YEW Grove REIT Annual Report 2018

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FY2018 Annual Report · YEW Grove REIT

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Report and Consolidated
Financial Statements

For the financial period from 5 April 2018
(date of incorporation) to 31 December 2018

Contents

Strategic Report

Chairman’s Statement

CEO’s Statement

Strategic Priorities

Key Performance Indicators

Portfolio report

Market Report

Governance

Directors’ Report

Directors’ Responsibility Statement

Corporate Governance Statement

Principal Risks and Uncertainties

Audit Committee Report

Nominations Committee Report

Remuneration Committee Report

Valuation Committee Report

Financial Statements

Independent Auditor’s Report

Consolidated Statement of Financial
Position

Consolidated Statement of
Comprehensive Income

Consolidated Statement of Changes in
Equity

Consolidated Statement of Cash Flow

Company Statement of Financial
Position

Company Statement of Changes in
Equity

Company Statement of Cash Flow

Notes to the Consolidated Financial
Statements

Disclosures under AIFMD (unaudited)

Glossary

Corporate Information

114

117

119

Yew Grove reit plcreport and consolidated Financial statements 2018
strategic
report

Strategic reportgovernanceFinancial StatementSChairman’s Statement

I am delighted to introduce the Report and Consolidated financial statements of Yew
Grove REIT plc (the “Company”) for the financial period from 5 April 2018 (date of
incorporation) to 31 December 2018 following the Company’s successful initial public
offering and admission to trading on the Alternative Investment Market of the London
Stock Exchange and the Euronext Growth market* of Euronext Dublin in June 2018.

Activity

Board

2018 was a significant and busy year for the Company
having successfully launched its initial public offering
and admission to trading on both the Alternative
Investment Market of the London Stock Exchange and
the Euronext Growth market of Euronext Dublin with
Admission on 8 June 2018. The Company was the only
REIT to successfully float on these exchanges in 2018.
Having raised €75 million and acquired the shares of the
Yew Tree Investment Fund, the Company was left with
investment capital of some €50 million. Those funds,
together with an additional €6.2 million drawn from
a revolving debt facility of €20 million from the Allied
Irish Bank plc, were invested in 5 new locations: namely
the Gateway buildings on East Wall Road just north of
the Dublin Docks; Blackwater House in Mallow, County
Cork; and three buildings on the IDA Ireland park outside
of Letterkenny, County Donegal in the north west of
Ireland. Following the year end the Company purchased
an office on the Cork Airport Business Park and agreed
to purchase another on the IDA Ireland park outside
Waterford in Ireland’s south east. These investments
leave the Company almost fully invested, with a strong
tenancy mix and rent roll which will stand the Company
in good stead in future.

During 2018 the Company organised the integration
of the Yew Tree Investment Fund, with the transfer of
the Yew Tree Investment Fund’s seed portfolio into the
Company and progressed the liquidation of the Yew
Tree Investment Fund. In early November the Company
applied for and received Court approval for the capital
reduction of its share premium account, allowing for
the declaration and payment of the Company’s maiden
dividend early in 2019.

During the period the Board devoted considerable
time to the Company’s post flotation organisation and
acquisitions and to the strategic plans for the development
of the business. Full details of the Board’s activities
are set out in the Corporate Governance Statement on
pages 37 to 45.

As required by the Corporate Governance Code the
majority of the Board are independent non-executive
directors with a level of relevant experience and diversity
so the Board can oversee executive management and
provide an effective framework of corporate controls.
These include the Board Committees (whose roles are
described in more detail below) as well as the Company’s
investment process. The Company has a clearly defined
process under which all material acquisitions and
disposals of buildings as well as material amendments
to leases (as well as other core contracts) come to the
Board for discussion and approval if they have been
recommended by the investment committee of the
Company.

The Board also oversees and is updated on the Company’s
performance by regularly reviewing financial performance
in absolute terms and against budgets. It sets the overall
strategic direction of the business by conducting an
annual Board review of the market, the Company’s place
in that market and the proposed focus for the year ahead.

I would like to thank each member of the Board for their
commitment during the period and I look forward to
working with them for the benefit of the Company in
the following year.

* While subsequently re-named Euronext Growth, at Admission it
was the Enterprise Securities Market.

Yew Grove reit plcreport and consolidated Financial statements 2018Barry O’DOwD
Chairman

“These investments leave
the Company almost fully
invested, with a strong
tenancy mix and rent
roll which will stand
the Company in good
stead in the future.”

Management and employees

On behalf of the Board, I would also like to thank the
management team and employees of the Company for
their continued hard work and energy over the past 7
months. We look forward to their contributions in the
years ahead. It has been a busy and demanding year
and as we look forward to further growth in 2019 and
beyond we believe that our success is driven by the
dedication and commitment of our team. Since Admission
the Company has had an Alternative Investment Fund
Manager agreement in place with Ballybunion Capital
which remains in place.

Outlook

We are confident in the continued growth and success of
our business in 2019. The first mover advantage bestowed
upon us by the successful IPO gives us the opportunity
to grow our business through the strong pipeline of
opportunity which has developed over the past year.
We remain committed to our strategy as outlined in
the admission document and believe that we are well
positioned to grow profitably.

On behalf of the Board, I would like to thank you, our
shareholders, for your continued support.

Barry O’Dowd
Chairman

23 April 2019

Strategic reportgovernanceFinancial StatementSChief Executive Officer’s Statement

I am pleased to announce a strong set of inaugural results for the
Yew Grove Group of companies (“the Group) for the financial period
from 5 April 2018 (date of incorporation) to 31 December 2018.

The net proceeds from the IPO have been fully invested and together with the
two investments in Waterford and Cork (made after the filing of the Company’s
Initial Financial Statements and announcement of the results) mean that most of
the current bank facility is now drawn and invested. The properties that have been
acquired have enhanced the rent roll and tenancy mix of the overall portfolio.

Results

Dividend

Pre-tax profits for the period were €2.3 million including
a net valuation gain of over €1.6 million. The valuation
gain was partially driven by growth in value of the seed
portfolio, but more substantially by the increase in value
of properties acquired since the IPO in June 2018. The
Company has tripled the size of its property portfolio
since IPO, and the valuation gain recorded for the period
represents a significant achievement given the market
assumption that Irish commercial property investments
have an associated cost (including stamp duty, legal,
surveying and other fees) of 8.46%.

As a result, European Public Real Estate (“EPRA”) Net
Asset Value (“NAV”) per share increased to 100.18c as
at 31 December 2018, from 96.55c as at 30 June 2018.
This means that the Company has not only covered the
acquisition costs of the new properties, but also the
costs of flotation. This is a noteworthy achievement for
a company in its first seven months of activity.

The agreement of a revolving credit facility with Allied
Irish Banks plc (“AIB”) increased the Company’s funds
available for investment and has allowed us to execute
further attractive investments.

The contracted rent roll as at 31 December 2018 was
€6.3 million and following the purchase of the Cork
and Waterford buildings and the completion of the car
park at our Athlone facility the contracted rent roll will
increase again, to €7.4 million. The Company has excellent
opportunities to increase this from the existing portfolio
both through asset management as well as generally
increasing rental levels driven by a backdrop of strong
demand from tenants in our geographic target market.

I am pleased that, as disclosed during the financial period,
the Board have agreed to pay an interim dividend in
respect of the period to 31 December 2018. The declared
dividend was the Group’s net income, which rounds to
0.964 cents per share.

Again, as disclosed during 2018, the Company intends to
pay quarterly dividends in 2019 and announced the first
of its quarterly dividends at the end of March.

Review of activity

In the period from our April 2018 incorporation to period
end, we successfully completed a €75 million IPO in June
2018 and have grown our portfolio to 14 properties. This
includes 10 properties from the seed portfolio acquired
at IPO.

In July 2018, the Group acquired two office buildings
(Buildings One and Three Gateway, together the
“Gateway buildings”) on East Wall Road, Dublin 3, just
north of the Dublin docklands. The two buildings were
acquired for €31.0 million (including transaction costs).
In October, the Group acquired Blackwater House in
Mallow for €2.0 million (including transaction costs).
In November 2018, the Group agreed terms with IDA
Ireland and a tenant of its Athlone property to acquire
land and begin construction of a car park adjacent to
that property. That work, which cost c €0.5 million, was
completed in February 2019. In December 2018, the Group
completed the acquisition of three buildings on an IDA
park outside Letterkenny in Donegal for an aggregate
purchase price of €17.1 million (including transaction
costs). The costs of these acquisitions are detailed in
note 13 to the accounts below.

Yew Grove reit plcreport and consolidated Financial statements 2018JOnathan LareDO
Chief exeCutive OffiCer

In November 2018, the Company was granted permission
by the Courts to reduce its share premium account which
was transferred to distributable reserves and as a result
when the Company’s Initial Financial Statements were
filed with the CRO in February 2019, the Board was able
to announce the payment of an interim dividend for 2018.

On 15 February the Company announced the inaugural
grant of options to executive management under the
Long Term Incentive Plan that had been established in
June 2018 at Admission to the Alternative Investment
Market of the London Stock Exchange and the Euronext
Growth market of Euronext Dublin.

Finally, in December 2018, the Company agreed a
revolving credit facility with AIB secured on some of
its properties. The facility has a three-year initial term
and has an initial principal amount of €19.95 million. At
period end the Group had uncommitted facilities of €13.7
million, the majority of which has since been deployed.

Post balance sheet events

On 7 February 2019 the Company declared the payment
of an interim dividend in respect of the period ended 31
December 2018 of €723,000 for 0.964 cents per ordinary
share. This was paid to shareholders on 26 February 2019.

On 8 February 2019 the Company exchanged contracts
to purchase Office Block A, located in the IDA Waterford
Business and Technology Park, Butlerstown, Waterford
for €4 million plus costs, representing a gross yield to fair
value of 8.56% after accounting for all purchase costs.
The property, 36,845 sq. ft. of open plan office space
arranged over three storeys and is tenanted by Tech
Mahindra Business Services Ltd under a 20 years lease
with a break in five years, and SE2 Information Services
Ireland Ltd under a five years lease.

On 11 February 2019 the Company delivered a completed
car park in Athlone to its adjacent tenant under a co-
terminus lease.

On 27 February 2019 the Company completed the
purchase of Unit 2600, Cork Airport Business Park,
Cork Airport for €7.5 million plus costs, representing
a gross yield at fair value of 7.85% after accounting for
purchase costs. The property, a two storey, 40,953 sq.
ft office block which was refurbished in 2015 to a high
standard and includes a 163-space car park, is tenanted by
Clearstream Global Securities Services Ltd, a subsidiary
of Deutsche Borse AG, under a 25 year lease with final
expiry in just over five years’ time.

On 29th March 2019 the Company declared the payment
of an interim dividend in respect of the first quarter of
2019 of €825,000 for 1.10 cents per ordinary share. This
is to be paid to shareholders on 13 May 2019.

Property valuation

Lisney valued the Company’s property portfolio at 31
December 2018, which included the initial valuation of
all properties acquired since the IPO. The portfolio was
valued at €77.9 million recognising a net valuation gain
of €1.6 million.

As at 31 December 2018, the portfolio had a contracted
rent roll of €6.3 million representing a gross yield at fair
value of 8.1%. The expected gross reversionary yield on
the portfolio is in excess of 8.7%.

Strategic reportgovernanceFinancial StatementSChief Executive Officer’s Statement (continued)

The portfolio has a weighted average unexpired lease term
(“WAULT”) of 4.9 years to break and 7.4 years to final
maturity. Given the current state of the market, i.e. that
demand for property in our geographic target market is
driving rent levels up, the Company is currently happy
with a slightly shorter WAULT to break/rent review where
it can increase rental earnings more quickly.

The post balance sheet transactions mentioned above
increase that contracted rent roll to €7.43 million
representing a gross yield at fair value of 8.13% with
an expected gross reversionary yield in excess of 8.7%.

Finance

Facility drawings at 31 December 2018 stood at €6.2
million with further available facility of €13.7 million.
Total debt to equity gearing and LTV at 31 December
2018 were 8.25% and 7.96% respectively. Details of the
facility and the amount drawn can be seen at note 18
to the accounts below. Following the 2019 acquisitions
most of the balance of the facility has now been drawn.

Irish Commercial Real Estate Market

The strength and depth of the Company’s potential
acquisition pipeline is a reflection of the positive Irish
commercial real estate market, as well as the Company’s
first mover advantage as the only publicly quoted
vehicle focusing predominantly outside of the Dublin
Central Business District (“CBD”). The Irish economy
has performed strongly in recent years and this has
been reflected by the volume of property investment
transactions. 2018 was one of the strongest years on
record with total transactions of €3.6 billion. More
significantly for the Company, approximately 67% of
those transactions happened outside of the Dublin CBD,*
i.e. within the Company’s geographic target market.
The prognosis for the economy remains positive despite
underlying concerns relating to Brexit and other macro-
economic headwinds.

On current trends, demand for office space is increasingly
being driven by the requirement from multinationals for
large footplate, Grade A or modern space. In addition,
the Irish Government has a proactive policy focused on
balanced regional development which is encouraging the
growth of regional FDI centres. With current rent rates
for prime space outside of the CBD at half of the CBD
levels or lower, multinationals and other tenants attracted
by suitable space are driving demand and falling vacancy
rates. For the past 3 years take up has been stronger in
Dublin’s secondary and suburban areas than in the CBD,
and in 2018 vacancy rates in those locations fell, whilst
vacancy increased in the CBD (principally in older, poorer
quality buildings). Vacancy rates have fallen in Cork,
Limerick, Galway and the other key cities and towns in
which large corporate FDI companies are increasingly
looking to site their businesses. Rising rents have seen
the beginnings of development outside of the CBD, with
over half a million square feet under construction.*

Transactions in industrial property are fewer as a
severe shortage of suitable properties makes secondary
transactions expensive and relatively infrequent. This
market accounted for only 3% of all commercial real
estate investment transactions in the first 3 quarters of
2018.* However, the demand for space is driving rents
upwards and there are increasing numbers of forward
funded developments for tenants. The Company expects
to see that continue in 2019 and beyond.

These trends align with Yew Grove REIT’s differentiated
strategy, targeting well-tenanted commercial real estate
located outside of the Dublin CBD and I and the Board
look forward with a high degree of optimism to our first
full year of active operations.

* Source: Cushman and Wakefield.

Yew Grove reit plcreport and consolidated Financial statements 2018StrateGiC repOrt

GOvernanCe

finanCial StatementS

“On current trends,
demand for office space
is increasingly being
driven by the requirement
from multinationals for
large footplate, Grade
A or modern space.”

Ashtown Gate
Office, Dublin

Strategic Priorities

Our business strategy is driven by our dividend strategy

The Company is committed to building a portfolio of commercial buildings in
Ireland, outside of Dublin’s central business district (‘CBD’). Target properties
should be structurally sound, attractive to tenants of good credit standing
(government or large corporations) and generate a rent roll and a reversionary
rent which will support a sustainable and growing dividend, paid quarterly.

The execution of that strategy is driven by a number of interlinked factors and
objectives:

We will continue to manage our cost base carefully. The Company is committed
to paying shareholders 100% of property income by way of a quarterly dividend. As
our costs are principally fixed and not linked to the size of our capital base we will
reduce our cost to revenue ratio as our capital base and portfolio grows, with the
consequent benefits for our dividend capacity.

We use our first mover advantage to buy well. Our chosen market still offers the
opportunity to invest in well tenanted buildings at attractive investment yields and
as the only public vehicle focused on this opportunity, we continue to maximise our
exposure to the sector. Irish commercial real estate outside of the Dublin CBD offers
institutional quality buildings at net investment yields in excess of 7%. Our target
market is small by European standards so it is not a core focus for European property
firms. Most institutional investors are interested only in the larger transactions
(typically above €20 million) which are few and far between. The Company targets
properties below this threshold which are typically beyond the price range of most
high net worth buyers. Because many of the non-public funds and companies also
targeting these properties have found it difficult to raise capital over the past 12-15
months Yew Grove has an opportunity to grow its portfolio without a compression
of net investment yields.

We manage the estate to optimise rent roll and WAULT. Many of the properties
in which we invest offer the opportunity to improve the investment yield, either
because rents are rising as demand for modern buildings with institutional floor
plates outstrips supply, or because they have not been actively managed by the
previous owners, or a combination of both factors. Where buildings are already
fully let at rents which we consider to have little opportunity for growth, we look
to extend and maximise the lease term. This fits with demand because, as there
is a shortage of good quality office and industrial buildings in our target market,
multinationals which are growing their activities locally are keen to tie down quality
space with longer leases.

Yew Grove reit plcreport and consolidated Financial statements 2018KCI Athlone
Industrial, Athlone

In addition to growing our portfolio through investments in existing buildings
we are also focused on developing relationships with key tenants that require
more space on sites they have occupied for some time. In certain circumstances we
will consider forward funded transactions to finance the development of new
industrial buildings or offices, provided the investment by Yew Grove meets our
required rate of return.

We also expect to rationalise the portfolio by selling down some of the higher
yielding, but smaller, buildings which are well tenanted but are not institutional
grade stock. The price for these buildings suits the high net worth market and so
should find interest at or above the valuations at which we own them. Any proceeds
of sale will be reinvested.

As rental growth begins to slow and the market outside of the Dublin CBD matures
(supply and demand begin to balance) we will seek to extend the WAULT on the
portfolio. We expect therefore, that our portfolio will over time coalesce into
a coherent collection of modern office and industrial buildings sited across the
country, with approximately 50% to 65% in the Dublin suburbs and commuter belt
and the balance spread between Cork, the Midlands and the rest of the country.

Strategic reportgovernanceFinancial StatementSKey Performance Indicators

The Company’s results for the financial period 2018 are set out in the
Consolidated Statement of Comprehensive Income on page 75. The
profit for the financial period ended 31 December 2018 was €2.3 million,
including unrealised profits on investment properties of €1.6 million.

The Company’s key performance indicators are chosen to be specific to the
Company’s sector, to provide a measure of the Company’s performance and
to show progression against the Company’s investment objectives.

KPI

Relevance to Strategy

Performance against KPIs

NAV
per share

The NAV reflects the Company’s
ability to deploy its capital in a value
enhancing manner.

EPRA NAV
per share*

Dividend
per share

The EPRA NAV reflects the
Company’s ability to deploy its
capital in a value enhancing manner
that can be compared with its peers.

The dividend reflects the
Company’s ability to deliver a
sustainable income stream from its
investment properties.

Total
shareholder
return*

The total shareholder return
demonstrates the Company’s
ability to generate returns for its
shareholders

Prior to
Admission

30 June
2018

31 December
2018

Change from prior
to Admission

Change from
30 June 2018

100.0

96.5c

100.2c

+0.2c

+3.7c

100.0

96.5c

100.2c

+0.2c

+3.7c

100.0

101.1

100.0

+0c

-1c

* Alternative Performance Measures (“APMs”). The Company uses a number of financial measures to describe its performance which are not
defined under International Financial Reporting Standards (“IFRS”) and which are therefore considered APMs. In particular, measures developed
by the European Public Real Estate Association (“EPRA”) are reported in line with other public real estate companies. These are defined in more
detail, and reconciled with IFRS where applicable, on page 115.

Yew Grove reit plcreport and consolidated Financial statements 2018Operational Metrics

Additionally, the Company measures operational performance metrics that allow the
Company’s property operations to be compared with others in its sector or peer group.

The Company’s investment objective, as laid out in the Admission document is to:

• Provide shareholders with high, good quality income;
• Pay a covered dividend and generate an attractive risk-adjusted total return for shareholders;
• Build a portfolio of Irish commercial office and industrial property assets to support a 7c per share dividend while

achieving moderate capital growth; and

• Ensure that the investment properties be tenanted principally by Government and corporate tenants with

favourable credit profiles

The Company intends to pay its comprehensive income (excluding fair value gains or losses on investment properties)
to shareholders by way of dividends. In order to pay dividends the Company was required to reduce its share premium
by transferring it to distributable reserves. The Irish Courts approved this on 2 November 2018, and following filing
financial statements with the CRO in February 2019 the Company began to pay quarterly dividends to shareholders.
The interim dividend paid for the financial period was 0.964c per share for a total of €723,000.

The primary operational metrics used by the Directors to measure the Company’s
progress in achieving its investment objectives are illustrated below:

The quality of the Company’s income is measured with reference to the creditworthiness of its tenants. Over the
period from Admission to 31 December 2018 the Company’s contracted rent roll by tenant type and ERV for vacancy
has changed as shown below:

Admission

31 December 2018

Period change

Government/quasi
Government

34.0%

37.5%

3.5%

FDI

52.5%

54.0%

1.5%

Large
Enterprise

1.0%

0.4%

-0.6%

SME

Vacancy

11.5%

5.3%

-6.2%

1.0%

2.8%

1.8%

Additionally, the tenor and trajectory of the Company’s rental income is measured;

WAULT
to next break

WAULT
to lease end

Life to next rent
reversion date

Gross Yield
at fair value*

Gross
reversionary yield*

Admission

31 December 2018

Period change

5.2 years

4.9 years

-0.3 years

10.4 years

7.4 years

-3.0 years

3.2 years

2.9 years

-0.3 years

10.0%

8.1%

-1.9%

8.6%

-0.4%

Strategic reportgovernanceFinancial StatementSKey Performance Indicators (continued)

Over the same period the Company has deployed the full proceeds of its IPO and €6.2 million of its debt facility,
increasing the value of the Group’s revenue generating assets from €25.9 million to €77.9 million while increasing the
Company’s contracted rent roll from €2.6 million at Admission to €6.3 million as at 31 December 2018. The Company
measures contracted rent roll in order to measure the progression of its primary source of income on a monthly basis.

The Company has incurred €3.5 million of purchase costs (including 6% stamp tax and legal/agency and due diligence
costs) on properties purchased since Admission. The fair value gain on the Company’s properties at 31 December
2018 offset the entirety of these costs to show a net gain of €1.6 million and a gain of €5.1 million from purchase price
(excluding costs) being the difference between the €25.9 million distributed in specie from the Yew Tree Investment
Fund, the subsequent property purchases of €46.9 million and the period end valuation of €77.9 million.

In order to manage the Company’s life and growth, the Directors have set short and medium-term targets for the
investment objectives. These are a mix of organisational and property management, investment and capital raising
objectives:

2018 progress

Impact

Short term objectives:

To have allocated the capital raised at admission
within 12 months

All of €75 million raised
deployed

Company ahead of
capital allocation target

To establish and run the Company’s business
prudently and in compliance with the REIT rules*

Capital reduction,
subsidiary fund
liquidation, REIT rule
compliance

Company paid
dividends and property
income distributions in
early 2019

Medium term objectives:

To raise leverage of no greater than 25% on
agreeable terms and deploy this in property assets

RCF of €19.9 million
agreed, €6.2 million
drawn

Revenue increase, asset
increase

To raise further equity capital and deploy further
equity capital in property assets

Selection of suitable
brokers and advisors

To increase amount, security and duration of the
Company’s rental income

Rent reviews initiated

To continue to minimise the Company’s cost base,
such that incremental capital raises can enhance
the Company’s dividends

Staffing and systems
established prudently

Timeline (excluding
market conditions)
achievable

Annual contracted rent
roll increase from 2019
from rent review of
€0.04 million

Company operationally
ready to raise and
deploy further capital

* As an Irish Real Estate Investment Trust (“REIT”), the Company is subject to Part 25A of the Taxes Consolidation Act 1997 (as inserted by
section 41 of the Finance Act 2013).

Yew Grove reit plcreport and consolidated Financial statements 2018StrateGiC repOrt

GOvernanCe

finanCial StatementS

Portfolio Report

Our Portfolio at a Glance

• Contracted rent roll: €6.3 million.

• Portfolio Value: €77.9 million1

• Gross yield at fair value at year end

valuation: 8.1%2

• Gross reversionary yield at year end

valuation: 8.6%.

• Number of Properties: 14

• Income security with WAULT at 4.98 years

to break and 7.4 years to expiry.

• Portfolio has increased in value from €25.9
million at Admission to €77.9 million at 31
December 2018.

• 31 December 2018 valuation includes €72.8
million as property purchase price, €5.1
million subsequent property valuation gains.

• Contracted rent roll has increased from €2.6

million at Admission to €6.3 million.

• Portfolio Location: 58% of income generated
by properties within the Dublin catchment
area3.

• Portfolio Quality: 92% of annualised rental
income secured by Government & Foreign
Direct Investment (“FDI”) tenants.

• Income by Property Type: 76% of income

generated from offices, 19% from industrial
buildings and 5% from mixed use or retail
buildings.

1 Lisney 31 December 2018.
2 Estimated rent divided by current valuation of the property.
3 Dublin Catchment Area defined as within a thirty minute commute of the M50 motorway.

Ashtown Gate
Office, Dublin

Portfolio Report (continued)

galway

athlone

8+12

limerick

7
cork

dublin
catchment
area

meath

kildare

N81

M50

1+3

dublin

M50

N11

Use by contracted
rent roll

Oﬃce
Industrial
Retail

76%
19%
5%

Tenant type by
contracted rent roll

FDI
Government
SME
Vacancy
Large Enterprise

54%
38%
5%
3%
0%

Portfolio Schedule

Building

Type

One Gateway Office

Location

Dublin

Letterkenny

Office

North West

Three Gateway Office

Ashtown Gate Office

Dublin

Airways Ind Est. Industrial

Dublin

IDA Athlone

Industrial

Midlands

Blackwater
House

Bridge Centre,
Tullamore

Office

Cork

Retail

Midlands

Holly Avenue

Industrial

Dublin

10 Naas Enterprise

Industrial

Park

Dublin
Catchment

Listowel

Office/Retail South West

12 Canal House

Office/Retail Midlands

13 Heather Road

Industrial

Dublin

14 Centre Point

Industrial

Dublin

Value*
(€’m)

18.0

16.0

14.0

9.4

4.5

3.9

2.3

1.9

1.8

1.7

1.6

1.0

0.9

Gross Yield
at fair value

Reversionary
Rent
(€’000)

Gross
Reversionary
Yield

WAULT to
lease break
(years)

WAULT to
lease end
(years)

Portfolio
Vacancy

Current
Rent
(€‘000)

1,101.2

1,436.7

913.4

766.7

300.0

386.7

229.0

6.1%

9.0%

6.5%

8.2%

6.6%

10.0%

10.1%

1,398.8

1,458.2

1,071.0

781.8

461.9

443.5

344.3

7.8%

9.1%

7.6%

8.3%

10.2%

11.4%

15.2%

229.2

11.8%

177.6

9.2%

169.9

170.0

275.9

106.5

92.5

110.0

9.4%

9.9%

16.9%

10.8%

9.7%

12.9%

169.9

185.5

150.3

51.6

53.0

51.0

9.4%

10.8%

9.2%

5.2%

5.6%

6.0%

8.7%

3.5

9.3

2.0

3.0

6.8

4.7

1.6

2.4

2.1

4.1

4.2

8.0

10.6

7.7

4.9

5.0

9.3

2.0

7.1

11.8

15.7

5.5

3.0

9.1

4.1

10.7

8.0

10.6

7.7

7.4

5.6%

0.0%

29.6%

0.0%

Total

77.9

6,287.7

8.1%

6,798.4

* Lisney 31 December 2018.

Yew Grove reit plcreport and consolidated Financial statements 20182

athlone

galway

8+12

limerick

cork

dublin

catchment

area

meath

kildare

N81

M50

1+3

dublin

M50

N11

Use by contracted

rent roll

Oﬃce

Industrial

Retail

76%

19%

Tenant type by

contracted rent roll

FDI

Government

SME

Vacancy

Large Enterprise

54%

38%

Investment Activity since Admission

The third quarter was dominated by the purchase and
closing of Gateway One and Three located on the East
Wall Road adjacent to Dublin docklands.

These buildings have 8,825 sq. m (95,000 sq. ft) of office
space and 71 car parking spaces and are tenanted by
the ESB, Colt and Whirlpool. This transaction was the
Company’s first acquisition following Admission at a
price of €29 million and €2 million of transaction costs.
The buildings have since been valued at €32 million for
a gross yield at fair value of 6.3%.

The buildings were constructed in 2008 and offer high
grade office space in the North Dock area adjacent to
East Point Business Park. The area is expanding and
improving in terms of profile and rental levels.

The buildings are 97% let with one single fully fitted HQ
suite unlet. The unit is being marketed at a headline* rent
of €350 per sq. metre (€32.50 per sq. ft). The recent letting
of the nearby Beckett Building to Facebook and rental
growth at the adjacent East Point Business Park gives
an indication of the substantial reversionary potential
of these buildings, which together have a WAULT of 2.8
years to the next tenant break option.

In the fourth quarter of 2018 the Company completed 2
further acquisitions.

The Company’s acquisition of Blackwater House in
Mallow Business Park, County Cork was completed in
November 2018 for a price of €1.85 million and transaction
costs of €0.15 million. The building was valued at 31st
December 2018 at €2.3 million giving a gross yield at fair
value of 10.1%. The building, which was included as part
of the property pipeline in the Company’s Admission
document, is a multi-tenanted office building with 29,462
sq. ft. of modern office space.

