We unlock potential,
creating sustainable
space for London
to thrive
Annual Report and Accounts 2022
See our website
www.gpe.co.uk
For more
information
p59
p26
Innovation at
2 Aldermanbury
Square, EC2
Our Social Impact
Strategy
Strategic Report –
Annual review
19 Statement from the Chief Executive
21 Our markets
23 Our development activities
27 Our leasing and Flex activities
29 Our investment activities
30 Our financial results
34 Our portfolio
37 Sustainability
52 Our people and culture
56 Our stakeholder relationships
62 Engaging with our stakeholders
64 Our approach to risk
Governance
80 Overview
81 Introduction from the Chair
84 The Board
86 Leadership and purpose
90 Engaging with our investors
92 Engaging with our employees
94 Board consideration of stakeholder
interests and s.172(1)
98 Division of responsibilities
100 Composition, succession
and evaluation
106 Audit, risks and internal controls
114 Directors’ remuneration report
134 Report of the Directors
136 Directors’ responsibilities statement
Strategic Report –
Overview
02 Our strategy is evolving…
03 …shaped by our purpose,
principles and strength
04 Creating great spaces
in central London
06 Our case studies
12 How we create value
14 Our Key Performance Indicators
16 Our near-term strategic priorities
Financial statements
138 Group income statement
138 Group statement of
comprehensive income
139 Group balance sheet
140 Group statement of cash flows
141 Group statement of changes
in equity
142 Notes forming part of the
Group financial statements
165 Independent auditor’s report
175 Company balance sheet
176 Company statement of changes
in equity
177 Notes forming part of the
Company financial statements
Other information
182 Five-year record
183 Our properties and customers
185 Portfolio statistics
186 Glossary
188 Shareholders’ information
190 Financial calendar
In this report
Cover image: The colonnade
at Hanover Square, W1
p28
Growing our
Flex spaces
Strategic Report – Overview
01Annual Report 2022 Great Portland Estates plc
Business mix
Locations
North of Oxford Street
Rest of West End
Office
Retail
Residential
£1,016.1m
£814.1m
£487.4m
£194.1m
£135.7m
£2,098.4m
£535.7m
£13.3m
38%
31%
5%
7%
19%
79%
20%
City
Southwark
Midtown
1%
Business mix
Locations
North of Oxford Street
Rest of West End
Office
Retail
Residential
£1,016.1m
£814.1m
£487.4m
£194.1m
£135.7m
£2,098.4m
£535.7m
£13.3m
38%
31%
5%
7%
19%
79%
20%
City
Southwark
Midtown
1%
Locations Business mix
Statement from the Chair
London recovery is building
Our commitment to creating great spaces in central London
for both our customers and communities is undiminished.
London remains a dominant world city and its economic
recovery is building positively following the COVID-19 pandemic.
Healthy office employment growth is driving demand for prime
and flex office space, with buoyant investment market activity
demonstrating London’s enduring appeal for investors.
Our innovative ‘Customer first’ approach
However, our customers are demanding more and we are
continuing to respond. We are delivering high quality space
and are providing both choice and flexibility. Sustainability and
health and wellbeing are integral to our offer, our services are
enhancing the customer experience and our use of technology is
future-proofing for tomorrow’s working patterns. Taken together,
our Customer first approach is a real differentiator.
Delivering outperformance
As we deliver better customer outcomes, we will deliver better
shareholder returns. This financial year we have delivered
record volumes of leasing, including pre-letting all the offices
at our 50 Finsbury Square, EC2 refurbishment scheme.
When combined with our portfolio performance well ahead
of our central London benchmarks, our Total Accounting
Return of 8.8% is the strongest for six years. And with our
talented team, portfolio primed for growth and financial
strength, there is more to come.
Investing in London’s sustainable future
We have started our £1.1 billion development programme,
focused on delivering prime HQ office space, all targeting Net
Zero Carbon. At the same time, we are seeking to grow organically
our Flex office offering to more than 600,000 sq ft, which we
will supplement through acquisitions, as demonstrated by our
purchases in recent months. Sustainability is at heart of all of our
activities as we seek to deliver our detailed Roadmap to Net Zero
by 2030, and we are pleased to have made the first deployment
of monies from our innovative decarbonisation fund. Our Social
Impact Strategy will also ensure that we continue to have a lasting
positive social impact in our communities and build a sustainable
legacy for our great capital city.
Greater together
To deliver on these ambitions, we have been embracing change
with our refreshed corporate brand and supplementing our
experienced team with new skills and diverse talent, including
the recruitment of Mark Anderson, Emma Woods and Dan
Nicholson who we welcomed onto the Board. I would of course
like to express my personal thanks to my Board colleagues,
GPE management and wider team for all their efforts over
the year and we can look to the future with confidence.
Taken together, we are well placed to capitalise on opportunities
that emerge and to continue unlocking potential, creating
sustainable space for London to thrive.
Our Strategic Report, on pages 02 to 78, has been reviewed
and approved by the Board.
On behalf of the Board
Richard Mully Chair
19 May 2022
To meet the changing needs of our customers and
the markets in which we operate, we are successfully
evolving our strategy through differentiating our
products with sustainability an imperative.”
Richard Mully Chair
100% central
London, with 24%
in our development
programme
Our portfolio
1
Business mix
Locations
North of Oxford Street
Rest of West End
Office
Retail
Residential
£1,016.1m
£814.1m
£487.4m
£194.1m
£135.7m
£2,098.4m
£535.7m
£13.3m
38%
31%
5%
7%
19%
79%
20%
City
Southwark
Midtown
1%
Our strategy is evolving…
02 Great Portland Estates plc Annual Report 2022
Our purpose
We unlock potential, creating
sustainable space for London
to thrive.
Our strength
One year
2022 2021
Portfolio valuation
1
£.bn £.bn
IFRS NAV & EPRA NTA per share p p
Profit/(loss) after tax £.m £(.)m
Total Property Return (TPR)
1
.% (.%)
Total Accounting Return (TAR) .% (.%)
Total Shareholder Return (TSR) .% .%
Our purpose underpins our strategy
We aim to deliver superior returns by unlocking
the often hidden potential in commercial
real estate in central London, creating high
quality sustainable spaces for our customers
and long-term value for our stakeholders.
Our strategy is underpinned by clear principles:
100% central London; West End focus
Reposition properties let off low rents
Match risk to the property cycle
Low financial leverage
Disciplined capital management
Sustainability: an imperative
Customer first
See more on page 12
As is usual practice in our sector, we use Alternative Performance
Measures (APMs) to help explain the performance of the business. These
include quoting a number of measures on a proportionally consolidated
basis to include joint ventures, as it best describes how we manage the
portfolio, like-for-like measures and using measures prescribed by EPRA.
The measures defined by EPRA are designed to enhance transparency
and comparability across the European real estate sector. Reconciliations
of APMs are included in note 8 of the financial statements.
1. Includes share of joint ventures.
2. MSCI Annual Central & Inner London index.
Our financial performance
Ten years
2022 Benchmark
Total Property Return (TPR)
1
.% .%
Total Accounting Return (TAR) .% .%
Total Shareholder Return (TSR) .% .%
IFRS net assets
£2.1bn
2021: £2.0bn
EPRA Loan to Value
1
20.5%
2021: 20.0%
