eurologisticsincome.co.uk
(formerly Aberdeen Standard European Logistics Income PLC)
Capturing long-term income potential from logistics real estate in Europe
Annual Report 31 December 2021
02 Annual Report 2021
DHL, Warsaw, Poland
Contents
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION. If you are in any doubt about the
action you should take, you are recommended to seek your
own independent financial advice from your stockbroker,
bank manager, solicitor, accountant or other financial
adviser authorised under the Financial Services and
Markets Act 2000 if you are in the United Kingdom or, if not,
from another appropriately authorised financial adviser.
If you have sold or otherwise transferred all your Ordinary
shares in abrdn European Logistics Income plc, please
forward this document, together with the accompanying
documents immediately to the purchaser or transferee,
or to the stockbroker, bank or agent through whom the sale
or transfer was effected for transmission to the purchaser
or transferee.
Visit our Website
To find out more about abrdn European Logistics
Income plc, please visit: eurologisticsincome.co.uk
Any Questions?
If you should have any questions in relation to this
Annual Report and financial statements please send
them by email to: European.Logistics@abrdn.com
Overview
Company Overview 04
Chairman’s Statement 05
Strategic Report
Overview of Strategy 11
Results 22
Performance 23
Our Unique Selling Points 24
2021 Accomplishments 26
Investment Manager’s Review 28
Portfolio
Property Portfolio 36
Group Structure 50
Environmental, Social and
Governance (ESG) (Unaudited) 53
ESG Embedded in the Investment
Philosophy (Unaudited) 54
Sustainability Performance (Unaudited) 60
Materiality (Unaudited) 61
Environmental Indicators (Unaudited) 62
Governance
Your Board of Directors 67
Directors’ Report 69
Directors’ Remuneration Report 77
Statement of Directors’ Responsibilities in Respect
of the Annual Report and the Financial Statements 80
Report of the Audit Committee 81
Financial Statements
Independent Auditor’s Report to the Members of 84
abrdn European Logistics Income plc 84
Consolidated Statement of Comprehensive Income 91
Consolidated Balance Sheet 92
Consolidated Statement of Changes in Equity 93
Consolidated Statement of Cash Flows 94
Notes to the Financial Statements 95
Parent Company Balance Sheet 119
Parent Company Statement of Changes in Equity 120
Parent Company Notes to the Financial Statements 121
Corporate Information
Information about the Investment Manager 131
Investor Information 134
EPRA Financial Reporting (Unaudited) 137
Alternative Investment Fund Managers Directive
Disclosures (Unaudited) 141
Glossary of Terms and Definitions and Alternative
Performance Measures 142
Notice
Notice of Annual General Meeting 147
Contact Addresses 152
03Annual Report 2021
Overview
Company Overview
abrdn European Logistics Income plc (the “Company” or “ASELI”) is an investment trust investing in
high quality European logistics real estate to achieve its objective of providing its shareholders with
a regular and attractive level of income and capital growth. The Company invests in a portfolio of
mid-box and urban logistics warehouses diversified by both geography and tenant throughout
Europe, targeting well located assets in established distribution hubs and within population centres.
In addition to its performance objective, the Company is characterised by:
A diverse portfolio of assets
across five countries
A strong focus on ESG and
green performance
Investment predominantly in
the more liquid mid-box and
urban logistics segment of
the real estate market
Modest gearing
parameters
Durable inflation-linked
rental income
abrdn asset managers
across Europe
Financial Highlights as at 31 December 2021
Net asset value total return
1
2020: 13.6%
12.4%
Net Asset Value (€‘000)
2020: 293,596
487,505
Net Asset Value per share (€)
2020: 1.20
1.29
Share price
total return
1
2020: 26.6%
12.4%
Premium to
Net Asset Value
1
2020: 0.5%
6.9%
Ordinary dividend
per share
2020: 5.64¢
5.64¢
Ongoing Charges
1
2020: 1.3%
1.3%
IFRS Earnings Per Share
2020: 14.8¢
15.4¢
Portfolio valuation (€‘000)
2
2020: 425,248
660,973
Number of
assets
2020: 14
23
Average lease length in years
(excl breaks)
2020: 11.0
8.0
Loan-To-Value
(%)
2020: 31.4%
25.1%
Average building size (sqm)
2020: 27,710
23,403
Rent collection
2020: 99.7%
100%
1
Alternative Performance Measure - see glossary on page 142.
2
Excluding IFRS 16 lease liabilities.
04 Annual Report 2021
Overview
Chairman’s Statement
Dear Shareholder,
It is a pleasure to present to you the Company’s fourth Annual
Report in respect of the year ended 31 December 2021.
2021 was a stand-out year for the Company and for
the wider European logistics real estate asset class.
While the onset of the pandemic in early 2020 created
significant uncertainty across all sectors, this ultimately led
to an acceleration of the key structural drivers impacting
the logistics sector. Having been a first mover into the
sector in the UK listed arena with our first investments
in early 2018, the Company continued to benefit from
these sector tailwinds, delivering a double digit net asset
value (“NAV”) total return for the second year running.
The Company’s 2021 sector leading GRESB rating was
a further endorsement of our strategy.
It has been a difficult few months watching events unfold
in Ukraine and our thoughts are with all of those affected.
At a portfolio level, we are monitoring for any potential
impact on our tenants and their businesses. Whilst to
date there is no indication that these businesses have
been impacted in any way, we stand ready to try to
help wherever there may be a need.
The segment of the market that we operate in has seen
extraordinarily fast growth, with little to suggest this is
not a permanent shift. The €274 million of acquisitions
during the year helped to further diversify the portfolio,
with the landmark last-mile Madrid portfolio acquisition
in particular adding further quality and a roster of high-
quality tenants, including Amazon. Following completion
of the Phase IV development shortly, the Company’s
portfolio will be 53% weighted by value to the high-growth,
urban logistics sector, the part of the market which is
forecast to see the strongest capital and rental growth
over the medium term.
It was very pleasing to see the support shown from our
existing shareholders as well as the introduction of some
new names on the register as we raised additional funds
to deliver on our ambition to scale the Company.
Importantly, the 8-year portfolio WAULT and CPI indexation
of the majority of our tenant leases provides for a durability
of income and a strong degree of inflation protection.
70% of our annual income is subject to uncapped CPI
indexation and the majority of the remainder subject to
capped indexation. At the same time, rent remains a small
element of our occupiers’ overheads.
Overview
As at 31 December 2021, the Company’s property
portfolio was independently valued at €661 million
(£556 million), and consisted of 23 assets located across
five European countries. The like-for-like portfolio valuation
increase was predominantly driven by yield compression
across the entire portfolio, reflecting the continued strength
of the European logistics real estate market alongside the
high-quality nature of the Company’s portfolio. We are
pleased to report that 100% of the rent due for the financial
year has been collected.
In April 2021, the Company completed the purchase of
a new warehouse in Łódź, Poland, for €28 million and this
was followed in July by the acquisition of an urban logistics
warehouse in Barcelona, Spain, for €18.7 million.
In December 2021, the Company announced the
acquisition of a portfolio of newly constructed last-mile
logistics warehouses with excellent sustainability credentials,
located in Gavilanes in the first ring of Madrid, Spain,
for a total acquisition price of €227 million. The best-in-
class portfolio comprises seven newly constructed logistics
warehouses, with a further warehouse and multi-story
parking station in development let to Amazon for 25 years.
Tony Roper
Chairman
05Annual Report 2021
The Madrid portfolio is let to five tenants and expected
to generate €7.7 million of annual contracted rent, with
Amazon Europe accounting for 43% of this. The portfolio
occupies a strategic micro location, with almost six
million people accessible within a 30-minute drive time,
and is near Madrid-Barajas International Airport and the
Abroñigal intermodal freight terminal, providing good
connectivity with the rest of Europe.
Our Investment Manager has the competitive advantage
of being able to draw on the relationships and market
knowledge of local abrdn teams across Europe, enabling
it to originate and then execute on attractive acquisitions,
as well as leveraging this insight to improve the portfolio
performance. It has built a portfolio of assets diversified
by both geography and tenant, in established distribution
hubs and within close proximity of cities that have
substantial labour pools and excellent transport links.
Further details on the composition of the portfolio are
provided in the Investment Manager’s Report.
Results
As at 31 December 2021 the audited Net Asset Value
(“NAV”) per Share was €1.29 (GBp - 108.5p), an increase
of 7.5% compared with the NAV per Share of €1.20
(GBp - 107.9p) at 31 December 2020. With the interim
dividends declared, this reflected a NAV total return of
12.4% for the year in euro terms (+5.4% in sterling).
The closing Ordinary Share price at 31 December 2021
was 116.0p (31 December 2020 – 108.5p), representing
a premium to NAV per Share of 6.9%. With dividends
reinvested this represented a strong share price total
return over the year of 12.4%.
Dividends
First, second and third interim dividends in respect of
the year ended 31 December 2021 of 1.41 euro cents
(equivalent to 1.21p) per Ordinary Share were paid to
Shareholders on 25 June 2021, 24 September 2021 and
30 December 2021 respectively.
On 18 February 2022 the Board declared a fourth interim
dividend of 1.41 euro cents per Ordinary Share (equivalent
to 1.21p) which was paid to Shareholders on 25 March
2022, making a total of 5.64 euro cents paid in respect of
the financial year under review. The equivalent sterling rate
paid was 4.84p per Share (2020 – 4.96p per Share).
It is the intention to continue to pay quarterly interim
dividends in line with our policy. Shareholders may elect
to receive dividend payments in Euros instead of Sterling.
A currency election period is effective from the record
date of each dividend for approximately 10 days to permit
Shareholders to make their currency choices. Once a
Shareholder has elected to receive dividends in Euros,
then all future dividends will be paid in Euros unless the
Shareholder elects to switch back to Sterling payments.
Dividends are declared in respect of the quarters ending
on the following dates: 31 March, 30 June, 30 September
and 31 December in each year. The dividend target and
any dividend payment may be made up of both dividend
income and income which is designated as an interest
distribution for UK tax purposes and therefore subject to the
interest streaming regime applicable to investment trusts.
Further details on this breakdown can be found on page 22.
Share Issuance
In March 2021 the Company announced the
oversubscribed issue of 18.45 million new Ordinary shares,
raising gross proceeds of £19.4 million (equivalent to
approximately €22.6 million). This was followed in October
with the issuance of a further 114.7 million new Ordinary
shares, raising gross proceeds of £125 million (equivalent
to approximately €145.9 million). This issue was also
oversubscribed with strong support from both existing and
new investors and a scaling back exercise was undertaken
due to the strong investor demand. Following the year
end, on 4 February 2022 the Company issued a further
34,545,455 new Ordinary shares at a price of 110 pence
per share in a placing and retail offer. This issue raised an
additional £38 million (€45.6 million), enabling the Company
to continue with its near-term acquisition strategy.
At the time of writing, the total number of shares in
issue and therefore with voting rights in the Company
is 412,174,356 shares.
Financing
Fixed term debt from banks is secured on certain assets or
groups of assets within the portfolio. These non-recourse
loans range in maturities between 3.2 and 6.7 years with
all-in interest rates ranging between 1.10% and 1.62%
per annum.
In December the Company increased the asset level
gearing on its Dutch portfolio by a further €17 million
at an all-in interest rate of 1.34%.
In November the Company increased its uncommitted
master facilities loan agreement (the “Facility”)
with Investec Bank plc from €40 million to €70 million.
Under the Facility, the Company may make requests for
drawdowns at selected short-duration tenors, as and
when required, to fund acquisitions or for other liquidity
requirements. Within the Facility, Investec also makes
available a £3.3 million committed revolving credit facility
(“RCF”) which is carved out of the total €70 million limit of
the Facility. This facility sits at the parent company level
and provides added flexibility.
06 Annual Report 2021
The year-end gearing level was 25.1% (2020 - 31.4%)
with an average interest rate of 1.43% on the total fixed
term debt arrangements of €161.6 million.
GRESB and Asset Management
The Investment Manager continues to focus on asset
management initiatives, leveraging its network of locally
based asset managers to enhance the value of the
portfolio’s assets. This includes initiatives around building
extensions and improvements to sites both internally and
externally for the benefit of tenants and their workforces
and to enhance the future value of the assets. The planned
extension to our Waddinxveen asset is a recent good
example of this.
I was pleased to report that in October, the Company
was awarded Sector Leader status and placed first in
the Listed European Industrial – Distribution Warehouse
segment, in the 2021 GRESB survey (Global Real Estate
Sustainability Benchmark), reflecting the continued work
that the Investment Manager has undertaken in improving
the sustainability credentials of the portfolio. The portfolio
maintained its four Green Stars out of a maximum of five.
The Company’s 2021 GRESB score of 84/100 represented
an improvement on its 2020 GRESB survey score of 79/100.
It also compared favourably against the 64/100 average
peer score and 73/100 overall average 2021 GRESB score.
This improved performance rewards the progress made
with regards to environmental, social and governance
(“ESG”) factors. These include solar panel project initiatives,
tenant satisfaction surveys, light sustainability audits and
100% data collection across the portfolio linked to Envizi
sustainable reporting software which is used to analyse
energy consumption. The Investment Manager obtains
volumetric usage data on energy use, waste disposal
and water consumption for reporting and possible cost
savings. In addition, all buildings have LED lighting and
the Investment Manager continues with plans to further
enhance ESG credentials going forward.
ESG is embedded within the Investment Manager’s
investment process and although many of our assets
are recently built, a programme of works continues to
enhance areas where improvements can be made.
Sustainability is fundamental to our ability to create
long-term value for all stakeholders and the Investment
Manager has defined and continues to implement a
strategy to support our sustainability targets for positive
environmental and socio-economic impacts.
The ESG section gives further clarity on our processes
including our initial thoughts on establishing a net zero
carbon pathway.
Governance
The Company is a member of the Association of
Investment Companies and seeks to follow best
practice regarding appropriate disclosure.
In accordance with good governance, the Directors
offered to meet with a number of our substantial
Shareholders during the year to hear their views on the
Company and its performance. Directors are available to
meet with investors to discuss the Company in more detail
throughout the year and may be contacted through the
Company Secretary.
The Board looks to undertake short annual site visits to
view the properties owned, meet with tenants where
possible and members of local staff and advisers of the
Investment Manager.
Following best practice, the whole Board is standing for
re-election at the forthcoming AGM and further details
on each Director may be found on pages 67 and 68.
Change of Company name
In order to align the Company’s name with the name
of the Manager’s business, which changed to abrdn plc,
the Board resolved to change the Company’s name to
abrdn European Logistics Income plc. This took effect
on 1 January 2022 with the Company’s ticker, ASLI,
remaining unchanged.
Annual General Meeting
It is currently the Board’s intention to hold the Company’s
Annual General Meeting in London on Monday, 6 June
2022 at 12:30pm at the offices of abrdn plc, Bow Bells
House, 1 Bread Street, London EC4M 9HH.
The formal Notice of AGM may be found on page 147.
Market
Logistics remains a preferred real estate sector for
investors, most recently demonstrated by the competition
for Blackstone’s €21 billion Mileway portfolio, a transaction
that on completion will be far and away the largest ever
in the European real estate sector. We are witnessing
unprecedented disruption caused by systemic changes to
the way global economies function. With businesses of all
shapes and sizes being forced to future proof their supply
chains, and as e-commerce penetration across Europe,
which lags the UK, accelerates, so occupier demand has
continued to strengthen with vacancy rates reaching
historic lows.
07Annual Report 2021
Leasing ‘tension’ remains robust, particularly for urban
logistics, with land values under pressure from competing
uses and with income growth prospects stronger than
for big-boxes, where risk is higher at lease maturity
with a more limited potential tenant base and where
replacement costs are more in line with capital costs.
Outlook
2021 was another successful year for the Company
in terms of both acquisitions and NAV performance,
as we continue to benefit from our early entry into what is
a fast growing and dominant subsector. The €666 million
portfolio is diversified by property, tenant and geography
and following the completion of Phase IV in Madrid, it will
comprise 13 urban logistics warehouses and 11 mid-box
logistics warehouses, with 18 of the 24 assets constructed
since 2018. Our tenant base is diversified across 50 tenants,
consisting predominantly of third-party logistics providers,
e-commerce related businesses and grocery-focused
vendors. Our tenants’ businesses are generally well
positioned in areas which remain essential to the
everyday operation of the modern economy.
A strong commitment to sustainability, demonstrated by
the Company’s sector-leading GRESB rating with four out
of five stars awarded for 2021, together with the inflation
linked nature of the portfolio’s leases, provides a strong
platform for further growth.
The Investment Manager’s pipeline of logistics assets is
regularly reviewed for quality of location and tenants,
and the ability to ensure that they are future fit. We are
expecting to shortly complete on an acquisition, located
in the popular Venlo-Venray agrofood-dominated region
in the Netherlands and we expect to also complete in the
coming month or so on the purchases of a further three
well-placed assets we have under exclusivity in France.
One of the Board’s priorities is to grow the Company,
albeit in a disciplined manner, in order to enjoy the benefits
that come with increased scale and liquidity providing our
shareholders with income and capital growth. We retain
a strong conviction in our investment strategy, which has
allowed us to reward shareholders with an attractive and
stable dividend, and continue to seek to grow and diversify
the portfolio. During a period of rapid inflationary pressure,
the Company’s portfolio should provide continued growth
with a level of inflation protection from CPI linked leases.
Tony Roper
Chairman
21 April 2022
08 Annual Report 2021
Strategic Report
The Company is a UK investment trust with a premium listing on the Main Market of the
London Stock Exchange. The Company invests in European logistics real estate to
achieve its objective of providing its shareholders with a regular and attractive level of
income return together with the potential for long-term income and capital growth.
The Company invests in a portfolio of mid-box and urban logistics warehouses
diversified by both geography and tenant throughout Europe, predominantly targeting
well-located assets at established distribution hubs and within population centres.
2017
The Company was launched on the London Stock Exchange in December 2017.
09Annual Report 2021
Strategic Report
Overview of Strategy
The Company
The Company was incorporated in England and Wales on
25 October 2017 with registered number 11032222 and
launched on 15 December 2017.
Change of Company name
Investment Objective
The Company aims to provide a regular and attractive
level of income return together with the potential for
long-term income and capital growth from investing in
high quality European logistics real estate.
Investment Policy
The Company aims to deliver the investment objective
through investment in, and active asset management of, a
diversified portfolio of logistics real estate assets in Europe.
The Company will invest in a portfolio of single and
multi-let assets diversified by both geography and
tenant throughout Europe, predominantly targeting
well-located assets at established distribution hubs and
within population centres. In particular, the Investment
Manager will seek to identify assets benefitting from
long-term, index-linked, leases as well as those which may
benefit from structural change, and will take into account
several factors, including but not limited to:
.
the property characteristics and whether they are
appropriate for the location (such as technical quality, ESG
credentials, scale, configuration, layout, transportation
links, power supply, data connectivity, manoeuvrability,
layout flexibility, and overall operational efficiencies);
.
.
the location and its role within European logistics
(city, regional, national or international distribution),
key fundamentals supporting logistics activity within
the micro location such as proximity to airport, port,
transport nodes,multimodal transport infrastructure,
established warehousing hubs, transport corridors,
population centres, labour availability and market
dynamics such as supply (of both land and existing stock),
vacancy rate and planned infrastructure upgrades;
.
the terms of the lease(s) focusing on duration, inflation-
linked terms, ESG criteria, level of passing rent relative to
market rent, the basis for rent reviews, and the potential
for capturing growth in market rental income;
.
the strength of the tenant’s financial covenant;
.
the business model of the tenant and their commitment
to the asset both in terms of capital expenditure and the
role it plays in their operations; and
.
the potential to implement active asset management
initiatives to add value over the holding period.
The Company will invest either directly or through
holdings in special purpose vehicles, partnerships, or
other structures. The Company may invest in forward
commitments when the Investment Manager believes
that to do so would enhance risk adjusted returns for
Shareholders and/or secure an asset at an attractive yield.
The Company’s active asset management activities are
expected to focus on adding value through:
.
negotiating or renegotiating leases to increase/secure
rental income: managing vacancies;
.
undertaking refurbishments to maintain liquidity;
.
managing redevelopments as assets
approach obsolescence;
.
adding solar panels to reduce carbon emissions and
generate additional income streams;
.
where appropriate, extending existing on-site buildings
or developing adjacent plots;
.
refurbishment and redevelopment activity will,
amongst other things, focus on: enhancing occupier
wellbeing; operational efficiencies; energy efficiency;
.
reducing carbon emissions; and elevating technological
provision as well as increasing lettable area.
The Company’s active management of debt will
effectively manage costs and risk to enhance
investment returns.
10 Annual Report 2021
Diversification of Risk
The Company will at all times invest and manage its
assets in a manner which is consistent with the spreading
of investment risk. The following investment limits and
restrictions will apply to the Company and its business
which, where appropriate, will be measured at the time
of investment:
.
the Company will only invest in assets located in Europe;
.
no more than 50 per cent. of Gross Assets will be
concentrated in a single country;
.
no single asset may represent more than 20 per cent.
of Gross Assets;
.
forward commitments will be wholly or predominantly
pre-let and/or have the benefit of a rental guarantee
and the Company’s overall exposure to forward
commitments and development activity will be limited
to 20 per cent. of Gross Assets;
.
the Company’s maximum exposure to any single
developer will be limited to 20 per cent. of Gross Assets;
.
the Company will not invest in other closed-ended
investment companies;
.
the Company will predominantly invest in assets with
tenants which have been classified by the Investment
Manager’s investment process, as having strong
financial covenants. However, the Company may, on an
exceptional basis, invest in an asset with a tenant with a
lower financial covenant strength (and/or with a short
lease term) where the Investment Manager believes
that the asset can be leased on a longer term tenancy
to a tenant with strong financial covenants within a
reasonable time period; and
.
no single tenant will represent more than 20 per
cent. of the Company’s annual gross income
measured annually.
The Company will not be required to dispose of any asset
or to rebalance the Portfolio as a result of a change in the
respective valuations of its assets.
The Company intends to conduct its affairs so as to
continue to qualify as an investment trust for the purposes
of section 1158 and 1159 (and regulations made
thereunder) of the Corporation Tax Act 2010.
Borrowing and Gearing
The Company uses gearing with the objective of
improving shareholder returns. Debt is typically non-
recourse and secured against individual assets or groups
of assets with or without a charge over these assets,
depending on the optimal structure for the Company
and having consideration to key metrics including lender
diversity, cost of debt, debt type and maturity profiles.
The aggregate borrowings are always subject to an
absolute maximum, calculated at the time of drawdown
for a property purchase, of 50 per cent. of Gross Assets.
Where borrowings are secured against a group of assets,
such group of assets will not exceed 25 per cent. of Gross
Assets in order to ensure that investment risk remains
suitably spread.
The Board has established gearing guidelines for the
Alternative Investment Fund Manager (“AIFM”) in
order to maintain an appropriate level and structure
of gearing within the parameters set out above. Under
these guidelines, aggregate asset level gearing will sit,
as determined by the Board, at or around 35 per cent of
Gross Assets. This level may fluctuate as and when new
assets are acquired until longer term funding has been
established or whilst short-term asset management
initiatives are being undertaken.
The Board will keep the level of borrowings under
review. In the event of a breach of the investment
guidelines and restrictions set out above, the AIFM will
inform the Board upon becoming aware of the same,
and if the Board considers the breach to be material,
notification will be made to a Regulatory Information
Service and the AIFM will look to resolve the breach with
the agreement of the Board. The Directors may require
that the Company’s assets are managed with the
objective of bringing borrowings within the appropriate
limit while taking due account of the interests of
shareholders. Accordingly, corrective measures may not
have to be taken immediately if this would be detrimental
to shareholders’ interests.
Any material change to the Company’s investment policy
set out above will require the approval of shareholders by
way of an ordinary resolution at a general meeting and the
approval of the Financial Conduct Authority. Non-material
changes to the investment policy may be approved by
theBoard.
Comparative Index
The Company does not have a benchmark.
Duration
Although the Company does not have a fixed life,
underthe Company’s articles of association the
Directorsare required to propose an ordinary resolution
for the continuation of the Company at the Annual
GeneralMeeting to be held in 2024 and then every
third year thereafter.
11Annual Report 2021
Key Performance Indicators (KPIs)
The Board uses a number of financial performance measures to assess the Company’s success in achieving its objective
and to determine the progress of the Company in pursuing its Investment Policy. The main KPIs identified by the Board in
relation to the Company, which are considered at each Board meeting, are as follows:
KPI Description
NAV Return
(per share)
1
The Board considers the NAV total return to be the best indicator of performance over time
and is therefore the main indicator of performance used by the Board. Performance for the
year and since inception is set out on page 21.
The Company is targeting, for an investor in the Company at launch, a total NAV return of
7.5per cent. per annum (in € terms).
Share Price
(on a total
return basis)
1
The Board also monitors the price at which the Company’s shares trade on a total return
basis over time. A graph showing the share price performance is shown on page 22.
Premium/
(Discount)
1
The premium/(discount) relative to the NAV per share represented by the share price is
closely monitored by the Board. A graph showing the share price (discount)/premium
relative to the NAV is shown on page 22.
Dividends
per Share
The Board’s aim is to pay a regular quarterly dividend enabling shareholders to rely on
a consistent stream of income. Dividends paid are set out on page 21. The Company is
targeting, for an investor in the Company at launch, an annual dividend yield of 5.0 per cent.
per Ordinary Share (in € terms).
Ongoing Charges
Ratio (“OCR”)
1
The OCR is the ratio of expenses as a percentage of average daily shareholders’ funds
calculated in accordance with the industry standard. The Board reviews the OCR regularly
as part of its review of all expenses. The aim is to ensure that the Company remains
competitive and is able to deliver on its yield target to Shareholders. The Company’s OCR is
disclosed on page 21.
1
Alternative Performance Measure - see glossary on page 142.
Manager
Under the terms of the Management Agreement, the
Company has appointed Aberdeen Standard Fund
Managers Limited as the Company’s alternative investment
fund manager (“AIFM”) for the purposes of the AIFM Rules.
The AIFM has delegated portfolio management to the
Amsterdam Branch of Aberdeen Standard Investments
Ireland Limited which acts as Investment Manager.
Pursuant to the terms of the Management Agreement,
the AIFM is responsible for portfolio and risk management
on behalf of the Company and will carry out the on-
going oversight functions and supervision and ensure
compliance with the applicable requirements of the AIFM
Rules. The AIFM and the Investment Manager are both
legally and operationally independent of the Company.
Dividend Policy
Subject to compliance with all legal requirements
the Company pays interim dividends on a quarterly
basis. The Company declares dividends in Euros,
but shareholders will receive dividend payments in
Sterling unless electing to receive payments in Euros
through the Equiniti Shareview Portfolio website or via
CRESTPay. If applicable, the date on which the Euro/
Sterling exchange rate is set will be announced at the
time the dividend is declared. Distributions made by the
Company may take the form of either dividend income or
‘‘qualifying interest income’’ which may be designated as
interest distributions for UK tax purposes.
Principal Risks and Uncertainties
There are a number of risks which, if realised,
could have a material adverse effect on the Company
and its financial condition, performance and prospects.
The Board has carried out a robust assessment of the
principal risks as set out below together with a description
of the mitigating actions taken by the Board. The Board
confirms that it has a process inplace for regularly
reviewing emerging risks that mayaffect the Company
in the future. The Board collectively discusses with the
Manager areas where there may be emerging risk themes
and maintains a register of these. Such risks may include,
but are not limited to, future pandemics, cybercrime,
12 Annual Report 2021
changes in interest rates and climate change. In the event
that an emerging risk has gained significant weight or
importance, that risk is categorised and added to the
Company’s risk register and is monitored accordingly.
The principal risksassociated with an investment in the
Company’s shares can be found in the Company’s latest
Prospectus dated 8 September 2021, published on the
Company’s website.
The Board continues to monitor the residual impact of
the UK’s departure from the EU (“Brexit”). The Board and
Manager do not believe that there will be a significant
impact on the Company but continues to monitor the
longer term impact and associated trends.
The Board has kept the risks related to the subsiding
COVID-19 pandemic under regular review throughout
the year and subsequently. The impact on the
Company and its operations of the pandemic has been
negligible through 2021 with rental income and services
unaffected. The Board, through the Investment Manager,
closelymonitors all third party service arrangements and
is pleased to report that it has not seen any reduction in the
level of service provided to the Company.
The Board is very mindful of current events involving
Russia and Ukraine which are causing significant market
volatility across Europe and the World. Whilst difficult to
predict the eventual outcome and naturally upsetting for
all involved, there has been no discernible impact to date
on our tenants located in Poland and across the wider
region. Inallother respects, the Company’s principal risks
and uncertainties have not changed materially since
the dateof the Annual Report and are not expected to
changematerially for the current financial year.
Description Mitigating Action
Strategic Risk: Strategic Objectives
andPerformance - The Company’s strategic
objectives and performance, both absolute and
relative, become unattractive to investors leading
to a widening of the discount, potential hostile
shareholder actions and the Board fails to adapt
the strategy and/or respond to investor demand.
.
The Company’s strategy and objectives are regularly reviewed
by the Board to ensure they remain appropriate and effective.
.
The Board receives regular presentations on the economy and
also the property market to identify structural shifts and threats
so that the strategy can be adapted if necessary.
.
There is regular contact with shareholders both through the
Investment Manager and the broker with additional direct
meetings undertaken by the Chairman and other Directors.
.
Board reports are prepared by the Investment Manager
detailing performance, NAV return and share price analysis
versus peers.
.
Cash flow projections are prepared by the Investment
Manager and reviewed quarterly by the Board.
.
Shareholder/market reaction to Company announcements
is monitored.
Investment and Asset Management Risk:
Investment Strategy - Poorly judged investment
strategy, regional allocation, use of gearing,
inability to deploy capital and the mis-timing
of disposals and acquisitions, resulting in poor
investment returns.
.
abrdn has real estate research teams which provide
performance forecasts for different sectors and regions.
.
There is a team of experienced portfolio managers who have
detailed knowledge of the markets in which they operate.
.
abrdn has a detailed investment process for both acquisitions
and disposals that require to be signed off internally before the
Board reviews any final decision.
.
The Board is very experienced with Directors having a
knowledge of property markets.
13Annual Report 2021
Description Mitigating Action
Investment and Asset Management Risk:
Developing and refurbishing property - Increased
construction costs, construction defects, delays,
contractor failure, lack of development permits,
environmental and third party damage can all
impact the resulting capital value and income
from investments.
.
abrdn has experienced investment managers with extensive
development knowledge with in-depth research undertaken
on each acquisition/development.
.
Development contracts are negotiated by experienced teams
supported by approved lawyers.
.
Due diligence is undertaken on developers including credit
checks and current pipelines.
.
Construction and risk insurance checked.
.
Post completion the developer is responsible for defects and
monies are held in escrow for a period of time after handover.
Investment and Asset Management Risk: Health
and Safety - Failure to identify and mitigate major
health & safety issues or to react effectively to an
event leading to injury, loss of life, litigation and any
ensuing financial and reputational impact.
.
For new properties health and safety is included as a key part
of due diligence.
.
Asset managers visit buildings on a regular basis.
.
Property managers are appointed by abrdn to monitor health
& safety in each building and reports are made to the asset
managers on a monthly basis.
.
Asset managers visit each building at least twice a year.
.
Tenants are responsible for day to day operations
of the properties.
Investment and Asset Management Risk:
Environment - Properties could be negatively
impacted by hazardous materials (for example
asbestos or other ground contamination) or an
extreme environmental event (e.g. flooding)
or the tenants’ own operating activities could
create environmental damage. Failure to achieve
environmental targets could adversely affect
the Company’s reputation and result in penalties
and increased costs and reduced investor
demand. Legislative changes relating to
sustainability could affect the viability of
asset management initiatives.
.
The Investment Manager undertakes in depth research on each
property acquisition with environmental surveys and considers
its impact on the environment and local communities.
.
The Investment Manager has adopted a thorough
environmental policy which is applied to all properties
in the portfolio.
.
Experienced advisers on environmental, social and governance
mattersare consulted both internally (within the Investment
Manager) and externallywhere required.
Financial Risks: Macroeconomic - Macroeconomic
changes (e.g. levels of GDP, employment, inflation,
interest rate and FX movements), political
changes (e.g. new legislation) or structural
changes (e.g. new technology or demographics)
negatively impact commercial property values
and the underlying businesses of tenants
(market risk and credit risk). Falls in the value
of investments could result in breaches of loan
covenants and solvency issues.
.
abrdn research teams take into account macroeconomic
conditions when collating forecasts. This research is fed into
Investment Manager decisions on purchases/sales and
regional allocations.
.
The portfolio is EU based and diversified across a number of
different countries and also has a diverse tenant base seeking
to minimise risk concentration.
.
There is a wide range of lease expiry dates within the portfolio
in order to minimise re-letting risk.
.
The Company has no exposure to speculative development
and forward funding is only undertaken where the
development is predominantly pre-let.
.
Rigorous portfolio reviews are undertaken by the Investment
Manager and presented to the Board on a regular basis.
.
Annual asset management plans are developed for each
property and individual investment decisions are subject to
robust risk versus return evaluation and approval.
14 Annual Report 2021
Description Mitigating Action
Financial Risks: Gearing - Gearing risk - an
inappropriate level of gearing, magnifying
investment losses in a declining market, could
result in breaches of loan covenants and threaten
the Company’s liquidity and solvency. An inability
to secure adequate borrowing with appropriate
tenor and competitive rates could also negatively
impact the Company.
.
Regular covenant reporting to banks is undertaken as required.
.
The gearing target is set at an indicative 35% asset level limit
and an absolute Company limit of 50%.
.
The Company’s diversified European logistics portfolio,
underpinned by its tenant base, should provide sufficient value
and income in a challenging market to meet the Company’s
future liabilities.
.
The portfolio has attracted very competitive terms and interest
rates from lenders for the Company’s loan facilities.
.
The Investment Manager has relationships with multiple
funders and wide access to different sources of funding on
both a fixed and variable basis.
.
Financial modelling is undertaken and stress tested annually as
part of the Company’s viability assessment and whenever new
debt facilities are being considered.
.
Loan covenants are continually monitored and reported to the
Board on a quarterly basis and would also be reviewed as part
of the disposal process of any secured property.
Financial Risks: Liquidity Risk and FX Risk -
The inability to dispose of property assets in order
to meet financial commitments of the Company
or obtain funds when required for asset acquisition
or payment of expenses or dividends. Movements
in foreign exchange and interest rates or other
external events could affect the ability of the
Company to pay its dividends.
.
The diversified portfolio is geared towards a favoured sector.
.
A cash buffer is maintained and an overdraft facility is currently
in place.
.
Investment is focused on mid-sized properties which is
considered the more liquid part of the sector.
.
The assets of the Company are denominated in a non-sterling
currency, predominantly the Euro. No currency hedging is
planned for the capital, but the Board periodically reviews the
hedging of dividend payments having regard to availability
and cost.
Financial Risks: Credit Risk - Credit Risk – the risk
that the counterparty will be unable or unwilling
to meet a commitment entered into by the Group:
failure of a tenant to pay rent or failure of a deposit
taker, future lender or a current exchange rate
swap counterparty.
.
The property portfolio has a balanced mix of investment grade
tenants and reflects diversity across business sectors.
.
Rigorous due diligence is performed on all prospective tenants
and their financial performance continues to be monitored
during their lease.
.
Rent collection from tenants is closely monitored so that early
warning signs might be detected.
.
Deposits are spread across various abrdn approved banks and
AAA rated liquidity funds.
Financial Risks: Insufficient Income Generation -
Insufficient income generation due to macro-
economic factors including the current COVID-19
pandemic, and/or due to inadequate asset
management resulting in long voids or rent
arrears or insufficient return on cash; dividend
cover falls to a level whereby the dividend
needs to be cut and/or the Company becomes
unattractive to investors. Level of ongoing charges
becomes excessive.
.
The Investment Manager seeks a good mix of tenants in
properties. A review of tenant risk and profile is undertaken
using, for example, the Dun & Bradstreet Failure Scoring
method and tenant covenants are thoroughly considered
before a lease is granted.
.
The abrdn team consists of asset managers on the
ground who undertake asset management reviews and
implementation and there is a detailed approval process within
abrdn for lettings.
.
At regular Board meetings forecast dividend cover is considered.
There is regular contact with the broker and shareholders to
ascertain, where possible, views on dividendcover.
15Annual Report 2021
Description Mitigating Action
Regulatory Risks: Compliance - The regulatory,
legal and tax environment in which the
Company’s assets are located is subject to
change and could lead to a sub-optimal
corporate structure and result in increased tax
charges or penalties.
.
The Company has an experienced Company Secretary and
engages lawyers who will advise on changes once any new
proposals are published. There is regular contact with tax
advisers in relation to tax computations and transfer pricing.
.
Directors have access to updates on relevant regulatory
changes through the Company’s professional advisers.
.
The highest corporate governance standards are
required from all key service providers and their
performance is reviewed annually by the Management
Engagement Committee.
Operational Risks: Service Providers - Poor
performance/inadequate procedures at service
providers leads to error, fraud, non-compliance
with contractual agreements and/or with relevant
legislation or the production of inaccurate or
insufficient information for the Company (NAV,
Board Reports, Regulatory Reporting) or loss of
regulatory authorisation. Key service providers
include the AIFM, Company Secretary,
the Depositary, the Custodian, the managing
agents and the Company’s Registrar.
.
abrdn has an experienced Investment Manager and Property
Administration Team.
.
The Company has engaged an experienced registrar:
Equiniti is a reputable worldwide organisation.
.
All service providers have a strong control culture that is
regularly monitored.
.
abrdn aims to meet all service providers once a year and the
Management Engagement Committee reviews all major
service providers annually.
.
The Company has the ability to terminate contracts.
Operational Risks: Business continuity - Business
continuity risk to any of the Company’s service
providers or properties, following a catastrophic
event e.g. pandemic, terrorist attack, cyber
attack, power disruptions or civil unrest, leading to
disruption of service, loss of data etc.
.
abrdn has a detailed business continuity plan in place with a
separate alternative working office if required and the ability
for the majority of its workforce to work from home.
.
abrdn has a dedicated Chief Information Security Officer
who leads the Chief Information Security Office covering the
following functions: Security Operations & Delivery, Security
Strategy, Architecture & Engineering, Data Governance &
Privacy, Business Resilience, Governance & Risk, Security & IT.
.
Properties within the portfolio are all insured.
.
The IT environment of service providers is reviewed as part of
the initial appointment and on an ongoing basis.
16 Annual Report 2021
Promoting the Company
The Board recognises the importance of promoting the
Company to prospective investors both for improving
liquidity and enhancing the value and rating of the
Company’s shares. The Board believes an effective way
to achieve this is through subscription to, and participation
in, the promotional programme run by abrdn on behalf of
a number of investment trusts under its management.
The Company’s financial contribution to the programme
is matched by abrdn. abrdn’s marketing team reports
quarterly to the Board giving analysis of the promotional
activities as well as updates on the shareholder register
and any changes in the make up of that register.
The purpose of the programme is both to communicate
effectively with existing shareholders and to gain new
shareholders with the aim of improving liquidity and
enhancing the value and rating of the Company’s
shares. Communicating the long-term attractions of
the Company is key and therefore the Company also
supports abrdn’s investor relations programme which
involves regional roadshows, promotional and public
relations campaigns.
Board Diversity
The Board recognises the importance of having a
range of skilled, experienced individuals with the right
knowledge represented on the Board in order to allow
the Board to fulfil its obligations. The Board also recognises
the benefits and is supportive of the principle of diversity
in its recruitment of new Board members. The Board
will not display any bias for age, gender, race, sexual
orientation, religion, ethnic or national origins, or disability
in considering the appointment of its Directors. The Board
will continue to ensure that any future appointments
are made on the basis of merit against the specification
prepared for each appointment and, therefore,
the Company does not consider it appropriate to set
diversity targets. At 31 December 2021, there were two
male Directors and two female Directors on the Board.
Socially Responsible Investment Policy
Further details on the socially responsible investment
policies adopted by the AIFM are disclosed from page 50.
Environmental, Social and
Human Rights Issues
The Company has no employees as the Board has
delegated day to day management and administrative
functions to Aberdeen Standard Fund Managers Limited.
There are therefore no disclosures to be made in respect
of employees. The Company’s socially responsible
investment policy is outlined in the Investment
Manager’s Review.
Due to the nature of the Company’s business, being a
Company that does not offer goods and services to
customers, the Board considers that it is not within the
scope of the Modern Slavery Act 2015 (“MSA”). In addition
the Company’s turnover is below the threshold of
£36 million. The Company is therefore not required to make
a slavery and human trafficking statement. In any event,
the Board considers the Company’s supply chains, dealing
predominantly with professional advisers and service
providers in the financial services industry, to be low risk in
relation to this matter.
A copy of the Manager’s statement in compliance
with the Modern Slavery Act is available for download
at abrdn.com
Emissions relating to properties owned by the Company
are the responsibility of the tenants and any emissions
relating to the Company’s registered office are the
responsibility of abrdn plc. The Company has no direct
greenhouse gas emissions to report from the operations
of its business, although it is responsible for low emissions
generated at certain properties within its portfolio
reportable under the Companies Act 2006 (Strategic
Report and Directors’ Reports) Regulations 2013,
see page 53.
Viability Statement
The Company does not have a formal fixed period
strategic plan but the Board formally considers risks
and strategy at least annually. The Board considers the
Company, with no fixed life, to be a long-term investment
vehicle, but for the purposes of this viability statement has
decided that a period of three years is an appropriate
period over which to report. The Board considers that
this period reflects a balance between looking out over
a long-term horizon and the inherent uncertainties of
looking out further than three years.
17Annual Report 2021
In assessing the viability of the Company over the review
period the Directors have conducted a robust review of
the principal risks focussing upon the following factors:
.
The principal risks detailed in the Strategic Report;
.
The ongoing relevance of the Company’s investment
objective in the current environment;
.
The demand for the Company’s shares evidenced by
the historical level of premium or discount;
.
The level of income generated by the Company;
.
The level of gearing including the requirement to
negotiate new facilities and repay or refinance future
facilities; and
.
The flexibility of the Company’s bank facilities
and putting these facilities in place in time to
meet commitments.
