Lease contracts - the Group and Company as lessee
The Group assesses whether a contract is a lease or contains a
lease at inception of the lease contract. The Group recognises a
right-of-use asset and a corresponding lease liability with respect
to all lease arrangements in which it is the lessee, except for
short-term leases (defined as leases with a lease term of 12 months
or less) and leases of low value assets (less than EUR5,000). For
these short-term leases, the Group recognises the lease payments as
an operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability of leases other than short term leases is
initially measured at the present value of the lease payments that
are not paid at the commencement date, discounted by the rate
implicit in the lease. If this rate cannot be readily determined,
the Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease
liability comprise:
-- fixed lease payments (including in substance fixed payments),
less any lease incentives;
-- variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date;
-- the amount expected to be payable by the lessee under
residual value guarantees;
-- the exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
-- payments of penalties for terminating the lease, if the lease
term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the
consolidated statement of financial position. The lease liability
is subsequently measured by increasing the carrying amount to
reflect interest on the lease liability (using the effective
interest method) and by reducing the carrying amount to reflect the
lease payments made. The Group remeasures the lease liability (and
makes a corresponding adjustment to the related right-of-use asset)
whenever:
-- the lease term has changed or there is a change in the
assessment of exercise of a purchase option, in which case the
lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
-- the lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using the initial discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used).
-- a lease contract is modified, and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease payments
using a revised discount rate.
Right-of-use assets are amortised over the shorter period of
lease term or useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease. The Group does not have any
leases that include purchase options or transfer ownership of the
underlying asset.
For short-term leases (lease term of 12 months or less) and
leases of low-value assets (such as peppercorn ground leases), the
Group has opted to recognise a lease expense on a straight-line
basis as permitted by IFRS 16. This expense is presented within
property expenses in the consolidated statement of comprehensive
income. As a practical expedient, IFRS 16 permits a lessee not to
separate non-lease components, and instead account for any lease
and associated non-lease components as a single arrangement. The
Group has not used this practical expedient.
1.11 Financial instruments
Financial assets and liabilities are recognised when a Group
entity becomes a party to the contractual provisions of the
instruments.
Financial assets and liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and liabilities (other
than financial assets or liabilities at fair value through profit
or loss) are added to or deducted from the fair value of the
financial assets or liabilities, as appropriate, on initial
recognition. Transaction costs attributable to the acquisition of
financial assets or liabilities at fair value through profit or
loss are recognised immediately in the Consolidated Statement of
Comprehensive Income.
(i) Cash and cash equivalents
Cash and cash equivalents include cash balances and call
deposits with maturities of three months or less from the
acquisition date that are subject to an insignificant risk of
changes in their fair value and are used by the Group and Company
in the management of its short-term commitments.
(ii) Trade and other receivables and trade and other
payables
Trade receivables include amounts due from tenants. Other
receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
Trade and other payables include amounts due to third party
suppliers and prepaid rent amounts received from tenants in
advance.
Trade and other receivables and trade and other payables are
initially measured at transaction value and subsequently measured
at amortised cost using the effective interest rate method. The
Group applies the simplified approach to trade receivables for
which expected credit loss uses the lifetime expected credit
allowance. The Group has no material exposure to bad debts beyond
those identified in the financial statements, as the majority of
the Group's rental income is from State bodies or FDI entities as
they have good credit standing. The payment and credit performance
of these tenants is closely monitored, while probability of default
exists, accordingly the expected credit loss is regarded as
immaterial.
(iii) Loans and borrowings
Loans are initially recorded at fair value plus transaction
costs. They are subsequently accounted for at amortised cost.
1.12 Investment
Investments in subsidiaries are held at cost. The Company
assesses investments for impairment whenever events or changes in
circumstances indicate that the carrying value of an investment may
not be recoverable. If any such indication of impairment exists,
the Company makes an estimate of its recoverable amount. When the
carrying amount of an investment exceeds its recoverable amount,
the investment is considered impaired and is written down to its
recoverable amount. In the opinion of the Directors the shares in
subsidiaries are worth at least the amounts at which they are
stated in the balance sheet.
Basis for consolidation
The consolidated financial statements include the financial
statements of the holding company (Yew Grove REIT plc) and all
subsidiary companies as at 31 December 2020. Control is achieved
when the Company has the power over the investee, exposure, or
rights, to variable returns from its involvement with the investee
and the ability to use its power over the investee to affect the
amount of the investor's returns. The results of subsidiaries
acquired or disposed of during the financial period are included in
the Consolidated Statement of Comprehensive Income from the
effective date of control or to the effective date of loss of
control as appropriate. All intragroup transactions, assets and
liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation. Upon acquisition of a business, fair values are
attributed to the identifiable net assets acquired. The Group's
accounting policy in relation to goodwill is set out in note
1.21.
There were no subsidiaries acquired in the current year.
Yew Tree Investment Fund plc (Dissolved)
The consolidated financial statements for the period ended 31
December 2018 included the results of Yew Tree Investment Fund plc
(Dissolved) from the date of acquisition of 8 June 2018 to the date
of loss of control on 27 July 2018 following the appointment of a
liquidator. The liquidation of Yew Tree Investment Fund plc
completed on 3 September 2020.
1.13 Property, Plant and Equipment
Fixtures and fittings and computer equipment are stated at cost
less accumulated depreciation and impairment losses. Depreciation
is recognised to write off the cost or value of assets less their
residual value over their useful lives. The estimated useful lives,
residual values and depreciation method are reviewed at the end of
each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
The estimated useful lives for the main asset categories
are:
- Office and computer equipment 3 years
- Fixtures and fitting 5 years
1.14 Business combinations
Acquisitions of subsidiaries and businesses are accounted for
under the acquisition method. The consideration transferred in a
business combination is measured at fair value. Acquisition-related
costs are expensed as incurred.
Investments in subsidiaries are held at cost. The Company
assesses investments for impairment whenever events or changes in
circumstances indicate that the carrying value of an investment may
not be recoverable. If any such indication of impairment exists,
the Company makes an estimate of its recoverable amount. When the
carrying amount of an investment exceeds its recoverable amount,
the investment is considered impaired and is written down to its
recoverable amount. In the opinion of the Directors the shares in
subsidiaries are worth at least the amounts at which they are
stated in the balance sheet.
1.15 Interest in Joint Ventures
A joint venture is an arrangement whereby the parties that have
joint control and have rights to the net assets of the joint
arrangement. Joint control is the contractually agreed sharing of
control of an arrangement, which exits only when decisions about
the relevant activities require unanimous consent of the parties
sharing control.
The results and assets and liabilities of joint ventures are
incorporated in the Group and Company financial statements using
the equity method of accounting, except when the investment is
classified as held for sale, in which case it is accounted for in
accordance with IFRS 5.
An investment in a joint venture is accounted for using the
equity method from the date on which the investee becomes a joint
venture.
1.16 Foreign currency
Monetary assets and liabilities denominated in foreign
currencies are translated at the rates of exchange ruling at the
Statement of Financial Position date. Non-monetary items that are
measured in terms of historical cost in a foreign currency are
translated at the rates of exchange ruling at the date of the
transaction. Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange rate at the
date when the fair value was determined. The resulting exchange
differences are dealt with in the Consolidated Statement of
Comprehensive Income.
1.17 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset (a qualifying
asset is one that necessarily takes a substantial period of time to
get ready for its intended use or sale) are included in the cost of
the asset. All other borrowing costs are recognised in the
Consolidated Statement of Comprehensive Income in the period in
which they are incurred.
1.18 Pension
Annual contributions payable to the Group's pension scheme are
charged to the Statement of Comprehensive Income in the period to
which they relate.
1.19 Share Based Payments
The long term incentive plan arrangement ("LTIP") between the
Company and its Executive Management is accounted for as an
equity-settled share-based awards granted under these arrangements
are measured at the fair value of the award at the date of grant.
The cost of the award is charged to the consolidated income
statement over the vesting period of the awards based on the
probable number of awards that will eventually vest, with a
corresponding credit to shareholders' equity.
The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to
the share-based payment reserve. When these shares vest they are
assessed for tax purposes at the current market share price and
employee taxes are generally settled through payroll in cash.
Employees therefore receive the number of shares net of taxes at
vesting date. Share-based payments that are cash-settled are
remeasured at fair value at each accounting date. At the end of
each reporting period, the Group revises its estimate of the number
of equity instruments expected to vest.
1.20 Share issue cost
Costs directly attributable to issuing new shares are deducted
from retained earnings net of any related tax deduction. All other
costs are recognised in the Statement of Comprehensive Income in
the period in which they are incurred.
1.21 Goodwill
Goodwill arising on the acquisition of a subsidiary is
recognised as an asset at the date that control is acquired (the
acquisition date). Goodwill is measured as the excess of the sum of
the consideration transferred and the fair value of the acquirer's
previously held equity interest (if any) in the entity over the net
fair value of the identifiable net assets recognised.
Goodwill is not amortised but is reviewed for impairment at
least annually. Any impairment loss is recognised immediately in
the Consolidated Statement of Comprehensive Income and is not
subsequently reversed. Any gain on a bargain purchase is recognised
in the statement of comprehensive income immediately.
1.22 Impairment of financial assets
The Group applies a three-stage expected credit loss model
("ECL") in relation to the impairment of its financial assets
carried at amortised cost except for trade receivables for which
the simplified approach is applied in accordance with IFRS 9. The
ECL is used to account for expected credit losses and changes in
those ECL at each reporting date to reflect changes in credit risk
since initial recognition of the financial assets.
The expected credit loss is charged against the respective
financial asset and recognised in the Consolidated Statement of
Comprehensive income.
The three stages that determine the amount of impairment to be
recognised as expected credit losses at each reporting date are as
follows:
(i) Stage 1: Credit risk has not increased significantly since
initial recognition - recognised 12 months ECL;
(ii) Stage 2: Credit risk has increased significantly since
initial recognition - recognise lifetime ECL;
(iii) Stage 3: Financial asset is credit impaired - recognise lifetime ECL.
The 12 months ECL is calculated by multiplying the possibility
of a default occurring in the next 12 months by the total
(lifetime) ECLs that would result from that default. Lifetime
expected credit losses are the present value of expected credit
losses that arise if a borrower defaults on its obligation at any
point throughout the terms of the financial asset.
Definition of default
The Group considers the following as constituting events of
default for internal credit risk management purposes as experience
indicates that financial assets that meet the following criteria
are generally not recoverable:
- When there is a breach of financial covenants by the debtor; and
- Information developed internally or obtained from external
sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any
collateral held by the Group).
Write off
The Group writes off a financial asset when there is information
indicating that the debtor is in severe financial difficulty and
there is no realistic prospect of recovery.