Blackwater House has a strong tenant mix with 85% of
rental income from Irish Water and the Health Service
Executive (HSE). At the time of acquisition, the building
had 29.6% vacancy.

The management team is actively marketing the space
both to existing and new tenants and expects to let the
vacant space at rents of between €12 and €14 per square
foot.

In December the Company acquired a three-office campus
on the IDA Technology & Business Park in Letterkenny,
Donegal for €16.0 million and transaction costs of €1.1
million. The building was valued at period end at the
purchase price of €16 million which is a 9% gross yield
at fair value.

The three buildings are tenanted by Optum Operations
(Ireland) Ltd under a 10-year lease with 9.25 years of
term remaining. The leases are guaranteed by Optum’s
parent, the United Health Group, the largest healthcare
business globally and one of the US’s largest corporations
by revenue. Following a major refurbishment in 2017
the buildings have 90,548 sq. ft. of net internal space
completed to Grade A specification. There are 688 surface
car parking spaces on the 2.18 ha (5.45 acre) site and
sufficient zoned land for expansion including a new
building and additional car parking.

Following Admission in 2018, the Company viewed 17 sites
in the Company’s Geographic Target Market with a total
value of €151 million. Of those, the Company acquired the
6 buildings on 3 sites ( 2 buildings at Gateway One and
Three, East Wall Road, 1 at Blackwater House, Mallow
Business Park and 3 at IDA Technology & Business Park,
Letterkenny) detailed above at a cost of €50.1 million
in 2018, and 2 further buildings in Waterford and Cork
Airport with a cost of €11.3 million subsequently in 2019.

* Headline rent is the rent in a lease agreement not including incentives e.g. rent-free periods.

Strategic reportgovernanceFinancial StatementSPortfolio Report (continued)

Portfolio Objectives & Policy

Reversionary and Rental Potential

Yew Grove’s investment strategy is to invest in a portfolio
of properties in its geographical target market let to and
attractive to FDI and Government tenants.

The strategy is supported by the following limitations;

(i) No single property exceeds 25% of the value of the

(ii)

total assets of the company;
Income receivable from any one tenant (other
than a State Body) does not exceed 35% of the
total rental income;

(iii) A minimum of 90% of the company’s assets are

invested in the office and industrial properties.

(iv) No more than 20% of the total assets of the
company are invested in properties outside its
geographic target market.

(v) The Company will not engage in speculative
development. The Company will consider funding
development where the cost of development and
the lease on the completion of the development
are agreed and in place.

Portfolio Structure

The portfolio has 44,374 sq. m (477,644 sq. ft) of interior
building area. Offices represent 55% of the portfolio
(260,469 sq. ft), of which approx. 27% (127,932 sq. ft) is
located within the Dublin catchment area. Industrial
buildings represent 41% of the portfolio (197,037 sq. ft) of
which approx. two thirds (116,443 sq. ft) is in the Dublin
catchment area. The balance of the industrial buildings
is located in the IDA Ireland Business and Technology
Park, Athlone.

Retail units represent 4% or 20,137 sq. ft of the Company’s
floor area.

The vacancy rate of the portfolio by floor area stands at
2.5% or 1,127 sq. m (12,132 sq. ft), and by ERV stands at
3.0%, the majority being at Blackwater House.

Of the vacancy, 363 sq. m (3,909 sq. ft) is currently under
offer with agreed heads of terms at Blackwater House
and the Bridge Centre in Tullamore. The EPRA vacancy
rate is 3.0% (the ERV of vacant space divided by ERV of
the Portfolio).

One of the key challenges for the management team is to
source a pipeline of assets that not only meet the building
and tenant covenant criteria but is also situated in areas
where the local economy is driving a growth in rents.
A consequence of the over development of speculative
property that led up to the Irish economic crisis was
that across the country many tenants were subject to
over-rented leases (i.e. leases where the existing rent
was higher than the prevailing rents for similar buildings
in the area). By and large this has been eliminated in
most areas of the country as the economy recovered,
vacancy rates fell and rents rose. Today, across most of
our portfolio the market rent is higher than that currently
charged to our tenants. That growth in rents continues
and this reversionary potential will fuel the company’s
rental income growth in the future.

The reduction in vacancy means that new lease terms
being agreed in the market are increasingly beneficial for
landlords with less tenant incentives and where rents are
stabilising, longer lease terms being achieved.

Similarly, rent-free periods are shorter and less frequent
for new tenants, allowing landlords to realise a higher
net effective rent on buildings.

The Company’s portfolio has government bodies (such
as Irish Water, ESB and the OPW) accounting for 37%
of the total rent roll, while FDI and Corporates (such as
KCI, Optum, GE) account for 54%.

Demand for office space is evident across the Company’s
geographic target market as businesses expand and
require more space but the supply of new development
remains scarce. As an example, the Company’s Blackwater
House property was acquired with 29.6% vacancy in
September 2018. Since then a further 10% has been agreed
to lease. It is anticipated that the remaining space will be
leased by the end of 2019. All new leases are expected to
be at levels at or above those underwritten at the time
of acquisition.

Reversionary potential now across the secondary

Dublin oﬃce market in 2019

Net Revisionary Yield

Net Initial Yield

Jun-08

Dec-18

Reversionary potential re-emerging too for regional

commercial property

Net Revisionary Yield

Net Initial Yield

Jun-08

Dec-18

Source: Goodbody, MSCI

Yew Grove reit plcreport and consolidated Financial statements 2018In the financial period, the company undertook a number
of asset management projects including the construction
of a new 70 space surface car park at the industrial unit
located within the IDA Technology & Business Park,
Athlone with an agreement to lease by KCI on a co-
terminus lease to their current lease. Additionally, a rent
review of a suburban industrial unit at Holly Avenue in
Stillorgan, Co Dublin producing a rental uplift of 36%
to €107.60 per sq. m (€10 per sq. ft) in February 2019.

Reversionary potential now across the secondary
Dublin oﬃce market in 2019

Net Revisionary Yield

Net Initial Yield

Jun-08

Dec-18

Reversionary potential re-emerging too for regional
commercial property

Net Revisionary Yield

Net Initial Yield

Jun-08

Dec-18

Source: Goodbody, MSCI

Project Management for 2019

The portfolio has ongoing projects that will be completed
within the first six months of the year. The Company may
from time to time, undertake planning, intensification,
unit consolidation, unit division, modernisations and
redevelopments in respect of properties, where the
management team believe it will enhance future income
generation and capital values.

The Company however does not acquire land for
speculative development of offices or industrial assets
except where it forms part of the demise of a property that
otherwise satisfies the Company’s investment criteria.

Acquisitions & Disposals Policy

The Company’s geographic target market is focused
on a) Dublin (other than the CBD area); b) the Dublin
catchment area and c) major regional cities and towns
(especially those identified as hubs for industrial
development under Project Ireland 2040) and d) IDA
Ireland Business and Technology Parks.

Outside Dublin, the Company acquired properties within
the major regional cities and towns and IDA Business and
Technology parks nationally, ranging from Letterkenny,
Donegal to the Cork and Dublin suburban markets.

The management team seeks to develop and encourage
close relationships with the Company’s tenants to
understand their business growth plans and where
suitable to try to facilitate that growth. Several tenants
have already confirmed that they would like to expand
their current operations and may need additional space
in the medium term.

The Company’s acquisition policy remains unchanged.
The Company is focused on buying industrial and office
buildings, with a targeted cost of between €5m and €15m.
The Company expects to generate a robust pipeline
of assets in 2019 coming from a number of different
sources including loan workouts, private equity firms,
construction and development firms, asset sales,
portfolio reconfiguration, sale and leaseback and market
consolidation.

In order to improve the weighting of capital values as well
as eliminating the retail exposure within the portfolio, the
Company will explore disposal of its smaller assets in 2019.

Strategic reportgovernanceFinancial StatementSPortfolio Report (continued)

Top Five Portfolio Assets

One & Three Gateway, East Wall Road, Dublin 3

Investment regIOn
Non-CBD Dublin

tenant
Gov/FDI/Corp

asset
Building One & Three,
Gateway

waULt (expIry/Break)
3.64/2.66

type
Office

area
94,800 sq. ft

acqUIsItIOn prIce
€29.0m

vaLUatIOn*
€32.0m

BUILDIng DesIgn
Multi- tenanted

grOss yIeLD at faIr vaLUe
6.3%

grOss reversIOnary yIeLD
7.7%

IDA Letterkenny Office Park, Letterkenny, Co. Donegal

Ashtown Gate, Dublin

Investment regIOn
Non-Core Regional

tenant
FDI

asset
Optum 1, 2 & 3

type
Office

area
90,548 sq. ft

BUILDIng DesIgn
Single-tenanted

grOss reversIOnary yIeLD
9.1%

waULt (expIry/Break)
9.3/9.3

acqUIsItIOn prIce
€16.0m

vaLUatIOn*
€16.0m

grOss yIeLD at faIr vaLUe
9.0%

Investment regIOn
Core Dublin

asset
Ashtown Gate B & C

type
Office

area
33,100 sq. ft

tenant
Govt/FDI

waULt (expIry/Break)
7.1/3.0

acqUIsItIOn prIce
€8.80m

vaLUatIOn*
€9.36m

BUILDIng DesIgn
Multi-tenanted

grOss yIeLD at faIr vaLUe
8.2%

grOss reversIOnary yIeLD
8.2%

Yew Grove reit plcreport and consolidated Financial statements 2018Top Five Portfolio Assets

7 & 8 Airways Industrial Estate, Santry, Dublin 9

Investment regIOn
Core Dublin

tenant
FDI

asset
7 & 8 Airways Ind. Est

waULt (expIry/Break)
11.8/6.8

type
Industrial

area
88,000 sq. ft

acqUIsItIOn prIce
€3.8m

vaLUatIOn*
€4.53m

BUILDIng DesIgn
Single-tenanted

grOss yIeLD at faIr vaLUe
6.6%

grOss reversIOnary yIeLD
10.2%

Block 2, IDA Ireland Business & Technology Park, Athlone, Co Westmeath

Investment regIOn
Core Dublin

tenant
FDI

asset
Block 2 IDA Tech & Bus Park

waULt (expIry/Break)
15.7/4.7

type
Industrial

area
46,900 sq. ft

acqUIsItIOn prIce
€3.615m

vaLUatIOn*
€3.875m

BUILDIng DesIgn
Single-tenanted

grOss yIeLD at faIr vaLUe
10.0%

grOss reversIOnary yIeLD
11.4%

* Lisney valuation as at 31st December 2018.

Strategic reportgovernanceFinancial StatementSMarket Report

European City Oﬃce Rents

Q3 2018 (€ per sq. m)

Source: Cushman & Wakeﬁeld Research

The Irish Commercial Real Estate Investment Market achieved a record-breaking volume
of €3.6bn of transactions in 2018 versus €2.2bn in 2017. The Dublin CBD (including
Docklands) accounted for 33% of the 2018 volume and the Dublin suburbs accounted
for an additional 50% of the volume, with the regional markets accounting for the 17%
balance. This illustrates that 67% of the transactions in the Irish investment market
are within the company’s geographic target market. The volume of transactions is
anticipated to be maintained at around the €3bn level for 2019 (source TWM).

€646

€350

€323

€296

€215

ris (

n (

ric

)

blin (

ila

)

ris (

Bir

nic

rlin

Vie

blin (

els

Lis

ric

)

The Company’s focus on its geographic target market
allows it to acquire institutional quality investment
stock with high quality tenant covenants at a premium
to investment property located in the CBD.

The yield differential between Dublin’s CBD and the
suburban or regional markets depends on location and
property specific issues, but the yields for institutional
quality office buildings outside the CBD are now between
250 and 350 bps higher (and in some cases even higher)
than in the CBD. There has been relatively limited
yield compression in the regional markets despite the
tightening seen in central Dublin, largely because the
regional markets have not yet had sustained investment
demand from institutional investors. This began to
change in 2018 and we expect this to continue in future.

Investment Volume and Yield

Placing Ireland’s prime rents in a European and UK
context (particularly cities competing for UK relocators)
both Dublin (particularly Dublin’s suburbs) and the
regional centres remain competitive. While Dublin rents
remained unchanged in Q3, the average growth rate
for office rents across Europe was 0.7% according to
Cushman & Wakefield’s ‘DNA of Real Estate Q3 2018’.
The outlook across Europe for 2019 is for further rent
increases in core cities.

Market expectation is that the Dublin prime CBD office
market will continue to perform with yields stabilising
between 4.0% and 4.5% for Grade A space. The CBD is
benefiting from the ‘Tech Mega Lease’ trend (Facebook,
Amazon, Salesforce) as well as attracting new first-time
foreign investors in Irish commercial real estate.

Early capital value growth has been largely
constrained to prime Dublin oﬃces...

...meaning that non-core submarkets oﬀer signiﬁcant
value and early stage recovery

Income premiums of 200bps are still available from

Non-core oﬃce yields are still a long way oﬀ

property outside Dublin CBD

previous peak highs

Prime

Secondary

Tertiary

Prime

Secondary

Tertiary

h
t
w
o
r
G

a
t
i
p
a
C

a
u
n
n
A
%

-50

120

x
e
d
n

h
t
w
o
r
G

a
t
i
p
a
C

Jun-08

Source: Goodbody, MSCI

Dec-18

Jun-08

Dec-18

Source: Goodbody, MSCI

Sep-08

Source: Goodbody, MSCI

Jun-16

Dec-18

Industrial

Retail

Provincial

Oﬃce

Central

Dublin

Oﬃce

Rest of

Dublin

Oﬃce

Provincial

Source: Goodbody, MSCI

Income Premium Provincial

Income Premium Non-Core Dublin

Cyclical Range High-Low 2007-18

Current

Regional Oﬃce Investment

2013 – YTD Q3 2018

€81m

€84m

Sale of

1 Albert Quay

= €58m

€38m

€30m

€44m

€42m

2013

2014

2015

2016

2017

2018 YTD

Source: Cushman & Wakeﬁeld Research

100

’

€

1,500

€

Yew Grove reit plcreport and consolidated Financial statements 2018

European City Oﬃce Rents
Q3 2018 (€ per sq. m)

Source: Cushman & Wakeﬁeld Research

1,500

M
q
S
r
e
p
€

€646

€350

€323

€296

€215

ris (

ric

ila

ris (

F
r

Bir

nic

in
g

rlin

Vie

blin (

els

Lis

blin (

)

L
a

)

n (

)

n (

it
y

)

ric

Regional Oﬃce Investment
2013 – YTD Q3 2018

100

€81m

€84m

Sale of
1 Albert Quay
= €58m

€38m

€30m

€44m

€42m

s
n
o

i
l
l
i

m
€

’

2013

2014

2015

2016

2017

2018 YTD

Source: Cushman & Wakeﬁeld Research

CBD rents have reached previous peaks at €65 per sq. ft.
but are expected to plateau at this level in the medium
term. As CBD rents are now matching the peak of the
2006/07 market and more importantly expected to
remain at this level (especially for grade A, large floorplate
buildings) for the medium term, the suburban Dublin
market is showing more value both for tenants and
investors as rental growth and yield compression have
both significantly lagged the CBD.

Outside Dublin, investment volume in regional markets
was €630m in 2018 with Cork, Limerick and Galway areas
providing most interest.

Cork prime city centre yields have reached 5.65% and
are expected to hit 5.50% in 2019. Likewise, in Galway
and Limerick, prime office yields stood at 6.00% and
6.50% respectively at the end of the year, with further
compression anticipated in 2019 (source Cushman &
Wakefield). Transaction frequency for office investment
in these three regional centres has been increasing year
on year.

Early capital value growth has been largely

constrained to prime Dublin oﬃces...

...meaning that non-core submarkets oﬀer signiﬁcant

value and early stage recovery

Income premiums of 200bps are still available from
property outside Dublin CBD

Non-core oﬃce yields are still a long way oﬀ
previous peak highs

Prime

Secondary

Tertiary

Prime

Secondary

Tertiary

Income Premium Provincial
Income Premium Non-Core Dublin

Cyclical Range High-Low 2007-18

Current

3
D
B
C
n

i
l

b
u
D

.
s
v
m
u
m
e
r
P
%
0

Sep-08

Source: Goodbody, MSCI

d
e
Y
t
n
e
a
v
u
q
E
%

Jun-16

Dec-18

Industrial

Retail
Provincial

Oﬃce
Central
Dublin

Oﬃce
Rest of
Dublin

Oﬃce
Provincial

Source: Goodbody, MSCI

-50

120

Jun-08

Source: Goodbody, MSCI

Dec-18

Jun-08

Dec-18

Source: Goodbody, MSCI

Strategic reportgovernanceFinancial StatementS

Market Report (continued)

Suburban Dublin Office Take-Up and Rents

Like the investment market, occupier activity in the office
market is performing strongly, with 2019 set to be another
record year for leasing activity in the Dublin market.

Suburban rents have lagged the CBD with more modest
growth leaving rents from €20 to €32.5 per sq. ft
depending on asset quality and location, however the
expectation is for continued growth in 2019.

Occupiers including multi-national, large corporate and
government tenants are all increasing their requirements
for space in response to a positive local economic outlook.
As a result, they are increasingly looking outside the
CBD for rental value and availability in order to take up
institutional space at rents up to 50% below the CBD.

Limited development and increasing demand are creating
upward pressure on rents. The forecast for Dublin
suburban offices in 2019 is 8.4%, to €350 per sq. m (€32.50
per sq. ft) (source Cushman & Wakefield).

Table 8: Dublin Suburban Prime Office Rents
Outlook

Measure

Q3 2018

2018f

2019f

Dublin
Suburbs

Sq m

Sq ft

€323

€30

€323 ↗

€32.50

Source: Cushman & Wakefiled Research

The IDA policy of ‘second siting’ new and expanding FDI
investment showcases lower rents and more attractive
labour markets to FDI tenants in both suburban and
regional market locations versus the CBD. Some
companies such as Google are increasingly viewing the
Dublin suburbs as sites for expansion, particularly the
southern suburbs such as Leopardstown, Cherrywood and
Carrickmines. This demand will drive new development
here as rents achievable make development viable as seen
in Sandyford. Others such as SAP, Metlife and Fidelity
have divided their expanded operations between Dublin
and Galway.

A total of 3.72 million sq. ft was taken up in 2018 in Dublin.
Of this, 2.75 million sq. ft was in the CBD including
the Facebook Fibonacci letting of 870,000 sq. ft, and
the balance of 976,555 sq. ft in the Dublin suburbs. As

occupiers are increasingly reviewing the north, south and
west Dublin suburbs for expansion, availability in the
suburbs has tightened by 11%, to 2.0 million sq. ft. There
is an additional 1.4 million sq. ft of office in planning and
under construction in the suburbs.

Prime headline rents in the southern suburbs were €30
per sq. ft (€328.5 per sq. m) at the end of Q4 while rents
in the northern suburbs were at €19.50 per sq. ft (€210
per sq. m) and in the western suburbs were at €17.50 per
sq. ft (€188.30 per sq. m).

Location

Dublin City Centre (Grade A)

Dublin City Centre (Grade B/C)

South Dublin Suburbs

North Dublin Suburbs

West Dublin Suburbs

Cork City (Grade A)

Cork City (Grade B/C)

Cork Suburbs (Grade A)

Cork Suburbs (Other)

Galway City & Suburbs

Limerick/Shannon

Waterford

Sligo

Athlone

Dundalk

Source: IDA, MSCI, Goodbody, Various Agents

Headline office rents
per sq.ft per annum

€62.5

€45–€55

€25–€30

€17.5–€22.5

€16.5–€20

€25–€35

€18–€25

€15–€22

€12–€18

€10–€25

€15–€25

€8–€18

€10–€15

€13–€16

Current Oﬃce Rent per sq. ft ex-Dublin (€)

32.5

Cork

City

Cork

Suburbs

(Grade A)

Cork

Suburbs

(Other)

Source: MSCI

Galway

City

Galway

Suburbs

Limerick

City

Limerick

Suburbs

Waterford

Sligo

Athlone

Dundalk

Dublin commercial rents have returned

to near peak levels...

...while regional commercial rents

remain well below peak.

Only 4% oﬀ peak

Still 57% below peak

400

Sep-05

Dec-08

Dec-18

Sep-05

Dec-08

Dec-18

Source: MSCI

Yew Grove reit plcreport and consolidated Financial statements 2018

Current Oﬃce Rent per sq. ft ex-Dublin (€)

a
t
n
e
R
t
e
k
r
a
M

C
S
M

x
e
d
n

h
t
w
o
r
G
e
u
a
V

32.5

Cork
City

Cork
Suburbs
(Grade A)

Cork
Suburbs
(Other)

Source: MSCI

Galway
City

Galway
Suburbs

Limerick
City

Limerick
Suburbs

Waterford

Sligo

Athlone

Dundalk

Regional Office Markets

Regional Office Take up and Rents

Regional office rents are recovering across the country
and continue to provide both FDI and Government
tenants value for money versus the Dublin CBD.

Performance in Cork, Limerick and Galway showed
improvement throughout 2018, with over-rental falling
and upward pressure on rents.

Tenant confidence is growing, but supply (especially for
modern offices) is limited in most locations. Cork, Galway
and Limerick continue to suffer from a shortage of large
Grade A space which has hampered tenant plans. These
regional cities now have their lowest vacancy levels for a
decade. Cork has experienced the greatest rental growth
which has driven the initial new development. As Dublin
rents return to previous peaks, regional rents remain
well below their own previous peaks by 5.7%.

Cork

Cork was the best performing of the three regional centres
in 2018. Cork experienced a 2018 take up of 470,800 sq.
ft versus a prior norm of 360,000 sq. ft. per annum and
several high-profile technology firms are moving from
the suburbs to the city centre as new modern Grade A
space is built there. The new Apple campus inflated the
2018 take up and the normalised take up of 360,000 sq.
ft is expected in 2019.

The relative attractiveness of Cork in terms of cost of
living for experienced staff relative to Dublin is helping
Cork to attract increased FDI investment. A number of
professional firms are increasing their representation
in the city as they find staff are easier to recruit and
costs are lower.

Dublin commercial rents have returned
to near peak levels...

...while regional commercial rents
remain well below peak.

400

a
t
n
e
R
t
e
k
r
a
M

C
S
M

x
e
d
n

h
t
w
o
r
G
e
u
a
V

Only 4% oﬀ peak

400

a
t
n
e
R
t
e
k
r
a
M

C
S
M

x
e
d
n

h
t
w
o
r
G
e
u
a
V

Still 57% below peak

Sep-05

Dec-08

Dec-18

Sep-05

Dec-08

Dec-18

Source: MSCI

Strategic reportgovernanceFinancial StatementS

Market Report (continued)

Prime rents are expected to exceed €30 psf for Grade
A offices in the city, almost half that of Dublin but still
below the last peak of €35 psf.

Rents are expected to remain stable into 2019, with
a slight increase of 1.4% forecast for the coming year.
Stronger rental growth of 5.6% to €375 per sq. m (€34.80
per sq. ft) is predicted for 2020. Suburban office rental
levels in Mahon are approximately €255 per sq. m (€23.70
per sq. ft), while other suburban areas of Cork are at
€185 per sq. m (€17.20 per sq. ft) (source Cushman &
Wakefield).

Cork is the most active of the three regional centres for
office development activity. Since 2016, 20,850 sq. m
(224,450 sq. ft) has been delivered in two large speculative
office blocks. At the end of 2018, approximately 21,800
sq. m (234,750 sq. ft) across three schemes was under
construction, all these developments are Grade A, in the
city centre commanding €30+ per sq. ft rents.

Limerick

Limerick recorded take up levels of 6,350 sq. m (68,150
sq. ft) in 11 transactions in 2018. Rents in both Limerick
city and suburbs remain at €215 per sq. m (€20 per sq.
ft) and are forecast to stay close to this level for the next
two years, with slight upward pressure of 5% expected
thereafter in 2021/22 to €225 per sq. m (€20.90 per sq. ft).

However, new high specification Grade A developments
are expected to achieve up to €325 per sq. m (€30.20 per
sq. ft). Although viewed as mixed use developments and
not market norm, they do create a trend for the city’s
rental levels. New buildings in suburban locations are
achieving circa €265 per sq. m (€24.60 per sq. ft), with
good quality suburban space being increasingly sought
near University of Limerick and Plassey Technology Park.

The volume of space under construction in Limerick is
17,750 sq. m (191,000 sq. ft) across three schemes.

Galway

Galway had 22,200 sq. m (239,000 sq. ft) of available
supply in 2018 which is a vacancy rate of 7.2% of mostly
secondary stock. Galway had few investment transactions
with office rents in the city steady at €296 per sq. m
(€27.50 per sq. ft) and €194 per sq. m (€18 psf) in the
suburbs. City centre demand and limited supply suggests
upward pressure over the next five years with rents
forecast to rise to €349 per sq. m (€32.40 sq. ft) next
year, and €365 per sq. m (€33.90 per sq. ft) in 2021. This
should push suburban rents in excess of €20 psf.

Office Market

Dublin

Galway

Cork

Limerick

Market Stock

3,625,900 sq m

308,300 sq m

585,700 sq m

346,400 sq m

(39,029,200 sq ft)

(3,318,300 sq ft)

(6,304,350 sq ft)

(3,728,400 sq ft)

Take Up YTD 2018

182,750 sq m

2,700 sq m

43,750 sq m

6,350 sq m

(1,967,050 sq ft)

(28,950 sq ft)

(470,800 sq ft)

(68,150 sq ft)

Availability

470,900 sq m

22,200 sq m

42,050 sq m

58,650 sq m

(5,068,500 sq ft)

(239,000 sq ft)

(452,700 sq ft)

(631,150 sq ft)

Vacancy Rate

13%

7.2%

15.3%

Under
Construction

Source: Cushman & Wakefield Research

406,300 sq m

7,000 sq m

21,800 sq m

17,750 sq m

(4,373,250 sq ft)

(75,150 sq ft)

(234,750 sq ft)

(191,000 sq ft)

Yew Grove reit plcreport and consolidated Financial statements 2018Industrial Market

The Company’s exposure to industrial property by floor
area is currently 41% (16% by income), and the Company
is focused on increasing that exposure in anticipation of
further growth in 2019.

The national industrial market has performed strongly in
2018 with suburban Dublin outperforming the regions.
This is due to a lack of available quality stock. Most
agents are forecasting prime rental growth over the next
three years as occupier demand increases and supply
(particularly of speculative space in the regional markets)
slow to respond.

The Dublin industrial market had strong capital growth in
2018, driven by demand for purpose-built units to match
occupier demand, in particular along arterial routes that
capture the benefits of the T50/ESB Metro Express deep
fibre network. Pharmaceutical, data centres, e-retailers,
and logistics operators are responsible for demand in
the ‘large box’ segment of the market. This is primarily
focused in the M50 belt around Dublin, particularly the
North and South West. The market is seeing increased
investor demand despite industrial investment accounting
for a minor portion of overall investment in the Irish
property market.

Yields have tightened over the past few years with strong
interest focusing on the logistics and data sector with
prime yields at 5.00% at year-end and expected for 2019.

Prime rents rose 12% to €95 per sq. m (€8.80 per sq. ft)
in 2018. Several logistics deals happened for example
at the Horizon Logistics Park for €102 per sq. m (€9.50
per sq. ft). Forecasts for 2019 see prime industrial rents
rising to €108 per sq. m (€10 per sq. ft) in 2019. Q4 take
up alone was 1.1 million sq. ft with high quality vacancy
at 8.3% at year end with occupier enquiries increasing
quarter by quarter.

Regionally, and in tandem with Dublin, Cork yields moved
tighter by 1% to 6.5% by Q3 2018. Agent forecasts suggest
prime yields in Cork will remain stable in 2019. Limerick
and Galway industrial yields improved to 8.00% and are
expected to stay at this level for 2019. (source Cushman
& Wakefield)

Regionally the combination of low transaction activity,
a slow release of second-hand stock to the market, and
few new completions has resulted in availability and
vacancy rates dropping.

Industrial rents in Cork were at €85 per sq. m (€8 per sq.
ft) in 2018, with new builds reaching €9.50 psf. Growing
demand and limited supply of new space are expected
to increase rents in the future.