The Directors have reviewed summaries from the portfolio
models prepared by the Investment Manager which
have been stress tested to highlight the performance
of the portfolio in a number of varying economic conditions
coupled with potential opportunities for mitigation.
The Directors have also stress tested the financial position
of the Company with attention on upcoming funding
for acquisitions, and particularly the loss of a tenant in a
French asset.
The Company has prepared cash flow forecasts which
reflect the potential impact of further reductions in rental
income due to a possible worsening COVID-19 situation,
including reasonably possible downside scenarios.
The impact of reductions in rental income could be
mitigated through a reduction in dividends to shareholders
if considered necessary by the Board.
The Company has modelled severe but plausible
downside scenarios, taking into account specific tenant
risks. These scenarios modelled reduced rental income
through to 2023 and the worst case model equates to an
overall 20% reduction of rental income per annum over
that period.
Accordingly, taking into account the Company’s current
position and the potential impact of its principal risks and
uncertainties, the Directors have a reasonable expectation
that the Company will be able to continue in operation
and meet its liabilities as they fall due for a period of
three years from the date of this Report. In making this
assessment, the Board has considered that matters such
as significant economic uncertainty, stock market volatility
and changes in investor sentiment could have an impact
on its assessment of the Company’s prospects and viability
in the future.
The Board recognises that this assessment makes the
assumption that the resolution to continue the Company,
which will be put to shareholders at the sixth AGM of
the Company, which will be held in 2024, is passed and
subsequent triennial continuation resolutions are also passed.
s172 Statement
The Board is required to describe to the Company’s
shareholders how the Directors have discharged their
duties and responsibilities over the course of the financial
year under section 172 (1) of the Companies Act 2006
(the “s172 Statement”). This s172 Statement requires the
Directors to explain how they have promoted the success
of the Company for the benefit of its members as a whole,
taking into account the likely long-term consequences
of decisions, the need to foster relationships with all
stakeholders and the impact of the Company’s operations
on the environment.
The Board’s philosophy is that the Company should
operate in a transparent culture where all parties are
treated with respect and provided with the opportunity
tooffer practical challenge and participate in positive
debate which is focused on the aim of achieving the
expectations of shareholders and other stakeholders alike.
The Board reviews the culture and manner in which the
Investment Manager operates at its regular meetings and
receives regular reporting and feedback from the other
key service providers.
Investment trusts are long-term investment vehicles,
with no employees. The Company’s Board of Directors
sets the investment mandate as published in the most
recent prospectus, monitors the performance of all service
providers and is responsible for reviewing strategy on a
regular basis.
The key service provider for the Company is the Alternative
Investment Fund Manager (the “Manager”) and this
relationship is reviewed at each Board meeting and
relationships with other service providers are reviewed at
least annually. Shareholders are seen as key stakeholders
in the Company. The Board seeks to meet at least annually
with shareholders at the Annual General Meeting.
This is seen as a very useful opportunity to understand the
needs and views of the shareholders.In between AGMs
the Directors and Investment Manager also conduct
programmes of investor meetings with larger institutional,
private wealth and other shareholders to ensure that
the Company is meeting their needs. Such regular
meetings may take the form of joint presentations with the
Investment Manager or meetings solely with a Director
where any matters of concern may be raised directly.
18 Annual Report 2021
The other key stakeholder group is that of the underlying
tenants that occupy space in the properties that the
Company owns. The Board aims to conduct a site visit
at least annually with the aim of meeting tenants locally
and discussing their businesses and needs and assessing
where improvements may be made or expectations
managed. The Investment Manager’s asset managers are
tasked with conducting meetings with building managers
and tenant representatives in order to ensure the smooth
running of the day to day management of the properties.
The Board receives reports on the tenants’ activities at its
regular Board meetings. The Board via the Management
Engagement Committee also ensures that the views of its
service providers are heard and at least annually reviews
these relationships in detail. The aim is to ensure that
contractual arrangements remainin line with best practice,
services being offered meet the requirements and needs
of the Company and performance is in line with the
expectations of the Board, Manager, Investment Manager
and other relevant stakeholders. Reviews will include those
of the Company depositary, custodian, share registrar,
broker, legal adviser and auditor.
The Investment Manager’s Report on pages 27 to 34
details the key investment decisions taken during the year
and subsequently. The Investment Manager has continued
to invest the Company’s assets in accordance with the
mandate provided by shareholders at launch, under the
oversight of the Board. In line with the increased equity
base, further gearing was introduced into the portfolio with
the aim of maintaining gearing at asset level at or around
35% over the longer term. abrdn’s dedicated treasury
team has been successful in negotiating the debt facilities
at competitive market rates, resulting in the Company’s
blended all-in interest rate across all its debt being 1.43%
which is to the benefit of all shareholders. In October 2020
the Board announced that the Company had entered
into a uncommitted four year €40 million master facilities
loan agreement with Investec Bank plc which was
increased in 2021 to €70 million to provide additional
flexibility. This facility increases the Company’s ability to
acquire new assets prior to any fresh equity raise and will
reduce the impact of cash drag on investment returns.
Details of how the Board and Investment Manager have
sought to address environmental, socialand governance
matters across the portfolio aredisclosed on pages 50
to 63.
The Company is just over four years old having been
launched at the end of 2017. However, it is a long-term
investor and the Board has established the necessary
procedures and processes to promote the long-term
success of the Company. The Board will continue to
monitor, evaluate and seek to improve these processes
as the Company grows, to ensure that the investment
proposition is delivered to shareholders and other
stakeholders in line with their expectations.
Future
Many of the non-performance related matters likely to
affect the Company in the future are common across
all closed ended investment companies, such as the
COVID-19 pandemic and its impact, theattractiveness
of investment companies as investment vehicles,
geopolitical tensions and the impact of regulatory
changes. These factors need to be viewed alongside the
outlook for the Company, both generally and specifically,
in relation to the portfolio. The Board’s view on the general
outlook for the Company can be found in my Chairman’s
Statement on page 8 whilst the Investment Manager’s
views on the outlook for the portfolio are included on
page 34.
Tony Roper
Chairman
21 April 2022
19Annual Report 2021
Annual General Meeting (AGM)
The AGM normally provides an
opportunity for directors to engage
with shareholders, answer their
questions and meet them informally.
The 2022 AGM iscurrently scheduled
to take placeon6 June 2022 in London.
The Board is looking forward to
meeting as many shareholders as
possible at the AGM which is currently
expected to be an in-person meeting.
Annual Report
We publish a full annual report
each year that contains a strategic
report, governance section, financial
statements and additional information.
The report is available online and in
paper format.
Company Announcements
We issue announcements for all
substantive news relating to the
Company, including the purchase and
sale of properties. You can find these
announcements on the website.
Results Announcements
We release a full set of financial and
operational results at the interim and
full year stage. Updated net asset value
figures are announced on a quarterly
basis in line with our valuation policy.
Website
Our website contains a range of
information on the Company and
includes details of our property
investments. Details of financial results,
the investment process and Manager
and Investment Manager together
with Company announcements and
contact details can be found here:
eurologisticsincome.co.uk.
The ways we engage with our shareholders include:
20 Annual Report 2021
Strategic Report
Results
Financial Highlights
31 December 2021 31 December 2020
Total assets (€’000) 728,386 484,104
Total equity shareholders’ funds (net assets) (€’000) 487,505 293,596
Net asset value per share (euros) 1.29 1.20
Net asset value per share (pence) 108.48 107.95
Share price (mid market) (pence) 117.00 108.50
Market capitalisation (£’000) 438,050 265,283
Share price premium to sterling net asset value
1
7.8% 0.5%
Dividends and earnings
Net asset value total return per share (€)
1
12.4% 13.6%
Dividends paid per share 5.64c (4.84p) 5.64c (4.96p)
Revenue reserves (€’000) 12,895 11,720
Gain/(Loss) (€’000) 44,443 35,389
Operating costs
Ongoing charges ratio (Group only expenses)
1
1.3% 1.3%
Ongoing charges ratio (Group and property expenses)
1
1.8% 1.6%
Performance (total return)
Year ended
31 December 2021
Since Launch
% return
Share price
1
12.4% 37.6%
Net Asset Value (EUR)
1
12.4% 34.3%
1
Considered to be an Alternative Performance Measure (see Glossary on page 143 for more information).
Dividends declared in respect of the Financial Year to 31 December 2021 (cents)
Dividend
Distribution
GBP pence
Dividend
Distribution
EURO cents
Equivalent
2
Qualifying
Interest
GBP pence
Qualifying
Interest
EURO cents
Equivalent
2
xd
Date
Record
Date
Pay
Date
First Interim 0.80 n/a 0.41 n/a 03/06/2021 04/06/2021 25/06/2021
Second Interim 0.95 n/a 0.26 n/a 02/09/2021 03/09/2021 24/09/2021
Third Interim 0.97 1.13 0.24 0.28 02/12/2021 03/12/2021 30/12/2021
Fourth Interim 1.01 1.18 0.20 0.23 03/03/2022 04/03/2022 25/03/2022
Total 3.73 1.11
2
The interim distributions are paid in GBP to shareholders on the register. However, with effect from the payment of the 3rd interim distribution, shareholders are able to make an
election to receive distributions in euros.
21Annual Report 2021
Strategic Report
Performance
Share Price Premium to Net Asset Value
Launch to 31 December 2021
1
Premium/(Discount)
-15
-12
-9
-6
-3
0
3
6
9
12
15
Dec 21
Dec 20Dec 19Dec 18Dec 17
Source: abrdn, Factset.
1
Using the daily share prices together with the quarterly NAVs as announced by the Company at data points.
Share Price Total Return
Launch to 31 December 2021 (rebased to 100 at launch)
60
70
80
90
100
110
120
130
140
150
Dec 21
Dec 20Dec 19Dec 18Dec 17
Source: abrdn, Factset.
22 Annual Report 2021
abrdn European Logistics Income plc was launched in December 2017 and has already built a strategic position in the
real estate market that the Board and Investment Manager believe will deliver the investment objective to shareholders
over the longer term.
Our main USPs are listed below:
1
The Investment Manager has local teams on the ground that
know the market
The property business is a local business. You have to speak the local language
and have a network withbrokers, developers, investors and owner-occupiers
to find the best opportunities at the right price. abrdn is one of the largest
real estate investors in Europe with over £50 billion of real estate under
management. abrdn has local boots on the ground with 290 real estate
professionals with expertise in fund management, research, transactions,
asset management, financing and other specialist property activities.
2
Investing in the most liquid mid-box and strong growth
segment of urban logistics
Durability of income stream is key for an income driven strategy.
The Investment Manager looks beyond the length of the initial lease contract
to see if a warehouse has a second life after the lease matures. The mid-box
section of the market, with building sizes reaching up to a maximum of
50,000 square metres, is where most of the leasing activity takes place
providing us with options in the future. This means we operate in a more liquid
area of the sector than the ultra ‘big-box’ part of the market where leasing
options are more limited. Equally from a disinvestment perspective there will be
limited numbers of potential investors who can take on these larger investment
volumes. Our portfolio is now weighted towards urban logistics and this is
where we have highest growth expectations. The urbanisation trend across
Europe and the competition for shorter deliverytimes amongst parcel delivery
specialists has created a higher demand for land in dense population areas
resulting in higher land prices and stronger rental growth.
3
An increasingly diversified, high quality portfolio with long
indexed leases to tenants
Durability of income streams will be achieved by acquiring the right warehouses
in the right locations. The Company now has 23 buildings in the portfolio,
of which 17 were new builds, in five European countries with 50 tenants providing
good risk diversification. All buildings in the portfolio are either located alongside
main transport corridors or within a short distance to dense population urban
locations. Our buildings have modern specifications in terms of free height,
floor load capacity, number of loading doors and yard depth, all features
that are particularly important for e-commerce focused logistics operators.
Average lease length is 8.0 years (excluding breaks) and all leases are index-
linked, the majority with indexation uncapped.
Strategic Report
Our Unique Selling Points
23Annual Report 2021
4
A clear focus on the European Continent
This is a European strategy with a very clear focus on the European Continent
and not the UK. There are several reasons for this. Firstly, e-commerce
penetration has been materially behind that seen in the UK with high growth
expected. Secondly, CPI-linked leases give a level of protection against inflation.
Thirdly, the European market has seen lower long-term debt costs and finally,
the region provides diversification options with 75% of the investable European
market in continental Europe.
5
ESG is embedded in the investment philosophy resulting in a
sector leading GRESB rating
abrdn, as a management house, has the ambition to become carbon neutral
by 2050. As an investment company, the Company has a clear focus on
improving the green performance of our buildings with the asset and property
managers working closely with our tenants. One of the key focuses is the
implementation of solar panels on the roofs of our buildings which are now
on nine of our warehouses. The Company, through abrdn, is in the process of
taking the first steps in describing a path to zero carbon emission.
The progress being made is clearly reflected in the 2021 GRESB survey with
a maintained score of 4 out of a maximum 5 green stars and the award of
Regional Sector Leader status making the Company the strongest performer
in the peer-group with six listed strategies focusing on pan-European
(including UK) logistics.
6
Modest gearing with attractive all-in costs
The Company has a modest long-term target Loan-To-Value ratio (LTV) of
c. 35%, with a current LTV of 25% (as at 31 December 2021). The maximum
LTV is 50% at the time of drawdown but the level of LTV may fluctuate through
the use of shorter term loan facilities and in advance of cash raises allowing the
Company to commit to further opportunities as they arise. All-in costs of the
current loanportfolio are 1.4%.
7
Low investment management fees
The investment management fee is set at a competitive rate of 75 basis points
of NAV up to €1.25 billion which will drop to 60 basis points above this.
24 Annual Report 2021
Strategic Report
2021 Accomplishments
In 2021 the logistics market once again showed its
strength and resilience. Logistics has been growing
in importance and scale thanks to changes in
consumption behaviour and much needed supply
chain reconfiguration. The success of the sector is
also reflected in the Company’s 2021 rent collection
statistics, sitting at 100%. The strength of the sector
and strong yield compression led to double-digit net
asset value returns and strong outperformance of
our targets. 2021 was also a transformational year
with accelerated growth in terms of the number of
assets we manage. Two successful oversubscribed
capital raises generated an additional £144.4 million
(€168.2 million) allowing the Investment Manager
to purchase ten further warehouses for a total
purchase price of €274.1 million and thus adding
further diversification to our property portfolio.
With the growing urban profile of the strategy and
the highest ESG rating in the peer group in the
annual GRESB survey, the portfolio looks future-fit
and well positioned for further growth. Having local
teams on the ground is crucial in managing an
international logistics portfolio and a key factor in
abrdn’s real estate offering. With these teams based
around Europe, the Investment Manager is able to
find good assets with competitive pricing and liaise
far more easily with tenants helping to protect value
by keeping them in good condition and to add value
through active management.
ACQUISITIONS
April 2021: the Company finalised the acquisition of a new
logistics warehouse in Lodz, Poland, for a net purchase price
of €28.1 million.
July 2021: the Company finalised the acquisition of an urban
logistics warehouse in Barcelona, Spain, for a net purchase
price of €18.7 million.
December 2021: the Company finalised the acquisition of
a portfolio of seven existing logistics warehouses with one
ongoing development in Madrid, Spain (Gavilanes), for a net
purchase price of €227.3 million.
FUNDING
March 2021: the Company issued 18.45 million new
Ordinary shares, raising gross proceeds of £19.4 million
(€22.3 million) at the issue price of 105.0 pence per share.
September 2021: the Company issued 114.7 million new
Ordinary shares, raising gross proceeds of £125 million
(€145.9 million) at the issue price of 109.0 pence per share.
November 2021: the Company signed a revised revolving
credit facility agreement with Investec Bank, increasing the
facility’s capacity to €70 million, providing further flexibility in
the acquisition of new properties.
December 2021: the Company increased by €17 million the
fixed term debt on the existing Dutch portfolio at an all-in
interest rate of 1.34% and with a remaining loan duration
of 4.6 years.
25Annual Report 2021
ESG
February 2021: the Investment Manager completed a
tenant satisfaction survey undertaken by Keepfactor.
The results of these surveys informs discussions with
tenants and provides a better understanding of areas
where improvements can be made.
June and September 2021: the Company completed the
installation of rooftop solar panels on the Ede and Den Hoorn
assets in the Netherlands generating annual income of
€96,000 per annum, helping to reduce the carbon footprint
of the building and providing clean, renewable on-site energy
for the tenants.
October 2021: achieved BREEAM-in-Use certification for
the warehouses in Den Hoorn, Ede and Waddinxveen in
the Netherlands.
November 2021: the Company was awarded Sector Leader
status in the annual GRESB survey with 84/100 points and a
maintained 4 out of 5 Green Stars making the Company the
strongest performer in the peer group of six listed strategies
focusing on European logistics.
December 2021: the Investment Manager finalised its first
analysis of the portfolio’s carbon footprint with its appointed
consultant Verco Advisory Services Limited as part of an
ambition to create a detailed Net Zero Carbon strategy.
ASSET MANAGEMENT
Full year 2021: the Company collected 100% of total rent for
the full calendar year 2021.
April 2021: a lease extension was signed, expiring in
December 2031, with Maintrans in Flörsheim for 5,337 square
metres with an annual starting rent of €315,000.
June 2021: saw the completion of the solar panel project in
Ede, the Netherlands, reducing the carbon footprint of the
buildings and generating an annual rent of €15,000.
September 2021: witnessed the completion of the solar
panel project in Den Hoorn, the Netherlands, reducing the
carbon footprint of the building and generating an annual
rent of €81,000.
November 2021: the Company signed a Letter Of Intent
with tenant Combilo for the extension of the warehouse
in Waddinxveen, the Netherlands, which requires a total
investment of €4.9 million and will generate a 5% yield.
POST PERIOD
END HIGHLIGHTS
January 2022: to align with the Manager’s parent company
rebranding, the Company’s name was changed to abrdn
European Logistics Income plc.
February 2022: the Company issued an additional 34,545,455
new Ordinary shares, raising gross proceeds of £38 million
(€45.6 million) at the issue price of 110.0 pence per share.
26 Annual Report 2021
Strategic Report
Investment Manager’s Review
2021 European Logistics -
another strong year
Notwithstanding the unprecedented global impact of
the pandemic, it is encouraging to witness economies
across Europe recovering thanks to the positive impact
of the mass vaccination roll-outs. While supply chains
were disrupted at the start of the pandemic logistics has
proven to be a very resilient asset class. Indeed, parts of
the sector were beneficiaries of European lockdowns as
changes in consumer behaviour accelerated, with more
and more people buying online. E-commerce is the key
driver behind the strong demand for logistics space, and
this is further supported by the building up of inventory
levels and the near-shoring, or re-siting, of manufacturing
facilities away from Asia and back to Europe. Making long
distance supply chains more resilient to external shocks
is key within industry, as the pandemic and the recent
blocking of the Suez Channel have taught us. For many
years, the amount of new logistics space being developed
has not been sufficient to keep up with demand resulting
in a supply/demand imbalance and an average vacancy
rate sitting at a historically low level of under 4%. The lack
of modern warehouse stock and rising construction costs
is underpinning rental growth, explaining why investors
focusing on yield and growing income streams are trying
to build their exposure to the sector.
Competition for product is fierce. However, abrdn’s large
and established local network and reputation provides
a competitive advantage when sourcing the right deals
for our clients. abrdn is one of Europe’s largest real
estate investors, managing approximately €53 billion
of real estate, with €21 billion of logistics assets across
12 countries. Its eight offices across Europe - London,
Edinburgh, Frankfurt, Amsterdam, Madrid, Paris, Brussels
and Copenhagen - employ a total of 290 abrdn real estate
colleagues including portfolio managers, local transaction
and asset managers and researchers.
Portfolio with urban profile well positioned
for future growth
In the four years since inception, the Company’s strategy
has been clear and focused on the most ‘liquid’ or in-
demand part of the market where growth expectations
are highest. Urban logistics and mid-sized (‘mid-box’)
warehouses are the areas of the market where supply/
demand dynamics are the strongest and the potential
tenant base the largest. A typical mid-box warehouse
sits between 20,000 – 50,000 square metres in size and
for urban logistics, often called the ‘final touch in the
supply chain’, building sizes are generally smaller and
located in close proximity to dense population centres.
With our focus on long-term, sustainable income, the
future-proofing or ‘second life’ of our warehouses is an
important consideration when acquiring new assets.
Building specifications the Investment Manager considers
important, amongst others, are the eaves’ height,
floor-load capacity, number of loading doors,
manoeuvrability around the building and increasingly
important, a building’s sustainability credentials.
Buildingspositioned alongside main transport corridors,
close to seaports, infrastructural nodes or in the case of
urban logistics, close to large population concentrations,
are important criteria in analysing new acquisition
opportunities. The big-box warehouse segment, often with
building sizes over 100,000 square metres, is not a focus of
our investment strategy, as the number of tenants that can
occupy that size of space is limited thus reducing liquidity.
The Company’s focus is Continental Europe, where
75% of the investable European logistics market can
be found, providing a deep pool of potential acquisition
targets and strong diversification options, limitingsingle
market risk. Astandard lease agreement on the
Continent often includes full annual CPI indexation of
rents, therebyproviding a strong hedge against inflation.
Despite recent upward pressure, our investment strategy
continues to benefit from lower financing costs achievable
Evert Castelein
Fund Manager
27Annual Report 2021
from European banks. Finally,e-commerce penetration is
still at an early stage on the Continent with strong forecast
growth, creating an attractive investment backdrop.
Growth is expected to be strongest in the urban logistics
sub sector, especially assets in dominant cities that
have warehousing supply constraints and demand from
different land uses, resulting in higher land costs and
ultimately underpinning higher rents. Parcel delivery
specialists are continuing to improve their services by
reducing delivery times and thereby transportation costs.
Operating a logistics warehouse in close proximity to their
ultimate customer base is the best way to reduce their
cost base with rental and building costs materially less
impactful than transportation costs.
Approximately 53% of the Company’s portfolio by value
comprises urban logistics warehouses with locations such
as Barcelona, Madrid, Frankfurt Rhine-Main, Warsawand
Den Hoorn located in the Netherlands between the cities of
The Hague and Rotterdam. In 2021, nine of the ten assets
acquired were urban logistics warehouses, all located in first
ring city locations. In December 2021, the Company closed
a milestone transaction in Gavilanes, Madrid, acquiring a
portfolio of seven income-producing urban warehouses
(“Phases I-III”) with a further warehouse/parking station
under development, with a completion date anticipated
in Q2 2022 (“Phase IV”). The total investment cost was
€227.3million with a net initial yield of 3.4%. The largest tenant
within this portfolio is Amazon, accounting for approximately
43%of total rental income with other tenants including the
global supermarket retailer Carrefour, operating their first
grocery e-commerce platform in Spain, electric vehicle
manufacturer Arrival, electronics distributor MCR which
boasts Amazon as its main client and Talentum, amarketing
and distribution company with 130employees across Spain
and Asia. After London and Paris, Madrid is the third largest
city in Europe and continues to grow with development
land scarce. Thisportfolio is located in Galivanes, a key
last-mile logistics hub located in the first ring of Madrid,
only17kilometres south of Madrid city centre and with a
population of approximately 6 million people accessible
within a 30minute drive.
We are extremely excited to see the completion of
PhaseIV of the Madrid portfolio, expected in Q2 2022.
Thisasset comprises a state-of-the-art parcel delivery
hub, optimised for last-mile delivery, let to Amazon on a
25 year lease (15 years to first break). The asset includes
a multi-level van parking station, offering over 500 parking
spaces and electric charging for last-mile delivery
vans, significantly increasing the operational efficiency
of the asset. As is typical of last-mile distribution units,
theproperty has been configured for the high volume
turnover of inventory with the asset’s low site cover,
multi-deck parking and large canopy with numerous
van loading areas maximising the number of parcels
which can be loaded and distributed. We believe this
asset represents the next-generation of urban logistics
warehousing and we look forward to seeing it become
operational and income producing later this quarter.
In July 2021, we acquired an urban logistics warehouse
located in the first ring of Barcelona for a net price of
€18.7 million, yielding 3.7%. The asset is let to Mediapost
and is highly reversionary, with a net reversionary yield
on acquisition of 4.7%. Barcelona is supply constrained by
nature due to the presence of the sea and the surrounding
mountains making it very hard to replicate this building
which is surrounded by residential units. This undersupply
situation is clearly reflected in the low vacancy rates of
2.4% providing further confidence that this asset has
strong upside potential.
An earlier transaction that the Company concluded
in April2021 was the purchase of a brand new, multi-
tenanted warehouse in Lodz, Poland, for a net purchase
price of €28.1 million and a net initial yield of 5.6%. Lodz
is the third largest city in Poland and centrally located
making it an ideal location for national distribution.
The warehouse is located on the Bosch-Siemens Campus
and alongside a key intermodal rail terminal for the Silk
Road railway connection between Asia and Europe.
Low labour costs have created a dominant manufacturing
industry in Poland and Lodz, creating an attractive
environment for tenants inthis warehouse who work
partly as subcontractors for theseindustries.
At the time of writing this report, the Company is in
exclusive talks with regard to the purchase of a warehouse
in the Netherlands. The building is located close to the
German border in one of the main logistics hubs in the
Netherlands. The Manager believes there is good potential
for this asset as there is ample land available and the
current site coverage of the building is only 16% of the
plot against a market standard of around 50%. Having
the flexibility to extend and possibly double the size of a
building in the future is very attractive and can add value
to the portfolio.
The Manager is also in exclusivity over a portfolio of
three assets in France which have comparable low site
coverage characteristics. It is expected that the purchase
of these warehouses located across three different areas
in France will complete in the coming weeks.
As at the Company’s year-end, 17 out of the
23warehouses held in the portfolio were newly developed
at the point of purchase and have been constructed
since 2018. This means specifications are very modern
and in line with tenant requirements. The portfolio is well
diversified with 23 buildings spread across five different
countries. As at 31December2021,
New stacking system at Zeewolde, Netherlands
28 Annual Report 2021
the Netherlands represented the largest
geographic exposure in the portfolio by value
(35%), followed by Spain (30%), Poland (14%),
France (11%) and Germany (10%). Taking account
of the development of the fourth phase of the
recent Madrid deal, these estimated allocation
percentages change to the following: Spain (36%),
followed by the Netherlands (33%), Poland (12%),
France (10%) and Germany (9%).
Country allocation Q4 2021
(by % of portfolio value)
Netherlands
Spain
Germany
Poland
France
35%
30%
14%
11%
10%
Country allocation including 2022 Madrid
acquisition (by % of portfolio value)
Netherlands
Spain
Germany
Poland
France
33%
36%
12%
10%
9%
29Annual Report 2021
Property Portfolio as at 31 December 2021
Country Location Built WAULT
1
WAULT
2
Q4 2021 %
of Portfolio
Value
Estimated % of Portfolio
Value on completion of
outstanding acquisition
France Avignon 2018 5.6 9.7 8.0 7.1
France Meung sur Loire 2004 0.3 0.3 3.2 2.9
Germany Erlensee 2018 5.9 8.2 6.5 5.8
Germany Flörsheim 2015 3.1 6.8 4.0 3.6
Netherlands Den Hoorn 2020 8.4 8.4 9.0 8.1
Netherlands Ede 1999/2005 6.0 6.0 5.1 4.5
Netherlands Oss 2019 12.5 12.5 2.8 2.5
Netherlands 's Heerenberg 2009/2011 10.0 10.0 5.1 4.5
Netherlands Waddinxveen 1983/1994/
2002/2018
11.9 11.9 7.4 6.6
Netherlands Zeewolde 2019 12.5 12.5 5.8 5.2
Poland Krakow 2018 3.0 3.0 4.4 3.9
Poland Lodz 2020 6.1 6.1 4.6 4.1
Poland Warsaw 2019 5.9 5.9 4.6 4.1
Spain Barcelona 2019 4.5 7.5 2.9 2.6
Spain Madrid (Coslada) 1999 5.0 8.0 1.9 1.6
Spain Leon 2019 7.2 7.2 2.7 2.4
Spain Madrid - Gavilanes 1.1 2019 8.1 8.1 5.6 5.0
Spain Madrid - Gavilanes 1.2 2019 1.6 8.6 3.1 2.8
Spain Madrid - Gavilanes 2.1 2020 4.6 14.6 2.4 2.2
Spain Madrid - Gavilanes 2.2 2020 2.5 4.5 2.0 1.8
Spain Madrid - Gavilanes 2.3 2020 - - 1.9 1.6
Spain Madrid - Gavilanes 3 2019 5.4 9.4 7.0 6.3
TOTAL - as at 31 December 2021 6.6 8.0 100.0 89.2
Spain Madrid - Gavilanes 4 2021 15.0 25.0 10.8
TOTAL incl. Madrid Phase IV 100.0
1
Weighted average unexpired lease term including break options.
2
Weighted average unexpired lease term excluding break options.
30 Annual Report 2021
A strong tenant base with inflation
linked income
Long-term sustainable income streams to pay quarterly
dividends is one of the Manager’s key objectives and for the
full year 2021 the Company collected 100% of total rents
due. With 50 tenants in the portfolio, thereis a diversified
tenant base across different sectors. Thecovenant strength
of our tenants is monitored on a regular basis using a variety
of data sources including Dun & Bradstreet. In terms of
exposure by sector, third party logistics providers (“3PLs”)
represent the largestsegment with 29% of total portfolio
rent. 3PLs are thriving, particularly those specialised in
parcel deliveries with DHL occupying our assets in Madrid
and Warsaw as a good example, representing 4.6%
of total rent. Manufacturers (20%) and companies related to
the food industry (19%) complete the top three.
Food related companies often have a long history and
are of a scale that makes them stable income producers
with supermarkets like Biocoop or Carrefour and traders
in food such as Combilo all holding up well during the
pandemic. The retail exposure (14%of total rent), is largely
related to Netherlands based drugstore Kruidvat (part
of the A.S Watson group) and its e-commerce platform
and Decathlon, the global discount sports retailer, whose
products have been in high demand since the pandemic.
The direct exposure to e-commerce (3% of total rent) will
increase significantly in 2022 once Phase IV in Madrid, let
to Amazon, is completed. This will be the largest asset in
the portfolio by value. Wholesalecurrently represents 12%
of total rent and is expected to reduce in 2022 when the
administrator responsible for Office Depot, the tenant
in Meung-sur-Loire, is due to vacate the warehouse.
Pre-COVID, Office Depot’s plan was to consolidate its
French business within this building in combination with a
large extension as the low site coverage provides for this
option, which furthers its appeal to a new tenant. Our local
French asset management team, alongside local agents
are conducting site inspections with prospective tenants,
with positive initial feedback. All the outstanding rent for
2021 has been paid for this asset.
A standard lease agreement on the Continent typically
has annual CPI indexation of rents which is not the
standard in the UK. Having this annual inflation protection
is more important than ever with rising energy prices and
supply chain issues driving inflation up to 5% in 2021 in the
Eurozone. 70% of the portfolio’s current income has full
CPI or ILAT
3
indexation, 22% has a cap at a level between
2-3%, 7% is German threshold indexation and 1% other.
This2021 inflation as it flows through will help to grow
our 2022 income on our existing leases which have an
average length of 6.6 years including break options and
8.0years excluding breaks.
Strong rent collection and a low cost loan portfolio with
good covenant headroom underpins the Company’s
stated distribution policy. The loan portfolio is still young
with asset level loan facilities effected immediately
after full deployment of capital from Q1 2019 onwards.
Stresstesting on the existing financial covenants such as
Interest Cover Ratios and Loan-To-Value (LTV) indicates a
good level of headroom, even more so now that property
values have increased strongly and all expected rents
paid. In order to diversify risk, the loan facilities have also
been cross-collateralised with groups of single-tenanted
buildings or have diversified risk thanks to multi-tenanted
leasing structures.
Exposure by sector (% of total rent) as at 31 December 2021
Transport/Logistics
Manufacturing
Wholesale
Food
Retail
Other
E-commerce
29%
22%
18%
12%
14%
3%
2%
Indexation of rental income ( % of total rent)
as at 31 December 2021
CPI/ILAT
CPI/ILAT with a cap
Other
Threshold indexation
70%
22%
1%
7%
3
French indexation which is a blend between CPI, GDP and construction cost index.
31Annual Report 2021
Lease expiry profile (% of total rent)
0%
5%
10%
15%
20%
20412034203320322031203020292028202720262025202420232022
7% 7%
5%
6%
0% 0%
4%
6% 6%
10%
8% 8%
16%
17%
Top 10 tenants based on current rents
Tenant Property
Contracted rent
(€000 p.a.)
Contracted rent
(%)
WAULT incl.
breaks (years)
WAULT excl.
breaks (years)
1 van der Helm Den Hoorn 2,922 10% 8.4 8.4
2 Biocoop Avignon (Noves) 2,331 8% 5.6 8.6
3 Combilo Waddinxveen 1,879 6% 11.9 11.9
4 VSH Zeewolde 1,585 5% 12.5 12.5
5 Kruidvat Ede 1,518 5% 6.6 6.6
6 JCL 's Heerenberg 1,485 5% 10.0 10.0
7 Office Depot Meung sur Loire 1,472 5% 0.3 0.3
8 DHL Madrid, Warsaw 1,352 5% 6.6 7.7
9 Talentum Madrid 1,322 4% 8.1 8.1
10 Decathlon Leon 1,061 4% 7.2 7.2
Subtotal 16,927 57% 7.8 8.3
Other tenants 12,518 43% 6.1 7.5
Portfolio as at 31 December 2021 29,445 100% 6.6 8.0
32 Annual Report 2021
Loan portfolio
Country Property Bank
Existing loan
(€million)
End date
Loan
Duration
in Years
Interest
(incl margin)
Germany Erlensee DZ Hyp 17.8 January 2029 10 1.62%
Germany Florsheim DZ Hyp 12.4 January 2026 7 1.54%
France Avignon + Meung sur Loire BayerbLB 33.0 February 2026 7 1.57%
Netherlands Ede + Oss + Waddinxveen Berlin Hyp 44.2 June 2025 6 1.37%
Netherlands ‘s Heerenberg Berlin Hyp 11.0 June 2025 6 1.13%
Netherlands Den Hoorn + Zeewolde Berlin Hyp 43.2 January 2028 8 1.40%
Total 161.6 7.26 1.43%
2021 Performance – double digit returns for
second year running
For the second year in a row, we are very pleased to have
delivered a double digit NAV total return for shareholders.
The NAV total return for 2021 was 12.4% (in euro terms)
which was also equal to the 2021 total shareholder
return. Assets held at the end of 2020 increased in value
by 9.1%% during 2021, with additional valuation uplifts
for the Barcelona and Lodz assets acquired during 2021.
Valuation gains were predominantly driven by yield
compression. Growth within the logistics sector is clearly
reflected in increasing portfolio valuations. The two solar
projects in Den Hoorn and Ede in the Netherlands added
c.€1 million to portfolio value.
In terms of future growth, the portfolio has been positioned
to focus on mid-boxes and urban logistics, the part of the
market which the Investment Manager believes has good
potential, especially with respect to rents. There are several
options within the portfolio where value may be added
and where a tenant may require additional space. A good
example is the small extension project already underway
in Waddinxveen in the Netherlands on an adjacent piece
of land owned by the tenant which is to be purchased at
an attractive yield.
Continent benefiting from low cost debt
Current gearing is 25% of gross asset value,
materiallybelow the long-term target of 35%.
TheCompany has arranged asset level fixed rate bank
debt gearing in those markets where all-in loan costs are
the lowest, such as France, Germany and the Netherlands
with German banks particularly active in this space.
The average all-in cost of the loan portfolio is currently
1.4% which had an average loan duration of 7.3 years,
of which 4.7 years remain. The most recent addition to
the loan portfolio was a €17 million top-up on the existing
Dutch loan portfolio at an all-in interest rate of 1.3% and
a remaining loan duration of 4.6 years. During the year,
the Company also revised its revolving credit facility
agreement with Investec Bank, increasing the facility’s
capacity from €40 million to €70 million and providing
further flexibility for the acquisition of new properties or for
the implementation of asset management initiatives.
ESG: sector leading GRESB Rating
4
In 2015, the Paris climate agreement was signed stating
an ambition to keep global warming below 2 degrees by
the year 2050. Reducing carbon emissions is a crucial part
of this target and has led to an increased awareness of
ESG across the market. ESG is strongly embedded in the
Investment Manager’s investment process and driven by
its dedicated ESG team. As an investment management
house, abrdn is aiming for carbon neutrality by 2050.
The Company now measures the carbon footprint of its
property portfolio and is taking advice on the required
steps for reducing this. Our starting point is strong as the
portfolio is modern, with the majority of assets constructed
after 2018 resulting in good energy efficiency across the
portfolio. LED lighting and rooftop solar panels further
enhance the energy efficiency of the portfolio. In 2021,
twosolar panel projects were completed with panels
installed in Den Hoorn and Ede, which added c.€1 million
to portfolio value, bringing the total number of buildings
with solar panels to nine. This is an efficient way to reduce
carbon emissions whilst helping retain tenants in our
buildings as many of these tenants have comparable
sustainability ambitions and seek buildings with strong ESG
credentials. Staying close to, and liaising with, our tenants
is important to help us understand what is expected
from abrdn as a manager and one of the reasons for
implementing our annual tenant satisfaction survey.
4
Global Real Estate Sustainability Benchmark.
33Annual Report 2021
A key objective is to have a portfolio of buildings that are
future fit and attractive to current and potential tenants.
One of the milestones of the year was the result from
the 2021 GRESB survey. This saw the Company being
awarded ‘Sector Leader’ status and placed first in the
peer group of six listed funds with strategies focusing on
pan-European logistics. A score of 84 points out of 100
resulted in the Company maintaining 4 out 5 Green Stars
and further improving on the 79/100 and 63/100 ratings
awarded in the two preceding years.
Outlook
The fundamentals supporting the logistics real estate
sector continue to strengthen. Structuralgrowth in
e-commerce penetration and the resulting increase
in demand for logistics space this creates continues
to support and drive valuation growth. This is further
supported as businesses of all shapes and sizes target
larger inventories or reshoring their manufacturing
activities back to Europe in order to make their supply
chains more resilient. This comes after the COVID-19
pandemic and the Suez canal blockage highlighted how
easily supply chains, which often operate to a ‘just in time’
model, can be disrupted.
The structural growth we have witnessed in the sector
has led to record low vacancy rates and this is likely to
continue with increasing demand and limited speculative
development, particularly as increasing regulation and
land scarcity limits scope to build.
European economies are cyclical and there are potential
headwinds arising from the conflict in Ukraine increasing
inflation. However, the pandemic highlighted the critical
nature of logistics real estate which is reflected in our
high rent collection statistics and double-digit total return
performance over the last two years.
The number of investors seeking to increase their
exposure to the sector continues unabated, attracted by
the Continent’s inflation protecting, indexed-linked leases
and strong rental growth prospects due to the favourable
supply/demand dynamics and ever rising construction
costs. Having local teams on the ground with in-depth
knowledge provides us with a significant advantage in this
extremely competitive sector.
We believe that the sector will continue to out-perform,
not only in 2022 but beyond. Our focus over the short term
is completing the planned acquisitions which together with
the ongoing asset management initiatives, will support
further capital and income growth, underpinning an
attractive dividend.
Evert Castelein
Fund Manager, abrdn
21 April 2022
34 Annual Report 2021
Portfolio
Property Portfolio
1
4
3
2
5
6
9
8
17
18
22
21
19
20
7
10
11
16
15 12
14 13
Property Portfolio as at 31 December 2021
Property Tenure Principal Tenant 2021 valuation (€m)
1 France, Avignon (Noves) Freehold Biocoop 53.1
2 France, Meung sur Loire Freehold Office Depot administrator 21.4
3 Germany, Erlensee Freehold Bergler 43.1
4 Germany, Flörsheim Freehold Ernst Schmitz 26.9
5 Poland, Krakow Freehold Lynka 29.1
7 Poland, Lodz Freehold Compal 30.4
6 Poland, Warsaw Freehold DHL 30.5
8 Spain, Barcelona Freehold Mediapost 19.3
10 Spain, Madrid (Coslada) Freehold DHL 12.4
9 Spain, Leon Freehold Decathlon 18.0
11 Spain, Madrid 1.1 Freehold Talentum 37.4
12 Spain, Madrid 1.2 Freehold Amazon 20.6
13 Spain, Madrid 2.1 Freehold Carrefour 16.3
14 Spain, Madrid 2.2 Freehold MCR 13.3
15 Spain, Madrid 2.3 Freehold Vacant (with rental guarantee) 12.4
16 Spain, Madrid 3 (2 buildings) Freehold Arrival 47.0
22 the Netherlands, Den Hoorn Leasehold Van der Helm 60.3
17 the Netherlands, Ede Freehold AS Watson (Kruidvat) 33.9
18 the Netherlands, Oss Freehold Orangeworks 18.5
19 the Netherlands, 's Heerenberg Freehold JCL Logistics 33.9
20 the Netherlands, Waddinxveen Freehold Combilo International 49.5
21 the Netherlands, Zeewolde Freehold VSH Fittings 38.7
Market Value as at 31 December 2021 666.0
Less Lease Incentives (5.0)
Total Market Value Less Lease Incentive Debtor 661.0
Add IFRS 16 Leasehold Asset 22.9
Total per Balance Sheet 683.9
35Annual Report 2021
FRANCE
AVIGNON
.
Avignon (92,000 inhabitants) is located in the heart of the Provence
close to larger cities Montpellier (280,000) and Marseille (978,000).
The Provence is the #1 region for the production of fruit and
vegetables in France explaining why tenant Biocoop (organic food
retailer) and other supermarkets (Carrefour, Aldi, Systeme U) and food
specialists have located distribution centres here
.
New sustainable warehouse with modern specifications and solar panels
.
Property consists of 4 cells, 2 of which are treated as cold storage
(1/3 of floor space)
SPA signed/ closing Jul 18 / Oct 18
On-/ off-market Off-market
Year of construction 2018
Net leasable area 28,469 sqm
Main tenants Biocoop and Bargreen (solar panels)
Indexation 100% ILAT (annual)
WAULT (incl/ excl breaks) 5.6/ 9.7 years
Property specifications Free height of 10.5m, floor load capacity of 5 t/sqm, 24 loading doors,
sprinklers, HQE Excellent certificate, 11% office space, LED,solar panels
MEUNG SUR LOIRE
.