2. Operating Segments
The Group is organised into two business segments, against which
the Group reports its segmental information. These are Office
Assets (including retail and mixed-use buildings) and Industrial
Assets. All of the Group's operations are in the Republic of
Ireland. Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker, who has been identified as the Board of Directors
of the Company. The split between industrial and office is
determined by the building type which is acquired and the
activities of the occupants.
Unallocated income and expenses are items incurred centrally
which are neither directly attributable nor reasonably allocable to
individual segments. Unallocated assets are cash and cash
equivalents, and certain other assets.
The Group's key measures of performance of a segment are net
rental income and the movement in fair value of properties, as
these measures illustrate and emphasize that segment's contribution
to the reported profits of the Group and the input of that segment
to earnings per share. By focusing on these prime performance
measures, other key statistical data such as capital expenditure
and one-off exceptional items are separately highlighted for
analysis and attention.
Revenue as stated in the Consolidated Statement of Comprehensive
Income relates to rental income from its investment in commercial
properties held by the Group, license income from the licensing of
the Group's car park spaces and service charges received by its
subsidiary management companies.
Major Customers
Gross rental income includes rents of EUR3.9m (2019: EUR4.6
million, inclusive of lease surrender income) which arose from the
Group's three largest tenants in each year; these contributed more
than 10% of the Group's revenue. No other single tenant contributed
more than 10% of the Group's revenue in either 2020 or 2019.
2. Operating Segments (Continued)
Unallocated Group Total
Office Industrial expenses
Assets Assets Total and assets
2020 2020 2020 2020 2020
EUR EUR EUR EUR EUR
Year ended 31 December
2020
Rental income and related
income 8,874,797 2,334,800 11,209,597 155,381 11,364,978
Property expenses (674,963) (37,516) (712,479) - (712,479)
------------ ----------- ------------ ------------ ------------
Net rental income 8,199,834 2,297,284 10,497,118 155,381 10,652,499
Fair value (loss)/gains
on investment properties (18,937) 1,185,000 1,166,063 - 1,166,063
Realised gain on disposal
of Investment properties - 135,534 135,534 - 135,534
------------ ----------- ------------ ------------ ------------
Net fair value movement (18,937) 1,320,534 1,301,597 - 1,301,597
Expected credit loss
on financial assets (95,172) (80,411) (175,583) - (175,583)
Operating expenses - - - (4,770,439) (4,770,439)
Profit before tax 8,085,724 3,807,407 11,623,132 (4,615,058) 7,008,074
------------ ----------- ------------ ------------ ------------
As at 31 December 2020
------------ ----------- ------------ ------------ ------------
Investment properties 115,655,000 26,270,000 141,925,000 - 141,925,000
------------ ----------- ------------ ------------ ------------
Unallocated
Office Industrial expenses
Assets Assets Total and assets Group Total
2019 2019 2019 2019 2019
EUR EUR EUR EUR EUR
Year ended 31
December
2019
Rental income
and related
income 8,382,108 1,564,616 9,946,724 - 9,946,724
Property
expenses (500,365) (27,583) (527,948) - (527,948)
-------------------------------------- ---------------------------- ------------ --------------------- -------------------------
Net rental
income 7,881,743 1,537,033 9,418,776 - 9,418,776
Fair value
(loss)/gains
on
investment
properties (1,063,004) 294,721 (768,283) - (768,283)
Realised gain
on disposal
of
Investment
properties - 123,174 123,174 - 123,174
-------------------------------------- ---------------------------- ------------ --------------------- -------------------------
Net fair
value
movement (1,063,004) 417,895 (645,109) - (645,109)
Operating
expenses - - - (3,714,458) (3,714,458)
Profit before
tax 6,818,739 1,954,928 8,773,667 (3,714,458) 5,059,209
-------------------------------------- ---------------------------- ------------ --------------------- -------------------------
As at 31
December 2019
-------------------------------------- ---------------------------- ------------ --------------------- -------------------------
Investment
properties 88,200,000 27,590,000 115,790,000 - 115,790,000
-------------------------------------- ---------------------------- ------------ --------------------- -------------------------
3. Rental and related income
31 December 2020 31 December
EUR 2019
EUR
-------------------------- ----------------- ------------
Gross rental income 10,285,213 7,337,846
License income 314,475 243,015
Service charge income 347,628 365,863
Lease surrender premium 150,161 2,000,000
Other income 267,501 -
-------------------------- ----------------- ------------
Net rental income 11,364,978 9,946,724
-------------------------- ----------------- ------------
Gross rental income represents amounts receivable from tenants
under leases associated with the Group's property business. License
income represents amounts under licences receivable from tenants
associated with the licensing of the Group's car park spaces.
Service charge income relates to contributions from tenants of the
Group's buildings for property expenses of the occupied buildings.
Service charge income receivable from tenants is recognised in the
period in which the related expenditure is recognised. Income from
subsidiary management companies consisting of service charge income
and other income in the period was EUR459,748.
During the year, the Company agreed terms on the surrender of a
lease at its property at Holly Avenue, Stillorgan, Dublin for
EUR426,603, of which EUR126,603 was for lease surrender and
EUR300,000 (note 5) was for dilapidations. The lease surrender was
completed on 8 May 2020. Two additional surrender amounts totalling
EUR23,558 were received from tenants who gave notice to break their
leases in 2021. In 2019 EUR2,000,000 was received for the surrender
of a lease at Cork Airport Business Park with a further
EUR1,000,000 (note 5) in dilapidations.
Other income includes the sale of car parking spaces by one of
the management companies and the proceeds of the voluntary
liquidation of Yew Tree Investment Fund plc (Dissolved) which was
finalised in the period.
4. Property expenses
31 December 2020 31 December
EUR 2019
EUR
------------------------- ----------------- ------------
Service charge expenses 297,739 329,552
Direct property costs 388,740 172,396
Car park costs 26,000 26,000
------------------------- ----------------- ------------
Total 712,479 527,948
------------------------- ----------------- ------------
Property expenses include service charges and other costs
directly recoverable from tenants, and non-recoverable costs
directly attributable to the Group's properties. Service charge
expenses typically include security, insurance, maintenance and
other costs of managing the Company's buildings due from and
recharged to tenants. Direct property costs have increased due to
increased portfolio size and some vacancy in the portfolio.
5. Fair value Gains/(Losses) on investment properties
31 December 2020 31 December
EUR 2019
EUR
------------------------------------------ ----------------- ------------
Fair value gains/(losses) on investment
properties (1) 1,166,063 (768,283)
Realised gain on disposal of investment
property 135,534 123,174
------------------------------------------ ----------------- ------------
Total 1,301,597 (645,109)
------------------------------------------ ----------------- ------------
(1) The fair value gains/(losses) on investment properties
includes a gain on lease surrender dilapidation premium of
EUR300,000 (2019: EUR784,095).
A valuation of the Group's properties as at 31 December 2020 was
completed by Lisney Limited ("Lisney") as external independent
valuer. Lisney prepared the valuation on the basis of market value
in accordance with the Royal Institution of Chartered Surveyors
("RICS") Valuation - Global Standards (January 2020). Their
valuation was subsequently reviewed by the Valuation and Audit
Committees.
During the year the group disposed of two properties, see note
13.
6. Administration expenses
Profit before tax for the financial year has been stated after
charging:
31 December 2020 31 December 2019
EUR EUR
-------------------------------------- ----------------- -----------------
Staff costs (Note 9)
Independent Non-executive Directors 1,429,088 1,581,426
(Note 24) 230,000 230,000
Listing expenses 14,868 18,859
Property valuation fees 86,500 69,000
Property management fees 80,564 88,842
Legal and consultancy fees 213,484 195,746
Independent accountant fees - 57,912
Audit and interim review fees 75,000 75,000
Depository fees 48,063 57,601
Broker, marketing, and promotion 316,433 138,390
Other costs 386,829 436,465
-------------------------------------- ----------------- -----------------
Total 2,880,829 2,949,241
-------------------------------------- ----------------- -----------------
Staff costs represents total remuneration and other benefits
paid to employees for the financial year. Further information on
Directors' remuneration can be found in note 24.
Other costs include items such as the general expenses,
insurance, company secretarial fees, donations and non-recoverable
VAT expenses.
Auditor's remuneration
31 December 31 December
2020 2019
EUR EUR
------------------------------------------------------- --------------
Company
Audit of the Company financial statements 45,000 45,000
Other assurance services 20,000 20,000
Tax advisory services - -
Other non-audit services - -
--------------------------------------------- --------- --------------
Company total 65,000 65,000
--------------------------------------------- --------- --------------
Group
Audit of the Group financial statements 10,000 10,000
Other assurance services - -
Tax advisory services - -
Other non-audit services - -
--------------------------------------------- --------- --------------
Group total 75,000 75,000
--------------------------------------------- --------- --------------
Other assurance services relates to the review of the Interim
Report.
7. AIFM Fees
31 December 2020 31 December
EUR 2019
EUR
----------- ----------------- ------------
AIFM Fees 75,000 95,833
----------- ----------------- ------------
Total 75,000 95,833
----------- ----------------- ------------
The Company is required, as a REIT, to have an alternative
investment fund manager ("AIFM"). The Company has agreed with
Ballybunion Capital, an AIFM authorised by the Central Bank of
Ireland, for Ballybunion Capital to act as the external AIFM of the
Group, subject to overall supervision of the AIFM by the Board. The
fees above are paid to the AIFM in accordance with the service
level agreement between the AIFM and the Company.
8. Finance costs
31 December 31 December 2019
2020 EUR
EUR
------------------------------------------ -------------- -------------------
Effective interest expense on borrowings 1,383,995 669,384
Extinguished borrowing costs on
loan amendment 430,178 -
Interest on lease liability 437 -
------------------------------------------ -------------- -------------------
Total 1,814,610 669,384
------------------------------------------ -------------- -------------------
The effective interest expense on borrowings arises as a result
of the recognition of interest expense, commitment fees and
arrangement fees using the effective interest rate method.
In December 2020 the Company agreed a new debt facility.
Capitalised costs from the prior facility which had been due to
expire in December 2021 were extinguished (note 19).
9. Employment
The average monthly number of employees (including Directors and
excluding Non-Executive Directors) directly employed during the
year to 31 December 2020 in the Company was seven (2019: six),
there were no additional employees in the Group.