Industrial Market

Dublin

Galway

Cork

Limerick

Market Stock

4,135,325 sq m

480,500 sq m

1,037,450 sq m

903,750sq m

(44,200,050 sq ft)

(5,712,200 sq ft)

(11,167,400 sq ft)

(9,727,850 sq ft)

Take Up YTD 2018

269,050 sq m

11,950 sq m

22,950 sq m

16,300 sq m

(2,895,900 sq ft)

(128,550 sq ft)

(247,150 sq ft)

(175,350 sq ft)

Availability

505,250 sq m

39,950 sq m

104,300 sq m

136,550 sq m

(5,438,250 sq m)

(376,150 sq ft)

(1,122,550 sq ft)

(1,469,800 sq ft)

Vacancy Rate

12.2%

7.3%

7.7%

15.1%

Under
Construction

Source: Cushman & Wakefield Research

95,600 sq m

1,150 sq m

5,550 sq m

0 sq m

Strategic reportgovernanceFinancial StatementSMarket Report (continued)

In Galway, industrial rents were €75 per sq. m (€7 per sq.
ft) in 2018, with moderate upward pressure anticipated
in 2019 as rents rise to €80 per sq. m (€7.50 per sq. ft).

In Limerick, secondary industrial rents are at €58 per
sq. m (€5.50 per sq. ft) for 2018, whereas advanced
manufacturing units in the Shannon region for example,
are achieving rents of €97 per m (€9 per sq. ft).

Development activity has been very limited across all
regional industrial markets. In 2018 Cork saw the start
of 5,550 sq. m (60,000 sq. ft) of development in Blarney
Business Park.

In Limerick, a 3,185 sq. m (34,300 sq. ft) unit was
completed in Shannon Industrial Estate in 2018.
Further refurbishments and development in this area
are anticipated in the coming quarters in line with the
Shannon Redevelopment Programme.

In Galway work started at Mervue Business Park on
a 1,150 sq. m (12,450 sq. ft) unit to be let in 2019 and
the IDA secured planning permission in Parkmore for
an advanced technology building of office and light
industrial/manufacturing space of 3,250 sq. m (34,950
sq. ft).

Across regional markets the company sees current rental
for advanced, technology quality space suitable for FDIs at
circa €9.50 per sq. ft and investment yields for industrial
investments in the company’s targeted market in a range
of 6.5% to 8%.

FDI investment in the regional locations is expected to
grow and be the main driver of occupier demand. 2018
saw a 9% increase in FDI employment to 230,000 jobs
(10% of the economy total). There has been a Brexit
boost to FDI investment in 2018 and this is expected to
continue into 2019. In the absence of new development,
this demand will be the main driver of rental growth.
Regional yields are expected to improve as more investors
look to these markets.

Airways Industrial Estate
Industrial, Dublin

Yew Grove reit plcreport and consolidated Financial statements 2018governance

Strategic reportgovernanceFinancial StatementSDirectors’ Report

The Directors of Yew Grove REIT plc present their report and the
audited consolidated financial statements for the financial period
from 5 April 2018 (date of incorporation) to 31 December 2018.

Principal activities

The Company (Yew Grove REIT plc) was established in
April 2018 and became an Irish real estate investment
trust in May 2018. The Company’s main activities are
the acquisition, management and rental of commercial
property in the Republic of Ireland. The Company
has a single class of shares that has been listed on the
Alternative Investment Market of the London Stock
Exchange and the Enterprise Securities Market of
Euronext Dublin from admission on 8 June 2018. The
Enterprise Securities Market has subsequently been
re-named the Euronext Growth market.

Results and activities for the Financial
period

The Group’s results for the financial period from 5 April
2018 (date of incorporation) to 31 December 2018 are set
out in the Consolidated Statement of Comprehensive
Income on page 75. The profit for the period was €2.3
million, including unrealised profits on investment
properties of €1.6 million. There is more detail attached on
page 69 in the Consolidated Statement of Comprehensive
Income.

The Chairman’s statement on page 2, the CEO’s statement
on page 4, the Portfolio Report on page 13 and the Key
Performance Indicators on page 10 provide detail of the
performance and events that influenced the Group’s
performance in this reporting period, the current
standing, recent events and future developments which
form a part of this report of the Directors.

Future developments

The Group reviews two year forward projections at its
quarterly board meetings and has conducted a strategy
review, including presentations from external market
participants. Since the financial period end date the
Company acquired two further buildings on IDA parks
in Cork and Waterford, due diligence on both of which
had been initiated in the financial period. While these
additional purchases leave the Company with relatively
little capital available for further acquisitions the

Company continues to explore accretive opportunities
that might merit the raising of further capital. The
Company will continue to manage its existing portfolio
in line with its investment strategy, reviewing each asset
to ensure its fit and economic benefit to the Company and
fulfilling a programme of works to ensure its properties
each remain at a standard that will satisfy tenants of good
credit quality and attract similar tenants to any vacancy.

The Company will also conduct a review of the
performance, cost and benefit of all its service providers,
making changes where these are merited and review the
need and cost benefit of additional staff to ensure the
Company remains operationally effective.

Events subsequent to the period end

On 8 February 2019 the Company exchanged contracts
to purchase Office Block A, located in the IDA Waterford
Business and Technology Park, Butlerstown, Waterford
for €4 million plus costs, representing a gross yield to fair
value of 8.56% after accounting for all purchase costs.
The property has 36,845 sq. ft. of open plan office space
arranged over three storeys and is tenanted by Tech
Mahindra Business Services Ltd under a 20 years lease
with a break in five years, and SE2 Information Services
Ireland Ltd under a five years lease.

On 11 February 2019 the Company delivered a completed
car park in Athlone to its adjacent tenant under a co-
terminus lease.

Yew Grove reit plcreport and consolidated Financial statements 201829

of the first quarter of 2019 of €825,000 for 1.10 cents
per ordinary share. This is to be paid to shareholders
on 13 May 2019.

Share Capital

At 31 December 2018, the Company’s total authorised
and issued share capital comprised 75,000,000 ordinary
shares of €0.01 each (“Ordinary Shares”) all of which
were issued in the period and none of which the Company
held in treasury. The Company’s entire authorised share
capital is €10,000,000 comprising 1,000,000,000
ordinary shares. All of these shares are of the same
class and carry equal voting rights and rank equally
for dividends. The Company has no securities in issue
conferring special rights with regard to control of the
Company. Details of the share capital of the Company
are set out in Note 19 to the Consolidated financial
statements and are deemed to form part of this report.
On 1 November 2018 the High Court of Ireland made
an Order confirming the Company’s capital reduction
resolution for the reduction of the Company’s Share
Premium Account in the sum of €70,250,000 such that
the balance remaining credited to that account will be
€4,000,000 such that the reserve resulting from such
cancellation be treated as realised profits as defined by
Section 117 of the Companies Act 2014. The Order of
Court and Minute on reduction of share premium account
was registered on the 2 November 2018.

The Company has only had a single class of shares since
incorporation on 5 April 2018. All of these shares are of
the same class and carry equal voting rights and rank
equally for dividends. The Company has no securities
in issue conferring special rights with regard to control
of the Company.

On 8 February 2019 the Company exchanged contracts
to purchase Office Block A, located in the IDA Waterford
Business and Technology Park, Butlerstown, Waterford
for €4 million plus costs, representing a gross yield to fair
value of 8.56% after accounting for all purchase costs.
The property has 36,845 sq. ft. of open plan office space
arranged over three storeys and is tenanted by Tech
Mahindra Business Services Ltd under a 20 years lease
with a break in five years, and SE2 Information Services
Ireland Ltd under a five years lease.

Dividends

Under the Irish REIT regime, subject to having sufficient
distributable reserves, the Company is required to
distribute to shareholders at least 85% of the Property
Income of its Property Rental Business for each
accounting period. It is the Board’s intention to propose
quarterly dividends from March 2019. Subsequent to
the financial period end the Board declared an interim
dividend of 0.964 cents per share, being €723,000 on 7
February 2019, which was paid on 26 February 2019 to all
ordinary shareholders on the share register at the close
of business on 15 February 2019. This dividend was 91%
a Property Income Distribution (“PID”), as defined in
Irish REIT legislation. On 29th March 2019 the Company
declared the payment of an interim dividend in respect

Strategic reportgovernanceFinancial StatementSDirectors’ Report (continued)

Details of Directors’ and Secretary’s interests in share capital at 31 December 2018:

Date of
appointment
as Director/
Secretary

Ordinary shares owned

Interest in options on
ordinary shares

On becoming a
Director

At 31
December
2018

On
becoming a
Director

At 31
December
2018

Ordinary
shares owned
subject to
performance
conditions

Ordinary
shares owned
not subject to
performance
conditions

Issued
Capital

Barry O’Dowd

4 June 2018

Eimear Moloney

4 June 2018

Garry O’Dea

5 June 2018

Brian Owens

4 June 2018

25,000

Jonathan Laredo

20 April 2018 24,999,999*

2,529,596

Charles Peach

20 April 2018

Michael Gibbons

20 April 2018

251,440

0 2,052,544

Sanne Group
(Company
Secretary)

5 June 2018

25,000

0.03%

25,000

0.03%

25,000

0.03%

25,000

0.03%

2,529,596

3.37%

251,440

0.34%

0 2,052,544

2.74%

The Company’s non-independent Directors (Jonathan Laredo, Charles Peach and Michael Gibbons) own 4,833,580
shares between them and have signed lock-in deeds that restrict the sale of the shares shown above before 8 June 2020.

Substantial shareholdings

As at 31 December 2018 the Company has been informed of the following substantial interests (being 3% or more of
the issued share capital) in the Company’s shares.

Royal London AM

OVMK

AIB

Invesco

Investec Wealth & Investment

Hof Hoorneman Bankiers

Alpha 4 S.A. SICAV-SIF Long Term Invest

Schroders plc

Jonathan Laredo

Shares held

12,200,000

7,500,000

7,312,500

6,000,000

4,817,400

4,240,000

3,000,000

2,925,000

2,529,596

% held

16.3%

10.0%

9.8%

8.0%

6.4%

5.7%

4.0%

3.9%

3.4%

* On 20 April 2018 Jonathan Laredo was issued with 24,999,999 shares of €0.001 each. On the same day, the Company’s shares of €0.001 each
were consolidated into shares of €0.10 each, and on the 30 April 2018 each share was subdivided into 10 Ordinary Shares of €0.01 each, such
that Jonathan Laredo then held 2,500,000 ordinary shares in the Company. On 8th June 72,500,000 further ordinary shares were issued on
admission to trading, with these shares being subscribed for at a price of €1.00 each. Jonathan Laredo subscribed €1.00 (being the subscription
price on 8 June 2018 and the same price that each other shareholder in the Company subscribed for the shares) for each of the 2,500,000
shares he held from prior to that date, such that the proceeds from subscription were €75,000,000.

Yew Grove reit plcreport and consolidated Financial statements 2018Directors

The names of each person, who at any time during the
financial period from 5 April 2018 (date of incorporation)
to 31 December 2018 was a Director and a short
biographical note on each Director appear on pages
38 to 39.

All Directors have agreed letters of appointment with
the Company of three years in duration from the date
of their appointment. The terms and conditions of
appointment of the Non-Executive Directors are set
out in their letters of appointment, which are available
for inspection at the Company’s registered office. In
accordance with the Code, all Directors submit to re-
election at each AGM. For the purposes of the European
Communities (Takeover Bids (Directive 2004/25/EC))
Regulations 2006, details concerning the appointment
and the re-election of Directors and the amendment of
the Company’s Articles of Association are set out in the
Corporate Governance Statement on page 36.

Details of Directors’ remuneration are disclosed in the
Remuneration Committee report on page 58.

Employees

The Company has grown to having 5 employees and 4
non executive Directors at financial period end. As a
smaller company the Directors recognise the benefits
of diversity of skills, experience, background, gender
and other qualities in the Company’s employees. We are
committed to reflecting diversity in its broadest sense,
while ensuring that we maintain the necessary skills and
experience required to oversee the significant financial
service activities and related requirements of the Group.
In reviewing the Company’s employment requirements,
candidates are considered on merit against objective
criteria and with due regard for the benefits of diversity.
The Company has a Diversity Policy, the aim of which is
to ensure that the percentage of women or men employed
by the Company remains at or exceeds 30%. At the end
of the financial period of the Company’s employees and
officers (including independent non executive directors)
33% were women, of the employees 40% were women.

All employees receive death in service and long-term
disability insurance, as well as health insurance for them,
their spouses and dependents under the age of 18, similar

to the executive directors. The executive directors are
responsible for the training and career mentoring of
their directly reporting employees.

Environment

Climate change has had a major impact on all business
operations. We are focused on corporate responsibility
and we are in the process of preparing a materiality
assessment to gather insight on the importance of specific
environmental, social and governance issues. This will
allow us to set sustainability goals and initiatives to create
a positive impact on environment and society. We are
also developing our Building Improvement Programme
which will incorporate our long term environmental
and sustainability policy. The Company commissions
environmental reports on each of its acquisitions.

We are working with our partners, tenants and contractors
to help to protect and preserve the environment by
operating efficiently, minimizing waste and saving energy.
Within our managed properties we have introduced a
Green Cleaning Policy focused on recycling of waste and
reducing energy by installing energy efficient lights. The
company is endeavouring to improve its overall portfolio
energy efficiency by working with its tenants to improve
individual property BER (Building Energy Report) scores.

REIT status

The Company elected for REIT status in May 2018 under
section 705 E of the Finance Act, 2013. As a result, the
Company does not pay Irish corporation tax on the profits
and gains from the qualifying rental business in Ireland
from that date, provided it meets the conditions.

As an Irish REIT, the Company is required to distribute
to its shareholders (by way of dividend), on or before the
filing date for its tax return for the accounting period
in question, at least 85% of the Property Income of the
Property Rental Business arising in each accounting
period (provided it has sufficient distributable reserves).
Failure to meet this requirement will result in an Irish
REIT incurring a tax charge calculated by reference to the
extent of the shortfall in the dividends paid. The Company
is in compliance with all the above REIT requirements
for the period from May 2018 to 31 December 2018.

Strategic reportgovernanceFinancial StatementSDirectors’ Report (continued)

Principal Risks and Uncertainties

The Directors have carried out a robust assessment of
the principal risks facing the Company, including those
that would threaten its business strategy, performance,
solvency or liquidity. The principal risks and uncertainties
are discussed in the ‘Principal Risks and Uncertainties’
section on page 46 and form part of this report.

Going Concern and the Viability Statement

In accordance with the relevant provisions of the UK
Corporate Governance Code and the Irish Corporate
Governance Annex, the Board has taken account of the
principal risks and uncertainties, as set out below, in
considering the statement to be made regarding the going
concern basis of accounting and the Viability Statement.
These statements are as follows:

Going Concern

The Company has a geographically spread portfolio
of commercial properties with close to full occupancy
(current levels of vacancy total 2.8% by rent) across the
portfolio and a low level of total debt to equity gearing
of 8.25% as at 31 December 2018. The Company has good
visibility of its future cash inflows from rental income
from its tenants, and of its cash outflows on expenses.
Having assessed the relevant business risks the Directors
believe that the Company is well placed to manage its
business risks successfully.

The Directors believe that the Company has adequate
resources to continue in operation for the foreseeable
future and that it is appropriate to continue to adopt
the going concern basis in preparing their Report and
Consolidated financial statements.

Viability Statement

The period over which the Directors consider it relevant
and appropriate to report on the Company’s viability is
the two years period to 31 December 2020. This period
has been selected because it is the period that is used
and reviewed quarterly for the Company’s medium-term
business plans. The assumptions behind these forecast
cash flows and covenant compliance forecasts were
stressed to review the strength of the Company in the
light of the Company’s principal risks. The principal risks
and uncertainties following from page 46 summarises

those matters that the Board believes might in the
Board’s view inhibit the Company’s ability to achieve
its investment objectives.

The Directors paid particular attention to the risk of
a deterioration in economic outlook and the potential
impact of Brexit, which would impact property
fundamentals, including occupier demand and
profitability, which would have a negative impact on
valuations and rental income, and the impact that this
would have on financing covenants and compliance with
the REIT regime. The remaining principal risks, whilst
potentially injurious on the Company’s business model,
are unlikely to impact the Company’s viability over the
two year period to 31 December 2020.

Having considered the forecast cash flows and covenant
compliance and the impact of the stressed risks, the
Directors confirm that they have a reasonable expectation
that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period
ending 31 December 2020.

Corporate Governance

For the period from the date of Admission on 8 June
2018 to 31 December 2018, the Company’s corporate
governance practices were governed by the relevant
requirements and procedures as set out by the Irish
Corporate Governance Annex (“Irish Annex”) and
the UK Corporate Governance Code (“UK Code”),
(collectively known as the “Codes”) and its Articles of
Association. The Board confirms that the Company has
complied with all provisions of the Codes during the
period from 8 June 2018 to 31 December 2018. Details
of the Company’s compliance with the Codes are in
the Corporate Governance Report from pages 37 to 42.

Yew Grove reit plcreport and consolidated Financial statements 2018Directors’ Compliance Statement

Audit Committee

The Directors have established an Audit Committee
in compliance with the Codes and section 167 and
section 1551 of the Companies Act 2014 to assist with
certain responsibilities relating to internal controls, risk
management and reporting.

Independent auditor

The statutory auditor, Deloitte Ireland LLP, Chartered
Accountants (“Deloitte”), was appointed on the 9 April
2018 and continues in office in accordance with section
383 (2) of the Companies Act 2014 and have indicated
their willingness to continue in office. A resolution to
re-appoint Deloitte will be proposed at the first AGM
of the Company.

Relevant audit information

The Directors believe that they have taken all steps
necessary to make themselves aware of any relevant audit
information and have established that the Company’s
statutory auditor is aware of that information. Insofar
as they are aware, there is no relevant audit information
of which the Company’s statutory auditor is unaware.

This Directors’ statement was approved by the Board
of Directors on 23 April 2019 and is signed on their
behalf by:

Jonathan Laredo
Chief Executive Officer

Charles Peach
Chief Financial Officer

The Directors have, with the assistance of advisers,
identified the relevant obligations, as required by the
Companies Act 2014, that they consider apply to the
Company. The Directors acknowledge that they are
responsible for securing the Company’s compliance
with its relevant obligations and confirm that they have:

• Drawn up a compliance policy statement setting out
the Company’s policies in respect of compliance with
its relevant obligations;

• Ensured that appropriate arrangements and structures
have been put in place that are designed to ensure
material compliance with the Company’s relevant
obligations; and

• Conducted a review, during the period from
incorporation to 31 December 2018, of the arrangements
and structures that were put in place to secure material
compliance with the Company’s Relevant Obligations.

Accounting records

The Directors are responsible for ensuring that adequate
accounting records, as outlined in sections 281 to 285
of the Companies Act 2014, are kept by the Company.
The Directors believe that they have complied with this
requirement by providing resources to maintain adequate
accounting records, including the provision of services by
the Administrator, Baker Tilly. The accounting records
of the Company are maintained at the Administrator’s
registered office, 21-23 Holles Street, Dublin 2, Ireland.

Principal Subsidiaries and Joint Ventures

Details of the Company’s principal subsidiaries and joint
venture are set out in Note 1.11 to the financial statements.

Political donations

There were no political donations made by the Company.

Branches

The Company does not have any branches outside the
Republic of Ireland.

Strategic reportgovernanceFinancial StatementSDirectors’ Responsibility Statement

The Directors, whose names and details are listed on pages 38 to 39
are responsible for preparing the Report and Consolidated financial
statements in accordance with applicable laws and regulations.

Irish Company law requires the Directors to prepare
financial statements for each financial period. Under that
law the Directors have to prepare the Group and Company
financial statements in accordance with International
Financial Reporting Standards as adopted by the EU
(“IFRSs”).

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 assets, liabilities
and financial position of the Group and Company as at
the financial period end date and of the profit or loss of
the Group for the financial period and otherwise comply
with the Companies Act 2014.

In preparing the Report and Consolidated financial
statements, the Directors are required to:

• Select suitable accounting policies and then apply

them consistently;

• Make judgements and accounting estimates that are

reasonable and prudent;

• State that Group and Company financial statements
comply with applicable International Financial
Reporting Standards as adopted by the European
Union, subject to any material departures disclosed and
explained in the financial statements, and ensure the
financial statements contain the information required
by the Companies Act 2014; and

• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group and Company will continue in business.

The Directors are also required by the Transparency
Directive (Directive 2004/109/EC) Regulations 2007,
the Transparency Rules of the Central Bank of Ireland,
the Companies Act 2014, the AIM Rules for Companies
issued by the London Stock Exchange and the Euronext
Growth market Rules for Companies issued by Euronext

Dublin (formerly the Irish Stock Exchange), to prepare
a Directors’ report and reports relating to Directors’
remuneration and corporate governance and the
Directors are required to include a management report
containing, amongst other things, a fair review of the
development and performance of the Group’s business
and of its position and a description of the principal risks
and uncertainties facing the Group.

The Directors are responsible for ensuring that the
Group and Company keeps or causes to be kept adequate
accounting records which:

• Correctly explain and record the transactions of the

Group and Company;

• Enable at any time the assets, liabilities, financial
position and profit or loss of the Group and Company
to be determined with reasonable accuracy;

• Enable them to ensure that the financial statements
and Directors’ report comply with the Companies
Act 2014; and

• Enable the financial statements to be audited.

Directors are also responsible for safeguarding the assets
of the Group and the Company and for taking reasonable
steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for
the maintenance and integrity of certain corporate and
financial information included on the Group’s website
(www.ygreit.com).

The Directors confirm that they have complied with
the above requirements in preparing the Report and
Consolidated financial statements.

Yew Grove reit plcreport and consolidated Financial statements 201835

Each of the Directors, whose names and functions are
listed on pages 38 and 39, confirms that, to the best of
each person’s knowledge and belief:

• The Report and Consolidated financial statements,
prepared in accordance with IFRSs as adopted by
the European Union, give a true and fair view of the
assets, liabilities, financial position for the Group and
Company as at 31 December 2018 and of the result for
the financial period then ended for the Group and
Company;

• The Directors’ Report includes a fair review of the
development and performance of the Group’s business
and the state of affairs of the Group and Company at
31 December 2018, together with a description of the
principal risks and uncertainties facing the Group; and
• The Report and Consolidated financial statements,
taken as a whole, are fair, balanced and understandable
and provides the information necessary for shareholders
to assess the position and performance, strategy and
business model of the Group and Company.

This responsibility statement was approved by the
Board of Directors on 23 April 2019 and is signed on
their behalf by:

Jonathan Laredo
Chief Executive Officer

Charles Peach
Chief Financial Officer

Strategic reportgovernanceFinancial StatementS36

Yew Grove reit plcreport and consolidated Financial statements 2018Corporate Governance Statement

Statement of Compliance

The Board confirms that the Company has complied
with all the provisions of the Codes during the period
from 8 June 2018 to 31 December 2018.

The Role of the Board of Directors

The role of the Board is to set the strategic objectives for
the Group, to monitor the achievement of these strategic
objectives, and to determine the nature and extent of the
principal risks it is prudent to take in achieving these
strategic objectives. The Board is also responsible for
monitoring and reviewing the effectiveness of the Group’s
risk management and internal control systems and
maintaining a high standard of corporate governance. The
Board is responsible for ensuring the accuracy of financial
and business information provided to shareholders and
for ensuring that such information, taken as a whole,
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the
company’s position and performance, business model
and strategy.

As at the date of this Report, there are seven (7) directors
on the Board, all of whom have been Directors from the
date of Admission. The Board does not have any planned
changes to its structure or size. While not required to
by the UK Code as a smaller company, the Company
ensures that there is a majority of independent non-

executive directors (four) in accordance with the UK
Code. The number of non executive directors ensures
that each non-executive sits on two of the Board’s
Committees, all of which have a majority (or only include)
independent non-executive directors. The Board has a
majority of independent non-executive directors and
has sufficient members to provide relevant experience
in the areas of particular importance to the Company.
These are, property investment, capital markets, Irish
foreign direct investment, property development,
financial management, property management and
asset management experience. The wide range of
these experiences has dictated the size of the Board. In
reviewing the Board composition and appointments,
candidates are considered on merit against objective
criteria and with due regard for the benefits of diversity.
The Board has a Board Diversity Policy, the aim of which
is to ensure that the percentage of women on the Board
achieves or exceeds 30%. The percentage is currently
14%. Barry O’Dowd (the Chairman), Eimear Moloney,
Garry O’Dea and Brian Owens are independent non-
executive directors. The Chief Executive Officer, Jonathan
Laredo, the Chief Financial Officer, Charles Peach and the
Chief Investment Officer, Michael Gibbons are executive
directors.

Strategic reportgovernanceFinancial StatementSCorporate Governance Statement (continued)

The biographies of each of the Directors is set out below:

Barry O’Dowd
(Chair, Independent
Non-executive Director)

Garry O’Dea
(Senior Independent
Non-executive Director)

Mr O’Dowd was appointed as Chairman of the Company on 8
June 2018 and is also chairman of the Nomination Committee.
Mr O’Dowd was Senior Vice President of IDA Ireland until
retiring from that role in 2018. At IDA Ireland he was Global
Head of two key operating divisions, Emerging Business (2010 –
2018) and New forms of Investment (2015-2018). From 2005 to
2009 he led the Pharmaceutical & Biotechnology Department.
Before joining IDA Ireland he was Director of Strategy and
Business Development at Organon International between 2002
and 2005. Mr O’Dowd is a Member of the Institute of Directors
of Ireland, holds an MSc (Management) from Trinity College,
Dublin and is a qualified Barrister at Law from University
College Dublin & Kings Inns.

Mr O’Dea was appointed as a Director of the Company and
Senior Independent Director on 8 June 2018. He is chairman of
the Audit Committee. Mr O’Dea is a former Finance Director of
Irish Continental Company plc (“ICG”), a position he held from
1988 until his retirement in 2015. Prior to joining ICG, he worked
in a number of financial roles at CRH plc. Mr O’Dea is currently
an independent trustee of the RTE Superannuation Scheme.
Mr O’Dea qualified as a Chartered Accountant with KPMG
and is also a member of the Institute of Directors in Ireland.

Eimear Moloney
(Independent Non-executive
Director)

Brian Owens
(Independent Non-executive
Director)

Ms Moloney was appointed as a Director of the Company on 8
June 2018. She is chairman of the Remuneration Committee. Ms
Moloney was, until December 2017, a Senior Fund Manager at
Zurich Life Assurance Ireland plc where she had responsibility
for equity and regional asset allocation. She has also held
responsibility for sector and stock selection in a number of
investment markets including the United Kingdom, Ireland
and the United States. She is currently a non-executive director
of Hostelworld Group plc, and a member of the Institute of
Directors in Ireland. She is a Chartered Accountant and holds an
MSc in Investments and Treasury from Dublin City University.

Mr Owens was appointed as a Director of the Company on 8
June 2018 and is chairman of the property Valuation Committee.
Mr Owens is CEO of Hardwicke Property Company, a position
he has held since 2001, and was previously CFO of the same
Company for 14 years. He qualified as a Chartered Accountant
with Deloitte and is a member of both the Society of Chartered
Surveyors and The Royal Institution of Chartered Surveyors.

Yew Grove reit plcreport and consolidated Financial statements 2018Jonathan Laredo
(Chief Executive Officer)

Charles Peach
(Chief Financial Officer)

Mr Laredo has over 29 years’ experience in investment markets,
including running the European and Asian structured finance
business at JP Morgan, where amongst other business he was
responsible for Commercial Mortgage Backed Securities
including both securitised debt issuance and direct lending
to real estate based private equity. Mr Laredo was one of the
founders and was the CEO of Solent Capital Partners, a hedge
fund founded in 2003. He was one of the owners and a director
of the Pepper Group, an Australian based mortgage lender and
servicer which built the largest third-party servicing business
in Ireland. He graduated with a BA (Hons) in Philosophy from
Sussex University. Mr Laredo was a co-founder of the Yew Tree
Investment Fund (which was acquired by Yew Grove REIT plc
at IPO) and a member of Parapet Capital Advisors’ management
team during the time it acted as investment adviser to the
Yew Tree Investment Fund’s Alternative Investment Fund
Manager. He was also responsible, along with the other members
of the Executive Management Team, for the construction of
the Seed Portfolio. He became a director of the Company on
incorporation on 5 April 2018 and was appointed to his current
role on 8 June 2018.

Mr Peach has over 24 years’ experience in investment markets,
structuring and raising capital for companies and funds. He
started his career with Bear Stearns’ FAST (Financial Analytics
and Structured Transactions) group for seven years, followed
by five years with Nomura’s Exotic Credit Trading Group. At
Nomura he developed and ran managed vehicle issuance and risk
management programmes. As well as raising and structuring
financing for funds and corporate borrowers, he has advised
pension schemes and banks on their funding requirements
and strategies. Mr Peach was a co-founder of the Yew Tree
Investment Fund and a member of Parapet Capital Advisors’
management team during the time it acted as investment adviser
to the Yew Tree Investment Fund’s Alternative Investment
Fund Manager (“AIFM”). He was also responsible, along with
the other members of the Executive Management Team, for the
construction of the Seed Portfolio. He graduated with an MA
(Hons) in History of Art from the University of Aberdeen. He
became a director of the Company on 20 April 2018 and was
appointed to his current role on 8 June 2018.