The property is located in the heart of France 27km southwest of
Orleans (115,000 inhabitants). Due to its excellent location the unit
serves Paris, Central and the South of France for both national and
international distribution
.
Established and growing logistics location, for DHL, ID Logistics, XPO
and Rexel. Office Depot, specialising in the office supplies market, is in
the process of vacating but has paid rent until Q1 2022. Brokers have
been instructed and several site inspections have taken place
.
Asset with modern specifications and low site cover of 29% provides
space for future expansion
SPA signed/ closing Nov 18 / Feb 19
On-/ off-market On-market
Year of construction 2004
Net leasable area 30,180 sqm
Main tenants Office Depot (vacating)
Indexation 100% ILAT (annual)
WAULT (incl/ excl breaks) 0.3/ 0.3 years (tenant vacating with rents paid until Q1 2022)
Property specifications Free height of 12-17m, 28 loading doors, floor load capacity of 5-7 t/sqm,
sprinklers, site cover of 29%, 6% office space, LED (partial)
36 Annual Report 2021
GERMANY
ERLENSEE
.
Two new logistics buildings on a new logistics hub to the West of the
Frankfurt Rhine-Main region (6m inhabitants) with
other companies like Dachser and Wilhelm Brandenburg Group
located close by. Acquired via forward funding
.
The project comprises two modern multi-let new logistics buildings of
10,936 and 15,764 sqm
.
Limited logistics supply in Rhine-Main region creating space for strong
future rental growth
SPA signed/ closing Jun 18 / Feb 19
On-/ off-market Off-market
Year of construction 2018
Net leasable area 26,700 sqm
Main tenants Bergler, DS Smith
Indexation Threshold indexations with combination of 5%/80% and 10%/80%
WAULT (incl/ excl breaks) 5.9/ 8.2 years
Property specifications Free height of 10.5m, 50 loading doors, sprinklers, floor load capacity of
5 t/sqm, 10% office space, LED
FLÖRSHEIM
.
Prime multi-let logistics park built in 2015 and located to the East
of the Frankfurt Rhine-Main region (6m inhabitants), just 15 kilometres
from Frankfurt airport. Acquired via forward funding
.
Project comprises two modern multi-let new logistics buildings of
10,762 and 7,047 sqm
.
Limited logistics supply in Rhine-Main region creating space for future
growth (sub 5% vacancy)
SPA signed/ closing Dec 17 / Feb 18
On-/ off-market On-market
Year of construction 2015
Net leasable area 17,809 sqm
Main tenants Ernst Schmitz, Maintrans
Indexation 100% CPI (annual) and 1 lease with threshold indexation (5%/80%)
WAULT (incl/ excl breaks) 3.1/ 6.8 years
Property specifications Free height of 10m, 22 loading doors, floor load capacity of 5 t/sqm,
sprinklers, 11% office space, LED (partial)
37Annual Report 2021
THE NETHERLANDS
EDE
.
Ede (112,000 inhabitants) very centrally located in the Netherlands
and well positioned for national distribution
.
One part of the building (30% of total) was fully renewed in 2018 with a
new floor and installations
.
Drugstore Kruidvat is part of the AS Watson Group. They will partly use
this location for their growing e-commerce business
.
Lease signed on the partial installation of solar panels
SPA signed/ closing Aug 18 / Aug 18
On-/ off-market On-market
Year of construction 1999 / 2005
Net leasable area 39,841 sqm
Main tenants Kruidvat
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 6.0/ 6.0 years
Property specifications Free height of 12.2m, 23 loading doors, floor load capacity of 2.5-10.0 t/sqm,
sprinklers, 8% office space, LED
DEN HOORN
.
Den Hoorn is located in the most densely populated area in the
Netherlands in the Rotterdam/ the Hague metropolitan area
(2.7 million inhabitants) and easily accessible by motorway
.
Brand-new flexible warehouse of over 42,500 square metres
with modern specifications
SPA signed/ closing Dec 19 / Jan 20
On-/ off-market On-market
Year of construction 2020
Net leasable area 42,577 sqm
Main tenants Van der Helm
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 8.4/ 8.4 years
Property specifications Free height of 12.2 meters, 36 loading doors, floor load capacity of
5t/ sqm, 11% office space, LED, sprinklers, solar panels
38 Annual Report 2021
THE NETHERLANDS (continued)
OSS
.
Oss (86,000 inhabitants) is strategically located between port of
Rotterdam and Ruhr area and ranked as number 7 logistics hotspot in
the Netherlands
.
Established logistics location with large companies such as Montea
Logistics, Vos Logistics, Heineken, Vetipak, Movianto and Mediq
.
Forward funded project with a 5.5% coupon rate delivered in July 2019
SPA signed/ closing Oct 18 / Jul 19
On-/ off-market Off-market
Year of construction 2019
Net leasable area 12,433 sqm
Main tenants Orangeworks
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 12.5/ 12.5 years
Property specifications Free height of 10m, 5 loading doors with option to create 10 more,
floor load capacity of 5 t/sqm, sprinklers, 14% office space, LED
‘S HEERENBERG
.
Located in an upcoming logistics hub close to A12 highway and
Emmerich barge terminal in Germany. Strong incentives for
3PL providers to locate close to NL-GER border with advantages in
customs and employment flexibility
.
Grade A specified warehouse and cross-dock with offices totalling
23,486 sq metres. Total site is 45,000 sq metres
SPA signed/ closing Jun 19 / Jul 19
On-/ off-market Off-market
Year of construction 2009/ 2011
Net leasable area 23,486 sqm
Main tenants JCL Logistics
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 10.0/ 10.0 years
Property specifications Warehouse free height 12m, cross-dock 5.5m. 40 loading doors,
floor-load capacity 3.0-4.0 t/sqm, LED (partial), sprinklers
39Annual Report 2021
THE NETHERLANDS (continued)
WADDINXVEEN
.
Waddinxveen is centrally located in the Randstad conurbation
(8 million consumers within 1 hour’s driving distance) and ranked as
number 5 logistics hotspot in the Netherlands
.
Established and strategic location for tenant due to large
concentration of greenhouses. Our tenant Combilo is a specialist
in the import and export and packaging of fruit/vegetables for
supermarkets/ wholesale making this an excellent location for them
.
Cross-dock warehouse of 29,058 sqm, with ample loading doors on
both sides of the building
SPA signed/ closing Nov 18 / Nov 18
On-/ off-market Off-market
Year of construction 1983/ 1994/ 2002/ 2018
Net leasable area 29,058 sqm
Main tenants Combilo International
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 11.9/ 11.9 years
Property specifications Cross-dock with 51 loading doors, free height 7-11m, sprinklers, floor load
capacity 1.0 - 3.5 t/sqm, 6% office space, LED (partial), solar panels (partial)
ZEEWOLDE
.
Zeewolde is a town with 23,000 inhabitants located in the heart of the
Netherlands in the province of Flevoland and close to Almere, the fastest
growing municipality in the Netherlands (197,000 inhabitants, forecast:
350,000) and Lelystad (96,000 inhabitants)
.
Region is ranked as number 6 logistics hotspot in the Netherlands and
will benefit from the expansion of Lelystad airport and opening of
Inditex/ Zara warehouse
SPA signed/ closing Nov 18 / Jun 19
On-/ off-market Off-market
Year of construction 2019
Net leasable area 35,898 sqm
Main tenants VSH Fittings
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 12.5/ 12.5 years
Property specifications Free height of 12.2m, 37 loading doors, floor load capacity of 5 t/sqm,
BREAAM Very Good, sprinklers, 4% office space, LED
40 Annual Report 2021
POLAND
KRAKOW
.
Krakow is the 2nd largest city in Poland with 760,000 inhabitants and
characterised by a relatively affluent population, the dominance of
added value industries, a strong education infrastructure and business
friendly policy
.
The Polish logistics market is strong benefitting from being the largest
economy within the Central and Eastern European block with a lower
cost labour force
.
New multi-tenant building with modern specifications
SPA signed/ closing Feb 19 / Feb 19
On-/ off-market On-market
Year of construction 2018
Net leasable area 34,932 sqm
Main tenants Lynka
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 3.0/ 3.0 years
Property specifications Free height of 12m, 70 loading doors, floor load capacity of 5 t/sqm,
sprinklers, 11% office space, LED
WARSAW
.
Warsaw is the wealthiest and largest, most urbanised area in Poland
with a population size of 1.8 million making it attractive for parcel
delivery specialists such as DHL
.
The Polish logistics market is strong benefitting from being the largest
economy within the Central and Eastern European block with a lower
cost labour force
.
Modern, state-of-the-art logistics scheme consisting of two brand-
new buildings. One building is cross-docking warehouse for the
E-commerce related activities of DHL (54% of total rent), the other one
is a standard warehouse with 3 units
SPA signed/ closing Oct 19
On-/ off-market Off-market
Year of construction 2019
Net leasable area 24,690 sqm
Main tenants DHL, ICS
Indexation 100% Euro CPI (annual)
WAULT (incl/ excl breaks) 5.9/ 5.9 years
Property specifications Free height of 10m in warehouse and 7.5m in cross-dock, 60 loading doors,
floor load capacity of 5 t/sqm, LED, 9% office space, solar panels (partial)
41Annual Report 2021
LODZ
.
Lodz is the 3rd largest logistics city in Poland (with 750,000 inhabitants)
and centrally located alongside main motorways and Europe’s key
railway link to China
.
Multi-tenanted building with several tenants having a direct link with
the Bosch/ Siemens Campus and Dell factory creating a reliable
tenant base
.
Lodz is one of the core markets in Poland with a low vacancy rate
SPA signed/ closing April 2021
On-/ off-market On-market
Year of construction 2021
Net leasable area 31,512
Main tenants Bilplast, Compal, EGT, Kan, Mecalit, Tabiplast
Indexation 100% EU CPI (annual)
WAULT (incl/ excl breaks) 6.1/ 6.1 years
Property specifications 10.0m clear height, 5T floor load, LEDs, sprinklers, 56 loading doors,
yard depth of 35m, 6% office space, solar panels
SPAIN
BARCELONA
.
Barcelona is the 2nd most populous city in Spain with the fastest
growing seaport in Europe
.
Asset located 20 minutes from the city centre
.
Undersupplied market with only 1% vacancy in the 1st ring with supply
constraints with sea/ mountains surrounding
.
Asset is heavily under-rented by an estimated 20%
SPA signed/ closing July 2021
On-/ off-market On-market
Year of construction 2019
Net leasable area 13,089 sqm
Main tenants Mediapost (subsidiary of La Poste Group)
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 4.5/ 7.5 years
Property specifications 11.0m clear height, 5T floor load, LEDs, sprinklers, 10 loading doors,
yard depth of 35m, 6% office space, solar panels
42 Annual Report 2021
LEON
.
Leon (126,000 inhabitants) is a strategic logistics location for
distribution in the North West of Spain (supermarket chain Mercadona
and Inditex have warehouses here). Decathlon has moved and closed
its business in Pamplona to supply 40 shops in this part of Spain
.
New logistics warehouse developed to latest logistics standards
delivered in April 2019. Asset consists of 3 different modules
totalling 32,637 sqm allowing for some flexibility to turn it into a
multi-tenant building
.
Decathlon has a 5 year option to expand the building by 10,000 sqm
if required
SPA signed/ closing Jul 18 / Apr 19
On-/ off-market On-market
Year of construction 2019
Net leasable area 32,637 sqm
Main tenants Decathlon
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 7.2/ 7.2 years
Property specifications Free height of 10.7m, 29 loading doors, floor load capacity of
5 t/sqm, sprinklers, 2% office space, LED, solar panels (partial)
MADRID - COSLADA
.
Madrid, the third largest city in Europe with a metropolitan population
of almost seven million people
.
Coslada is perfectly located for last-mile logistics with its location
between the City centre and the airport in the east
.
Cross-dock warehouse with loading doors at both sides
.
Leased out to DHL who have occupied this building since it was constructed
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction 1999
Net leasable area 6,805 sqm
Main tenants DHL
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 5.0/ 8.0 years
Property specifications Free height of 10.5m, cross-dock with 12 loading bays at the front and
25 doors at the back, floor load capacity of 5 t/sqm, 20% office space
43Annual Report 2021
MADRID – GAVILANES 1.1
.
Urban logistics hub located in southern Madrid, the third largest
city in Europe with a metropolitan population of almost seven
million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the
A-4 motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction 2019
Net leasable area 21,713 sqm
Main tenants Talentum (designs and markets promotional materials across Spain for
major clients)
Indexation 100% CPI (annual, capped at 3%)
WAULT (incl/ excl breaks) 8.1/ 8.1 years
Property specifications 11.2m clear height, LEDs, sprinklers, 5T floor load, yard depth >33m and
9% office space, LEED Silver rating
MADRID – GAVILANES 1.2
.
Urban logistics hub located in southern Madrid, the third largest
city in Europe with a metropolitan population of almost seven
million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the
A-4 motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction 2019
Net leasable area 11,264 sqm
Main tenants Amazon (fully functional last mile delivery station servicing central and
southern Madrid)
Indexation 100% CPI (annual, capped at 3%)
WAULT (incl/ excl breaks) 1.6/ 8.6 years
Property specifications 11.2m clear height, LEDs, sprinklers, 5T floor load, yard depth >33m and
8% office space, LEED Silver rating
44 Annual Report 2021
MADRID – GAVILANES 2.1
.
Urban logistics hub located in southern Madrid, the third largest
city in Europe with a metropolitan population of almost seven
million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the
A-4 motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction 2019
Net leasable area 9,512 sqm
Main tenants Carrefour (leading food retailer established in more than 30 countries -
this asset is Carrefour’s first for last-mile delivery in Spain)
Indexation 100% CPI (annual, capped at 2%)
WAULT (incl/ excl breaks) 4.6/ 14.6 years
Property specifications 11.2m clear height, 5T floor load, LEDs, sprinklers, yard depth of 55m and
13.6% office space, LEED silver rating
MADRID – GAVILANES 2.2
.
Urban logistics hub located in southern Madrid, the third largest
city in Europe with a metropolitan population of almost seven
million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the
A-4 motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction 2019
Net leasable area 7,718 sqm
Main tenants MCR (a leading electronics and IT hardware distributor)
Indexation 100% CPI (annual, capped at 2%)
WAULT (incl/ excl breaks) 2.5/ 4.5 years
Property specifications 11.2m clear height, 5T floor load, LEDs, sprinklers, yard depth of 55m and
13.6% office space, LEED silver rated
45Annual Report 2021
MADRID – GAVILANES 2.3
.
Urban logistics hub located in southern Madrid, the third largest
city in Europe with a metropolitan population of almost seven
million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the
A-4 motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction 2019
Net leasable area 7,375 sqm
Main tenants Vacant (Appropriate rental guarantee in place.
Prospective tenant identified)
Indexation N/A
WAULT (incl/ excl breaks) N/A
Property specifications 11.2m clear height, 5T floor load, LEDS, sprinklers, yard depth of 55m and
13.6% office space, LEED silver rated
MADRID – GAVILANES 3.1
.
Urban logistics hub located in southern Madrid, the third largest
city in Europe with a metropolitan population of almost seven
million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the
A-4 motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction 2019
Net leasable area 16,500 sqm
Main tenants Arrival (electric vehicle manufacturer specialising in vans and buses)
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 5.4/ 9.4 years
Property specifications 11.2m clear height, 5T floor load, LEDs, sprinklers, yard depth of 31 - 45m
and 11% office space, LEED Gold rating
46 Annual Report 2021
MADRID – GAVILANES 3.2
.
Urban logistics hub located in southern Madrid, the third largest
city in Europe with a metropolitan population of almost seven
million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the
A-4 motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction 2019
Net leasable area 10,665 sqm
Main tenants Arrival
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 5.4/ 9.4 years
Property specifications 11.2m clear height, 5T floor load, LEDs, sprinklers, yard depth of 31 - 45m
and 11% office space, LEED Gold rating
MADRID – GAVILANES 4 (Completion expected Q2 2022)
.
Urban logistics hub located in southern Madrid, the third largest
city in Europe with a metropolitan population of almost seven
million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the
A-4 motorway (Spain’s main north-south motorway)
.
Amazon parcel delivery hub, optimised for last mile deliveries,
including multi-level van parking deck fully prepared for electric
charging capability and canopy with numerous van loading areas
SPA signed/ closing December 2021
On-/ off-market On-market
Year of construction Delivery Q2 2022
Net leasable area 16,467 sqm + 20,748 sqm parking deck
Main tenants Amazon (multinational focused on e-commerce through its online retail
platform. From this state-of-the-art parcel delivery hub Amazon will
have the ability to reach almost 6 million people within 30 minutes)
Indexation 100% CPI (annual, capped at 3%)
WAULT (incl/ excl breaks) 15.0/ 25.0 years
Property specifications 11.0m clear height, 7.5T floor load, LEDs, sprinklers, yard depth of 41m
and 19% office space, BREEAM Very Good rating expected
47Annual Report 2021
Portfolio
Group Structure
100%
100%
100%
100%
100%
100%
Leon
Coslada
Barcelona
Waddinxveen
ASELI
Waddinxveen B.V
Flörsheim
ASELI
Flörsheim B.V
ASELI
Leon B.V
Erlensee
ASELI
Erlensee B.V
Ede
Oss
ASELI
Netherlands I B.V
Zeewolde
Den Hoom
Distributiestraat 5,
7041 KJ’s
Heerenberg
Phase I
(Previous name
Newark Spain S.L.)
ASELI
Netherlands II B.V
ASELI
‘s Heerenberg B.V
ASELI
Netherlands
Holdings B.V
Holding 100%
less 1 share
Holding 1 share
Holding 1 share
ASELI France
Holding SAS
ASELI
Meung SCI
Meung Sur Loire Avignon
ASELI
Avignon SCI
abrdn Standard European Logistics Income plc
(UK Investment Trust)
Luxembourg
Poland
France
The Netherlands England & Wales Spain
100% 100% 100% 100%
100%100% 100%
100% 100%
100%
PDC Industrial
Centre 92
Sp. z o.o
Warsaw West VII
Circulus
Investments SP
z.o.o.
Lodz
PDC Industrial
Centre 72
Sp. z o.o
Krakow Warehouse
ASELI Madrid
Holding S.L
ASELI MADRID 3,
S.L.U.
Phase II
(Previous name
Shipman Spain S.L.)
ASELI MADRID 4,
S.L.U.
Phase III
(Previous name
Barkley Invest S.L.)
ASELI MADRID 1,
S.L.U.
ASELI
Den Hoorn BV
100%
100%
100%
100%
100%
100%
Leon
Coslada
Barcelona
Waddinxveen
ASELI
Waddinxveen B.V
Flörsheim
ASELI
Flörsheim B.V
ASELI
Leon B.V
Erlensee
ASELI
Erlensee B.V
Ede
Oss
ASELI
Netherlands I B.V
Zeewolde
Den Hoom
Distributiestraat 5,
7041 KJ’s
Heerenberg
Phase I
(Previous name
Newark Spain S.L.)
ASELI
Netherlands II B.V
ASELI
‘s Heerenberg B.V
ASELI
Netherlands
Holdings B.V
Holding 100%
less 1 share
Holding 1 share
Holding 1 share
ASELI France
Holding SAS
ASELI
Meung SCI
Meung Sur Loire
Avignon
ASELI
Avignon SCI
abrdn Standard European Logistics Income plc
(UK Investment Trust)
Luxembourg
Poland
France
The Netherlands England & Wales Spain
100% 100% 100%
100%
100%100% 100%
100% 100%
100%
PDC Industrial
Centre 92
Sp. z o.o
Warsaw West VII
Circulus
Investments SP
z.o.o.
Lodz
PDC Industrial
Centre 72
Sp. z o.o
Krakow Warehouse
ASELI Madrid
Holding S.L
ASELI MADRID 3,
S.L.U.
Phase II
(Previous name
Shipman Spain S.L.)
ASELI MADRID 4,
S.L.U.
Phase III
(Previous name
Barkley Invest S.L.)
ASELI MADRID 1,
S.L.U.
ASELI
Den Hoorn BV
48 Annual Report 2021
100%
100%
100%
100%
100%
100%
Leon
Coslada
Barcelona
Waddinxveen
ASELI
Waddinxveen B.V
Flörsheim
ASELI
Flörsheim B.V
ASELI
Leon B.V
Erlensee
ASELI
Erlensee B.V
Ede
Oss
ASELI
Netherlands I B.V
Zeewolde
Den Hoom
Distributiestraat 5,
7041 KJ’s
Heerenberg
Phase I
(Previous name
Newark Spain S.L.)
ASELI
Netherlands II B.V
ASELI
‘s Heerenberg B.V
ASELI
Netherlands
Holdings B.V
Holding 100%
less 1 share
Holding 1 share
Holding 1 share
ASELI France
Holding SAS
ASELI
Meung SCI
Meung Sur Loire Avignon
ASELI
Avignon SCI
abrdn Standard European Logistics Income plc
(UK Investment Trust)
Luxembourg
Poland
France
The Netherlands England & Wales Spain
100% 100% 100%
100%
100%100% 100%
100% 100%
100%
PDC Industrial
Centre 92
Sp. z o.o
Warsaw West VII
Circulus
Investments SP
z.o.o.
Lodz
PDC Industrial
Centre 72
Sp. z o.o
Krakow Warehouse
ASELI Madrid
Holding S.L
ASELI MADRID 3,
S.L.U.
Phase II
(Previous name
Shipman Spain S.L.)
ASELI MADRID 4,
S.L.U.
Phase III
(Previous name
Barkley Invest S.L.)
ASELI MADRID 1,
S.L.U.
ASELI
Den Hoorn BV
49Annual Report 2021
Sustainability
The management of Environmental, Social and Governance issues is a fundamental
part of our business.
50 Annual Report 2021
Sustainability
Environmental, Social and
Governance (ESG)
Sustainability, Impact and Futureproofing –
company approach
The Company believes that comprehensive assessment
of ESG factors leads to better outcomes for shareholders
and adopts the Investment Manager’s policy and
approach to integrating ESG which has been used as
the basis for establishing the Company’s ESG objectives.
The Investment Manager views ESG as a fundamental
part of its business. Whilst real estate investment provides
valuable economic benefits and returns for investors it has
– by its nature – the potential to affect environmental and
social outcomes, both positively and negatively.
The Investment Manager’s approach is underpinned by
the following three over-arching principles:
.
Transparency, Integrity and Reporting: being transparent
in the ways in which it communicates and discusses its
strategy, approach and performance with investors and
stakeholders.
.
Capability and Collaboration: drawing together
and harnessing the capabilities and insights of the
Investment Manager’s platforms, with those of its
investment, supply chain and industry partners.
.
Investment Process and Asset Management: integrating
ESG into decision making, governance, underwriting
decisions and asset management approach.
This includes the identification and management of
material ESG risks and opportunities across the portfolio.
A key element of the Investment Manager’s approach
is the employment of its ESG Impact Dial, a proprietary
research framework, in support of investment strategies
and asset management approach. Four major themes
have been identified: Environment & Climate, Governance
& Engagement, Demographics and Technology &
Infrastructure, which together form the basis of the ESG
Impact Dial. These guide the assessment of materiality
and integration of ESG factors within the Company’s
portfolio and provide the framework for the Company’s
ESG objectives. The ESG Impact Dial tool scores assets
based on their ESG characteristics across 21 indicators
and provides the basis for target setting, action planning
and the monitoring of progress over time.
The Investment Manager makes use of the expertise
within its ESG Real Estate team and is actively engaged
with the European Union, national governments
and industry working groups, including a number of
Green Building Councils, GRESB, the UK Better Building
Partnership and the UN Principles for Responsible
Investment (UN PRI). This ensures that it can help to
formulate government policies and that its management
teams are well informed of future government intent and
market direction.
Of particular focus is responding to climate change,
both in terms of resilience to climate impacts and in
reducing emissions from activities.
Planet
Environment & Climate
Change
Biodiversity Vulnerability and Inclusion Diversity and Labour Rights Digital Connectivity
Outdoor Air Quality Accessibility and Experience Occupier Quality Smart Connectivity
Public Realm and Cultural Value Occupiuer Wellbeing
Waste and Circularity
Land and Water Contamination Affordability Occupier Engagement Physcial Connectivity
Noise Pollution Employment, Skills and Enterprise Patnerships
Water Efficiency
Climate Resilience
People
Demograpics
Process
Governance and
engagement
Progress
Technology and
infrastructure
51Annual Report 2021
Sustainability
ESG Embedded in the Investment Philosophy
The Company is taking advice on the carbon footprint of
its property portfolio and starting the process to create
asset level strategies to reduce carbon emissions.
Several projects are supporting the Company in
formulating its strategy. Two solar panel projects were
completed in the Netherlands in 2021 and the Company
is taking advice on how it can further enhance on-site
renewable energy generation for assets that do not have
panels yet. Good progress has also been made with
the collection of volumetric data on energy and water
consumption which is to be automated with smart meters
and formalising this data collection exercise by signing
Green leases with portfolio tenants, making it easier
to analyse on a daily basis. Such leases provide for the
accurate reporting and collation of usage data, enabling
analysis to be undertaken to help tenants to understand
their outputs and to work with the Company in seeking
to reduce costs and impact. An annual tenant satisfaction
survey helps inform the Investment Manager and its
local teams and ensures close contact with tenants.
Other initiatives have included the tendering of energy
contracts in Poland and Germany resulting in the
Company signing eco-friendly energy contracts together
with three assets in the Netherlands obtaining BREEAM-
In-Use certificates. All of these initiatives when taken
together with the quality of the portfolio’s buildings led to
the Company being awarded Sector Leader status in the
2021 GRESB survey. The Company’s ambition in tandem
with its Investment Manager is to continue out-performing
the sector and to increase its rating in the 2022 survey.
EPRA Sustainability Best Practice
Recommendations
The Company has adopted the 2017 EPRA Sustainability
Best Practice Recommendations Guidelines (sBPR) to
inform the scope of indicators reported against.
The Company has reported against all EPRA sBPR
indicators that are material to it. The Company also
reports additional data not required by the EPRA sBPR
where it believes this to be relevant (e.g. like-for-like
greenhouse gas emissions).
A full outline of the scope of reporting and materiality
review in relation to EPRA sBPR indicators is included below.
Operational Performance Summary
The Investment Manager has processes in place to ensure
operational sustainability performance is monitored and
actions are implemented to drive continual improvement.
Due to the nature of the portfolio, comprised largely
of single-let assets, occupiers have direct control over
day-to-day operations. As landlord, the Company can
influence ESG performance as assets are developed and
refurbished and when the Investment Manager engages
with occupiers on fit-outs, leases and during the course
of their occupation. However, the Company does not
have direct operational control day-to-day. Therefore the
approach is to engage with occupiers and encourage
data sharing as well as further collaboration projects such
as smart metering upgrades, satisfaction surveys and
sustainability audits on assets.
2021 GRESB Assessment
The GRESB Assessment is the leading global sustainability
benchmark for real estate vehicles. The Company was
reviewed by GRESB in 2021 and achieved a score of 84 out
of 100 points and placed 1st out of 6 within its peer group
(achieving a 4-star rating). The Company is in a strong
position to further build on this performance in 2022.
Energy efficiency and decarbonisation
In 2021, COP26 served to reinforce the need for the rapid
decarbonisation of the global economy. The Board and
the Investment Manager believe that the real estate sector
has made some progress in the past but the pace must
accelerate from here.
The Investment Manager has an active approach
to reducing emissions across the portfolio through
assessment of energy performance prior to acquisition
and working with occupiers on solar PV projects,
as well as undertaking energy efficient refurbishments.
In 2021 work was undertaken to establish the operational
carbon footprint baseline of the portfolio and begin to
model a pathway to net zero. This involved benchmarking
the performance of each asset, modelling the future
footprint, including embodied and operational carbon,
and identifying the types of measures necessary and
costs to fully decarbonise the portfolio over time.
Pathway to Net Zero
The Company’s net zero principles
Although the pathway may seem clear, definitions and
standards on net zero and the policy mix to support it
remain immature. In this context, several key principles
have been established that underpin the strategy to
ensure it has integrity, robustness and delivers value:
.
Practical:
.
Asset-level action: focusing on energy efficiency and
renewables is a priority to ensure compliance with
energy performance regulations. This improves the
quality of assets for occupiers and reduces exposure
to regulatory and market risk.
52 Annual Report 2021
.
Timing: the Company aims to align improvements
with existing plant replacement cycles and
planned refurbishment activities wherever possible.
This ensures that functional equipment is not
replaced well ahead of end-of-life unless necessary,
which reduces cost and embodied carbon.
.
Realistic:
.
Target s: long-term targets must be stretching but
deliverable and complemented by near-term targets
and actions.
.
Policy support: it is important to recognise that to
fully decarbonise the real estate sector requires a
supportive policy mix to incentivise action and level
the playing field.
.
Collaborative:
.
Occupiers: net zero cannot be achieved in isolation.
The Company will work closely with occupiers,
many of whom have their own decarbonisation
strategies covering their leased space. Many of the
portfolio tenants have their own decarbonisation
commitments and the Company’s interests are
aligned on this issue.
.
Suppliers: the Company will work with suppliers,
including property managers and consultants,
in order that all stakeholders are clear on their
role in the pathway to net zero.
.
Measurable:
.
Clear key performance indicators at the asset and
portfolio level.
Company baseline
The Company’s operational carbon footprint for 2020 is
shown below. This shows a total operational footprint of
12,159 tonnes of carbon dioxide equivalent (Co2e).
Of this, 7% is associated with Scope 2
1
emissions that are
in the direct control of the Company which it seeks to
minimise and 93% are Scope 3 emissions from tenant-
procured energy and purchased goods and services.
For 2020, actual energy consumption data for 72% of
the portfolio by floor area was available with
representative industry standard benchmarks used
to estimate the balance.
Tenant Energy Consumption
(Scope 3)
Landlord Electricity
(Scope 2)
Purchased Goods and Services
(Scope 3)
89%
7%
4%
1
a. Scope 1 and 2 – These are emissions that directly result from the landlord’s activities where there is operational control, either through the purchase and consumption of
energy or refrigerant losses.
b. Scope 3 – These are emissions that occur in supply chains and downstream leased assets (i.e. tenant spaces) over which the Company has a degree of influence but
limited control.
53Annual Report 2021
Our delivery strategy
Near-term Long-term
Target s Improve emissions intensity across all scopes by
50% in the near-term from a 2020 baseline.
Net zero across all emissions scopes over the
long-term.
Context We see setting an intermediate target as a
sensible stepping-stone towards long-term
decarbonisation. In the near-term activities
are focused on occupier engagement and
compliance with energy performance
regulations which will mean investment in energy
efficiency, heat decarbonisation and renewable
energy when undertaking refurbishment works.
The Company recognises that it cannot deliver
in isolation and this requires both co-operation
from property occupiers and a supportive
policy mix to drive decarbonisation in the
real estate sector.
To meet the European Commission’s net zero
commitments the buildings sector will have
to substantially decarbonise by 2050 through
energy efficiency and the decarbonisation of
heat and electricity. The Company will aim
to reach a long-term target through these
measures with as little use of offsets as possible.
When set, the long-term target will be kept
under review in the context of the policy-mix and
market dynamics affecting the decarbonisation
of real estate.
Near-term
delivery actions
Standing portfolio:
.
Improve ability to obtain tenant energy data through improved engagement, lease agreements
and smart meters.
.
Build improved understanding of tenant decarbonisation strategies and extent of tenant
renewable energy procurement.
.
Implement low-carbon refurbishments to ensure regulatory compliance focusing on energy
efficiency and heat decarbonisation and start to quantify and reduce embodied carbon.
.
Continue to implement solar PV projects and establish power purchase agreements with tenants.
Acquisitions and developments:
.
In line with the Investment Manager’s policies:
.
benchmark assets pre-acquisition, understand costs and build decarbonisation into the asset
management plan from the start of ownership.
.
direct development and development funding to be designed to whole life net zero principles.
Measurement
indicators
Standing portfolio:
.
%age of tenants data coverage.
.
Absolute portfolio emissions (tCO2e).
.
Energy and emissions intensity (kwh/m2,year; kg CO2e/m2/year).
.
Installed solar capacity (MWp).
.
Embodied carbon of development projects.
54 Annual Report 2021
Taskforce for Climate-Related Financial Disclosures (TCFD)
TCFD was established to provide a standardised
way to disclose and assess climate-related risks and
opportunities. Recommendations are structured around
four key topics: Governance, Strategy, Risk Management
and Metrics & Targets. The Company is committed to
implementing the recommendations of the TCFD to
provide investors with information on climate risks and
opportunities that are relevant to the business.
TCFD covers risks and opportunities associated with two
overarching categories of climate risk: transition and physical:
.
Transition risks are those that relate to an asset, portfolio
or a company’s ability to decarbonise. An entity can be
exposed to risks as a result of carbon pricing, regulation,
technological change and shifts in demand related to
the transition.
.
Physical risks are those that relate to an asset’s
vulnerability to factors such as increasing temperatures
and extreme weather events as a result of climate
change. Exposure to physical risks may result in,
for example, direct damage to assets, rising insurance
costs or supply chain disruption.
There is still significant uncertainty and methodological
immaturity in assessing climate risks and opportunities
and there is not yet a widely recognised net zero standard.
Nonetheless, together with the Investment Manager, the
Company has progressed already with work to model the
implications of decarbonising the portfolio in line with a 1.5°C
scenario and undertaken analysis to understand potential
future physical climate risks. This is the first year that the
Company is reporting against TCFD recommendations and
we expect disclosures to evolve over time as methodologies
improve and work develops further.
TCFD Recommendation Company Approach
Governance
Board oversight of climate-related
risks and opportunities
The Board will consider climate-related risks and opportunities alongside all
other Company risks which fall under its remit.
Investment Manager’s role in assessing
and managing climate-related risks
and opportunities
At an operational level, the Investment Manager is responsible for integrating a
consideration of climate risks and opportunities into the investment and asset
management process. In the first instance this is undertaken by adopting
abrdn real estate’s internal processes and policies, and reporting to the Board.
Strategy
Climate-related risks and
opportunities the organisation has
identified over the short, medium,
and long term
As part of the Company’s investment and asset management process it
considers climate-related risks and opportunities over a range of timescales.
A summary of an initial assessment over the short, medium and long term is
as follows:
In the short term (0-5 years) the Company anticipates regulations affecting
the energy performance and emissions of buildings to tighten to align more
closely with Government targets for economy-wide decarbonisation.
Whilst this will provide clarity of direction it is likely to increase development
and refurbishment costs and will start to affect valuations. These trends,
however, will also create opportunities to benefit from moving occupier
and investor demand to low-carbon, future-fit assets.
55Annual Report 2021
TCFD Recommendation Company Approach
Climate-related risks and
opportunities the organisation has
identified over the short, medium,
and long term
Over the medium term (5-15 years) these trends will continue, and it is
expected that regulations and market sentiment will further drive energy
efficiency and decarbonisation. The Company anticipates significant
technological change in this period particularly in relation to heat pump
solutions which will improve the technical and financial feasibility of
decarbonising heat in buildings.
Over the long term (15+ years) climate-related extreme weather events
are likely to increase in frequency and severity which may impact built
environment assets depending on their location andcharacteristics.
The impact of climate-related risks
and opportunities on the organisation’s
business, strategy, and financial
planning where material
The Board recognises that climate change will affect the built environment,
both through decarbonisation and increased physical risks. The trends
summarised above are therefore expected to affect the Company’s strategy
and operations in the coming years.
Alongside net zero planning, the Company reviews assets in the context of
existing and proposed legislation affecting the energy performance of buildings
including minimum certification requirements.
The Investment Manager has also recently completed an assessment of
‘value at risk’ as a result of physical climate risks under the RCP8.5 climate
scenario which implies a 4.3° C temperature rise by 2100.
The resilience of the organisation’s
strategy, taking into consideration
different climate-related scenarios,
including a 2°C or lower scenario
Progress against long-term aims will be tracked using interim energy and
emissions intensity targets at the portfolio and
asset levels.
The work to establish a net zero pathway for the Company is informed by
industry benchmarks including the Carbon Risk Real Estate Monitor (CRREM)
1.5°C Paris-aligned emissions trajectories. As part of this work high level cost
estimates have been identified for transitioning assets to net zero. The Board
considers that the portfolio and Company strategy is well-positioned to
decarbonise in line with this trajectory assuming all stakeholders together
with national energy and climate policy are also supportive of this goal.
The Investment Manager will continue to engage with industry bodies such
as the Better Building Partnership to standardise net zero definitions across
the industry. The Company recognises that it cannot act in isolation and that
achieving this level of decarbonisation will require supportive climate policy
and the cooperation of the Company’s tenants and suppliers.
Recent work on understanding value at risk as a result of physical climate risk has
highlighted the importance of considering changes in wind speeds and flood
risk over time as well as the implications of rising temperatures on the demand
for cooling within buildings. An initial assessment of these results is that in general
under the RCP8.5 high emissions scenario, physical climate risks generally result
in a valuation impact to assets of below 1% by 2080 and there are no meaningful
affects until after 2040. Most of the impact is associated with additional cooling
demand due to rising temperatures. The Board considers that its existing
portfolio and Company strategy is resilient to physical climate risks in the short
to medium term. The Board together with the Investment Manager will keep
this under regular review, particularly as methodologies for physical risk
assessment improve.
56 Annual Report 2021
TCFD Recommendation Company Approach
Risk Management
The Company’s processes for
identifying and assessing climate-
related risks
Climate-related risks and opportunities are considered and assessed
by the Board as a whole as advised by the Investment Manager and
appointed consultants.
Metrics and Targets
The metrics used by the organisation
to assess climate-related risks and
opportunities in line with its strategy
and risk management process.
The Company discloses below emissions in line with EPRA Sustainability Best
Practices Recommendations. As part of a decarbonisation strategy progress
will be tracked against the long-term aim using interim energy and emissions
intensity targets at the portfolio and asset levels.
Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG)
emissions and the related risks.
The Company discloses below its emissions in line with EPRA Sustainability
Best Practice Recommendations. This covers Scope 1 and 2 emissions
associated with landlord-procured energy as well as Scope 3 emissions from
energy sub-metered to occupiers.
The targets used by the organisation
to manage climate-related risks
and opportunities and performance
against targets
The Company is setting long-term and short-term decarbonisation targets
and defining a practical delivery strategy with KPIs.
57Annual Report 2021
This section details the Company’s sustainability
performance using the EPRA Sustainability Best Practice
Recommendations Guidelines (sBPR). It also meets
the requirements for Streamlined Energy and Carbon
Reporting (SECR) under the Companies (Directors’
Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018.
Explanatory notes on methodology
Reporting period
This is a relatively new investment vehicle created to
specifically invest in logistic assets and as a result, the
Company is in a position where it can only report on
some of the indicators as determined in the materiality
assessment. The Company was launched in December
2017 with the first asset acquired in February 2018.
Sustainability data in this report covers the calendar years
of 2020 and 2021.
Organisational boundary and data coverage
For the purposes of sustainability reporting, the Company
includes single-let assets within the organisational
boundary even though operational control is limited and
it does not have full coverage of consumption data from
occupier-managed utility supplies. Note that the vast
majority (>95%) of utility data reported in this section is
obtained from occupiers. Whilst checks are undertaken
on the accuracy of the data where anomalies have been
reported, it is not possible to fully verify given occupiers are
in control of these supplies.
Note that the data reported below differs from the
baseline carbon footprint reported in the main body of this
report. This is primarily due to the inclusion of estimates in
the company footprint for net zero purposes to cover gaps
in occupier data.
The like-for-like portfolio is determined on the basis of
assets that were held for two full reporting years and were
not subject to major refurbishment or development during
that time.
Note that the Company does not employ any staff and
does not have its own premises; these corporate aspects
fall within the scope of the Investment Manager.
Normalisation
The floor areas used for normalisation are those used for
independent valuation purposes. Measurement practices
deviate marginally from jurisdiction to jurisdiction but cover
the internal lettable area. This is the most appropriate
choice for the Company’s portfolio as it is the most widely
available metric. It enables year-on-year comparisons
within the portfolio to be made.
Renewable energy
Solar PV is installed at nine properties within the portfolio,
please see below:
Property Country Comment
Avignon France Fully optimised
Barcelona Spain Minimal coverage
Den Hoorn Netherlands Fully optimised
Ede Netherlands Fully optimised
Leon Spain Minimal coverage
Oss Netherlands Minimal coverage but scope to optimise
Waddinxveen Netherlands Fully optimised
Warsaw Poland Minimal coverage
Zeewolde Netherlands Minimal coverage but scope to optimise
Auditing and assurance
Only a small proportion of landlord utility data which feeds
into sustainability reporting is currently validated by the
Utilities Bureau/sustainability data consultant. As more
and more landlord-procured utility supplies transition
under this consultant, an increased proportion of landlord
procured data will be validated.
Sustainability
Sustainability Performance
58 Annual Report 2021
Sustainability
Materiality
The Company has undertaken a review of materiality against each of the EPRA sBPR indicators. The table below
indicates the outcome of the review.
Code Performance measure Review outcome
Environmental
Elec-Abs Total electricity consumption Material
Elec-LfL Like-for-like total electricity consumption Material
DH&C-Abs Total district heating & cooling consumption Not material – none of the
Company’s assets are connected to
district energy supplies
DH&C-LfL Like-for-like total district heating & cooling consumption
Fuels-Abs Total fuel consumption Material
Fuels-LfL Like-for-like total fuel consumption Material
Energy-Int Building energy intensity Material
GHG-Dir-Abs Total direct greenhouse gas (GHG) emissions Material
GHG-Indir-Abs Total indirect greenhouse gas (GHG) emissions Material
GHG-Int Greenhouse gas (GHG) emissions intensity from building
energy consumption
Material
Water-Abs Total water consumption Material
Water-LfL Like-for-like total water consumption Material
Water-Int Building water intensity Material
Waste-Abs Total weight of waste by disposal route Material – whilst all tenants have direct
control over waste management,
data is still obtained wherever possible
Waste-LfL Like-for-like total weight of waste by disposal route Material
Cert-Tot Type and number of sustainably certified assets Material
Social
Diversity-Emp Employee gender diversity Not material – the Company has
no employees. There are 2 male and
2 female directors on the board
Diversity-Pay Gender pay ratio
Emp-Training Employee training and development
Emp-Dev Employee performance appraisals
Emp-Turnover New hires and turnover
H&S-Emp Employee health and safety
H&S-Asset Asset health and safety assessments Material
H&S-Comp Asset health and safety compliance Material
Comty-Eng Community engagement, impact assessments and
development programs
Not Material – The Company is
developing ideas in this area for
thefuture
Governance
Gov-Board Composition of the highest governance body
Material – see main body of
report (page 67 onwards for content
related to Governance)
Gov-Selec Process for nominating and selecting the highest
governance body
Gov-CoI Process for managing conflicts of interest
59Annual Report 2021
Absolute Energy Consumption
Absolute landlord electricity consumption increased by 148% year-on-year, primarily due to improved data coverage
in 2021, along with a greater number of total assets in the portfolio. Absolute tenant electricity consumption increased
by 64%, primarily due to improved data coverage, but also due to the ramping up of tenant operations (at newly let
assets) throughout 2021. Tenant gas consumption decreased by 18%, driven partly by significantly reduced tenant gas
consumption at Leon, Spain, and missing 2021 tenant gas data for the Warsaw asset (Poland). Absolute energy intensity
decreased by 7% year-on-year.