Total employees and officers at financial
year end:
2020 2019
Number Number
------------------------------------------- ---------------------------- -------------------------------
At financial year end:
Executive Directors 3 5 3
Office staff 4 3
Non-Executive Directors 4
------------------------------------------- ---------------------------- -------------------------------
Total employees and officers 12 10
------------------------------------------- ---------------------------- -------------------------------
The staff costs for the above employees were:
31 December 31 December
2020 2019
EUR EUR
------------------------------------------ -------------- --------------
Wages and salaries 698,675 577,901
Bonus accrual 280,529 633,429
Social insurance cost 68,251 62,991
Pension costs - defined contribution
plan 159,232 163,445
Share based payments and other benefits
(Note 24) 205,913 133,321
Other benefits - Health insurance 16,488 10,339
------------------------------------------ -------------- --------------
Total staff costs 1,429,088 1,581,426
------------------------------------------ -------------- --------------
Independent Non-Executive Directors
(Note 24) 230,000 230,000
------------------------------------------ -------------- --------------
Staff costs are allocated to administration expenses during the
financial year.
10. Income tax
Current tax: current tax is the expected tax payable or
receivable on the taxable income or loss for the year, using tax
rates enacted at the reporting date, and any adjustment to tax
payable in respect of previous years. Yew Grove REIT plc has
elected for Real Estate Investment Trust ("REIT") status under
section 705E of the Tax Consolidation Act 1997. As a result, the
Group does not pay Irish corporation tax on the profits and gains
from its qualifying rental business in Ireland provided it meets
certain conditions. With certain exceptions, corporation tax is
still payable in the normal way in respect of income and gains from
a Group's Residual Business, that is its non-property rental
business which was EURnil (2019: EURnil).
31 December 31 December
2020 2 019
EUR EUR
------------------------------------- -------------- --------------
Income tax on residual income - -
Current year charge - -
------------------------------------- -------------- --------------
Income tax expense for the financial - -
year
------------------------------------- -------------- --------------
Reconciliation of the income tax expense for the financial
year
31 December 31 December
2020 2 019
EUR EUR
-------------------------------------------- -------------- --------------
Profit before tax 7,008,074 5,059,209
Tax charge on profit at standard rate
of 12.5% 876,009 632,401
Non-taxable revaluation surplus - -
REIT tax-exempt profits (876,009) (632,401)
Other (charge on subsidiary undertakings) - -
-------------------------------------------- -------------- --------------
Income tax expense for the financial - -
year
-------------------------------------------- -------------- --------------
The Directors confirm that in their opinion having conducted due
enquiries the Group and the Company have remained in full
compliance with the Irish REIT rules and regulations up to and
including the date of the approval of this report.
11. Earnings per share and EPRA Earnings per share
WEIGHTED AVERAGE NUMBER OF SHARES 31 December 31 December
2020 2019
EUR EUR
----------------------------------------- --------------- --------------
Issued share capital at beginning
of the financial year 111,572,210 75,000,000
Shares issued during the financial
year - 36,572,210
------------------------------------------ -------------- --------------
Share in issue at financial year end 111,572,210 111,572,210
------------------------------------------ -------------- --------------
Weighted average number of shares 111,572,210 81,095,292
------------------------------------------ -------------- --------------
Share based payments payable - dilutive
effect 293,628 125,222
------------------------------------------ -------------- --------------
Diluted number of shares 111,865,838 81,220,514
------------------------------------------ -------------- --------------
31 December 31 December
BASIC AND DILUTED EARNINGS PER SHARE 2020 2019
EUR EUR
-------------------------------------------- -------------- --------------
Profit for the financial year attributable
to the owners of the Group 7,008,074 5,059,209
-------------------------------------------- -------------- --------------
EUR EUR
-------------------------------------------- -------------- --------------
Weighted average number of ordinary
shares (basic) 111,572,210 81,095,292
Weighted average number of ordinary
shares (diluted) 111,865,838 81,220,514
Basic earnings per share (cent) 6.28 6.24
-------------------------------------------- -------------- --------------
Diluted earnings per share (cent) 6.26 6.23
-------------------------------------------- -------------- --------------
11. Earnings per share and EPRA Earnings per share
(Continued)
Earnings per share
The basic and diluted earnings per ordinary share of 6.28 and
6.26 cents per share (2019: 6.24 and 6.23) is based on the profit
for the financial year of EUR7,008,074 and on 111,572,210 ordinary
shares (2019: EUR5,059,209 and on 81,095,292 ordinary shares) being
the weighted average number of shares in issue for the year.
EPRA Earnings per share
31 December 31 December
2020 2 019
EUR EUR
-------------------------------------------- -------------- --------------
Profit for the financial year 7,008,074 5,059,209
Adjusted for:
Change in the fair value of investment
property (1,166,063) 768,283
(Gain) on disposal of investment property (135,534) (123,174)
Borrowing costs extinguished (Note
20) 430,178 -
-------------------------------------------- -------------- --------------
Total EPRA earnings 6,136,655 5,704,318
EPRA EPS (Basic) 5.50 7.03
EPRA EPS (Diluted) 5.49 7.02
-------------------------------------------- -------------- --------------
12. IFRS and EPRA NTA per share
The IFRS NAV is calculated as the value of the Group's assets
less the value of its liabilities based on IFRS measures. EPRA NTA
is calculated with accordance with the European Real Estate
Association ("EPRA") Best Practice Recommendations: October
2019.
EPRA net tangible assets ("EPRA NTA") assumes that entities buy
and sell assets, thereby crystallising certain levels of
unavoidable deferred taxation.
31 December 31 December
2020 2 019
EUR EUR
------------------------------------- -------------- --------------
IFRS net assets at end of financial
year 111,603,077 109,922,541
Ordinary shares in issue 111,572,210 111,572,210
------------------------------------- -------------- --------------
IFRS NAV per ordinary share (cents) 100.03 98.52
------------------------------------- -------------- --------------
Ordinary shares in issue 111,572,210 111,572,210
------------------------------------- -------------- --------------
Diluted number of shares 111,865,838 111,697,432
------------------------------------- -------------- --------------
Diluted IFRS NAV per share (cents) 99.77 98.41
------------------------------------- -------------- --------------
31 December 31 December
2020 2 019
EUR EUR
------------------------------------- -------------- --------------
IFRS net assets at end of financial
year
Net market to market on financial 111,603,077 109,922,541
assets - -
------------------------------------- -------------- --------------
EPRA NTA 111,603,077 109,922,541
------------------------------------- -------------- --------------
EPRA NTA per share (cent) 99.77 98.41
------------------------------------- -------------- --------------
13. Investment properties
a) Group and Company
31 December 2020 31 December
EUR 2 019
EUR
------------------------------------------------------- --------------
Opening balance
Property purchases 115,790,000 77,915,000
Disposal of property 27,353,330 39,546,096
Development expenditure (2,205,000) (950,000)
Lease surrender dilapidations premium 120,607 831,282
Fair value (loss)/gain on investment (300,000) (784,095)
properties 1,166,063 (768,283)
----------------------------------------- ------------- --------------
Closing fair value 141,925,000 115,790,000
----------------------------------------- ------------- --------------
In 2020 the Group acquired a portfolio of six office buildings
at Millennium Park, Naas, County Kildare for EUR27.4 million
(vendor price EUR25.3 million and transaction costs of EUR2.1
million). In 2019 a deposit of EUR2.5 million had been paid for the
purchase of these buildings.
The Group disposed of two properties in 2020. The first was an
industrial unit at Holly Avenue, Stillorgan, which was vacated in
May 2020 with a lease surrender dilapidation premium of EUR300,000
received. The unit was sold for EUR1.46 million and had a carrying
value of EUR1.35 million in November 2020 at sale. The second was
Unit F4/F5 at Centrepoint Business Park, Clondalkin, County Dublin,
this unit was sold for EUR950,000, and had a carrying value of
EUR855,000 in December 2020 at sale. There was a net gain on these
two properties of EUR135,000 after disposal costs and derecognition
of their carrying value.
During the year the Group also completed capital works on
buildings in Letterkenny and Waterford.
In 2019 the Group acquired Office Block A, located in the IDA
Waterford Business and Technology Park, Butlerstown, Waterford for
EUR4.3 million (vendor price of EUR4 million and transaction costs
of EUR308 thousand) and Office Block, Unit 2600, located in the
Cork Airport Business Park, Cork for EUR8 million (vendor price of
EUR7.5 million and transaction costs of EUR505 thousand). A
portfolio of three industrial buildings at the IDA Business and
Technology Park, Garrycastle, Athlone was acquired for EUR14
million (vendor price of EUR13 million and transaction costs of
EUR960 thousand) and an Office building at the IDA Ireland Business
and Technology Park, Garrycastle, Athlone for EUR13 million (vendor
price of EUR12 million and transaction costs of EUR1 million)
In 2019 the Group disposed of an industrial property, at Heather
Road, Sandyford for EUR1.1 million. The carrying value of the
building was EUR950 thousand, showing a net gain of EUR123 thousand
after disposal costs and derecognition of its carrying value.
A valuation is conducted on the Group's owned properties on 30
June and 31 December each year based upon the key assumptions of
estimated rental values and market-based yields. In determining
fair value, the valuers refer to market evidence and recent
transaction prices for similar properties.
The Directors are satisfied that the valuation of the Group's
properties is appropriate for inclusion in the accounts. The fair
value of the Group's properties owned at 31 December 2020 is based
on the valuation provided by the external independent Valuers,
Lisney. This valuation is prepared on the basis of market value in
accordance with the Royal Institution of Chartered Surveyors
Valuation - Global Standards (January 2020) and the principles of
IFRS 13. In this report the Valuer had particular regard to the
impact of COVID-19 on the valuation process, and technical guidance
from the Society of Chartered Surveyors Ireland ( the "SCS") in
interpreting the RICS Red Book for this event. The Valuer, as
required by the SCS, has included in his Valuation Report a
'material uncertainty' clause in the valuation of the retail
element of the Company's investment property portfolio, which
amounts to 1.4% of the total in value terms. Subsequent to the
valuation date the SCS has advised that it may no longer be
appropriate to use this clause in favour of a "market conditions"
clause.
13. Investment properties (Continued)
Fair value
The valuation technique used in determining the fair value of
the Group's property assets is market value as defined by the Royal
Institution of Chartered Surveyors Valuation Standards (January
2020), being the estimated amount for which an asset or liability
should exchange on the valuation date between a willing buyer and a
willing seller in an arm's length transaction after proper
marketing wherein the parties had acted knowledgeably, prudently
and without compulsion. This is in accordance with IFRS 13.
The main inputs for property valuation using a market-based
capitalisation approach are the ERV ("Estimated Rental Value") and
equivalent yield. ERV is a valuer's opinion as to the open market
rental value of a property on a valuation date which could
reasonably be expected to be the achievable rent for a new letting
of that property on the valuation date. ERVs are not generally
directly observable and therefore classified as Level 3 inputs.