Michael Gibbons
(Chief Investment Officer)

Mr Gibbons has over 26 years’ experience in investment
markets and has run high yield, distressed debt and special
opportunities businesses. He started his career in corporate
finance at Bankers Trust then spent seven years in Asia where he
built Sumitomo Finance’s capital markets business spanning new
issues to secondary trading activity. He subsequently worked for
Commerzbank, BNP Paribas, Aladdin Capital Management LLP
and distressed specialist Guy Butler, moving back to Ireland in
2014. From 2008 to 2011 he was a member of the international
advisory board of Parker Green International. He graduated
with a BComm from University College Dublin and a Diploma
in Accounting from Queens University. Mr Gibbons was a co-
founder of the Yew Tree Investment Fund and a member of
Parapet Capital Advisors’ management team during the time it
acted as investment adviser to the Fund Yew Tree Investment
Fund’s Alternative Investment Fund Manager. He was also
responsible, along with the other members of the Executive
Management Team, for the construction of the Seed Portfolio.
He became a director of the Company on 20 April 2018 and was
appointed to his current role on 8 June 2018.

Strategic reportgovernanceFinancial StatementS40

As required by the UK Code, specific areas of delegation
are set out in the terms of reference for each of the Audit
Committee, Nomination Committee, Remuneration
Committee, and Valuation Committee. The terms of
reference of the Audit, Nomination, Remuneration and
Valuation Committees are available on the Company’s
website at w w w.ygreit.com/investors/corporate-
governance, and reports of each of these Committees are
set out below. The Board reviews the Group’s performance
and management accounts on a quarterly basis. The
executive directors have discretionary authority to enter
into transactions for and on behalf of the Company,
except for certain matters that require the consent of the
Board. Unless required to be performed by the Company’s
AIFM as a matter of law or in order to respond to a bona
fide emergency, the Board’s prior approval is required
by the executive directors for certain reserved matters,
which include but are not limited to:

7.
8.

any acquisition/disposal of a property investment
or the entry into any agreement to acquire /dispose
of a property investment in excess of €5 million;
any new financing or refinancing agreements or
arrangements;
any capital expenditure or pre-funding agreements
in excess of €5 million;
any proposed lease surrender where the rent
referable to the relevant lease is greater than 10%
of the aggregate rental income of the Company or
25% of the aggregate rental income of the lease’s
property;
any proposed lease commitment where the area
being leased exceeds 50,000 square feet;
any acquisition or the entry into any agreement to
acquire any property investment through a joint
venture or co-investment structure;
any hedging or use of derivatives;
the entry by the Company into any transactions for
the purchase of assets from, or provision of services
of a material nature by, any connected party.

Under the Company’s corporate governance framework
any matter which requires the consent or approval of the
Board of the Company is considered at a Board meeting
at which a quorum must be present or by way of written
resolution of the Board.

The Schedule of Matters Reserved for the Board was
reviewed prior to 31 December 2018 and will be reviewed
annually and updated as appropriate.

General meetings

The Company will hold an AGM in each year from 2019
year in addition to any other meetings in that year. Not
more than 15 months shall elapse between the date
of one Annual General Meeting and that of the next.
The Company has not held an annual general meeting
(“AGM”) in the 2018 calendar year and will hold its first
AGM on 24 May 2019. Notice of the 2019 AGM, together
with details of the resolutions to be considered at the
meeting, will be circulated to the shareholders in or
around 25 April 2019.

The Directors are responsible for the convening of
general meetings. An annual general meeting and an
extraordinary general meeting calling for the passing of
a special resolution shall be called by at least twenty-one
clear days’ notice and all other extraordinary general
meetings shall be called by at least fourteen clear days’
notice (whether in electronic form or otherwise). No
business other than the appointment of a chairman shall
be transacted at any general meeting unless a quorum
is present at the time when the meeting proceeds to
business. Three members present in person or by proxy
shall be a quorum.

The Company’s AGM affords shareholders the opportunity
to question the Chairman and the Board. The chairperson
of the Audit, Nomination, Remuneration and Valuation
Committees are also available to answer questions at
the AGM. The Chief Executive will present at the AGM
on the Company’s business and its performance during
the prior year and answer questions from shareholders.

Voting rights

a. Votes of members: votes may be given either personally
or by proxy. Subject to any rights or restrictions for the
time being attached to any class or classes of shares,
on a show of hands every member present in person
and every proxy shall have one vote, so, however, that
no individual shall have more than one vote, and on a
poll every member shall have one vote for every share
carrying voting rights of which he/she is the Holder. The
Chairman shall be entitled to a casting vote where there
is an equality of votes.

Yew Grove reit plcreport and consolidated Financial statements 201850 for the Audit Committee, page 56 for the Nomination
Committee, page 58 for the Remuneration Committee
and page 62 for the Valuation Committee.

Board Meetings

The Board met four (4) times as below in the period from
5 April 2018 to 31 December 2018 (the Board convened
an additional six times for a strategy meeting and to
review matters reserved for the Board) and will meet
at least four (4) times each following calendar year and,
prior to such meetings taking place, an agenda and board
papers are circulated to the Directors so that they are
adequately prepared for the meetings. The Company
Secretary is responsible for the procedural aspects of
the Board meetings.

Directors are expected to participate in all scheduled
Board meetings as well as the AGM. A schedule of Board
meetings is circulated to the Board before period end
for the following year. The Board and Committee papers
are circulated sufficiently in advance of each meeting
to allow the Directors and Committee members to
properly prepare for the meetings. From time to time
the Board and Committees may be required to convene
ad-hoc meetings but appropriate notice is given and
relevant papers are circulated in advance. Standing
items at quarterly Board meetings include management
accounts for the previous quarter, a review of budgeted
and actual performance, compliance reporting, portfolio
and pipeline reporting and other operational reports.

b. Resolutions: resolutions are categorised as either
ordinary or special resolutions. The essential difference
between an ordinary resolution and a special resolution is
that a simple majority of more than 50% of the votes cast
by members voting on the relevant resolution is required
for the passing of an ordinary resolution, whereas a
qualified majority of more than 75% of the votes cast by
members voting on the relevant resolution is required
in order to pass a special resolution. Matters requiring
a special resolution include for example:

• Altering the objects of the company;
• Altering or implementing new pre-emption rights;
• Market purchase of own shares and reissuing;
• Altering the articles of association of the company.

Committees of the Board

The Board has delegated certain of its responsibilities to
Committees of the Board, namely the Audit Committee,
Nomination Committee, Remuneration Committee, and
Valuation Committee. The duties and responsibilities of
each of these Committees are set out clearly in written
terms of reference which have been approved by the
Board and are available on the Company’s website www.
ygreit.com. Each Committee has reported separately on
its activities on pages 50, 56, 58 and 62. Membership and
chairmanship of each committee is reviewed by the Board
at intervals of not more than three years.

Audit
Committee

Garry O’Dea (Chair)
Eimear Moloney
Brian Owens

Nomination
Committee

Barry O’Dowd (Chair)
Eimear Moloney
Jonathan Laredo

Remuneration
Committee

Eimear Moloney (Chair)
Garry O’Dea

Valuation
Committee

Brian Owens (Chair)
Barry O’Dowd
Jonathan Laredo

The Chairs of each of the Committees have reported
separately on their Committees’ responsibilities and
activities during the reporting period. These are on page

Strategic reportgovernanceFinancial StatementSCorporate Governance Statement (continued)

Attendance at Meetings, 8 June 2018 to 31 December 2018

The table below shows the number of meetings to which each Director was invited, followed by the number of
meetings attended by the Director in the period:

Barry O’Dowd

Eimear Moloney

Garry O’Dea

Brian Owens

Jonathan Laredo

Charles Peach

Michael Gibbons

Board
Meetings

4/4*

4/4

* Chair
** Invited, not a Committee member

Audit
Committee

Nomination
Committee

2/2*

Remuneration
Committee

Valuation
Committee

2/2

4/4

4/4*

4/3

4/4**

1/1*

1/1

1/1**

2/2

2/2*

2/2

2/2**

All committee members were appointed to their
respective committees on 8 June 2018, except for the
Valuation Committee, which Jonathan Laredo became
a member of on 2 August 2018 and the Audit Committee
which Eimear Moloney became a member of on 21 August
2018. Directors may request that any relevant concern
they have be considered and minuted at any Board or
Committee meeting, and minutes are circulated for
review in advance of approval and signing at the next
meeting, or as appropriate.

Chair

The Chairman, Barry O’Dowd, is an independent non-
executive director. The Board believes that the Chairman
meets all the criteria in the Codes and is demonstrably
independent in character and judgement in his role. The
Chairman’s primary responsibility is to lead the Board
and to ensure it and its members are both effective and
provide good governance. The Chairman additionally is
responsible for monitoring and measuring performance
against strategy. The Chairman will meet shareholders
from time to time and intends to do so at the Company’s
AGM and as part of results presentations, in order to
understand their views. He also makes himself aware of
shareholder views through feedback and reporting provided
by the Company’s brokers, Investec and Goodbody.

Before the beginning of each calendar year and following
consultation with the Company Secretary and other
Directors, the Chairman and the Chairs of the Board

Committees set a schedule of Board and Committee
meetings, with key agenda items, for the following year.
The Chairman also leads the Company’s strategy session
held in each calendar year, in conjunction with the Chief
Executive.

There have been no changes to the other significant
commitments of the Chairman since 8 June 2018, and
the other non-executive directors have informed the
Board that there have been no additional significant
commitments undertaken by them since admission which
require notification to the Board. The Chairman ensures
all directors are furnished with the information necessary
to assist them in the performance of their duties.

The Senior Independent Director

The Senior independent director Garry O’Dea is an
independent non-executive director. His role includes
acting as an advisor to the Chair and as an intermediary
for the Directors, providing an alternate point of contact
from the Chair and CEO for shareholders, and discussing
the Chair’s performance with other Directors.

Board Strategy

The Board receives regular updates on the Company’s
achievements in light of its strategy, as well as reviewing
the Company’s performance against key metrics and
investment objectives. The Board held a dedicated strategy
review meeting in October 2018, attended by all Board

Yew Grove reit plcreport and consolidated Financial statements 201843

members, at which the strategy was reviewed for market
validity, appropriateness and viability, following which
the strategic priorities for the Company were confirmed.

Information and Support

Directors have access to the Company Secretary
and, where appropriate, are entitled to have access to
independent professional advice at the expense of the
Company. The Committees of the Board are provided
with sufficient resources to undertake their duties. The
Company provides appropriate Directors’ and Officers’
insurance in respect of legal action against its directors.

As required by the Codes, the Chairman has held meetings
during the financial period with the non-executive
Directors without the presence of the executive Directors.

Appointments to the Board

The Directors were all selected to bring in a range and
depth of knowledge, skills and business experience to the
Company. All serving members of the Board have been
in place since Admission. The Nomination Committee is
responsible for leading the process for Board appointments
and is comprised of a majority of independent non-
executive directors. The criteria that it applies when
selecting potential candidates include experience and
knowledge of the Irish commercial real estate sector, strong
financial skills, general business experience, professional
background and likely availability, and a need for balance
and diversity, including gender, on the Board. At least half
of the Board are independent non-executive directors
(excluding the Chairman). All non-executive directors
were appointed for a term of three years and, subject to
continued satisfactory performance, all directors will
submitted for re election at the Company’s AGM in 2019,
in accordance with the Company’s Articles of Association
and the provisions of the Codes. Accordingly, all Directors
will seek re-election at the Company’s forthcoming AGM
on 24 May 2019.The terms and conditions of appointment
of all directors are set out in letters of appointment which
will be made available at each AGM.

property management, operations and tenant relations.
The independent directors also receive presentations
from the executive management and the Company’s
advisors on matters relevant to the Company’s business.
The Nomination Committee, on behalf of the Board,
assesses the training needs of the directors on at least
an annual basis.

The Chairman also considers the training needs of
directors, in conjunction with individual directors, and
has concluded that those needs are adequately met.

Communications with Shareholders

The Board acknowledges the importance of and
welcomes feedback and all effective communications
with shareholders. The Board is responsible for ensuring
that a satisfactory discourse with shareholders takes place
and that the Company maintains open, two way lines
of communication with shareholders. It is important to
the Board that shareholders understand the Company’s
strategy and objectives, which the Board works to ensure
are clearly explained and articulated.

The Company formally updates the market on its
financial performance with half year and full year results.
Presentations are made to both existing and prospective
institutional shareholders, principally after the release of
the interim and annual results but also as part of investor
days organised by brokerage firms.

Major acquisitions are also announced to the market and
the Company’s website (www.ygreit.com) provides the
full text of all stock exchange releases. The website also
contains the first interim report and will contain future
interim reports and Reports when they are published. The
Chairman, in line with the Codes, will, as required, ensure
that the views, issues and concerns of major shareholders
are communicated to the Board so that appropriate action
can be taken if required. The Chairman and the other
directors also have the opportunity to meet shareholders
and analysts at the Company’s AGM.

Induction and Development of Directors

All new independent directors receive induction training
on joining the Board and are invited to visit part of the
Company’s portfolio as soon as possible following their
appointment to gain first hand understanding of examples
of the implementation of the Company’s strategy,

If shareholders would like to communicate directly with
the Board, they should contact Jonathan Laredo, contact
details for whom are available from the Company’s
website. The Senior Independent non executive Director,
Garry O’Dea, is also available to shareholders who may
have concerns which they would like to bring to his
particular attention.

Strategic reportgovernanceFinancial StatementSCorporate Governance Statement (continued)

Share Dealings

The Market Abuse Regulation (Regulation 596/2014 of the
European Parliament and the Council of the European
Union) contains rules requiring listed companies to
have effective systems and controls regarding persons
discharging managerial responsibilities (“PDMRs”)
securities dealing clearance. The Board has put in place
securities dealing rules which apply to the directors
and relevant employees of the Company and any of its
affiliates (and certain persons connected with such
persons). The securities dealing rules set out the pre
clearance approval procedures to be adhered to when
dealing in the shares of the Company and also set out
periods in which share dealings are prohibited.

Details of each director’s interests in the Company’s
shares at 31 December 2018 are set out as below:

Number of shares

Issued Capital

Barry O’Dowd

Eimear Moloney

Garry O’Dea

Brian Owens

Jonathan Laredo

Charles Peach

Michael Gibbons

Independence

25,000

2,529,596

251,440

2,052,544

0.03%

3.37%

0.34%

2.74%

In accordance with the principles of the Codes, the
Company maintains a majority of independent non
executive directors on the Board. The independence of
each non-executive director is considered each calendar
year by the Board. The Board determines whether each
director is independent in character and judgement
and whether there are relationships or circumstances
which are likely to affect, or could appear to affect, the
director’s judgement.

The Board is satisfied that each of its designated
independent non executive directors, namely Barry
O’Dowd, Eimear Moloney, Garry O’Dea and Brian Owens
fulfil the independence requirements of the Codes. The
Board is also satisfied that the other directorships held
by its directors do not interfere with the discharge of
their duties to the Company.

The Company has and continues to maintain a robust
whistleblowing policy that allows Company staff or
advisors to raise concerns about possible improprieties in
financial reporting or any other activities of the Company.

Board Evaluation

The effectiveness and performance of the Board and its
directors, and of its Committees and their chairmen, will
be evaluated annually by the Board. Provision B.6.2 of
the Codes provides that the Company (also as a smaller
Company for the purposes of the Irish Annex) is not
required to be externally evaluated every three years,
however the Company intends that an independent review
by an independent outside expert should be conducted
at least every three years.

The Board will formally conclude on a self-evaluation of
its performance in early 2019, on the performance of the
Committees and on the performance of the individual
directors including the Chairman. The senior independent
non-executive director will meet with the non-executive
Directors (other than the Chairman) to appraise the
Chairman’s performance, taking into consideration the
views of the executive directors.

Memorandum and Articles of Association

The Company’s Memorandum and Articles of Association
sets out the objects and powers of the Company and are
available at http://www.ygreit.com/investors/company-
documents/2018. The Articles of Association detail the
rights attaching to shares, the method by which the
Company’s shares can be purchased or re-issued, the
provisions which apply to the holding of and voting at
general meetings and the rules relating to the Directors,
including their appointment, retirement, re-election,
duties and powers. The Directors are responsible for the
management of the business of the Company and may
exercise all the powers of the Company subject to applicable
legislation and regulation and the Company’s Articles of
Association. The Company’s Articles of Association may be
amended by a special resolution passed by the shareholders
at an AGM or EGM of the Company.

Purchase of own shares

The Company may purchase any of its own shares and any
shares the Company purchases may be cancelled or held
by the Company as treasury shares. The Company shall
not make a purchase of shares in the Company unless the

Yew Grove reit plcreport and consolidated Financial statements 201845

purchase has first been authorised by a special resolution
of the Company. On 4th June 2018 the Company made
a special resolution to permit the Directors to make
market purchases not exceeding the lower of €75,000
nominal value and 10% of the aggregate nominal value of
the issued share capital at 8 June 2018. There have been
no purchases of own shares made by the Company in
the financial period and there were no shares owned in
treasury at the end of the financial period.

Accountability report

In accordance with the Codes, the Board aims to present
a fair, balanced and understandable assessment of the
Company’s position, performance, business model and
strategy specifically that they consider that the Report and
Consolidated financial statements, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position,
performance, business model and strategy. The Board’s
opinion as to the validity of adopting the going concern
basis of accounting in preparing the annual financial
statements is included in their Directors’ Report on pages
28 to 33, as well as the basis by which the Company seeks
to generate or preserve value over the long term.

Risk Management and Internal Control

The Board has overall responsibility for the implementation
and success of the Company’s system of internal
control and risk management. The Board has delegated
responsibility for the monitoring of the effectiveness of
this system to the Audit Committee. In accordance with
the “Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting” issued
by the Financial Reporting Council in September 2014,
the Board confirms that there is an ongoing process for
identifying, measuring and managing the significant
risks faced by the Company in achieving its strategic
objectives, that this process has been in place from 6
June 2018 and up to the date of this report, and that this
process is regularly reviewed by the Board. The Board
and the Audit Committee have developed, documented
and maintain a robust risk identification, management
and internal control framework and periodically review
and consider if the systems are operating effectively. The
Chairman of the Audit Committee reports to the Board
during the financial period on the Committee’s activities
regarding risk management and internal control. The
Audit Committee reviewed the risk register and risk

management policy and recommended it for adoption
by the Board. The Company’s risk management policy and
risk register identify the principal risks facing the Company
and assess the controls in place to mitigate those risks and
the procedures in place to monitor them. This process
is designed to manage rather than eliminate the risk of
failure to achieve the Company’s business objectives and
can only provide reasonable, but not absolute, assurance
against material loss or mis-statement. The principal risks
facing the Company and the means for their management
and mitigants are included in the Principal Risks and
Uncertainties on page 46.

Code Compliance

The Directors are committed to maintaining high
standards of corporate governance and this Corporate
Governance Statement describes how the Company has
complied with all provisions of the Codes in the period
from Admission on 8 June 2018 to 31 December 2018.
The Board have reviewed the UK Corporate Governance
Code 2018 and will adopt its principles.

AGM

The AGM of the Company will take place at 12.00p.m.
on 24 May 2019 at the offices of William Fry, Grand
Canal Square, Grand canal Dock, Dublin. The Report
and Consolidated financial statements and Notice of
the AGM will be sent to shareholders at least 20 working
days prior to the date of the meeting. The Notice of
the AGM sets out the business of the meeting and an
explanatory note on all resolutions to be considered at
the meeting. Separate resolutions will be proposed on
each substantive issue. All shareholders will have the
opportunity to attend and vote, in person or by proxy,
at the AGM. The Chairman, the Chair of each of the
Committees and the three Executive Directors will be
available at the AGM to answer shareholders’ questions.

Results of resolutions proposed at the AGM will be
published on the Company’s website www.ygreit.com
following the AGM.

Barry O’Dowd
Chairman

Jonathan Laredo
Chief Executive Officer

Strategic reportgovernanceFinancial StatementSPrincipal Risks and Uncertainties

The Company’s Board has overall responsibility for the establishment and oversight
of the Company’s risk management framework to ensure that its strategy can be
successfully implemented. The Audit Committee is responsible for developing and
monitoring the Company’s risk management policies, as set out in the governance
statement. Risk management policies are established to identify and analyse the
risks faced by the Company, to set appropriate risk limits and controls and to
monitor risks and adherence to limits. All of these policies are regularly reviewed in
order to reflect changes in the market conditions and the Company’s activities.

The Company’s risk register, reviewed by the Audit
Committee, records key risks across the Company’s
current and future investment, operations, IT,
governance, economic and strategic areas of activity.
The register assesses the likelihood and impact of risks
as well as their direction in order to monitor progress in
managing and mitigating them. A register of errors and
breaches is also maintained and no material breaches
were noted during the financial period.

The Board

The Board has overall responsibility for maintaining and
monitoring the Group’s systems for risk management
and internal control. The Board reviews and approves
the risk appetite of the Company.

The Audit Committee

The Board has charged the Audit Committee with
reviewing the adequacy and effectiveness of the
Company’s internal control (including financial control)
and risk management systems. The Audit Committee
assesses management’s risk measurement and control.

Executive Management

Executive management have day to day responsibility
for ensuring the Board’s strategy with regards to
risk management, measurement and reporting is
implemented. In addition, they identify and provide
assessment of current and future risks the Company
may face for the Board’s review.

Internal Audit

The Audit Committee considers the nature, scale,
complexity and range of operations of the Company,
including its external administrator structure in relation
to financial reporting. The Company has appointed
Baker Tilly (“BT” or “the Administrator “) to act as an
accounting service provider to the Company. There
is a comprehensive services agreement between the
parties which sets out the role of the Administrator in
relation to financial reporting. As part of the services
agreement between the Company and the Administrator,
the Administrator is required to ensure that appropriate
internal controls suitable for the agreement are
maintained. BT is also required to ensure that reporting
is adequate, accurate and timely.

The Administrator is required to report compliance
with its internal control processes, disaster recovery
processes, and business continuity programme on a
regular basis. The Administrator and the management
team are available to assist the Audit Committee and the
Board in discharging their responsibilities with regards
to assessing the effectiveness of the Company’s risk
management and internal control systems. Based on
the foregoing, and in particular the size of the Company,
the Committee has recommended to the Board that it
is not necessary to establish an internal audit function
within the Company. The Board concurs with the Audit
Committee’s recommendation not to establish an internal
audit function for the Company. The Audit Committee
will continue to review this position annually and make
appropriate recommendations to the Board.

Yew Grove reit plcreport and consolidated Financial statements 2018The Company’s assets are primarily office and industrial commercial properties in the Republic of Ireland. The
principal risks it therefore faces are related to the Irish commercial property market in general, the Company’s
operating environment and individual properties and tenants. The Board has carried out a robust assessment of
the principal risks and sets out below the principal risks and uncertainties that the Company is exposed to and that
may impact performance in the coming financial year. The Company proactively identifies, assesses, monitors and
manages these risks. Some risks are not yet known and some that are not currently deemed material may turn out
to be material in the future. The material risks and uncertainties identified, along with their strategic impact on the
business and mitigating factors, have been outlined.

Identified Risk

Impact on the Company/
Property market

Mitigating
activities

Key Macro economic risks

Brexit

Weakening economy

Weakening Irish economy
puts pressure on rents and
tenants, in the event of
a hard Brexit there is the
possibility that the border
between the Republic
of Ireland and Northern
Ireland became a hard
border.

Weakening global and/
or national economy puts
pressure on rents and
tenants. Fall in availability
of debt financing. Fewer
buyers for the REIT’s
properties

Weak Foreign Direct
Investment demand
due to macro-economic
factors

Risk of falling demand from
Foreign Direct Investment
tenants

Interest rate risk –
rising rates

Debt facility costs based
on Euribor may increase
with an adverse effect on
dividend payments.

The key risk areas by sector
(agriculture, food manufacture)
are avoided in the REIT portfolio.
Tenants are assessed on the volume
of their sales to the UK or supplies
from the UK at rental or acquisition.
Targeted properties are majority
tenanted by stronger tenants.

The REIT assets are judged on
the quality and local grounding of
tenants and prospective tenants.
Targeted properties are majority
tenanted by stronger tenants with
demand and businesses not just
dependant on the local economy.

The Company’s acquisition policy
requires alternative use planning.
The Company monitors and aims
to understand Foreign Direct
Investment trends in advance.

The Company will seek to mitigate
the impact of interest rate rises
on any future debt facility. The
Company’s finance manual includes
mitigating policies for hedging
interest rate risk.

Momentum

Increasing

Decreasing

Stable

Strategic reportgovernanceFinancial StatementSPrincipal Risks and Uncertainties (continued)

Identified Risk

Impact on the Company/
Property market

Mitigating
activities

Key Property related risks

Valuation of Company
Assets

Tenant payment
behaviour

Property assets outside the
Dublin Central Business
District may lack recent
comparable transactions or
benchmarks for an external
valuer to use in valuation.

The Company has a separate
Valuation Committee to ensure
the most capable valuers are used.
The Valuation Committee can
change the valuer and use more
than one valuer for the portfolio.
The property team keep a record
of comparables from acquisition to
share with the valuer.

Risk that the Company’s
current or future tenants
fail to make payments due
in a full or timely manner,
which could affect the
Company’s dividends.

Tenants’ covenant strength
and prior rental performance is
reviewed at purchase, the property
management group conduct
regular tenant meetings and tenant
financial reviews.

Tightening of rental
yields

Risk the Company will not
be able to invest capital at its
expected rental yields

Refurbishment –
contractor failure and
cost

Failing contractors may
delay or increase the cost of
refurbishment

The Company’s owned assets
would reflect this tightening to
help achieve NAV price targets. The
Company has a higher yielding seed
portfolio to provide current income
in the absence of suitable purchases.

The Company does not expect
to undertake substantial
refurbishment and then only
with Board approval. The Chief
Investment Officer’s team would
require competing bids, pre-set
timelines and budgets to identify
failings and replace contractors
earlier.

Momentum

Decreasing

Stable

Yew Grove reit plcreport and consolidated Financial statements 2018Identified Risk

Impact on the Company/
Property market

Mitigating
activities

Key Operational Risks

Inability to raise
further equity capital

Risk the Company will not
be able to fund unexpected
major capital expenditure.
Risk the Company will not
be able to achieve its IPO
growth strategy

Loss of key staff

Risk of Executive
management resignation,
illness or death

Regulatory, legislative,
tax, environmental or
planning changes

Risk of changing operating
environment hurting
returns and amending
strategy

The Company will have leverage
below the REIT ceiling. The
Company will remain in contact
with leverage providers to ensure
leverage is available at attractive
levels. The Investor relations policy
has a calendar for capital raising
ensuring the Company is regularly
appraised of Investor interest and
can target investors well in advance
of the Company’s immediate needs.

The Company has Executive
management with significant
personal investment in the
Company with lock-ups, and a
specifically judged remuneration
scheme and Long Term Incentive
Plan to encourage retention.
Executive management have non-
compete clauses.

The Company has a strong Board
with a mix of capital markets,
property and audit experience
to better be aware of and react
to these changes. The Executive
management have experience of
managing through legislative and
tax changes and relationships with
suitable professionals for Company
advice.

Momentum

Stable

Strategic reportgovernanceFinancial StatementSAudit Committee Report

Dear Shareholder,

garry O’Dea
COmmittee Chairman

On behalf of the Audit Committee, I am
pleased to present the Audit Committee’s
Inaugural Report for the period from
the Committee’s establishment on 8
June 2018 to 31 December 2018.

The following pages provide insight into our work
and activities during the Committee’s tenure as we
discharge our responsibilities in relation to the integrity
of the Company’s financial reporting, the relationship
with and independence of the external auditor and the
effectiveness of the Company’s internal controls and
risk management system.

As part of our activities we met regularly with the
Management Team, the Administrator and the external
auditors. During this financial period the Company
established and subsequently reviewed its risk policies
and procedures and published its first interim financial
statements.

are satisfied that the Audit Committee has the right
balance of skills and resources, has been able to work
effectively and has received the support and response it
has required from both management and the external
service providers. We are also satisfied that the level
of scrutiny of the Company’s public announcements
is sufficient and effective. There were no issues arising
from this evaluation.

I will be available at the AGM to answer any questions
on the work of the Audit Committee.

While the Company is relatively newly established we
have reviewed the Committee’s make-up and skills
and our interactions with external assurance such as
the external auditor and Administrator to date. We

Garry O’Dea

23 April 2019

Yew Grove reit plcreport and consolidated Financial statements 201851

The Audit Committee is chaired by Garry O’Dea, who is the Senior Independent Director and an independent Non-
Executive Director. He is considered by the Board to have recent and relevant financial experience and the necessary
understanding of financial reporting and accounting principles. All the members of the Audit Committee are
independent Non-Executive Directors, appointed by the Board on the recommendation of the Nomination Committee.
They are appointed for a period of up to three years, extendable by no more than two additional three-year periods
provided the member continues to meet the criteria for membership. A quorum consists of two Independent member
Directors and all the members of the Committee are considered to have recent significant and relevant financial
experience. The Committee brings experience in, among other areas, commercial property, capital markets and
financial accounting, all of which are relevant to the sector the Company operates in. All members are in their first
term, which started at Admission, 8 June 2018.