Landlord Electricity
(kWh)
Occupier Electricity
(kWh)
Landlord-obtained Gas
(kWh)
Occupier-obtained Gas
(kWh)
Total Energy
(kWh)
Energy Intensity
(kWh/ sqm)
Indicator references Elec-Abs Elec-Abs Fuels-Abs Fuels-Abs Fuels-Abs Energy-Int
Sector
Coverage
2020
(assets)
Coverage
2021
(assets) 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change
Industrial,
Distribution
warehouse 11 of 14 17 of 19 204,188 505,744 148% 15,493,072 25,337,341 64% 0 0 n/a 7,956,613 6,493,848 -18% 23,653,873 32,336,933 37% 76 70 -7%
Absolute Greenhouse Gas Emissions
The majority of consumption data is occupier data, therefore the majority of associated emissions are Scope 3,
which have increased by 50% year-on-year, mainly driven by improved data coverage in 2021, along with an increased
number of assets in the portfolio with associated tenant consumption. Scope 2 (landlord) emissions increased by 81%
for the same reasons. There are no Scope 1 emissions due to there being no landlord-consumed gas. Overall carbon
intensity increased by 3% year-on-year.
Scope 1 Emissions
(tCO
2
)
Scope 2 Emissions
(tCO
2
)
Scope 3 Emissions
(tCO
2
)
Total Emissions
(tCO
2
)
Emissions Intensity - Scopes 1, 2 & 3
(kgCO
2
/m
2
)
Indicator references GHG-Dir-Abs GHG-Indir-Abs GHG-Indir-Abs GHG-Abs GHG-Int
Sector
Coverage
2020
(assets)
Coverage
2021
(assets) 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change
Industrial, Business Parks 11 of 14 17 of 19 0 0 n/a 145 262 81% 7323 10994 50% 7468 11256 51% 23.8 24.5 3%
For the purposes of Streamlined Energy and Carbon Reporting (SECR) Scope 1 and 2 emissions are reported separately
below along with an intensity metric and total landlord energy consumption. Energy consumption used to calculate these
emissions is include in the Absolute Energy Consumption table above.
SECR table - GHGs
Data Type 2020 2021 % Change 2021 vs 2020
Total Scope 1/2 GHG Emissions (tCO2e) 145 262 81%
Emissions Intensity (kgCO2e/m2 NLA) 2.4 1.9 -24%
Total Landlord Energy Consumption (kWh) 204,188 505,744 148%
Like-for-like Energy Consumption
On a like-for-like basis, landlord electricity consumption increased by 30% year-on-year. This increase was driven by
improved coverage of landlord electricity data in 2021 compared with 2020. Tenant electricity consumption increased
by 28%; driven primarily by a combination of improved data coverage in 2021, along with large electricity consumption
increases at Den Hoorn (Netherlands), Warsaw and Krakow (Poland). The increase in electricity consumption at Den
Hoorn was attributable to a significant increase in on-site cooling. However, it is noted that the tenant is in the process
of installing solar panels at this asset, which will serve to reduce the demand of the asset on grid-supplied energy.
The tenant electricity consumption increases at Warsaw and Krakow were attributable to the ramping up of tenant
operations (and a reduction in vacancy) across the 2020 and 2021 period. These increases were offset by a 18%
reduction in tenant gas consumption, driven in part by a significant reduction in tenant gas consumption at Leon, Spain,
alongside missing tenant gas consumption for 2021 at Warsaw. Energy intensity decreased by 4% year-on-year.
Sustainability
Environmental Indicators
60 Annual Report 2021
Landlord Electricity
(kWh)
Occupier Electricity
(kWh)
Landlord-obtained Gas
(kWh)
Occupier-obtained Gas
(kWh)
Total Energy
(kWh)
Energy Intensity
(kWh/ sqm)
Indicator references Elec-Like for Like Elec-Like for Like Fuels-Like for Like Fuels-Like for Like Fuels-Like for Like Energy-Int Like for Like
Sector
Coverage
2020
(assets)
Coverage
2021
(assets) 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change
Industrial,
Distribution
warehouse 9 of 13 12 of 13 204,188 265,569 30% 13,859,523 17,737,037 28% 0 0 n/a 7,956,613 6,493,848 -18% 22,020,324 24,496,454 11% 82 78 -4%
Like-for-like GHG Emissions
Scope 2 GHG emissions increased by 6%, mainly due to improved coverage of landlord-procured electricity
consumption data. Scope 3 emissions increased by 26%, driven by the significantly increased tenant electricity
consumption detailed above.
Scope 1 Emissions
(tCO
2
)
Scope 2 Emissions
(tCO
2
)
Scope 3 Emissions
(tCO
2
)
Total Emissions
(tCO
2
)
Emissions Intensity - Scopes 1, 2 & 3
(kgCO
2
/m
2
)
Indicator references GHG-Dir-Like for Like GHG-Indir-Like for Like GHG-Indir-Like for Like GHG-Like for Like GHG-Int-Like for Like
Sector
Coverage
2020
(assets)
Coverage
2021
(assets) 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change 2020 2021
%
Change
Industrial, Business Parks 9 of 13 12 of 13 0 0 n/a 145 153 6% 6641 8335 26% 6786 8488 25% 25 27 7%
Absolute Water Consumption
Absolute water consumption increased slightly year-on-year, primarily due to an increased number of assets in the
portfolio for which water data was available. Absolute water intensity increased by only 7%.
Absolute Water Consumption (m
3
)
Indicator reference Water-Abs; Water-Int
Sector
Coverage 2020
(assets)
Coverage 2021
(assets)
2020
(m
3
)
2020 intensity
(litres/m
2
)
2021
(m
3
)
2021 intensity
(litres/m
2
)
%
Change
Industrial, Distribution
warehouse 11 of 14 13 of 19 25,616 0.082 30,495 0.088 7%
Like-for-like Water Consumption
Like-for-like water consumption decreased year-on-year, as a result of slightly reduced data coverage. Water intensity
increased by 8% year on year.
Like-for-like Water Consumption (m
3
)
Indicator reference Water-Lfl; Water-Int
Sector
Coverage 2020
(assets)
Coverage 2021
(assets)
2020
(m
3
)
2020 intensity
(litres/m
2
)
2021
(m
3
)
2021 intensity
(litres/m
2
)
% Change
(Intensity)
Industrial, Distribution
warehouse 10 of 13 8 of 13 22,786 0.084 18,369 0.091 8%
61Annual Report 2021
Absolute Waste Generation
Absolute waste generation decreased year-on-year, despite improved data coverage in 2021 (this was due to
decreased waste generation volumes at Spanish assets “Leon” and “Madrid”). Note that disposal route percentages do
not total 100%, due to a small percentage of tenant waste for which the disposal route is unknown. Note that all waste
generated and disposed of at these assets is under the control of the tenants.
Indicator reference Waste-Abs
Sector
Coverage 2020
(assets)
Coverage 2021
(assets)
Total Waste
(tonnes)
Waste to Landfill
(Tonnes)
Waste Recovered
(Tonnes)
Waste Recycled
(Tonnes)
2020 2021 2021 2021 2021
Industrial, Distribution
warehouse 8 of 14 10 of 19 10,536 6,168 293 5% 205 3% 5,619 91%
Like-for-like Waste Generation
Like-for-like waste generation decreased year-on-year, despite improved data coverage. This decrease was driven
primarily by a large decrease in waste generated from the Leon and Madrid assets (Spain). Note that disposal route
percentages do not equal 100%, due to a small percentage of tenant waste for which the disposal route is unknown.
Note that all waste generated and disposed of at these assets is under the control of the tenants.
Indicator reference Waste-Abs
Sector
Coverage 2020
(assets)
Coverage 2021
(assets)
Total Waste
(tonnes)
Waste to Landfill
(Tonnes)
Waste Recovered
(Tonnes)
Waste Recycled
(Tonnes)
2020 2021 2021 2021 2021
Industrial, Distribution
warehouse 7 of 13 10 of 13 9,530 4,963 276 6% 205 4% 4,431 89%
Sustainability Certifications
The below metric measures the percentage Gross Asset Value (GAV) of all properties held that have achieved a Green
Building rating/certificate on completion compared to the percentage GAV for the whole portfolio during the reporting
period. This includes stock recently acquired, held for the long term and those refurbished, developed or forward funded.
2018 2019 2020 2021
% assets under management 17 39 40 55
Certified properties
Property Unit Certificate type Rating
Florsheim, Germany Whole DGNB Gold
Avignon, France Whole HQE Excellent
Leon, Spain Whole BREEAM Good
Zeewolde, Netherlands Whole BREEAM Very Good
Oss, Netherlands Whole BREEAM Very Good
Den Hoorn, Netherlands Whole BREEAM Good
Ede, Netherlands Whole BREEAM Good
Waddinxveen, Netherlands Whole BREEAM Pass
Warsaw, Poland Whole BREEAM Good
Lodz, Poland Whole BREEAM Good
62 Annual Report 2021
Property Unit Certificate type Rating
Madrid, Sky phase 1, Spain Whole LEED Silver
Madrid, Sky phase 2, Spain Whole LEED Silver
Madrid, Sky phase 3, Spain Whole LEED Gold
Energy Performance Certificate (EPC) ratings for assets owned by the Company are shown below:
Energy Performance Certificate (EPC) rating % Net Lettable Area (NLA)
A+++++ 6%
A 58%
B 26%
C 2%
D 0%
E 0%
F 0%
G 0%
German Rating 8%
Social Indicators
Health & Safety
All tenants occupying assets in the portfolio (i.e. 100% coverage) are contractually required, through lease agreements,
to comply with all relevant local and national legislation relating to Health & Safety. This includes Health and Safety
assessments relating to the asset itself and the health and safety of the tenants’ employees together with visiting
customers/clients/third parties. Such compliance of health and safety requirements covers, but is not limited to,
fire safety, sprinkler systems and adequate welfare provision. The asset managers and property managers are not
aware of any health and safety breaches, however minor, or notifications/concerns across the portfolio which have not
been, or are not being, mitigated.
63Annual Report 2021
Governance
The Directors, all of whom are non-executive and independent of the AIFM and
Investment Manager, oversee the management of the Company and represent the
interests of shareholders.
The Company is registered as a public limited company in England and Wales and
is an investment company as defined by Section 833 of the Companies Act 2006.
The Company is also a member of the Association of Investment Companies.
64 Annual Report 2021
Governance
Your Board of Directors
Details of the current Directors, all of whom are non-executive and independent of the AIFM and Investment Manager,
are set out below. The Directors oversee the management of the Company and represent the interests of shareholders.
Anthony Roper
Caroline Gulliver
Status: Independent Non-Executive Chairman.
Length of service: Four years, appointed a Director on
8 November 2017 and Chairman on 11 June 2019.
Experience: Tony started his career as a structural engineer
with Ove Arup and Partners in 1983. In 1994
he joined John Laing plc to review and make equity
investments in infrastructure projects both in the UK
and abroad and then in 2006 he joined HSBC Specialist
Investments (‘HSIL’) to be the fund manager for HICL
Infrastructure Company Limited. In 2011, Tony was part
of the senior management team that bought HSIL from
HSBC, renaming it InfraRed Capital Partners.
Tony was a Managing Partner and a senior member of
the infrastructure management team at InfraRed Capital
Partners until June 2018. He holds a MA in Engineering from
Cambridge University and is an ACMA.
Last re-elected to the Board: 7 June 2021.
Contribution: The Nomination Committee has reviewed
the contribution of Mr Roper in light of his forthcoming
re-election at the AGM to be held in June 2022 and
concluded that Mr Roper has continued to skilfully chair
the Company through a turbulent yet successful year
for the Company. Mr Roper’s real estate and investment
trust experience is deeply valued by his fellow Directors.
Committee membership: Management Engagement
Committee and Nomination Committee.
Remuneration: £50,000 per annum from 1 January 2022
(2021: £49,000).
All other public company directorships: SDCL Energy
Efficiency Income Trust plc.
Employment by the Investment Manager: None.
Other connections with Trust or Investment Manager: None.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: 102,812 Ordinary shares.
Status: Senior Independent Non-Executive Director.
Length of service: Four years, appointed a Director on
8 November 2017.
Experience: Caroline is a chartered accountant with
over 25 years’ experience at Ernst & Young LLP, latterly as
an executive director before leaving in 2012. During that
time, she specialised in the asset management sector
and developed an extensive experience of investment
trusts. She is a director of a number of other
investment companies.
Last re-elected to the Board: 7 June 2021.
Contribution: The Nomination Committee has reviewed
the contribution of Ms Gulliver in light of her forthcoming
re-election at the AGM to be held in June 2022 and
concluded that Ms Gulliver has continued to expertly chair
the Audit Committee through the year drawing on her
significant wealth of financial and accounting experience.
Committee membership: Audit Committee
(Chairman), Nomination Committee and Management
Engagement Committee.
Remuneration: £40,000 per annum from 1 January 2022
(2021: £38,000).
All other public company directorships: JP Morgan Global
Emerging Markets Income Trust plc, International
Biotechnology Trust plc and Civitas Social Housing PLC.
Employment by the Investment Manager: None.
Other connections with Trust or Investment Manager: None.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: 72,500 Ordinary shares.
65Annual Report 2021
John Heawood
Diane Wilde
Status: Independent Non-Executive Director.
Length of service: Four years, appointed a Director on
8 November 2017.
Experience: John has 40 years’ experience as a Chartered
Surveyor advising a broad range of investors, developers
and occupiers. He was a partner, and subsequently a
director, of DTZ responsible for the London-based team
dealing with industrial, logistics and business park projects
across the UK. In 1996 he was appointed to the board of
SEGRO plc and was responsible for its UK business for
the next 12 years. From 2009-2013 he was managing
director of the Ashtenne Industrial Fund, a £500 million
multi-let industrial and logistics portfolio managed by Aviva
on behalf of 13 institutional investors. John is currently
a member of Council and member of the finance and
general purposes committee of the Royal Veterinary
College and a trustee of Marshalls Charity.
Last re-elected to the Board: 7 June 2021.
Contribution: The Nomination Committee has reviewed
the contribution of Mr Heawood in light of his forthcoming
re-election at the AGM to be held in June 2022 and
concluded that Mr Heawood has continued to provide
significant real estate experience and insight to the
Board as well as expertly chairing the Management
Engagement Committee.
Committee membership: Management Engagement
Committee (Chairman), Audit Committee and
Nomination Committee.
Remuneration: £35,000 per annum from 1 January 2022
(2021:£34,000).
All other public company directorships: None
Employment by the Investment Manager: None.
Other connections with Trust or Investment Manager: None.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: 60,000 Ordinary shares.
Status: Independent Non-Executive Director.
Length of service: Four years, appointed a Director on
8 November 2017.
Experience: Diane was managing director at Gartmore
Scotland Ltd, managing investment trust assets from 1993
– 2000. Following a period of managing similar assets at
Aberdeen Asset Managers between 2000 and 2003,
she joined Barclays Wealth as Head of Endowment
Funds in Scotland, and managing clients in the multi
asset space until 2014. She was an adviser at Allenbridge,
an investment consulting firm until May 2018. She is also
a board member of the Social Growth Fund, managed
by Social Investment Scotland (SIS), a leading social
enterprise and impact investor in Scotland and the
United Kingdom.
Last re-elected to the Board: 7 June 2021.
Contribution: The Nomination Committee has reviewed
the contribution of Ms Wilde in light of her forthcoming
re-election at the AGM to be held in June 2021 and
concluded that Ms Wilde has provided useful insight
and experience to the Board’s deliberations.
Committee membership: Audit Committee, Management
Engagement Committee and Nomination Committee.
Remuneration: £35,000 per annum from 1 January 2022
(2021: £34,000).
All other public company directorships: None.
Employment by the Investment Manager: None.
Other connections with Trust or Investment Manager: None.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: 74,375 Ordinary shares.
66 Annual Report 2021
Governance
Directors’ Report
The Directors present their Report and the
audited financial statements for the year ended
31 December 2021.
Results and Dividends
Details of the Company’s results and dividends are shown
on page 21 of this Annual Report. The dividend policy is
disclosed in the Strategic Report on page 12.
Investment Trust Status
The Company was incorporated on 25 October 2017
(registered in England & Wales No. 11032222) and
has been accepted by HM Revenue & Customs as an
investment trust subject to the Company continuing
to meet the relevant eligibility conditions of Section
1158 of the Corporation Tax Act 2010 and the ongoing
requirements of Part 2 Chapter 3 Statutory Instrument
2011/2999 for all financial periods commencing on or after
15 December 2017. The Directors are of the opinion that
the Company has conducted its affairs for the year ended
31 December 2021 so as to enable it to comply with the
ongoing requirements for investment trust status.
Individual Savings Accounts
The Company has conducted its affairs so as to satisfy
the requirements as a qualifying security for Individual
Savings Accounts. The Directors intend that the Company
will continue to conduct its affairs in this manner.
Share Capital
The Company’s capital structure is summarised in note 16
to the financial statements. At 31 December 2021,
there were 377,628,901 fully paid Ordinary shares of
1p each in issue. During the year no Ordinary shares were
purchased in the market for treasury or cancellation.
On 17 March 2021 18,450,000 new Ordinary shares
were issued at 105.0p per share and on 1 October 2021
114,678,900 new Ordinary shares were issued at 109,0p
per share. Subsequent to the year end, on 4 February 2022,
a further 34,545,455 new Ordinary shares were issued at
110.0p. All new shares were issued at a premium to the
prevailing unaudited NAVs.
Voting Rights, Share Restrictions and
Amendments to Articles of Association
Ordinary shareholders are entitled to vote on all resolutions
which are proposed at general meetings of the Company.
The Ordinary shares carry a right to receive dividends.
On a winding up, after meeting the liabilities of the
Company, the surplus assets will be paid to Ordinary
shareholders in proportion to their shareholdings.
There are no restrictions concerning the transfer of
securities in the Company; no special rights with regard
to control attached to securities; no agreements between
holders of securities regarding their transfer known to the
Company; and no agreements which the Company is party
to that might affect its control following a takeover bid.
In accordance with the Companies Act, amendments to
the Company’s Articles of Association may only be made by
shareholders passing a special resolution in general meeting.
Borrowings
A full breakdown of the Company’s loan facilities is
provided in note 14 to the financial statements.
Management Agreement
Under the terms of a Management Agreement dated
17 November 2017 between the Company and the
AIFM, Aberdeen Standard Fund Managers Limited
(and amended by way of side letters dated 22 February
2019 and 25 May 2018), the AIFM was appointed to
act as alternative investment fund manager of the
Company with responsibility for portfolio management
and risk management of the Company’s investments.
Under the terms of the Management Agreement, the
AIFM may delegate portfolio management functions
to the Investment Manager and is entitled to an annual
management fee together with reimbursement of all
reasonable costs and expenses incurred by it and the
Investment Manager in the performance of its duties.
Pursuant to the terms of the Management Agreement,
the AIFM is entitled to receive a tiered annual management
fee (the ‘‘Annual Management Fee’’) calculated by
reference to the Net Asset Value (as calculated under IFRS)
on the following basis:
.
On such part of the Net Asset Value that is less than or
equal to €1.25 billion, 0.75 per cent. per annum.
.
On such part of the Net Asset Value that is more than
€1.25 billion, 0.60 per cent. per annum.
The Annual Management Fee is payable in Euros quarterly
in arrears,save for any period which is less than a full
calendar quarter.
The Company or the AIFM may terminate the
Management Agreement by giving not less than
12 months’ prior written notice.
The AIFM has also been appointed by the Company under
the terms of the Management Agreement to provide
day-to-day administration services to the Company
and provide the general company secretarial functions
required by the Companies Act. In this role, the AIFM will
provide certain administrative services to the Company
which includes reporting the Net Asset Value, bookkeeping
67Annual Report 2021
and accounts preparation. Effective from March 2020
accounting and administration services undertaken on
behalf of the Company have been delegated to Brown
Brothers Harriman.
The AIFM has also delegated the provision of the general
company secretarial services to Aberdeen Asset
Management PLC.
Risk Management
Details of the financial risk management policies and
objectives relative to the use of financial instruments by the
Company are set out in note 22 to the financial statements.
The Board
The current Directors, Ms Gulliver, Mr Heawood, Mr Roper
and Ms Wilde were the only Directors who served during
the year. In accordance with the Articles of Association,
each Director will retire from the Board at the Annual
General Meeting convened for 6 June 2022 and, being
eligible, will offer himself or herself for re-election to the
Board. In accordance with Principle 23 of the AIC’s 2019
Code of Corporate Governance, each Director will retire
annually and submit themselves for re-election at theAGM.
The Board considers that there is a balance of skills and
experience within the Board relevant to the leadership
and direction of the Company and that all the Directors
contribute effectively.
In common with most investment trusts, the Company
has no employees. Directors’ & Officers’ liability insurance
cover has been maintained throughout the period at the
expense of the Company.
The Role of the Chairman and Senior
Independent Director
The Chairman is responsible for providing effective
leadership to the Board, by setting the tone of the
Company, demonstrating objective judgement
and promoting a culture of openness and debate.
The Chairman facilitates the effective contribution,
and encourages active engagement, by each Director.
In conjunction with the Company Secretary, the Chairman
ensures that Directors receive accurate, timely and
clear information to assist them with effective decision-
making. The Chairman leads the evaluation of the Board
and individual Directors, and acts upon the results of
the evaluation process by recognising strengths and
addressing any weaknesses. TheChairman also
engages with major shareholders offering annual review
meetings and ensures that all Directors understand
shareholder views.
The Senior Independent Director acts as a sounding
board for the Chairman and as an intermediary for other
directors, when necessary. The Senior Independent
Director takes responsibility for an orderly succession
process for the Chairman, and leads the annual appraisal
of the Chairman’s performance and is also available to
shareholders to discuss any concerns they may have.
Corporate Governance
The Company is committed to high standards of corporate
governance. The Board is accountable to the Company’s
shareholders for good governance and this statement
describes how the Company has applied the principles
identified in the UK Corporate Governance Code as
published in July 2018 (the “UK Code”), which is available
on the Financial Reporting Council’s (the “FRC”) website:
frc.org.uk.
The Board has also considered the principles and provisions
of the AIC Code of Corporate Governance as published in
February 2019 (the “AIC Code”). The AIC Code addresses
the principles and provisions set out in the UK Code, as
well as setting out additional provisions on issues that are
of specific relevance to the Company. The AIC Code is
available on the AIC’s website: theaic.co.uk.
The Board considers that reporting against the
principles and provisions of the AIC Code, which has been
endorsed by the FRC, provides more relevant information
to shareholders. The full text of the Company’s Corporate
Governance Statement can be found on the Company’s
website, eurologisticsincome.co.uk.
The Board confirms that, during the year, the Company
complied with the principles and provisions of the AIC
Code and the relevant provisions of the UK Code,
except as set out below.
The UK Code includes provisions relating to:
.
interaction with the workforce (provisions 2, 5 and 6);
.
the need for an internal audit function (provision 26);
.
the role and responsibility of the chief executive
(provisions 9 and 14);
.
previous experience of the chairman of a remuneration
committee (provision 32); and
.
executive directors’ remuneration (provisions 33 and
36 to 40).
The Board considers that these provisions are not relevant
to the position of the Company, being an externally
managed investment company. In particular, all of the
Company’s day-to-day management and administrative
functions are outsourced to third parties. As a result,
the Company has no executive directors, employees
or internal operations. The Company has therefore not
reported further in respect of these provisions.
68 Annual Report 2021
During the year ended 31 December 2021, the Board had
four scheduled meetings and a further 20 ad hoc Board
meetings as well as numerous update calls. In addition,
theAudit Committee met four times and there was one
meeting of the Management Engagement Committee
and one meeting of the Nomination Committee. Between
meetings the Board maintains regular contact with the
Investment Manager. The Directors have attended the
following scheduled Board meetings and Committee
meetings during the year ended 31December 2021 (with
their eligibility to attend therelevant meeting in brackets):
Director Board
Audit
Committee MEC Nomination
T Roper
1
4 (4) N/A 1 (1) 1 (1)
C Gulliver 4 (4) 4 (4) 1 (1) 1 (1)
D Wilde 4 (4) 4 (4) 1 (1) 1 (1)
J Heawood 4 (4) 4 (4) 1 (1) 1 (1)
1
Mr Roper is not a member of the Audit Committee but attended all meetings by
invitation.
Policy on Tenure
The Board’s policy on tenure is that Directors need not
serve on the Board for a limited period of time only.
The Board does not consider that the length of service
of a Director is as important as the contribution he or
she has to make, and therefore the length of service will
be determined on a case-by-case basis. However, in
accordance with corporate governance best practice and
the future need to refresh the Board over time, it is currently
expected that Directors will not typically serve on the
Board beyond the Annual General Meeting following the
ninth anniversary of their appointment.
Board Committees
Audit Committee
The Audit Committee Report is on pages 79 and 80 of this
Annual Report.
Nomination Committee
All appointments to the Board of Directors are considered
by the Nomination Committee which, due to the relatively
small size of the Board, comprises all of the Directors
and is chaired by the Chairman of the Company.
The Nomination Committee advises the Board on
succession planning, bearing in mind the balance of
skills, knowledge and experience existing on the Board,
and will make recommendations to the Board in this
regard. The Nomination Committee also advises the Board
on its balance of relevant skills, experience and length of
service of the Directors serving on the Board. The Board’s
overriding priority when appointing new Directors in the
future will be to identify the candidate with the best range
of skills and experience to complement existing Directors.
The Board recognises the benefits of diversity and its policy
on diversity is disclosed in the Strategic Report on page 17.
The Committee has put in place the necessary procedures
to conduct, on an annual basis, an appraisal of the
Chairman of the Board, Directors’ individual self evaluation
and a performance evaluation of the Board as a whole
and its Committees. In 2021 a thorough external evaluation
was conducted by Lintstock Limited, an independent
third party evaluation service provider. The evaluation
was based upon completed questionnaires covering
the Board, individual Directors, the Chairman and the
Audit Committee Chairman. The Chairman meets each
Director individually to review their responses whilst the
Senior Independent Director meets with the Chairman
to review his performance. This evaluation highlighted
certain areas of further focus such as continuing
professional development but concluded that collectively
the Board has a very relevant and appropriate balance
of experience, knowledge of property markets, legal
regulation, promotion and financial accounting and
continues to work in an effective manner. The Company
currently plans to conduct an externally facilitated
evaluation of Board remuneration during 2022.
In accordance with Principle 23 of the AIC’s Code of
Corporate Governance which recommends that all
directors of investment companies should be subject to
annual re-election by shareholders, all the members of
the Board will retire at the forthcoming Annual General
Meeting and will offer themselves for re-election.
In conjunction with the evaluation feedback,
the Committee has reviewed each of the proposed
reappointments and concluded that each of the Directors
has the requisite high level and range of business and
financial experience and recommends their re-election at
the forthcoming AGM. Details of the contributions provided
by each Director during the year are disclosed on pages 65
and 66.
Management Engagement Committee
The Management Engagement Committee comprises
all of the Directors and is chaired by Mr Heawood.
The Committee reviews the performance of the
Manager and Investment Manager and its compliance
with the terms of the management and secretarial
agreement. Theterms and conditions of the Manager’s
appointment, including an evaluation of fees, are reviewed
by the Committee on an annual basis. Based upon the
competitive management fee and expertise of the
Manager, the Committee believes that the continuing
appointment of the Manager on the terms agreed is in
theinterests of shareholders as a whole. The Committee
also at least annually reviews the Company’s relationships
with its other service providers. These reviews aim to
69Annual Report 2021
ensure that services being offered meet the requirements
and needs of the Company and performance is in line with
the expectations of stakeholders.
Remuneration Committee
Under the FCA Listing Rules, where an investment trust has
only non-executive directors, the Code principles relating
to directors’ remuneration do not apply. Accordingly,
matters relating to remuneration are dealt with by the full
Board, which acts as the Remuneration Committee.
The Company’s remuneration policy is to set
remuneration at a level to attract individuals of a calibre
appropriate to the Company’s future development.
Further information on remuneration is disclosed in the
Directors’ Remuneration Report on pages 75 to 77.
Terms of Reference
The terms of reference of all the Board Committees
may be found on the Company’s website
eurologisticsincome.co.uk and copies are available from
the Company Secretary upon request. The terms of
reference are reviewed and re-assessed by the relevant
Board Committee for their adequacy on an annual basis.
Going Concern
In accordance with the Financial Reporting Council’s
guidance the Directors have undertaken a rigorous review
of the Company’s ability to continue as a going concern.
The Board has set limits for borrowing and regularly
reviews the level of any gearing, cash flow projections and
compliance with banking covenants.
The Directors are mindful of the principal risks and
uncertainties disclosed on pages 12 to 16 and the
Viability Statement on page 17 and 18 and have reviewed
forecasts detailing revenue and liabilities and they believe
that the Company has adequate financial resources to
continue its operational existence for the foreseeable
future and at least 12 months from the date of this
Annual Report. Accordingly, the Directors believe that
it is appropriate to continue to adopt the going concern
basis in preparing the financial statements. In coming
to this conclusion, the Board has also considered the
impact, where feasible, of the COVID-19 pandemic
and other geopolitical risks such as the Ukraine conflict.
The Investment Manager is in contact with tenants and
third party suppliers and continues to have a constructive
dialogue with all parties. A range of scenarios have been
modelled looking at possible impact to cash flows in the
short to medium term and this is kept under regular review.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation
where a Director has a conflict of interest. As part of this
process, the Directors prepare a list of other positions
held and all other conflict situations that may need to be
authorised either in relation to the Director concerned
or his/her connected persons. The Board considers
each Director’s situation and decides on any course of
action required to be taken if there is a conflict, taking into
consideration what is in the best interests of the Company
and whether the Director’s ability to act in accordance
with his or her wider duties is affected. Each Director is
required to notify the Company Secretary of any potential,
or actual, conflict situations that will need authorising by
the Board. Authorisations given by the Board are reviewed
at each Board meeting.
No Director has a service contract with the Company
although Directors are issued with letters of appointment
upon appointment. The Directors’ interests in contractual
arrangements with the Company are as shown in note
23 to the financial statements. No other Directors had any
interest in contracts with the Company during the year
orsubsequently.
The Board has adopted appropriate procedures designed
to prevent bribery. The Company receives periodic reports
from its service providers on the anti-bribery policies of
these third parties. It also receives regular compliance
reports from the Manager.
The Criminal Finances Act 2017 has introduced the
corporate criminal offence of “failing to take reasonable
steps to prevent the facilitation of tax evasion”. The Board
has confirmed that it is the Company’s policy to conduct all
of its business in an honest and ethical manner. The Board
takes a zero-tolerance approach to the facilitation of tax
evasion, whether under UK law or under the law of any
foreign country.
Accountability and Audit
The respective responsibilities of the Directors and the
auditor in connection with the financial statements are
set out on pages 78 and 88 respectively.
Each Director confirms that:
.
so far as he or she is aware, there is no relevant audit
information of which the Company’s auditor is
unaware; and,
.
each Director has taken all the steps that they ought to
have taken as a Director in order to make themselves
aware of any relevant audit information and to establish
that the Company’s auditor is aware of that information.
Additionally there have been no important events since the
period end that impact this Annual Report.
70 Annual Report 2021
The Directors have reviewed the level of non-audit services
provided by the independent auditor during the year
amounting to £45,000+VAT in connection with the issue of
a Prospectus in September 2021 (2020: £nil) and remain
satisfied that the auditor’s objectivity and independence is
being safeguarded.
Independent Auditor
The auditor, KPMG LLP, has indicated its willingness to
remain in office. The Directors will place a resolution before
the Annual General Meeting to re-appoint KPMG LLP as
auditor for the ensuing year, and to authorise the Directors
to determine its remuneration.
Internal Control
The Board is ultimately responsible for the Company’s
system of internal control and for reviewing its
effectiveness and confirms that there is an ongoing
process for identifying, evaluating and managing the
significant risks faced by the Company. This process has
been in place for the year under review and up to the date
of approval of this Annual Report and financial statements.
It is regularly reviewed by the Board and accords with the
FRC Guidance.
The Board has reviewed the effectiveness of the system of
internal control. In particular, it has reviewed and updated
the process for identifying and evaluating the significant
risks affecting the Company and policies by which these
risks are managed.
The Directors have delegated the investment management
of the Company’s assets to members of the abrdn Group
within overall guidelines, and this embraces implementation
of the system of internal control, including financial,
operational and compliance controls and risk management.
Internal control systems are monitored and supported by
the abrdn Group’s internal audit function which undertakes
periodic examination of business processes, including
compliance with the terms of the management agreement,
and ensures that recommendations to improve controls
are implemented.
Risks are identified and documented through a risk
management framework by each function within the
abrdn Group’s activities. Risk includes financial, regulatory,
market, operational and reputational risk. This helps
the internal audit risk assessment model identify those
functions for review. Any weaknesses identified are
reported to the Board, and timetables are agreed for
implementing improvements to systems.
The implementation of any remedial action required is
monitored and feedback provided to the Board.
The significant risks faced by the Company have been
identified as being strategic; investment and asset
management; financial; regulatory; and operational.
The key components of the process designed by the
Directors to provide effective internal control are
outlined below:
.
the AIFM prepares forecasts and management accounts
which allows the Board to assess the Company’s
activities and review its performance;
.
the Board and AIFM have agreed clearly defined
investment criteria, specified levels of authority and
exposure limits. Reports on these issues, including
performance statistics and investment valuations,
are regularly submitted to the Board and there are
meetings with the AIFM and Investment Manager
as appropriate;
.
as a matter of course the AIFM’s compliance
department continually reviews abrdn’s operations and
reports to the Board on a six monthly basis;
.
written agreements are in place which specifically define
the roles and responsibilities of the AIFM and other third
party service providers and, where relevant, ISAE3402
Reports, a global assurance standard for reporting on
internal controls for service organisations,
or their equivalents are reviewed;
.
the Board has considered the need for an internal audit
function but, because of the compliance and internal
control systems in place within abrdn, has decided to
place reliance on the Manager’s systems and internal
audit procedures. At its March 2022 meeting, the Audit
Committee carried out an annual assessment of
internal controls for the year ended 31 December 2021
by considering documentation from the AIFM and the
Depositary, including the internal audit and compliance
functions and taking account of events since
31 December 2021. The results of the assessment,
that internal controls are satisfactory, were then reported
to the Board at the subsequent Board meeting.
Internal control systems are designed to meet the
Company’s particular needs and the risks to which it is
exposed. Accordingly, the internal control systems are
designed to manage rather than eliminate the risk of
failure to achieve business objectives and by their nature
can only provide reasonable and not absolute assurance
against mis-statement and loss.
71Annual Report 2021
Substantial Interests
The Board has been advised that the following
shareholders owned 3% or more of the issued Ordinary
share capital of the Company at 31 December 2021
(based upon 377,628,901 shares in issue):
Shareholder
No. of
Ordinary
shares held
%
held
East Riding of Yorkshire 31,000,000 8.2
Brewin Dolphin Ireland 25,541,893 6.8
Quilter Cheviot Investment Management 21,307,505 5.6
CCLA Investment Management 18,816,719 5.0
Canaccord Genuity Wealth Management (Retail) 17,121,071 4.5
Hargreaves Lansdown, stockbrokers (EO) 16,455,990 4.4
BlackRock 15,535,171 4.1
Brewin Dolphin, stockbrokers 14,255,934 3.8
Investec Wealth & Investment 13,677,678 3.6
Following the Placing of new Ordinary shares on 4 February
2022, the Company is aware of the following substantial
shareholders (based upon 412,174,356 shares in issue):
Shareholder
No. of
Ordinary
shares held
%
held
East Riding of Yorkshire 33,000,000 8.0
Brewin Dolphin Ireland 25,989,405 6.3
Quilter Cheviot Investment Management 21,595,934 5.2
CCLA Investment Management 18,798,522 4.6
Canaccord Genuity Wealth Management (Retail) 18,178,139
4.4
Hargreaves Lansdown, stockbrokers (EO) 17,961,497 4.4
BlackRock 16,482,218 4.0
Investec Wealth & Investment 15,678,497 3.8
Brewin Dolphin, stockbrokers 14,871,966 3.6
CG Asset Management 12,359,375 3.0
Save as disclosed, there have been no significant changes
notified in respect of the above holdings between
31 December 2021 and 21 April 2022.
Relations with Shareholders
The Directors place a great deal of importance on
communication with shareholders. The Annual Report
will be widely distributed to other parties who have an
interest in the Company’s performance. Shareholders
and investors may obtain up to date information on the
Company through the freephone information service
shown under Investor Information and on the Company’s
website eurologisticsincome.co.uk.
Aberdeen Asset Management PLC (AAM) has been
appointed Company Secretary to the Company.
Whilst AAM is a wholly owned subsidiary of the abrdn
Group, there is a clear separation of roles between the
Manager and Company Secretary with different board
compositions and different reporting lines in place.
The Board notes that, in accordance with Market Abuse
Regulations, procedures are in place to control the
dissemination of information within the abrdn plc group
of companies when necessary. Where correspondence
addressed to the Board is received there is full disclosure to
the Board. This is kept confidential if the subject matter of
the correspondence requires confidentiality.
The Board’s policy is to communicate directly with
shareholders and their representative bodies without
the involvement of representatives of the Manager
(including the Company Secretary and Investment
Manager) in situations where direct communication is
required and usually a representative from the Board is
available to meet with major shareholders on an annual
basis in order to gauge their views.
The Notice of the Annual General Meeting, included within
the Annual Report and financial statements, is sent out
at least 20 working days in advance of the meeting.
Innormal circumstances, all Shareholders have the
opportunity to put questions to the Board or the Investment
Manager, either formally at the Company’s Annual
General Meeting or at the subsequent buffet luncheon
for Shareholders. Shareholders are, however, invited to
send any questions for the Board and/or the Investment
Manager on the Annual Report by email to European.
Logistics@abrdn.com. The Company Secretary is available
to answer general shareholder queries at any time
throughout the year.
Annual General Meeting
The Annual General Meeting will be held on 6 June 2022
at 12:30 p.m. at the offices of abrdn, Bow Bells House,
1 Bread Street, London EC4M 9HH. In addition to the
usual resolutions the following matters will be proposed
at the AGM:
Special Business Directors’ Authority to Allot
Relevant Securities
Approval is sought in Resolution 11, an ordinary resolution,
to renew the Directors’ existing general power to allot
shares but will also provide a further authority (subject
to certain limits) to grant rights to subscribe for or to
convert any security into shares under a fully pre-emptive
rights issue. The effect of Resolution 11 is to authorise the
Directors to allot up to a maximum of 272,035,075 shares
in total (representing approximately 66% (as at the latest
practicable date before publication of this Annual Report)
of the existing issued share capital of the Company),
72 Annual Report 2021
of which a maximum of 136,017,537 shares
(approximately 33% (as at the latest practicable date
before publication of this Annual Report) of the existing
issued share capital of the Company) may only be applied
other than to fully pre-emptive rights issues. This authority
is renewable annually and will expire at the conclusion
of the next Annual General Meeting in 2023, or 30 June
2023, whichever is earlier. The Directors do not have any
immediate intention to utilise this authority.
Special Business Disapplication of Pre-emption Rights
Resolution 12 is a special resolution that seeks to renew
the Directors’ existing authority until the conclusion of the
forthcoming Annual General Meeting to make limited
allotments of shares for cash of up to a maximum of
41,217,435 shares representing 10% of the issued share
capital (as at the latest practicable date before publication
of this Annual Report) other than according to the statutory
pre-emption rights which require all shares issued for cash
to be offered first to all existing shareholders.
This authority includes the ability to sell shares that have
been held in treasury (if any), having previously been
bought back by the Company. The Board has established
guidelines for treasury shares and will only consider buying
in shares for treasury at a discount to their prevailing
NAV and selling them from treasury at or above the then
prevailing NAV.
New shares issued in accordance with the authority sought
in Resolution 12 will always be issued at a premium to the
NAV per Ordinary share at the time of issue. The Board
will issue new Ordinary shares or sell Ordinary shares
from treasury for cash when it is appropriate to do so, in
accordance with its current policy. It is therefore possible
that the issued share capital of the Company may change
between the date of this document and the Annual General
Meeting and therefore the authority sought will be in
respect of 10% of the issued share capital as at the date
of the Annual General Meeting rather than the date of this
document. This authority is renewable annually and will
expire at the conclusion of the Annual General Meeting in
2023 or 30 June 2023, whichever is earlier.
Special Business Purchase of the Company’s Shares
Resolution 13 is a special resolution proposing to renew
the Directors’ authority to make market purchases of
the Company’s shares in accordance with the provisions
contained in the Companies Act 2006 and the Listing Rules
of the Financial Conduct Authority. The minimum price to
be paid per Ordinary share by the Company will not be
less than £0.01 per share (being the nominal value) and
the maximum price should not be more than the higher of
(i) an amount equal to 5% above the average of the middle
market quotations for an Ordinary share taken from the
London Stock Exchange Daily Official List for the five
business days immediately preceding the date on
which the Ordinary share is contracted to be purchased;
and (ii) the higher of the price of the last independent
trade and the current highest independent bid on the
trading venue where the purchase is carried out.