Equivalent yields depend on the valuer's assessment of market
capitalisation rates and are therefore Level 3 inputs. There were
no transfers between fair value levels in 2020 and 2019.
Details of the Group's investment properties and information
about the fair value hierarchy using unobservable inputs (Level 3)
at 31 December 2020:
Range
Asset Class Market value Input Low Median High
------------- ----------------- -------- --------- ---------
Commercial Property EUR141.9 ERV per sq.
Assets million ft. EUR4.00 EUR16.38 EUR29.00
------------- ----------------- -------- --------- ---------
Equivalent yield
% 6.48% 7.70% 10.17%
------------- ----------------- -------- --------- ---------
at 31 December 2019:
Range
Asset Class Market value Input Low Median High
------------- ----------------- -------- --------- ---------
Commercial Property EUR115.8 ERV per sq.
Assets million ft. EUR4.00 EUR12.00 EUR33.34
------------- ----------------- -------- --------- ---------
Equivalent yield
% 6.49% 7.77% 10.09%
------------- ----------------- -------- --------- ---------
Sensitivity of measurement to variance of significant
unobservable inputs
A decrease in the ERV will decrease the fair value. An increase
in equivalent yield will decrease the fair value. There are
interrelationships between these rates as they are partially
determined by market rate conditions.
The table below shows the sensitivity of the Group's properties
to changes in equivalent yield and ERV, which have been identified
as key sensitivities by the Directors. A change in long term
vacancy rates was not considered significant and was not therefore
tested, as the Group's long-term vacancy rates are low and lease
contracts are long in duration.
Across the entire portfolio of investment properties, a 0.25%
increase in equivalent yield would have the impact of a EUR4.9
million (2019: EUR4.0 million) reduction in fair value whilst a
0.25% decrease in equivalent yield would result in a fair value
increase of EUR5.3 million (2019: EUR4.2 million). A 5% increase in
ERV would have the impact of a EUR6.0 million (2019: EUR5.0
million) increase in fair value, whilst a 5% decrease in ERV would
result in a fair value decrease of EUR6.3 million (2019: EUR5.1
million).
13. Investment properties (Continued)
At 31 December 2020
Market Value Value Value Value
Value +5% -5% +0.25% -0.25% Equivalent
in ERV in Equivalent Yield
ERV Yield
EUR EUR EUR EUR
Commercial property
assets EUR141.9m 6.0m (6.3m) (4.9m) 5.3m
Total 6.0m (6.3m) (4.9m) 5.3m
---------------------- ---------- -------- ------- ------------ -------------------
At 31 December 2019
Market Value Value Value Value
Value +5% -5% +0.25% -0.25% Equivalent
in ERV in Equivalent Yield
ERV Yield
EUR EUR EUR EUR
Commercial property
assets EUR115.8m 5.0m (5.1m) (4.0m) 4.2m
Total 5.0m (5.1m) (4.0m) 4.2m
---------------------- ---------- -------- ------- ------------ -------------------
14. Property, plant & equipment
a) Group and Company
At 31 December 2020:
Computer Fixtures Right-of-use
&
Costs Equipment Fittings Asset Total
EUR EUR EUR EUR
---------------------- ---------------------- ---------------------- ----------------------- ---------------------
At 1 January 2020 5,575 - - 5,575
Additions 3,287 10,000 249,632 262,919
Disposals - - - -
---------------------- ---------------------- ---------------------- ----------------------- ---------------------
At 31 December 2020 8,862 10,000 249,632 268,494
---------------------- ---------------------- ---------------------- ----------------------- ---------------------
Accumulated
Depreciation
At 1 January 2020 (858) - - (857)
Charge for the year (2,424) (833) (24,963) (28,220)
At 31 December 2020 (3,282) (833) (24,963) (29,078)
---------------------- ---------------------- ---------------------- ----------------------- ---------------------
Net Book Value 31
December
2020 5,580 9,167 224,669 239,416
Net Book Value 31
December
2019 4,717 - - 4,717
---------------------- ---------------------- ---------------------- ----------------------- ---------------------
In 2020 the Company entered a lease for its head office. The
right-of-use asset is the Company's office, there is a
corresponding lease liability disclosed in other creditors (Note
18).
14. Property, plant & equipment (Continued)
a) Group and Company
At 31 December 2019:
Computer
Costs Equipment Total
EUR EUR
----------------------------------- ---------------------- ---------------------
At 1 January 2019 - -
Additions 5,575 5,575
Disposals - -
----------------------------------- ---------------------- ---------------------
At 31 December 2019 5,575 5,575
----------------------------------- ---------------------- ---------------------
Accumulated Depreciation
At 1 January 2019 - -
Charge for the year (858) (858)
At 31 December 2019 (858) (858)
----------------------------------- ---------------------- ---------------------
Net Book Value 31 December 2019 4,717 4,717
Net Book Value 31 December 2018 - -
----------------------------------- ---------------------- ---------------------
15. Interest in joint venture (Group)
Details of the Group's only joint venture at the end of the
reporting year were as follows:
Name of joint Address/Country Nature Investment Votes controlled Carrying
venture of Incorporation of the by the amount
business Company 31 December
2020
Friends First
House, Cherrywood Private
Science & Limited
Technology Company.
Ashtown Management Park, Loughlinstown, Management Ashtown Management
Company Limited Co. Dublin, of common Company Limited
(Joint venture) Ireland areas (Joint venture) 50% EUR3,473
----------------------- ------------- -------------------- ----------------- -------------
This joint venture is accounted for using the equity method in
these consolidated financial statements as set out in the Group's
accounting policies in note 1.
The share of profits attributable to the Group for the year
ended 31 December 2020 and the prior year ended 31 December 2019
are as follows;
31 December 31 December
2020 2 019
EUR EUR
----------------------------------- -------------- --------------
Share of joint venture profits for - -
the year
----------------------------------- -------------- --------------
15. Interest in joint venture (Continued)
The joint venture broke-even for the year ended 2020 (2019:
break-even). Summarised financial information in respect of the
results of the joint venture to 31 December 2020 is as follows:
31 December 31 December
2020 2 019
EUR EUR
---------------------------------------------------------- --------------
Revenue 563,368 306,908
Expense (563,368) (306,908)
Profit post tax from continuing operations - -
Profit for the year - -
---------------------------------------------- ----------- --------------
Total comprehensive income - -
---------------------------------------------- ----------- --------------
The balance sheet value of the Company's interest in a joint
venture as at 31 December 2020 is as follows:
31 December 2020 31 December
EUR 2 019
EUR
---------------------------------------- --------------
Cash and cash equivalents 448,024 61,126
Trade and other payables (441,078) (54,180)
---------------------------- ----------- --------------
Net assets 6,946 6,946
---------------------------- ----------- --------------
16. Trade and other receivables
a) Group
Current
31 December 31 December
2020 2 019
EUR EUR
------------------------------------- -------------- --------------
Trade receivables and prepayments 251,976 634,879
Taxation debtors - VAT recoverable 252,303 231,311
Deposit paid - 2,530,000
Expected credit loss allowance (175,583) -
Tenant lease incentives 92,893 -
Other receivables 654,990 131,564
------------------------------------- -------------- --------------
Total 1,076,579 3,527,754
------------------------------------- -------------- --------------
Non-current
31 December 2020 31 December
EUR 2 019
EUR
------------------------ ----------------- ------------
Tenant lease incentives 793,333 -
------------------------ ----------------- ------------
Total 793,333 -
------------------------ ----------------- ------------
Trade receivables include amounts due from tenants for rental
and service charges. The ECL allowance is calculated according to
the provision matrix and totals EUR175,583 related to trade
receivables. The balance of trade and other receivables has no
concentration of credit risk as it covers mainly prepayments. The
Directors therefore consider the carrying value of trade and other
receivables approximates to their fair value.
In 2019 a deposit of EUR2.53 million had been paid for the
purchase of six buildings at Millennium Park, Naas which completed
in February 2020.
16. Trade and other receivables (Continued)
Where a rent-free period is included as an incentive in a lease,
the rental income foregone is allocated evenly over the period from
the date of the lease to the earliest termination date of the
lease. Where a lease incentive takes the form of an incentive
payment to a tenant the resultant cost is amortised evenly over the
remaining life of the lease to the earliest termination date. The
balance included in trade and other receivables is the sum of these
unamortised incentives which will be released over the term of the
relevant leases to their earliest termination date.
The other receivables balance includes costs that have been
incurred by the company and can be recovered from tenants under the
terms of existing leases along with deposits, lease renewal costs
which are recognised over the life of the lease and other amounts
recoverable. Management company receivables are also included.
b) Company
Current
31 December 31 December
2020 2 019
EUR EUR
------------------------------------- -------------- --------------
Trade receivables and prepayments 251,976 214,390
Taxation debtors - VAT recoverable 252,303 231,311
Deposit paid - 2,530,000
Expected credit loss (175,583) -
Tenant lease incentive 92,893 -
Other receivables 335,629 256,418
------------------------------------- -------------- --------------
Total 757,218 3,232,119
------------------------------------- -------------- --------------
Non-current
31 December 2020 31 December
EUR 2 019
EUR
----------------------- ----------------- ------------
Tenant lease incentive 793,333 -
----------------------- ----------------- ------------
Total 793,333 -
----------------------- ----------------- ------------
17. Cash and cash equivalents
a) Group
31 December 31 December
2020 2 019
EUR EUR
---------------------------------------- ------------
Cash and cash equivalents 10,721,464 14,577,461
---------------------------- ----------- ------------
b) Company
31 December 31 December
2020 2 019
EUR EUR
---------------------------------------- ------------
Cash and cash equivalents 10,439,802 14,086,632
---------------------------- ----------- ------------
Of the cash balance as at 31 December 2020 EUR3,255,070 (2019:
EUR2,311,076) is classified as restricted cash. The Company's
facility agreement requires rent paid in advance on secured
properties to be collected in a rent account controlled by the
facility provider. The amount of this cash as at 31 December 2020
was EUR2,447,732 (2019: EUR778,352). Rent in excess of accrued
facility interest is released at each quarterly facility interest
payment date to an account controlled by the Group. Dilapidation
amounts held by the Group on secured properties total an additional
EUR807,338 (2019: EUR1,000,000) which was similarly held as
restricted cash at the year end in accordance with facility banking
covenants.
The management of cash and cash equivalents is discussed in
detail in note 26.