Cash and undrawn credit facilities
1
£3 91 m
2021: £443m
Employee engagement index
86%
2021: 93%
Customer satisfaction (NPS Score)
+27.8
2021: +42.0
Dividend per share
12.6p
2021: 12.6p
…shaped by our purpose,
principles and strength
Strategic Report – Overview
03Annual Report 2022 Great Portland Estates plc
R
I
V
E
R
T
H
A
M
E
S
C R O W
N
D A
L
E
R
D
P
I
C
C
A
D
I
L
L
Y
P
A
R
K
L
A
N
E
B
A
K
E
R
S
T
G L O U C E S T E R P L
M
A
R
Y
L
E
B
O
N
E
R
D
E
U
S
T
O
N
R
D
E
U
S
T
O
N
R
D
F
A
R
R
I
N
G
D
O
N
R
D
T
H
E
O
B
A
L
D
S
R
D
C
L
E
R
K
E
N
W
E
L
L
R
D
O
L
D
S
T
V
I
C
T
O
R
I
A
E
M
B
A
N
K
M
E
N
T
U
P
P
E
R
T
H
A
M
E
S
S
T
T
H
E
M
A
L
L
F
L
E
E
T
S
T
F
L
E
E
T
S
T
Q
U
E
E
N
V
I
C
T
O
R
I
A
S
T
C H
E
A P S I
D
E
L
O
N
G
L
N
K
I
N
G
W
I
L
L
I
A
M
S
T
C
I
T
Y
R
D
M
O
O
R
G
A
T
E
L
O
N
D
O
N
W
A
L
L
W
A
T
E
R
L
O
O
B
R
I
D
G
E
T
H
E
C
U
T
U
N
I
O
N
S
T
Y
O
R
K
R
D
S
T
A
M
F
O
R
D
S
T
S
O
U
T
H
W
A
R
K
S
T
W
A
T
E
R
L
O
O
R
D
C
O
N
S
T
I
T
U
T
I
O
N
H
I
L
L
S L O
A
N E
S
T
W
H
I
T
E
H
A
L
L
H
O
R
S
E
G
U
A
R
D
S
R
D
R
E
G
E
N
T
S
T
C
H
A
R
I
N
G
C
R
O
S
S
R
D
S
H
A
F
T
E
S
B
U
R
Y
A
V
E
G
O
W
E
R
S
T
M
I
D
L
A
N
D
R
D
P
A
N
C
R
A
S
R
D
G
O
O
D
G
E
S
T
B R O O K S T
G
R
O
S
V
E
N
O
R
S
T
G
E O
R G
E S T
N E W C A V E N D
I
S H S
T
W
E
Y M O U T H S T
S
E
Y
M
O
U
R
P
L
C R A W F O R D S
T
A
L
D
W
Y
C
H
B
E E
C H
S
T
B
U
N
H
I
L
L
R
O
W
R O B E R T S T
J
U
D
D
S
T
O
U
T
E
R
C
I
R
C
L
E
P
O
R
T
L
A
N
D
P
L
P A L L
M
A
L
L
O
X
F
O
R
D
S
T
N
E
W
O
X
F
O
R
D
S
T
H
I
G
H
H
O
L
B
O
R
N
N
E
W
G
A
T
E
S
T
K I N G S W A
Y
W O
B
U
R N
P
L
E V
E
R S
H
O L
T
S
T
T
O
T
T
E
N
H
A
M
C
O
U
R
T
R
D
H
A
M
P
S
T
E
A
D
R
D
W I G M O R E S T
M
O
R
T
I
M
E
R
S
T
E
D
G
W
A
R
E
R
D
P
A
R
K
R
D
A
L B A N Y S T
G R
E A T P
O
R T
L A
N D
S T
G
R
A
Y
’
S
I
N
N
R
D
B
I
R
D
C
A
G
E
W
A
L
K
W
E
S
T
M
I
N
S
T
E
R
B
R
I
D
G
E
S
T
R
A
N
D
S
T
P
A
U
L
’
S
C
H
U
R
C
H
Y
A
R
D
C
A
N
N
O
N
S
T
B
L
A
C
K F
R
I A R S
B
R I D G E
B L A
C K
F R I A R S
R D
S
O
U
T
H
W
A
R
K
B
R
I
D
G
E
L
O
N
D
O
N
B
R
I
D
G
E
A
L
D
E
R
S
G
A
T
E
S
T
G
O
S
W
E
L
L
R
D
P
E
N
T
O
N
V
I
L
L
E
R
D
C
I T
Y
R
D
C H I S
W
E L L
S T
N
E
W
N
O
R
T
H
R
D
C
A
L
E
D
O
N
I
A
N
R
D
Y
O
R
K
W
A
Y
B
R
O
M
P
T
O
N
R
D
K
I
N
G
S
C
R
O
S
S
R
D
O
U
T
E
R
C
I
R
C
L
E
V
I
C
T
O
R
I
A
S
T
A
B
I
N
G
D
O
N
S
T
E
A
S
T
R
D
W A
P
P I N G
H
I
G
H
S
T
V
A
U
G
H
A
N
W
A
Y
L
E
M
A
N
S
T
C
O
M
M
E
R
C
I
A
L
S
T
G
R
E
A
T
E
A
S
T
E
R
N
S
T
W
H
I
T
E
C
H
A
P
E
L
R
D
A
L
D
G
A
T
E
H
I
G
H
S
T
M
A
N
S
E
L
L
R
D
T
O
W
E
R
B
R
I
D
G
E
R
D
M
I N
O R
I
E S
C A
B
L E S T
L
O
W
E
R
T
H
A
M
E
S
S
T
B
I
S
H
O
P
S
G
A
T
E
G
R
A
C
E
C
H
U
R
C
H
S
T
G
R
E
A
T
D
O
V
E
R
S
T
A
B
B
E
Y
S
T
T
O
O
L
E
Y
S
T
J
A
M
A
I
C
A
R
D
D
R
U
I
D
S
T
B
E
T
H
N
A
L
G
R
E
E
N
R
D
G
O
S
S
E
T
S
T
C
O L U M
B
I
A
R D
G
R
O
S
V
E
N
O
R
P
L
B
A
Y
L
I
S
R
D
L
A
M
B
E
T
H
P
L
A
C
E
R
D
W
E
S
T
M
I
N
S
T
E
R
B
R
I
D
G
E
R
D
L O N D O N R D
S
T
G
E
O
R
G
E
’
S
R
D
B
U
C
K
I
N
G
H
A
M
G
A
T
E
B
E
L
G
R
A
V
E
P
L
U
P
P
E
R B E
L
G
R
A V E
S
T R
E
E
T
P
I T
F
I
E
L D
S
T
A
L
I
E
S
T
T
H
E
H
I
G
H
W
A
Y
E
S
M
I
T
H
F
I
E
L
D
C
O
R
N
H
I
L
L
L
E
A
D
E
N
H
A
L
L
S
T
F
E
N
C
H
U
R
C
H
S
T
C
O M
M
E R C
I A
L R
D
C
A N N O N
S
T R D
V
A
L
L
A
N C E
R
D
S
Q U I R R E L S T
S C AT L
E
R
S
T
C
H E S H
I R
E
S
T
T
A
N
N
E
R
S
T
K
E
N
N
I
N
G
T
O
N
R
D
R
O
Y
A
L
M
I N
T
S T
N
E W
R
D
K
I
N
G
S
L
A
N
D
R
D
H
A
C K N
E Y
R D
Leicester
Square
Leicester
Square
Covent
Garden
Covent
Garden
Old
Street
Old
Street
HolbornHolborn
Chancery LaneChancery Lane
Piccadilly
Circus
Piccadilly
Circus
FarringdonFarringdon
Green
Park
Green
Park
Goodge
Street
Goodge
Street
Bond
Street
Bond
Street
Marble
Arch
Marble
Arch
Hyde Park
Corner
Hyde Park
Corner
Oxford
Circus
Oxford
Circus
Regent’s
Park
Regent’s
Park
Great
Portland
Street
Great
Portland
Street
Euston
Square
Euston
Square
EustonEuston
King’s Cross
St Pancras
King’s Cross
St Pancras
Russell
Square
Russell
Square
BlackfriarsBlackfriars
St Paul’sSt Paul’s
BankBank
Mansion
House
Mansion
House
London
Bridge
London
Bridge
BoroughBorough
WaterlooWaterloo
Lambeth
North
Lambeth
North
SouthwarkSouthwark
WestminsterWestminster
BarbicanBarbican
MoorgateMoorgate
TempleTemple
St James’s
Park
St James’s
Park
Charing
Cross
Charing
Cross
EmbankmentEmbankment
Baker
Street
Baker
Street
Warren
Street
Warren
Street
Tottenham
Court Road
BermondseyBermondsey
Tower
Hill
Tower
Hill
Fenchurch
Street
Fenchurch
Street
Liverpool
Street
Liverpool
Street
AldgateAldgate
Aldgate EastAldgate East
WhitechapelWhitechapel
Bethnal
Green
Bethnal
Green
Shoreditch
High Street
Shoreditch
High Street
MonumentMonument
HYDE PARKHYDE PARK
GROSVENOR
SQUARE GARDEN
GROSVENOR
SQUARE GARDEN
CAVENDISH
SQUARE
CAVENDISH
SQUARE
PORTMAN
SQUARE
PORTMAN
SQUARE
HANOVER
SQUARE
HANOVER
SQUARE
RUSSELL
SQUARE
RUSSELL
SQUARE
BEDFORD
SQUARE
GARDEN
BEDFORD
SQUARE
GARDEN
LINCOLN’S
INN FIELDS
LINCOLN’S
INN FIELDS
INNER TEMPLE
GARDENS
INNER TEMPLE
GARDENS
JUBILEE
GARDENS
JUBILEE
GARDENS
BERKELEY
SQUARE
BERKELEY
SQUARE
REGENT’S PARKREGENT’S PARK
GREEN PARKGREEN PARK
ST JAMES’S
PARK
ST JAMES’S
PARK
ST JAMES’S
SQUARE
ST JAMES’S
SQUARE
SOHO
SQUARE
SOHO
SQUARE
BELGRAVE
SQUARE
GARDEN
BELGRAVE
SQUARE
GARDEN
ARCHBISHOP
PARK
ARCHBISHOP
PARK
WAPPING
GARDENS
WAPPING
GARDENS
WEAVERS
FIELDS
WEAVERS
FIELDS
MAYFAIR
COVENT
GARDEN
SOUTHBANK
SOUTHWARK
HOLBORN
BLOOMSBURY
FITZROVIA
CLERKENWELL
SHOREDITCH
WHITECHAPEL
WAPPING
BETHNAL
GREEN
BARBICAN
CITY OF
LONDON
MARYLEBONE
BELGRAVIA
WESTMINSTER
Creating great
spaces in central London
Mount
Royal
183/190
Tottenham
Court Road
31/34
Alfred
Place
35
Portman
Square
Kent
House
95/96
New Bond
Street
Hanover
Square
6 Brook
Street
Elm Yard
Orchard
Court
Wells
& More
Elsley
House
23/24
Newman
Street
Walmar
House
200 & 214
Gray’s Inn
Road
The
Piccadilly
Buildings
Pollen
House
103/113
Regent
Street
Kingsland
House
Poland
Street
1 Newman
Street &
70/88 Oxford
Street
Carrington
House
6/10
Market
Place
North of Oxford Street Rest of West End City, Midtown and Southwark
7/15 Gresse
Street
See more
on page 29
48/54
Broadwick
Street &
16 Dufour’s
Place
04 Great Portland Estates plc Annual Report 2022
R
I
V
E
R
T
H
A
M
E
S
C R O W
N
D A
L
E
R
D
P
I
C
C
A
D
I
L
L
Y
P
A
R
K
L
A
N
E
B
A
K
E
R
S
T
G L O U C E S T E R P L
M
A
R
Y
L
E
B
O
N
E
R
D
E
U
S
T
O
N
R
D
E
U
S
T
O
N
R
D
F
A
R
R
I
N
G
D
O
N
R
D
T
H
E
O
B
A
L
D
S
R
D
C
L
E
R
K
E
N
W
E
L
L
R
D
O
L
D
S
T
V
I
C
T
O
R
I
A
E
M
B
A
N
K
M
E
N
T
U
P
P
E
R
T
H
A
M
E
S
S
T
T
H
E
M
A
L
L
F
L
E
E
T
S
T
F
L
E
E
T
S
T
Q
U
E
E
N
V
I
C
T
O
R
I
A
S
T
C H
E
A P S I
D
E
L
O
N
G
L
N
K
I
N
G
W
I
L
L
I
A
M
S
T
C
I
T
Y
R
D
M
O
O
R
G
A
T
E
L
O
N
D
O
N
W
A
L
L
W
A
T
E
R
L
O
O
B
R
I
D
G
E
T
H
E
C
U
T
U
N
I
O
N
S
T
Y
O
R
K
R
D
S
T
A
M
F
O
R
D
S
T
S
O
U
T
H
W
A
R
K
S
T
W
A
T
E
R
L
O
O
R
D
C
O
N
S
T
I
T
U
T
I
O
N
H
I
L
L
S L O
A
N E
S
T
W
H
I
T
E
H
A
L
L
H
O
R
S
E
G
U
A
R
D
S
R
D
R
E
G
E
N
T
S
T
C
H
A
R
I
N
G
C
R
O
S
S
R
D
S
H
A
F
T
E
S
B
U
R
Y
A
V
E
G
O
W
E
R
S
T
M
I
D
L
A
N
D
R
D
P
A
N
C
R
A
S
R
D
G
O
O
D
G
E
S
T
B R O O K S T
G
R
O
S
V
E
N
O
R
S
T
G
E O
R G
E S T
N E W C A V E N D
I
S H S
T
W
E
Y M O U T H S T
S
E
Y
M
O
U
R
P
L
C R A W F O R D S
T
A
L
D
W
Y
C
H
B
E E
C H
S
T
B
U
N
H
I
L
L
R
O
W
R O B E R T S T
J
U
D
D
S
T
O
U
T
E
R
C
I
R
C
L
E
P
O
R
T
L
A
N
D
P
L
P A L L
M
A
L
L
O
X
F
O
R
D
S
T
N
E
W
O
X
F
O
R
D
S
T
H
I
G
H
H
O
L
B
O
R
N
N
E
W
G
A
T
E
S
T
K I N G S W A
Y
W O
B
U
R N
P
L
E V
E
R S
H
O L
T
S
T
T
O
T
T
E
N
H
A
M
C
O
U
R
T
R
D
H
A
M
P
S
T
E
A
D
R
D
W I G M O R E S T
M
O
R
T
I
M
E
R
S
T
E
D
G
W
A
R
E
R
D
P
A
R
K
R
D
A
L B A N Y S T
G R
E A T P
O
R T
L A
N D
S T
G
R
A
Y
’
S
I
N
N
R
D
B
I
R
D
C
A
G
E
W
A
L
K
W
E
S
T
M
I
N
S
T
E
R
B
R
I
D
G
E
S
T
R
A
N
D
S
T
P
A
U
L
’
S
C
H
U
R
C
H
Y
A
R
D
C
A
N
N
O
N
S
T
B
L
A
C
K F
R
I A R S
B
R I D G E
B L A
C K
F R I A R S
R D
S
O
U
T
H
W
A
R
K
B
R
I
D
G
E
L
O
N
D
O
N
B
R
I
D
G
E
A
L
D
E
R
S
G
A
T
E
S
T
G
O
S
W
E
L
L
R
D
P
E
N
T
O
N
V
I
L
L
E
R