The Directors do not intend to use this authority to
purchase the Company’s Ordinary shares unless to do so
would result in an increase in NAV per share and would be
in the interests of Shareholders generally. The authority
sought will be in respect of 14.99% of the issued share
capital as at the date of the Annual General Meeting
rather than the date of this document.
Whilst the Company’s shares have traded at a premium to
NAV per share for the majority of the life of the Company
since its launch, and therefore the Company has not bought
back any shares for treasury or cancellation, the Directors
view buybacks as a very useful tool for seeking to assist in
the management of the liquidity of the Company shares
which could be used in the future as one of a number of
methods to address imbalances of supply and demand
which, arithmetically, can cause discounts to NAV per share.
Shares bought back would be purchased at a discount
to the prevailing NAV per share and the result would be
accretive to the NAV for all on-going shareholders.
The authority being sought in Resolution 13 will expire
at the conclusion of the Annual General Meeting in 2023
or 30 June 2023, whichever is earlier unless it is renewed
before that date. Any Ordinary shares purchased in this
way will either be cancelled and the number of Ordinary
shares will be reduced accordingly or under the authority
granted in Resolution 12 above, may be held in treasury.
If Resolutions 11 to 13 are passed then an announcement
will be made on the date of the Annual General Meeting
which will detail the exact number of Ordinary shares to
which each of these authorities relates.
These powers will give the Directors additional flexibility
going forward and the Board considers that it will be in the
interests of the Company that such powers be available.
Such powers will only be implemented when, in the view
of the Directors, to do so will be to the benefit of
Shareholders as a whole.
Special Business Notice of Meetings
Resolution 14 is a special resolution seeking to authorise the
Directors to call general meetings of the Company (other
than Annual General Meetings) on 14 days’ clear notice.
This approval will be effective until the Company’s Annual
General Meeting in 2023 or 30 June 2023 whichever is
earlier. In order to utilise this shorter notice period, the
Company is required to ensure that Shareholders are able
to vote electronically at the general meeting called on such
short notice. The Directors confirm that, in the event that
a general meeting is called, they will give as much notice
73Annual Report 2021
as practicable and will only utilise the authority granted by
Resolution 14 in limited and time sensitive circumstances.
Dividend Policy
As a result of the timing of the payment of the Company’s
quarterly dividends, the Company’s Shareholders are
unable to approve a final dividend each year. In line
with good corporate governance, theBoard therefore
proposes to put the Company’s dividend policy to
Shareholders for approval at the Annual General Meeting
and on an annual basis.
Resolution 4 is an ordinary resolution to approve the
Company’s dividend policy. The Company’s dividend
policy shall be that dividends on the Ordinary shares are
payable quarterly in relation to periods ending March,
June, September and December and the last dividend
referable to a financial year end will not be categorised as
a final dividend that is subject to Shareholder approval.
It is intended that the Company will pay quarterly
dividends consistent with the expected annual underlying
portfolio yield. The Company has the flexibility in
accordance with its Articles to make distributions
from capital.
Shareholders should note that references to ‘‘dividends’’
are intended to cover both dividend income and income
which is designated as an interest distribution for UK tax
purposes and therefore subject to the interest streaming
regime applicable to investment trusts.
Recommendation
Your Board considers Resolutions 11 to 14 to be in
the best interests of the Company and its members as
a whole and most likely to promote the success of the
Company for the benefit of its members as a whole.
Accordingly, your Board unanimously recommends that
Shareholders should vote in favour of all Resolutions to be
proposed at the AGM, as they intend to do in respect of
their own beneficial shareholdings amounting to 309,687
Ordinary shares.
By order of the Board
Aberdeen Asset Management PLC - Secretaries
Bow Bells House
1 Bread Street
London EC4M 9HH
21 April 2022
74 Annual Report 2021
Governance
Directors’ Remuneration Report
The Board has prepared this report in accordance with
the regulations governing the disclosure and approval
of Directors’ remuneration. This Directors’ Remuneration
Report comprises three parts:
1. Remuneration Policy
Which is subject to a binding shareholder vote every three
years (or sooner if varied during this interval) – approved
by Shareholders at the AGM held on 11 June 2019 and to
be voted upon at the AGM convened for 6 June 2022;
2. Implementation Report
Which provides information on how the Remuneration
Policy has been applied during the period and which is
subject to an advisory vote on the level of remuneration
paid during the period; and
3. Annual Statement
The law requires the Company’s Auditor to audit certain
of the disclosures provided. Where disclosures have been
audited, they are indicated as such. The auditor’s opinion is
included in the report on page 82..
Remuneration Policy
The Directors’ remuneration policy takes into consideration
the principles of UK Corporate Governance and there
have been no changes to the policy during the period
nor are there any changes proposed for the foreseeable
future. No shareholder views were sought in setting the
remuneration policy although any comments received
from shareholders are considered by the Board.
As the Company has no employees and the Board is
comprised wholly of non-executive Directors and,
given the size and nature of the Company, the Board has
not established a separate Remuneration Committee.
Directors’ remuneration is determined by the Board as
a whole.
The Directors are non-executive and the Company’s
Articles of Association limit the annual aggregate fees
payable to the Board of Directors to £300,000 per annum.
This cap may be increased by shareholder resolution from
time to time.
Fees payable to Directors in respect of the year ended
31 December 2021 were:
£
Chairman 49,000
Chairman of Audit Committee 39,000
Director 34,000
Subject to this overall limit, the Board’s policy is that the
remuneration of non-executive Directors should reflect the
nature of their duties, responsibilities and the value of their
time spent and be fair and comparable to that of other
investment trusts that are similar in size, have a similar
capital structure and have a similar investment objective.
Appointment
.
The Company only appoints non-executive Directors.
.
Directors must retire and be subject to election at the
first AGM after their appointment, and voluntarily submit
themselves for annual re-election.
.
New appointments to the Board will be placed on the fee
applicable to all Directors at the time of appointment.
.
No incentive or introductory fees will be paid to
encourage a Directorship.
.
The Directors are not eligible for bonuses, pension
benefits, share options, long-term incentive schemes or
other benefits.
.
Directors are entitled to re-imbursement of out-of-
pocket expenses incurred in connection with the
performance of their duties, including travel expenses.
.
The Company indemnifies its Directors for all costs,
charges, losses, expenses and liabilities which may be
incurred in the discharge of duties, as a Director of
the Company.
Performance, Service Contracts,
Compensation and Loss of Office
.
The Directors’ remuneration is not subject to any
performance-related fee.
.
No Director has a service contract.
.
No Director has an interest in any contracts with the
Company during the period or subsequently.
.
The terms of appointment provide that a Director may
be removed upon three months’ notice.
.
Compensation will not be due upon leaving office.
.
No Director is entitled to any other monetary payment or
to any assets of the Company.
Directors’ and Officers’ liability insurance cover is
maintained by the Company on behalf of the Directors.
Under the Articles, the Company indemnifies each of
the Directors out of the assets of the Company against
any liability incurred by them as a Director in defending
proceedings or in connection with any application to the
Court in which relief is granted and separate deeds of
indemnity exist in this regard between the Company and
each Director.
A resolution to approve the Remuneration Policy will be
proposed for approval at the AGM convened for 6 June
2022. It is intended that, if approved, the remuneration
Policy will take effect from the conclusion of the AGM on
6 June 2022.
75Annual Report 2021
Implementation Report
Directors’ Fees
The Board has carried out an annual review of the level of
fees payable to Directors including a review of comparable
peer group directors’ fees. The Board concluded that,
witheffect from 1 January 2022 the annual fees payable
toDirectors should be increased to: Chairman £50,000,
Audit Committee Chairman £40,000, Directors £35,000.
This increase is benchmarked against other similar
investment company roles and ensures that fees remain
competitive enough to attract the required calibre of
experienced non executive director when required.
There are no further fees to disclose as the Company has
no employees, chief executive or executive directors.
Company Performance
The following chart illustrates the total shareholder return
(including reinvested dividends) for a holding in the
Company’s shares as compared to the FTSE All Share
Index for the period from launch to 31 December 2021
(rebased to 100 at launch). Given the absence of any
meaningful index with which to compare performance,
the FTSE All Share index is deemed to be the most
appropriate one against which to measure the
Company’s performance.
Inception to 31 December 2021
Share Price Total Return FTSE All Share Total Return
60
70
80
90
100
110
120
130
140
150
Dec 21
Dec 20Dec 19Dec 18Dec 17
Source: abrdn, Factset.
Statement of Voting at Annual
General Meeting
At the Company’s AGM held on 7 June 2021, Shareholders
approved the Directors’ Remuneration Report (other than
the Directors’ Remuneration Policy which was approved
at the AGM held on 11 June 2019) in respect of the period
ended 31 December 2020. The following proxy votes were
received on the resolutions:
Resolution For
*
Against Withheld
(2) Receive and
Adopt Directors’
Remuneration Report
142.3m
(99.8%)
255,725
(0.2%)
22,886
(3) Approve Directors’
Remuneration Policy
**
68.3m
(99.9%)
31,447
(0.0%)
27,060
* Including discretionary votes.
** approved at the AGM held on 11 June 2019.
Spend on Pay
Fees Payable (Audited)
The Directors received the following fees which exclude
employers’ NI and any VAT payable for the year ended
31 December 2021 and the year ended 31 December 2020:
Fees are pro-rated where a change takes place during a
financial year.
Director
2021
£
2020
£
T Roper 49,000 47,000
C Gulliver 39,000 38,000
J Heawood 34,000 33,000
D Wilde 34,000 33,000
Total 156,000 151,000
In euro terms the Directors were paid €182,000
(2020: €169,026).
The table below shows the actual expenditure in the year in
relation to Directors’ remuneration and shareholder dividends.
2021
€
2020
€
Directors’ Fees paid 182,000 169,000
Dividends paid 16,188,000 13,508,000
76 Annual Report 2021
Sums Paid to Third Parties
None of the fees disclosed above were payable to third
parties in respect of making available the services of
the Directors.
Annual Percentage Change in Directors’ Remuneration
The table below sets out the annual percentage change
in Directors’ fees for the past two years. These increases
reflected the lower level of fees paid from the initial public
offering and were the first increases implemented.
Year ended
31 December 2021
%
Year ended
31 December 2020
%
T Roper
1
4.3 32.2
C Gulliver 2.6 8.6
J Heawood 3.0 10.0
D Wilde 3.0 10.0
1
Tony Roper was appointed Chairman on 11 June 2019.
Directors’ Interests in the Company (Audited)
The Directors are not required to have a shareholding
in the Company. The Directors’ interests in contractual
arrangements with the Company are as shown in
note 23 to the financial statements. The Directors
(including connected persons) at 31 December 2021
had no interest in the share capital of the Company other
thanthose interests, all of which are beneficial interests,
shownin the table below.
31 Dec 2021
Ordinary shares
31 Dec 2020
Ordinary shares
T Roper 92,812 55,000
C Gulliver 62,500 40,000
J Heawood 50,000 30,000
D Wilde 64,375 40,000
Following the Placing of new Ordinary shares on
4 February 2022, Mr Roper is interested in 102,812 shares,
Ms Gulliver is interested in 72,500 shares, Mr Heawood is
interested in 60,000 shares and Ms Wilde is interested in
74,375 shares.
These interests were unchanged at 21 April 2022,
being the nearest practicable date prior to the signing of
this Report.
Annual Statement
On behalf of the Board and in accordance with Part 2 of
Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment)
Regulations 2013, I confirm that the above Report on
Remuneration Policy and Remuneration Implementation
summarises, as applicable, for the year ended
31December 2021:
.
the major decisions on Directors’ remuneration;
.
any substantial changes relating to Directors’
remuneration made during the period; and
.
the context in which the changes occurred and
in which decisions have been taken.
Tony Roper
Chairman
21 April 2022
77Annual Report 2021
Governance
Statement of Directors’ Responsibilities in Respect of the
Annual Report and the Financial Statements
The Directors are responsible for preparing the
Annual Report and the Group and parent Company
financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group
and parent Company financial statements for each
financial year. Under that law they are required to
prepare the Group financial statements in accordance
with International Financial Reporting Standards as
adopted by the United Kingdom (IFRSs as adopted by the
UK) and applicable law and have elected to prepare the
parent Company financial statements in accordance
with UK accounting standards, including FRS 101 Reduced
Disclosure Framework.
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
parent Company and of their profit or loss for that period.
In preparing each of the Group and parent Company
financial statements, the Directors are required to:
.
select suitable accounting policies and then apply
them consistently;
.
make judgements and estimates that are reasonable,
relevant, reliable and prudent;
.
for the Group financial statements, state whether
they have been prepared in accordance with IFRSs as
adopted by the UK;
.
for the parent Company financial statements,
state whether applicable UK accounting standards
have been followed, subject to any material departures
disclosed and explained in the parent company
financial statements;
.
assess the Group and parent Company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern; and
.
use the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group and parent Company’s transactions
and disclose with reasonable accuracy at any time the
financial position of the parent Company and enable
them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable
the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that complies with that
law and those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in the
UK governing the preparation and dissemination of
financial statements may differ from legislation in
other jurisdictions.
Responsibility statement of the Directors in
respect of the annual financial report
We confirm that to the best of our knowledge:
.
the financial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole;
.
that the Annual Report and financial statements, taken
as a whole, is fair, balanced, and understandable and
provides the information necessary for shareholders to
assess the position, performance, business model and
strategy; and
.
the Strategic Report and Directors’ Report includes a
fair review of the development and performance of
the business and the position of the Company and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
We consider the Annual Report and financial statements,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for Shareholders
to assess the group’s position and performance,
business model and strategy.
By order of the Board
Tony Roper
21 April 2022
78 Annual Report 2021
Governance
Report of the Audit Committee
I am pleased to present the report of the Audit Committee
for the year ended 31 December 2021 which has been
prepared in compliance with applicable legislation.
Committee Composition
The Audit Committee comprises three independent
Directors: Mr Heawood, Ms Wilde and myself (Ms Gulliver)
as Chairman. The Directors have satisfied themselves
that at least one of the Committee’s members has recent
and relevant financial experience. Iam a member of the
Institute of Chartered Accountants of Scotland (ICAS)
and I confirm that the Audit Committee as a whole has
competence relevant to the investment trust sector and
that at least one member has competence in accounting.
Functions of the Committee
The principal function of the Committee is to assist the
Board in relation to the reporting of financial information,
the review of financial controls and the management
of risk. The Committee has defined terms of reference
which are reviewed and re-assessed for their adequacy
on an annual basis. Copies of the terms of reference are
published on the Company’s website.
The Committee’s main audit review functions are
listedbelow:
.
to review and monitor the internal control systems and
risk management systems (including review of non-
financial and emerging risks) on which the Company
is reliant;
.
to develop and implement policy on the engagement
of the Auditor to supply non-audit services. Non-audit
fees of £45,000+VAT were paid in 2021 (2020: £nil) for
reporting accountant services in connection with the
issue of a Prospectus . The Audit Committee reviews
and approves the provision of all non-audit services in
the light of the potential for such services to impair the
Auditor’s independence;
.
to consider annually whether there is a need for the
Company to have its own internal audit function;
.
to review and challenge the investment valuation
process employed by the Investment Manager;
.
to monitor the integrity of the half-yearly and annual
financial statements of the Company by reviewing,
and challenging where necessary, the actions and
judgements of the Investment Manager;
.
to review, and report to the Board on, the significant
financial reporting issues and judgements made in
connection with the preparation of the Company’s
financial statements, interim reports, announcements
and related formal statements;
.
to review the content of the Half Yearly Report and
Annual Report and Financial Statements and advise the
Board on whether, taken as a whole, it is fair, balanced
and understandable and provides the information
necessary for Shareholders to assess the Company’s
performance, business model and strategy;
.
to meet with the auditor to review their proposed audit
programme of work and the findings of the Auditor.
The Committee shall also use this as an opportunity
to assess the effectiveness of the audit process;
.
to review a statement from the Manager detailing the
arrangements in place within the AIFM whereby the
AIFM staff may, in confidence, escalate concerns about
possible improprieties in matters of financial reporting or
other matters (“whistleblowing”);
.
to make recommendations in relation to the
appointment of the auditor and to approve the
remuneration and terms of engagement of the Auditor;
.
to monitor and review annually the Auditor’s
independence, objectivity, effectiveness, resources and
qualification; and
.
to investigate, when an auditor resigns, the reasons
giving rise to such resignation and consider whether any
action is required.
Performance Evaluation of the Committee
In 2021 a thorough external evaluation was conducted by
Lintstock Limited, an independent third party evaluation
service provider. The evaluation was based upon
questionnaires and the results allowed the Committee
members to agree priorities for future consideration including
areas where future succession planning should be focused.
Activities During the Period
The Audit Committee met four times during the period
when it considered the Half Yearly Report in detail,
reviewed the Auditor’s audit planning report and reviewed
the Annual Report and financial statements. The reviews of
the Half Yearly Report and Annual Report included detailed
work in relation to the Going Concern status and viability
of the Company together with significant oversight of the
preparation of the financial statements. Representatives of
the AIFM’s internal audit, risk and compliance departments
reported to the Board at these meetings on matters such
as internal control systems, risk and the conduct of the
business in the context of its regulatory environment.
The Audit Committee continues to believe that the
Company does not require an internal audit function of
its own as it delegates its day to day operations to third
parties from whom it receives internal controls reports.
Review of Internal Control Systems and Risk
The Committee considers the internal control systems
and a matrix of risks at each of its meetings. There is more
detail on the process of these reviews in the Directors’
Report. In addition, details of the principal risks faced by the
Company can be found within the Strategic Report on
pages 12 to 16.
79Annual Report 2021
Financial Statements and Significant Issues
During its review of the Company’s financial statements for
the year ended 31 December 2021, the Audit Committee
considered the following significant issues, including,
in particular, those communicated by the Auditor as
key areas of audit emphasis during their planning and
reporting of the period end audit.
Valuation of Investment Property – The valuation of
the Group’s investment properties is performed by an
independent external valuer in accordance with the RICS
Red Book. The valuation of investment property requires
significant judgement and estimates by the independent
valuer. The Audit Committee is responsible for reviewing
and challenging the investment valuation process
employed. The independent valuer is appointed by the
Manager and its direct property pricing committee is
responsible for ensuring that the valuation is independent,
fair and compliant with the abrdn valuation policies.
Portfolio managers are responsible for correcting any
matters of factual inaccuracy during the valuation process
but are not permitted to express any opinion in relation to
the valuation itself.
Fair Value of Group Loans Receivable – The carrying amount
of the group loan balance represents 76% of the parent
company’s total assets. Their recoverability is not at a high
risk of significant misstatement or subject to significant
judgement. In structuring the group loan arrangements the
Manager has received specialist advice and is therefore
confident of the recoverability of these loans.
Review of Financial Statements
The Committee is responsible for the preparation of the
Company’s Annual Report. The process is extensive,
requiring input from a number of different third party
service providers. The Committee reports to the Board on
whether, taken as a whole, the Annual Report and financial
statements are fair, balanced and understandable.
In so doing, the Committee has considered the
following matters:
.
the existence of a comprehensive control framework
surrounding the production of the Annual Report and
Financial Statements which includes a number of
different checking processes;
.
the existence of extensive levels of reviews as part
of the production process involving the depositary,
the AIFM, the Company Secretary and the Auditor
as well as the Committee’s own expertise;
.
the controls in place within the various third party service
providers to ensure the completeness and accuracy of
the financial records and the security
of the Company’s assets;
.
the externally audited internal control reports of
abrdn plc, and related service providers.
The Committee has reviewed the Annual Report and the
work undertaken by the third party service providers and
is satisfied that, taken as a whole, the Annual Report and
Financial Statements is fair, balanced and understandable.
The Committee has reported its findings to the Board
which in turn has made its own statement in this regard in
the Directors’ Responsibility Statement on page 78.
Review of Auditor
The Audit Committee has reviewed the effectiveness of
the Auditor including:
.
Independence: the Auditor discusses with the Audit
Committee, at least annually, the steps it takes to
ensure its independence and objectivity and makes the
Committee aware of any potential issues, explaining all
relevant safeguards;
.
Quality of audit work: (i) the ability to resolve issues
in a timely manner – the Audit Committee is confident
that identified issues are satisfactorily and promptly
resolved; (ii) its communications/presentation of outputs
– the Audit Committee is satisfied that the explanation of
the audit plan, any deviations from it and the subsequent
audit findings are comprehensible; and (iii) working
relationship with management – the Audit Committee
is satisfied that the Auditor has a constructive working
relationship with the Manager; and,
.
Quality of people and service including continuity and
succession plans: the Audit Committee is satisfied
that the audit team is made up of sufficient, suitably
experienced staff.
The Audit Committee therefore supports the
recommendation to the Board that the reappointment of
the Auditor be put to Shareholders for approval at the AGM.
Tenure of the Auditor
KPMG has held office as Auditor since the incorporation
of the Company in 2017. In accordance with present
professional guidelines the audit partner will be rotated after
no more than five years and the year ended
31 December 2021 is the second year for which the present
partner has served. The Committee considers KPMG, the
Company’s auditor, to be independent of the Company.
Companies Act legislation requires listed companies to
tender the audit every 10 years and rotate after a maximum
of 20 years. The Committee therefore expects to conduct a
tender for audit services by 2027 at the latest.
Caroline Gulliver
Audit Committee Chairman
21 April 2022
80 Annual Report 2021
Financial Statements
The audited Net Asset Value (“NAV”) per Share as at 31 December 2021 was
€1.29 (GBp 108.5p), compared with the NAV per Share of €1.20 (GBp 107.9p)
at the end of 2020, reflecting, with the interim dividends declared, a NAV total
return of 12.4% for the year in euro terms.
81Annual Report 2021
Financial Statements
Independent Auditor’s Report to the Members of
abrdn European Logistics Income plc
[UPDATED AUDIT REPORT
TO BE SUPPLIED]
1. Our opinion is unmodified
We have audited the financial statements of abrdn
European Logistics Income plc (“the Company”) for the
year ended 31 December 2021 which comprise the
Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Statement of
Changes in Equity, Consolidated Cash Flow Statement,
Parent Company Balance Sheet, Parent Company
Statement of Changes in Equity, and the related
notes,including the accounting policies in note 1.
In our opinion:
— the financial statements give a true and fair view of
the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2021 and the
Group’s net return for the year then ended;
— The Group financial statements have been properly
prepared in accordance with UK-adopted
international accounting standards;
— the Parent Company financial statements have been
properly prepared in accordance with UK accounting
standards, including FRS 101 Reduced Disclosure
Framework (The Financial Reporting Standard
applicable in the UK and Republic of Ireland); and
— the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described
below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report
to the audit committee.
We were first appointed as auditor by the shareholders
on 14 November 2017. The period of total uninterrupted
engagement is for the four financial years ended 31
December 2021. We have fulfilled our ethical
responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied to listed
public interest entities. No non-audit services prohibited by
that standard were provided.
Independent
auditor’s report
to the members of abrdn European Logistics Income plc
Overview
Materiality:
group financial
statements as a
whole
€7.2m (2020:€4.8m)
1% (2020: 1%) of Total Assets
Coverage
100% of Group total assets
Key audit matters vs 2020
Recurring risks
Valuation of investment
properties.
◄►
Recoverability of
Company’s loans due
from Group entities.
◄►
82 Annual Report 2021
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those
which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. We summarise below the key audit matters, in decreasing order of audit significance, in arriving at our audit opinion
above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those
procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that
opinion, and we do not provide a separate opinion on these matters.
The risk
Our response
Valuation of investment properties
(Group Key Audit Matter)
€683.9m
(2020: €448m)
Refer to page 80 (Audit Committee
Report), page 95 (accounting policy)
and pages 102
- 103 (financial
disclosures).
Subjective valuation
The carrying amount of the Group’s
property portfolio makes up 94% (2021:
93%) of the Group’s total assets by value.
Valuations of the Group’s investment
properties are performed by external
valuation advisers.
The valuation of investment property
requires significant judgement and
estimates by management and the
external valuation advisers. As a result
there is an inherent risk that the subjective
assumptions used in the calculations of fair
value are inappropriate.
The effect of these matters is that, as part
of our risk assessment, we have
determined that the valuation of
investment properties has a high degree of
estimation uncertainty, with a potential
range of reasonable outcomes greater
than our materiality for the financial
statements as a whole. The financial
statements disclose the sensitivity of the
estimate to changes in
the discount rate.
We performed the detailed tests below rather than
seeking to rely on controls, because the nature of the
balance is such that we would expect to obtain audit
evidence primarily through the detailed procedures
described:
1.
Understanding of valuation approach:
We corresponded with the Group’s external valuation
advisers in respect of a sample of properties to
understand the assumptions and methodologies used
in valuing the investment properties and the market
evidence used by the external valuation advisors to
support their assumptions. We also obtained an
understanding of the directors’ involvement in the
valuation process to assess whether appropriate
oversight has occurred.
2. Assessing valuation advisors’ credentials:
Critically assessing the independence, professional
qualifications, competence and experience of the
external valuation advisors used by the Group.
3. Methodology choice:
Critically assessed the methodology used by the
external valuation advisors by considering whether
their valuations were prepared in accordance with
market practice for the estimation of fair value and
relevant accounting standards.
4. Benchmarking assumptions:
Challenging the key assumptions upon which the
valuations were based, including those relating to
Estimated Rental Value (‘ERV’) and discount rates by
making a comparison to our own assumptions
independently derived from market data.
5. Input assessment:
Agreeing observable inputs used in the valuations,
such as rental income, lease incentives, break clauses
and lease lengths back to lease agreements for a
sample of leases.
6. Disclosure assessment:
We also considered the adequacy of the Group’s
disclosures about the degree of estimation and
sensitivity to key assumptions made when valuing the
investment properties.
Our results
We found the Group’s valuation of investment
properties to be acceptable (2020: acceptable).
83Annual Report 2021
The risk
Our response
Recoverability
of the Company’s
loans due from Group entities.
(Parent Company Key Audit Matter)
€322.3
m (2020: €153.8m)
Refer to page 79 (Audit Committee
Report), page 121 (accounting
policy) and page 124 (financial
disclosures).
Low risk, high value
The carrying amount of the parent loan
balance represents 75.6%
(2020: 61%) of
the Parent Company’s total assets. The
parent loans are measured at fair value,
which is subject to management
judgement, albeit the loans are repayable
on demand and have no access to upside
value from the borrowers, the key risk to
measurement is if the borrower could not
repay them.
Due to their materiality in the context of
the parent Company financial statements,
this is considered to be the area that
requires the greatest effort in the Parent
Company audit and is hence a Key Audit
Matter.
We performed the detailed tests below rather than
seeking to rely on controls, because the nature of the
balance is such that we would expect to obtain audit
evidence primarily through the detailed procedures
described:
Tests of detail:
•
Checking whether the borrowers have a positive net
asset value – and the headroom of this over the debt
owed.
Our results:
We found the measurement of the Parent Company
loans to be acceptable (2020: acceptable).
3. Our application of materiality and
an overview of the scope of our audit
Materiality for the Group financial statements as a whole was
set at €7.2m (2020: €4.8m), determined with reference to a
benchmark of total assets, of which it represents 1% (2020:
1%).
Materiality for the Parent Company financial statements as a
whole was set at €4.2m (2020: €2.5m), determined with
reference to a benchmark of total assets, of which it represents
1% (2020: 1%).
In line with our audit methodology, our procedures on
individual account balances and disclosures were performed to
a lower threshold, performance materiality, so as to reduce to
an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a
material amount across the financial statements as a whole.
Group and Parent Company performance materiality was set at
75% (2020: 75%) of materiality for the financial statements as a
whole, which equates to €5.4m (2020: €3.6m), (Parent
Company €3.1m (2020: €1.9m)). We applied this percentage in
our determination of performance materiality because we did
not identify any factors indicating an elevated level of risk.
In addition, we applied a materiality of €680k (2020: €600k) to
the rental income account for which we believe misstatements
of a lesser amounts than materiality for the financial
statements as a whole could reasonably be expected to
influence the Company’s members’ assessment of the financial
performance of the Group. Performance materiality over rental
income was set at 75% (2020: 75%) of rental income
materiality, which equates to €510k (2020: €450k)
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding €364k (2020:
€240k), in addition to other identified misstatements that
warranted reporting on qualitative grounds, Parent Company
€210k (2020: €125k) and rental income €68k (2020: €60k).
Group Total Assets
€728.4m (2021: €484.1m)
Materiality
€7.2m (2021: €4.8m)
Tota l As se ts
€7.2m
Whole financial
statements materiality
(2020: €4.8m
)
€5.4m
Performance materiality
(2020: €3.6m)
€680k
Materiality over rental
income
(2020: €600k)
€364k
Misstatements reported to
the audit committee (2020:
€240k)
The Group team performed the audit of the Group as if it
was a single aggregated set of financial information. The
audit was performed using the materiality levels set out
above and was performed by our team based in the United
Kingdom.
The scope of the audit work performed was fully substantive
as we did not rely upon the Company’s internal controls over
financial reporting.
84 Annual Report 2021
4. The impact of climate risk on our audit
In planning our audit we have considered the potential
impacts of climate change on the Company’s financial
statements.
We have performed a risk assessment of how the impact
of climate change may affect the financial statements
and our audit. We assessed that the financial statements
estimate that is primarily exposed to climate risk is the
investment property portfolio, for which the valuation
assumptions and estimates may be impacted by physical
and policy or legal climate risks, such as flooding or an
increase in climate related compliance expenditure. We
made enquiries of the property manager and the
external valuer to understand the extent of the potential
impact of physical and policy or legal climate change risk
on the investment property portfolio. We also held
discussions with our own climate change professionals to
challenge our risk assessment.
We assessed that, whilst climate change posed a risk to
the determination of investment property valuations in
the current year, this risk was not significant when
considering both the nature and domicile of the
properties and the tenure of unexpired leases. Therefore
there was no significant impact of this on our key audit
matters.
We have read the disclosure of climate related narrative
in the front half of the financial statements and
considered consistency with the financial statements and
our audit knowledge.
5. We have nothing to report on going concern
The Directors have prepared the financial statements on
the going concern basis as they do not intend to
liquidate the Company or the Group or to cease their
operations, and as they have concluded that the
Company’s and the Group’s financial position means that
this is realistic. They have also concluded that there are
no material uncertainties that could have cast significant
doubt over their ability to continue as a going concern
for at least a year from the date of approval of the
financial statements (“the going concern period”).
We used our knowledge of the Group and Company, its
industry, and the general economic environment to
identify the inherent risks to its business model and
analysed how those risks might affect the Group or the
Company’s financial resources or ability to continue
operations over the going concern period. The risks that
we considered most likely to adversely affect the Group’s
and Company’s available financial resources and its
ability to operate over this period were:
— The impact of a significant reduction in the valuation
of investment property and the implications for the
Group’s loan covenants; and
— The risk of future non-payment of rent by tenants
thereby impacting the liquidity position of the
Group and Parent Company, as well as the resulting
effect of non compliance with interest cover
covenants.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by assessing the degree of
downside assumption that, individually and collectively, could
result in a liquidity issue, taking into account the Group’s current
and projected cash position and loan covenant headroom.
We considered whether the going concern disclosure in note 1 to
the financial statements gives a full and accurate description of
the Directors’ assessment of going concern, including the
identified risks and related sensitivities.
Our conclusions based on this work:
— We consider that the Directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
— We have not identified, and concur with the Directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, may
cast significant doubt on the Group’s and Company’s ability
to continue as a going concern for the going concern period;
— We have nothing material to add or draw attention to in
relation to the Directors’ statement in note 1 to the financial
statements on the use of the going concern basis of
accounting with no material uncertainties that may cast
significant doubt over the Group’s and Company’s use of
that basis for the going concern period, and we found the
going concern disclosure in note 1 to be acceptable; and
— The related statement under the Listing Rules set out on
page 73 is materially consistent with the financial
statements and our audit knowledge.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee that
the Company will continue in operation.
6. Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
— Enquiring of Directors as to the Group’s high-level policies
and procedures to prevent and detect fraud, as well as
whether they have knowledge of any actual, suspected or
alleged fraud;
— Assessing the segregation of duties in place between the
Directors, the Administrator and the Group’s and Parent
Company’s Investment Manager; and
— Reading Board and Audit Committee minutes.
85Annual Report 2021
6. Fraud and breaches of laws and regulations – ability to
detect (continued)
As required by auditing standards, we perform procedures to
address the risk of management override of controls, in
particular to the risk that management may be in a position to
make inappropriate accounting entries. We evaluated the design
and implementation of the controls over journal entries and
other adjustments and made inquiries of the Administrator
about inappropriate or unusual activity relating to the processing
of journal entries and other adjustments. We substantively
tested all material post-closing entries and, based on the results
of our risk assessment procedures and understanding of the
process, including the segregation of duties between the
Directors and the Administrator, no further high-risk journal
entries or other adjustments were identified
On this audit do not believe there is a fraud risk related to
revenue recognition because the Group’s primary revenue
stream, rental income, is simple in nature with respect to
accounting policy choice and variable amounts are verifiable to
external data sources or agreements with little or no
requirement for estimation from management. We did not
identify any significant unusual transactions or additional fraud
risks.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the Directors, the Investment Manager and the
Administrator (as required by auditing standards) and discussed
with the Directors the policies and procedures regarding
compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved
gaining an understanding of the control environment including
the entity’s procedures for complying with regulatory
requirements.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Company is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies legislation),
distributable profits legislation, and its qualification as an
Investment Trust under UK taxation legislation, any breach of
which could lead to the Company losing various deductions and
exemptions from UK corporation tax, and we assessed the extent
of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
We assessed the legality of the distributions made by the Group
in the period based on comparing the dividends paid with the
distributable reserves prior to each distribution, including
consideration of interim accounts filed during the year.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: money laundering, bribery and corruption
legislation, landlord and tenant legislation, building regulations,
and certain aspects of company legislation recognising the
financial and regulated nature of the Group’s and Company’s
activities and its legal form.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of
the Directors and the Administrator and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of
law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
7. We have nothing to report on the other information in the
Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
86 Annual Report 2021
7. We have nothing to report on the other information in the
Annual Report (continued)
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the Directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether
there is a material inconsistency between the Directors’
disclosures in respect of emerging and principal risks and the
viability statement, and the financial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
— the Directors’ confirmation within the Viability Statement on
page 17 that they have carried out assessment of the
emerging and principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency and liquidity;
— the Principal and Emerging Risks disclosures describing these
risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
— the Directors’ explanation in the Viability Statement of how
they have assessed the prospects of the Group and Parent
Company, and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group and Parent Company
will be able to continue in operation and meet its liabilities as
they fall due over the period of their assessment, including
any related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the Viability Statement, set out on
page 17 under the Listing Rules. Based on the above procedures, we
have concluded that the above disclosures are materially consistent
with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only
the knowledge acquired during our financial statements audit. As
we cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the
absence of anything to report on these statements is not a
guarantee as to the Group’s longer-term viability
.
Corporate governance disclosures
We are required to perform procedures to identify whether there is
a material inconsistency between the Directors’ corporate
governance disclosures and the financial statements and our audit
knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:
— the Directors’ statement that they consider that the annual
report and financial statements taken as a whole is fair, balanced
and understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;
— the section of the annual report describing the work of the Audit
Committee, including the significant issues that the audit
committee considered in relation to the financial statements,
and how these issues were addressed; and
— the section of the annual report that describes the review of the
effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance
Statement relating to the Company’s compliance with the provisions
of the UK Corporate Governance Code specified by the Listing Rules
for our review. We have nothing to report in this respect.
8. We have nothing to report on the other matters on which we are
required to report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
— adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
— the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
— certain disclosures of directors’ remuneration specified by law
are not made; or
— we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
87Annual Report 2021
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 78, the
Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate
the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
.
10. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Matthew Williams (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor Chartered
Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
21 April 2022
88 Annual Report 2021
Financial Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Notes
Year ended 31 December 2021 Year ended 31 December 2020
Revenue
€'000
Capital
€'000
Total
€’000
Revenue
€'000
Capital
€'000
Total
€’000
REVENUE
Rental Income 23,283 - 23,283 20,257 - 20,257
Property service charge income 3,435 - 3,435 3,096 - 3,096
Other operating income 219 - 219 47 - 47
Total Revenue 2 26,937 - 26,937 23,400 - 23,400
GAINS ON INVESTMENTS
Gains on revaluation of investment properties 9 - 41,031 41,031 - 32,878 32,878
Total Income and gains on investments 26,937 41,031 67,968 23,400 32,878 56,278
EXPENDITURE
Investment management fee (2,756 ) - (2,756 ) (2,066 ) - (2,066 )
Direct property expenses (1,851 ) - (1,851 ) (1,305 ) - (1,305 )
Property service charge expenditure (3,435 ) - (3,435 ) (3,096 ) - (3,096 )
SPV property management fees (371 ) - (371 ) (139 ) - (139 )
Other expenses 3 (1,735 ) - (1,735 ) (1,290 ) - (1,290 )
Total expenditure (10,148 ) - (10,148 ) (7,896 ) - (7,896 )
Net operating return before finance costs 16,789 41,031 57,820 15,504 32,878 48,382
FINANCE COSTS
Finance costs 4 (3,449 ) - (3,449 ) (2,545 ) - (2,545 )
Effect of foreign exchange differences 264 753 1,017 (892 ) 301 (591 )
Net return before taxation 13,604 41,784 55,388 12,067 33,179 45,246
Taxation 5 (651 ) (10,294 ) (10,945 ) (228 ) (9,629 ) (9,857 )
Net return for the year 12,953 31,490 44,443 11,839 23,550 35,389
Total comprehensive return for the period 12,953 31,490 44,443 11,839 23,550 35,389
Basic and diluted earnings per share 7 4.50 ¢ 10.93 ¢ 15.43 ¢ 4.95 ¢ 9.84 ¢ 14.79 ¢
The accompanying notes are an integral part of the financial statements.
The total column of the Consolidated Statement of Comprehensive Income is the profit and loss account of the Group.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or
discontinued during the year.
89Annual Report 2021
Financial Statements
Consolidated Balance Sheet
For the year ended 31 December 2021
Notes
As at 31 December 2021
Total
€’000
As at 31 December 2020
Total
€’000
NON-CURRENT ASSETS
Investment properties 9 683,878 448,418
Deferred tax asset 5 2,978 1,425
Total non-current assets 686,856 449,843
CURRENT ASSETS
Trade and other receivables 10 11,175 9,286
Cash and cash equivalents 11 23,280 24,874
Other Assets 6,966 75
Derivative financial assets 15 109 26
Total current assets 41,530 34,261
Total assets 728,386 484,104
CURRENT LIABILITIES
Bank loans 14 15,500 -
Lease liability 12 550 550
Trade and other payables 13 14,466 8,291
Total current liabilities 30,516 8,841
NON-CURRENT LIABILITIES
Bank loans 14 160,447 143,331
Lease liability 12 22,355 22,620
Deferred tax liability 5 27,563 15,716
Total non-current liabilities 210,365 181,667
Total liabilities 240,881 190,508
Net assets 487,505 293,596
SHARE CAPITAL AND RESERVES
Share capital 16 4,309 2,756
Share premium 17 225,792 61,691
Special distributable reserve 18 178,207 185,661
Capital reserves 19 63,258 31,768
Revenue reserve 15,939 11,720
Equity shareholders' funds 487,505 293,596
Net asset value per share 8 € 1.29 € 1.20
The Financial Statements on pages 89 to 127 were approved and authorised for issue by the Board of Directors on
21 April 2022 and signed on its behalf by:
Caroline Gulliver
Independent Non-Executive Director
Company number: 11032222.
The accompanying notes are an integral part of the financial statements.
90 Annual Report 2021
Financial Statements
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Notes
Share capital
€'000
Share
premium
€'000
Special
distributable
reserve
€'000
Capital
reserve
€'000
Revenue
reserve
€'000
Total
€'000
Balance at 31 December 2020 2,756 61,691 185,661 31,768 11,720 293,596
Share Issue 16/17 1,553 166,924 - - - 168,477
Share Issue costs 17 - (2,823 ) - - - (2,823 )
Total Comprehensive return for the period - - - 31,490 12,953 44,443
Dividends paid 6 - - (7,454 ) - (8,734 ) (16,188 )
Balance at 31 December 2021 4,309 225,792 178,207 63,258 15,939 487,505
For the year ended 31 December 2020
Notes
Share capital
€'000
Share
premium
€'000
Special
distributable
reserve
€'000
Capital
reserve
€'000
Revenue
reserve
€'000
Total
€'000
Balance at 31 December 2019 2,645 50,364 191,579 8,218 7,471 260,277
Share Issue 16/17 111 11,442 - - - 11,553
Share Issue costs 17 - (115 ) - - - (115 )
Total Comprehensive return for the period - - - 23,550 11,839 35,389
Dividends paid 6 - - (5,918 ) - (7,590 ) (13,508 )
Balance at 31 December 2020 2,756 61,691 185,661 31,768 11,720 293,596
The accompanying notes are an integral part of the financial statements.
91Annual Report 2021
Financial Statements
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
Notes
Year ended
31 December 2021
€’000
Year ended
31 December 2020
€’000
CASH FLOWS FROM OPERATING ACTIVITIES
Net gain for the period before taxation 55,388 45,246
Adjustments for:
Gains on investment properties (41,031 ) (32,878 )
Land leasehold liability decreases 265 257
(Increase)/Decrease in operating trade and other receivables (9,088 ) 1,215
Increase/(Decrease) in operating trade and other payables 2,939 (1,270 )
Finance costs 4 3,449 2,545
Tax paid (473 ) (106 )
Cash generated by operations 11,449 15,009
Net cash inflow from operating activities 11,449 15,009
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment properties (193,475 ) (46,223 )
Derivative financial instruments (83 ) (34 )
Net cash outflow from investing activities (193,558 ) (46,257 )
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid 6 (16,188 ) (13,508 )
Bank loans interest paid (1,311 ) (1,588 )
Bank loans drawn 68,860 35,201
Bank loans repaid (36,500 ) -
Proceeds from share issue 16/17 168,477 11,553
Issue costs relating to share issue 17 (2,823 ) (115 )
Net cash inflow from financing activities 180,515 31,543
Net (decrease)/increase in cash and cash equivalents (1,594 ) 295
Opening balance 24,874 24,579
Closing cash and cash equivalents 23,280 24,874
REPRESENTED BY
Cash at bank 11 23,280 24,874
The accompanying notes are an integral part of the financial statements.