18. Trade and other payables
a) Group
31 December 2020 31 December
EUR 2 019
EUR
--------------------------------- ------------------- --------------
Trade payables and accruals 3,275,168 3,061,571
Tenant lease incentives 771,450 385,633
Taxation creditors - PAYE/PRSI 28,911 22,698
Borrowings (note 19) 30,603 16,053
Lease obligations 76,690 -
Other payables 541,393 91,703
--------------------------------- ------------------- --------------
Total 4,724,215 3,577,657
--------------------------------- ------------------- --------------
Non-current
31 December 2020 31 December
EUR 2 019
EUR
----------------- ----------------- ------------
Lease obligation 153,379 -
----------------- ----------------- ------------
Total 153,379 -
----------------- ----------------- ------------
Trade payables include amounts due to third party suppliers and
prepaid rent amounts received from tenants in advance. Accrued
expenses include operational expenses incurred but not yet invoiced
to the Group as at 31 December 2020. Trade and other payables are
interest free and have settlement dates within one year. The
Directors consider that the carrying value of the trade and other
payables approximates to their fair value.
Other payables includes a sinking fund received at the
Millennium Park acquisition, this is payable to the Millennium Park
estate fund for the liabilities of the estate's management
companies.
b) Company
31 December 31 December
2020 2 019
EUR EUR
--------------------------------- -------------- --------------
Trade payables and accruals 2,938,198 2,528,784
Lease incentives 771,450 385,633
Taxation creditors - PAYE/PRSI 28,911 22,698
Borrowings 30,603 16,053
Lease obligations 76,690 -
Other payables 541,393 91,703
--------------------------------- -------------- --------------
Total 4,387,245 3,044,870
--------------------------------- -------------- --------------
Non-current
31 December 2020 31 December
EUR 2019
EUR
----------------- ----------------- ------------
Lease obligation 153,379 -
----------------- ----------------- ------------
Total 153,379 -
----------------- ----------------- ------------
Trade payables includes amounts due to third party suppliers and
prepaid rent amounts received from tenants in advance. Accrued
expenses include operational expenses incurred but not yet invoiced
to the Company as at 31 December 2020. Trade and other payables are
interest free and have settlement dates within one year. The
Directors consider that the carrying value of the trade and other
payables approximates to their fair value.
Other payables includes a sinking fund received at the
Millennium Park acquisition, this is payable to the Millennium Park
estate fund for the liabilities of the estate's management
companies.
18. Trade and other payables (Continued)
Group as a Lessee
The Group has a three-year lease contract for its head office
which started in September 2020. The Group's obligations under its
leases are secured by the lessor's title to the leased assets.
Generally, the Group is restricted from assigning and subleasing
the leased asset. The Group also held a property lease with a term
of less than 12 months until September 2020. The Group applied the
'short-term lease' and 'lease of low-value assets' recognition
exemptions for this lease.
The carrying amounts of the lease liabilities (included under
interest-bearing loans and borrowings) and their movements during
the year are shown below:
31 December 31 December
2020 2019
EUR EUR
------------------------ ------------ ------------
As at 1 January 2020 - -
Additions 249,632 -
Accretion of interest 437 -
Payments (20,000) -
------------------------ ------------ ------------
As at 31 December 2020 230,069 -
------------------------ ------------ ------------
Current 76,690
------------------------ ------------
Non-current 153,379
------------------------ ------------
19. Borrowings
The Company agreed a revolving credit facility with Allied Irish
Bank plc ("AIB"), secured by fixed and floating charges over
certain property assets. The facility available as at 31 December
2020 was EUR53,595,000 (2019: EUR29,074,000).
a) Group and Company
31 December 2020 31 December
EUR 2 019
EUR
---------------------------------- ------------------- --------------
Balance at the beginning of the
financial year
Bank finance drawn during the
financial year
Bank finance repaid during the 20,419,260 5,852,235
financial year 19,805,638 14,591,200
Interest during the financial (2,000,000) -
year (1,032,044) (523,219)
Borrowing costs extinguished (430,178) -
Borrowing costs (267,652) (185,976)
Effective interest expense 1,814,173 685,020
---------------------------------- ------------------- --------------
Balance at end of the financial
year 38,309,197 20,419,260
Maturity of borrowings is as
follows
Less than one year 30,603 16,053
Between two and five years 38,278,594 20,403,207
---------------------------------- ------------------- --------------
Total
38,309,197 20,419,260
Undrawn at end of the financial
year 14,998,623 8,283,260
---------------------------------- ------------------- --------------
In December 2020 the Company amended the revolving credit
facility with Allied Irish Bank plc ("AIB"). The facility maturity
was extended from December 2021 to December 2024 (extendible by a
further year), the property assets securing the facility were
changed, the facility available was increased, and some covenants
were removed. This facility of EUR53,595,000 can be repaid and
re-drawn without penalty throughout its life. This facility was
measured initially at fair value, after transaction costs, and
carried at amortised cost, with all attributable costs charged to
Consolidated Statement of Comprehensive Income over the life of the
facility.
19. Borrowings (Continued)
The loan facility drawings in the year were EUR17.8m 2019:
EUR14.5m) and there were loan repayments of EUR2.0m (2019: EURnil)
during the period to 31 December 2020. The total interest paid was
EUR1.0m (2019: EUR0.5m). As at 31 December 2020 EUR15.0m (2019:
EUR8.3m) of the facility was undrawn, EUR38.6m (2019: EUR20.4m) was
drawn.
The Company stated in its admission document its intention to
target borrowings, following full investment of the net proceeds
raised at admission, of 25% loan-to-value ("LTV"). LTV is the ratio
of drawn debt to the value of property investments, which at 31
December 2020 was 27.2% (2019:18.0%). During the year an EGM was
held at which the Company's shareholders agreed to increase the LTV
target from 25% to 40%. Under the Irish REIT rules a REIT's
borrowings must not exceed 50% of the value of its assets.
All borrowings are denominated in euro. All borrowings are
subject to six months or less interest rate changes and contractual
re-pricing rates.
Net Debt and LTV
Net debt and LTV are key metrics in the Group. Net debt is
redemption value of borrowings as adjusted by cash available for
use. LTV is the ratio of net debt to investment property value at
the measurement date.
31 December 31 December
2020 2019
EUR EUR
------------------------------------------------ -------------------------- --------------------------
Cash and cash equivalents 10,721,464 14,577,461
Cash reserved* (171,076) -
Gross debts (38,309,197) (20,419,260)
-------------------------- --------------------------
Net debt at year end (27,758,809) (5,841,799)
Investment property at year end 141,925,000 115,790,000
Net Debt to value ratio 19.6% 5.1%
------------------------------------------------ -------------------------- --------------------------
*These balances are not viewed as available funds for the
purposes of the above calculation.
20. Share Capital
31 December 31 December
2020 2019
Shares in issue 111,572,210 111,572,210
========================== ==========================
EUR EUR
Issue for cash 2018 750,000 750,000
Issue for cash 2019 365,722 365,722
-------------------------- --------------------------
In issue 31 December
2020 1,115,722 1,115,722
========================== ==========================
The Group has a single class of ordinary shares of one cent
each. 111.6 million authorised and issued shares where in issue at
31 December 2020. All issued shares were fully paid.
On 28 April 2020 the Company announced proposed details of an
issuance program of up to 100 million new shares through a 12-month
Share Issuance Programme. This issuance program was agreed at an
EGM of the Company on 29 May 2020.
The Company had 100,000,000 unissued shares remaining under the
12-month share issuance program at 31 December 2020.
The Company's entire authorised share capital is EUR10,000,000
comprising 1,000,000,000 ordinary shares.
21. Reserves
The equity of the Company consists of Ordinary Shares issued.
The par value of each share is recorded in the share capital
account. The excess of proceeds received over the par value is
recorded in the share premium account. Direct issue costs in
respect of the issue of shares are accounted for in the retained
earnings reserve, net of any related tax deduction.
22. Distributions made and declared
Cash dividends to the equity holders
of the Company: 31 December 31 December
2020 2019
EUR EUR
--------------------------------------- -------------- --------------
Dividends on ordinary shares declared
and paid
Final dividend for 2018: 0.96 cent
per share - 723,000
Interim dividend for Q1 2019: 1.10
cent per share - 825,000
Interim dividend for Q2 2019: 1.37
cent per share - 1,027,500
Special dividend* Q2 2019: 1.86 cent
per share - 1,395,000
Interim dividend for Q3 2019: 1.38
cent per share - 1,173,000
Interim dividend for Q4 2019: 1.04
cent per share 1,160,351
Interim dividend for Q1 2020: 1.20
cent per share 1,338,867
Interim dividend for Q2 2020: 1.25
cent per share 1,394.653
Interim dividend for Q3 2020: 1.30
cent per share 1,450,438
--------------------------------------- -------------- --------------
Total 5,344,309 5,143,500
--------------------------------------- -------------- --------------
Declared dividend on ordinary shares
Proposed Interim dividend for Q4 2020: 1,562,011 -
1.40 cent per share
--------------------------------------- ----------
*A Q2 2019 special dividend was declared on 26 June 2019 and
paid to equity holders on 24 July 2019. This dividend of 1.86 cent
per share was paid following the receipt of a lease surrender
during the year.
The proposed Q4 2020 interim dividend would result in dividends
declared from 2020 earnings of 5.15 cents per share (2019: 6.75
cents per share). The proposed dividend had not been accounted for
as a liability at year end. The Board approved the dividend on 23
February 2021 and it was due to be paid on 7 April 2021.
23. Related party transactions
The Directors are considered to be related parties.
On admission to the AIM and Euronext Growth markets the
Executive Directors subscribed for shares in the Company at the
issued price. They subscribed their post-tax proceeds from
redemption of shares in the Yew Tree Investment Fund plc
(Dissolved) and their shares of all incentive fees due from Parapet
Capital Advisors' role as Investment Adviser to the AIFM of the Yew
Tree Investment Fund plc (Dissolved). Concurrently the
Non-Executive Directors subscribed for shares in the Company at the
issued price.
The Directors made further subscriptions for shares at the
issued price in the July and December share placings in 2019. In
2020 some Directors made further market purchases of shares.
The Directors of the Group received remuneration, fees and other
benefits from the Group for their services. Total amounts for the
financial year were EUR980,019 (2019: EUR1,358,154). No variable
remuneration was paid to the Non-Executive Directors. No
remuneration, fees or other benefits were paid to the Directors by
any subsidiary or joint venture.
All transactions between the Company and its subsidiaries are
eliminated on consolidation.
Key management personnel
The remuneration of key management personnel during the
financial year is disclosed in note 24.