D
C
I T
Y
R
D
C H I S
W
E L L
S T
N
E
W
N
O
R
T
H
R
D
C
A
L
E
D
O
N
I
A
N
R
D
Y
O
R
K
W
A
Y
B
R
O
M
P
T
O
N
R
D
K
I
N
G
S
C
R
O
S
S
R
D
O
U
T
E
R
C
I
R
C
L
E
V
I
C
T
O
R
I
A
S
T
A
B
I
N
G
D
O
N
S
T
E
A
S
T
R
D
W A
P
P I N G
H
I
G
H
S
T
V
A
U
G
H
A
N
W
A
Y
L
E
M
A
N
S
T
C
O
M
M
E
R
C
I
A
L
S
T
G
R
E
A
T
E
A
S
T
E
R
N
S
T
W
H
I
T
E
C
H
A
P
E
L
R
D
A
L
D
G
A
T
E
H
I
G
H
S
T
M
A
N
S
E
L
L
R
D
T
O
W
E
R
B
R
I
D
G
E
R
D
M
I N
O R
I
E S
C A
B
L E S T
L
O
W
E
R
T
H
A
M
E
S
S
T
B
I
S
H
O
P
S
G
A
T
E
G
R
A
C
E
C
H
U
R
C
H
S
T
G
R
E
A
T
D
O
V
E
R
S
T
A
B
B
E
Y
S
T
T
O
O
L
E
Y
S
T
J
A
M
A
I
C
A
R
D
D
R
U
I
D
S
T
B
E
T
H
N
A
L
G
R
E
E
N
R
D
G
O
S
S
E
T
S
T
C
O L U M
B
I
A
R D
G
R
O
S
V
E
N
O
R
P
L
B
A
Y
L
I
S
R
D
L
A
M
B
E
T
H
P
L
A
C
E
R
D
W
E
S
T
M
I
N
S
T
E
R
B
R
I
D
G
E
R
D
L O N D O N R D
S
T
G
E
O
R
G
E
’
S
R
D
B
U
C
K
I
N
G
H
A
M
G
A
T
E
B
E
L
G
R
A
V
E
P
L
U
P
P
E
R B E
L
G
R
A V E
S
T R
E
E
T
P
I T
F
I
E
L D
S
T
A
L
I
E
S
T
T
H
E
H
I
G
H
W
A
Y
E
S
M
I
T
H
F
I
E
L
D
C
O
R
N
H
I
L
L
L
E
A
D
E
N
H
A
L
L
S
T
F
E
N
C
H
U
R
C
H
S
T
C
O M
M
E R C
I A
L R
D
C
A N N O N
S
T R D
V
A
L
L
A
N C E
R
D
S
Q U I R R E L S T
S C AT L
E
R
S
T
C
H E S H
I R
E
S
T
T
A
N
N
E
R
S
T
K
E
N
N
I
N
G
T
O
N
R
D
R
O
Y
A
L
M
I N
T
S T
N
E W
R
D
K
I
N
G
S
L
A
N
D
R
D
H
A
C K N
E Y
R D
Leicester
Square
Leicester
Square
Covent
Garden
Covent
Garden
Old
Street
Old
Street
HolbornHolborn
Chancery LaneChancery Lane
Piccadilly
Circus
Piccadilly
Circus
FarringdonFarringdon
Green
Park
Green
Park
Goodge
Street
Goodge
Street
Bond
Street
Bond
Street
Marble
Arch
Marble
Arch
Hyde Park
Corner
Hyde Park
Corner
Oxford
Circus
Oxford
Circus
Regent’s
Park
Regent’s
Park
Great
Portland
Street
Great
Portland
Street
Euston
Square
Euston
Square
EustonEuston
King’s Cross
St Pancras
King’s Cross
St Pancras
Russell
Square
Russell
Square
BlackfriarsBlackfriars
St Paul’sSt Paul’s
BankBank
Mansion
House
Mansion
House
London
Bridge
London
Bridge
BoroughBorough
WaterlooWaterloo
Lambeth
North
Lambeth
North
SouthwarkSouthwark
WestminsterWestminster
BarbicanBarbican
MoorgateMoorgate
TempleTemple
St James’s
Park
St James’s
Park
Charing
Cross
Charing
Cross
EmbankmentEmbankment
Baker
Street
Baker
Street
Warren
Street
Warren
Street
Tottenham
Court Road
BermondseyBermondsey
Tower
Hill
Tower
Hill
Fenchurch
Street
Fenchurch
Street
Liverpool
Street
Liverpool
Street
AldgateAldgate
Aldgate EastAldgate East
WhitechapelWhitechapel
Bethnal
Green
Bethnal
Green
Shoreditch
High Street
Shoreditch
High Street
MonumentMonument
HYDE PARKHYDE PARK
GROSVENOR
SQUARE GARDEN
GROSVENOR
SQUARE GARDEN
CAVENDISH
SQUARE
CAVENDISH
SQUARE
PORTMAN
SQUARE
PORTMAN
SQUARE
HANOVER
SQUARE
HANOVER
SQUARE
RUSSELL
SQUARE
RUSSELL
SQUARE
BEDFORD
SQUARE
GARDEN
BEDFORD
SQUARE
GARDEN
LINCOLN’S
INN FIELDS
LINCOLN’S
INN FIELDS
INNER TEMPLE
GARDENS
INNER TEMPLE
GARDENS
JUBILEE
GARDENS
JUBILEE
GARDENS
BERKELEY
SQUARE
BERKELEY
SQUARE
REGENT’S PARKREGENT’S PARK
GREEN PARKGREEN PARK
ST JAMES’S
PARK
ST JAMES’S
PARK
ST JAMES’S
SQUARE
ST JAMES’S
SQUARE
SOHO
SQUARE
SOHO
SQUARE
BELGRAVE
SQUARE
GARDEN
BELGRAVE
SQUARE
GARDEN
ARCHBISHOP
PARK
ARCHBISHOP
PARK
WAPPING
GARDENS
WAPPING
GARDENS
WEAVERS
FIELDS
WEAVERS
FIELDS
MAYFAIR
COVENT
GARDEN
SOUTHBANK
SOUTHWARK
HOLBORN
BLOOMSBURY
FITZROVIA
CLERKENWELL
SHOREDITCH
WHITECHAPEL
WAPPING
BETHNAL
GREEN
BARBICAN
CITY OF
LONDON
MARYLEBONE
BELGRAVIA
WESTMINSTER
1. Including share of joint ventures.
2. Includes joint ventures.
City
Tower
Woolyard
New City
Court
Minerva
House
50 Finsbury
Square
See more
on page 08
Portfolio valuation
1
£2.6bn
2021: £2.5bn
Rent roll
1
£104.1m
2021: £95.2m
No. of customers
2
295
2021: 297
Property sq ft
2
2.5m sq ft
2021: 2.6m sq ft
The Hickman
& Challenger
House
2
Aldermanbury
Square
See more
on page 24
Strategic Report – Overview
05Annual Report 2022 Great Portland Estates plc
Greater
together.
We have evolved our brand to better
reflect GPE as it operates today, with
a more customer-focused voice to put
us in a strong position for the future.
We believe that the whole is greater than
the sum of its parts; as a collective, we
achieve more. That’s why ‘Greater together’
as our new brand story perfectly sums up
our personality.
Greater
choice.
See more on page 07
Trusted
partners.
See more on page 08
Driving
innovation.
See more on page 10
Future
London.
See more on page 11
06 Great Portland Estates plc Annual Report 2022
Greater
choice.
We recognise that the needs of the modern
customer are evolving fast. We have always
delivered quality, but increasingly sustainability,
technology and flexibility are shaping the spaces
that our customers want and we are responding.
We know every business is different, so we aim to provide
choice to allow our customers to create the space the way
they want it. While our buildings might be made of stone, our
customers’ options are not. We provide spaces that are Ready
to Fit or delivered flexibly on a Fitted, or Fully Managed basis,
making life easier and hassle free. To increase the choice that
we provide, our ambition is to significantly grow our flexible
office offerings to more than 600,000 sq ft over the next
five years.
As proven workplace experts, we own our buildings and
manage them ourselves. There is no middleman and, with
a diverse portfolio across London, we aim to partner with
our customers to meet their business needs today and
provide space for them to grow into in the future.
See more on page 27
Strategic Report – Overview
07Annual Report 2022 Great Portland Estates plc
Trusted
partners.
We believe in the power of people and partnerships
to create exceptional, climate change-conscious
places that deliver for our customers and our most
recent refurbishment at 50 Finsbury Square, EC2
has the magnetic appeal to do just that.
In August 2021, only ten months after committing to the scheme,
we pre-let the entirety of the offices to Inmarsat, one of
the world’s leading global mobile satellite communications
companies. Together we will deliver a world class London
headquarters that responds to the needs of this forward-
thinking organisation by providing an amenity-rich environment,
combined with smart building technology powered by our
award-winning app, sesame®. 50 Finsbury Square will be our first
development to deliver on all four pillars of our Sustainability
Statement of Intent and is expected to be our first building
certified as Net Zero Carbon. We are delighted that Inmarsat
share our sustainability ambitions and have committed to
continue to work with us on this important issue.
See more on pages 24 to 26
08 Great Portland Estates plc Annual Report 2022
Strategic Report – Overview
09Annual Report 2022 Great Portland Estates plc
Driving
innovation.
We consistently prove our ability to think and act
differently in everything we do, embracing change
and championing technology to drive performance,
environmental efficiency and to create more
healthy and sustainable communities, all of
which we are hardwiring across our substantial
and flexible development pipeline.
Beyond our one committed scheme, we have seven
uncommitted schemes, four of which are in our near-term
pipeline. These four prime office-led schemes will commit
£1.1 billion of capital, they will have exemplary sustainability
credentials, all targeting net zero carbon, they will adopt market-
leading technology and be well matched to evolving customer
requirements. Our development pipeline provides a strong
platform for organic growth and a wealth of value-creating
opportunities, delivering sustainable spaces for our great
capital city to thrive.
See more on page 24
10 Great Portland Estates plc Annual Report 2022
Future
London.
We want to build a sustainable legacy for our
great capital city with positive social impact
at its heart, whilst also supporting a thriving
economy for London’s future.