92 Annual Report 2021
Financial Statements
Notes to the Financial Statements
1. Accounting Policies
The principal accounting policies adopted by the Group are set out below, all of which have been applied
consistently throughout the period.
(a) Basis of Accounting
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (‘IFRS’), which comprise standards and interpretations approved by the International Accounting
Standards Board (‘IASB’), and International Accounting Standards and Standing Interpretations Committee
interpretations approved by the International Accounting Standards Committee (‘IASC’) that remain in effect, and
to the extent that they have been adopted by the United Kingdom, and the Listing Rules of the UK Listing Authority.
The Consolidated Financial Statements of the Group have been prepared under the historical cost convention
as modified by the measurement of investment property and derivative financial instruments at fair value.
The consolidated financial statements are presented in Euro.
In compliance with the AIC’s Statement of Recommended Practice: Financial Statements of Investment Trust
Companies and Venture Capital Trusts (Issued November 2014 and updated in October 2019 with consequential
amendments), the consolidated statement of comprehensive income is separated between capital and revenue
profits and losses.
New and revised standards and interpretations issued in the current period
The accounting policies adopted have been consistently applied throughout the period presented,
unless otherwise stated. This includes the below noted Standards and Interpretations that became effective
during the period, which the group has incorporated in the preparation of the financial statements:
.
Amendments to IFRS 9, IAS 39 and IFRS 7 - the amendments provide clarifications for specific hedge
accounting requirements for the interest rate benchmark.
.
Amendments to IFRS 16 - the amendments allow lessees not to account for rent concessions as lease
modifications if they are a direct consequence of COVID-19 and meet certain conditions.
Standard and Interpretations issued by IASB but not adopted by the United Kingdom and not yet effective:
.
IFRS 17 Insurance Contracts (effective 1 January 2023);
.
Amendments to IAS 1 - Classification of liabilities as current or non-current (effective 1 January 2023);
.
Amendments to IFRS 10, IAS 28 - Sale or Contribution of Assets between an investor and its Associate or
Joint Venture (effective date deferred indefinitely).
The Group has made no adjustments to its financial statements following the above listed amendments and
hence these are not discussed further.
(b) Significant accounting judgements, estimates and assumptions
The preparation of the Group’s financial statements requires the directors to make judgements, estimates
and assumptions that affect the amounts recognised in the financial statements and contingent liabilities.
However, uncertainty about these judgements, assumptions and estimates could result in outcomes that could
require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Key estimation uncertainties
Fair value of investment properties: Investment property is stated at fair value as at the balance sheet date as set
out in note 9 to these financial statements.
The determination of the fair value of investment properties requires the use of estimates such as future cash
flows from the assets, estimate inflation, market rents, discount and capitalisation rates. The estimate of future
cash flows includes consideration of the repair and condition of the property, lease terms, future lease events,
as well as other relevant factors for the particular asset.
These estimates are based on local market conditions existing at the balance sheet date.
93Annual Report 2021
(c) Basis of Consolidation and Going Concern
The consolidated financial statements comprise the accounts of the Company and its subsidiaries drawn
up to 31 December 2021, and are prepared on a going concern basis. Subsidiaries are consolidated from
the date on which control is transferred to the Group and cease to be consolidated from the date on which
control is transferred out of the Group. The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the
Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquiree on an acquisition by acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net
assets acquired is recorded as goodwill.
If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is
less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference
is recognised directly in the consolidated statement of comprehensive income.
See note 28 for further details on going concern.
(d) Functional and Presentation currency
Items included in the consolidated financial statements of the Group are measured using the currency of the
primary economic environment in which the Company and its subsidiaries operate (“the functional currency”)
which in the judgement of the Directors is Euro. The financial statements are also presented in Euro. All figures in
the consolidated financial statements are rounded to the nearest thousand unless otherwise stated.
(e) Foreign Currency
Transactions denominated in foreign currencies are converted at the exchange rate ruling at the date of the
transaction. Monetary and non-monetary assets and liabilities denominated in foreign currencies held at the
financial period end are translated using London closing foreign exchange rates at the financial period end.
Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included
as an exchange gain or loss to capital or revenue in the Consolidated Statement of Comprehensive Income
as appropriate. Foreign exchange movements on investments are included in the Consolidated Statement of
Comprehensive Income within gains on investments.
(f) Revenue Recognition
Rental income, including the effect of lease incentives, arising from operating leases (including those containing
fixed rent increases) is recognised on a straight line basis over the lease term.
Service charge income represents the charge to tenants for services the Group is obliged to provide under lease
agreements. This income is recorded gross within Income on the basis the Group is acting as principal, with any
corresponding cost shown within expenses.
Interest income is accounted for on an effective interest rate basis.
(g) Expenses
All expenses, including the management fee, are accounted for on an accruals basis and are recorded through
the revenue column of the Consolidated Statement of Comprehensive Income, except for gains or losses on
investment properties which are recorded in the capital column.
(h) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from ‘net return before
tax’ as reported in the Consolidated Statement of Comprehensive Income because of items of income or
expense that are taxable or deductible in other years and items that are never taxable or deductible.
94 Annual Report 2021
Where corporation tax arises in subsidiaries, these amounts are charged to the Consolidated Statement of
Comprehensive Income. The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the date of the balance sheet in the countries where the Group operates.
The Manager periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation, and establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities
in the consolidated financial statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets
are generally recognised for all deductible temporary differences to the extent that it is probable that taxable
profits will be available against which those deductible temporary differences can be utilised. Such deferred tax
assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than
in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from
the initial recognition of goodwill.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
The carrying values of the Group’s investment properties are assumed to be realised by sale at the end of use.
The capital gains tax rate applied is that which would apply on a direct sale of the property recorded in the
Consolidated Balance Sheet regardless of whether the Group would structure the sale via the disposal of the
subsidiary holding the asset, to which a different tax rate may apply. The deferred tax is then calculated based on
the respective temporary differences and tax consequences arising from recovery through sale, and accounted
for through the capital reserve.
(i) Investment Properties
Investment properties are initially recognised at cost, being the fair value of consideration given, including
transaction costs associated with the investment property. Any subsequent capital expenditure incurred in
improving investment properties is capitalised in the period during which the expenditure is incurred.
After initial recognition, investment properties are measured at fair value, with the movement in fair value
recognised in the Consolidated Statement of Comprehensive Income and transferred to the Capital Reserve.
Fair value is based on the external valuation provided by CBRE GmbH and Savills, chartered surveyors, at the
balance sheet date undertaken in accordance with the RICS Valuation – Global Standards 2020, (Red Book),
published by the Royal Institution of Chartered Surveyors. The assessed fair value is reduced by the carrying amount
of any accrued income resulting from the spreading of lease incentives and/or minimum lease payments.
On derecognition, gains and losses on disposals of investment properties are recognised in the Consolidated
Statement of Comprehensive Income.
The Group may enter into forward funding agreements with third party developers in respect of certain
properties. Under these agreements the Group will make payments to the developer as construction progresses.
The value of these payments is assessed and certified by an expert and capitalised in the period during which
the expenditure is incurred and included within the book cost of the property.
(j) Distributions
Interim distributions payable to the holders of equity shares are recognised in the Statement of Changes in Equity
in the period in which they are paid. An annual shareholder resolution is voted upon to approve the Group’s
distribution policy.
95Annual Report 2021
(k) Lease Contracts
Operating Lease Contracts – the Group as Lessor
The Group has entered into commercial property leases on its investment property portfolio. The Group has
determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the
significant risks and rewards of ownership of these properties and so accounts for leases as operating leases.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of
the leased asset and recognised as an expense on a straight-line basis over the lease term.
Operating and Finance Lease Contracts - the Group as intermediate lessor
When the Group is an intermediate lessor, it accounts for its interest in the head lease and the sub-lease
separately. The Group assesses all leases where it acts as an intermediate lessor, based on an evaluation of
the terms and conditions of the arrangements. Any head leases identified as having a low value at the lease
commencement date are classified as operating leases and accounts for the lease payments on a straight-line
basis over the lease terms.
Any head leases identified as finance leases are capitalised at the lease commencement present value of the
minimum lease payments discounted at an applicable discount rate as a right-of-use asset and leasehold liability.
Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate
on the finance balance outstanding. The interest element of the finance cost is charged to the Statement of
Comprehensive Income over the lease period.
(l) Share Issue Expenses
Incremental external costs directly attributable to the issue of shares that would otherwise have been avoided
are written off to share premium.
(m) Segmental Reporting
The Group is engaged in property investment in Europe. Operating results are analysed on a geographic basis
by country. In accordance with IFRS 8 ‘Operating Segments’, financial information on business segments is
presented in note 20 of the Consolidated financial statements.
(n) Cash and Cash Equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits, and other short-term highly liquid
investments readily convertible within three months or less to known amounts of cash and subject to insignificant
risk of changes in value.
(o) Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately
in the Consolidated Statement of Comprehensive Income.
Financial assets
Financial assets are measured at amortised cost, financial assets ‘at fair value through profit or loss’ (FVTPL),
or financial assets ‘at fair value through other comprehensive income’ (FVOCI). The classification is based
on the business model in which the financial asset is managed and its contractual cash flow characteristics.
All purchases and sales of financial assets are recognised on the trade date basis.
Financial assets at amortised cost
Financial assets at amortised cost are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market.
Loans and receivables (including trade and other receivables, bank balances and cash, and others) are
measured at amortised cost using the effective interest method, less any impairment. The Group holds the
trade receivables with the objective to collect the contractual cash flows.
96 Annual Report 2021
Impairment of financial assets
The Group’s financial assets are subject to the expected credit loss model. For trade receivables, the Group
applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised
from initial recognition of the receivables. The expected loss rates are based on the payment profiles of tenants
over a period of twelve months before 31 December 2021, and the corresponding historical credit losses
experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the liability of the tenants to settle the receivable.
Such forward-looking information would include:
.
significant financial difficulty of the issuer or counterparty; or
.
breach of contract, such as a default or delinquency in interest or principal payments; or
.
it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
.
the disappearance of an active market for that financial asset because of financial difficulties. The Group’s
financial assets are subject to the expected credit loss model. For trade receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables. The expected loss rates are based on the payment profiles of tenants over a
period of twelve months before 31 December 2021, and the corresponding historical credit losses experienced
within this period. The historical loss rates are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the liability of the tenants to settle the receivable. Such forward-looking
information would include:
.
changes in economic, regulatory, technological and environmental factors, (such as industry outlook, GDP,
employment and politics);
.
external market indicators; and
.
tenant base.
Financial liabilities
Financial liabilities are classified as ‘other financial liabilities’.
Other financial liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at
amortised cost using the effective interest method. The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments (including all fees 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 financial liability, or (where appropriate) a shorter period, to the net carrying
amount on initial recognition.
(p) Derivative financial instruments
The Company used forward foreign exchange contracts to mitigate potential volatility of income returns and
to provide greater certainty as to the level of Sterling distributions expected to be paid in respect of the period
covered by the relevant currency hedging instrument. It does not seek to provide a long-term hedge for the
Company’s income returns, which will continue to be affected by movements in the Euro/Sterling exchange rate
over the longer term.
Derivatives are measured at fair value calculated by reference to forward exchange rates for contracts
with similar maturity profiles. Changes in the fair value of derivatives are recognised in the Statement of
Comprehensive Income as revenue or capital depending on their nature.
(q) Reserves
Share Capital
This represents the proceeds from issuing Ordinary shares and is non-distributable.
Share Premium
Share premium represents the excess consideration received over the par value of Ordinary shares issued and is
classified as equity and is non-distributable. Incremental costs directly attributable to the issue of Ordinary shares
are recognised as a deduction from share premium.
97Annual Report 2021
Special Distributable Reserve
The special reserve is a distributable reserve to be used for all purposes permitted by applicable legislation and
practice, including the buyback of shares and the payment of dividends.
Capital Reserve
The capital reserve is a distributable reserve subject to applicable legislation and practice, and the following are
accounted for in this reserve:
.
gains and losses on the disposal of investment properties;
.
increases and decreases in the fair value of investment properties held at the period end, which are not distributable.
Revenue Reserve
The revenue reserve is a distributable reserve and reflects any surplus arising from the net return on ordinary
activities after taxation.
2. Revenue
Year ended
31 December 2021
€'000
Year ended
31 December 2020
€'000
Rental income 23,283 20,257
Other income 3,435 3,096
Property service charge income 219 47
Total revenue 26,937 23,400
Included within rental income is amortisation of rent free periods granted.
3. Expenditure
Year ended
31 December 2021
€'000
Year ended
31 December 2020
€'000
Professional fees 656 375
Directors' fees 182 169
Audit fee for statutory services
1
275 270
Other expenses 382 301
Broker fees 69 67
Depositary fees 44 8
Stock exchange fees 66 59
Directors’ liability insurance expense 3 4
Registrar fees 43 24
Empoyers NI 15 13
Total expenses 1,735 1,290
1
The Audit fee above for 2021 reflects an audit fee of €218,400 which includes £45,000 paid in respect of non-audit services fees incurred in relation to the share issuance
programme and the issue of a prospectus in September 2021 (2020: nil). Subsidiary audit fees of €12,790 are also included.
98 Annual Report 2021
4. Finance Costs
Year ended
31 December 2021
€'000
Year ended
31 December 2020
€'000
Interest on bank loans 2,587 1,998
Bank interest 606 335
Amortisation of loan costs 256 212
Total finance costs 3,449 2,545
5. Taxation
The Company is resident in the United Kingdom for tax purposes. The Company is approved by HMRC as an
investment trust under sections 1158 and 1159 of the Corporation Tax Act 2010. In respect of each accounting
period for which the Company continues to be approved by HMRC as an investment trust the Company will be
exempt from UK taxation on its capital gains. The Company is, however, liable to UK Corporation tax on its income.
The Company is able to elect to take advantage of modified UK tax treatment in respect of its ‘‘qualifying interest
income’’ for an accounting period referred to as the ‘‘streaming’’ regime. Under regulations made pursuant to the
Finance Act 2009, the Company may, if it so chooses, designate as an ‘‘interest distribution’’ all or part of the amount
it distributes to Shareholders as dividends, to the extent that it has ‘‘qualifying interest income’’ for the accounting
period. Were the Company to designate any dividend it pays in this manner, it would be able to deduct such interest
distributions from its income in calculating its taxable profit for the relevant accounting period. The Company should
in practice be exempt from UK corporation tax on dividend income received, provided that such dividends (whether
from UK or non-UK companies) fall within one of the ‘‘exempt classes’’ in Part 9A of the CTA 2010. In March 2021 the
UK Government confirmed an increase in the Corporation Tax Rate from 19% to 25% from 1 April 2023. This will not
affect the Company’s ability to take advantage of the streaming regime as it currently does.
Reconciliation between the tax charge and the product of accounting profit/(loss) multiplied by the applicable tax
rate for the year ended 31 December 2021.
(a) Tax charge in the Group Statement of Comprehensive Income
Year ended 31 December 2021 Year ended 31 December 2020
Revenue
€'000
Capital
€'000
Total
€'000
Revenue
€'000
Capital
€'000
Total
€'000
Current taxation:
Overseas taxation 651 - 651 228 - 228
Deferred taxation:
Overseas taxation - 10,294 10,294 - 9,629 9,629
Total taxation 651 10,294 10,945 228 9,629 9,857
99Annual Report 2021
Year ended 31 December 2021 Year ended 31 December 2020
Revenue
€'000
Capital
€'000
Total
€'000
Revenue
€'000
Capital
€'000
Total
€'000
Net result before taxation 13,604 41,784 55,388 12,067 33,179 45,246
Theoretical tax at UK corporation
tax rate of 19%
2,585 7,939 10,524 2,293 6,304 8,597
Effect of:
Losses where no deferred taxes
have been recognised
229 - 229 110 - 110
Impact of different tax rates on
foreign jurisdictions
1,262 2,355 3,617 (1,381) 3,325 1,944
Expenses that are not deductible /
income that is not taxable
(2,602) - (2,602) (81) - (81)
Impact of UK interest distributions
from the Investment Trust
(823) - (823) (713) - (713)
Total taxation 651 10,294 10,945 228 9,629 9,857
(b) Tax in the Group Balance Sheet
Year ended 31 December 2021 Year ended 31 December 2020
Revenue
€'000
Capital
€'000
Total
€'000
Revenue
€'000
Capital
€'000
Total
€'000
Deferred tax assets:
On tax losses - 2,828 2,828 - 1,084 1,084
On other temporary differences - 150 150 - 341 341
Total taxation - 2,978 2,978 - 1,425 1,425
Year ended 31 December 2021 Year ended 31 December 2020
Revenue
€'000
Capital
€'000
Total
€'000
Revenue
€'000
Capital
€'000
Total
€'000
Deferred tax liabilities:
Differences between tax and
property valuation
- 27,563 27,563 - 15,716 15,716
Total taxation - 27,563 27,563 - 15,716 15,716
In March 2021 the UK Government announced the UK Corporation tax rate is to remain at 19% until April 2023,
at which point it will be increased to 25%. This is not expected to have a material impact on the Group.
No deferred tax asset has been recognised (2020: nil) on estimated UK tax losses.
100 Annual Report 2021
6. Dividends
Year ended
31 December 2021
€'000
Year ended
31 December 2020
€'000
2020 Fourth Interim dividend of 1.41c /(1.24p) per Share paid
26 March 2021
(2019 Fourth Interim: 1.41c/1.27p)
3,447 3,306
2021 First Interim dividend of 1.41c (1.21p) per Share paid
25 June 2021
(2020 First Interim: 1.41c /1.24p)
3,708 3,306
2021 Second Interim dividend of 1.41c (1.21p) per Share paid
24 September 2021
(2020 Second interim: 1.41c/1.24p)
3,708 3,448
2021 Third Interim dividend of 1.41c (1.21p) per Share paid 30
December 2021
(2020 Third interim: 1.41c/1.24p)
5,325 3,448
Total Dividends Paid 16,188 13,508
A fourth interim dividend of 1.41c/(1.21p) per share was paid on 25 March 2022 to Shareholders on the register on
4 March 2022. Although this payment relates to the year ended 31 December 2021, under IFRS it will be accounted
for in the year in which it has been paid.
7. Earnings per Share (Basic and Diluted)
Year ended
31 December 2021
Year ended
31 December 2020
Revenue net return attributable to Ordinary shareholders (€'000) 12,953 11,839
Weighted average number of shares in issue during the period 288,114,820 239,213,116
Total revenue return per ordinary share 4.50¢ 4.95¢
Capital return attributable to Ordinary shareholders (€'000) 31,490 23,550
Weighted average number of shares in issue during the period 288,114,820 239,213,116
Total capital return per ordinary share 10.93¢ 9.84¢
Total return per ordinary share 15.43¢ 14.79¢
Earnings per Share is calculated on the revenue and capital loss for the period (before other comprehensive income)
and is calculated using the weighted average number of Shares in the period of 288,114,820 Shares
(2020: 239,213,116 Shares).
101Annual Report 2021
8. Net Asset Value Per Share
2021 2020
Net assets attributable to shareholders (€'000) 487,505 293,596
Number of shares in issue at 31 December 377,628,901 244,500,001
Net asset value per share (€) 1.29 1.20
9. Investment Properties
2021
€'000
2020
€'000
Opening carrying value 448,418 348,519
Purchase at cost and capital expenditure 194,429 43,851
Gains on revaluation to fair value 41,031 32,878
Purchase of leasehold interest (non cash) - 23,170
Total carrying value at 31 December 683,878 448,418
Gains on investment properties at fair value comprise:
Valuation gains 40,683 31,958
Decrease in leasehold liability 265 (137)
Movements in lease incentives 83 1,057
41,031 32,878
Valuation Methodology
Valuations were performed by CBRE GmbH and Savills, both accredited independent valuers with a recognised and
relevant professional qualification. The valuers have sufficient current local and national knowledge of the particular
property markets involved and have the skills and understanding to undertake the valuations competently.
The Investment Manager appoints a suitable valuer (such appointment is reviewed on a periodic basis) to undertake
a valuation of all the direct real estate investments on a quarterly basis. The valuation is undertaken in accordance
with the RICS Valuation – Global Standards 2020, (Red Book), published by the Royal Institution of Chartered
Surveyors.
The Investment Manager meets with the valuer on a quarterly basis to ensure the valuer is aware of all relevant
information for the valuation and any change in the investments over the quarter. The Investment Manager then
reviews and discusses draft valuations with the valuer to ensure correct factual assumptions are made prior to the
valuer issuing a final valuation report.
The fair value of completed investment property is determined using the discounted cash flow method. Future annual
net operating income over a hold period of 10 years. Growth and inflation are included explicitly in the cash flow
forecast. The valuer calculates the present value of cashflow generated by the investment property plus the present
value of the exit value at the end of the 10-year hold period. The cash flow is discounted at a rate the valuer considers
appropriate for the specific investment property.
102 Annual Report 2021
The property valuer takes account of deleterious materials included in the construction of the investment properties
in arriving at its estimate of fair value when the Investment Manager advises of the presence of such materials.
The majority of the leases are on a full repairing and insurance basis and as such the Group is not liable for costs in
respect of repairs or maintenance to its investment properties.
The fair value of investment properties amounted to €666,008,000. The difference between the fair value and
the value per the Consolidated Balance Sheet at 31 December 2021 consists of accrued income relating to the
pre-payment for rent-free periods recognised over the life of the lease, and a lease asset relating to future use of
the leasehold at Den Hoorn. These total €5,035,000 and €22,905,000 respectively. The rent incentive balance is
recorded separately in the financial statements as a current asset, and the lease asset is offset by an equal and
opposite lease liability.
The following disclosure is provided in relation to the adoption of IFRS 13 Fair Value Measurement. All properties are
deemed Level 3 for the purposes of fair value measurement and the current use of each property is considered the
highest and best use.
Country and sector
Fair Value
€'000 Valuation techniques
Key Unobservable
inputs Range (weighted average)
Netherlands -
Logistics
234,800 Discounted Cash Flow Annual rent per sq m 44.14 - 69.81 (59.85)
Capitalisation rate 3.60% - 4.78% (4.05%)
Discount rate 4.15% - 5.25% (4.57%)
Germany - Logistics 70,000 Discounted Cash Flow Annual rent per sq m 65.97 - 66.04 (66.01)
Capitalisation rate 3.20% - 3.35% (3.26%)
Discount rate 3.85% - 4.10% (3.95%)
France - Logistics 74,500 Discounted Cash Flow Annual rent per sq m 48.78 - 87.48 (76.37)
Capitalisation rate 4.30% - 5.00% - (4.50%)
Discount rate 4.40% - 5.25% - (4.64%)
Poland - Logistics 90,000 Discounted Cash Flow Annual rent per sq m 48.20 - 65.42 - (54.53)
Capitalisation rate 5.05% - 5.65% - (5.27%)
Discount rate 5.18% - 5.63% - (5.37%)
Spain - Logistics 196,708 Discounted Cash Flow Annual rent per sq m 32.51 - 70.18 - (54.15)
Capitalisation rate 3.75% - 5.65% - (4.10%)
Discount rate 4.25% - 7.50% - (4.91%)
103Annual Report 2021
Sensitivity Analysis
The table below presents the sensitivity of the valuation to changes in the most significant assumptions underlying
the valuation of investment property.
Country and sector Assumption Movement
Effect on Valuation
€’000
Netherlands - Logistics Capitalisation and
Discount rate
+50 basis points (26,400)
- 50 basis points 33,800
Germany - Logistics Capitalisation and
Discount
+50 basis points (9,300)
- 50 basis points 12,800
France - Logistics Capitalisation and
Discount rate
+50 basis points (7,500)
- 50 basis points 9,200
Poland - Logistics Capitalisation and
Discount rate
+50 basis points (7,600)
- 50 basis points 9,200
Spain - Logistics Capitalisation and
Discount rate
+50 basis points (22,164)
- 50 basis points 28,826
10. Trade and Other Receivables
2021
€'000
2020
€'000
Trade debtors 5,549 4,130
VAT receivable 591 140
Lease incentives 5,035 4,952
Other receivables - 64
Total receivables 11,175 9,286
The ageing of these receivables is as follows:
2021
€'000
2020
€'000
Less than 6 months 5,580 8,769
Between 6 & 12 months 5,595 517
11,175 9,286
11. Cash and Cash Equivalents
2021
€'000
2020
€'000
Cash at bank 23,280 24,874
Total cash and cash equivalents 23,280 24,874
104 Annual Report 2021
12. Leasehold Liability
2021
€'000
2020
€'000
Maturity analysis - contractual undiscounted cash flows
Less than one year 550 550
One to five years 2,201 2,201
More than five years 25,615 26,165
Total undiscounted lease liabilities 28,366 28,916
Lease liability included in the Consolidated Balance Sheet
Current 550 550
Non - current 22,355 22,620
Total lease liability included in the Consolidated Balance Sheet 22,905 23,170
On 15 January 2020 the Group acquired a new logistics warehouse in Den Hoorn. The property is on land owned by
the local municipality and leased to the Group on a perpetual basis. The Group reserves the option to acquire the
freehold ownership on 1 July 2044 for the total sum of €15,983,000. The annual ground lease payments amount to
€531,000 per annum, the present value of these future payments being €22,905,000 as at 31 December 2021.
13. Trade and Other Payables
2021
€'000
2020
€'000
Rental income received in advance 1,964 2,604
Accrued acquisition and development costs 41 833
Management fee payable 931 555
VAT payable 643 811
Accruals 2,850 1,048
Trade creditors 5,164 1,236
Tenant deposits 2,873 1,204
Total payables 14,466 8,291
105Annual Report 2021
14. Bank Loans
2021
€'000
2020
€'000
Bank borrowings drawn 177,100 144,600
Loan issue costs paid (1,740) (1,599)
Accumulated amortisation of loan issue costs 587 330
Total Bank Loans 175,947 143,331
2021
€'000
2020
€'000
Maturity less than 1 year 15,500 -
Maturity beyond 1 year 160,447 143,331
Total payables 175,947 143,331
The above loans are secured on the following properties on a non-recourse basis.
Property Country
Loan
(€’000) Start date End date Lender
Fixed
Interest Rate
Erlensee Germany 17,800 20/02/2019 31/01/2029 DZ HYP 1.62%
Flörsheim Germany 12,400 18/02/2019 30/01/2026 DZ HYP 1.54%
Avignon + Meung Sur Loire France 33,000 12/02/2019 12/02/2026 BAYERN LB 1.57%
Ede/Waddinxveen + Oss Netherlands 44,200 06/06/2019 06/06/2025 BERLIN HYP 1.37%
s Heerenberg Netherlands 11,000 27/06/2019 27/06/2025 BERLIN HYP 1.13%
Zeewolde+Den Hoorn Netherlands 43,200 15/01/2020 14/01/2028 BERLIN HYP 1.40%
Not property related United Kingdom 15,500 15/10/2021 03/01/2022 INVESTEC 3.75%
177,100
15. Derivative Financial Instruments
2021
€'000
2020
€'000
Forward foreign exchange contracts 109 26
109 26
The Company employed currency hedging to provide greater certainty as to the level of Sterling distributions paid
in respect of the year. A forward FX contract was entered into fixing the EUR: GBP exchange rate at €1.17:£1 for the
three interim distributions paid in the year, and the fourth interim distribution paid after the year end. The forward
FX in place at year end relates solely to the fourth interim distribution payable.
106 Annual Report 2021
16. Share Capital
2021
€'000
2020
€'000
Opening balance 2,756 2,645
Ordinary shares issued 1,553 111
Balance as at 31 December 4,309 2,756
Ordinary shareholders participate in all general meetings of the Company on the basis of one vote for each
share held.
Each Ordinary share has equal rights to dividends and equal rights to participate in a distribution arising from a
winding up of the Company. The Ordinary shares are not redeemable.
The Group commenced the year with 244,500 001 Ordinary shares in issue. On 16 March 2021, the Group increased
its share capital by the issue of 18,450,000 new Ordinary Shares at 105p (€1.22) per share. On 1 October 2021,
the Group increased its share capital by the issue of 114,678,900 new Ordinary Shares at 109p (€1.27) per share.
The number of Ordinary shares in issue at 31 December 2021 was 377,628,901.
The nominal value of each share is £0.01.
17. Share Premium
2021
€'000
2020
€'000
Opening balance 61,691 50,364
Premium arising on issue of new shares 166,924 11,442
Share issue costs deducted (2,823) (115)
Balance as at 31 December 225,792 61,691
The share premium arising in the year was converted to EUR using the issue date exchange rate on 16 March 2021 of
1.16353482 and on 1 October 2021 of 1.16750143.
18. Special Distributable Reserve
2021
€'000
2020
€'000
Opening balance 185,661 191,579
Dividends Paid (7,454) (5,918)
Balance as at 31 December 178,207 185,661
At a General Meeting held on 8 November 2017, a special resolution was passed authorising, conditional on the issue of
Ordinary shares by the Company, the amount standing to the credit of the share premium account of the Company
following issue to be cancelled. In order to cancel the share premium account the Company was required to obtain a
Court Order, which was received on 13 March 2018. A Statement of Capital form was lodged at Companies House with
a copy of the Court Order on 16 March 2018. With effect from that date the amount of the share premium account
cancelled was credited as a special distributable reserve in the Company’s books of account.
107Annual Report 2021
19. Capital Reserves
Realised capital
reserve
€'000
Unrealised
gains/(losses)
€'000
Total capital
reserve
€'000
Opening balance (2) 31,770 31,768
Movement in deferred taxation - (10,294) (10,294)
Movement in fair value gains of investments - 41,031 41,031
Currency gains during the year - 753 753
Balance as at 31 December (2) 63,260 63,258
20. Operating Segments
The Group’s reportable segments are the geographical areas in which it operates. These operating segments
reflect the components of the Group that are regularly reviewed to allocate resources and assess performance.
2021
Netherlands
€'000
Poland
€'000
Germany
€'000
Spain
€'000
France
€'000
Parent
Company
€'000
Total
€'000
Total Assets 264,155 94,100 71,571 215,789 80,725 2,046 728,386
Total Liabilities 139,464 6,608 34,134 6,663 37,206 16,806 240,881
Total Comprehensive return
for the period (Revenue)
2,646 (969) (578) (14) 2,110 9,758 12,953
Total Comprehensive return
for the period (Capital)
21,436 6,607 3,655 2,814 (3,022) - 31,490
Included in Total
Comprehensive Income
Net gain from the fair value
adjustment on investment
property
29,636 7,708 4,580 2,319 (3,212) - 41,031
Rental income 10,368 3,634 2,846 2,306 4,129 - 23,283
108 Annual Report 2021
2020
Netherlands
€'000
Poland
€'000
Germany
€'000
Spain
€'000
France
€'000
Parent
Company
€'000
Total
€'000
Total Assets 231,747 57,557 67,387 29,423 83,745 14,245 484,104
Total Liabilities 113,681 3,407 33,038 1,138 38,389 855 190,508
Total Comprehensive return
for the period (Revenue)
2,376 (334) 625 437 1,732 7,003 11,839
Total Comprehensive return
for the period (Capital)
14,999 865 3,721 490 3,622 (147) 23,550
Included in Total
Comprehensive Income
Net gain from the fair value
adjustment on investment
property
21,199 1,709 3,931 801 5,238 - 32,878
Rental income 9,674 2,380 2,870 1,531 3,802 - 20,257
21. Financial instruments and investment properties
Fair value hierarchy
IFRS 13 requires the Group to classify its financial instruments held at fair value using a hierarchy that reflects the
significance of the inputs used in the valuation methodologies. These are as follows:
Level 1 – quoted prices in active markets for identical investments;
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates,
prepayments, credit risk, etc.); and
Level 3 – significant unobservable inputs.
The following table shows an analysis of the fair values of investment properties recognised in the balance sheet by
level of the fair value hierarchy:
31 December 2021
Level 1
€'000
Level 2
€'000
Level 3
€'000
Total fair value
€'000
Investment properties - - 683,878 683,878
31 December 2020
Level 1
€'000
Level 2
€'000
Level 3
€'000
Total fair value
€'000
Investment properties - - 448,418 448,418
The lowest level of input is the underlying yields on each property which is an input not based on observable
market data.
31 December 2021
Level 1
€'000
Level 2
€'000
Level 3
€'000
Total fair value
€’000
Derivative Financial Instruments - 109 - 109
109Annual Report 2021
31 December 2020
Level 1
€'000
Level 2
€'000
Level 3
€'000
Total fair value
€’000
Derivative Financial Instruments - 26 - 26
The lowest level of input is EUR:GBP exchange rate.
22. Risk Management
The Group’s financial instruments comprise securities and other investments, cash balances, loans and debtors and
creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement,
and debtors for accrued income. The Group also has the ability to enter into derivative transactions in the form of
forward foreign currency contracts, futures and options, for the purpose of managing currency and market risks
arising from the Group’s activities.
The main risks the Group faces from its financial instruments are (a) market price risk (comprising of (i) interest rate
risk, (ii) foreign currency risk and (iii) other price risk), (b) liquidity risk and (c) credit risk.
(a) Market price risk
The fair value or future cash flows of a financial instrument held by the Group may fluctuate because of changes
in market prices. This market risk comprises three elements - interest rate risk, foreign currency risk and other
price risk.
(i) Market risk arising from interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are
taken into account when making investment and borrowing decisions.
Interest risk profile
The interest rate risk profile of the portfolio of financial assets and liabilities at the year end were as follows:
As at 31 December 2021
Interest
rate
%
Local
currency
'000
Foreign
exchange
rate
Euro
equivalent
€'000
Assets:
Euro (0.50) 21,994 €1.00 21,994
Pound Sterling 0.25 149 0.84 177
Polish Zloty 1.25 5,080 4.60 1,109
Total 23,280
As at 31 December 2020
Interest
rate
%
Local
currency
'000
Foreign
exchange
rate
Euro
equivalent
€'000
Assets:
Euro (0.50) 23,594 €1.00 23,594
Pound Sterling 0.10 726 0.90 807
Polish Zloty 2,184 4.61 473
Total 24,874
The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.
An increase of 0.1 per cent in interest rates as at the reporting date would have increased the reported profit and
equity shareholders’ funds by €23,280. A decrease of 0.1 per cent would have reduced the reported profit and
equity shareholders’ funds by €23,280. Other financial assets (eg debtors) are not subject to interest rate risk.
110 Annual Report 2021
(ii) Market risk arising from foreign currency risk
The income and capital value of the Groups investments and liabilities can be affected by exchange rate
movements as some of the Group’s assets and income are denominated in currencies other than Euro which
is the Group’s reporting currency.
The revenue account is subject to currency fluctuation arising from overseas income.
Foreign currency risk profile
Foreign currency risk exposure by currency of denomination:
As at 31 December 2021
Investment
exposure
€'000
Net
monetary
exposure
€'000
Total
currency
exposure
€'000
Pound Sterling - 332 332
Złoty 51,852 1,109 52,961
Total foreign currency 51,852 1,441 53,293
Euro 632,026 (197,814) 434,212
Total 683,878 (196,373) 487,505
As at 31 December 2020
Investment
exposure
€'000
Net
monetary
exposure
€'000
Total
currency
exposure
€'000
Pound Sterling - 1,052 1,052
Złoty 51,852 473 473
Total foreign currency 51,852 1,525 1,525
Euro 396,566 (156,347) 292,071
Total 448,418 (154,822) 293,596
The asset allocation between specific markets can vary from time to time based on the Investment
Manager’s opinion of the attractiveness of the individual markets.
Foreign currency sensitivity
The following table details the Group’s sensitivity to a 10% increase and decrease in Sterling and Polish Zloty
against the Euro and the resultant impact that any such increase or decrease would have on net return
before tax and equity shareholders’ funds. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the year end for a 10% change in foreign
currency rates.
As at 31 December 2021
€'000
As at 31 December 2020
€'000
Zloty 110.9 47.3
Pound Sterling 33.2 105.2
111Annual Report 2021
(iii) Market risk arising from other price risk
Other price risks (i.e. changes in market prices other than those arising from interest rate or currency risk)
may affect the value of the quoted investments. The carrying amount for financial assets approximates to the
fair value of trade and other receivables (note 10) and trade and other payables (note 13).
Other price risk sensitivity
If the investment valuation fell by 10% at 31 December 2021, the decrease in total assets and return before
tax would be €66m (2020: €43m). If the investment portfolio valuation rose by 10% at 31 December 2020,
the increase in total assets and return before tax would be €66m (2020: €43m). Exposures vary throughout
the period as a consequence of changes in the net assets of the Group arising out of the investment and risk
management processes.
(b) Liquidity risk
This is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.
All creditors are payable within three months.
The Group’s liquidity risk is managed by the Investment Manager placing cash in liquid deposits and accounts.
Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial
commitments and also includes:
The level of dividends and other distributions to be paid by the Group may fluctuate and there is no guarantee
that any such distributions will be paid.
The Group’s target returns are targets only and are based on estimates and assumptions about a variety of
factors all of which are beyond the Group’s control and which may adversely affect the Group’s ability to make
its target returns. The Group may not be able to implement its investment policy and strategy in a manner
that generates dividends in line with the target returns or the Group’s investment objective. Liquidity risk is not
considered to be significant.
(c) Credit risk
This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction
that could result in the Group suffering a loss.
The risk is not considered significant by the Board, and is managed as follows:
The Group has acquired a portfolio of European logistics properties and has a number of leases with tenants.
In the event of default by a tenant, the Group will suffer a rental shortfall and incur additional costs until the
property is re-let, including legal expenses, in maintaining, insuring and re-letting the property. The Board
receives regular reports on concentrations of risk and any tenants in arrears. The Investment Manager monitors
such reports in order to anticipate and minimise the impact of defaults by tenants. Cash is held only with
reputable financial institutions with high quality external credit ratings.
None of the Group’s financial assets is secured by collateral.
The maximum credit risk exposure as at 31 December 2021 was €28.8m (2020 - €29.0m). This was due to trade
receivables and cash as per notes 10 and 11.
All cash is placed with financial institutions with a credit rating of -A or above. Bankruptcy or insolvency may
cause the Group’s ability to access cash placed on deposit to be delayed or limited. Should the credit quality
or the financial position of the financial institutions currently employed significantly deteriorate, the Investment
Manager would move the cash holdings to another financial institution. There are no significant concentrations of
liquidity risk within the Group.
(d) Taxation and Regulation risks
The Company must comply with the provisions of the Companies Act and, as the shares are admitted to the
premium segment of the Official List, the Listing Rules and the Disclosure Guidance and Transparency Rules.
A breach of the Companies Act could result in the Company and/or the Board being fined or being the subject
of criminal proceedings. Breach of the Listing Rules could result in the shares being suspended from listing.
Legal and regulatory changes could occur that may adversely affect the Company. The Company has obtained
UK Investment Trust Company status. The Company must comply with the provisions of sections 1158 and 1159
112 Annual Report 2021
of the Corporation Tax Act 2010 and Part 2 Chapter 1 of Statutory Instruments 2011/2999 to maintain this status.
Breaching these regulations could result in the Company paying UK Corporation Tax it would otherwise be
exempt from, adversely affecting the Company’s ability to pursue its investment objective.
Capital Management
The Group considers that capital comprises issued Ordinary shares and long-term borrowings. The Group’s
capital is deployed in the acquisition and management of subsidiaries in line with the Group’s investment
objective, specifically to provide a regular and attractive level of income return together with the potential for
long-term income and capital growth from investing in high quality European logistics real estate.The following
investment limits and restrictions apply to the Group and its business which, where appropriate, are measured at
the time of investment and once the Group is fully invested:
.
the Group will only invest in assets located in Europe;
.
no more than 50 per cent. of Gross Assets will be concentrated in a single country;
.
no single asset may represent more than 20 per cent. of Gross Assets;
.
forward funded commitments will be wholly or predominantly pre-let and the Group’s overall exposure to
forward funded commitments will be limited to 20 per cent. of Gross Assets;
.
the Group’s maximum exposure to any single developer will be limited to 20 per cent of Gross Assets;
.
the Group will not invest in other closed-ended investment companies;
.
the Group may only invest in assets with tenants which have been classified by the Investment Manager’s
investment process as having strong financial covenants; and
.
no single tenant will represent more than 20 per cent. of the Group’s annual gross income measured annually.
The Group’s principal use of cash will be to fund investments in accordance with its investment policy,
on-going operational expenses and to pay dividends and other distributions to shareholders, as set out in the
Prospectus. The Group may from time to time have surplus cash (for example, following the disposal of an
investment). Pending reinvestment of such cash, it is expected that any surplus cash will be temporarily invested
in cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with financial
institutions or other counterparties having a single –A (or equivalent) or higher credit rating as determined by an
internationally recognised rating agency; or ‘‘government and public securities’’ as defined for the purposes of
the FCA rules.
The Group monitors capital primarily through regular financial reporting and also through a gearing policy.
The Group intends to use gearing with the objective of improving shareholder returns. Debt will typically be
secured at the asset level and potentially at the Group level with or without a charge over some or all of the
Group’s assets, depending on the optimal structure for the Group and having consideration to key metrics
including lender diversity, cost of debt, debt type and maturity profiles. Borrowings will typically be non-recourse
and secured against individual assets or groups of assets and the aggregate borrowings at asset level will always
be subject to an absolute maximum, calculated at the time of drawdown for a property purchase, of 50 per cent.
of Gross Assets. Where borrowings are secured against a group of assets, such group of assets shall not exceed
25 per cent. of Gross Assets in order to ensure that investment risk remains suitably spread. The Board has
established gearing guidelines for the AIFM in order to maintain an appropriate level and structure of gearing
within the parameters set out above. Under these guidelines, aggregate borrowings at asset level are expected
to be at or around 35 per cent. of gross assets. The Board will keep the level of borrowings under review and the
aggregate borrowings will always be subject to the absolute maximum set at the time of the Group’s launch,
calculated at the time of drawdown for a property purchase, of 50 per cent. of Gross Assets. The fair value of the
Groups bank borrowings as at 31 December 2021 was €164,980,000 (2020: €150,121,000).