23. Related party transactions (Continued)
Subsidiaries, associates and joint ventures
All transactions between the Company and its subsidiaries are
eliminated on consolidation. There is no equity issued by the
subsidiaries. The subsidiaries are management companies which are
limited by guarantee and do not have share capital. The
subsidiaries of the Group are:
Name of subsidiary Registered Address/Country Nature of Membership Votes controlled
of Incorporation the business by the Company
Gateway Estate 2(nd) Floor, Management 2/3 99% of voting
Management Company River House, of common rights
Limited by Guarantee East Wall Road, areas
Dublin 3, Ireland
--------------------------- -------------- ----------- -----------------
Mallow Business Mallow Business Management 1/2 66% of voting
Park Management Park, Gooldhill, of common rights
Company Limited Mallow, Co. areas
by Guarantee Cork, Ireland
--------------------------- -------------- ----------- -----------------
The Group has a single joint venture:
Name of joint venture Registered Address/Country Nature of Votes controlled
of Incorporation the business by the Company
Ashtown Management Friends First House, Management
Company Limited Cherrywood, Loughlinstown, of common
by Guarantee Co. Dublin, Ireland areas 50%
----------------------------- --------------- -----------------
The joint venture had a break even result for the year to 31
December 2020.
Associates
During the year the Company acquired a portfolio of six office
buildings at Millennium Park, Naas Co. Kildare, following which the
Company has a holding in management companies associated with those
properties, listed below. The Company does not exert control over
these management companies, they have been classified as associates
and do not form part of the consolidated Group. There is no equity
issued by the associates as they are management companies are
limited by guarantee not having share capital.
Name of subsidiary Registered Address/Country Nature of the Votes controlled
of Incorporation business by the Company
Naas Millennium C/O Tetrarch Capital Management of 13.8% of voting
(East) Management Limited, Heritage common areas rights
Company Limited House, 23 St. Stephen's
by Guarantee Green, Dublin 2,
Ireland
--------------------------- -------------- -----------------
Naas Millennium C/O Tetrarch Capital Management of 12.23% of voting
(West) Management Limited, Heritage common areas rights
Company Limited House, 23 St. Stephen's
by Guarantee Green, Dublin 2,
Ireland
--------------------------- -------------- -----------------
Osberstown Management C/O Tetrarch Capital Management of 3.87% of voting
Company Limited Limited, Heritage common areas rights
by Guarantee House, 23 St. Stephen's
Green, Dublin 2,
Ireland
--------------------------- -------------- -----------------
Other related parties
No other related party transactions have been identified.
24. Directors' remuneration
31 December 31 December
2020 2 019
EUR EUR
---------------------------------------------- ------------- -------------
Remuneration - Independent Non-executive
Directors 230,000 230,000
Remuneration - Executive Directors 375,012 375,012
Total Directors and Non-executive Directors
remuneration
Bonus accrual - Executive Directors 605,012 605,012
Pension defined contribution plan -
Executive Directors
Other benefits - Executive Directors 225,000 615,000
112,500 113,242
37,507 24,900
---------------------------------------------- ------------- -------------
Total 980,019 1,358,154
---------------------------------------------- ------------- -------------
The remuneration of Directors and key management is determined
by the Remuneration Committee in order to reflect the performance
of individuals and market trends. Other benefits paid to the
Executive Directors during the year include health insurance, death
in service and illness insurance. Defined contribution pension
payments represent contributions on behalf of the three Executive
Directors. All fees paid to Non-Executive Directors are for
services as Directors to the Group, they receive no other benefits.
There were no payments of compensation made to any Directors for
termination or loss of office.
Share based payments
In 2020, the Group has recognised EUR68,475 of share-based
payment expense from the 2019 Long Term Incentive Plan ("2019
LTIP") award in the Consolidated Statement of Comprehensive Income.
This award was made in 2019 and vests in 2022.
On 29 June 2020 the Remuneration Committee granted 785,000 share
options to senior executives and staff under the 2020 Long Term
Incentive Plan ("2020 LTIP"). The exercise price of these options
of EUR0.01 is the nominal value of the underlying ordinary shares.
The options' vesting is dependent on the Company's performance
against two criteria, being Relative Total Shareholder Return
("TSR") for 50% of the options and Absolute Total Property Return
for the remaining 50% of the options. The Company has set
performance conditions for each criterion, 30% of options vest if
performance is at the lower hurdle and 100% if at or above higher
hurdle, the extent of vesting if performance is between the hurdles
will be determined on a straight line basis.
Vesting for both 2019 LTIP and 2020 LTIP awards occurs three
years after the date of grant and requires the senior executive and
staff to still be employed by the Company on such date. If the
lower hurdles are not met, the options lapse. The vested options
must be exercised within seven years of grant. The fair value at
grant date is estimated using a Monte Carlo simulation pricing
model, taking into account the terms and conditions upon which the
options were granted. There is no cash settlement of the grant. The
fair value of options granted during the year to 31 December 2020
was estimated on the date of grant using the following
assumptions:
Dividend yield (%) 5.67
Volatility (%) 38.44
Risk-free interest rate (%) 1.00
Vesting period of share options (years) 2.51
Grant date share price (EUR) 0.75
While the TSR linked option values calculated are based on
market-based assumptions, the Absolute Total Property Return per
share linked options, being non-market based, required management
assumptions as to the probability of their respective hurdles being
achieved.
In 2020, the Group has recognised EUR99,930 of share-based
payment expense for the 2020 LTIP in the Consolidated Statement of
Comprehensive Income.
25. Operating lease receivables
Future aggregate minimum rental receivables (to the next break
date) under non-cancellable operating leases and licences are:
31 December 31 December
2020 2 019
EUR EUR
------------------------------------- ------------- -------------
Operating lease rentals and licence
income receivables due in:
Less than one year
Between two and five years 10,902,596 8,778,209
Greater that five years 25,889,070 20,983,091
10,225,170 9,943,038
------------------------------------- ------------- -------------
Total 47,016,835 39,704,338
------------------------------------- ------------- -------------
The Group has both operating leases and operating licences. The
operating licences are predominantly for car parking spaces and are
less than one year in duration.
The Group leases its investment properties under operating
leases. The weighted average unexpired lease term of these leases
("WAULT") at 31 December 2020 is 7.2 years to expiry (2019: 8.1
years). The weighted average unexpired lease term of these leases
("WAULT") at 31 December 2020 is 4.1 years to break (2019: 4.6
years).
These calculations are based on all lease and licences at 31
December 2020.
The Company produces internal weekly reports which include
details of the next lease events for all its leases. Following
distribution of this report the Company holds a weekly meeting at
which each property, and the strategy for impending or future lease
amendments is discussed. The principal strategies for managing risk
of the Company's leases are: monitoring the creditworthiness and
business models of existing tenants and their guarantors, arranging
new leases with existing or new tenants, effecting rent reviews and
lease amendments with existing tenants.
26. Financial instruments - risk management and fair value
Financial assets and financial liabilities
The following table shows the Group's financial assets and
liabilities and the methods used to calculate fair value.
ASSET/ CARRYING CARRYING LEVEL VALUATION TECHNIQUE
LIABILITY VALUE VALUE (EUR)
--------------------- ------------ -------------- -------- ----------------------------------
All trade and other receivables
that could be classified
as financial instruments
are short-term, the majority
being less than three months
in duration, and therefore
face value approximates fair
value on an amortised costs
Trade and Amortised basis using the effective
other receivables cost 251,976 3 interest rate method.
--------------------- ------------ -------------- -------- ----------------------------------
The carrying amount of loans
and borrowings held at amortised
cost have been calculated
by discounting the expected
Loans and Amortised cashflows at prevailing interest
borrowings cost 38,309,197 3 rates.
--------------------- ------------ -------------- -------- ----------------------------------
All trade and other payables
that could be classified
as financial instruments
are short-term, the majority
being less than three months
in duration, and therefore
face value approximates fair
value on an amortised cost
Trade and Amortised basis using the effective
other payables cost 3,275,168 3 interest rate method.
-------------------- ------------- -------------- -------- ----------------------------------
26. Financial instruments - risk management and fair value
(Continued)
The Board has overall responsibility for the establishment and
oversight of the Group's risk management framework. The Audit
Committee is responsible for developing and monitoring the Group's
risk management policies. Risk management policies are established
to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls and to monitor risks and
adherence to limits. All of these policies are regularly reviewed
in order to reflect changes in the market conditions and the
Group's activities.
The main risks arising from the Group's financial instruments
are market risk, credit risk and liquidity risk. The policies for
managing each of these and the principal effects of these policies
on the results for the financial year are summarised below:
i. Market risk
Market risk is the risk that the fair value or cashflows of a
financial instrument will fluctuate due to changes in market
prices. Market risk reflects interest rate risk, currency risk and
other price risks. The Group's financial assets mainly comprise of
investment properties, and trade and other receivables and cash
which are classified as financial assets. The Group has no
financial assets or liabilities denominated in foreign currencies.
Financial liabilities comprise short-term payables and bank
borrowings. All of these items are denominated in Euro. The Group's
primary market risk for financial instruments is interest rate
risk.
a) Interest rate risk
Bank borrowing interest rates are based on short-term variable
interest rates which the Group has chosen not to hedge. Exposure to
interest rates is limited to the exposure of its earnings from
uninvested funds and borrowings. The Group has a revolving credit
facility with AIB of which EUR38.6m (2019: EUR20.8m) was drawn at
year end, EUR15.0m was undrawn as at 31 December 2020 (2019:
EUR8.3m) Interest due on the drawn amount of the facility will vary
with changes in the underlying interest rate which may result in an
increase in financing costs. The Group's drawings under its bank
facility float at a margin over the higher of 3 months Euribor or
0% at drawing and quarterly reset dates and therefore the impact of
a rise in 3 months Euribor to 1% for a full year on drawings as at
31 December 2020 would be approximately EUR0.39m (2019: EUR0.21m),
and if the facility were fully drawn would be EUR0.54m (2019:
EUR0.30m).
The Group is also exposed to interest rate risk on its cash and
cash equivalents. There were EUR10.7m of uninvested Group funds
held within Bank of Ireland, Allied Irish Bank and Societe Generale
accounts at 31 December 2020 (2019: EUR14.6m). These balances
attract low interest rates and therefore a relative increase or
decrease in their interest rates would not have a material effect
on the Consolidated Statement of Comprehensive Income.
b) Currency risk
The Company has a sterling bank account with Société Générale.
As at 31 December 2020 the amount outstanding was GBGBP19,130
(2018: GBGBP6,202). This amount is judged sufficient to settle
expected sterling payments due to service providers. As such, the
Company had minimal foreign exchange exposure.
ii. Liquidity risk
Liquidity risk is the risk the Group may encounter difficulties
in meeting the obligations associated with its financial
liabilities settled by cash or other financial assets. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation. The Group monitors the level of expected cash
inflows on trade and other receivables, together with expected cash
outflows on trade and other payables and capital commitments.