There are huge social, environmental and economic
challenges in London, with some of the most disadvantaged
communities in the UK located within the central London
boroughs in which we are working. Our Social Impact
Strategy sets out our priorities, how we can make a
difference and how a focus on social impact can bring
business benefits. It also details the actions we will take
and how we will hold ourselves to account. We aim to have
regular engagement with community groups and our other
stakeholders to learn, and further adapt our approach,
as we progress towards achieving our vision to ‘create
a lasting positive impact in our communities’.
See more on pages 43 and 59
Strategic Report – Overview
11Annual Report 2022 Great Portland Estates plc
How we create value
In order to unlock potential we apply our specialist skills to reposition properties
to produce high quality, sustainable spaces that our customers demand.
Our disciplined approach to allocating capital shapes our activities, ensuring
we operate in tune with London’s cyclical property markets to maximise returns.
Our stakeholder relationships
– Intense, supportive, customer-focused approach to
understand customers’ needs. Utilising regular customer
feedback to create bespoke action plans.
– Strong levels of customer satisfaction.
– Open relationship with debt and equity providers based
on clear investment case and transparent disclosure.
– Deep relationships with key suppliers (including contractors)
and joint venture partners.
– Positive engagement with local communities,
local authorities, and planning departments.
Our portfolio and sustainability
– 100% central London, in attractive locations well served
by local infrastructure with enduring customer demand.
– High customer retention, diverse customer base and off low rents
from which to grow.
– Continual repositioning of buildings to improve the customer
experience, future proof value and enhance the environment
in which they are located.
– Located in markets with high barriers to entry playing to our strengths.
– Positioned for future growth; 24% of portfolio in development
programme. Potential £1.1 billion commitment across four
near-term schemes.
Acquire
– Disciplined capital allocation
approach; must be accretive
to existing portfolio.
– Tired, inefficient properties,
often with poor EPC ratings,
with angles to exploit.
– Attractive central London locations
supported by infrastructure
improvements/local investment.
– Discount to replacement cost
and typically off-market.
– Off low rents and low capital
values per sq ft.
– Optionality: flexible business plans.
– Opportunity to enhance
sustainability credentials and
grow our Flex portfolio.
See more on our investment activities
on page 29
Reposition
– Through lease restructuring,
the delivery of flexible space,
refurbishment or redevelopment.
– Deliver high quality sustainable
spaces into supportive markets that
meet and exceed customer needs.
– Manage risk through pre-letting,
joint ventures and forward sales.
– Deliver climate resilient buildings
that integrate market-leading
sustainability standards,
flexibility, amenity, wellbeing
and technological innovation.
– Enhance the local environment
and public realm.
– Deliver a lasting positive social
impact in our communities.
See more on our development activities
on pages 23 to 26
We apply our specialist skills to reposition properties…
…to create value
+ 27.8
Net promoter score,
outperforming the UK
office average of +2
£631k
Social value created
85
GPE employees
participating in the
GPE community day
+6.1%
Like-for-like portfolio
valuation growth
1
100%
BREEAM ’Excellent’
completions
£403k
Invested through our
Decarbonisation Fund
See our KPIs on pages 14 and 15
See more on our stakeholder relationships
on pages 56 to 62
See more on our portfolio and sustainability
on pages 34 to 36 and 37 to 51
Sustainability touches everything we do
During the year, we
bought 7/15 Gresse Street,
W1, to augment our Flex
office offer. We anticipate
securing vacant possession
next year to allow us to
convert the building into
our Fully Managed offering.
See more on page 29
Repositioning buildings
is key to adding value.
This year, our activities
focused on further evolving
our flexible office offers,
pre-letting our on-site
development scheme and
preparing our near-term
development pipeline.
See more on
pages 24, 26 and 28
…underpinned by key resources and relationships…
12 Great Portland Estates plc Annual Report 2022
Our people and culture
– Experienced management team supported by specialist
in-house portfolio management, occupier services, development,
investment, leasing and finance teams and support functions.
– Entrepreneurial and collegiate culture based on strong
values with disciplined approach to risk management.
– Reward linked to purpose, strategy and values with close
alignment with stakeholders to deliver value and outperform
our KPI benchmarks.
– Effective governance structure.
– Strong employee engagement.
Our capital strength
– Consistently strong balance sheet and conservative
financial leverage.
– Low cost, diversified debt facilities and plentiful liquidity.
– Evolving debt book to align with our values via
ESG-linked financing.
– Sustainable finance framework in place,
– Disciplined allocation of capital through analytical,
risk adjusted IRR decision making.
– Support low and progressive dividend policy.
– Tax efficient REIT structure.
See more in our investment activities
on page 29
See more in our case study
on pages 06 to 11
Manage
– Deliver a ‘Customer first’ approach
providing efficient, resilient, healthy
and innovative space to meet the
demands of modern customers.
– Provide a greater choice of spaces to
appeal to a variety of customer needs,
whether on a Ready to Fit, Fitted or
Fully Managed basis.
– Constantly evolving to lead emerging
trends, including the use of technology
to enhance the customer experience.
– Detailed business plan for every
property reviewed quarterly to
maximise total returns over our
cost of capital.
– Strong sustainability credentials to
maximise customer appeal, enhance
the long-term property value and
reduce obsolescence.
Recycle
– Disciplined capital recycling
through the sale of properties
where we have executed
our business plans, projected
returns are insufficient or where
we are able to monetise our
expected future profits.
– Create a legacy of high
quality, sustainable buildings
to benefit London and the
communities in which they
are located.
– Reinvest proceeds into higher
return opportunities.
– Return excess equity capital to
shareholders when reinvestment
opportunities are limited.
89%
Employees who
recommend GPE as
a great place to work
86%
Employee
engagement index
81%
Employee retention
(stability index)
+ 7. 2 %
EPRA NTA NAV growth
20.5%
EPRA loan to value
1
£391m
Cash and
undrawn facilities
1
See more on our culture and people
on pages 52 to 55
See more on our capital strength
on page 32
Customers increasingly
require greater levels
of service and amenity.
Therefore, the spaces we
deliver and the services
we provide are evolving to
meet this growing demand,
including our new Fully
Managed offer.
See more on page 28
Given the continued
strength of the investment
market, we took the
opportunity to crystallise
the development surplus we
created at 160 Old Street,
EC1, selling the building for
£181.5 million, 5% ahead of
the 31 March 2021 valuation.
See more on page 29
1. Includes share of joint ventures.
Strategic Report – Overview
13Annual Report 2022 Great Portland Estates plc
Financial KPIs
Total Shareholder Return
% (TSR)
Rationale
TSR is a standard measure of shareholder value creation
over time. It measures the movement in a company’s
share price plus dividends expressed as an annual
percentage movement.
Commentary
TSR of the Group is benchmarked against the TSR of the
FTSE 350 Real Estate Index (excluding agencies). The TSR
of the Group was +6.6%
1
for the year, compared to +20.8%
for the benchmark following strong share price performance
of other real estate sectors, including those providing
self storage, industrial and logistics space.
1. On a spot basis. For the 2021/22 annual bonus, TSR was calculated
using monthly period averaging at the start and end of the
performance period, which resulted in a Group TSR of 0.6%.
See more on page 121
40
0
30
20
10
4.0
14.0
(7.2)
1.7
(12.4)
Benchmark (italics)
6.5
(1.0)
21.1
2018 2019 2020 2021 2022
6.6
20.8
Total Accounting Return
% (TAR)
Rationale
TAR is measured as absolute EPRA NTA per share growth
(the industry standard measure of a real estate company’s
success at creating value) plus any ordinary dividends paid,
expressed as a percentage of the period’s opening EPRA NTA.
Commentary
We have typically compared our TAR to a target year
on year growth of 4% or more. TAR was +8.8% for the year.
The TAR outperformance was primarily driven by the robust
property value growth of 6.1% on a like-for-like basis.
See more on pages 30 to 33 and note 8
to the financial statements
40
0
30
20
10
2018
4.04.0
7.1
3.2
2.3
2019 2020 2021 2022
4.0 4.0
Benchmark (italics)
(8.8)
4.0
8.8
Total Property Return
% (TPR)
Rationale
TPR measures a company’s performance at driving value
from its property portfolio. It is calculated from the net
capital growth of the portfolio plus net rental income derived
from holding these properties plus profit or loss on disposals
expressed as a percentage return on the period’s opening
value as calculated by MSCI.
Commentary
TPR is compared to a benchmark of around £50 billion of
similar assets included in the MSCI central London annual
benchmark. When compared to the annual benchmark of 7.0%,
the Group generated a portfolio TPR of 9.4%, outperformance
of 2.4% for the year. This outperformance was driven by our
committed and recently completed development schemes,
along with GPE delivering a record leasing year.
See more on pages 32 to 35
2018
5.5
3.7
3.5
2019 2020 2021 2022
8.2
(5.9)
(3.2)
9.4
7.0
2.9
4.5
Benchmark (italics)
40
0
30
20
10
1. Capital growth element of TPR.
Our key performance indicators (KPIs) measure the principal metrics that we focus
on to run the business and they help determine how we are remunerated. Over the
longer term, we aim to outperform our benchmarks through successfully executing
our strategy. Over the last 12 months, given our strong operating performance,
we have outperformed the majority of our benchmarks (financial and non-financial).
Our Key Performance Indicators
LTIP Exec Bonus
LTIP Exec Bonus
LTIP Exec Bonus
1
14 Great Portland Estates plc Annual Report 2022
Non-financial KPIs
Energy Consumption
% reduction
Embodied Carbon
% reduction
Biodiversity
% increase
24.4%
Benchmark: 11.5%
22.0%
Benchmark: 10.0% New developments
2.0%
Benchmark: 8.0%
Rationale
The energy consumption of our portfolio
was 48% of our carbon footprint during
the year. Lowering our energy intensity
is an essential part of delivering our
Roadmap to Net Zero.
Commentary
Our target is to reduce energy intensity
by 40% by 2030, when compared to our
2016 baseline. While a number of projects
were undertaken during the year to
improve energy intensity, our performance
also continued to benefit from lower
occupancy levels due to the pandemic.
See more on pages 37 to 51
Rationale
Embodied carbon from our development
activities represents around 40% of our
carbon footprint. Reducing our embodied
carbon is key to delivering our Roadmap
to Net Zero.
Commentary
Our target is to reduce the embodied
carbon from our development and
refurbishment activities by 40% by 2030.
Our significant progress on building design
resulted in the Group outperforming
its targeted 10.0% reduction for new
developments at the design stage.
Rationale
Biodiversity is essential for climate
resilience and health and wellbeing.
We aim to increase biodiversity across
our portfolio by introducing urban
greening to improve air quality, reduce
the urban heat island effect and provide
habitats for insects and birds.
Commentary
Our target is to increase biodiversity
net gain across our portfolio by 25% by
2030. This year, postponed urban greening
works at some of our operational buildings
resulted in the Group not meeting its
annualised target of 8.0%.
Customer Satisfaction
(NPS)
Employee Engagement
% (EEI)
25.3
42.0
2020 2021 2022
(6.8)
(6.1)
27.8
2.0
40
35
30
25
20
15
10
5
0
-5
45
-10
Benchmark (italics)
100
0
20
80
60
40
91
93
2020 2021 2022
75
75
86
75
Benchmark (italics)
Rationale
High levels of customer satisfaction are
critical to both attracting and retaining
businesses in our buildings.