113Annual Report 2021
Contractual undiscounted maturities
All financial liabilities presented as current are payable within 3 months. The analysis of non-current financial
liabilities is below:
At 31 December 2021
Within 1 year
€’000
1-2 years
€’000
2-5 years
€’000
Over 5 years
€’000
Total
€’000
Bank loans 2,373 2,299 62,096 108,585 175,352
Lease liability 550 550 1,651 25,615 28,366
Total 2,922 2,849 63,747 134,200 203,718
At 31 December 2020
Within 1 year
€’000
1-2 years
€’000
2-5 years
€’000
Over 5 years
€’000
Total
€’000
Bank loans 1,963 1,963 51,588 102,218 157,732
Lease liability 550 550 1,651 26,165 28,916
Total 2,513 2,513 53,239 128,383 186,648
23. Related Party Transactions
The Company’s Alternative Investment Fund Manager (‘AIFM’) throughout the period was Aberdeen Standard Fund
Managers Limited (“ASFML”). Under the terms of a Management Agreement dated 17 November 2017 the AIFM
is appointed to provide investment management services, risk management services and general administrative
services including acting as the Company Secretary. The agreement is terminable by either the Company or ASFML
onnot less than 12 months’ written notice.
Under the terms of the agreement portfolio management services are delegated by ASFML to Aberdeen Standard
Investments Ireland Limited (‘ASIIL’). The total management fees charged to the Consolidated Statement of
Comprehensive Income during the period were €2,756,000 (2020: €2,066,000), of which €931,000 (2020: €555,000)
were payable at the period end. Under the terms of a Global Secretarial Agreement between ASFML and Aberdeen
Asset Management PLC (‘AAM PLC’), company secretarial services are provided to the Company by AAM PLC.
A Promotional and Marketing Budget fee of £137,000 was approved for 2021/2022 at the November 2021 Board
meeting which is payable to Aberdeen Asset Managers Limited (‘AAML’).
The remuneration of Directors is detailed below. Further details on the Directors can be found on pages 75 to 77.
2021
€’000
2020
€’000
Caroline Gulliver 45 43
John Heawood 40 37
Tony Roper 57 52
Diane Wilde 40 37
Balance as at 31 December 182 169
Please note the above figures are all Euro, while those in the directors remuneration report are stated in GBP.
114 Annual Report 2021
The Directors’ shareholdings are detailed below.
31 December 2021 Ordinary shares 31 December 2020 Ordinary shares
T Roper 92,812 55,000
C Gulliver 62,500 40,000
J Heawood 50,000 30,000
D Wilde 50,000 40,000
On 16 March 2021, the Director’s increased their shareholdings by: T Roper 20,000, C Gulliver 10,000, J Heawood
10,000 and D Wilde 10,000.
On 1 October 2021, the Director’s increased their shareholdings by: T Roper 17,812, C Gulliver 12,500, J Heawood
10,000 and D Wilde 14,375.
24. Lease Analysis
The group leases out its investment properties under operating leases.
The future income under operating leases, based on the unexpired lease length at the year end was as follows
(based on total rents).
2021
€’000
2020
€’000
Less than one year 28,027 22,443
Between one and two years 27,372 22,061
Between two and three years 26,867 21,781
Between three and four years 25,748 21,446
Between four and five years 24,415 20,664
More than five years 100,195 140,045
Total 232,624 248,440
The largest single tenant at the year end accounted for 10 per cent of the annualised rental income at
31 December 2021.
The Group has entered into commercial property leases on its investment property portfolio. These leases have
remaining lease terms of between 1 and 26 years.
25. Post Balance Sheet Events
Equity Raise
The Company issued 34.5 million new Ordinary Shares at a price of 110 pence per share on 4 February 2022, raising
gross proceeds of £38 million (€45.6 million). Following the issue of the new Ordinary shares, the total number of voting
rights in the Company is 412,174,356. Details of the Directors participation in the share issue is included in note 23.
War between Russia and Ukraine
In 2014 Russia annexed Crimea, a mainly Russian speaking region of Ukraine. This lead to various separatist uprisings
in the Donetsk and Luhansk regions of Ukraine. A peace deal in 2015 established a line of demarcation but since then,
low-level fighting has continued. Post the Balance Sheet date, on 24th February 2022, Russia launched a full scale
military operation in Ukraine.
As at the date of the report the Group did not hold any assets in Ukraine or Russia. The situation in the region is rapidly
evolving and the Directors and the Manager continue to monitor the situation carefully and will take whatever
steps are necessary and in the best interests of the Company’s Shareholders. This includes but is not limited to
115Annual Report 2021
ensuring that the requirements of all international sanctions are adhered to, actively managing the assets of the
Group proactively to best manage risk and ensuring that the Manager and other key suppliers continue to operate
all protections, protocols and monitoring of heightened cyber threats. The Group’s key suppliers do not have
operations in Ukraine or Russia and there is not expected to be any adverse impact from the military operation on the
operational activities, processes and procedures of the Group.
26. Capital Commitments
As at the 31 December 2021 the Group had capital commitments of €73.4m in relation to the acquisition of Phase IV
of the Sky Madrid portfolio.
27. Ultimate Parent Company
In the opinion of the Directors on the basis of shareholdings reviewed by them, the Company has no immediate or
ultimate controlling party.
28. Going Concern
The Group and Company meets its longer term funding and working capital requirements through a combination of
cash balances, rental income and a number of bank loans with different banks.
Following the share issuance in February 2022 (€45.6m), expected purchase of assets in the second quarter of
2022, and the upcoming drawing of additional asset level debt to fund these acquisitions, the Group will have
c.€20m cash reserves.
As detailed in note 14 there are currently six bank facilities, none of which are due to expire before June 2025.
The Group also has an undrawn €70m revolving credit facility with Investec Bank, €3.3m of which is committed
and available on request to cover any short-term liquidity gaps.
The ongoing COVID-19 pandemic, and the Russian invasion of Ukraine have not materially impacted the Groups
portfolio. Rent collection for the year was 99.5%, and the Groups portfolio delivered a capital return of 8.3%.
The Group has no assets or exposure to Russia or Ukraine but the potential impact of contagion in the European and
Global economy could, however, impact the Group through a reduction in rental income, reduction in investment
property valuation and increased debt costs. The Company has prepared cash flow forecasts which reflect these
potential impacts, including severe but plausible downside scenarios taking into account specific tenant risks and
upcoming debt requirements. The impact of reductions in rental income and increased debt costs in these scenarios
could be mitigated through, among other actions, a reduction in dividends to shareholders if considered necessary
by the Board.
The scenarios model reduced rental income through to 2023 and the worst case model equates to an overall 20%
reduction of rental income per annum over that period. There are no anticipated breaches of loan to value covenants
as a result of reasonably possible reductions in property values or rental income. Regarding interest cover covenants
of those three bank loans subject to financial covenants, two are secured over multiple properties. This affords the
Group headroom on the interest cover covenants under all scenarios. The third bank loan is secured over only one
property, with a single tenant, and as such is more exposed to the risk of rental reductions.
The Group is able to mitigate this risk through a combination of maintaining sufficient cash resources under the
modelled scenarios to, as permitted under the provisions of the loan facility agreement, potentially cure a breach
should it occur, or provide additional security, or let the property should it become vacant.
While the Company cannot predict with any certainty the full potential impact of these ongoing crises, the financial
forecasts prepared, including the downside scenarios, indicate that it can continue to operate as a going concern
and meet its liabilities as they fall due.
Accordingly, the Directors have a reasonable expectation that the Company will be able to continue as a going
concern and meet its liabilities as they fall due for a period of at least 12 months from the date of this report.
116 Annual Report 2021
Parent Company Balance Sheet
As at 31 December 2021
Notes
2021
€’000
2020
€’000
Non-current assets
Investment in subsidiaries 2 101,406 80,915
Group loan receivable 4 321,592 153,800
422,998 234,715
Current assets
Cash and cash equivalents 3 906 13,401
Group loan interest receivable 4 1,226 3,304
Group loan receivable 4 921 -
Other receivables 402 156
Derivative financial instruments 109 26
3,564 16,887
Total assets 426,562 251,602
Current liabilities
Bank loans 15,500 -
Trade and other payables 5 1,457 1,053
16,957 1,053
Non-current liabilities
Bank loans 6 (144) (196)
Total liabilities 16,813 857
Net assets 409,749 250,745
Represented by:
Share capital 7 4,309 2,756
Share premium 7 225,792 61,691
Special Distributable Reserve 178,207 185,661
Revenue reserve 1,529 1,552
Capital reserve (88) (915)
409,749 250,745
The financial statements on pages 117 to 127 were approved and authorised for issue by the Board of Directors on
21 April 2022 and signed on its behalf by:
Caroline Gulliver
Independent Non-Executive Director
Company number: 11032222.
The accompanying notes are an integral part of the financial statements.
117Annual Report 2021
Parent Company Statement of Changes in Equity
For the year ended 31 December 2021
Notes
Share
Capital
€'000
Share
Premium
€'000
Special
Distributable
Reserve
€'000
Revenue
Reserve
€'000
Capital
Reserve
€'000
Total
€'000
As at 31 December 2020 2,756 61,691 185,661 1,552 (915) 250,745
Issue of shares 7 1,553 166,924 - - - 168,477
Share Issue Costs 7 - (2,823) - - - (2,823)
Net gain after taxation - - - 8,711 827 9,538
Dividends paid - - (7,454) (8,734) - (16,188)
As 31 December 2021 4,309 225,792 178,207 1,529 (88) 409,749
For the year ended 31 December 2020
Notes
Share
Capital
€'000
Share
Premium
€'000
Special
Distributable
Reserve
€'000
Revenue
Reserve
€'000
Capital
Reserve
€'000
Total
€'000
As at 31 December 2019 2,645 50,364 191,579 2,139 (410) 246,317
Issue of shares 7 111 11,442 - - - 11,553
Share Issue Costs 7 - (115) - - - (115)
Net gain after taxation - - - 7,003 (505) 6,498
Dividends paid - - (5,918) (7,590) - (13,508)
As 31 December 2020 2,756 61,691 185,661 1,552 (915) 250,745
The accompanying notes are an integral part of the financial statements.
118 Annual Report 2021
Parent Company Notes to the Financial Statements
1. Accounting Policies
The principal accounting policies, all of which have been applied consistently throughout the period, are set out below.
(a) Basis of Accounting
Basis of preparation of financial statements
The Parent Company financial statements have been prepared in accordance with FRS 101 Reduced Disclosure
Framework and the Companies Act 2006 (the Act). FRS 101 sets out a reduced disclosure framework for a
‘qualifying entity’ as defined in the standard which addresses the financial reporting requirements and disclosure
exemptions in the individual financial statements of qualifying entities that otherwise apply the recognition,
measurement and disclosure requirements of UK-adopted IFRS.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under
that standard in relation to business combinations, financial instruments, capital management, presentation
of comparative information in respect of certain assets, presentation of a cash flow statement, impairment of
assets, share-based payments and related party transactions. Where required, equivalent disclosures are
given in the consolidated financial statements.
The Parent Company financial statements are prepared on a going concern basis as set out in Note 1 of the
consolidated financial statements.
The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006
and not presented an income statement or a statement of comprehensive income for the Company alone.
A summary of the Company’s significant accounting policies is set out below.
(b) Significant accounting judgements, estimates and assumptions
The preparation of the Company’s financial statements requires Directors to make judgements, estimates and
assumptions that affect the amounts recognised in the financial statements. However, uncertainty about these
judgements, assumptions and estimates could result in outcomes that could require a material adjustment to the
carrying amount of the asset or liability affected in future periods.
Key estimation uncertainties
Group loans are recognised at fair value. Each group loan is assessed individually in order to determine the fair
value, and any gain or loss to be taken through the statement of comprehensive income. Wherethe Company
is expected to receive all contractual payments on the loan in full, the fair value of the loan equals the face
value and as such no gain or loss arises. The net asset value of each borrower is reviewed to consider if there
is sufficient value within the subsidiary to meet the contractual cash flows. Fundamental to the net asset value
of the borrower is the fair value of the investment properties owned. The valuation uncertainty ofinvestment
properties is detailed within the consolidated group financial statement notes. Where there areexpected cash
shortfalls, these are reduced from the face value of the group loans to get to their fairvalue, discounted at the
interest rate of the loan, which is benchmarked to ensure is on an arms length market rate.
(c) Functional and Presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary
economic environment in which the Company and its subsidiaries operate (“the functional currency”) which
in the judgement of the directors is Euro. The financial statements are also presented in Euro. All figures in the
financial statements are rounded to the nearest thousand unless otherwise stated.
(d) Foreign Currency
Transactions denominated in foreign currencies are converted at the exchange rates ruling at the date of the
transaction. Monetary and non-monetary assets and liabilities denominated in foreign currencies held at the
financial period end are translated using London closing foreign exchange rates at the financial period end.
Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included
as an exchange gain or loss to capital or revenue in the Statement of Comprehensive Income as appropriate.
Foreign exchange movements on investments are included in the Statement of Comprehensive Income within
gains on investments.
119Annual Report 2021
(e) Revenue Recognition
Interest income is accounted for on an effective interest rate basis and included in finance income.
(f) Expenses
Expenses are accounted for on an accruals basis. The Company’s investment management and administration
fees, finance costs and all other expenses are charged through the Statement of Comprehensive Income.
(g) Taxation
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid
to taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the reporting date. Current income tax relating to items recognised directly in equity
is recognised in equity and not in profit or loss. Positions taken in tax returns with respect to situations in which
applicable tax regulations are subject to interpretation are periodically evaluated and provisions established
where appropriate.
Deferred income tax is provided using the liability method on all temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be
available against which deductible temporary differences, carried forward tax credits or tax losses can
be utilised.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities. In determining the expected manner of realisation of an asset the
directors consider that the Company will recover the value of investment property through sale. Deferred income
tax relating to items recognised directly in equity is recognised in equity and not in profit or loss.
(h) Distributions
Interim distributions payable to the holders of equity shares are recognised in the Statement of Changes in Equity
in the period in which they are paid. An annual shareholder resolution is voted upon to approve the Company’s
distribution policy.
(i) Share Issue Expenses
Incremental external costs directly attributable to the issue of shares that would otherwise have been avoided
are written off to share premium.
(j) Cash and Cash Equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits, and other short-term highly liquid
investments readily convertible within three months or less to known amounts of cash and subject to insignificant
risk of changes in value.
(k) Trade and Other Receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest rate method less any impairment losses.
(l) Trade and Other Payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest method.
(m) Reserves
Share Capital – This represents the proceeds from issuing Ordinary shares and is non-distributable.
Share Premium – Share premium represents the excess consideration received over the par value of Ordinary
shares issued and is classified as equity. Incremental costs directly attributable to the issue of Ordinary shares are
recognised as a deduction from share premium. This reserve is non-distributable.
Special Distributable Reserve – The special reserve is a distributable reserve to be used for all purposes permitted,
including the buyback of shares and the payment of dividends.
120 Annual Report 2021
Capital Reserve – Is a distributable reserve subject to applicable legislation and practice and realised gains and
losses on currency settlements and disposals are accounted for in this reserve.
Revenue Reserve – The revenue reserve is a distributable reserve and reflects any surplus arising from the net
return on ordinary activities after taxation.
(n) Investments in subsidiaries
Investments in subsidiaries are initially recognised at cost, then at the cost less any provision for impairment.
(o) Group Loans
Group loans are recognised and subsequently measured at fair value.
2. Investments in Subsidiaries
As at 31 December 2021 the total cost of shares purchased in ASELI Florsheim BV was €1,000 and €5,170,000 share
premium (2020: €1,000 and €5,170,000 share premium). The net assets of ASELI Florsheim BV are €9,798,000
as at 31 December 2021 (2020: €9,025,000). ASELI Florsheim BV is a private limited company, registered in
the Netherlands.
As at 31 December 2021 the total cost of shares purchased in ASELI Erlensee BV was €1,000 and €8,372,000
share premium (2020: €1,000 and €8,372,000 share premium). The net assets of ASELI Erlensee BV are €16,568,000
as at 31 December 2021 (2020: €14,265,000). ASELI Erlensee BV is a private limited company, registered in
the Netherlands.
As at 31 December 2021 the total cost of shares purchased in ASELI Leon BV was €1,000 and €15,664,000 share
premium (2020: €1,000 and €9,434,000 share premium). The net assets of ASELI Leon BV are €19,660,000 as at
31 December 2021 (2020: €12,100,000). ASELI Leon BV is a private limited company, registered in the Netherlands.
As at 31 December 2021 the total cost of shares purchased in ASELI Netherlands I BV was €1,000 and €6,132,000
share premium (2020: €1,000 and €8,868,000 share premium). The net assets of ASELI Leon BV are €13,721,000
as at 31 December 2021 (2020: €12,049,000). ASELI Netherlands I BV is a private limited company, registered
in the Netherlands.
As at 31 December 2021 the total cost of shares purchased in ASELI Netherlands II BV was €1,000 and €2,956,000
share premium (2020: €1,000 and €5,864,000 share premium). The net assets of ASELI Netherlands II BV are
€10,092,000 as at 31 December 2021 (2020: €9,005,000). ASELI Netherlands II BV is a private limited company,
registered in the Netherlands.
As at 31 December 2021 the total cost of shares purchased in ASELI Waddinxveen BV was €1,000 and €5,169,000
share premium (2020: €1,000 and €7,169,000 share premium). The net assets of ASELI Waddinxveen BV are
€17,378,000 as at 31 December 2021 (2020: €12,313,000). ASELI Waddinxveen BV is a private limited company,
registered in the Netherlands.
As at 31 December 2021 the total cost of shares purchased in ASELI France Holding was €10,078,000
(2020: €10,078,000). The net assets of ASELI France Holding are €17,234,000 as at 31 December 2021
(2020: €18,146,000). ASELI France Holding is a private limited company, registered in France.
As at 31 December 2021 the total cost of shares purchased in ASELI ‘s Heerenberg BV was €1,000 and €3,966,000
share premium (2020: €1,000 and €6,651,000 share premium). The net assets of ASELI ‘s Heerenberg BV are
€10,284,000 as at 31 December 2021 (2020: €9,751,000). ASELI s’Heernberg BV is a private limited company,
registered in the Netherlands.
As at 31 December 2021 the total cost of shares purchased in ASELI Netherlands Holdings BV was €1,000 and
€6,536,000 share premium (2020: €1,000 and €10,936,000 share premium). The net assets of ASELI Netherlands
Holdings BV are €16,831,000 as at 31 December 2021 (2020: €15,834,000). ASELI Netherlands Holdings BV is a private
limited company, registered in the Netherlands.
As at 31 December 2021 the total cost of shares purchased in PDC Industrial 92 Sp. z o.o. was €1,000 and €4,657,000
share premium (2020: €1,000 and €4,657,000 share premium). The net assets of PDC Industrial 92 Sp. z o.o. are
€7,578,000 as at 31 December 2021 (2020: €5,408,000). PDC Industrial 92 Sp. z o.o. is a private limited company,
registered in Poland.
121Annual Report 2021
As at 31 December 2021 the total cost of shares purchased in PDC Industrial 72 Sp. z o.o. was €88,000, and €3,619,000
share premium (2020: €88,000, and €3,619,000 share premium). The net assets of PDC Industrial 72 Sp. z o.o. are
€7,264,000 as at 31 December 2021 (2020: €5,750,000). PDC Industrial 72 Sp. z o.o. is a private limited company,
registered in Poland.
As at 31 December 2021 the total cost of shares purchased in Circulus Investments Sp. z o.o. was €2,994 and
€2,864,398 share premium (2020: € nil). The net assets of Circulus Investments Sp. z o.o. are €1,273,000 as at
31 December 2021 (2020: € nil). Circulus Investments Sp. z o.o. is a private limited company, registered in Poland.
As at 31 December 2021 the total cost of shares purchased in ASELI Madrid Holding S.L. was €26,123,000
(2020: € nil). The net assets of ASELI Madrid Holding S.L. are €27,594,000 as at 31 December 2021 (2020: € nil).
ASELI Madrid Holding S.L. is a private limited company, registered in Spain.
Indirect Subsidiaries
As at 31 December 2021 ASELI France Holdings owned 100% of the share a capital in both ASELI Meung SCI
and ASELI Avignon SCI. The total cost of of shares purchased was €7,030,000 and €18,174,000 respectively
(2020: €7,030,000 and €18,174,000). The net assets were €4,330,000 and €30,148,000 respectively
(2020: €10,857,000 and €26,178,000). Both companies are private limited companies, registered in France.
As at 31 December 2021 ASELI Netherlands Holdings BV owned 100% of the share a capital in ASELI Caprev Den
Hoorn BV. The total cost of of shares purchased was €12,000 and €13,424,000 share premium (2020: €12,000 and
€13,424,000 share premium). The net assets were €45,570,000 (2010: €39,167,000). Company is private a limited
companies, registered in the Netherlands.
As at 31 December 2021 ASELI Madrid Holding S.L. owned 100% of the share a capital in: ASELI Madrid 1 S.L.U.,
ASELI Madrid 3 S.L.U. and ASELI Madrid 4 S.L.U. The total cost of of shares purchased was €3,000 for all three
companies and for share premium €39,727,000, €51,903,000 and €37,021,000 respectively (2020: € nil for all three
companies). The net assets were €39,268,000, €54,479,000 and €38,316,000 respectively (2020: € nil for all three
companies). The above companies are private limited companies, registered in Spain.
Additional details of each subsidiary are noted below, all subsidiary shares are the same class:
Subsidiary Address
Share Capital
& Premium
(€’000)
% Shares
Owned Activity
ASELI Florsheim BV
c/o Citco Nederland B.V.
Naritaweg 165
1043 BW Amsterdam
The Netherlands
5,171
100 Property Investment
ASELI Erlensee BV
c/o Citco Nederland B.V.
Naritaweg 165
1043 BW Amsterdam
The Netherlands
8,373 100 Property Investment
ASELI Leon BV
c/o Citco Nederland B.V.
Naritaweg 165
1043 BW Amsterdam
The Netherlands
15,665 100 Property Investment
ASELI Netherlands I BV
c/o Citco Nederland B.V.
Naritaweg 165
1043 BW Amsterdam
The Netherlands
6,133 100 Property Investment
ASELI Netherlands II BV
c/o Citco Nederland B.V.
Naritaweg 165
1043 BW Amsterdam
The Netherlands
2,957 100 Property Investment
122 Annual Report 2021
Subsidiary Address
Share Capital
& Premium
(€’000)
% Shares
Owned Activity
ASELI Waddinxveen BV
c/o Citco Nederland B.V.
Naritaweg 165
1043 BW Amsterdam
The Netherlands
5,170 100 Property Investment
ASELI France Holding SAS
c/o Primexis, Tour Opus 12- La
Défense 9, 77, espalanade du
Général de Gaulle, 92914 Paris
LA Défense Cedex
10,078 100 Property Investment
ASELI sHeerenberg BV
c/o Citco Nederland B.V.
Naritaweg 165
1043 BW Amsterdam
The Netherlands
3,967 100 Property Investment
PDC Industrial 92 Sp. zo.o
c/o New Business Solutions
Piekna 18,
00-549 Warsaw,
Poland
4,658 100 Property Investment
PDC Industrial 72 Sp. zo.o
c/o New Business Solutions
Piekna 18,
00-549 Warsaw,
Poland
3,707 100 Property Investment
ASELI Netherlands Holdings BV
c/o Citco Nederland B.V.
Naritaweg 165
1043 BW Amsterdam
The Netherlands
6,537 100 Property Investment
ASELI Madrid Holding S.L. Pinar 7 - 5 Izq,
28006 Madrid, Spain
26,123 100 Property Investment
Circulus Investments Sp. zo.o c/o New Business Solutions
Piekna 18,
00-549 Warsaw,
Poland
2,867 100 Property Investment
3. Cash and Cash Equivalents
2021
€’000
2020
€’000
Cash 906 13,401
906 13,401
123Annual Report 2021
4. Group Loans
2021
€’000
2020
€’000
Accrued interest on Group loan receivable in less than one year 1,226 3,304
1,226 3,304
Group loan receivable in greater than one year 321,592 153,800
Group loan expected to be received in less than one year 921 -
322,513 153,800
A summary of the various group loans is provided in the following table:
Borrower
Limit
€’000
Balance Drawn €’000
Maturity
Date
yrs Loan Type
Interest
Rate
Outstanding Interest €’000
As at
31 Dec 2021
As at
31 Dec 2020
As at
31 Dec 2021
As at
31 Dec 2020
ASELI Florsheim BV 6,125 3,725 3,725 Jan 28 Interest Bearing Loan 3.50% 11 24
ASELI Erlensee BV 16,500 1,678 1,678 May 28 Interest Bearing Loan 2.50% - -
ASELI Erlensee BV 10,300 5,636 5,636 May 28 Interest Bearing Loan 3.50% 21 1
ASELI Leon BV 9,650 9,650 9,650 Jan 28 Interest Bearing Loan 2.80% 68 68
ASELI Leon BV 3,224 - - Mar 21 Interest Bearing Loan 5.00% - 1
ASELI Leon BV (Coslada) 6,398 6,398 6,398 Dec 29 Interest Bearing Loan 4.00% 65 65
ASELI Leon BV (Polinya) 13,370 13,221 - Jun 31 Interest Free Loan 4.00% 133 -
ASELI Netherlands I BV (Ede) 35,584 11,808 13,715 Aug 28 Interest Bearing Loan 4.80% 52 124
ASELI Netherlands II BV
(Zeewolde)
23,760 9,173 9,173 Sep 28 Interest Bearing Loan 4.60% 36 106
ASELI Den Hoorn BV 16,000 15,136 15,136 Jan 23 Interest Bearing Loan 6.50% 248 280
ASELI France Holding SAS
(Avignon)
10,905 10,905 10,905 Oct 28 Interest Bearing Loan 3.13% 29 749
ASELI France Holding SAS
(Meung)
6,096 4,212 4,212 Feb 29 Interest Bearing Loan 3.13% 11 251
ASELI Avignon SCI 27,265 2,454 2,454 Oct 28 Interest Bearing Loan 3.13% 6 19
ASELI Waddinxveen BV 29,200 9,075 9,575 Nov 28 Interest Bearing Loan 4.50% 35 81
ASELI Meung SCI 15,240 8,580 8,580 Nov 28 Interest Bearing Loan 3.13% 23 -
PDC Industrial 72 Sp. z o.o. 2,000 2,000 2,000 Feb 29 Interest Free Loan 0.00% - -
PDC Industrial 72 Sp. z o.o. 18,807 18,807 18,807 Feb 29 Interest Bearing Loan 4.10% 65 389
ASELI sHeerenberg BV 11,300 2,776 2,776 Jun 29 Interest Bearing Loan 5.29% 13 10
ASELI sHeerenberg BV 8,000 8,000 8,000 Jun 29 Interest Bearing Loan 5.29% 36 133
ASELI Madrid Holding S.L. 71,017 71,017 - Dec 23 Interest Bearing Loan 3.00% 140 -
ASELI Madrid Holding S.L. 60,928 60,928 - Dec 23 Interest Bearing Loan 2.10% 84 -
Circulus Investments Sp. z o.o. 25,780 25,073 - Apr 31 Interest Bearing Loan 4.10% 73 -
Circulus Investments Sp. z o.o. 6,460 921 -
*
Dec 22 Interest Bearing Loan 4.10% 3 -
PDC Industrial 92 Sp. z o.o. 21,340 21,340 21,340 Oct 29 Interest Bearing Loan 4.10% 74 1,003
455,249 322,513 153,800 1,226 3,304
Fair value of group loans 322,513 153,800 1,226 3,304
*
The loan was used by the Parent Company for the purposes of acquiring real estate for the purposes of the Group’s
property rental business and in particular to cover the amount of the Polish value added tax imposed on the sale of
the real estate and connected assets and the transfer of rights connected with the real estate. The loan is treated as
a short-term one and will be repaid immediately after receiving refund of aforementioned Polish value added tax.
124 Annual Report 2021
5. Trade and Other Payables
2021
€’000
2020
€’000
Investment Management fee payable 931 555
Accruals and other payables 526 498
1,457 1,053
6. Bank loans
In September 2021 the company increased its new uncommitted four year €40 million master facilities loan
agreement with Investec Bank plc to €70 million. Under the facility, the company may make requests for drawdowns
at selected short-duration tenors as and when needed to fund acquisitions or for other liquidity requirements.
Within the facility, £3.3 million committed revolving credit facility is carved out of the total €70 million limit of the
facility. As at 31 December 2021 the Company had drawn down €15.5 million of the facility (2020: € nil).
As at 31 December 2021 the company incurred €207,000 of capitalised financing fees, which are being spread over
the four year term of the facility.
7. Share Capital and Share Premium
Share Capital
2021
€’000
2020
€’000
Opening Balance 2,756 2,645
Ordinary shares issued 1,553 111
As at 31 December 4,309 2,756
Ordinary shareholders participate in all general meetings of the Company on the basis of one vote for each
share held.
Each Ordinary share has equal rights to dividends and equal rights to participate in a distribution arising from a
winding up of the Company. The Ordinary shares are not redeemable.
At the beginning of the year the Group had 244,500,001 Ordinary shares in issue. On 16 March 2021, the Group
increased its share capital by the issue of 18,450,000 new Ordinary Shares at 105p (€1.22) per share. On 1 October
2021, the Group increased its share capital by the issue of 114,678,900 new Ordinary Shares at 109p (€1.27) per
share. The number of Ordinary Shares authorised, issued and fully paid at 31 December 2021 was 377,628,901
(2020: 244,500,001). The nominal value of each share is £0.01.
Share Premium
2021
€’000
2020
€’000
Opening Balance 61,691 50,364
Premium arising on issue of new shares 166,924 11,442
Share issue costs deducted (2,823) (115)
Balance at 31 December 225,792 61,691
The share premium arising in the year was converted to EUR using the issue date exchange rate on 16 March 2021 of
1.16353482 and on 1 October 2021 of 1.16750143.
125Annual Report 2021
8. Dividends
To maintain status as an approved Investment Trust Company, the Company must comply with the eligibility
conditions set out in section 1158 of the Corporation Tax Act 2010 as well as additional requirements outlined in
The Investment Trust (Approved Company) (Tax) Regulations 2011. Regulation 19 provides that the Company must
comply with an income distribution requirement and, specifically, cannot retain more than the higher of 15% of its
income for the accounting period or any brought forward revenue reserve deficit. Any dividend that the Company
must pay in order to satisfy this requirement must be paid within 12 months of the end of the accounting period.
Dividends paid in the year have therefore been split between the Special Distributable Reserve and Revenue Reserve
as follows:
Special
Distributable
Reserve
€’000
Revenue
Reserve
€’000
Total
€’000
Accounting
Period Applied
to for Income
Retention Test
2020 Fourth Interim dividend of 1.41c
(1.24p) per Share paid 26 March 2021
- 3,447 3,447 2020
2021 First Interim dividend of 1.41c (1.21p)
per Share paid 25 June 2021
3,293 415 3,708 2021
2021 Second Interim dividend of 1.41c
(1.21p) per Share paid 24 September 2021
- 3,708 3,708 2021
2021 Third Interim dividend of 1.41c (1.21p)
per Share paid 30 December 2021
4,161 1,164 5,325 2021
Total Dividends Paid 7,454 8,734 16,188
9. Capital Commitments
As at 31 December 2021 the company had capital commitments of €129.6m (2020 - €207.4m) relating to undrawn
group loans.
10. Ultimate Parent Company
In the opinion of the Directors on the basis of shareholdings reviewed by them, the Company has no immediate or
ultimate controlling party.
11. Fair Value of Financial Instruments
The Company measures fair values using the following fair value hierarchy, which reflects the significance of the
inputs used in making the measurements.
Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active
markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less
than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from
market data.
Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes
inputs that are not observable and the unobservable inputs have a significant effect on the instrument’s valuation.
126 Annual Report 2021
Fair value hierarchy
The Company’s financial instruments measured at fair value relate to group loans due from group entities,
disclosed in Note 4. The group loans are classified as level 3 (2018: level 3) in the fair value hierarchy.
Level 3 fair value measurements
Reconciliation
The following table shows a reconciliation from the beginning balances to the ending balances for fair value
measurements in Level 3 of the fair value hierarchy.
2021
€’000
2020
€’000
Opening balance 153,800 193,685
Issued 179,563 31,001
Repayments (7,986) (26,357)
Conversions to share capital - (44,416)
Reclassifications - (113)
Conversions to investment in subsidiaries (2,864) -
Closing balance 322,513 153,800
Valuation techniques include net present value and discounted cash flows, each loan discounted at its arms length
interest rate noted in Note 4.
Unobservable inputs used in measuring fair value.
The following table sets out information about significant unobservable input of Group Loan Receivable interest
rate, used at 31 December 2021 and 2020 in measuring financial instruments categorised as Level 3 in the fair
value hierarchy.
Range of estimates (weighted-
average) for unobservable input -
Group loan receivable interest rate
Fair value measurement sensitivity
to unobservable inputs Movement
Effect on valuation
€’000
2 – 7% (2020: 2 – 6%) Significant increases in any of
these inputs in isolation would
result in lower fair values.
+1%
-1%
(15,874) (2020: (12,362))
17,380 (2020: 9,881)
127Annual Report 2021
Corporate Information
The Company’s Investment Manager is Aberdeen Standard Investments Ireland
Limited, a wholly owned subsidiary of abrdn pc whose group companies as at
31 December 2021 had approximately £542 billion under management
and administration.
128 Annual Report 2021
Corporate Information
Information about the Investment Manager
Aberdeen Standard Fund Managers Limited
Aberdeen Standard Fund Managers Limited (“ASFML”),
authorised and regulated by the Financial Conduct
Authority, has been appointed as alternative investment
fund manager to the Company. ASFML has in turn
delegated portfolio management to the Amsterdam
branch of Aberdeen Standard Investments Ireland
Limited (“ASIIL”).
abrdn
Worldwide, abrdn plc group companies had
approximately £542 billion under management and
administration (as at 31 December 2021) in assets for
a range of clients, including individuals and institutions,
through mutual and segregated funds.
abrdn operates a fully integrated property investment
management platform and has an extensive regional
presence across the UK and Continental Europe.
Its eight offices across Europe - London, Edinburgh,
Frankfurt, Amsterdam, Madrid, Paris, Brussels and
Copenhagen - employ a total of 290 abrdn real estate
professionals in fund management, research, transactions,
asset management, financing and other specialist
property activities.
The real estate teams within these offices are responsible
for sourcing and managing all the assets acquired across
the region. Having teams in the key target markets in
which the Company proposes to invest provides, in the
Investment Manager’s view, a significant competitive
advantage, with improved local market knowledge,
better access to potential deals, closer implementation of
asset business plans and improved ability to manage and
mitigate risk.
The Investment Team Senior Managers
Evert Castelein
Fund Manager, Real Estate
Investment Management
Evert is the primary Fund Manager responsible for the
Company’s portfolio and is based in Amsterdam. Prior to
the Company’s launch, he was Assistant Fund Manager
for one of abrdn’s flagship funds: the Aberdeen European
Balanced Property Fund with 13 retail, 3 office and
7 logistics properties in 7 Eurozone countries. Evert joined
the abrdn Real Estate Fund team in 2012, prior to which
he was responsible for the asset management of a small
German and Swedish fund and also Senior Analyst within
the Property Research and Strategy team of Aberdeen
Asset Management PLC (AAM). Evert joined Goodman
Property Investors (which was acquired by AAM in 2008)
in 2006, a leading unlisted property partnership investing
in logistics real estate across Europe and the FGH Bank
Netherlands, market leader in the financing of Dutch
commercial real estate, where he worked as a research
analyst. Evert has 15 years’ experience within the (direct)
real estate market. Evert holds a Masters degree in
Economic Geography from the University of Groningen
and has a Master of Science in Real Estate (MSRE).
Evert speaks Dutch, Frysian, German, French and English.
129Annual Report 2021
Attila Molnar
Deputy Fund Manager, Real
Estate Investment Management
Attila is a Fund Manager based in Frankfurt. Attila joined
Dresdner Bank’s property fund management business
(DEGI) in 2006, shortly before the business was acquired
by Aberdeen Asset Management PLC. Attila has been
involved in the planning and establishment of new
product lines for institutional clients and joined the fund
management teams of those funds. At present in addition
to his responsibilities for the Company he is responsible for
two institutional funds. Prior to joining DEGI Attila worked
for PricewaterhouseCoopers where he was responsible
for a diverse range of audit and due diligence projects in
the property funds sector. Attila graduated with a MSc
in Accounting and Finance from Budapest University of
Economics and speaks English, German and Hungarian.
Geoff Hepburn
Deputy Fund Manager, Real
Estate Investment Management
Geoff Hepburn is Deputy Fund Manager of the Company
based in Edinburgh. Responsibilities include developing
and implementing Fund strategy, client reporting,
managing transactions and ensuring the delivery of the
ESG strategy. Since joining abrdn in January 2012 he has
had responsibility as Investment Manager and Deputy
Fund Manager for several balanced UK institutional funds.
He joined abrdn from a London property company as
Development & Investment Manager responsible for two
large Central London office projects as well as a mixed use
regional investment and development portfolio. Previously,
Geoff worked for Ediston Properties having begun his
client-side career at Standard Life Investments as Portfolio
Manager on the Pooled Pension Fund in 2001. In a varied
career spanning more than 20 years, Geoff has transacted
and developed over £1bn of real estate.
Geoff graduated LLB Bachelor of Scots Law, followed
by a Postgraduate Diploma in Land Economy (with
commendation) in 1999. Both degrees were awarded by
the University of Aberdeen. Geoff qualified as a Chartered
Surveyor (MRICS) with DTZ in 2001. He speaks English
and French.
The Investment Process
The Investment Manager is responsible for sourcing and
managing the transaction process for new acquisitions.
The Investment Manager sources potential acquisitions
through its property teams based in Europe. The teams
based in the target markets have an in-depth knowledge
of the local markets and a wide network of relationships for
identifying and selecting the best investment opportunities.
Having local teams on the ground provides for in-depth
local insight and, in turn, is a significant competitive
advantage that should enable the Investment Manager
to implement the Company’s investment policy in the key
cities and regions.
Furthermore, focusing on income durability, location and
propensity for rental growth, combined with the ability
to carry out active asset management, enables the
Investment Manager to invest in properties where the
competition from other investors is weaker than for the
big, long-leased properties with no asset management
requirements, where competition among potential buyers
is very high.
Each transaction is assessed against individual fund
criteria and, if considered potentially suitable, a detailed
financial and economic analysis and review is undertaken
of the property, the location, quality of construction,
the existing leases, the rents being paid versus market level,
the tenants and the market prospects. This process
is informed by a significant database of proprietary
information held by the Investment Manager, experienced
investment professionals, including people on the ground
in the relevant markets and a dedicated research function
that assists in identifying rental and capital growth
prospects at country, regional, city, sub-market and
sector level.
The Investment Manager operates a pan-European
Investment Committee which approves all investment
plans, transactions, financing decisions and material
asset management activity. The Investment Committee
includes senior members of the real estate team.
If, following analysis, property inspections and negotiations
with the owner of the property, the fund managers wish
to proceed with an acquisition, Investment Committee
approval is required.
An active asset management strategy (i.e. defining,
implementing and regularly reviewing business plans for
each property in the Portfolio) is an important element in
helping to deliver investment performance. An important
part of this is that the properties are managed by local
asset managers in the countries where the properties are
located who have better access to tenants, advisers and
consultants to help generate outperformance.
130 Annual Report 2021
Active asset management means the individual asset
manager involved in acquiring the property is also
responsible for implementing the business plan once
acquired, resulting in carefully researched and robust
assumptions and a focus on long-term performance
from purchase through to any potential sale. The types of
active asset management initiatives which the Investment
Manager may utilise are:
.
renegotiating leases to capture market rental
growth and/or extend lease duration;
.
managing any vacancies to maximise
rental performance;
.
exploiting ancillary development opportunities on or
around the properties;
.
assessing and effecting changes of use where this would
add value;
.
undertaking refurbishments to increase rents; and
.
changing unit size and configuration to maximise the
potential income from a property.
The majority of the Portfolio comprises properties where
the main asset management activities are likely to be
renegotiating leases, managing vacancies, growing rental
income and undertaking light refurbishments.
Approach to ESG
The Investment Manager views ESG as a fundamental
part of its business. Whilst real estate investment provides
valuable economic benefits and returns for investors it has
– by its nature – the potential to affect environmental and
social outcomes, both positively and negatively.
The Investment Manager’s approach is underpinned by
the following three over-arching principles:
.
Transparency, Integrity and Reporting: being transparent
in the ways in which it communicates and discusses
strategy, approach and performance with investors and
stakeholders.
.
Capability and Collaboration: drawing together and
harnessing the capabilities and insights of its platforms,
with those of its investment, supply chain and industry
partners.
.
Investment Process and Asset Management: integrating
ESG into decision making, governance, underwriting
decisions and asset management approach. This
includes the identification and management of material
ESG risks and opportunities across the portfolio.
131Annual Report 2021
Corporate Information
Investor Information
Keeping You Informed
For internet users, detailed data on the Company,
including price, performance information and a monthly
fact sheet is available from the Company’s website
(eurologisticsincome.co.uk) and the TrustNet website
(trustnet.co.uk). Alternatively you can call 0808 500 0040
(free when dialling from a UK landline) for investment
company information.
Twitter:
@abrdn Trusts
LinkedIn:
abrdn Investment Trusts
Investor Warning
The Board has been made aware by the Manager that
some investors have received telephone calls from
people purporting to work for the Manager, or third parties,
who have offered to buy their investment trust shares.
These may be scams which attempt to gain personal
information with which to commit identity fraud or could
be ‘boiler room’ scams where a payment from an investor
is required to release the supposed payment for their
shares. These callers do not work for the Manager and
any third party making such offers has no link with the
Manager. The Manager never makes these types of offers
and does not ‘cold-call’ investors in this way. If investors
have any doubt over the veracity of a caller, they should
not offer any personal information, end the call and
contact the Manager’s investor services centre using the
details provided below.
Dividend Tax Allowance
The annual tax-free personal allowance on dividend
income is £2,000 for the 2022/2023 tax year. Above this
amount, individuals will pay tax on their dividend income
at a rate dependent on their income tax bracket and
personal circumstances. The Company will provide
registered shareholders with a confirmation of dividends
paid by the Company and this should be included with
any other dividend income received when calculating and
reporting to HMRC total dividend income received. It is the
shareholder’s responsibility to include all dividend income
when calculating any tax liability.