26. Financial instruments - risk management and fair value
(Continued)
Detailed below are the contractual maturities of the Group's
financial liabilities;
2020: Carrying 6 months 6 to 1 to 2 2 to 5 More Total contractual
Value or less 12 months years years than amount
5 years EUR
EUR EUR EUR EUR EUR
EUR
-------------------- ----------- ----------- ----------- ---------- ----------- --------- ------------------
Borrowings 38,309,197 513,116 513,116 1,026,232 40,361,661 - 42,414,125
Trade payables 3,275,168 3,275,168 - - - - 3,275,168
Other payables 541,393 341,933 199,460 - - - 541,393
Lease liabilities 230,069 38,345 38,345 153,379 - - 230,069
-------------------- ----------- ----------- ----------- ---------- ----------- --------- ------------------
Total carrying
amount 42,355,827 4,168,562 750,921 1,179,611 40,361,661 - 46,460,755
-------------------- ----------- ----------- ----------- ---------- ----------- --------- ------------------
2019: Carrying 6 months 6 to 1 to 2 to 5 More Total contractual
Value or less 12 months 2 years years than amount
5 years EUR
EUR EUR EUR EUR EUR
EUR
------------------ ----------- ----------- ----------- --------- ----------- --------- ------------------
Borrowings 20,419,260 297,440 297,440 594,879 20,419,260 - 21,609,018
Trade and
other payables 3,561,604 3,344,401 201,150 - - - 3,545,551
------------------ ----------- ----------- ----------- --------- ----------- --------- ------------------
Total carrying
amount 23,980,864 3,641,841 498,590 594,879 20,419,260 - 25,154,569
------------------ ----------- ----------- ----------- --------- ----------- --------- ------------------
iii. Credit risk
Cash and cash equivalents : cash and cash equivalents are held
with major Irish and European banking institutions. These banking
institutions and their short term ratings are listed below (ratings
for each are from Standard and Poors/Moody's/Fitch):
Société Générale has short term unsecured debt ratings of
A-1/P-1/F1
Allied Irish Bank plc has short term unsecured debt ratings of
A-2/P-1/F2
The Governor and Company of the Bank of Ireland has short term
ratings of A-2/P-1/F2
Trade and other receivables: rents and licences are generally
received monthly in advance or quarterly in advance from tenants.
The balance of trade and other receivables has no concentration of
credit risk as it comprises mainly prepayments.
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of its customers. Trade and other
receivables relate mainly to the Group's property tenants. The
day-to-day management of the Group's customers is managed by
appointed property agents under the oversight of the Group's
internal property management group.
The Group applies the simplified approach to trade receivables
for which expected credit losses uses the lifetime expected credit
allowance. The Group has no exposure to bad debts other than those
disclosed in note 16 as the majority of the Group's rental income
is from State bodies or FDI entities as they have good credit
standing. The payment and credit performance of these tenants is
closely monitored.
There was an expected credit loss in the year of EUR175,583
mainly as a result of difficulties encountered by tenants in
trading during movement and trading restrictions as a result of the
COVID-19 pandemic.
26. Financial instruments - risk management and fair value
(Continued)
Detailed below are the carrying amount of the Group's financial
assets as the maximum amount of exposure to credit risk;
31 December 31 December
2020 2 019
EUR EUR
----------------------------- ------------ ------------
Trade and other receivables 1,076,579 3,477,065
Cash and cash equivalents 10,721,464 14,577,461
----------------------------- ------------ ------------
Balance at end of year 11,798,043 18,054,526
----------------------------- ------------ ------------
Capital management
The Group's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
the future development of the business. The key performance
indicators used in evaluating the achievement of strategic
objectives are return on capital, growth in NAV and dividends to
ordinary shareholders (dividend per share) as well as the total
return of the Group's property portfolio.
Capital consists of share capital, reserves and retained
earnings. At 31 December 2020 the equity of the Group was EUR111.6m
(2019: EUR109.9m).
The Group seeks to leverage capital in order to enhance returns,
refer to note 19 for further details.
The Group's issued share capital is publicly traded on the
Euronext Growth market of Euronext Dublin and the Alternative
Investment Market of the London Stock Exchange.
27. Contingent Liabilities
The Group has not identified any contingent liabilities which
are required to be disclosed in the consolidated financial
statements.
28. Events after the reporting period
On 1 January 2021 the Company's previously agreed letting of
20,268 sq. ft. (the first floor) of Unit 2600, Cork Airport
Business Park to Alter Domus Fund Services Ireland Ltd along with
79 carparking spaces took effect.
On 4 February 2021 the Company held an Extraordinary General
Meeting at which the resolutions intended to facilitate the
migration of the Company's participating securities from the CREST
System to the central securities depository system operated by
Euroclear Bank SA/NV and to make certain changes to the Company's
Articles of Association were duly passed by shareholders.
On 9 February 2021 the Company announced that it had started the
process of listing on a main market of a recognised stock exchange
in an EU member state. This is required by the Irish tax provisions
governing REITs, the Company expects to be listed (on the Main
Securities Market of Euronext Dublin) in the first half of
2021.
On 23 February the Company declared the payment of an interim
dividend for the quarter ended 31 December 2020 of EUR1,562,011 for
1.40 cents per ordinary share. This will be paid to shareholders on
7 April 2021.
On 25 February the Company announced that it had agreed a new
lease for the entirety of the Gateway Three building, East Wall
Road, Dublin to the Electricity Supply Board ("ESB") group.
On 18 March 2021 an agreement was made to finance the
construction of an adjoining building to its currently owned
Building C at the IDA Business and Technology Park at Athlone,
Westmeath, which the tenant has agreed to lease on completion. The
Company has established a 100% owned subsidiary, Yew Grove HoldCo
One Limited, for this purpose.
29. Capital commitments
It is expected that a car park will be built at the Waterford
property with an estimated cost of EUR100,000. This commitment was
taken on as part of the purchase of the Waterford property in 2019
and was due to be completed by December 2019, an extension until
2021 has been requested for this.
There are no other capital commitments at the Statement of
Financial Position date.
Disclosures under AIFMD (unaudited)
Disclosure required under the Alternative Investment Fund
Managers Directive ("AIFMD") for Reports of alternative investment
funds ("AIFs") (unaudited)
Financial information disclosures
The Company realised a gain of EUR0.1 million on the sale of two
of its investment properties in the financial year from 1 January
2020 to 31 December 2020. Within the total unrealised gains for the
same period of EUR1.2 million disclosed under IFRSs, there is a
total of EUR1.6 million in unrealised losses and EUR2.8 million in
unrealised gains.
Material changes and periodic risk management disclosures
All disclosure requirements to be made to investors prior to
investing in the Company are set out on the Company's website,
www.ygreit.com .
Remuneration disclosures
The information provided below relates to Ballybunion Capital
Limited, the alternative investment fund manager ("AIFM"), and not
to Yew Grove REIT plc. The disclosure is required under AIFMD for
reports of alternative investment funds ("AIFs").
The AIFM operates under the terms of its remuneration policy
which has been developed with due regard to all relevant
legislation and regulatory guidance. This remuneration policy is
designed to:
-- Promote sound and effective risk management
-- Not encourage risk taking that is inconsistent with the risk
profile, rules or investment policies of the REIT and
-- Prevent conflicts of interest.
The AIFM charged a fixed annual fee of EUR75,000 for its
services to the REIT for 2020. There is no variable element to this
fee. Total remuneration paid by the AIFM to its staff for the year
ended 30 June 2020 (most recent audited figures) was EUR1,131,408
which related to an average staff number of 10 during that period.
All AIFM staff receive only contracted fixed remuneration where the
payment and benefits thereof are not subject to the performance of
the REIT. The average number of AIFM staff engaged in providing
part-time services to the REIT during the reporting period was
5.
Alternative performance measures
The Group has applied the European Securities and Markets
Authority (ESMA) 'Guidelines on Alternative Performance Measures'
in this annual report and consolidated financial statements. An
alternative performance measure ("APM") is a measure of financial
or future performance, position or cashflows of the Group which is
not a measure defined by International Financial Reporting
Standards ("IFRS").
The following are the APMs used in this report together with
information on their calculation and relevance.
APM Description
Contracted rent roll Annualised cash rental income (net of car
park licence income) being received as
at the stated date
----------------------------------------------
Loan to value Outstanding drawings under loan facilities
as a percentage of the fair value of the
investment properties
----------------------------------------------
Debt to equity gearing Outstanding drawings under loan facilities
as a percentage of the IFRS net asset value
of the Group
----------------------------------------------
Total shareholder A measurement of the growth in share value
return for shareholders (assuming gross dividends
are reinvested and share price appreciation)
over a defined period.
----------------------------------------------
Weighted average An indicator of the average remaining life
unexpired lease term of a lease or group of leases within the
(" WAULT") portfolio.
----------------------------------------------
Gross yield at fair The contracted rent roll as at the stated
value "FV" date, divided by the fair value of the
investment properties as at the reporting
date.
----------------------------------------------
Gross reversionary The ERV of a property or group of properties
yield as a percentage of their fair value.
----------------------------------------------
European Public Real Estate Association ("EPRA") Performance
Measures (unaudited)
EPRA performance measures presented here are calculated
according to the EPRA Best Practices Recommendations October 2019.
EPRA performance measures are used in order to enhance transparency
and comparability with other public real estate companies in
Europe.
EPRA earnings and EPRA NAV measures are also included within the
financial statements, in which they are audited, as they are
important key performance indicators. All measures are presented on
a consolidated basis only and, where relevant, are reconciled to
IFRS measures as presented in the consolidated financial
statements.
EPRA Measure IFRS measure Note Description
EPRA earnings IFRS profit (i) As EPRA earnings is used to measure the operational
after performance of the
tax Group, it excludes all components not relevant
to the underlying net income performance
of the portfolio, such as the change in value
of the underlying investments and any gains
or losses from the sales of investment properties.
--------------- ------ -----------------------------------------------------
EPRA earnings IFRS EPS (i) Earnings from core operational activities.
per share A key measure of a company's underlying operating
results from its property rental business
and an indication of the extent to which
current dividend payments are supported by
earnings
--------------- ------ -----------------------------------------------------
EPRA Net IFRS NAV (iii) Assumes that entities never sell assets and
Reinstatement aims to represent the value required to rebuild
Value ("NRV") the entity
--------------- ------ -----------------------------------------------------
EPRA Net IFRS NAV (iii) Assumes that entities buy and sell assets,
Tangible thereby crystallising certain levels of unavoidable
Assets ("NTA") deferred tax.
--------------- ------ -----------------------------------------------------
EPRA Net IFRS NAV (iii) Represents the shareholders' value under
Disposal a disposal scenario, where deferred tax,
Value ("NDV") financial instruments and certain other adjustments
are calculated to the full extent of their
liability, net of any resulting tax.