Commentary
The Net Promoter Score (NPS) of the Group is
compared to the overall UK sector average,
expressed as a number between -100 and
+100, with a minimum target of the sector
average. Our NPS of +27.8 significantly
outperformed the UK office average of
+2.0, delivering upper quartile performance
against London office property peers.
See more on page 57
Rationale
Maintaining high levels of employee
engagement is key to motivation,
productivity and ultimately the delivery
of our business plans.
Commentary
The Employee Engagement Index (EEI)
of the Group is compared to a 75% hurdle.
Our EEI continues to be exceptionally high,
with 92% of our employees participating
in our latest survey delivering an EEI of 86%.
See more on page 53
Performance criteria for Executive Directors’ and
certain senior managers’ long-term incentives.
Performance criteria for Executive Directors’
and all employees’ annual bonuses in the
case of the financial KPIs and certain senior
executives’ annual bonuses in the case of
the non-financial KPIs.
For the 2020/21 and 2021/22 annual bonuses,
TAR was exceptionally replaced with TSR as the
applicable metric, as explained on page 117.
Exec Bonus
Exec Bonus
Exec Bonus
Exec Bonus
Exec Bonus
LTIP
Exec Bonus
New financial KPI
for 2022/23
Flex Growth
Growing our Flex space forms
a key part of the Group’s strategy
and will be a new KPI and a financial
measure within the Annual Bonus
structure for 2022/23.
Strategic Report – Overview
15Annual Report 2022 Great Portland Estates plc
Our near-term strategic priorities
We have a clear strategic focus that enables us to deliver attractive long-term
value to our stakeholders. Our primary focus remains on maximising value
from our portfolio organically through creating exciting sustainable spaces
for customers, expanding our flexible offerings, delivering the development
programme and driving innovation.
Priorities for 2021/22 Priorities for 2021/22
1
Progress
sustainability
agenda
2
Drive
innovation
and change
3
Continue
to grow our
Flex offer
4
COVID-19
response
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
See more on pages 37 to 51 See more on pages 52 to 55 See more on pages 27 and 28 See more on page 34 See more on pages 23 to 26 See more on pages 23 to 26
Key initiatives
– Deploy Decarbonisation Fund.
– Develop Climate Change
Resilience Strategy.
– Launch Social Impact Strategy.
– Develop EPC strategy for
each building.
– Identify ‘stranded’ assets
for acquisition.
– Deliver new Workplace
and Innovation Strategy.
– Finalise corporate branding
and marketing review.
– Recruit HR Director and further
broaden I&D initiatives.
– Update GPE flexible working policy.
– Roll-out further Flex+ space
at six buildings.
– Identify further opportunities
to expand Flex portfolio through
conversion of existing space
and acquisitions.
Key initiatives
– Assist our customers to safely
return to their workplaces.
– Reduce portfolio vacancy.
– Reposition portfolio mix and
identify accretive acquisitions.
– Lease remaining space
at completed schemes.
– Complete 1 Newman Street
& 70/88 Oxford Street, W1,
in summer 2021.
– Seek a pre-let of
50 Finsbury Square, EC2.
– Gain planning permissions
at New City Court, SE1 and
2 Aldermanbury Square, EC2.
– Commence development
of 2 Aldermanbury Square, EC2
in early 2022.
– Submit planning application
for Minerva House, SE1.
Progress in year
– All £403,000 of 2021 Decarbonisation
Fund deployed in the year.
– Climate Change Resilience Strategy
now scheduled for November 2022.
– Social Impact Strategy launched.
– EPC analysis complete and building
strategies assessed, with plans
to invest c.£20 million to achieve
EPC B ratings across the portfolio
by 2030.
– To date, limited ‘stranded assets’
coming to the investment market.
– On or ahead of target on each
of the four pillars of the Workplace
and Innovation Strategy.
– Great Portland Estates successfully
rebranded as GPE.
– Carrie Heiss recruited as HR Director
and inaugural People Plan launched.
– GPE flexible working policy updated
to new Hybrid Working Policy.
– Flex space comprises around
250,000 sq ft, or 13% of office
portfolio.
– Flex offerings rebranded to
‘Fitted’, ‘Fully Managed’ and
‘Flex Partnerships’.
– First Flex acquisition at
7/15 Gresse Street, W1.
– Team restructured to support
further growth; appointed
specialists in design, procurement,
acquisitions and leasing.
Progress in year
– All buildings open throughout the
pandemic on a ‘COVID-19 Secure’ basis.
– Financial support provided to
customers on a case-by-case basis.
– Portfolio vacancy reduced from
13.2% to 10.8%.
– Limited acquisition opportunities
to date, one acquisition during
the year.
– All office space let at Hanover
Square, W1 and one floor remaining
at 1 Newman Street, W1. Retail space
leasing progressing.
– 1 Newman Street, W1 completed
summer 2021.
– All of the office space at 50 Finsbury
Square, EC2 pre-let to Inmarsat
ahead of ERV.
– Planning decision at New City Court,
SE1 outstanding, resolution expected
late 2022.
– Planning consents gained
at 2 Aldermanbury Square, EC2
and French Railways House &
50 Jermyn Street, SW1.
– Enabling works commenced
at 2 Aldermanbury Square, EC2.
– Planning application submitted
at Minerva House, SE1.
Priorities for 2022/23
Unchanged
Unchanged Deliver on our
Flex ambition
Priorities for 2022/23
Embed our
‘Customer first’
approach
Unchanged Unchanged
Key initiatives
– Deliver Climate Resilience Strategy.
– Launch Sustainable Spaces Brief.
– Commence business plans to
upgrade portfolio EPC ratings.
– Deploy Decarbonisation Fund.
– Identify ‘stranded’ assets
for acquisition.
– Develop a GPE data warehouse,
to aid information flows and
decision making.
– Implement updated Innovation
Strategy – discover potential
disruptors and implement
known technology.
– Launch new GPE website.
– Implement People Plan.
– Deliver 600,000 sq ft of Flex
space organically by 2027.
– Further supplement growth of
Flex space through acquisition.
– Deliver the majority of our Flex
space on a Fully Managed basis.
– Further enhance systems and
structures to support Flex growth.
Key initiatives
– Finalise our customer vision,
strategy and implementation plan.
– Refine customer journeys for
key touchpoints.
– Deliver engagement plan to
communicate our customer strategy.
– Establish KPIs to assess progress
towards customer vision.
– Commence development
of 2 Aldermanbury Square, EC2,
sign construction contract Q4 2022.
– Lease remaining retail space at
Hanover Square, W1 and 1 Newman
Street & 70/88 Oxford Street, W1.
– Seek a pre-let of 2 Aldermanbury
Square, EC2.
– Complete 50 Finsbury Square, EC2
in late 2022.
– Resolve planning status
at New City Court, SE1.
– Further develop design concepts
and planning consultation on
medium term pipeline.
– Achieve planning permission
at Minerva House, SE1.
16 Great Portland Estates plc Annual Report 2022
Priorities for 2021/22 Priorities for 2021/22
1
Progress
sustainability
agenda
2
Drive
innovation
and change
3
Continue
to grow our
Flex offer
4
COVID-19
response
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
See more on pages 37 to 51 See more on pages 52 to 55 See more on pages 27 and 28 See more on page 34 See more on pages 23 to 26 See more on pages 23 to 26
Key initiatives
– Deploy Decarbonisation Fund.
– Develop Climate Change
Resilience Strategy.
– Launch Social Impact Strategy.
– Develop EPC strategy for
each building.
– Identify ‘stranded’ assets
for acquisition.
– Deliver new Workplace
and Innovation Strategy.
– Finalise corporate branding
and marketing review.
– Recruit HR Director and further
broaden I&D initiatives.
– Update GPE flexible working policy.
– Roll-out further Flex+ space
at six buildings.
– Identify further opportunities
to expand Flex portfolio through
conversion of existing space
and acquisitions.
Key initiatives
– Assist our customers to safely
return to their workplaces.
– Reduce portfolio vacancy.
– Reposition portfolio mix and
identify accretive acquisitions.
– Lease remaining space
at completed schemes.
– Complete 1 Newman Street
& 70/88 Oxford Street, W1,
in summer 2021.
– Seek a pre-let of
50 Finsbury Square, EC2.
– Gain planning permissions
at New City Court, SE1 and
2 Aldermanbury Square, EC2.
– Commence development
of 2 Aldermanbury Square, EC2
in early 2022.
– Submit planning application
for Minerva House, SE1.
Progress in year
– All £403,000 of 2021 Decarbonisation
Fund deployed in the year.
– Climate Change Resilience Strategy
now scheduled for November 2022.
– Social Impact Strategy launched.
– EPC analysis complete and building
strategies assessed, with plans
to invest c.£20 million to achieve
EPC B ratings across the portfolio
by 2030.
– To date, limited ‘stranded assets’
coming to the investment market.
– On or ahead of target on each
of the four pillars of the Workplace
and Innovation Strategy.
– Great Portland Estates successfully
rebranded as GPE.
– Carrie Heiss recruited as HR Director
and inaugural People Plan launched.
– GPE flexible working policy updated
to new Hybrid Working Policy.
– Flex space comprises around
250,000 sq ft, or 13% of office
portfolio.
– Flex offerings rebranded to
‘Fitted’, ‘Fully Managed’ and
‘Flex Partnerships’.
– First Flex acquisition at
7/15 Gresse Street, W1.
– Team restructured to support
further growth; appointed
specialists in design, procurement,
acquisitions and leasing.
Progress in year
– All buildings open throughout the
pandemic on a ‘COVID-19 Secure’ basis.
– Financial support provided to
customers on a case-by-case basis.
– Portfolio vacancy reduced from
13.2% to 10.8%.
– Limited acquisition opportunities
to date, one acquisition during
the year.
– All office space let at Hanover
Square, W1 and one floor remaining
at 1 Newman Street, W1. Retail space
leasing progressing.
– 1 Newman Street, W1 completed
summer 2021.
– All of the office space at 50 Finsbury
Square, EC2 pre-let to Inmarsat
ahead of ERV.
– Planning decision at New City Court,
SE1 outstanding, resolution expected
late 2022.
– Planning consents gained
at 2 Aldermanbury Square, EC2
and French Railways House &
50 Jermyn Street, SW1.
– Enabling works commenced
at 2 Aldermanbury Square, EC2.
– Planning application submitted
at Minerva House, SE1.
Priorities for 2022/23
Unchanged
Unchanged Deliver on our
Flex ambition
Priorities for 2022/23
Embed our
‘Customer first’
approach
Unchanged Unchanged
Key initiatives
– Deliver Climate Resilience Strategy.
– Launch Sustainable Spaces Brief.
– Commence business plans to
upgrade portfolio EPC ratings.
– Deploy Decarbonisation Fund.
– Identify ‘stranded’ assets
for acquisition.
– Develop a GPE data warehouse,
to aid information flows and
decision making.
– Implement updated Innovation
Strategy – discover potential
disruptors and implement
known technology.
– Launch new GPE website.
– Implement People Plan.