Direct
Investors can buy and sell shares in the Company directly
through a stockbroker or indirectly through a lawyer,
accountant or other professional adviser. Alternatively,
for retail clients, shares can be bought directly through
the abrdn Investment Plan for Children, abrdn Share Plan
and abrdn Investment Trust ISA.
abrdn Investment Plan for Children
abrdn runs an Investment Plan for Children (the “Children’s
Plan”) which covers a number of investment companies
under its management including the Company. Anyone
can invest in the Children’s Plan, including parents,
grandparents and family friends (subject to the eligibility
criteria as stated within the terms and conditions). All
investments are free of dealing charges on the initial
purchase of shares, although investors will suffer the
bid-offer spread, which can, on some occasions, be a
significant amount. Lump sum investments start at £150
per trust, while regular savers may invest from £30 per
month. Investors simply pay Government Stamp Duty
(currently 0.5%) on all purchases. Selling costs are £10 +
VAT. There is no restriction on how long an investor need
invest in the Children’s Plan, and regular savers can stop
or suspend participation by instructing abrdn in writing at
any time. In common with other schemes of this type, all
investments are held in nominee accounts. Investors have
full voting and other rights of share ownership.
abrdn Investments Trust Share Plan
abrdn runs a Share Plan (the “Plan”) through which
shares in the Company can be purchased. There are no
dealing charges on the initial purchase of shares, although
investors will suffer the bid-offer spread, which can,
on some occasions, be a significant amount. Lump sum
investments start at £250, while regular savers may invest
from £100 per month. Investors simply pay Government
Stamp Duty (currently 0.5%). Selling costs are £10 + VAT.
There is no restriction on how long an investor need
invest in a Plan, and regular savers can stop or suspend
participation by instructing abrdn in writing at any time.
In common with other schemes of this type, all investments
are held in nominee accounts. Investors have full voting
and other rights of share ownership.
abrdn Investment Trusts ISA
An investment of up to £20,000 can be made in the tax
year 2022/2023. The annual ISA administration charge is
£24 + VAT, calculated annually and applied on 31 March
(or the last business day in March) and collected soon
thereafter either by direct debit or, if there is no valid direct
debit mandate in place, from the available cash in the Plan
prior to the distribution or reinvestment of any income, or,
where there is insufficient cash in the Plan, from the sale of
investments held in the Plan. Investors have full voting and
other rights of share ownership. Under current legislation,
investments in ISAs can grow free of capital gains tax.
132 Annual Report 2021
ISA Transfer to abrdn
You can choose to transfer previous tax year investments
to us which can be invested in the Company while
retaining your ISA wrapper. The minimum lump sum for
an ISA transfer is £1,000, subject to a minimum per trust
of £250.
Shareholder Enquiries
In the event of queries regarding their holdings of shares,
lost certificates dividend payments, registered details, etc
shareholders holding their shares in the Company directly
should contact the registrars, Equiniti Limited, Aspect
House, Spencer road, Lancing West Sussex or Tel: 0371
384 2416 Lines are open 8.30 a.m. to 5.30 p.m. (UK Time)
Monday to Friday (excluding public holidays in England &
Wales). Calls may be recorded and monitored randomly
for security and training purposes. Changes of address
must be notified to the registrars in writing.
Any general enquiries about the Company should be
directed to the Company Secretary, abrdn European
Logistics Income plc, Bow Bells House, 1 Bread Street,
London EC4M 9HH or by email at CEF.CoSec@abrdn.com.
If you have any questions about an investment held
through the abrdn Share Plan, abrdn Investment Trusts
ISA or abrdn Investment Plan for Children, please
telephone the Manager’s Customer Services Department
on 0808 500 0040. Alternatively, email inv.trusts@abrdn.com
or write to abrdn Investment Trusts, PO Box 11020,
Chelmsford, Essex CM99 2DB.
Literature Request Service
For literature and application forms for the Company
and the abrdn range of investment trust products, please
telephone: 0808 500 4000. For information on the abrdn
Investment Plan for Children, abrdn Investment Trusts
Share Plan, abrdn ISA or ISA Transfer to abrdn please write
to abrdn Investment Trust Administration, PO Box 11020,
Chelmsford, Essex, CM99 2DB or telephone the Manager’s
Customer Services Department on 0808 500 00 40 (free
from a UK landline). Terms and conditions for the abrdn
managed savings products can be found under the
literature section of invtrusts.co.uk.
Key Information Document (“KID”)
The KID relating to the Company and published by the
Manager can be found on the Manager’s website:
www.invtrusts.co.uk/en/fund-centre/literature-order-form.
Online Dealing
There are a number of online dealing platforms for
private investors that offer share dealing, ISAs and
other means to invest in the Company. Real-time
execution-only stockbroking services allow you to trade
online, manage your portfolio and buy UK listed shares.
These sites do not give advice. Some comparison websites
also look at dealing rates and terms. Some well-known
online providers, which can be found through internet
search engines, include:
AJ Bell YouInvest; Barclays Smart Investor; Charles Stanley
Direct; Fidelity; Halifax; Hargreaves Lansdown; Interactive
Investor; Novia; Transact; and Standard Life.
Discretionary Private Client Stockbrokers
If you have a large sum to invest, you may wish to contact a
discretionary private client stockbroker. They can manage
your entire portfolio of shares and will advise you on your
investments. To find a private client stockbroker visit The
Personal Investment Management and Financial Advice
Association at pimfa.co.uk.
Independent Financial Advisers
To find an adviser who recommends on investment trusts,
visit unbiased.co.uk.
Regulation of Stockbrokers
Before approaching a stockbroker, always check that they
are regulated by the Financial Conduct Authority:
Tel: 0800 111 6768
https://register.fca.org.uk/
register@fca.org.uk
AIFMD
The Company has appointed Aberdeen Standard Fund
Managers Limited as its alternative investment fund
manager and NatWest Trustee and Depositary Services
Limited (from 1 April 2022 Citibank UK Limited) as its
depositary under the AIFMD. Details of the leverage and
risk policies which the Company is required to have in
place under AIFMD are published in the Company’s PIDD
which can be found on the website eurologisticsincome.
co.uk. The periodic disclosures required to be made by the
AIFM under the AIFMD are set out on page 139.
133Annual Report 2021
Suitable for Retail/NMPI Status
The Company’s securities are intended for investors
primarily in the UK (including retail investors), professionally
advised private clients and institutional investors who
are seeking exposure to European logistical real estate
and who understand and are willing to accept the risks
of exposure to this asset class. Investors should consider
consulting a financial adviser who specialises in advising
on the acquisition of shares and other securities before
acquiring shares. Investors should be capable of evaluating
the risks and merits of such an investment and should have
sufficient resources to bear any loss that
may result.
The Company currently conducts its affairs so that its
securities can be recommended by a financial adviser
to ordinary retail investors in accordance with the
Financial Conduct Authority’s (FCA) rules in relation to
non-mainstream pooled investments (NMPIs) and
intends to continue to do so for the foreseeable future.
The Company’s shares are excluded from the FCA’s
restrictions which apply to non-mainstream investment
products because they are shares in an investment trust.
Note
Please remember that past performance is not a guide to
the future. Stock market and currency movements may
cause the value of shares and the income from them to fall
as well as rise and investors may not get back the amount
they originally invested.
As with all equity investments, the value of investment
trusts purchased will immediately be reduced by the
difference between the buying and selling prices of the
shares, the market maker’s spread.
Investors should further bear in mind that the value of
any tax relief will depend on the individual circumstances
of the investor and that tax rates and reliefs, as well as
the tax treatment of ISAs may be changed by
future legislation.
The information on pages 132 to 134 has been approved
for the purposes of Section 21 of the Financial Services
and Markets Act 2000 (as amended by the Financial
Services Act 2012) by Aberdeen Standard Fund Managers
Limited which is authorised and regulated by the Financial
Conduct Authority.
134 Annual Report 2021
Corporate Information
EPRA Financial Reporting (Unaudited)
In February 2022, EPRA issued new best practice recommendations (BPR) for financial guidelines on its definitions of
NAV measures: EPRA net tangible assets (NTA), EPRA net reinvestment value (NRV) and EPRA net disposal value (NDV).
The 2022 amendment to the EPRA BPR specifies an additional key metric - the EPRA LTV. The rationale behind each of
these measures is set out below. The Group has adopted these new guidelines and applied them in this Annual Report.
EPRA Net Tangible Assets (NTA) is considered to be the most relevant NAV measure for the Group and will now report this
as the primary non-IFRS NAV measure, replacing the previously reported EPRA NAV per share metrics.
Rationale:
EPRA Net Tangible Assets:
The underlying assumption behind the EPRA Net Tangible Assets calculation assumes entities buy and sell assets, thereby
crystallising certain levels of deferred tax liability.
EPRA Net Reinstatement Value:
The objective of the EPRA Net Reinstatement Value measure is to highlight the value of net assets on a long-term basis.
Assets and liabilities that are not expected to crystallise in normal circumstances such as the fair value movements on
financial derivatives and deferred taxes on property valuation surpluses are therefore excluded. Since the aim of the
metric is to also reflect what would be needed to recreate the company through the investment markets based on its
current capital and financing structure, related costs such as real estate transfer taxes should be included.
EPRA Net Disposal Value:
Shareholders are interested in understanding the full extent of liabilities and resulting shareholder value if company assets
are sold and/or if liabilities are not held until maturity. For this purpose, the EPRA Net Disposal Value provides the reader
with a scenario where deferred tax, financial instruments, and certain other adjustments are calculated as to the full
extent of their liability, including tax exposure not reflected in the Balance Sheet, net of any resulting taxation.
EPRA Loan-to-Value
LTV is a widely used KPI in corporate reporting. However, there was no consistency nor comparability in how the metric
was being calculated and reported across various listed real estate companies and different jurisdictions. The EPRA LTV
introduces a consistent and comparable metric for the sector, with the aim to assess the gearing of the shareholder
equity within a real estate company.
EPRA Performance Measures
31 December 2021
Total
31 December 2020
Total
A. EPRA earnings (€'000) 15,189 12,106
A. EPRA earnings per share (cents) 5.27 5.06
B. EPRA Net Tangible Assets (“NTA”) (€'000) 515,177 309,251
B. EPRA NTA per share (cents) 136.40 126.48
C. EPRA Net Reinstatement Value ("NRV") (€'000) 551,283 333,002
C. EPRA NRV per share (cents) 145.99 136.20
D. EPRA Net Disposal Value (“NDV”)(€'000) 491,894 287,003
D. EPRA NDV per share (cents) 130.26 117.38
E. EPRA Net Initial Yield 3.93% 4.54%
E. EPRA topped-up Net Initial Yield 4.02% 4.66%
F. EPRA Vacancy Rate 0.0% 0.0%
F. EPRA Cost Ratios - including direct vacancy costs 29% 24%
F. EPRA Cost Ratios - excluding direct vacancy costs 29% 24%
135Annual Report 2021
31 December 2021
Total
31 December 2020
Total
G. EPRA Capital Expenditure (€m) 194,429 43,856
H. EPRA Like for Like Rental Growth 1.3% 1.3%
I. EPRA LTV 24.8% 29.5%
A. EPRA Earnings (€000)
Earnings per IFRS income statement 44,443 35,389
Adjustments to calculate EPRA Earnings, exclude: - -
Net changes in value of investment properties (41,031) (32,878)
Deferred tax 11,847 9,629
Changes in fair value of financial instruments (83) (34)
EPRA Earnings 15,176 12,106
Weighted average basic number of shares (‘000) 288,115 239,213
EPRA Earnings per share (cents per share) 5.27 5.06
B. EPRA Net Tangible Assets (“NTA”) (€’000)
IFRS NAV 487,505 293,596
Exclude:
Fair value of financial instruments 109 26
Deferred tax in relation to fair value gains of
Investment Property
27,563 15,629
515,177 309,251
Shares in issue at end of year (‘000) 377,629 244,500
EPRA NAV per share (cents per share) 136.40 126.48
C. EPRA Net Reinstatement Value (“NRV”) (€’000)
EPRA NTA 515,177 309,251
Real Estate Transfer Tax and other acquisition costs 36,106 23,751
EPRA NRV 551,283 333,002
EPRA NRV per share (cents per share) 145.99 136.20
136 Annual Report 2021
31 December 2021
Total
31 December 2020
Total
D. EPRA Net Disposal Value (“NDV”) (€’000)
IFRS NAV 487,505 293,596
Fair Value of Fixed Interest Debt 4,389 (6,593)
EPRA NDV 491,894 287,003
EPRA NDV per share (cents per share) 130.26 117.38
E. EPRA Net Initial Yield and ‘topped up’ NIY disclosure (€’000)
Investment property - wholly owned 666,008 430,200
Less developments - -
Completed property portfolio 666,008 430,200
Allowance for estimated purchasers' costs 36,106 23,751
Gross up completed property portfolio valuation 702,114 453,951
Annualised cash passing rental income 29,445 21,933
Property outgoings (1,851) (1,305)
Annualised net rents 27,594 20,628
Add: notional rent expiration of rent free periods or
other lease incentives
600 522
Topped-up net annualised rent 28,194 21,150
EPRA NIY 3.93% 4.54%
EPRA "topped-up" NIY 4.02% 4.66%
F. EPRA Cost Ratios (€’000)
Administrative / property operating expense line
per IFRS income statement
10,148 7,896
Net service charge costs/fees (3,435) (3,096)
EPRA Costs (including direct vacancy costs) 6,713 4,800
Direct vacancy costs - -
EPRA Costs (excluding direct vacancy costs) 6,713 4,800
Gross Rental income less ground rent costs - per IFRS 23,283 20,257
EPRA Cost Ratio (including direct vacancy costs) 29% 24%
EPRA Cost Ratio (excluding direct vacancy costs) 29% 24%
Overhead and operating expenses capitalised
(incl. share of joint ventures)
- -
137Annual Report 2021
31 December 2021
Total
31 December 2020
Total
G. Property-related CapEx
Acquisitions 194,104 43,856
Investment Properties:
Incremental Lettable Space 325 -
Total CapEx 194,429 43,856
Conversion from accrual to cash basis (954) 2,367
Total CapEx on cash basis 193,475 46,223
H. Like For Like Rental Growth
Rental income growth:
France 0.0% 0.8%
Germany (1.5%) 5.1%
Netherlands 2.3% 0.2%
Poland 2.2% 1.2%
Spain 0.3% 0.0%
Total 1.3% 1.3%
I. EPRA LTV
Borrowings from Financial Institutions 177,100 144,600
Net payables 14,466 8,291
Exclude:
Cash and cash Equivalents (23,280) (24,874)
Net Debt (a) 168,286 128,017
Investment properties at fair value 666,008 430,200
Net receivables (excluding lease incentives) 13,106 4,409
Total Property Value (b) 679,114 434,609
LTV (a/b) 24.8% 29.5%
138 Annual Report 2021
Corporate Information
Alternative Investment Fund Managers Directive
Disclosures (Unaudited)
Aberdeen Standard Fund Managers Limited and the
Company are required to make certain disclosures
available to investors in accordance with the Alternative
Investment Fund Managers Directive (‘AIFMD’).
Those disclosures that are required to be made
pre-investment are included within a pre-investment
disclosure document (‘PIDD’) which can be found on
the Company’s website eurologisticsincome.co.uk.
There have been no material changes to the disclosures
contained within the Prospectus.
The periodic disclosures as required under the AIFMD to
investors are made below:
.
Information on the investment strategy, geographic and
sector investment focus and principal stock exposures
are included in the Strategic Report.
.
None of the Company’s assets are subject to special
arrangements arising from their illiquid nature.
.
The Strategic Report, note 22 to the Financial Statements
and the PIDD together set out the risk profile and risk
management systems in place. There have been no
changes to the risk management systems in place in the
period under review and no breaches of any of the risk
limits set, with no breach expected.
.
There are no new arrangements for managing the
liquidity of the Company or any material changes to
the liquidity management systems and procedures
employed by ASFML.
.
All authorised Alternative Investment Fund Managers
are required to comply with the AIFMD Remuneration
Code. In accordance with the Remuneration Code,
the Company’s AIFM remuneration policy is available
from the Company Secretaries, Aberdeen Asset
Management PLC on request (see contact details
on page 133) and the numerical remuneration in the
disclosures in respect of the AIFM’s reporting period for
the year ended 31 December 2021 are available on the
Company’s website.
Leverage
The table below sets out the current maximum permitted
limit and actual level of leverage for the Company:
Gross
method
Commitment
method
Maximum level of leverage 365.0% 185.0%
Actual level at
31 December 2021
136% 136%
There have been no breaches of the maximum level
during the period and no changes to the maximum level
of leverage employed by the Company. There is no right
of re-use of collateral or any guarantees granted under
the leveraging arrangement. Changes to the information
contained either within this Annual Report or the PIDD
in relation to any special arrangements in place, the
maximum level of leverage which ASFML may employ on
behalf of the Company; the right of use of collateral or any
guarantee granted under any leveraging arrangement; or
any change to the position in relation to any discharge of
liability by the Depositary will be notified via a regulatory
news service without undue delay in accordance with
the AIFMD.
The information above has been approved for the
purposes of Section 21 of the Financial Services and
Markets Act 2000 (as amended by the Financial Services
Act 2012) by Aberdeen Standard Fund Managers Limited
which is authorised and regulated by the Financial
Conduct Authority.
139Annual Report 2021
Corporate Information
Glossary of Terms and Definitions and Alternative
Performance Measures
abrdn abrdn plc
abrdn Group the abrdn plc group of companies
AIC Association of Investment Companies
AIFMD The Alternative Investment Fund Managers Directive
AIFM the alternative investment fund manager, being ASFML
Alternative Performance Measures Alternative performance measures are numerical measures of the
Company’s current, historical or future performance, financial position or cash
flows, other than financial measures defined or specified in the applicable
financial framework. The alternative performance measures that have been
adopted by the Company are in line with general comparable measures
used widely across the investment trust industry such as the level of discount/
premium, NAV/Share price total return and ongoing charges which are each
explained more fully below. The Company’s applicable financial framework
includes IFRS and the AIC SORP
Annual Rental Income Cash rents passing at the Balance Sheet date
ASFML or AIFM or Manager Aberdeen Standard Fund Managers Limited
ASIIL or the Investment Manager Aberdeen Standard Investments Ireland Limited is a wholly owned subsidiary of
Standard Life Aberdeen plc and acts as the Company’s investment manager
Asset Cover The value of a company’s net assets available to repay a certain security.
Asset cover is usually expressed as a multiple and calculated by dividing the
net assets available by the amount required to repay the specific security
Contracted Rent The contracted gross rent receivable which becomes payable after all the
occupier incentives in the letting have expired
Covenant Strength This refers to the quality of a tenant’s financial status and its ability to perform
the covenants in a lease
Dividend Cover
1
The ratio of the Company’s net profit after tax (excluding the below items) to
the dividends paid.
As at
31 December 2021
As at
31 December 2020
Earnings per IFRS income
statement
44,443 35,389
Adjustments to calculate
dividend cover:
Net changes in the value of
investment property
(41,031) (32,878)
Deferred Taxation 10,294 9,629
Effects of foreign exchange
differences
(1,017) 591
Profits (A) 12,689 12,731
Dividend (B) 16,188 13,508
Dividend Cover (A)/(B) 78.4% 94.2%
1
Defined as an Alternative Performance Measure.
140 Annual Report 2021
Discount
1
The amount by which the market price per share of an investment trust is
lower than the net asset value per share. The discount is normally expressed
as a percentage of the NAV per share
As at
31 December 2021
As at
31 December 2020
Share price (A) 117.00p 108.50p
NAV (B) 108.50p 107.95p
Premium / (Discount) (A-B)/B 7.8% 0.5%
Earnings Per Share Profit for the period attributable to shareholders divided by the weighted
average number of shares in issue during the period
EPRA European Public Real Estate Association
Europe The member states of the European Union, the European Economic Area
(“EEA”) and the members of the European Free Trade Association (“EFTA”)
(and including always the United Kingdom, whether or not it is a member state
of the European Union, the EEA or a member of EFTA)
ERV The estimated rental value of a property, provided by the property valuers
Gearing
1
Calculated as gross external bank borrowings dividend by total assets
As at
31 December 2021
As at
31 December 2020
Bank Loans €177.1m €144.6m
Gross Assets €705.50 €460.9m
Gearing 25.1% 31.4%
Group The Company and its subsidiaries
Gross Assets and Gross Asset Value
(GAV)
The aggregate value of the total assets of the Company as determined in
accordance with the accounting principles adopted by the Company from
time to time
As at
31 December 2021
As at
31 December 2020
Gross Asset Value per
Balance Sheet
728,386 484,104
Exclude IFRS 16 right of
use asset
(22,905) (23,170)
Gross Assets 705,481 460,934
FRC Financial Reporting Council
IFRS International Financial Reporting Standards
Index Linked The practice of linking the review of a tenant’s payments under a lease to
a published index, most commonly the Retail Price Index (RPI) but also the
Consumer Price Index (CPI), French Tertiary Activities Rent Index (ILAT)
141Annual Report 2021
Key Information Document or KID The Packaged Retail and Insurance-based Investment Products (PRIIPS)
Regulation requires the Manager, as the Company’s PRIIP “manufacturer,”
to prepare a key information document (“KID”) in respect of the Company.
This KID must be made available by the AIFM to retail investors prior to them
making any investment decision and is available via the Company’s website.
The Company is not responsible for the information contained in the KID and
investors should note that the procedures for calculating the risks, costs and
potential returns are prescribed by law. The figures in the KID may not reflect
the expected returns for the Company and anticipated performance returns
cannot be guaranteed
Lease incentive A payment used to encourage a tenant to take on a new lease, for example
by a landlord paying a tenant a sum of money to contribute to the cost of a
tenant’s fit-out of a property or by allowing a rent free period
Leverage For the purposes of the Alternative Investment Fund Managers Directive,
leverage is any method which increases the Company’s exposure, including
the borrowing of cash and the use of derivatives. It is expressed as a ratio
between the Company’s exposure and its net asset value and can be
calculated on a gross and a commitment method. Under the gross method,
exposure represents the sum of the Company’s positions after the deduction
of sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated
without the deduction of sterling cash balances and after certain hedging and
netting positions are offset against each other. At year end the loan to value
was 25.1% (2020: 31.4%)
NAV total return
1
The return to shareholders, expressed as a percentage of opening NAV,
calculated on a per share basis by adding dividends paid in the period to the
increase or decrease in NAV. Dividends are assumed to have been reinvested
in the quarter they are paid, excluding transaction costs
Year ended
31December 2021
Year ended
31December 2020
Opening NAV 120.1c 111.0c
Movement in NAV 9.0c 9.1c
Closing NAV 129.1c 120.1c
% increase in NAV 7.49% 8.2%
Impact of reinvested dividends 4.91% 5.36%
NAV total return 12.4% 13.56%
Net Asset Value or NAV The value of total assets less liabilities. Liabilities for this purpose include
current and long-term liabilities. The net asset value divided by the number of
shares in issue produces the net asset value per share
142 Annual Report 2021
Ongoing Charges
1
Ratio of expenses as a percentage of average daily shareholders’ funds
calculated as per the industry standard. A reconciliation of ongoing charges
is below:
Year ended
31 December 2021
Year ended
31 December 2020
Expenditure per Statement of
comprehensive income 10,148 7,896
Less Property service charge
expense and bad debt provision (3,435) (3,492)
Group operating costs including
property costs (A) 6,713 4,403
Less Direct property expenses
and property management fees
excluding bad debt provision (1,851) (909)
Group operating costs
(excluding property costs) (B) 4,862 3,494
Average net asset value (C) 366,359 275,964
Ongoing charges
(excluding property costs) (B/C) 1.3% 1.3%
Ongoing charges
(including property costs) (A/C) 1.8% 1.6%
Passing Rent The rent payable at a particular point in time
PIDD The pre-investment disclosure document made available by the AIFM in
relation to the Company
Premium
1
The amount by which the market price per share of an investment trust
exceeds the net asset value per share. The premium is normally expressed as
a percentage of the net asset value per share
Prior Charges The name given to all borrowings including long and short-term loans and
overdrafts that are to be used for investment purposes, reciprocal foreign
currency loans, currency facilities to the extent that they are drawn down,
index-linked securities, and all types of preference or preferred capital,
irrespective of the time until repayment
Portfolio fair value The market value of the company’s property portfolio, which is based on the
external valuations provided by CBRE GmbH and Savills
The Royal Institution of
Chartered Surveyors (RICS)
The global professional body promoting and enforcing the highest
international standards in the valuation, management and development of
land, real estate, construction and infrastructure
143Annual Report 2021
Share price total return
1
The return to shareholders, expressed as a percentage of opening share price,
calculated on a per share basis by adding dividends paid in the period to the
increase or decrease in share price. Dividends are assumed to have been
reinvested in the quarter they are paid, excluding transaction costs
Year ended
31 December 2021
Year ended
31 December 2020
Opening Share Price 108.5p 90.4p
Movement in share price 8.5p 18.1p
Closing share price 117.0p 108.5p
% increase/(decrease)
in share price
7.8% 20.02%
Impact of reinvested dividends 4.6% 6.61%
Share price total return 12.4% 26.63%
SPA Sale and purchase agreement
SPV Special purpose vehicle
Total Assets Total assets less current liabilities (before deducting prior charges as
defined above)
WAULT Weighted Average Unexpired Lease Term. The average time remaining until
the next lease expiry or break date
144 Annual Report 2021
Notice
Notice of Annual General Meeting
Notice is hereby given that the fourth annual general meeting (the “Annual General Meeting”) of abrdn European
Logistics Income plc (the “Company”) will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH, at12:30 p.m.
on 6 June 2022 for the following purposes:
To consider and if thought fit, pass the following resolutions of which Resolutions 1 to 11 will be proposed as ordinary
resolutions and Resolutions 12 to 14 as special resolutions:
Ordinary Business
1. To receive and adopt the Company’s financial statements for the year ended 31 December 2021, together with the
Directors’ Report and the auditor’s report thereon.
2. To receive and adopt the Directors’ Remuneration Report as set out in the Company’s Annual Report and financial
statements for the year ended 31 December 2021 (other than the Directors’ Remuneration Policy as set out on
pages 75 of the Directors’ Remuneration Report).
3. To approve the Directors’ Remuneration Policy as set out on page 75 of the Directors’ Remuneration Report which
takes effect immediately after the end of the Annual General Meeting.
4. To authorise the Directors of the Company to declare and pay all dividends of the Company as interim dividends
and for the last dividend referable to a financial year not to be categorised as a final dividend that is subject to
shareholder approval.
5. To re-elect Ms C. Gulliver as a Director.
6. To re-elect Mr J. Heawood as a Director.
7. To re-elect Mr T. Roper as a Director.
8. To re-elect Ms D. Wilde as a Director.
9. To re-appoint KPMG LLP as the Company’s auditor to hold office from the conclusion of this Annual General Meeting
until the conclusion of the next annual general meeting at which accounts are laid before the Company.
10. To authorise the Directors to determine the auditor’s remuneration.
Special Business
11. THAT in substitution for all existing powers the Directors be generally and unconditionally authorised for the purposes
of section 551 of the Companies Act 2006 (the “Act”) to exercise all powers of the Company:
a. to allot shares in the Company up to an aggregate nominal amount of £1,360,175 (such amount to be reduced
by the nominal amount of any equity securities allotted pursuant to the authority in sub-paragraph (b) below in
excess of £1,360,175); and
b. to grant rights (“Relevant Rights”) to subscribe for, or to convert any security into, shares in the Company up to
an aggregate nominal amount of £2,720,351 (such amount to be reduced by the nominal amount of any shares
allotted pursuant to the authority in sub-paragraph (a) above) in connection with an offer made by means of a
negotiable document to (i) all holders of ordinary shares of £0.01 each in the capital of the Company (“Ordinary
Shares”) in proportion (as nearly as may be practicable) to the respective numbers of such Ordinary Shares
held by them and (ii) to holders of other equity securities as required by the rights of those securities (but subject
in either case to such exclusions, limits or restrictions or other arrangements as the Directors may consider
necessary or appropriate to deal with treasury shares, fractional entitlements, record dates or legal, regulatory or
practical problems in or under the laws of any territory, or the requirements of any regulatory body or any stock
exchange in any territory or otherwise howsoever);
such authorisation to expire on 30 June 2023 or, if earlier, at the conclusion of the next annual general meeting
of the Company to be held in 2023 unless previously renewed, revoked or varied by the Company in general
meeting, save that the Company may at any time before the expiry of this authorisation make an offer or enter
into an agreement which would or might require shares to be allotted or Relevant Rights to be granted after the
expiry of this authorisation and the Directors may allot shares or grant Relevant Rights in pursuance of any such
offer or agreement as if the authorisation conferred hereby had not expired.
145Annual Report 2021
12. THAT subject to the passing of Resolution numbered 11 above and in substitution for all existing powers the Directors
be empowered pursuant to sections 570 and 573 of the Act to allot equity securities (within the meaning of section
560 (1), (2) and (3) of the Act) for cash either pursuant to the authorisation under section 551 of the Act as conferred
by Resolution 11 above or by way of a sale of treasury shares, in each case for cash as if section 561(1) of the Act did
not apply to such allotment or sale, provided that this power shall be limited to:
a. the allotment of equity securities or sale of treasury shares (otherwise than pursuant to sub-paragraph (b)
below) to any person up to an aggregate nominal amount of £412,174 which are, or are to be, wholly paid up
in cash, at a price representing a premium to the net asset value per share at allotment, as determined by the
Directors, and do not exceed up to 10% of the issued share capital (as at the date of the Annual General Meeting
convened by this notice); and
b. the allotment of equity securities in connection with an offer (but, in the case of the authority granted under
Resolution 11(b) above, by way of a rights issue only) to (i) all holders of Ordinary Shares in proportion (as nearly
as may be practicable) to the respective numbers of Ordinary Shares held by them and (ii) to holders of other
equity securities as required by the rights of those securities (but subject in either case to such exclusions, limits or
restrictions or other arrangements as the Directors may consider necessary or appropriate to deal with treasury
shares, fractional entitlements, record dates or legal, regulatory or practical problems in or under the laws of
any territory, or the requirements of any regulatory body or any stock exchange in any territory or otherwise
howsoever) at a price representing a premium to the net asset value per share at allotment, as determined by the
Directors, and such power shall expire on 30 June 2023, or, if earlier, at the conclusion of the next annual general
meeting of the Company to be held in 2023 unless previously renewed, revoked or varied by the Company in
general meeting, save that the Company may at any time before the expiry of this power make an offer or enter
into an agreement which would or might require equity securities to be allotted or treasury shares to be sold after
the expiry of this power and the Directors may allot securities or sell treasury shares in pursuance of any such
offer or agreement as if the power conferred hereby had not expired.
13. THAT, the Company be generally and unconditionally authorised in accordance with section 701 of the Act to make
market purchases (within the meaning of section 693(4) of the Act) of Ordinary Shares and to cancel or hold in
treasury such shares provided that:
a. the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is 14.99% of the
Ordinary Shares in issue as at the date of the passing of this Resolution;
b. the minimum price which may be paid for an Ordinary Share is £0.01;
c. the maximum price (exclusive of expenses) which may be paid for an Ordinary Share shall not be more than the
higher of (i) an amount equal to 5% above the average of the middle market quotations for an Ordinary Share
taken from the London Stock Exchange Daily Official List for the five business days immediately preceding the date
on which the Ordinary Share is contracted to be purchased; and (ii) the higher of the price of the last independent
trade and the current highest independent bid on the trading venue where the purchase is carried out;
d. the authority hereby conferred shall expire on 30 June 2023, or, if earlier, at the conclusion of the annual general
meeting of the Company to be held in 2023 unless such authority is renewed, revoked or varied prior to such time
by the Company in general meeting; and
e. (the Company may make a contract to purchase Ordinary Shares under the authority hereby conferred prior to
the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority
and may make a purchase of Ordinary Shares pursuant to any such contract.
14. THAT a general meeting of the Company other than an annual general meeting may be called on not less than
14 clear days’ notice.
By order of the Board
Aberdeen Asset Management PLC
Secretaries
Bow Bells House
1 Bread Street
London
EC4M 9HH
21 April 2022
146 Annual Report 2021
Notes:
1. In accordance with section 311A of the Companies
Act 2006, the contents of this Notice of Meeting,
details of the total number of shares in respect of
which members are entitled to exercise voting rights
at the Annual General Meeting and, if applicable,
any members’ statements, members’ resolutions
or members’ matters of business received by the
Company after the date of this notice will be available
on the Company’s website
eurologisticsincome.co.uk.
2. As a member, you are entitled to appoint a proxy or
proxies to exercise all or any of your rights to attend,
speak and vote at the Annual General Meeting. A proxy
need not be a member of the Company. You may
appoint more than one proxy provided each proxy
is appointed to exercise rights attached to different
shares. You may not appoint more than one proxy to
exercise the rights attached to any one share. A form
of proxy is enclosed.
3. To be valid, any form of proxy or other instrument of
proxy and any power of attorney or other authority,
if any, under which they are signed or a notarially
certified copy of that power of attorney or authority
should be sent to the Company’s registrars so as to
arrive not less than 48 hours before the time fixed for
the meeting (excluding non working days). The return
of a completed form of proxy or other instrument
of proxy will not prevent you attending the Annual
General Meeting and voting in person if you wish
to do so.
4. The right to vote at the meeting is determined by
reference to the Company’s register of members
as at 6.30 p.m. on 31 May 2022 or, if this meeting is
adjourned, at 6.30 p.m. on the day two business days
prior to the adjourned meeting. Changes to the entries
on that register of members after that time shall be
disregarded in determining the rights of any member
to attend and vote at the meeting.
5. As a member you have the right to put questions at the
meeting relating to the business being dealt with
at the meeting.
6. CREST members who wish to appoint a proxy
or proxies by utilising the CREST electronic proxy
appointment service may do so for the Annual General
Meeting and any adjournment(s) thereof by utilising
the procedures described in the CREST Manual.
CREST Personal Members or other CREST sponsored
members, and those CREST members who have
appointed a voting service provider(s), should refer
to their CREST sponsor or voting service provider(s),
who will be able to take the appropriate action
on their behalf.
7. In order for a proxy appointment made by means of
CREST to be valid, the appropriate CREST message
(a“CREST Proxy Instruction”) must be properly
authenticated in accordance with Euroclear UK
& Ireland Limited’s (“EUI”) specifications and must
contain the information required for such instructions,
as described in the CREST Manual which can be
viewed at www.euroclear.com. The message must
be transmitted so as to be received by the issuer’s
agent (ID RA19) by the latest time(s) for receipt of
proxy appointments specified in the notice of Annual
General Meeting. For this purpose, the time of receipt
will be taken to be the time (as determined by the
timestamp applied to the message by the CREST
Applications Host) from which the issuer’s agent is able
to retrieve the message by enquiry to CREST in the
manner prescribed by CREST.
8. CREST members and, where applicable, their CREST
sponsors or voting service providers should note that
EUI does not make available special procedures in
CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to
take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a
voting service provider(s), to procure that his CREST
sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message
is transmitted by means of the CREST system by any
particular time. In this connection, CREST members
and, where applicable, their CREST sponsors or voting
service providers are referred, in particular, to those
sections of the CREST Manual concerning practical
limitations of the CREST system and timings.
9. You may also submit your proxy votes via the internet.
You can do so by visiting www.sharevote.co.uk.
Youwill require your voting ID, task ID and Shareholder
Reference Number. This information can be found
under your name on your form of proxy. Alternatively,
shareholders who have already registered with Equiniti
Registrars’ online portfolio service, Shareview, can
appoint their proxy electronically by logging on to
their portfolio at www.shareview.co.uk using their user
ID and password. Once logged in, click “view” on the
“MyInvestments” page. Click on the link to vote and
follow the on screen instructions.
10. The Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
147Annual Report 2021
11. In the case of joint holders, where more than one
of the joint holders completes a proxy appointment,
only the appointment submitted by the most senior
holder will be accepted. Seniority is determined by the
order in which the names of the joint holders appear in
the Company’s register of members in respect of the
joint holding (the first-named being the most senior).
12. A corporation which is a shareholder can appoint one
or more corporate representatives who may exercise,
on its behalf, all its powers as a shareholder provided
that no more than one corporate representative
exercises powers over the same share. A Director, the
company secretary, or some person authorised for
the purpose by the company secretary, may require
any representative to produce a certified copy of the
resolution so authorising him or such other evidence of
his authority reasonably satisfactory to such Director,
company secretary or other person before permitting
him to exercise his powers.
13. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies
Act 2006 to enjoy information rights (a “Nominated
Person”) may, under an agreement between them
and the member by whom they were nominated,
have a right to be appointed (or to have someone
else appointed) as a proxy for the Annual General
Meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, they
may, under any such agreement, have a right to give
instructions to the member as to the exercise of voting
rights. Anyperson holding 3% of the total voting rights
in the Company who appoints a person other than the
Chairman as his or her proxy(ies) will need to ensure
that both he or she and such proxy(ies) comply with
their respective disclosure obligations under the UK
Disclosure Guidance and Transparency Rules.
14. The statement of the rights of members in relation
tothe appointment of proxies in paragraphs 2 and
3above does not apply to Nominated Persons.
Therights described in these paragraphs can
only be exercised by members of the Company.
15. As at close of business on 21 April 2022 (being the
latest practicable date prior to publication of this
document), the Company’s issued share capital
comprised 412,174,356 Ordinary Shares and there
were no shares held in treasury. Each Ordinary Share
carries the right to one vote at a general meeting of
the Company and therefore the total number of voting
rights in the Company as at close of business on
21 April 2022 is 412,174,356.
16. No Director has a service contract with the Company,
however, copies of Directors’ letters of appointment will
be available for inspection for at least 15 minutes prior
to the meeting and during the meeting.
17. Under section 338 of the Companies Act 2006,
members may require the Company to give, to
members of the Company entitled to receive this
Notice of Meeting, notice of a resolution which may
properly be moved and is intended to be moved at the
Annual General Meeting. Under section 338A of that
Act, members may request the Company to include
in the business to be dealt with at the Annual
General Meeting any matter (other than a proposed
resolution) which may be properly included in
the business.
18. Members should note that it is possible that, pursuant
to requests made by the members of the Company
under section 527 of the Companies Act 2006, the
Company may be required to publish on a website
a statement setting out any matter relating to: (i)
the audit of the Company’s accounts (including the
auditor’s report and the conduct of the audit) that are
to be laid out before the Annual General Meeting; or
(ii) any circumstances connected with an auditor of
the Company ceasing to hold office since the previous
meeting at which annual accounts and reports were
laid in accordance with section 437 of the Companies
Act 2006. The Company may not require the members
requesting any such website publication to pay its
expenses in complying with sections 527 or 528 of the
Companies Act 2006. Where the Company is required
to place a statement on a website under section
527 of the Companies Act 2006, it must forward the
statement to the Company’s auditor not later than the
time when it makes the statement available on the
website. The business which may be dealt with at the
Annual General Meeting includes any statement that
the Company has been required under section 527 of
the Companies Act 2006 to publish on the website.
19. Pursuant to section 319A of the Companies Act
2006, the Company must cause to be answered at
the Annual General Meeting any question relating to
the business being dealt with at the Annual General
Meeting which is put by a member attending the
meeting, except in certain circumstances, including
if it is undesirable in the interests of the Company or
the good order of the meeting that the question be
answered or if to do so would involve the disclosure of
confidential information.
148 Annual Report 2021
20. You may not use any electronic address provided
either in this Notice of Meeting or any related
documents (including the Form of Proxy) to
communicate with the Company for any purposes
other than those expressly stated.
21. There are special arrangements for holders of shares
through abrdn Investment Plan for Children, abrdns
Investment Trusts Share Plan and abrdn Investment
Trust ISA (“Plan Participants”). These are explained
in the separate ‘Letter of Direction’ which Plan
Participants will have received with this Annual Report.
22. The Board is hopeful that the 2022 AGM will be an
in-person meeting. However, given the evolving nature
of the COVID-19 pandemic, should circumstances
change significantly before the time of the AGM,
theCompany will notify shareholders of any changes
to the AGM arrangements by updating the Company’s
website at eurologisticsincome.co.uk and through
anRIS announcement, where appropriate, as early as
ispossible before the date of the meeting. Shareholders
should note that if law or Government guidance so
requires at the time of the meeting, the Chairman of
the Meeting will limit, in his sole discretion, the number
of individuals in attendance at the meeting and may be
required to impose entry restrictions on certain persons
wishing to attend the meeting in order to ensure the
safety of those attending the meeting and to satisfy any
requirements mandated by the venue managers.
149Annual Report 2021
Contact Addresses
Directors
Anthony Roper, (Chairman)
Caroline Gulliver
John Heawood
Diane Wilde
Secretaries and Registered Office
Aberdeen Asset Management PLC
Alternative Investment Fund Manager
Aberdeen Standard Fund Managers Limited
Bow Bells House
1 Bread Street
London EC4M 9HH
Investment Manager
Aberdeen Standard Investments Ireland Limited
2nd Floor
2-4 Merrion Row
Dublin 2
Stockbrokers
Investec PLC
30 Gresham Street
London EC2V 7QP
Solicitors
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Registrars
Equiniti Limited
Aspect House Spencer Road
Lancing
West Sussex BN99 6DA
Tel: 0371 384 2416
Tel: +44 (0) 121 415 7047 (International)
Lines open 8:30am to 5:30pm (UK time), Monday to
Friday, (excluding public holidays in England and Wales)
shareview.co.uk
Depositary
NatWest Trustee and Depositary Services Limited
250 Bishopsgate
London
EC2M 4AA
Replaced 1st April 2022 by:
Citibank UK Limited
Citigroup Centre
Canada Square
Canary Wharf
London
E14 5LB
Independent Auditor
KPMG LLP
319 St Vincent Street
Glasgow G2 5AS
Website
eurologisticsincome.co.uk
Foreign Account Tax Compliance Act
(“FATCA”)IRS Registration Number (‘‘GIIN’’)
DF2TVL.99999.SL.826
Legal Entity Identifier (LEI)
213800I9IYIKKNRT3G50
Registered Number
Incorporated in England & Wales with number 11032222
150 Annual Report 2021
0000734898
abrdn.com
For more information visit eurologisticsincome.co.uk