The Audit Committee is constituted in compliance with the Codes, section 167 of the Companies Act 2014, section
1551 of the Companies (Statutory Audits) Act 2018 and the Company’s Articles regarding the composition of the
Audit Committee. The current Terms of Reference for the Audit Committee are published on the Company’s website.

The Audit Committee meets regularly, in alignment with the financial reporting calendar. The Audit Committee
was formed on 8 June 2018 and met 4 times in the period to 31 December 2018. The Audit Committee requests the
attendance of relevant other parties as required. The parties met were as follows:

Deloitte Ireland LLP as
External Auditor

The independent external auditor attended to present its audit plans in respect
of the annual audit and interim review, its analysis of the audit risks it sees
in the Group, the results of an interim review, and its recommendations for
improvements in systems and controls.

Baker Tilly as
Administrator (“BT”)

The Administrator met the Committee to discuss its work, its interaction with the
Company and any significant assumptions or matters in relation to the preparation
of the Group’s accounts.

Representatives of the
Company

Representatives of the Company, principally the CFO, met the Committee in order
to present the financial statements, to discuss significant judgements and areas
of uncertainty, the Group’s risks and measures in place to mitigate risks, and any
other matters as requested by the Audit Committee.

The Company Secretary acts as secretary to the Committee.

Strategic reportgovernanceFinancial StatementSAudit Committee Report (continued)

Role of the Audit Committee

The roles and responsibilities of the Audit Committee are summarised below. The full schedule of the roles and
responsibilities are contained in the Committee’s terms of reference, which are available from the Company’s
website www.ygreit.com.

Financial reporting

Monitoring the integrity of Group financial statements and any other formal
announcements relating to the Group’s financial performance, business model and
strategy.

Assessing whether the Report and Consolidated financial statements taken as
a whole are fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and performance,
business model and strategy.

Evaluating the Group’s accounting policies, any changes to them and their
appropriateness.

Reviewing and challenging judgements, estimates and assumptions made by the
Group in its reports or announcements.

External Audit

Overseeing the relationship with the external auditor, including selection,
appointment, removal, terms of engagement, approval of remuneration, assessing
independence and objectivity, assessing effectiveness of the audit process, and
setting policy on the use of non-audit services.

Valuation

Monitoring and reviewing the property valuation process, taking into account the
actions of the Valuations Committee.

Reviewing the valuation methodology for non-property judgements.

Internal Audit

Reviewing the Group’s requirement for an internal audit function.

Assessing the need for additional internal audit review and reporting.

Risk Management and
Internal Controls

Reviewing the principal risks facing the Group and recommending to the Board the
Group’s risk register and risk management systems.

Reviewing the adequacy and effectiveness of the Group’s system of internal
financial controls and internal controls including implementation, relevance and
any breaches of controls.

Reviewing the Group’s procedures for detecting fraud, and the systems and
controls for the prevention of bribery.

Performing an assessment of the Group’s compliance with the Codes and other
obligations.

Committee

Reviewing the Committee’s Terms of Reference, composition and performance.

Monitoring compliance with legal, listing, REIT rules and accounting standards.

Reporting to the Board on fulfilment of its responsibilities.

Yew Grove reit plcreport and consolidated Financial statements 2018Reporting

Valuation of owned property

The Chairperson of the Audit Committee reports to the
Board on the activities of the Committee. The Audit
Committee’s activities in the period from 8 June 2018 to
31 December 2018 are set out under each of the relevant
headings below:

Compliance with Code

The Codes require that the Board should present a
fair, balanced and understandable assessment of the
Company’s position and prospects and specifically that
they consider that the Report and Consolidated financial
statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy.

At the request of the Board, the Committee considered
whether the 2018 Report and Consolidated financial
statements met these requirements.

The Committee considered and discussed with
management the established and documented process
put in place by management for the preparation of the
2018 Report and Consolidated financial statements, and
in particular the timetable, co-ordination and review
activities. The Committee also noted the formal audit
plan and process undertaken by Deloitte Ireland LLP.
The Committee and then the Board concluded that the
Report and Consolidated financial statements, taken as
a whole, are fair, balanced and understandable and that
they provide the necessary information for shareholders
to assess the Company’s position and performance,
business model and strategy.

Significant Issues

All of the properties owned by the Company were
valued by Lisney Limited (the “Valuer”) as at 31
December 2018. The Valuation Committee met with
the Valuer, and reviewed its objectivity, experience
and cost competitiveness before engaging with it. The
Valuation Committee tested the Valuer’s assumptions
and valuations and is satisfied that the valuations were
conducted in accordance with the Royal Institution of
Chartered Surveyors Valuation Standards. The valuation
report prepared by the Valuer was also provided to the
external auditor. The Audit Committee reviewed the
valuations and their underlying comparable evidence
and assumptions. All properties are valued in accordance
with their current use, which is also the highest and best
use except for property under development. The Audit
Committee paid specific attention to the valuation of the
car park under development at the Company’s property
in Athlone, in particular the assumptions made by the
Valuer on timing of completion and investment return.

Treatment of subsidiary holdings

The Group owned, or following reorganisation of the
management companies expects to own, interests in
three property management companies and Yew Grove
Investment Fund (in Member’s Voluntary Liquidation),
a qualifying investor alternative investment fund
(“QIAIF”). The Committee received a report addressed
to the Group from Holmes O’Malley Sexton (the
solicitors acting on behalf of the Group with respect to
the management companies) describing the ownership
and influence the Group has or could have on each
management company. Additionally, the Committee
discussed the recognition and valuation of each of these
with the Company, the Administrator and the external
auditor.

The Committee considered the Company and Group’s
proposed accounting treatments for material and
complex transactions and key assumptions made in the
preparation of the financial statements. The Committee
also reviewed the suitability of the Company and Group’s
accounting policies, their adoption and their consistent
application across financial periods. The key judgements
considered by the Audit Committee during the financial
period ended 31 December 2018 and the action taken by
the Committee are set out below:

Treatment of share-based payments

Under the Company’s Long-Term Incentive Plan (“LTIP”)
and Bonus scheme the Company may be obliged to make
payments or settle options on the Company’s shares
contingent on individual and Company performance.
While the Company has not made any grants for the
reporting period, the Audit Committee reviewed the
treatment of the LTIP with the Company in the presence
of the Administrator in order that the Committee and

Strategic reportgovernanceFinancial StatementSAudit Committee Report (continued)

the Remuneration Committee be aware of the cost and
recognition of awards made under these schemes in
the future.

Treatment of debt facility

The Company raised a debt finance facility during the
reporting period. The Committee reviewed the terms
and use of the facility and the costs of the facility in
determining how these would be treated and recognised
in the Company and Group’s accounts. The Group paid
particular attention to the valuation and treatment of the
liabilities the Company has incurred under the facility.

The External Auditors

The Audit Committee oversees the relationship with
the External Auditor.

Deloitte Ireland LLP was appointed as first statutory
auditor to the Company in 2018. The Audit Committee
keeps the tenure of Deloitte Ireland LLP under review
in accordance with best practice, recent applicable
legislation and its terms of reference.

The Audit Committee has recommended to the Board
that Deloitte Ireland LLP should be re-appointed
for the coming financial year. As required under the
Articles of the Company, the reappointment will be
tabled at the Annual General Meeting for consideration
by shareholders. In the course of arriving at this
recommendation the Audit Committee completed a
detailed assessment of the external auditor including
the key points below:

• Confirmation from the auditor that there are no
issues concerning its status as a statutory auditor or
the designation of the audit engagement partner as a
responsible individual.

• The independence and objectivity of the audit partner
and senior audit staff, particularly as regards to their
interaction with Company management.

• The quality of the audit partner and audit staff from
a technical accounting and auditing perspective,
including their industry knowledge and their specialist
technical expertise.

• Whether issues were raised at the right time by the
appropriate level of audit staff with the appropriate
Company staff and in particular, the timeliness and
quality of communication with the Committee.

The outcome of this assessment confirmed that the
auditor was performing well, adding value to the
control process, had a good relationship with both Audit
Committee, Administrator and Company management
and was sufficiently independent and technically qualified
to justify the Committee’s recommendation to re-appoint.

Services carried out by the external auditor
during the financial period

Services provided by Deloitte Ireland LLP to the Company
and the Company’s subsidiaries for the financial period
ending 31 December 2018 are:

Audit of Company accounts
at 6 April 2018

Financial Position and Prospects
Procedures review and reporting
accountant at Admission

€12,500

€170,000

Review of interim accounts

€12,500

Audit of Initial Financial Statements

€12,500

Audit of the Company for the financial
period ended 31 December 2018

Audit of the Group for the financial
period ended 31 December 2018

€30,000

€10,000

Internal Audit

In accordance with the Codes, the Audit Committee has
considered the Company’s scale, complexity and range
of operations, including the role of the Administrator in
relation to financial reporting. There is a comprehensive
services agreement between the Company and the
Administrator, BT, which sets out the role of the
Administrator in relation to financial reporting.

As part of the services agreement, the Administrator is
required to report to the Company that it has appropriate
internal controls in place. BT is also required to ensure
that reporting to the Audit Committee and the Board is
adequate, accurate, and timely.

Yew Grove reit plcreport and consolidated Financial statements 201855

The Administrator is required to report to the Company
on compliance with its internal control processes, disaster
recover processes and business continuity programme
on a regular basis. Based on the Committee’s assessment
of the foregoing controls within the Administrator,
and also the current size of the Company, the Audit
Committee has recommended to the Board that it does
not believe it is necessary to establish an internal audit
function at this time. The Board concurs with the Audit
Committee’s recommendation not to establish an internal
audit function for the Company at this time. The Audit
Committee will continue to review this position annually
and make appropriate recommendations to the Board.

REIT status

As an Irish REIT, the Company is subject to Part 25A of
the Taxes Consolidation Act 1997 (as inserted by section
41 of the Finance Act 2013). The Committee reviewed the
Company’s compliance with these requirements at 30
October and 31 December 2018, based on the Company’s
internal calculations. The Committee has confirmed to
the Board that the Company is in compliance with the
REIT rules at the date of this report. The Committee
noted that in order to maintain compliance the Company
would need to be listed on the Main market of the London
or Euronext Dublin stock exchanges by May 2021.

Internal controls and Risk Management

The Board acknowledges that it is responsible for
monitoring the effectiveness of the Company’s system
of internal control (including financial control) and risk
management to safeguard the Company’s assets. The
Company’s internal control environment is designed to
identify, manage and mitigate financial, operational and
compliance risks inherent to the Company. The system
is designed to manage rather than eliminate the risk
of failure to achieve business objectives and can only
provide reasonable, but not absolute, assurance against
material misstatement or loss.

The Company’s internal control system is built on certain
fundamental principles and is subject to review by the
Board. The following are the principles under which the
internal control system operates:

• A defined schedule of matters reserved to the Board
• Documented, approved policies and procedures
• A clear, effective authorisation process

• Risk metrics and risk reporting at meetings
• Approval and recording of all significant transactions
• Maintenance of a breaches register with details of

corrective actions

• Business and financial planning (including two year

forward cashflows and viability modelling)

• Formal multi step appraisal of property investment

decisions

• Performance assessment versus budget.

The Committee carried out an annual assessment of the
Group’s risk management and internal control systems,
using the Group’s risk management framework and risk
register. The Committee identified the Group’s principal
risks and reviewed the controls and procedures in place to
mitigate these risks. The Committee reviewed each of the
entries on the risk register to ascertain whether they were
relevant and complete, whether the risks identified were
expected to become more prevalent, what the potential
impact of the risks might be, mitigants to the risks that
had been or could be brought into action, and actions to
be taken by the Group. The Committee recommended
the updated risk register to the Board for adoption.

Whistleblowing

The Committee reviewed the adequacy and security
of the Group’s arrangements for its employees and
contractors to raise concerns in confidence about possible
wrongdoing in financial reporting or other matters,
and the subsequent proportional and independent
investigation of such matters. There were no items
reported or identified to the Audit Committee during
the period ended 31 December 2018 which required
investigation or follow up and the Committee reported
this to the Board.

Reporting

The Chairman of the Committee reports to the Board at each
meeting on the activities of the Committee and intends to
attend the Company’s AGM to answer any questions on the
Committee’s responsibilities and this report.

Approval of reports

The Report and Consolidated financial statements were
considered in draft on 9 April 2019. The Report and
Consolidated financial statements were approved by the
Board on 23 April 2019.

Strategic reportgovernanceFinancial StatementSNomination Committee Report

Barry O’DOwD
COmmittee Chairman

I am pleased to present the first report
of the Nomination Committee from
the Committee’s establishment on
8 June 2018 to 31 December 2018,
which provides a summary of the
Nomination Committee’s role and
responsibilities, and how the Committee
discharged these during 2018.

Role of the Nomination Committee

The duties, reporting responsibilities and authority
on the Nomination Committee is clearly set out in our
written Terms and Reference which are available on the
Company’s website www.ygreit.com. These include, but
are not limited to, the following:

• Regularly reviewing the structure, size and composition
of the Board and make recommendations to the Board
with regard to any changes;

• Assessing the effectiveness and performance of
the Board and each of its committees including
consideration of the balance of skills, experience,
independence and knowledge of the Company on the
Board, its diversity, including gender, how the board
works together as a unit, and other factors relevant
to its effectiveness;

• Giving full consideration to succession planning for
Directors and other senior executives in the course
of its work, taking into account the challenges and
opportunities facing the Company, and the skills
and expertise needed on the Board in the future,
in particular with respect to the chairman of the
Company;

• Being responsible for identifying and nominating
candidates for approval by the Board to fill Board
vacancies as and when they arise;

• Before any appointment is made by the Board,
evaluating the balance of skills, knowledge, experience,
independence and diversity on the Board, and, in
the light of this evaluation preparing a description
of the role and capabilities required for a particular
appointment;

• Reviewing annually the time required from non-
executive Directors and assessing whether the non-
executive Directors are spending sufficient time on
fulfilling their duties.

Board Membership

The Board recognises and embraces the benefits of
diversity among its own members, including diversity of
skills, experience, background, gender and other qualities.
We are committed to reflecting diversity in its broadest
sense, while ensuring that we maintain the necessary
skills and experience required to oversee the significant
financial service activities and related requirements of
the Group. In reviewing the Board composition and
appointments, candidates are considered on merit against
objective criteria and with due regard for the benefits of
diversity. The Board has a Board Diversity Policy, the aim
of which is to ensure that the percentage of women on
the Board achieves at or exceeds 30%. The percentage
is currently 14%. All Directors are subject to re-election
by shareholders at this year’s Annual General Meeting
and will be subject to annual re-election thereafter. The
Board’s composition will remain under continuous review.

Yew Grove reit plcreport and consolidated Financial statements 2018Committee Membership

Activities of the Nomination Committee

Under the Terms of Reference, the Nomination
Committee must comprise at least two Directors, of
whom a majority shall be independent non-executive
Directors. Members are appointed to the Committee by
the Board for a period of up to three years which may
be extended for further periods of up to three years,
provided the relevant member still meets the criteria
for membership of the Committee.

The Committee is comprised of two non-executive
Directors and one executive Director:

• Barry O’Dowd (Chairman)
• Eimear Moloney (Non-executive Director)
• Jonathan Laredo (CEO)

The Nomination Committee meets at least once in each
calendar year and otherwise as required. The Nomination
Committee met on two occasions during the period from
8 June 2018 to 31 December 2018. The principal activities
of the Nomination Committee throughout this period
are detailed below:

• The Committee reviewed the Terms of Reference for
the Nomination Committee to ensure the contents
remained relevant and appropriate and best reflect the
role and responsibilities of the Committee.

• The Committee reviewed the results of the annual
performance evaluation of the Board, its committees
and individual Directors, including a review of the
time required from non-executive Directors to fulfil
their duties.

See pages 38 and 39 for their individual biographies.

• A review of the Corporate Governance Code that will

Other executives may be invited to attend when deemed
appropriate. The Company Secretary or his or her
nominee shall act as the secretary of the committee
and will ensure that the committee receives information
and papers in a timely manner to enable full and proper
consideration to be given to issues.

apply from 1 January 2019.

• In line with the UK Code, ensuring that all Directors,
subject to and seeking re-election, be put forward for
re-appointment at the Company’s 2019 AGM.

• The Committee appointed Jonathan Laredo to the
Valuation Committee with effect from 2 August 2018
and proposed to the Board that Eimear Moloney be a
member of the Audit Committee from 21 August 2018.

I will be available at the AGM to answer any questions
that shareholders may have on the work of the
Committee.

On behalf of the Committee.

Barry O’Dowd

23 April 2019

Strategic reportgovernanceFinancial StatementSRemuneration Committee Report

Dear Shareholder,

eImear mOLOney
COmmittee Chairman

I am pleased to present the inaugural
report of the Remuneration Committee
covering the remuneration policy
and practice from the Committee’s
establishment on 8 June 2018 to 31
December 2018 which has been prepared
by the Remuneration Committee
and approved by the Board.

The objective of the report is to provide shareholders
with information to enable them to understand the
remuneration structures and how they relate to the
Group’s financial performance.

We have been mindful to ensure disclosures in relation
to the remuneration structures are in line with best
practice and we recognise the importance of having
remuneration policies, practices and reporting that reflect
best corporate governance practices, having regard to
the Company’s size and the markets on which its shares
are traded.

The Committee is dedicated to str ucturing a
remuneration policy for the business which promotes
a continued alignment of shareholders’ and executives’
interests. The significant shareholdings of both the Chief
Executive Officer and the Chief Investment Officer also
demonstrate their ongoing commitment to the long-term
success of the Company.

Membership and Responsibilities

The Remuneration Committee is chaired by Eimear
Moloney and its other member is Garry O’Dea, each of
whom is considered by the Board to be independent.
The Remuneration Committee was set up at the date of
admission to trading in June 2018 and meets formally at
least once a year and otherwise as required.

Only members of the committee have the right to attend
committee meetings. However, other individuals such as
officers and staff of the Company and other directors and

representatives from service providers to the Company
may be invited to attend all or part of any meeting as
and when appropriate and necessary.

The Company Secretary or his or her nominee shall act
as the secretary of the committee and will ensure that
the committee receives information and papers in a
timely manner to enable full and proper consideration
to be given to issues.

The responsibilities of the Remuneration Committee are
summarised below and are set out in full in the Terms of
Reference for the Remuneration Committee which are
available on the Company’s website www.ygreit.com. In
the admission document published in connection with the
listing of the Company we set out the core principles for
our remuneration policy. The roles and responsibilities
include but are not limited to, the following:

• within the terms of the agreed remuneration policy
and in consultation with the chairman and/or chief
executive, as appropriate, determine the total individual
remuneration package of the chairman, each executive
director, company secretary and other designated
senior executives including bonuses, incentive
payments, share options or other share awards and
pension benefits. No director or manager shall be
involved in any decisions as to their own remuneration.
• obtain reliable, up-to-date information about
remuneration in other companies. To help it fulfil its
obligations the Committee shall have full authority to
appoint remuneration consultants and to commission

Yew Grove reit plcreport and consolidated Financial statements 2018or purchase any reports, surveys or information which
it deems necessary, within any budgetary restraints
imposed by the board.

remuneration prepared by Mercer Consulting Group
(“Mercer”), acting as independent remuneration
consultants to the Company.

• review the ongoing appropriateness and relevance of
the remuneration policy and the terms of reference
and make recommendations to the Board as regards
changes or otherwise.

Key activities of the Remuneration
Committee

There has been one Committee meeting during the period
and the key activities during the financial period were
focused on:

• Agreement of the Remuneration Committee’s terms

of reference;

• Formulation of the Company Remuneration Policy as

fit for a listed company;

• Benchmarking base salary and total remuneration of

executive directors prior to listing;

• Setting the policy for Chairman, and with the Board,

the policy for non-executive directors’ fees;

• Implementing the Company’s new Long-Term Incentive

Plan (“LTIP”);

• Drafting the Committee’s first Report;
• Started to consider the implications of the updated 2018
UK Corporate Governance Code for the Company’s
remuneration practices and reporting following the
financial period.

Summary of current executive
remuneration framework

The Group’s policy on Executive Directors’ remuneration
is designed to ensure that employment and remuneration
conditions reward, retain and motivate them to perform
in the best interests of shareholders. The Group aims to
provide a remuneration package for all employees that
is market competitive and operates the same reward
and performance philosophy throughout the business.

The elements of the remuneration package which may
apply to Executive Directors are base salary, pension and
benefits, annual bonus and the long term incentive plan.
The following paragraphs summarise the framework
which was applied at IPO and will apply during 2019.
The initial levels of salary, pension, and benefits were
agreed following the review of a recommendation for

Executive remuneration framework

Base Salary: An appropriate level of fixed remuneration
to reflect the skills and experience of the individual.
Salaries are reviewed bi-annually by the committee taking
into account all relevant factors. Prior to admission
Mercer were engaged by the board to consider the
appropriate level of both Executive and Non-Executive
remuneration by benchmarking the company against
other similar sized listed companies.

The salaries of each of the Executive Directors was set
at admission at €250,000 p.a. Each of the Executive
Directors has agreed to waive half of their annual salary
until such time as the share capital issued by the Company
equals or exceeds €175 million.

Benefits: To provide a market competitive benefits
package. Benefits currently provide the Executives
with critical illness and death in service cover and
reimbursement of the cost of a family health insurance
plan for spouse and children under 18 years old.

Pension: Contribution to a company pension scheme at
15% of salary. These pension contributions are in line with
the contribution level provided to the other members of
the workforce.

Bonus: To reward executives for the delivery of annually
agreed objectives and performance targets. The maximum
bonus for a year for each of the Executive Directors is
100% of salary. Targets are set each year for the CFO
and CIO by the CEO, and for the CEO by the Chairman
and each is assessed and approved by the Committee.

In respect of 2018 no bonuses were payable to the Executive
Directors. While the board recognises the value generated
by the executive for the Company in successfully effecting
the flotation of Yew Grove REIT plc, in light of the limited
resources and profitability in this initial period it was
considered prudent not to pay a bonus.

For 2019, 70% of the bonus will be based on the
achievement of challenging actual dividend per
share targets with the balance being paid based on

Strategic reportgovernanceFinancial StatementSRemuneration Committee Report (continued)

individually agreed non-financial objectives. The
non-financial objectives are set individually for each
executive director depending on their role and how they
might further influence the Company’s objectives. The
actual performance targets set are not disclosed at the
start of the financial year, as they are considered to
be commercially sensitive. These will be reported and
disclosed retrospectively at the end of the year in order for
shareholders to assess the basis for any bonus outcomes.

LTIP: Prior to admission in June 2018 an LTIP was
established. Awards are designed to reward Executive
Directors for the delivery of long term performance
and align their interests with those of shareholders
and other stakeholders. Under the LTIP scheme the
maximum annual award is 150% of salary. In addition,
no more than 5% of the issued ordinary share capital
of the Company may be issued or reserved under the
Scheme. The options are granted with a fixed exercise
price which is determined by the market value per share
of the Company at the grant date of the options. Options
will vest no earlier than the third anniversary of the
award grant date. The options expire seven years after
the date of grant. The Group has no legal or constructive
obligation to repurchase or settle the options in cash.

Malus will apply for the three year period from grant to
vesting with claw back applying for the two year period
post vesting. Malus and claw back provisions within the
annual bonus scheme and LTIP apply in the following
circumstances:

• Material restatement of the Company’s audited

financial statements;

• Where an award that has been granted based on any
materially incorrect information relevant to the basis
for setting the performance conditions;

• Material breach by the executive of this contract of
employment including, a material breach of a restrictive
covenant and/or confidentiality obligations of the
Company; or

• Serious business or reputational damage to the
Company arising from a criminal offence, serious
misconduct or willful misconduct by the individual
executive.

There were no awards in 2018. The first awards under the
LTIP plan will be made during 2019. The Remuneration
Committee has determined that an exceptional award

of 150% of base salary will be made to each executive
director as the Company builds out its strategy and moves
towards achieving its investment objectives.

Commencing in 2019, awards may be granted annually to
executive directors in the form of share options. These
will vest at the end of a three year period subject to:

the executive director’s continued employment at
the date of vesting;
satisfaction of the performance conditions.

The options are exercisable based on a series of
performance metrics agreed by the Remuneration
Committee and approved by the board. The vesting
criteria for the 2019 LTIP Scheme awards are split evenly
across three metrics;

NAV growth but excluding dividends, 30% vests
at ≥ 10% growth, 60% at 15% growth and 100% at
≥ 20% growth.
Aggregate dividend payment per share over the
final twelve months of the performance period,
30% vests at €0.06 per share, 60% at €0.07 per
share and 100% at €0.075 per share.
Annualised Total Shareholder Return (TSR), 30%
vests ≥10%, 60% at ≥12% and 100% at ≥15%.

The Remuneration Committee may change the balance
of the measures, or use different measures for subsequent
awards, as appropriate. No material change will be made
to the type of performance conditions without prior
shareholder consultation.

Non executive Directors fees:

The company provides a level of fees to support
recruitment and retention of Non-Executive Directors
with the necessary experience to advise and assist with
establishing and monitoring the Company’s strategic
objectives. The Board as a whole is responsible for setting
the remuneration of the Non-Executive Directors, other
than the Chairman whose remuneration is considered
by the Remuneration Committee and recommended to
the Board. The Chairman is paid additional fees above
other Non-Executive Directors to reflect the additional
responsibilities and/or additional/unforeseen time
commitments. Non-Executive Directors do not participate
in any of the Company’s incentive arrangements.

Yew Grove reit plcreport and consolidated Financial statements 2018Outcomes for 2018 (to be read as part of the Consolidated financial statements)

The following table summarises the remuneration received by the Directors for the period from 8 June 2018 to 31
December 2018:

Executive Directors

Jonathan Laredo

Charles Peach

Michael Gibbons

Non-Executive Directors

Barry O’Dowd

Garry O’Dea

Eimear Moloney

Brian Owens

Total

Salary / Fees

Bonus

Other Benefits

Pension

2018 Total

€’000

338

101

414

Service contracts/letters of appointment

The Remuneration Committee reviews the contractual
terms for any new Directors to ensure these reflect best
market practice.

The initial terms of the non-executive directors’
positions are subject to their election by the Company’s
shareholders at the AGM scheduled for 24 May 2019 and
to re-election at any subsequent AGM at which the non-
executive directors stand for re-election.

Executive Directors

All Executive Directors have service contracts with the
Group with a notice period of six months. The service
contracts for all three executive directors are dated 5
June 2018. The service contracts allow for termination
by way of payment for the entire notice period or part
thereof in lieu of notice. Standard ‘cause’ provisions are
included in the service agreement to allow the Company
to terminate without notice.

Non-Executive Directors

The Non-Executive Directors were appointed under
letters of appointment dated 4 June 2018. Each
independent non-executive director’s term of office is
for an initial period of 3 years unless terminated earlier
upon written notice or upon their resignations.

I am always happy to hear from the Company’s
shareholders and you can contact me via the Company
Secretary if you have any questions on this report or more
generally in relation to the Company’s remuneration.

I will be available at the AGM to answer any questions
on the work of the Committee.

On behalf of the Remuneration Committee

Eimear Moloney

23 April 2019

Strategic reportgovernanceFinancial StatementSValuation Committee Report

BrIan Owens
COmmittee Chairman

I am pleased to present the first report
from the Valuation Committee for the
financial period ended 31 December
2018, which provides a summary of the
Committee’s role and responsibilities and
how the Committee discharged these
since its establishment on 8 August 2018.

Role of the Valuation Committee

The Valuation Committee plays an important role in
providing the Board with assurance that the valuation
process in valuing the Company’s investment properties is
robust, objective, independent and in accordance with the
RICS Valuation – Global Standards 2017, incorporating the
International Valuation Standards and RICS Professional
Standards (the “Red Book”).

The duties, reporting responsibilities and authority of the
Valuation Committee are set out in the written terms of
reference which are available on the company’s website
www.ygreit.com and include the following;

Valuation reporting

The Committee shall monitor the integrity of the
valuation of the property assets of the Company,
reviewing and reporting to the Board on significant
valuation reporting issues and judgements which they
contain. The Committee shall also review and report to
the Board on summary valuation statements, valuation
methodologies used, and any valuation assumptions
contained in valuation documents.

In particular, the Committee shall review and challenge
where necessary;

ii.

the consistency of, and any changes to, valuation
methodologies both on a year on year basis
and across the Company and, if applicable, its
subsidiaries to ensure the valuations are in
accordance with the Red Book;
the methods used to account for significant or
unusual properties where different approaches
are possible;

iv.

iii. whether the valuer has followed appropriate
valuation standards and made appropriate
estimates and judgements;
the clarity of disclosure in the valuer’s reports and
the context in which statements are made; and the
annual and semi-annual valuations, and where the
Committee is not satisfied with any aspect of the
valuations provided by the external valuer, it shall
report its views to the Board.