– Deliver 600,000 sq ft of Flex
space organically by 2027.
– Further supplement growth of
Flex space through acquisition.
– Deliver the majority of our Flex
space on a Fully Managed basis.
– Further enhance systems and
structures to support Flex growth.
Key initiatives
– Finalise our customer vision,
strategy and implementation plan.
– Refine customer journeys for
key touchpoints.
– Deliver engagement plan to
communicate our customer strategy.
– Establish KPIs to assess progress
towards customer vision.
– Commence development
of 2 Aldermanbury Square, EC2,
sign construction contract Q4 2022.
– Lease remaining retail space at
Hanover Square, W1 and 1 Newman
Street & 70/88 Oxford Street, W1.
– Seek a pre-let of 2 Aldermanbury
Square, EC2.
– Complete 50 Finsbury Square, EC2
in late 2022.
– Resolve planning status
at New City Court, SE1.
– Further develop design concepts
and planning consultation on
medium term pipeline.
– Achieve planning permission
at Minerva House, SE1.
Strategic Report – Overview
17Annual Report 2022 Great Portland Estates plc
The communal roof space
at 1 Newman Street, W1
In this section:
19 Statement from the Chief Executive
21 Our markets
23 Our development activities
27 Our leasing and Flex activities
29 Our investment activities
30 Our financial results
34 Our portfolio
37 Sustainability
52 Our people and culture
56 Our stakeholder relationships
62 Engaging with our stakeholders
64 Our approach to risk
Strategic
Report
Annual review
18 Great Portland Estates plc Annual Report 2022
Statement from the Chief Executive
Evolving our strategy and organisation
We are resolutely focused on providing our customers with
great spaces in central London that are flexible, sustainable
and beautifully designed, offering high quality services to
deliver them an enticing real estate experience. To ensure we
meet our customers’ evolving needs and changing working
patterns, we have evolved our strategy incorporating flexibility,
service, technology and sustainability as imperatives to the
delivery of a truly differentiated product.
To support our strategy evolution, we are now organising
ourselves into two complementary, overlapping activities:
– HQ repositioning – delivering large, best-in-class
HQ buildings; and
– Flex spaces – smaller fitted units, often with higher
service levels.
Both of these areas are primed for growth, with our
£1.1 billion near-term development programme and the
opportunity to deliver more than 600,000 sq ft of Flex space
across our existing portfolio. These activities are also strongly
aligned with our sustainability ambitions and delivering
our detailed Roadmap to Net Zero by 2030.
Our ‘Customer first’ approach
To deliver these ambitions, we are putting customer needs at
the centre of everything we do. As well as providing both choice
and flexibility, sustainability, and health and wellbeing are
integral to our offer, our services are enhancing the customer
experience and our use of technology is future-proofing our
buildings for tomorrow’s working patterns. Positive feedback
from our customers is already strong, with our net promoter
score of +27.8, significantly ahead of the UK office sector
average of +2.0 and in the upper quartile for London offices.
We have also refreshed our corporate brand and redefined
our product lines, each tailored to match specific
customer needs:
– ‘Ready to Fit’ – for businesses typically taking larger
spaces on longer leases who want to fit out the space
themselves;
– ‘Fitted’ spaces – where businesses can move into fully
furnished, well designed workspaces, with their own front
door, furniture, meeting rooms, kitchen and branding; and
– ‘Fully Managed’ – fitted space where GPE handles all
day-to-day running of the workplace in one monthly bill.
Record leasing year drives strong
operational performance
In a year full of challenges, our strong operational focus has
delivered a record leasing year with £38.5 million of leases
signed, with market letting 9.8% ahead of ERV. The breadth
of our leasing activities demonstrates the ongoing attractions
of our spaces, including the £8.5 million pre-letting of all
the office space at our 50 Finsbury Square net zero carbon
refurbishment scheme and the leasing of the entirety of
103/113 Regent Street for £4.7 million, central London’s
largest retail letting in the year.
We completed our 1 Newman Street development (122,700 sq ft)
at the eastern end of Oxford Street, directly opposite the new
Elizabeth Line station which will open this summer. We have
also grown our Flex office offer to 13% of our office portfolio,
including our most recent Flex partnership deal at the Hickman
in Whitechapel, where our tech-enabled refurbishment was
awarded a SmartScore ‘platinum’ rating, the first building
in the world to achieve this accolade.
Delivering robust financial results
These successes delivered robust financial results, with IFRS
NAV and EPRA NTA per share rising by 7.2% over the year.
When combined with an ordinary dividend maintained at
12.6 pence per share, our Total Accounting Return was +8.8%.
We delivered an IFRS profit for the year of £167.2 million and
a diluted EPRA EPS of 10.8 pence, a decline of 31.6%, in part
driven by rental income foregone through our profitable
sale of 160 Old Street for £181.5 million during the year and
increased provision for performance related pay.
Across our portfolio, property values were up 6.1% over
the year, well ahead of our central London benchmarks.
Our offices delivered a stronger relative valuation
performance, up by 7.9%, whilst retail values remained
flat. Office ERVs were up 4.1% in the year, with prime office
investment yields holding firm, whilst retail ERVs fell 0.7%,
although the retail outlook appears to be improving with
West End footfall back to 80% of pre-pandemic levels
and our ERVs rising by 0.2% in the second half.
We have delivered a record leasing year and strong
financial performance, whilst evolving our strategy
to meet our customers’ changing needs, with a clear
focus on creating high quality, sustainable HQ and
Flex office spaces in central London.”
Toby Courtauld Chief Executive
Strategic Report – Annual review
19Annual Report 2022 Great Portland Estates plc
Statement from the Chief Executive continued
London economic recovery underway
As the London economy continues its recovery from the
pandemic, we are seeing some encouraging positive
prospects. London remains a dominant global city and is
the world’s top ranked city for innovation. Whilst inflationary
pressures and the unknown full impact of the Ukraine conflict
persist, healthy office employment growth is driving demand
for prime and flex office space, with buoyant investment
market activity demonstrating London’s enduring appeal
for investors. We have seen this positive momentum feed
into our occupational markets, where we expect the future
supply of new office space in central London to decline further,
leading to a potential shortage of some 55% over the next
three years.
As a result, we expect rents for the best office space to
rise over the next 12 months by 0.0%–6.0%, with retail rents
expected to be between minus 2.5% to 2.5%. Having delivered
record leasing volumes in the financial year just ended, we have
started the new year well with £2.9 million of lettings to date.
Today we have £9.4 million of lettings under offer and a further
£32 million under negotiation.
Our opportunity-rich portfolio
With these supportive market conditions and our clear strategy,
we have a portfolio which is well positioned to generate growth
as we create best-in-class HQ spaces and expand our Flex
office offer. Crucially we have the financial strength to deliver
on these ambitions with our EPRA loan to value ratio at only
20.5%, and £391 million of available firepower.
HQ repositioning – delivering best-in-class
developments with £1.1 billion programme
We are on track to complete our pre-let 50 Finsbury Square
development (129,200 sq ft) in December, where we are
forecasting a 39.1% profit on cost and will be delivering
our first Net Zero Carbon scheme, eight years ahead of
target. We have also made excellent progress in preparing
our four near-term schemes which will together deliver
917,800 sq ft of prime, predominantly office space with
exemplary sustainability credentials, along with £72 million
of ERV following our proposed £1.1 billion of total investment.
During the year, we started enabling works at our consented
321,100 sq ft 2 Aldermanbury Square, EC2 scheme, where
leasing enquiries are already good. We recently achieved
planning permission at our proposed 67,700 sq ft redevelopment
on Piccadilly and we submitted our planning application
for a major 139,900 sq ft refurbishment of Minerva House
in Southwark. Beyond this, we have a further three schemes
in our medium-term pipeline.
Flex spaces – targeting growth to more
than 600,000 sq ft
In response to market demand, we launched our first
Flex office spaces in 2018 across 87,000 sq ft and today
we have grown this to 250,000 sq ft across 17 of our buildings.
We have been achieving significant rental and cashflow
premia on this space, in particular on our Fully Managed offer,
where we secured £230 per sq ft on the most recent letting
at 16 Dufour’s Place, W1.
Our portfolio is ideally suited to delivering more Flex, with 87%
of our office spaces sub 10,000 sq ft, and we are seeking to grow
our Flex office offering to more than 600,000 sq ft within our
existing portfolio. We will also look to supplement this growth
through acquisitions, as demonstrated by our £36.5 million
purchase of 7/15 Gresse Street, W1 in March and more recently
our £30 million purchase at 6/10 St Andrew Street, EC4.
Our people and purpose
Our successes this year and the ambitious targets that
we have set for the future would not be possible without the
efforts of our talented and dedicated team, and their ongoing
commitment to delivering our purpose, our sustainability
ambitions and living our values. Employee engagement levels
across GPE continue to be exceptional and we have made
positive strides in broadening skills, capabilities and diversity
across our team. With the launch during the year of our People
Plan ‘OneGPE.’ there is more to come, including the creation
of our Inclusion Committee to champion our ambitious
Diversity and Inclusion Plans.
We have also broadened our reach and commitment to our
communities in the year through our Social Impact Strategy
which will ensure that we create a lasting positive social
impact in the communities where we operate, building a
sustainable legacy for our great capital city. Finally, we were
delighted that our successes have been recognised through
winning both Property Company of the Year and Developer
of the Year at the Property Awards 2021.
Outlook
Whilst we expect macro-economic and geopolitical
uncertainties to persist in the near term, dampening growth,
the conditions we highlighted at our Interims in November
and which had kick-started the post-pandemic recovery
in London’s economy and its property markets, remain in
evidence today. London is substantially busier than this
time last year with office workers and shoppers returning,
Crossrail is about to open, job vacancies are rising and inward
investment into income yielding real estate is up. Plus, we
expect weaker sentiment and cost inflation in the short term,
along with further tightening in the planning environment,
to impact the appetite for development risk, choking off the
supply of new office space, intensifying the already acute
shortage as customers continue their flight to quality.
Despite current uncertainties, our outlook is positive; through
our Customer first approach, we are addressing today’s key
customer themes of flexibility, service delivery and amenity
provision in well designed, tech-enabled and sustainable
spaces; through our strategic focus on HQ and Flex spaces,
we are investing in two of the fastest growing sectors of the
office market and where we have a competitive advantage
and significant ambition, including our £1.1 billion near-term
development programme. With our strategic agility, strong
balance sheet, plentiful liquidity and our motivated and
engaged team, we have the ability to capitalise on London’s
potential and we look to our future with confidence.
20 Great Portland Estates plc Annual Report 2022
Our markets
Macro-economic backdrop
– IMF estimates global GDP growth of 6.1% in 2021
and forecasts 3.6% growth for 2022 and 2023.
– UK still forecast to grow; 3.8% GDP growth in 2022
(Oxford Economics).
– Consumer confidence at lowest level since July 2008
led by higher interest rates and rising inflation.
– Deloitte CFO survey: Geopolitical risk now primary
concern; 56% rating financial and economic risk
‘high’ or ‘very high’ in Q1 2022.