--------------- ------ -----------------------------------------------------
EPRA Net NA (iv) Annualised rental income based on the cash
Initial Yield rents passing at the balance sheet date,
("NIY") less non-recoverable property expenses, divided
by the market value of the property with
(estimated) purchasers' costs
--------------- ------ -----------------------------------------------------
EPRA 'topped NA (iv) This measure incorporates an adjustment to
up' Net Initial EPRA NIY for rent-free-periods or other unexpired
Yield lease incentive discounted rent periods and
stepped rents.
--------------- ------ -----------------------------------------------------
EPRA Vacancy NA (v) Estimated Market Rental Value (ERV) of any
Rate vacancy in the portfolio divided by the ERV
of the whole portfolio
--------------- ------ -----------------------------------------------------
EPRA cost IFRS operating (vi) Calculated using all administrative and operating
ratios expenses expenses under IFRS net of
service fees. It is measured including and
excluding vacancy costs.
--------------- ------ -----------------------------------------------------
EPRA Performance Measure 31 December 31 December
2020 2019
EPRA Earnings (note 11) 6,136,655 5,704,318
------------ ------------
IFRS NAV (note 12) 100.03 98.52
------------ ------------
EPRA Net Reinstatement Value (NRV) 112.35 108.69
------------ ------------
EPRA Net Tangible Assets (NTA) 99.77 98.41
------------ ------------
EPRA Net Disposal Value (NDV) 99.77 98.41
------------ ------------
EPRA Net Initial Yield (NIY) 6.4% 6.6%
------------ ------------
EPRA 'topped up' NIY 6.7% 6.8%
------------ ------------
EPRA Vacancy Rate 6.9% 7.4%
------------ ------------
EPRA Cost Ratios:
EPRA Cost Ratio (including direct 26.4% 37.7%
vacancy costs)
EPRA Cost Ratio (excluding direct 23.5% 36.0%
vacancy costs)
------------ ------------
i. EPRA Earnings
For calculations, please refer to note 11
ii. IFRS NAV
For calculations, please refer to note 12
iii. EPRA NRV, EPRA NTA and EPRA NDV
As at 31 December 2020 EPRA NRV EPRA NTA EPRA NDV
EUR EUR EUR
IFRS NAV 111,603,077 111,603,077 111,603,077
Include:
Fair value of derivatives - - -
Real estate transfer tax[8] 14,078,960 - -
NAV performance measure 125,682,037 111,603,077 111,603,077
Diluted number of shares
at financial year end 111,865,838 111,865,838 111,865,838
NAV per share at financial
year end 112.35 99.77 99.77
As at 31 December 2019 EPRA NRV EPRA NTA EPRA NDV
EUR EUR EUR
IFRS NAV 109,922,541 109,922,541 109,922,541
Include:
Fair value of derivatives - - -
Real estate transfer tax 11,486,368 - -
NAV performance measure 121,408,909 109,922,541 109,922,541
Diluted number of shares
at financial year end 111,697,432 111,697,432 111,697,432
NAV per share at financial
year end 108.69 98.41 98.41
iv. EPRA Net Initial Yield (NIY) and EPRA "topped-up" NIY
31 December 31 December
2020 2019
EUR EUR
Investment property 141,925,000 115,790,000
Allowance for estimated purchasers'
costs 14,078,960 11,486,368
Gross up completed property portfolio
valuation 156,003,960 127,276,368
Annualised cash passing rental income 10,378,534 8,546,065
Property outgoings (414,740) (198,396)
Annualised net rents 9,963,794 8,347,669
Rent free/other lease incentives 543,108 368,935
Topped-up net annualised rent 10,506,902 8,716,604
EPRA NIY 6.4% 6.6%
EPRA "topped-up" NIY 6.7% 6.8%
v. EPRA Vacancy rate
31 December 31 December
2020 2019
EUR EUR
Estimated Rental Value of vacant
space 853,550 750,952
Estimated Rental Value of the whole
portfolio 12,403,015 10,092,357
EPRA Vacancy Rate 6.9% 7.4%
vi. EPRA Cost ratios
31 December 31 December
2020 2019
EUR EUR
IFRS Administrative/operating expense 2,880,829 2,949,241
Property management fees 80,564 88,842
Ground rent costs 728 96
EPRA Costs (including direct vacancy
costs) 2,799,537 2,860,303
Direct vacancy costs 306,974 130,160
EPRA Costs (excluding direct vacancy
costs) 2,492,563 2,730,143
IFRS Rental income 10,599,687 7,580,860
EPRA Costs Ratio (including direct
vacancy costs) 26.4% 37.7%
EPRA Costs Ratio (excluding direct
vacancy costs) 23.5% 36.0%
There are no administration costs capitalised in the year, the
company does not have any construction contracts in place at year
end.
Glossary
CBD: The central business district of a city.
Contracted rent roll : The annualised cash rental income
(including car park licence income) being received as at the stated
date.
Debt to Equity gearing: The ratio calculated by dividing the
amount of drawn loans by the Net Asset Value of the Group.
Dublin Catchment Area: The geographic area within an
approximately thirty-minute commute of the M50 motorway.
EPRA: The European Public Real Estate Association.
EPRA EPS : is calculated by dividing EPRA Earnings for the
reporting period attributable to shareholders of the Company by the
weighted average number of ordinary shares outstanding during the
reporting period. EPRA Earnings measures the level of income
arising from operational activities. It is intended to provide an
indicator of the underlying income generated from leasing and
management of the property portfolio and so excludes components not
relevant to the underlying net income performance of the portfolio
such as unrealised changes in valuation and any gains or losses on
disposals of properties.
ERV/ Estimated Rental Value: A valuer's opinion as to the open
market rental value of a property on a valuation date which could
reasonably be expected to be the achievable rent for a new letting
of that property on the valuation date. Colloquially referred to as
market rent.
Foreign Direct Investment companies ("FDI"): Overseas companies
that have established operations in Ireland, often with the
assistance of IDA Ireland.
Gale Date: The day on which rent or interest is due.
Gross reversionary yield: The reversionary rent roll of a
property or group of properties as a percentage of their fair
value.
Gross yield at fair value: A calculation of the current expected
cash rental return, being the contracted rent roll divided by the
fair value of the investment property or properties.
Ireland: The Republic of Ireland
Loan to Value/LTV : The LTV is calculated by dividing the amount
of drawn loans by the fair value of the Company's investment
properties.
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) purchasers' costs.
Net valuation gain: The fair value gain over the period (from
the shorter of the time to the last valuation or purchase).
Purchases made since the last valuation are initially recognised at
price including transaction costs.
Next rent reversion date: The earliest following date at which
the Company could be expected to choose to re-let a property or
re-set the rent at that property's ERV.
Property income: As defined in section 705A of the Taxes
Consolidation Act, 1997. It means, in relation to a company or
group, the Property Profits of the Company or Group, as the case
may be, calculated using accounting principles, as: (a) reduced by
the Property Net Gains of the Company or Group, as the case may be,
where Property Net Gains arise, or (b) increased by the Property
Net Losses of the Company or Group, as the case may be, where
Property Net Losses arise.
Property Net Losses: As defined in section 705A of the Taxes
Consolidation Act, 1997.
Property Net Gains: As defined in section 705A of the Taxes
Consolidation Act, 1997.
Property Profits: As defined in section 705A of the Taxes
Consolidation Act, 1997.
Property Rental Business : As defined in section 705A of the
Taxes Consolidation Act, 1997.
Rent review: A clause often included in property leases that
provides for a periodic adjustment of the rent of a property to the
market level of rent.
Reversion: A term used to describe the difference in rent from
that which is currently due on outstanding leases and the ERV.
Under-rented properties have contracted rents lower than ERV,
over-rented properties have contracted rents higher than ERV.
Reversionary rent roll: The annualised cash rental income (net
of car park licence income) that would be received if the property
or properties were leased at ERV.
Seed portfolio : The portfolio of investment properties owned by
the Yew Tree Investment Fund (Dissolved) when it was purchased on 8
June 2018.
SME : As defined by Enterprise Ireland, an enterprise that has
between 50 employees and 249 employees and has either an annual
turnover not exceeding EUR50m or an annual balance sheet total not
exceeding EUR43m.
State Body: a body established by legislation in the Republic of
Ireland which is either entirely or majority owned by the Irish
Government
Total expense ratio ("TER"): The ratio of the Company's
annualised expenses, excluding transaction costs, financing costs
and capital expenses as a percentage of the average net assets
during that period.
Total shareholder return: The growth in share value over a
period assuming all dividends are reinvested in shares of the
Company when paid.
Vacancy: Lettable space owned by the Company which is not let or
licenced to a tenant.
WAULT: Weighted average unexpired lease term
Corporate Information
Directors Barry O'Dowd (Chair, Independent Non-executive
Director)
Eimear Moloney (Independent Non-executive
Director)
Garry O'Dea (Independent Non-executive
Director)
Brian Owens (Independent Non-executive
Director)
Jonathan Laredo (Chief Executive Officer)
Charles Peach (Chief Financial Officer)
Michael Gibbons (Chief Investment Officer)
Registered office 1(st) Floor
57 Fitzwilliam Square
Dublin 2, Ireland
Company Secretary Tarryn Van Beek
AIFM Ballybunion Capital Limited
Ashley House
Morehampton Road
Dublin 4, Ireland
Euronext Growth Goodbody Stockbrokers
Adviser and Joint Ballsbridge Park
Broker Ballsbridge
Dublin 4, Ireland
Nominated Adviser Liberum Capital Limited
and Joint Broker Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Legal Adviser William Fry
to the Company Grand Canal Square
as to Irish law Grand Canal Dock
Dublin 2, Ireland
Registrar Link Asset Services
Link Registrars Limited
2 Grand Canal Square
Dublin 2, Ireland
Depositary and Société Générale
Custodian S.A., Dublin Branch
3rd Floor, IFSC House
IFSC
Dublin 1, Ireland
Valuer Lisney Limited
St. Stephen's Green House
Dublin 2, Ireland
Auditor Deloitte Ireland LLP
Chartered Accountants and Statutory Audit
Firm
Deloitte & Touche House
29 Earlsfort Terrace
Dublin 2, Ireland
[8] The Group has no goodwill or intangibles. This is the
purchasers' costs amount as provided in the valuation certificate.
Purchasers' costs consist of items such as stamp duty on legal
transfer and other purchase fees that may be incurred, and which
are deducted from the gross value in arriving at the fair value of
investment and owner occupied property for IFRS purposes.
Purchasers' costs are in estimated at 9.92% by the external
valuer.
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END
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