Narrative reporting

Where requested by the Board, the Committee should
review the content of the valuation reports and advise
the Board on whether, taken as a whole, they are fair,
balanced and understandable and provide a third party
valuation for shareholders to assess the value of the
Company’s properties.

External Valuation

The Committee shall consider and make recommendations
to the Board, in relation to the appointment, re-
appointment and removal of the Company’s external
valuer and oversee the relationship with the external
valuer including (but not limited to):

approval of their remuneration and that the level
of fees is appropriate;
approval of their terms of engagement, including
any engagement letter issued at the start of each
valuation;
assess annually their performance, independence
and objectivity and the effectiveness of the
valuation process;
ensuring no conf lict of interest impacts the
independence of the external valuer;

Yew Grove reit plcreport and consolidated Financial statements 2018e.

assessing annually the qualifications, expertise
and resources of the valuer or valuers and the
effectiveness of the valuation process which shall
include a report from the external valuer on their
own internal quality procedures;
meet the external valuer or valuers at least once
a year, without any member of the Company’s
management being present, to discuss their remit
and any issues arising from the valuation;
review and approve the annual valuation plan and
ensure that it is consistent with the scope of the
valuation engagement;
review the findings of the valuation with the
external valuer or valuers, including but not be
limited to, the following;
− a discussion of any major issues which arose

during the valuation;

− any valuation judgements; and
− the effectiveness of the valuation process.

Reporting responsibilities

The Committee Chairman shall report formally to the
Board on its proceedings after each meeting on all matters
within its duties and responsibilities and shall also formally
report on how it has discharged its responsibilities. The
Committee shall make whatever recommendations to the
Board it deems appropriate on any area within its remit,
where action or improvement is needed.

Membership

Membership of the Committee comprises Brian Owens
(Chairman of the Committee), Barry O’Dowd and
Jonathan Laredo. The membership fulfills the quorum
of 3 members of which 2 are non-executive directors of
the Company.

Each member of the Committee has one vote with
the Committee Chairman having the casting vote.
The Company Secretary also acts as Secretary to the
Committee.

appointment to the Board, which recommendation was
endorsed. It was further agreed that this appointment
be rotated at intervals of not more than three years.

Accordingly, Lisney was appointed the Company’s
independent external valuer for the first three year
rotation period. The Committee satisfied itself as to
the qualification and resources available to the valuer
to conduct their valuations whilst ensuring that there
is no conflict of interest.

The Committee has met with the independent valuer to
agree the scope and terms of engagement. It has been
agreed that in conducting their valuations, the valuer will
physically inspect all properties and review the relevant
legal title of the properties to assist in determining their
value. The Committee also met with the valuer to review
the valuation process, to discuss matters which might
be relevant to the valuation process, and to identify any
relevant material judgements.

The Committee also met with the valuer to discuss and
consider the interim and financial period end valuations
before formally adopting them and recommending their
acceptance to the Board of Directors. As part of this
exercise the Committee worked closely with the Audit
Committee to ensure the valuations, and their principal
assumptions, are properly recorded in the financial
statements.

The Committee is satisfied that it was provided with
adequate management, legal, secretarial and other
resources to effectively carry out its duties in addition
to having unrestricted access to the Company’s records
and the valuer.

On behalf of the Valuation Committee

Activities of the Valuation Committee

The Committee meets at least twice a year and has met
twice in the financial period.

Brian Owens

23 April 2019

To begin, the Committee selected a panel of external
independent third party valuation firms suitably qualified
to value the Company property assets. The Committee
then chose one firm from the panel and recommended its

Strategic reportgovernanceFinancial StatementSyew grOve reit plC

repOrt and COnSOlidated finanCial StatementS 2018

“Target properties should be
attractive to tenants of good
credit standing and generate
a rent roll and a reversionary
rent which will support a
sustainable and growing
dividend, paid quarterly.”

financial
statements

Strategic reportgovernanceFinancial StatementSIndependent Auditor’s Report
To The Members Of Yew Grove Reit Plc

Report on the audit of the financial statements

Opinion on the financial statements of Yew Grove REIT PLC (the ‘company’)

In our opinion the group and company financial statements:

• give a true and fair view of the assets, liabilities and financial position of the group and company as at 31 December

2018 and of the profit of the group for the financial period then ended; and

• have been properly prepared in accordance with the relevant financial reporting framework and, in particular,

with the requirements of the Companies Act 2014.

The financial statements we have audited comprise:

The group financial statements:

• the Consolidated Statement of Comprehensive Income;
• the Consolidated Statement of Financial Position;
• the Consolidated Statement of Changes in Equity;
• the Consolidated Statement of Cash Flow; and
• the related notes 1 to 28, including a summary of significant accounting policies as set out in note 1.

The company financial statements:

• the Company Statement of Financial Position;
• the Company Statement of Changes in Equity;
• the Company Statement of Cash Flow; and
• the related notes 1 to 28, including a summary of significant accounting policies as set out in note 1.

The relevant financial reporting framework that has been applied in the preparation of the group financial statements
is the Companies Act 2014 and International Financial Reporting Standards (IFRS) as adopted by the European
Union (“the relevant financial reporting framework”).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and
applicable law. Our responsibilities under those standards are described below in the “Auditor’s responsibilities for
the audit of the financial statements” section of our report.

We are independent of the group and parent company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and
Accounting Supervisory Authority, as applied to listed entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Yew Grove reit plcreport and consolidated Financial statements 201867

Summary of our audit approach
Key audit matters

Materiality

Scoping

Significant changes in our
approach

The key audit matters that we identified in the current year were:

• Valuation of investment property
• Completeness and accuracy of rental income
The materiality that we used in the current year was €0.75 million which
was determined on the basis of 1% of group net assets.
We focused our audit scope, and the extent of our testing, based on our
assessment of the risks of material misstatement and of the materiality
determined.
There is no significant changes to our approach as this is the group’s
first year of audit.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which ISAs (Ireland) require us to report
to you where:

• the directors’ use of the going concern basis of accounting in preparation of the financial statements is not

appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the group or parent company’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in

our audit of the financial statements of the current financial period and include the most significant assessed risks
of material misstatement (whether or not due to fraud) we identified, 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. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.

Strategic reportgovernanceFinancial StatementSIndependent Auditor’s Report
To The Members Of Yew Grove Reit Plc (continued)

Valuation of investment properties
Key audit matter description

Refer to page 82 (Note 1.5 – Significant accounting judgements, estimates and
assumptions), page 84 (Accounting Policy – Fair value of investment property),
and page 98 (Note 13 - Investment properties).

How the scope of our audit
responded to the key audit
matter

For the financial year ended 31 December 2018, the investment properties of
the group is €77.9 million.

The valuation of the group’s investment properties requires significant
judgement to be made by the Directors taking into consideration advice from
the external valuer and Management. Any inaccurate inputs or calculations
used in the estimation of fair value could result in a material misstatement
of the financial statements.
We evaluated the design and implementation of the controls the Board has
implemented over the valuation of investment properties.

We considered the basis used by the group for the valuation of investment
properties in light of the group’s valuation policy and the requirements of IFRS.

We enquired with the external valuer to discuss and challenge the significant
assumptions used in the valuation process, including estimated rental value
and market based yields, and considered these assumptions in accordance
with available market data.

We assessed the competence, independence and integrity of the external valuer.

We compared the recorded value of each investment property held to the
valuation report prepared by the external valuer and considered any adjustments
made in light of the Group’s accounting policies and the requirements of IFRS.

We performed audit procedures to assess the accuracy and completeness of
information provided to the external valuers including agreements back to
underlying lease agreements.

Key observations

We have not identified any issues to bring to the attention of the Audit
Committee.

Yew Grove reit plcreport and consolidated Financial statements 2018Completeness and accuracy of rental income
Key audit matter description

Refer to page 85 (Note 1.6 – Revenue recognition – Rental income).

Rental income is recognised over the term of the lease. Lease incentives granted
are recognised as an integral part of the rental income over the term of the lease.

During the period ended 31 December 2018, the group has recognised net
rental income of €2.8 million.

We focused on this area due to the significance of the balances and as the
group has a manual process for the calculation of rental income.

How the scope of our audit
responded to the key audit
matter

We considered the group’s accounting policy in respect of revenue recognition
and were satisfied that it is in accordance with applicable accounting standards
and that it has been consistently applied throughout the year.

We obtained an understanding of the controls in place over the accounting
for rental income.

We recalculated our expectation of rental income recognised in the group
consolidated financial statements based on the lease agreements taking into
consideration rent-free periods, if any. We compared our expectation to what
is included in the financial statements and obtained explanations for any
differences above threshold.

We ensured that the group is entitled to the rental income recognised in the
group consolidated financial statements.

Key observations

We have not identified any issues to bring to the attention of the Audit
Committee.

Our audit procedures relating to these matters were designed in the context of our audit of the financial
statements as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion on the
financial statements is not modified with respect to any of the risks described above, and we do not express an
opinion on these individual matters.

Strategic reportgovernanceFinancial StatementSIndependent Auditor’s Report
To The Members Of Yew Grove Reit Plc (continued)

Our application of materiality

We def ine mater ia lit y as the
m a g n it ude of m i s s t ate me nt
that makes it probable that the
economic decisions of a reasonably
knowledgeable person, relying on
the financial statements, would
be changed or influenced. We use
materiality both in planning the
scope of our audit work and in
evaluating the results of our work.

Net assets
Materiality
Audit Committee
reporting threshold

€75
€0.75
€0.038

We determined materiality for the group to be €750,000 which is approximately 1% of the group net assets. We
have considered the net assets to be the critical component for determining materiality because it is one of the
principal benchmarks within the Financial Statements relevant to members of the Company in assessing financial
performance. We have considered quantitative and qualitative factors such as understanding the company and its
environment, complexity of the company and the reliabity of control environment.

We agreed with the Audit Committee that we would report to them any audit differences in excess of €37,500, as
well as differences below that threshold which, in our view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of
the financial statements.

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-
wide controls, and assessing the risks of material misstatement at the Group level.

In establishing the overall approach to our group audit, we assessed the risk of material misstatement, taking into
account the nature, likelihood and potential magnitude of any misstatement. Following this assessment, we applied
professional judgement to determine the extent of testing required over each balance in the financial statements.

Other information

The directors are responsible for the other information. The other information comprises the information included
in the Annual Report and Consolidated Financial Statements, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Yew Grove reit plcreport and consolidated Financial statements 2018Responsibilities of directors

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view and otherwise comply with the
Companies Act 2014, and for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group and parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group and parent company or to cease
operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

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 an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs (Ireland), we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
group and parent company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and

related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the group and parent company’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may
cause the entity (or where relevant, the group) to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within
the group to express an opinion on the (consolidated) financial statements. The group auditor is responsible for
the direction, supervision and performance of the group audit. The group auditor remains solely responsible for
the audit opinion.

Strategic reportgovernanceFinancial StatementSIndependent Auditor’s Report
To The Members Of Yew Grove Reit Plc (continued)

We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that the
auditor identifies during the audit.

For listed entities and public interest entities, the auditor also provides those charged with governance with a
statement that the auditor has complied with relevant ethical requirements regarding independence, including
the Ethical Standard for Auditors (Ireland) 2016, and communicates with them all relationships and other matters
that may be reasonably be thought to bear on the auditor’s independence, and where applicable, related safeguards.

Where the auditor is required to report on key audit matters, from the matters communicated with those charged
with governance, the auditor determines those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. The auditor describes these matters in the
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, the auditor determines that a matter should not be communicated in the auditor’s report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.

This report is made solely to the company’s members, as a body, in accordance with Section 391 of the Companies
Act 2014. 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.

Report on other legal and regulatory requirements

Opinion on other matters prescribed by the Companies Act 2014

Based solely on the work undertaken in the course of the audit, we report that:

• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
• In our opinion the accounting records of the parent company were sufficient to permit the financial statements

to be readily and properly audited.

• The company balance sheet are in agreement with the accounting records.
• In our opinion the information given in the directors’ report is consistent with the financial statements and the

directors’ report has been prepared in accordance with the Companies Act 2014.

Corporate Governance Statement

We report, in relation to information given in the Corporate Governance Statement on pages 37 to 45 that:

• In our opinion, based on the work undertaken during the course of the audit, the information given in the Corporate
Governance Statement pursuant to subsections 2(c) of section 1373 of the Companies Act 2014 is consistent with
the company’s statutory financial statements in respect of the financial year concerned and such information has
been prepared in accordance with the Companies Act 2014.

• Based on our knowledge and understanding of the company and its environment obtained in the course of the

audit, we have not identified any material misstatements in this information.

• In our opinion, based on the work undertaken during the course of the audit, the Corporate Governance Statement
contains the information required by Regulation 6(2) of the European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and groups) Regulations 2017 (as amended); and

• In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to
section 1373(2)(a),(b),(e) and (f) of the Companies Act 2014 is contained in the Corporate Governance Statement.

Yew Grove reit plcreport and consolidated Financial statements 2018Matters on which we are required to report by exception

Based on the knowledge and understanding of the group and the parent company and its environment obtained in
the course of the audit, we have not identified material misstatements in the directors’ report.

We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to
you if, in our opinion, the disclosures of directors’ remuneration and transactions specified by law are not made.

Matthew Foley
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
Deloitte & Touche House, Earlsfort Terrace, Dublin 2

23 April 2019

Strategic reportgovernanceFinancial StatementS
Consolidated Statement of Financial Position
As at 31 December 2018

Non-current assets
Investment properties
Interest in joint venture

Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets

Current liabilities
Trade and other payables
Non-current liabilities
Borrowings
Total liabilities
Net assets

Equity
Share capital
Share premium
Retained earnings
Total equity

IFRS Net asset value per ordinary share (cents)
EPRA Net asset value per ordinary share (cents)
Diluted IFRS asset value per ordinary share (cents)

As at
31 December 2018
€

Notes

13
14

16
15

19
20
20

12
12
12

77,915,000
3,473
77,918,473

565,100
4,823,734
5,388,834
83,307,307

(2,333,729)

(5,840,398)
(8,174,127)
75,133,180

750,000
4,000,000
70,383,180
75,133,180

100.18
100.18
100.18

The Consolidated financial statements on pages 74 to 113 were approved by the Board of Directors on 23 April 2019
and were signed on its behalf by:

Charles Peach
Chief Financial Officer

Jonathan Laredo
Chief Executive Officer

23 April 2019

Yew Grove reit plcreport and consolidated Financial statements 2018
Consolidated Statement of Comprehensive Income
For the financial period from 5 April 2018 (date of incorporation)
to 31 December 2018

Period ended
31 December 2018
€

Notes

Total Revenue
Revenue
Property expenses
Net Revenue
Fair value gains on investment properties
Total income after revaluation gains and losses

Expenditure
AIFM fees
Goodwill
Finance costs
Administration expenses
Total expenditure

Share of result from joint venture

Profit before taxation
Income tax

Profit for the financial period

Total comprehensive income for the financial period attributable to
the owners of the Group
Basic and diluted earnings per share (cent)

2
3

5
6
7
8

2,764,695
(204,351)
2,560,344
1,609,126
4,169,470

(70,378)
(180,011)
(15,412)
(1,568,725)
(1,834,526)

3,473

2,338,417
(4,538)

2,333,879

2,333,879
4.08

Strategic reportgovernanceFinancial StatementSConsolidated Statement of Changes in Equity
For the financial period from 5 April 2018 (date of incorporation)
to 31 December 2018

Total comprehensive income
for the period:
Transactions with owners
recognised in equity:
Issue of ordinary share capital
Transfer to retained earnings
Issue costs
As at 31 December 2018

Notes

Share capital
account

Share premium

€

Retained
earnings

€

Total
equity

€

2,333,879

750,000
-
-
750,000

74,250,000
(70,250,000)
-
4,000,000

-
70,250,000
(2,200,699)
70,383,180

75,000,000
-
(2,200,699)
75,133,180

Yew Grove reit plcreport and consolidated Financial statements 2018Consolidated Statement of Cash Flow
For the financial period from 5 April 2018 (date of incorporation)
to 31 December 2018

Cash flows from operating activities
Profit before taxation
Adjustments for:
Fair value gains on investment properties
Share of profit in joint venture
Finance costs
Goodwill
Increase in trade and other receivables
Decrease in trade and other payables
Corporation Tax paid
Net cash inflow from operating activities

Cash flows from investing activities
Purchase of investment properties and development expenses
Net cash outflow from investing activities

Cash flows from financing activities
Proceeds from the issue of ordinary share capital
Redemption of Class A shares in Yew Tree Investment Fund(1)
Issue costs
Proceeds from loans and borrowings
Loan repayment (2)
Net cash acquired from subsidiary undertaking
Net cash inflow from financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at the end of the period

Period ended
31 December 2018

Notes

€

2,338,417

(1,609,126)
(3,473)
15,412
180,011
(147,502)
974,402
(6,606)
1,741,535

(50,395,874)
(50,395,874)

75,000,000
(23,064,484)
(2,200,699)
6,199,540
(8,329,422)
5,873,138
53,478,073

4,823,734
4,823,734

4
14
7
6

18
23
23

15
15

(1) On 8 June 2018 all of the Yew Tree Investment Fund (in Members Voluntary Liquidation) Class A shares were redeemed.
(2) On 8 June 2018 the Company subscribed to 8,329,422 €1 B ordinary shares for €8,329,422, the €8,329,422 proceeds were used to fully repay
the Yew Tree Investment Fund’s (in Members Voluntary Liquidation) outstanding loan subsequent to acquisition.

Strategic reportgovernanceFinancial StatementSCompany Statement of Financial Position
As at 31 December 2018

Non-current assets
Investment properties

Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Non-current liabilities
Borrowings
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Total equity

As at
31 December 2018
€

Notes

16
15

19
20
20

77,915,000
77,915,000

562,976
4,364,045
4,927,021
82,842,021

(2,099,951)

(5,840,398)
(7,940,349)
74,901,672

750,000
4,000,000
70,151,672
74,901,672

The Company reported a profit of €2,102,371 for the financial period from 5 April 2018 (date of incorporation) to 31
December 2018.

The Consolidated financial statements on pages 74 to 113 were approved by the Board of Directors on 23 April 2019
and were signed on its behalf by:

Charles Peach
Chief Financial Officer

Jonathan Laredo
Chief Executive Officer

23 April 2019

Yew Grove reit plcreport and consolidated Financial statements 2018
Company Statement of Changes in Equity
For the financial period from 5 April 2018 (date of incorporation)
to 31 December 2018

Total comprehensive income
for the period:
Transactions with owners
recognised in equity:
Issue of ordinary share capital
Transfer to retained earnings
Issue costs
As at 31 December 2018

Notes

Share capital
account

Share premium

€

Retained
earnings

€

Total
equity

€

2,102,371

750,000
-
-
750,000

74,250,000
(70,250,000)
-
4,000,000

-
70,250,000
(2,200,699)
70,151,672

75,000,000
-
(2,200,699)
74,901,672

Strategic reportgovernanceFinancial StatementSCompany Statement of Cash Flow
For the financial period from 5 April 2018 (date of incorporation)
to 31 December 2018

Cash flows from operating activities
Profit before taxation
Adjustments for:
Fair value gains on investment properties
Finance costs
Increase in trade and other receivables
Increase in trade and other payables
Net cash inflow from operating activities

Cash flows from investing activities
Purchase of investment properties and development expenses
Purchase of shares in subsidiary(1)
Net cash outflow from investing activities

Cash flows from financing activities
Proceeds from the issue of ordinary share capital
Issue costs(2)
Proceeds from loans and borrowings
Net cash inflow from financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at the end of the period

Period ended
31 December 2018

Notes

€

2,102,371

(1,609,126)
15,412
(403,622)
1,725,397
1,830,432

(50,395,874)
(26,069,354)
(76,465,228)

75,000,000
(2,200,699)
6,199,540
78,998,841

4,364,045
4,364,045

4
7

15
15

(1) In relation to the purchase of shares in subsidiary, on 8 June 2018 all of the Yew Tree Investment Fund (in Members Voluntary Liquidation)
Class A shares were redeemed following the issue of Class B shares.
(2) Issue costs represent the Company’s contribution to costs of issuing ordinary share capital for the financial period.

Yew Grove reit plcreport and consolidated Financial statements 201881

Notes to the Consolidated Financial Statements

1. Accounting policies

1.1 General information

Yew Grove REIT plc (the “Company”, registered number 623896), together with entities controlled by the Company
(its subsidiaries) (together the “Group”), is engaged in investing in a diversified portfolio of Irish commercial property
with a view to maximising its shareholder returns.

The Company is a public limited company, incorporated and domiciled in Ireland. The registered address of the
Company is 4th Floor, 76 Lower Baggot Street, Dublin 2.

The ordinary shares of the Company were admitted to trading on the Euronext Growth market (formerly the
Enterprise Securities Market) of Euronext Dublin and the Alternative Investment Market of the London Stock
Exchange on 8 June 2018.

1.2 Trading period

The Consolidated financial statements for the Group shown herein are for the financial period from 5 April 2018
(date of incorporation) to 31 December 2018.

The results are inclusive of the parent company (Yew Grove REIT plc) and its subsidiary companies controlled by
the Company as disclosed in note 1.11 during the financial period from 5 April 2018 (date of incorporation) to 31
December 2018.

1.3 Going concern

The Group raised €75m, excluding issue costs, from an equity placement on 8 June 2018 and deployed the majority
of these funds through: (i) subscription for the entire share capital of the Yew Tree Investment Fund (in Members
Voluntary Liquidation) on 8 June 2018 and (ii) direct purchase of Irish commercial property. The Group’s funds
were employed to generate stable income streams from majority tenanted Irish commercial properties (primarily
office and industrial property) that have the potential for income and capital appreciation. As at 31 December 2018
the Group held €4.8m in cash that had not been invested in or committed to acquire property.

Based on financial projections which extend beyond twelve months from the date of the approval of this report, the
Directors consider that the Company and Group has adequate resources to continue in operational existence for
the foreseeable future. For this reason, the Directors have concluded that they should prepare the consolidated and
company financial statements on a going concern basis.

1.4 Basis of preparation

The Consolidated financial statements of the Group for the financial period 5 April 2018 (date of incorporation) to
31 December 2018 have been prepared in accordance with International Financial Reporting Standards (“IFRS”),
as adopted by the European Union (“EU”) and the Companies Act 2014.

The Consolidated financial statements have been prepared on the historical cost basis, except for investment
properties that are measured at fair value.

The Consolidated financial statements are presented in Euro, which is the Group’s functional currency and the
Group’s presentational currency.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

1. Accounting policies (continued)

Standards not affecting the reported results and financial position

IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of
these Consolidated financial statements:

International Accounting Standards (IAS / IFRSs)
IFRS 16 - Leases
IFRS 17- Insurance Contracts
IFRIC 23 - Uncertainty over Income Tax Treatments
Amendments to IAS 28 - Long-term Interests in Associates and Joint Ventures
Annual Improvements to IFRS Standards 2015-2017 Cycle
Amendments to IAS 19 - Plan Amendment, Curtailment or Settlement
Amendments to References to the Conceptual Framework in IFRS Standards
Amendments to IFRS 9 - Prepayment Features with Negative Compensation
Amendments to IFRS 3 – Definition of a business
Amendments to IAS 1 and IAS 8 – Definition of material

Effective date
1 January 2019
1 January 2021
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2020
1 January 2019
1 January 2020
1 January 2020

Management are of the view that the initial adoption of any of the above will not materially change financial
performance or the reported position of the Group.

1.5 Significant accounting judgements, estimates and assumptions

The preparation of the Group’s Consolidated financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and the disclosure of
contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities affected in
future periods.

In the process of applying the Company’s and Group’s accounting policies, management has made the following
judgements, which have the most significant effect on the amounts recognised in the Consolidated financial statements:

(a) Significant judgements

The following are the significant judgements, apart from those involving estimations (which are presented separately
below), that the directors have made in the process of applying the Group’s accounting policies and that have the
most significant effect on the amounts recognised in the Consolidated financial statements.

Operating lease contracts - the Group as lessor

The Group has acquired investment properties which are subject to commercial property leases and licence with
tenants. The Group has determined, based on an evaluation of the terms and conditions of the arrangements,
particularly the duration of the lease terms and minimum lease payments, that it retains all the significant risks and
rewards of ownership of these properties and so accounts for these leases as operating leases.

Yew Grove reit plcreport and consolidated Financial statements 20181. Accounting policies (continued)

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree
to which inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurements in its entirety, which are described as follows:

(i)

Fair value hierarchy applied
(a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
(b)

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).

(c)

(ii) Property is treated as acquired or disposed of when the significant risks and rewards of ownership have been

assumed or relinquished by the Group. This occurs when:
(a)

it is probable that the future economic benefits that are associated with the property will flow to the
Group;
there are no material conditions which could affect completion of the acquisition; and
the cost of the investment property can be measured reliably.

(b)
(c)

(iii) Additions to property consist of construction, re-development, refurbishment and other directly attributable

costs such as professional fees and expenses and capitalised interest where applicable.

(1v) Property is initially measured at cost including related acquisition costs, and subsequently valued by the
Group’s Valuers at its respective fair value at each reporting date (30 June and 31 December). The difference
between the fair value of a property at the reporting date and its carrying value prior to the external valuation
is recognised in the Consolidated Statement of Comprehensive Income as a fair value gain or loss.

Control

The IFRS 10 control model focuses on whether the Group has power over an investee, exposure or rights to variable
returns from its involvement with the investee, and ability to use its power to affect those returns. In particular, IFRS
10 requires the Group to consolidate investees that it controls on the basis of de facto control. In accordance with
IFRS 10, the Group’s assessment of control is performed on a continuous basis and the Group reassesses whether
it controls an investee if facts and circumstances indicate that there are changes to one or more of the elements of
the control model.

Strategic reportgovernanceFinancial StatementS

Notes to the Consolidated Financial Statements (continued)

1. Accounting policies (continued)

(b) Analysis of sources of estimation uncertainty

The key future assumptions, and other key sources of estimation uncertainty for the reporting period that may have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.

Fair value of investment property

The market value of investment property (“property”) would normally be determined by a real estate valuation
expert to be the estimated amount for which a property should exchange on the date of the valuation in an arm’s
length transaction. Properties are valued on an individual basis.

The valuation of the Group’s properties as at 31 December 2018 was completed by Lisney Limited (”Lisney”) as
external independent Valuer. Lisney prepared the valuation on the basis of market value in accordance with the
Royal Institution of Chartered Surveyors (“RICS”) Valuation – Global Standards (June 2017). Their valuation was
subsequently reviewed by the Valuation Committee.

The Group’s investment properties will next be valued by the Group’s Valuers as at 30 June 2019. The valuers will
continue to use recognised valuation techniques and the principles of IFRS 13 for the valuation as at 30 June 2019
and 31 December 2019. Refer to note 13 for further disclosure on the recognised valuation techniques.

The Board’s Valuation Committee conducts a detailed review of each property valuation, the underlying valuation
assumptions and the valuation process used by the valuer to ensure that valuation assumptions are valid and have
been applied as set out below. Property valuations are complex and involve data which is not publicity available
and a degree of judgement. Each valuation is based upon key assumptions, particularly estimated rental values and
market-based yields. The valuation approach to on-going developments and material refurbishments is on a residual
basis and factors such as the assumed timescale, the assumed future development costs and an appropriate finance
and/or discount rate are used to determine the property value together with market evidence and recent comparable
properties where appropriate.

The Directors are satisfied that the valuations of the Group’s properties are appropriate for inclusion in the Consolidated
financial statements. The fair value of the Group’s properties accurately reflects the valuation provided by Lisney.
The valuation is based on the future cashflows from rental income both for the current lease period and future
estimated rental values, adjusted for expected void periods and appropriate discount rates.

Calculation of loss allowance

When measuring expecting credit loss (“ECL”) the Group uses reasonable and supportable forward-looking
information, which is based on assumptions for the future movement of different economic drivers and how these
drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the
difference between the contractual cash flows due and those that the lender would expect to receive, taking into
account cash flows from collateral and integral credit enhancements.

Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood
of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations
of future conditions.

Yew Grove reit plcreport and consolidated Financial statements 20181. Accounting policies (continued)

1.6 Revenue recognition

The Group’s main source of revenue is the leasing and licensing of properties. Lease and licence revenue is recognised
over the period of the lease or licence contracts. Rental income is recognised as revenue at the time and amount
governed by the lease or licence in place with the customer.

The Group recognised revenue from the following major activities:

• Rental income from the Group’s investment properties;
• License income from licencing of the Group’s car park spaces.
• Service charge income from contributions received from tenants relating to property expenses.

Revenue is measured based on the consideration to which the Group’s expects to be entitled in a contract with a
customer and excludes amounts collected on behalf of third parties.