– Composite PMI surveys have moderated but continue
to indicate expansion; 57.6 in April 2022.
– Inflationary risks remain; UK CPI 6.2% in March 2022,
forecast to remain elevated.
Occupational markets
1
– Activity levels have recovered; central London
take-up 10.6 million sq ft in year, up 134%.
– Central London active demand remains healthy
at 6.1 million sq ft, down 5% year on year.
– Availability remains elevated at 26.0 million sq ft,
up from 25.4 million at 31 March 21 and 66% ahead
of the ten-year average.
– Central London vacancy rate 9.0% at 31 March 2022;
up from 8.7% last year.
– Supply remains tight; availability of space newly
completed or under construction low at 30%
of total stock (7.9 million sq ft).
Our markets recovered over 2021 as the impact of COVID-19 abated.
However, the recent tragic events in Ukraine have once more clouded
the outlook, moderating GDP forecasts and accelerating existing
inflationary pressures.
Investment markets
1
– Restrictions on international travel still limiting buyers’
ability to inspect buildings and conduct effective
due diligence.
– Demand for London real estate robust; office investment
deals £10.0 billion in 2021; up 32.9% year on year.
First quarter of 2022, highest on record at £5.5 billion.
– We estimate that £6.6 billion of real estate is currently
on the market to buy versus £36.7 billion of equity
demand looking to invest.
– Given the weight of money for offices, prime yields
remained firm; CBRE report prime yields of 3.25%
and 3.75% for the West End and City respectively.
– Retail yields now stable; 4.00% Regent Street,
4.25% Oxford Street and 2.75% Bond Street.
The West End
– Office take-up 4.0 million sq ft;
up 135.0% on preceding year.
– Availability 5.6 million sq ft,
down 19.8%.
– Vacancy 4.6% down from 5.8%
at March 21, Grade A vacancy
only 0.5%.
– Prime office rental values
£125.00 per sq ft at 31 March
2022, up 13.6% in year.
– Retail vacancy stabilised;
Zone A rents unchanged
on key retail streets.
The City
– Office take-up
4.2 million sq ft; up 113.4%
on preceding year.
– Availability 12.2 million sq ft,
up 8.2%.
– Vacancy 12.9% up from
11.7% at March 21, Grade A
vacancy only 2.7%.
– Prime office rental values
£71.00 per sq ft, up 1.4%
in year.
Near-term outlook
We actively monitor numerous lead indicators to help
identify key trends in our marketplace. Over the last year,
our property capital value indicators have marginally
improved, initially driven by the continued economic
recovery, but more recently offset by the economic
impact of geopolitical tensions.
Today, we expect investment activity in the central London
commercial property market to be supportive with yields
trending flat in the near term. In the occupational market,
given a strong leasing and rental performance of the
portfolio, our rental value growth range for the financial
year to 31 March 2023 is positive at between 0.0% and
5.0%, predominantly driven by the positive expected
performance of our office portfolio.
1. To 31 March 2022 and sourced from CBRE unless otherwise stated.
Strategic Report – Annual review
21Annual Report 2022 Great Portland Estates plc
Our markets are evolving, with a number of key themes
changing the way we operate and shaping the services
and spaces that we provide.
The future office
The pandemic transformed the way we both live and work,
with working from home temporarily becoming the new normal.
As we emerge from the pandemic we fully expect that the office
will remain the primary workplace for the majority of businesses.
However, it is clear that many people have enjoyed the ability
to work virtually. The future office will need to accommodate
both in person and virtual working, adopting a hybrid approach
to deliver the best of both worlds.
Structural retail change
Since 2016, more shops have been closing in the UK than opening,
with sales from physical stores moving online. This trend has been
greatly accelerated by COVID-19 with successive restrictions
dramatically reducing retail footfall, particularly in city centres.
Unsurprisingly, central London, with its reliance on office workers
and tourism (both domestic and international), has been
especially hard hit. Retailers have had to adapt and, in some
cases, greatly reduce the physical space they occupy.
Our response
Looking forward, once the pandemic is behind us, the
workplace must be somewhere that is worth travelling
to. The best offices will need to act as a magnet for their
workforce, providing services and amenities that employees
cannot get at home. The quality of the office experience
matters. In our view, the best buildings will need to provide
flexible work settings, support the health and wellbeing
of employees, promote sustainability and be more human
in scale and connected to the communities in which they
sit. They also need to be well connected to high quality
public transport to minimise the impact of the commute.
Buildings that cannot meet these criteria risk being stranded.
This plays to our strengths.
Our response
We believe that central London’s attraction as a premium
retail destination will persist. Its unique combination of
tourist destinations, flagship stores, selection of restaurants
and a deep cultural offer remains and will continue to attract
shoppers from around the world.
Retail comprises 20% of our portfolio by value. We aim to
provide high quality, modern retail units into locations with
enduring appeal. Accordingly, the bulk of our activities
centre on the prime shopping streets delivering new retail
experiences into locations that will benefit from the expected
opening of Crossrail this year. Whilst interest was muted in
the first half of 2021, as restrictions have eased, retailers
have a more positive outlook and lettings, together with
enquiry levels, are increasing.
The growing demand for flexible spaces
London has witnessed significant growth in the demand for
flexible office and co-working space in recent years. Advances in
technology, the growth in start-up businesses, increased mobility
in the workforce and the rise of the gig economy have helped
drive this growth. A plethora of new suppliers have entered the
market to meet this demand. Whilst COVID-19 slowed the growth
of some co-working operators, today flexible spaces comprise
an estimated 6% of the central London office market.
The need for sustainable spaces
The demand for highly sustainable spaces is growing fast.
Customers, together with their employees, are increasingly
aware of their impact on the environment and are demanding
spaces with the highest sustainability and wellbeing credentials.
Regulation is also accelerating, both through the planning regime
and from forthcoming legislation to tighten EPC regulations.
Sustainability is therefore no longer only a moral obligation,
it is a prerequisite for high quality spaces and a strategic
and economic imperative.
Our response
Whilst for many businesses, securing high quality,
well-located space for longer-term occupation is vital,
we recognise that customers are increasingly seeking an
element of flexibility for some parts of their business. To meet
this growing demand our Fitted offer provides dedicated,
fully-furnished space on flexible terms allowing customers
to move in and out of the space with ease. More recently,
we have rolled out a number of Fully Managed spaces,
including at 16 Dufour’s Place, W1, which extends our
proposition to provide additional services and amenity.
Interest in these spaces has been positive, they typically let
quicker and we are charging a premium for a hassle-free
real estate experience. Over time we expect this to be the
default requirement for spaces of less than 10,000 sq ft.
See more on page 28
Our response
Sustainability is becoming an increasing differentiator
between the best space and the rest. Therefore, owners
of real estate need the expertise to either create new high
quality spaces or retrofit existing space in line with the new
and evolving requirements. Buildings that are not repositioned
risk being stranded. We see this as an opportunity. We are
an experienced developer with a track record of delivering
the highly sustainable buildings that customers demand.
We also know how to reposition assets through refurbishment
and renovation. Furthermore, buildings with poorer
sustainability credentials are a potential avenue for future
acquisitions, allowing us to create value by transforming
unloved buildings into desirable, highly sustainable,
prime real estate.
See more on pages 37 to 51
Our markets continued
22 Great Portland Estates plc Annual Report 2022
Our development activities
HQ repositioning
We successfully completed one development
during the year and have pre-let the entirety
of the offices at 50 Finsbury Square, EC2, where
we expect to complete the building in December
2022. Furthermore, we achieved planning
permission at two of our four exciting near-term
schemes. Today, the potential capital commitment
of our near-term schemes is £1.1 billion, providing
the foundation for significant value growth
over the coming decade.
It has been an active year for the development team.
We completed one scheme at 1 Newman Street, W1,
which is now 69% let or under offer, and also let the entire
office space at our one remaining committed scheme,
50 Finsbury Square, EC2. In addition, we are busy working
up plans on our four near-term schemes, with the enabling
works already started at 2 Aldermanbury Square, EC2,
our 321,100 sq ft scheme in the City. Across the remaining
near-term schemes we have achieved planning permission
at French Railways House, SW1, submitted a planning
application at Minerva House, SE1 and hope to resolve
the planning status of New City Court, SE1, during
summer 2022.
At 50 Finsbury Square, EC2, our sole committed scheme,
we are on track to deliver a highly sustainable office-led
development, near Crossrail, our first to be Net Zero Carbon
and targeting BREEAM ‘Excellent’. Capital expenditure
to come on the building is £23.9 million.
Looking forward, our pipeline of future schemes remains
substantial, with the team busy preparing a further
seven schemes set to deliver 1.1 million sq ft across
the coming decade.
One scheme completed in the year
At 1 Newman Street & 70/88 Oxford Street, W1, following
the pre-let of the upper three floors in May 2020, we
completed the 122,700 sq ft office and retail building in July
2021, which sits directly opposite the Dean Street entrance
to the Tottenham Court Road Crossrail station. In June
2021, we agreed the letting of all of the basement space
to Boom Battle Bar for a new competitive socialisation
offer. Since completion, our leasing success has continued.
We leased a further 13,800 sq ft of office space to a global
investment firm for its new European headquarters.
The investment company, who will occupy the fourth floor,
has committed to a ten-year lease of prime office space
in line with September 2021 ERV and are due to move
into its new workspace later this year.
The new building is now 49% let, with both of the remaining
office floors under offer and good interest in the retail
space. Given the recent challenges in the retail market,
the scheme delivered a loss on cost on completion of 9.6%,
although we expect this position to improve as the retail
environment recovers.
2021/22 Strategic priorities:
5
Deliver and lease
the committed schemes
6
Prepare the pipeline
Operational measures
1
2022 2021
Profit/(loss) on cost .% (.%)
Ungeared IRR .% .%
Yield on cost .% .%
Income already secured .% .%
BREEAM Excellent (targeted) % %
Committed capital expenditure
to come
2
£.m £.m
1. Committed developments at date of report.
2. Including share of joint ventures.
Our approach
Upgrading our portfolio through development,
using targeted capital expenditure, creates sustainable
spaces with improved customer appeal and longevity.
This enhances both rental values and capital returns.
The cyclical nature of central London property markets
means it is critical for us to match this development
activity to the appropriate point in the cycle, delivering
new buildings into a supportive market when quality
space is scarce and demand is resilient. By combining
our forensic analysis of market conditions with
our active portfolio management, we aim to be
opportunistic and flexible when planning the start
and, therefore, completion dates for our schemes.
We have a good track record of matching our activities
to the ebb and flow of London’s cyclical market and
providing spaces that customers want. Today, we have
one committed scheme and a substantial pipeline
of opportunities. As a result, the successful leasing of
these schemes and preparation of the development
programme are key near-term strategic priorities.
Our near-term pipeline is both
substantial, with the ability to
deliver 917,800 sq ft of new highly
sustainable space, and imminent
with the first commitment expected
later this year. In total, including
land value, it represents a potential
capital commitment of over £1.1
billion which will deliver significant
value over the coming years.”