Rental income

The Group receives rental income from tenants under leases associated with the Group’s properties. Rental income
is recognised over the term of the lease. Lease incentives granted are recognised as an integral part of the rental
income over the term of the lease.

Where a rent-free period is included as an incentive in a lease the rental income foregone is allocated evenly over
the period from the first day of the lease to the earliest termination date of the lease. Where a lease incentive takes
the form of an incentive payment to a tenant the resultant cost is amortised evenly over the remaining life of the
lease to its earliest termination date. The sum of unamortised incentives is included in trade and other receivables
and is released over the term of the relevant leases. Lease adjustments such as rent reviews are included when the
rent review or adjustment has been completed and agreed with the tenant.

License income

License income represents amounts under licences receivable from tenants associated with the licensing of the
Group’s car park spaces. License income is recognised over the term of the license. License adjustments such as
reviews or extensions are included when the licence review, extension or adjustment has been completed and agreed
with the tenant.

Service charge income

Service charge income from tenants are recognised as revenue in the period in which the related expenditure is
incurred.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

1. Accounting policies (continued)

1.7 Direct lease costs

Direct lease costs incurred in the negotiation and arrangement of new leases to tenants are initially capitalised and are
then recognised as an expense over the period from the date of the lease to the earliest termination date of the lease.

There were no direct lease costs capitalised during the financial period.

1.8 Finance income and finance costs

The Group’s finance income and finance costs include interest income, interest expense, commitment fees and
related charges. Interest income or expense is recognised using the effective interest method. The effective interest
rate is the rate that exactly discounts estimated future cash receipts (including all fees and costs paid or received
that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on
initial recognition.

1.9 Taxation

Current tax

The Company elected for Real Estate Investment Trust (“REIT”) status on 21 May 2018 and following the acquisition of
the entire share capital of the Yew Tree Investment Fund (in Members Voluntary Liquidation) gave notice to Revenue
that it was the principal company of a group REIT. An Irish REIT or group REIT will not pay Irish corporation tax
on profits and gains from its Property Rental Business. Corporation tax will still apply in the normal way in respect
of its Residual Business which may include certain trading activities incidental to letting, letting of administrative
property which is temporarily surplus to requirements, and certain income such as dividends from other Irish REITs.
Corporation tax may also be payable in respect of profits arising in joint venture or co-investment arrangements
where no REIT election has been made (or on the non-REIT proportion of the profits of joint ventures where an
Irish REIT election has been made) and also where a member of a group or an interest in an investment vehicle (as
opposed to property involved in the Property Rental Business) is sold. Other taxes such as VAT, stamp duty, local
property tax and payroll taxes will also still apply in the normal way.

1.10 Financial instruments

Financial assets and liabilities are recognised when a Group entity becomes a party to the contractual provisions
of the instruments.

Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and liabilities (other than financial assets or liabilities at fair value through
profit or loss) are added to or deducted from the fair value of the financial assets or liabilities, as appropriate, on initial
recognition. Transaction costs attributable to the acquisition of financial assets or liabilities at fair value through
profit or loss are recognised immediately in the Consolidated Statement of Comprehensive Income.

Yew Grove reit plcreport and consolidated Financial statements 20181. Accounting policies (continued)

(i) Cash and cash equivalents

Cash and cash equivalents include cash balances and call deposits with maturities of three months or less from the
acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Group in
the management of its short-term commitments.

(ii) Trade and other receivables and trade and other payables

Trade receivables include amounts due from tenants. Other receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market. Trade and other payables include amounts due
to third party suppliers and prepaid rent amounts received from tenants in advance.

Trade and other receivables and trade and other payables are initially measured at fair value and subsequently
measured at amortised cost using the effective interest rate method. The Group applies the simplified approach
to trade receivables for which expected credit loss uses the lifetime expected credit allowance. The Group has no
material exposure to bad debts as the majority of the Group’s rental income is from State bodies or FDI entities as
they have good credit standing. The payment and credit performance of these tenants is closely monitored; therefore,
the expected credit loss is not material and has not been presented. Where there is evidence of credit loss appropriate
allowances are recognised as bad debts in the Statement of Comprehensive income.

(iii) Loans and borrowings

Loans are initially recorded at fair value plus transaction costs. They are subsequently accounted for at amortised cost.

1.11 Investment

Investments held as fixed assets are stated at fair value. Income from other investments together with any related
taxation is recognised in the Consolidated Statement of Comprehensive Income in the year in which it is receivable.

Basis for consolidation

The Consolidated financial statements include the financial statements of the holding company (Yew Grove REIT
plc) and all subsidiary companies as at 31 December 2018. Control is achieved when the Company has the power
over the investee, exposure, or rights, to variable returns from its involvement with the investee and the ability to
use its power over the investee to affect the amount of the investor’s returns. The results of subsidiaries acquired or
disposed of during the financial period are included in the Consolidated Statement of Comprehensive Income from
the effective date of control or to the effective date of loss of control as appropriate. All intragroup transactions,
assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group
are eliminated in full on consolidation. Upon acquisition of a business, fair values are attributed to the identifiable
net assets acquired. The Group’s accounting policy in relation to goodwill is set out in note 1.18.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

1. Accounting policies (continued)

Details of the subsidiaries acquired during the financial period are as follows;

Name of subsidiary
Yew Tree Investment Fund
(in Members Voluntary
Liquidation)

(Consolidated up to the
date of loss of control –
27 July 2018)

Registered Address/Country of
Incorporation
Ashley House,
Morehampton Road,
Donnybrook, Dublin 4,
Ireland

Nature of the business
Qualifying Investor
Alternative
Investment
Fund. Property
investment

Investment
100% Class
B ordinary
shares

Votes controlled
by the Company
100%

Gateway Estate
Management Company
Limited by Guarantee

2nd Floor, River House,
East Wall Road, Dublin 3,
Ireland

Company Limited
by Guarantee.
Management of
common areas

0%
Membership

99% of
voting
rights

(Consolidated Subsidiary
at the financial reporting
date)

Yew Tree Investment Fund plc (in Members Voluntary Liquidation)

The Consolidated financial statements include the results of Yew Tree Investment Fund (in Members Voluntary
Liquidation) from the date of acquisition of 8 June 2018 to the date of loss of control 27 July 2019 following the
appointment of a liquidator.

At the Statement of Financial Position date, the liquidation of Yew Tree Investment Fund (in Members Voluntary
Liquidation) had yet to be fully completed.

1.12 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the acquisition
is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control of the acquire. Acquisition-related costs are
recognised in the Consolidated Statement of Comprehensive Income as incurred.

1.13 Investments in Joint Ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement,
which exits only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Yew Grove reit plcreport and consolidated Financial statements 20181. Accounting policies (continued)

The results and assets and liabilities of joint ventures are incorporated in these Consolidated financial statements
using the equity method of accounting, except when the investment is classified as held for sale, in which case it is
accounted for in accordance with IFRS 5.

An investment in a joint venture is accounted for using the equity method from the date on which the investee
becomes a joint venture.

1.14 Foreign currency

Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at
the Statement of Financial Position date. Non-monetary items that are measured in terms of historical cost in a
foreign currency are translated at the rates of exchange ruling at the date of the transaction. Non-monetary items
that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the
fair value was determined. The resulting exchange differences are dealt with in the Consolidated Statement of
Comprehensive Income.

1.15 Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (a qualifying
asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale) are included
in the cost of the asset. All other borrowing costs are recognised in the Consolidated Statement of Comprehensive
Income in the period in which they are incurred.

1.16 Pension

Annual contributions payable to the Group’s pension scheme are charged to the Consolidated Statement of
Comprehensive Income in the period to which they relate.

1.17 Share issue cost

Costs directly attributable to issuing new shares are deducted from retained earnings net of any related tax deduction.
All other costs are recognised in the Consolidated Statement of Comprehensive Income in the period in which they
are incurred.

1.18 Goodwill

Goodwill arising on the acquisition of a subsidiary is recognised as an asset at the date that control is acquired (the
acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred and the fair value
of the acquirer’s previously-held equity interest (if any) in the entity over the net fair value of the identifiable net
assets recognised.

Goodwill is not amortised but is reviewed for impairment at least annually. Any impairment loss is recognised
immediately in the Consolidated Statement of Comprehensive Income and is not subsequently reversed. Any gain
on a bargain purchase is recognised in the statement of comprehensive income immediately.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

1. Accounting policies (continued)

1.19 Segmental information

The directors have considered the requirements of IFRS 8 ‘Operating Segments’. The Group’s investments are
commercial properties in the Republic of Ireland. The financial information on a property by property basis is
provided to senior management of the Group, who collectively comprise the chief operating decision makers.

Properties are not aggregated by type or location for reporting purposes, the properties are managed and reported
on for the Group to the Board of Directors collectively as a single portfolio. Collectively the properties have similar
characteristics and therefore, the Directors are of the opinion that the Group is currently engaged in a single segment
business, being investment in commercial property in the Republic of Ireland.

Revenue as stated in the Consolidated Statement of Comprehensive Income relates to rental income from its
investment in commercial properties held by the Group, license income from the licensing of the Group’s car park
spaces and service charges received by its subsidiary management companies. The profit or loss and total assets and
liabilities of the Group are from its single segment business.

Major Customers

Included in gross rental income are rents of €1.3m which arise from the Group’s three largest tenants, each of which
contributed more than 10% of the Group’s revenue. No other single tenant contributed more than 10% of the Group’s
revenue in 2018.

1.20 Impairment of financial assets

The Group applies a three-stage expected credit loss model (“ECL”) in relation to the impairment of its financial
assets carried at amortised cost except for trade receivables for which the simplified approach is applied in accordance
with IFRS 9. The ECL is used to account for expected credit losses and changes in those ECL at each reporting date
to reflect changes in credit risk since initial recognition of the financial assets.

The expected credit loss is charged against the respective financial asset and recognised in the Consolidated
Statement of Comprehensive income.

The three stages that determine the amount of impairment to be recognised as expected credit losses at each
reporting date are as follows:

Stage 1: Credit risk has not increased significantly since initial recognition – recognised 12 months ECL;

(i)
(ii) Stage 2: Credit risk has increased significantly since initial recognition – recognise lifetime ECL;
(iii) Stage 3: Financial asset is credit impaired – recognise lifetime ECL.

The 12 months ECL is calculated by multiplying the probability of a default occurring in the next 12 months by the
total (lifetime) ECLs that would result from that default. Lifetime expected credit losses are the present value of
expected credit losses that arise if a borrower defaults on its obligation at any point throughout the terms of the
financial asset.

Yew Grove reit plcreport and consolidated Financial statements 20181. Accounting policies (continued)

Definition of default

The Group considers the following as constituting events of default for internal credit risk management purposes
as experience indicates that financial assets that meet the following criteria are generally not recoverable:

(i) When there is a breach of financial covenants by the debtor; and
(ii)

Information developed internally or obtained from external sources indicates that the debtor is unlikely to
pay its creditors, including the Group, in full (without taking into account any collateral held by the Group).

Write off

The Group writes off a financial asset when there is information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery.

2. Revenue

Gross rental income
License income
Service charge income
Net rental income

Period ended
31 December 2018
€
2,556,944
56,789
150,962
2,764,695

Gross rental income represents amounts receivable from tenants under leases associated with the Group’s property
business. License income represents amounts under licences receivable from tenants associated with the licensing
of the Group’s car park spaces. Service charge income relates to contributions from tenants of the Group’s buildings
for property expenses of the occupied buildings. Service charge income receivable from tenants is recognised as
revenue in the period in which the related expenditure is recognised.

3. Property expenses

Service charge expenses
Direct property costs
Car park costs
Total

Period ended
31 December 2018
€
157,581
32,100
14,670
204,351

Property expenses include service charges and other costs directly recoverable from tenants, and non-recoverable
costs directly attributable to the Group’s properties. Service charge expenses typically include security, insurance,
maintenance and other costs of managing the buildings due from and recharged to tenants.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

4. Fair value gains on investment properties

Fair value gains on investment properties
Total

5. AIFM Fees

AIFM Fees
Total

Period ended
31 December 2018
€
1,609,126
1,609,126

Period ended
31 December 2018
€
70,378
70,378

The Company is required, as a REIT, to have an alternative investment fund manager (“AIFM”). The Company has
agreed with Ballybunion Capital, an AIFM authorised by the Central Bank of Ireland, for it to act as the external
AIFM of the Group, subject to overall supervision of the AIFM by the Board. The fees above are fees paid to the
AIFM in accordance with the service level agreement between the AIFM and the Company.

6. Goodwill

Impairment of goodwill
Negative goodwill
Total

Period ended
31 December 2018
€
238,750
(58,739)
180,011

As referred to in note 23, goodwill arose on the acquisition of 100% of the class B ordinary share capital of Yew Tree
Investment Fund (in Members Voluntary Liquidation). The fair value of unamortised loan facility costs with a book
value of €238,750 included in trade receivables was estimated to have a recoverable amount of €nil at the acquisition
date. This gave rise to goodwill of €238,750 at the date of acquisition. The goodwill was subsequently reviewed for
impairment and an impairment charge was taken to the Statement of Comprehensive Income.

The recoverable amount of the trade receivable and prepayments was determined based on a level 3 fair value
hierarchy. The fair value was determined based on company only information available at the date of acquisition.

Goodwill also arose on the acquisition of Gateway Estate Management Company Limited by Guarantee (refer to
note 23) as the company was acquired on 2 July 2018 for nil consideration following the acquisition of One and Three
Gateway, East Wall Road, Dublin 3. As nil consideration was paid this resulted in negative goodwill of €58,739 at the
date of acquisition. In line with the Groups accounting policy, negative goodwill of €58,739 was taken directly to the
Statement of Comprehensive Income during the period.

None of the goodwill is expected to be deductible for income tax purposes.

The carrying value of the Goodwill at the Statement of Financial Position date was nil.

Yew Grove reit plcreport and consolidated Financial statements 20187. Finance costs

Effective interest expense on borrowings
Total

Period ended
31 December 2018
€
15,412
15,412

The effective interest expense on borrowings arises as a result of the recognition of interest expense, commitment
fees and arrangement fees.

8. Administration expenses

Profit before tax for the financial period has been stated after charging:

Capital reduction costs
Staff costs
Listing expenses
Property valuation fees
Property management fees
Legal and consultancy fees
Independent accountant fees
Audit fees
Liquidation costs
Other costs
Total

Period ended
31 December 2018
€
108,667
529,900
160,329
53,639
60,936
87,637
73,888
65,000
119,589
309,140
1,568,725

Staff costs represents total remuneration and other benefits paid to all employees and officers for the financial period.
Further information on Directors’ remuneration can be found in note 22 to the Consolidated financial statements.

Capital reduction costs relate to the Company’s application to the Court to reduce the amount standing to the credit
of the Company’s share premium account by the sum of €70,250,000. The Company’s application to the Court was
approved on 1 November 2018. Refer to note 20 for further details

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

8. Administration expenses (continued)

Auditor’s remuneration

Company
Audit of entity financial statements
Other assurance services
Tax advisory services
Other non-audit services
Company total

Group
Audit of the Group financial statements
Other assurance services
Tax advisory services
Other non-audit services
Group total

Period ended
31 December 2018
€

42,500
195,000
-
-
237,500

10,000
-
-
-
10,000

Other assurance services include fees paid in respect to the role of reporting accountant at Admission to trading on
AIM and the Euronext Growth market, review of the Interim Report, and Report on the Initial Financial Statements.

9. Employment

The Company had no employees prior to Admission (8 June 2018). The average monthly number of employees
(including Directors) directly employed during the period from incorporation to period end (5 April 2018 to 31
December 2018) in the Group was 7.

Total employees and officers at financial period end:

At financial period end:
Executive Directors
Office staff
Non-Executive Directors
Total employees and officers

31 December 2018
Number

3
2
4
9

Yew Grove reit plcreport and consolidated Financial statements 20189. Employment (continued)

The staff costs for the above employees and officers were:

Wages and salaries
Social insurance cost
Other benefits – Health insurance
Pension costs – defined contribution plan
Total – all charged to income statement; nil capitalised

Staff costs are allocated to administration expenses during the financial period.

10. Income tax

Period ended
31 December 2018
€
421,158
23,031
14,445
71,266
529,900

Current tax: current tax is the expected tax payable or receivable on the taxable income or loss for the period, using
tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Yew Grove
REIT plc has elected for Real Estate Investment Trust (“REIT”) status under section 705E Tax Consolidation Act
1997. As a result, the Group does not pay Irish corporation tax on the profits and gains from its qualifying rental
business in Ireland provided it meets certain conditions. With certain exceptions, corporation tax is still payable in the
normal way in respect of income and gains from a Group’s Residual Business, that is its non-property rental business.

Income tax on residual income
Current period charge
Income tax expense for the financial period

Reconciliation of the income tax expense for the financial period

Profit before tax
Tax charge on profit at standard rate of 12.5%
Non-taxable revaluation surplus
REIT tax-exempt profits
Other (charge on subsidiary undertakings)
Income tax expense for the financial period

Period ended
31 December 2018
€
-
4,538
4,538

Period ended
31 December 2018
€
2,338,417
292,302
(201,140)
(91,162)
4,538
4,538

The directors confirm that in their opinion having conducted due enquiries the Group and the Company have
remained in full compliance with the Irish REIT rules and regulations up to and including the date of the approval
of this report.

Strategic reportgovernanceFinancial StatementS
Notes to the Consolidated Financial Statements (continued)

11. Earnings per share

Weighted average number of shares

Shares issued during the financial period
Share in issue at financial period end
Weighted average number of shares
Diluted number of shares

Basic and diluted earnings per share

Profit for the financial period attributable to the owners of the Group

Weighted average number of ordinary shares (basic)
Weighted average number of ordinary shares (diluted)
Basic earnings per share (cent)
Diluted earnings per share (cent)

Adjusted earnings per share

Period ended
31 December 2018
€
75,000,000
75,000,000
57,231,482
57,231,482

Period ended
31 December 2018
€
2,333,879

€
57,231,482
57,231,482
4.08
4.08

The adjusted basic and diluted earnings per ordinary share of 3.11 cents per share is based on the profit for the financial
period of €2,333,879 and on 75,000,000 ordinary shares, being the number of shares in issue since admission and
at the period end.

Yew Grove reit plcreport and consolidated Financial statements 201812. IFRS and EPRA NAV per share

The IFRS NAV is calculated as the value of the Group’s assets less the value of its liabilities based on IFRS measures.
EPRA NAV is calculated with accordance with the European Real Estate Association (“EPRA”) Best Practice
Recommendations: November 2016.

EPRA net asset value (“EPRA NAV”) is defined as the IFRS assets including properties and other investment interests
at fair value and to exclude certain items not expected to crystallise in a long-term investment property business.

IFRS net assets at end of financial period
Ordinary shares in issue
IFRS NAV per share (cent)
Ordinary shares in issue
Diluted number of shares
Diluted IFRS NAV per share (cent)

IFRS net assets at end of financial period
Net market to market on financial assets
EPRA NAV
EPRA NAV per share (cent)

Period ended
31 December 2018
€
75,133,180
75,000,000
100.18
75,000,000
75,000,000
100.18

Period ended
31 December 2018
€
75,133,180
-
75,133,180
100.18

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

13. Investment properties

(a) Group and Company

Acquired by distribution in specie
Property purchases
Development expenditure
Fair value gain on investment properties
Closing fair value

As at
31 December 2018
€
25,910,000
50,147,611
248,263
1,609,126
77,915,000

During the financial period the Company acquired 100% of the B ordinary shares in the Yew Tree Investment Fund
(in Members Voluntary Liquidation). By this acquisition the Company secured 10 properties with a fair value as at
30 June 2018 of €25,910,000. The Company has since received all the properties and the majority of the cash from
the Yew Tree Investment Fund (in Members Voluntary Liquidation) through distribution in specie following the
Members Voluntary Liquidation of the Fund.

The Group also acquired the One and Three Gateway, East Wall Road, Dublin 3 buildings during the financial period
for €31,001,082 (vendor price of €29,000,000 and transaction costs of €2,001,082), Blackwater House, Mallow Business
Park, Mallow, Co. Cork building for €2,010,008 (vendor price of €1,850,000 and transaction costs of €160,008)
and Buildings 1, 2 and 3, Letterkenny Business Park, Co. Donegal for €17,136,521(vendor price of €16,000,000 and
transaction costs of €1,136,521).

A valuation is conducted on the Group’s owned properties on 30 June and 31 December each year based upon the
key assumptions of estimated rental values and market-based yields. In determining fair value, the valuers refer to
market evidence and recent transaction prices for similar properties.

The Directors are satisfied that the valuation of the Group’s properties is appropriate for inclusion in the accounts.
The fair value of the Group’s properties owned at 31 December 2018 is based on the valuation provided by the
external independent Valuers, Lisney. This valuation is prepared on the basis of market value in accordance with
the Royal Institution of Chartered Surveyors Valuation – Global Standards (June 2017) and the principles of IFRS 13.
This valuation has not been adjusted by the directors in making their determination of the fair value of investment
properties at 31 December 2018.

Yew Grove reit plcreport and consolidated Financial statements 201813. Investment properties (continued)

Fair value

The valuation technique used in determining the fair value of the property assets is market value as defined by
the Royal Institution of Chartered Surveyors Valuation, being the estimated amount for which an asset or liability
should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction
after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion. This is in
accordance with IFRS 13.

The main inputs for property valuation using a market-based capitalisation approach are the ERV (“Estimated
Rental Value”) and equivalent yield. ERV is a valuer’s opinion as to the open market rental value of a property on
a valuation date which could reasonably be expected to be the achievable rent for a new letting of that property on
the valuation date. ERVs are not generally directly observable and therefore classified as Level 3 inputs. Equivalent
yields depend on the valuer’s assessment of market capitalisation rates and are therefore Level 3 inputs. There were
no transfers between fair value levels during the financial period.

Details of the Group’s investment properties and information about the fair value hierarchy using unobservable
inputs (level 3) at the end of the reporting period are as follows:

Asset Class
Commercial Property Assets

Market value
€77.9m

Input
ERV per sq ft
Equivalent yield %

Low
€4.00
6.44%

Range

Median
€11.98
8.23%

High
€33.33
10.23%

Sensitivity of measurement to variance of significant unobservable inputs

A decrease in the ERV will decrease the fair value. An increase in equivalent yield will decrease the fair value. There
are interrelationships between these rates as they are partially determined by market rate conditions.

The table below shows the sensitivity of the Group’s properties to changes in equivalent yield and ERV, which have
been identified as key sensitivities by the directors. A change in long term vacancy rate was not considered significant
and was not therefore tested, as the Group’s long-term vacancy rates are low and lease contracts are long in duration.

Across the entire portfolio of investment properties, a 0.25% increase in equivalent yield would have the impact of
a €3.00m reduction in fair value whilst a 0.25% decrease in yield would result in a fair value increase of €3.19m, and
a 5% increase in ERV would have the impact of a €3.28m increase in fair value whilst a 5% decrease in ERV would
result in a fair value decrease of €3.29m.

Commercial property assets
Total

Market
Value

€77.9m

Value +5%
in ERV

€
3.28m
3.28m

Value -5%
in ERV

Value +0.25%
Equivalent Yield

Value -0.25%
Equivalent Yield

€
(3.29m)
(3.29m)

€
(3.00m)
(3.00m)

€
3.19m
3.19m

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

14. Interest in joint venture

100

Details of the Group’s only joint venture at the end of the reporting period was as follows:

Name of joint venture
Ashtown
Management
Company
Limited

(Joint venture)

Country of
Incorporation
Friends
First House,
Cherrywood
Science &
Technology Park,
Loughlinstown,
Co. Dublin,
ireland

Nature of the business
Private Limited
Company.
Management of
common areas

Investment
Ashtown
Management
Company
Limited

(Joint venture)

Votes controlled
by the Company
50%

Carrying amount
31 December 2018
€3,473

This joint venture is accounted for using the equity method in these Consolidated financial statements as set out in
the Group’s accounting policies in note 1.

The Group acquired its interest in the joint venture when it acquired the entire class B ordinary share capital of the
Yew Tree Investment Fund (in Members Voluntary Liquidation) on 8 June 2018. The share of profits attributable to
the Group from 8 June 2018 to 31 December 2018 are as follows;

Distribution in specie on 8 June 2018
Share of joint venture profits for the period
Period ended 31 December 2018

Period ended
31 December 2018
€
nil
3,473
3,473

Summarised financial information in respect to the results of the joint venture for the financial period 8 June 2018
to 31 December 2018 is set out below:

Revenue
Profit post tax from continuing operations
Profit for the period
Total comprehensive income

Period ended
31 December 2018
€
178,198
6,946
6,946
6,946

The balance sheet of the Company’s interest in a joint venture as at 31 December 2018 is as follows:

Cash and cash equivalents
Trade and other payables
As at 31 December 2018

As at
31 December 2018
€
122,349
(115,403)
6,946

Yew Grove reit plcreport and consolidated Financial statements 201815. Cash and cash equivalents

(a) Group

Cash and cash equivalents

(b) Company

Cash and cash equivalents

The management of cash and cash equivalents is discussed in detail in note 25.

16. Trade and other receivables

(a) Group

Trade receivables and prepayments
Taxation debtors – VAT recoverable
Other receivables
Total

101

As at
31 December 2018
€
4,823,734

As at
31 December 2018
€
4,364,045

As at
31 December 2018
€
201,214
160,081
203,805
565,100

Trade receivables include amounts due from tenants for rental and service charges. The balance of trade and other
receivables has no concentration of credit risk as it covers mainly prepayments. The directors therefore consider
the carrying value of trade and other receivables approximates to their fair value.

(b) Company

Trade receivables and prepayments
Taxation debtors – VAT recoverable
Other receivables
Total

As at 31
31 December 2018
€
199,090
160,081
203,805
562,976

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

16. Trade and other receivables (continued)

102

Trade receivables include amounts due from tenants. Other receivables are inclusive of €159,354 due from the
liquidator of Yew Tree Investment Fund (in Members Voluntary Liquidation).

On 27 July 2018, the Yew Tree Investment Fund was placed into Members Voluntary Liquidation (“MVL”) with the
expectation that the Fund’s properties and cash be distributed in specie to the Company as the 100% owner of the B
ordinary shares. In the financial period to 31 December 2018 €31,234,552 (€25,910,000 in investment properties and
€5,324,552 in cash) of the Fund’s assets were distributed in specie to the Company. The directors expect to receive
a distribution of the remaining assets of the Fund in 2019.

Other than the amounts due from the liquidator of Yew Tree Investment Fund (in Members Voluntary Liquidation)
the balance of trade and other receivables has no concentration of credit risk as it covers mainly prepayments
and amounts due from tenants. The directors therefore consider the carrying value of trade and other receivables
approximates to their fair value.

17. Trade and other payables

(a) Group

Trade payables and accruals
Taxation creditors – PAYE/PRSI
Borrowings
Total

As at
31 December 2018
€
2,302,163
19,729
11,837
2,333,729

Trade payables includes amounts due to third party suppliers and prepaid rent amounts received from tenants in
advance. Accrued expenses include operational expenses incurred but not yet invoiced to the Group as at 31 December
2018. Trade and other payables are interest free and have settlement dates within one year. The Directors consider
that the carrying value of the trade and other payables approximates to their fair value.

(b) Company

Trade payables and accruals
Taxation creditors – PAYE/PRSI
Borrowings
Total

As at
31 December 2018
€
2,068,385
19,729
11,837
2,099,951

Trade payables includes amounts due to third party suppliers and prepaid rent amounts received from tenants in
advance. Accrued expenses include operational expenses incurred but not yet invoiced to the Company as at 31
December 2018. Trade and other payables are interest free and have settlement dates within one year. The Directors
consider that the carrying value of the trade and other payables approximates to their fair value.

Yew Grove reit plcreport and consolidated Financial statements 201818. Borrowings

The Group has a revolving credit facility with Allied Irish Bank plc (“AIB”), secured by fixed and floating charges
over certain property assets. The facility is €19,954,000 and can be repaid and re-drawn without penalty throughout
its 3 years expected life. The facility was partially drawn once, the amount of drawing remained the same to period
end. This facility was measured initially at fair value, after transaction costs, and carried at amortised cost, with all
attributable costs charged to Consolidated Statement of Comprehensive Income over the life of the facility.

103

a) Group and Company

Reconciliation of borrowings is shown below

Bank finance drawn during the financial period
Less: Borrowing costs
Plus: effective interest rate
Balance at end of the financial period

Maturity of borrowings is as follows
Less than one year
Between two and five years
Total
Undrawn at end of the financial period

Period ended
31 December 2018
€
6,199,540
(362,717)
15,412
5,852,235

11,837
5,840,398
5,852,235
13,754,460

The loan facility was drawn down in December 2018 and there were no loan repayments during the period to 31
December 2018. No interest was paid during the financial period.

The Company stated in its Admission document its intention to target borrowings, following full investment of
the net proceeds raised at Admission, of 25% loan-to-value (“LTV”). LTV is the ratio of drawn debt to the value of
property investments, which at 31 December 2018 was 7.96%. Under the Irish REIT rules the REIT’s borrowings
must not exceed 50% of the value of its assets.

Where debt is drawn to finance material refurbishments and developments on qualifying assets, the borrowing cost
associated with this debt is capitalised. No amounts were capitalised during the financial period for this purpose.
All costs related to finance arrangements are amortised using the effective interest rate.

All borrowings are denominated in Euro. All borrowings are subject to six months or less interest rate changes and
contractual re-pricing rates.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

19. Share Capital

104

Issued and fully paid *
Issued during the financial period
Closing total issued ordinary Shares

Period ended
31 December 2018

Number of shares

€

75,000,000
75,000,000

750,000
750,000

The Group has authorised and issued share capital of 75m Ordinary Shares.

* share capital as at 31 December 2018 was fully paid. There is one class of ordinary shares of one cent each.

On 7 June 2018, the day before Admission, the Company had 2,500,000 shares in issue, all of which had been issued
to Jonathan Laredo. On 8 June 2018 an additional 72,500,000 shares were issued at a price of €1.00 each, of which
29,596 were issued to Jonathan Laredo. On 8 June 2018 Jonathan Laredo subscribed €1.00 for each of the 2,500,000
shares he already held, and an additional €29,596 for the shares issued to him on that date, such that all the Company’s
shares were subscribed for at a price of €1.00 and the proceeds of share issuance were €75,000,000.

20. Reserves

(a) Group

Shares issued in the period
Issue costs
Transfer to retained earnings
Profit for the financial period
As at 31 December 2018

(b) Company

Shares issued in the period
Issue costs
Transfer to retained earnings
Profit for the financial period
As at 31 December 2018

Share Premium
€
74,250,000
-
(70,250,000)
-
4,000,000

Retained
Earnings
€
-
(2,200,699)
70,250,000
2,333,879
70,383,180

Retained
Earnings
€
-
(2,200,699)
70,250,000
2,102,371
70,151,672

Yew Grove reit plcreport and consolidated Financial statements 201820. Reserves (continued)

The equity of the Company consists of Ordinary Shares issued. The par value of the share is recorded in the share
capital account. The excess of proceeds received over the par value is recorded in the share premium account. Direct
issue costs in respect of the issue of shares are accounted for in the retained earnings reserve, net of any related
tax deduction.

105

On 1 November 2018 the High Court of Ireland made an Order confirming the Company’s capital reduction resolution
for the reduction of the Company’s Share Premium Account in the sum of €70,250,000 such that the balance
remaining credited to that account will be €4,000,000 such that the reserve resulting from such cancellation be
treated as realised profits as defined by Section 117 of the Companies Act 2014. The Order of Court and Minute on
reduction of share premium account was registered on the 2 November 2018.

21. Related party transactions and fees paid to directors

The Directors are considered to be related parties.

On Admission to the AIM and the Euronext Growth market the Executive Directors subscribed for shares in the
Company at the issued price. They subscribed their post-tax proceeds from redemption of shares in the Yew Tree
Investment Fund (in Members Voluntary Liquidation) and their shares of all incentive fees due from Parapet
Capital Advisors’ role as Investment Adviser to the AIFM of the Yew Tree Investment Fund (in Members Voluntary
Liquidation). Concurrently the Non-executive Directors subscribed for shares in the Company at the issued price.

The interest of the Directors in the share capital of the Group as at 31 December 2018 is as follows:

Director
Michael Gibbons
Charles Peach
Jonathan Laredo
Barry O’Dowd
Garry O’Dea
Eimear Moloney
Brian Owens

No. of Ordinary Shares
2,052,544
251,440
2.529,596
25,000
25,000
25,000
25,000

% of issued share capital
2.74%
0.34%
3.37%
0.03%
0.03%
0.03%
0.03%

The Directors of the Group received remuneration, fees and other benefits from the Group for their services. Total
amounts for the financial period were €414,807. No remuneration, fees or other benefits were paid to the Directors
by any subsidiary or joint venture.

Full disclosure of the Directors’ remuneration can be seen under the Remuneration Committee report on page 58
and in note 22.

All transactions between the Company and its subsidiaries are eliminated on consolidation.

Key management personnel

The remuneration of the key management personnel during the financial period is disclosed in note 22 below.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

22. Directors’ remuneration

106

Remuneration – Executive Directors
Other benefits – Health insurance
Pension contributions – defined contribution plan (3 Directors)
Remuneration - Independent Non-executive Directors
Total

Period ended
31 December 2018

€
210,426
12,086
63,126
129,169
414,807

The remuneration of Directors and key management is determined by the Remuneration Committee to reflect the
performance of individuals and market trends. Other benefits paid to the three Executive Directors during the period
includes health insurance. Defined contribution pension payments represent contributions on behalf of the three
Executive Directors. All fees paid to Non-Executive Directors are for services as Directors to the Group, they receive
no other benefits. There were no payments of compensation made to Directors for termination or loss of office.

The Company established a Long Term Investment Plan (LTIP) on Admission. The plan did not make any awards
in the financial period and had no awards outstanding at 31 December 2018.

23. Acquisition of subsidiaries

Yew Tree Investment Fund plc (in Member’s Voluntary Liquidation)

On 8 June 2018 the Company acquired 100% of the class B ordinary share capital of the Yew Tree Investment Fund
(in Members Voluntary Liquidation) for cash consideration of €23,064,484. The AIFM of the Yew Tree Investment
Fund (in Members Voluntary Liquidation) had previously been advised by the Executive Directors, and details of the
Fund and its assets were included in the Company’s Admission document. Goodwill arising on the acquisition of the
Yew Tree Investment Fund (in Members Voluntary Liquidation) has been capitalised and assessed for impairment
at the period end date.

Analysis of acquisition of the Yew Tree Investment Fund (In Member’s Voluntary
Liquidation)

Upon acquisition of a subsidiary, fair values are attributed to the identifiable net assets acquired. The amounts
recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below.

Yew Grove reit plcreport and consolidated Financial statements 201823. Acquisition of subsidiaries (continued)

Net assets at the date of acquisition

107

Book value at the date
of acquisition

Fair value adjustment

Fair value at the date
of acquisition

Investment properties
Trade receivables and prepayments
Cash and cash equivalents

Trade payables and accruals
Loan

Share of net asset acquired (100%)
Cash consideration
Goodwill arising on acquisition

€
25,910,000
513,727
5,781,977
32,205,704
(811,798)
(8,329,422)
23,064,484

€
-
(238,750)
-
(238,750)
-
-
(238,750)

€
25,910,000
274,977
5,781,977
31,966,954
(811,798)
(8,329,422)
22,825,734

22,825,734
23,064,484
238,750

On 8 June 2018 the Company subscribed for 23,064,484 of the €1 B ordinary share capital in Yew Tree Investment
Fund (in Members Voluntary Liquidation) for €23,064,484 as consideration for the Fund’s net assets.

The fair value of unamortised loan facility costs with a book value of €238,750 included in trade receivables was
estimated to have a fair value of €nil at the acquisition date.

No deferred tax arose from this acquisition.

On 27 July 2018, the Yew Tree Investment Fund was placed into Members Voluntary Liquidation, from which date
the Yew Tree Investment Fund is no longer consolidated in the Group’s financial statements.

Subsequent to the appointment of the liquidator on 27 July 2018 and prior to 31 December 2018, Yew Tree Investment
Fund’s properties of €25.9m and cash of €5.3m had been distributed in specie to Yew Grove REIT plc as the 100%
owner of the B ordinary shares. A further distribution is expected to be made on finalisation of the liquidation in 2019.

At the Statement of Financial Position date the Yew Tree Investment Fund (in Members Voluntary Liquidation) was
still under the Member’s Voluntary Liquidation process.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

23. Acquisition of subsidiaries (continued)

108

Gateway Estate Management Company Limited by Guarantee

On 2 July the Group acquired 99% of the voting rights of Gateway Estate Management Company Limited by Guarantee
for nil consideration following the acquisition of One and Three Gateway, East Wall Road, Dublin 3. Negative goodwill
arising on the acquisition of Gateway Estate Management Company Limited by Guarantee has been taken directly
to the Statement of Comprehensive Income during the period. The investment in Gateway Estate Management
Company Limited by Guarantee has been included in the Group’s balance sheet at its fair value.

Analysis of acquisition of Gateway Estate Management Company Limited by Guarantee

Net assets at the date of acquisition

Trade receivables and prepayments
Cash and cash equivalents

Trade payables and accruals

Share of net asset acquired (100%)
Consideration
Negative goodwill arising on acquisition

Book value at the date
of acquisition

Fair value at the date
of acquisition

€
142,621
91,161
233,782
(175,043)
58,739

58,739
-
(58,739)

Negative goodwill arising on the acquisition of Gateway Estate Management Company Limited by Guarantee has
been taken directly to the Statement of Comprehensive Income during the period.

Yew Grove reit plcreport and consolidated Financial statements 201824. Operating lease receivables

Future aggregate minimum rental receivables (to the next break date) under non-cancellable operating leases and
licences are:

109

Operating lease and licence receivables due in:
Less than one year
Between two and five years
Greater that five years
Total

Period ended
31 December 2018
€

6,283,984
16,679,791
7,918,572
30,882,347

The Group has both operating leases and operating licences. The operating licences are predominantly for car parking
spaces and are less than one year in duration.

The Group leases its investment properties under operating leases. The weighted average unexpired lease term of
these leases (“WAULT”) at 31 December 2018 is 7.4 years.

These calculations are based on all lease and licences outstanding at 31 December 2018.

25. Financial instruments – risk management and fair value

Financial assets and financial liabilities

The following table shows the Group’s financial assets and liabilities and the methods used to calculate fair value.

Asset/ Liability Carrying Value Carrying Value Level
Trade
and other
receivables

Amortised
cost

360,568

Loans and
borrowings

Amortised
cost

5,840,398

Trade
and other
payables

Amortised
cost

1,930,902

Valuation Technique
All trade and other receivables that could be classified as
financial instruments are short-term, the majority being
less than three months in duration, and therefore face value
approximates fair value on an amortised costs basis using
the effective interest rate method.
The carrying amount of loans and borrowings held at
amortised cost have been calculated by discounting the
expected cashflows at prevailing interest rates.
All trade and other payables that could be classified as
financial instruments are short-term, the majority being
less than one months in duration, and therefore face value
approximates fair value on an amortised costs basis using
the effective interest rate method.

Strategic reportgovernanceFinancial StatementS
Notes to the Consolidated Financial Statements (continued)

25. Financial instruments – risk management and fair value (continued)

Fair value hierarchy

110

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

(i)
(ii) Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either

directly (i.e. as prices) or indirectly (i.e. derived from prices).

(iii) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Group’s Board has overall responsibility for the establishment and oversight of the Group’s risk management
framework. The Audit Committee is responsible for developing and monitoring the Group’s risk management policies.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls and to monitor risks and adherence to limits. All of these policies are regularly reviewed in
order to reflect changes in the market conditions and the Group’s activities.

The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risk. The
policies for managing each of these and the principal effects of these policies on the results for the financial period
are summarised below:

(i) Market risk

Market risk is the risk that the fair value or cashflows of a financial instrument will fluctuate due to changes in market
prices. Market risk reflects interest rate risk, currency risk and other price risks. The Group’s financial assets mainly
comprise of investment properties, and trade and other receivables and cash which are classified as financial assets.
The Group has no financial assets or liabilities denominated in foreign currencies. Financial liabilities comprise
short-term payables and bank borrowings. All of these items are denominated in Euro. The Group’s primary market
risk for financial instruments is interest rate risk.

(a) Interest rate risk

Bank borrowing interest rates are based on short-term variable interest rates which the Group has chosen not to
hedge. Exposure to interest rates is limited to the exposure of its earnings from uninvested funds and borrowings.
The Group has a revolving credit facility with AIB of €19.9m, of which €13.7m was undrawn as at 31 December 2018.
Interest due on the drawn amount of the facility will vary with changes in the underlying interest rate which may
result in an increase in financing costs. The Group’s drawings under its bank facility float on the higher of 3 months
Euribor or 0% at drawing and quarterly reset dates and therefore the impact of a rise in 3 months Euribor to 1% for
a full year on drawings as at 31 December 2018 would be approximately €0.06m, and if the facility were fully drawn
would be €0.2m.

Yew Grove reit plcreport and consolidated Financial statements 201825. Financial instruments – risk management and fair value (continued)

The Group is also exposed to interest rate risk on its cash and cash equivalents. There were €4.36m uninvested Group
funds held within Bank of Ireland and Societe Generale accounts at 31 December 2018. These balances attract low
interest rates and therefore a relative increase or decrease in their interest rates would not have a material effect on
the Consolidated Statement of Comprehensive Income.

111

(b) Currency risk

The Company has a sterling bank account with Societe Generale. As at 31 December 2018 the amount outstanding
was £18,168. This amount is judged sufficient to settle all expected sterling payments due to service providers for
2019. As such, the Company had minimal foreign exchange exposure.

(ii) Liquidity risk

Liquidity risk is the risk the Group may encounter difficulties in meeting the obligations associated with its financial
liabilities settled by cash or other financial assets. The Group’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group monitors
the level of expected cash inflows on trade and other receivables, together with expected cash outflows on trade and
other payables and capital commitments.

Detailed below are the contractual maturities of the Group’s financial liabilities;

Carrying
6 months or
Value
less
159,101
5,840,398
1,930,902 1,930,902
7,771,300 2,090,003

6 to 12
months
159,100
-
159,100

Borrowings
Trade and other payables
Total carrying amount

(iii) Credit risk

1 to 2 years

2 to 5 years
319,703 6,508,152
-
319,703 6,508,152

More than 5
years

Total
contractual
amount
- 7,146,056
- 1,930,902
- 9,076,958

Cash and cash equivalents: cash and cash equivalents are held with major Irish and European banking institutions.
These banking institutions and their short term ratings are listed below (ratings for each are from Standard and
Poors/Moody’s/Fitch):

• Societe Generale S.A. has short term unsecured debt ratings of A-1/P-1/F1
• Allied Irish Bank plc has short term unsecured debt ratings of A-2/P-2/F3
• The Governor and Company of the Bank of Ireland has short term ratings of A-2/P-1/F2

Trade and other receivables: rents and licences are generally received monthly in advance or quarterly in advance from
tenants. There are no significant concentrations of credit risk at the financial period end. The balance of trade and
other receivables has no concentration of credit risk as it comprises mainly prepayments.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of its customers. Trade and
other receivables relate mainly to the Group’s property tenants. The day-to-day management of the Group’s customers
is managed by appointed property agents under the oversight of the Group’s internal property management group.

Refer to accounting policy 1.20 for details of the Group’s policy in relation to ECL.

Strategic reportgovernanceFinancial StatementSNotes to the Consolidated Financial Statements (continued)

25. Financial instruments – risk management and fair value (continued)

112

The Group applies the simplified approach to trade receivables for which expected credit losses uses the lifetime
expected credit allowance. The Group has no exposure to bad debts as the majority of the Group’s rental income is
from State bodies or FDI entities as they have good credit standing. The payment and credit performance of these
tenants is closely monitored; therefore, the expected credit loss is not material and has not been presented.

There was no credit loss in the period as a result of the Directors’ assessment.

Detailed below are the carrying amount of the Group’s financial assets as the maximum amount of exposure to
credit risk;

Trade and other receivables
Cash and cash equivalents
Balance at end of period

Capital management

As at
31 December 2018
€
565,100
4,823,734
5,388,834

The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain the future development of the business. The key performance indicators used in evaluating the
achievement of strategic objectives are return on capital, growth in NAV and dividends to ordinary shareholders
(dividend per share) as well as the total return of the Group’s property portfolio.

Capital consists of share capital, reserves and retained earnings. At 31 December 2018 the equity of the Group was
€75.13m.

The Group seeks to leverage capital in order to enhance returns. Refer to note 18 for more details.

The Group’s share capital is publicly traded on the Euronext Growth market of Euronext Dublin and the Alternative
Investment Market of the London Stock Exchange.

26. Contingent Liabilities

The Group has not identified any contingent liabilities which are required to be disclosed in the Consolidated
financial statements.

Yew Grove reit plcreport and consolidated Financial statements 201827. Events after the reporting period

On 7 February 2019 the Company declared the payment of an interim dividend in respect of the period ended 31
December 2018 of €723,000 for 0.964 cents per ordinary share. This was paid to shareholders on 26 February 2019.

113

On 8 February 2019 the Company exchanged contracts to purchase Office Block A, located in the IDA Waterford
Business and Technology Park, Butlerstown, Waterford for €4 million plus costs, representing a gross yield to fair
value of 8.56% after accounting for all purchase costs. The property,845 sq. ft. of open plan office space arranged
over three storeys and is tenanted by Tech Mahindra Business Services Ltd under a 20 years lease with a break in
five years, and SE2 Information Services Ireland Ltd under a five years lease.

On 11 February 2019 the Company delivered a completed car park in Athlone to its adjacent tenant under a co-
terminus lease.

On 15 February the Company announced the inaugural grant of options to executive management under the Long
Term Incentive Plan that had been established in June 2018 at Admission to the Alternative Investment Market of
the London Stock Exchange and the Euronext Growth market of Euronext Dublin.

On 27 February 2019 the Company completed the purchase of Unit 2600, Cork Airport Business Park, Cork Airport
for €7.5 million plus costs, representing a gross yield at fair value of 7.85% after accounting for purchase costs. The
property, a two storey, 40,953 sq. ft office block which was refurbished in 2015 to a high standard and includes a
163-space car park, is tenanted by Clearstream Global Securities Services Ltd, a subsidiary of Deutsche Borse AG,
under a 25 year lease with final expiry in just over five years’ time.

On 29th March 2019 the Company declared the payment of an interim dividend in respect of the first quarter of 2019
of €825,000 for 1.10 cents per ordinary share. This is to be paid to shareholders on 13 May 2019.

28. Capital commitments

At the Statement of Financial Position, the Group has entered contracts for future capital expenditure of amounting
to €236,671 in respect of the development of a car park at one of its investment properties. The capital commitments
were fully satisfied on delivery of the car park post year end.

There are no other capital commitments at the Statement of Financial Position date.

Strategic reportgovernanceFinancial StatementSDisclosures under AIFMD (unaudited)

Disclosure required under the Alternative Investment Fund Managers Directive
(“AIFMD”) for Reports of alternative investment funds (“AIFs”) (unaudited)

114

Financial information disclosures

The Company did not realise any gains or losses on sale of any of its investment properties in the financial period from
5 April 2018 (date of incorporation) to 31 December 2018. Within the total unrealised gains for the same period of €1.6
million disclosed under IFRSs, there is a total of €1.2 million in unrealised losses and €2.8 million in unrealised gains.

Material changes and periodic risk management disclosures

All disclosure requirements to be made to investors prior to investing in the Company are set out on the Company’s
website, www.ygreit.com.

Remuneration disclosures

The information provided below relates to Ballybunion Capital Limited, the alternative investment fund manager
(“AIFM”), and not to Yew Grove REIT plc. The disclosure is required under AIFMD for reports of alternative
investment funds (“AIFs”).

The AIFM operates under the terms of its remuneration policy which has been developed with due regard to all
relevant legislation and regulatory guidance. This remuneration policy is designed to:

• Promote sound and effective risk management
• Not encourage risk taking that is inconsistent with the risk profile, rules or investment policies of the REIT and
• Prevent conflicts of interest.

The AIFM charges a fixed annual fee of €120,000 for its services to the REIT. There is no variable element to this fee.
Total remuneration paid by the AIFM to its staff for the year ended 30 June 2018 (most recent audited figures) was
€697,000 which related to an average staff number of 9 during that period. All AIFM staff receive only contracted
fixed remuneration where the payment and benefits thereof are not subject to the performance of the REIT. The
average number of AIFM staff engaged in providing part-time services to the REIT during the reporting period was 5.

Yew Grove reit plcreport and consolidated Financial statements 2018Alternative performance measures

The Group has applied the European Securities and Markets Authority (ESMA) ‘Guidelines on Alternative Performance
Measures’ in this Report and Consolidated financial statements. An alternative performance measure (“APM”) is a
measure of financial or future performance, position or cashflows of the Group which is not a measure defined by
International Financial Reporting Standards (“IFRS”).

115

The following are the APMs used in this report together with information on their calculation and relevance.

APM
Contracted rent
roll

EPRA NAV

IFRS measure for
reconciliation
n/a

IFRS NAV (note
12)

Description
Annualised cash rental income (including car park licence income)
being received as at the stated date.

The objective of the EPRA NAV measure is to illustrate the fair value
of net assets on an ongoing, long-term basis. Assets and liabilities that
are not expected to crystallise in normal circumstances (e.g. the fair
value of financial derivatives, deferred taxes on property valuation
surpluses) are excluded.

EPRA NAV per
share

IFRS NAV per
share (note 12)

EPRA NAV calculated on a diluted basis taking into account the impact
of any options, convertibles, etc. that are dilutive.

EPRA Net
Initial Yield
(“EPRA NIY”)

n/a

Loan to Value

n/a

Inherent yield of the portfolio using cash passing rent at the reporting
date.

Outstanding drawings under loan facilities as a percentage of the fair
value of the investment properties.

Total
Shareholder
Return

n/a

A measurement of the growth in share value for shareholders
(assuming gross dividends are reinvested and share appreciation) over
a defined period.

Strategic reportgovernanceFinancial StatementS116

Yew Grove reit plcreport and consolidated Financial statements 2018Glossary

117

CBD: The central business district of a city.

Contracted rent roll: The annualised cash rental income
(including car park licence income) being received as at
the stated date.

Dublin Catchment Area: The geographic area within
an approximately thirty-minute commute of the M50
motorway.

EPRA: The European Public Real Estate Association.

EPRA EPS: is calculated by dividing EPRA Earnings
for the reporting period attributable to shareholders
of the Company by the weighted average number of
ordinary shares outstanding during the reporting period.
EPRA Earnings measures the level of income arising
from operational activities. It is intended to provide
an indicator of the underlying income generated from
leasing and management of the property portfolio and so
excludes components not relevant to the underlying net
income performance of the portfolio such as unrealised
changes in valuation and any gains or losses on disposals
of properties.

EPRA NAV: A measures of the fair value of net assets on
an ongoing, long-term basis in accordance with guidelines
issued by the EPRA while taking into account the dilutive
effects of any outstanding options, convertibles, or
other financial instruments. The EPRA NAV excludes
the net mark-to market value of financial instruments
used for hedging purposes where a company has the
intention to keep the hedge position until the end of the
contractual duration, and deferred tax in respect of any
difference between the fair value and the book value of
the investment properties.

ERV/Estimated Rental Value: A valuer’s opinion as to the
open market rental value of a property on a valuation date
which could reasonably be expected to be the achievable
rent for a new letting of that property on the valuation
date. Colloquially referred to as market rent.

Gross reversionary yield: The reversionary rent roll
of a property or group of properties as a percentage of
their fair value.

Gross yield at fair value: A calculation of the current
expected cash rental return, being the contracted rent
roll divided by the fair value of the investment property
or properties.

Loan to Value/LTV: The LTV is calculated by dividing the
amount of drawn loans by the fair value of the Company’s
investment properties.

Net Initial Yield (“NIY”): Annualised rental income
based on the cash rents passing at the balance sheet
date, less non-recoverable property operating expenses,
divided by the market value of the property, increased
with (estimated) purchasers’ costs.

Net valuation gain: The fair value gain over the period
(from the shorter of the time to the last valuation or
purchase). Purchases made since the last valuation are
initially measured at cost including transaction costs.

Next rent reversion date: The earliest following date
at which the Company could be expected to choose to
re-let a property at the property’s ERV or conduct a
market level rent review.

Property income: As defined in section 705A of the
Taxes Consolidation Act, 1997. It means, in relation to a
company or group, the Property Profits of the company
or group, as the case may be, calculated using accounting
principles, as: (a) reduced by the Property Net Gains of
the company or group, as the case may be, where Property
Net Gains arise, or (b) increased by the Property Net
Losses of the company or group, as the case may be,
where Property Net Losses arise.

Property Net Losses: As defined in section 705A of the
Taxes Consolidation Act, 1997. It means in relation to a
company or group, the amount by which the sum of the
losses recognised in arriving at the aggregate profits of
the company or group, as the case may be, being losses
which arise on the revaluation or disposal of investment
property or other non-current assets which are assets
of the property rental business, exceeds the sum of the
gains so recognised, being gains which arise on such
revaluation or disposal.

Strategic reportgovernanceFinancial StatementSSME: As defined by Enterprise Ireland, an enterprise
that has between 50 employees and 249 employees and
has either an annual turnover not exceeding €50m or an
annual balance sheet total not exceeding €43m.

State Body: a body established by legislation in the
Republic of Ireland which is either entirely or majority
owned by the Irish Government.

Total debt to equity gearing: The ratio of drawn debt
to NAV of the Company.

Total shareholder return: The growth in share value
over a period assuming all dividends are reinvested in
shares of the Company when paid.

Vacancy: Lettable space owned by the Company which
is not let or licenced to a tenant.

118

Glossary (continued)

Property Net Gains: As defined in section 705A of the
Taxes Consolidation Act, 1997. It means the amount by
which the sum of the gains recognised in arriving at the
aggregate profits of the company or group, as the case
may be, being gains which arise on the revaluation or
disposal of investment property or other non-current
assets which are assets of the property rental business,
exceeds the sum of the losses so recognised, being losses
which arise on such revaluation or disposal.

Property Profits: As defined in section 705A of the
Taxes Consolidation Act, 1997. It means, in relation to a
company or group, means an amount which is the lesser
of (a) the amount which would be the aggregate profits of
the company or group, as the case may be, if the residual
business, if any, of the company or group, as the case
may be, were disregarded, and (b) the aggregate profits
of that company or group, as the case may be.

Property Rental Business: As defined in section 705A
of the Taxes Consolidation Act, 1997. A business which
is carried on by a REIT or a group REIT, as the case may
be, for the sole purpose of generating rental income in
the State or outside the State, and, for the purpose of this
definition, such businesses of a group are to be treated
as a single business.

QIAIF: A Qualifying Investor Alternative Investment
Fund.

Rent review: A clause often included in property leases
that provides for a periodic adjustment of the rent of a
property to the market level of rent.

Reversion: A term used to describe the difference in rent
from that which is currently due on outstanding leases
and the ERV. Under-rented properties have contracted
rents lower than ERV, over-rented properties have
contracted rents higher than ERV.

Reversionary rent roll: The annualised cash rental
income (including car park licence income) that would be
received if the property or properties were leased at ERV.

Seed portfolio: The portfolio of investment properties
owned by the Yew Tree Investment Fund (in Members
Voluntary Liquidation) when it was purchased on 8 June
2018.

Yew Grove reit plcreport and consolidated Financial statements 2018Corporate Information

Directors

Barry O’Dowd (Chair, Independent Non-executive Director)

119

Eimear Moloney (Independent Non-executive Director)

Garry O’Dea (Senior Independent Non-executive Director)

Brian Owens (Independent Non-executive Director)

Jonathan Laredo (Chief Executive Officer)

Charles Peach (Chief Financial Officer)

Michael Gibbons (Chief Investment Officer)

Registered office

4th Floor

76 Lower Baggot Street

Dublin 2, Ireland

Company Secretary

Sanne Corporate Administration Services Ireland Limited

4th Floor

76 Lower Baggot Street

Dublin 2, Ireland

AIFM

Ballybunion Capital Limited

Ashley House

Morehampton Road

Dublin 4, Ireland

ESM Adviser and Broker

Investec Bank plc (Irish Branch)

Nominated Adviser

The Harcourt Building

Harcourt Street

Dublin 2, Ireland

Investec Bank plc

30 Gresham Street

London EC2V 7QP

Joint Broker

Goodbody Stockbrokers

Ballsbridge Park

Ballsbridge

Dublin 4, Ireland

Strategic reportgovernanceFinancial StatementSCorporate Information (continued)

120

Legal adviser to the Company
as to English law

Legal Adviser to the
Company as to Irish law

Registrar

Dickson Minto W.S.

Broadgate Tower

20 Primrose Street

London EC2A 2EW

William Fry

Grand Canal Square

Grand Canal Dock

Dublin 2, Ireland

Link Asset Services

Link Registrars Limited

2 Grand Canal Square

Dublin 2, Ireland

Depositary and Custodian

Société Générale S.A., Dublin Branch

Valuer

Administrator

Auditor

3rd Floor, IFSC House

IFSC

Dublin 1, Ireland

Lisney Limited

St. Stephen’s Green House

Dublin 2, Ireland

Baker Tilly

Joyce House

22/23 Holles Street

Dublin 2, Ireland

Deloitte Ireland LLP

Chartered Accountants and Statutory Audit Firm

Deloitte & Touche House

29 Earlsfort Terrace

Dublin 2, Ireland

Yew Grove reit plcreport and consolidated Financial statements 2018