Andrew White
Development Director
Strategic Report – Annual review
23Annual Report 2022 Great Portland Estates plc
Our development activities continued
HQ repositioning
One committed scheme, office space
100% pre-let
At 50 Finsbury Square, EC2, the refurbishment of the
129,200 sq ft building, including construction of the new
roof pavilion, is progressing well, and we expect completion
later this year. Our extensive repositioning will extend the
office floor plates within the existing frame of the building,
create a large reception with a concierge as well as an
improved retail, leisure and amenity offer. The new building
will be a sustainability, wellbeing and technology exemplar
delivering on all four pillars of our Sustainability Statement
of Intent and is expected to be our first building certified
as Net Zero Carbon. We committed to the refurbishment at
the start of 2021 and, testament to the quality of the building,
in August 2021 we pre-let all of the offices to Inmarsat Global
Limited (Inmarsat). Inmarsat have taken the entirety of the
121,800 sq ft office space, on a 20-year lease (15-year break)
paying an annual rent of £8.5 million, 11.2% above March
2021 ERV. We are targeting a profit on cost of 39.1%, with
completion of the scheme expected in Q4 2022.
See our case study on page 08
In total, we have £25.1 million of committed capital expenditure,
including £23.9 million at our committed development.
Four near-term schemes
Beyond our one committed scheme, we have a substantial
and flexible pipeline of seven uncommitted schemes,
including four schemes in our near-term pipeline, one
of which is on-site.
Enabling works started at 2 Aldermanbury Square
Following achieving planning permission in 2021, we are
progressing the regear of the headlease with the City of
London to enable our redevelopment of 2 Aldermanbury
Square, EC2. In January this year, we achieved vacant
possession of the building and have commenced strip out
works ahead of hard demolition of the current structure
over the coming months. As part of the demolition we will
be working with a specialist firm to carefully remove the
steel superstructure (beams and columns) so they can be
used on another GPE project as part of a wider circular
economy initiative, see page 26 for more details.
Our proposed development will substantially increase the
size of the building to 321,100 sq ft (up from 176,000 sq ft)
and will incorporate our sustainability aspirations from the
outset, with the aim of delivering our second Net Zero Carbon
building. The scheme also includes a number of public realm
and amenity improvements that will have a positive impact
on the local area and improve accessibility to the western
entrance of the Liverpool Street Crossrail station. To date,
we have been greatly encouraged by the strong customer
interest in the scheme.
At New City Court, SE1, we submitted a second planning
application for an amended scheme of 389,100 sq ft in
April 2021. Having explored all avenues to have both the
2018 and 2021 schemes approved by Southwark without
success, we have therefore regretfully appealed for
non-determination with the public enquiry due to
commence in July 2022.
At Minerva House, SE1, we are finalising plans for a
139,900 sq ft major office refurbishment. Our proposals
will reposition this building taking full advantage of its
river frontage and, by adding additional storeys, we will
be able to create outdoor terraces and amenity space
with commanding views over central London. A planning
application for the scheme was submitted in November
2021, and we expect a decision in late 2022.
One committed scheme: 129,200 sq ft
50 Finsbury Square, EC2
Size 129,200 sq ft
Construction cost £59.4m
Expected completion date Q4 2022
BREEAM target Excellent
Distance to Crossrail station 250 metres
39.1%
Estimated profit on cost
at 50 Finsbury Square
24 Great Portland Estates plc Annual Report 2022
In May 2022, we obtained planning permission at French
Railways House and 50 Jermyn Street, SW1, part of
our Piccadilly Estate. Our proposed major office-led
redevelopment will provide 67,700 sq ft (up from 54,600 sq ft)
of new Grade A space. Whilst aspects of the circular economy
have been integrated in other development schemes, this
scheme is designed to fully embrace the principles of the
circular economy. As well as reusing the existing basement
and foundations, we are aiming to reuse the structural steel
from the demolition of 2 Aldermanbury Square, EC2, in its
construction. If successful, this will save around 1,000 tons
of carbon and reduce the embodied carbon in the steelwork
by around 99%. The development of the building is subject
to Crown consent.
Subject to planning, these four near-term schemes could
together deliver 917,800 sq ft of Grade A space, with an
expected capital expenditure of c.£836 million and an
expected ERV of c.£72 million.
Computer Generated Images.
Four near-term schemes: 917,800 sq ft, all Net Zero Carbon
2 Aldermanbury Square, EC2
Proposed size 321,100 sq ft
Construction cost £267m
Expected completion date 2025
Distance to Crossrail station 250 metres
New City Court, SE1
Proposed size 389,100 sq ft
Earliest start 2024
Opportunity area London Bridge
Distance to Crossrail station n/a
Minerva House, SE1
Proposed size 139,900 sq ft
Earliest start 2023
Opportunity area London Bridge
Distance to Crossrail station n/a
French Railways House and
50 Jermyn Street, SW1
Proposed size 67,700 sq ft
Earliest start 2023
Opportunity area Core West End
Distance to Crossrail station 750 metres
24%
Of portfolio in
development programme
Strategic Report – Annual review
25Annual Report 2022 Great Portland Estates plc
Three approaches for low carbon development
We are adopting three approaches for low carbon
redevelopment at our near-term schemes.
Reuse and extend
Where an existing building has a structure that suits modern
requirements, we aim, where possible, to reuse as much
of it as we can and, if feasible, add additional space. We are
currently using this technique at 50 Finsbury Square, EC2,
which finishes later this year, and it forms the basis of our
proposals at Minerva House, SE1 in our near-term pipeline.
Our plans at Minerva House are to retain approximately 80%
of the structural frame and reuse the foundations. We also
intend to extend the building by adding three new floors,
including landscaped terracing, whilst keeping as much
of the existing façade as possible. The building will benefit
from energy-efficient heating and cooling and potentially
openable windows and the building will be fossil-fuel free.
Our public realm works include a new public square next to
Southwark Cathedral and the entrance has been designed
to maximise river views.
It is still early days in the design process, but we are targeting
for the building to be Net Zero Carbon and have an embodied
carbon level of below 340 kg per square metre.
Low carbon rebuilds
Where it is not possible to reuse the existing building, we
undertake low carbon rebuilds, where we reuse elements
of the existing building, such as basements and foundations,
and then build the new elements of the building using low
carbon materials and modular construction techniques.
We will utilise this approach at 2 Aldermanbury Square,
EC2 and New City Court, SE1.
At 2 Aldermanbury Square, EC2 we are using a number
of techniques to reduce the embodied carbon, including:
– increasing the use of cement alternatives in the concrete;
– sourcing steel from electric arc furnaces powered
by green energy;
– reusing existing steel for roof plant areas and some
structural elements;
– using recycled raised access flooring; and
– employing the electrification of site plant and equipment.
As the design for 2 Aldermanbury Square has progressed,
we have reduced its carbon footprint at each design stage.
Today we estimate that the building will have embodied
carbon level of around 572 kg per square metre, 36% below
our 2016 baseline and already meeting our 2030 target,
with further reductions still being explored.
Circular economy new builds
The circular economy will require the reuse of as much
of the existing building as possible, including basements
and foundations, with the new build elements utilising
reused materials from other buildings. We are adopting
this approach at French Railways House, SW1 where we
are proposing a highly sustainable seven-storey building
with an extensive landscaped communal roof terrace with
new retail on Piccadilly and Jermyn St. We are proposing
to reuse the structural steel from City Place House (which is
being demolished to make way for 2 Aldermanbury Square).
It is at an early stage, but, if successful, we will save over
1,000 tonnes of carbon; and there is a 99% reduction
in embodied carbon in the new building’s steel frame.
There are also a number of other benefits:
– reusing this steel means that we can remove all of the
on-floor columns, further improving market appeal;
– we are also proposing to reuse all of the existing stone
cladding as well as reusing the existing basement
and foundations; and
– there will also be openable windows – and the building
will be fossil fuel free.
As our designs progress, we have so far reduced the targeted
embodied carbon of the scheme to below 400 kg per square
metre, which is comparable to a major refurbishment.
See more on pages 37 to 51
Our pipeline of opportunity
How we are positioned
In addition to our four schemes that are on-site or in
our near-term programme, our medium-term pipeline
consists of a further three schemes.
This provides a strong platform for organic growth
and a wealth of value-creating opportunities. All of
the schemes are currently income producing, are well
located around major public transport interchanges
in the heart of London and have flexible start dates.
Today, our total development programme is substantial,
encompassing 24% of the portfolio and set to provide
around 1.3 million sq ft of modern, high quality, sustainable
space, well matched to evolving customer requirements.
Our development activities continued
HQ repositioning
26 Great Portland Estates plc Annual Report 2022
Our leasing and Flex activities
In a period marked by economic and social
disruption, we have achieved a record leasing year,
delivering £38.5 million of new leases and beating
rental values by 9.8%. This year’s performance is
testament to our market-leading ‘Customer first’
approach which addresses today’s key customer
themes of flexibility, service delivery and amenity
provision, with well designed, tech-enabled and
sustainable spaces.
As the UK economy continues its recovery from the
pandemic, we have seen this positive momentum feed into
our occupational markets, with our peak office utilisation
up to around 55% and strong leasing at levels well ahead of
rental values, 9.8% overall. We expect the future supply of new
prime space in central London to remain limited. This lack of
availability, coupled with the strengthening of the UK economy,
is expected to have a positive impact on leasing, supporting
the demand for our high quality spaces and prime rents.
Whilst our market lettings were 9.8% ahead of ERV, rental
values across the portfolio also returned to growth, increasing
by 3.0%. Within this, our offices continue to perform better
than our retail space, with our office rental values increasing
by 4.1% compared to a 0.7% fall in retail rental values,
as the retail sector recovery was slower and impacted
by further restrictions.
See our markets on pages 21 and 22
The key leasing highlights for the year included:
– 65 new leases and renewals completed during the year
(2021: 27 leases) generating annual rent of £38.5 million
(our share: £32.0 million; 2021: £10.9 million), with market
lettings 9.8% ahead of ERV;
– flex space 13% (250,000 sq ft) of office portfolio, with
ambitions to grow organically to more than 600,000 sq ft;
– our managed space at 16 Dufour’s Place, W1 (16,300 sq ft)
which was fully let within six months of launch with the last
two lettings at more than £200 per sq ft;
– ten rent reviews securing £4.1 million of rent (our share:
£4.1 million; 2021: £6.8 million) were settled at an increase
of 1.9% over the previous rent and 2.1% ahead of ERV at
review date; and
– total space covered by new lettings, reviews and
renewals was 580,800 sq ft (2021: 300,200 sq ft).
The Group’s vacancy rate decreased to 10.8% (31 March
2021: 13.2%) following the successful leasing period, and
Group rent roll has increased by 9.3% to £104.1 million, as our
leasing successes were offset by achieving vacant possession
ahead of our proposed development at 2 Aldermanbury
Square, EC2.
9.8%
Premium to ERV
on market lettings
Operational measures
2022 2021
New lettings and renewals £.m £.m
Premium to ERV
1
(market lettings) .% .%
Vacancy rate
2
.% .%
ERV growth
2
.% (.%)
Reversionary potential
2
.% .%
Rent collected within seven days
3
.% .%
1. ERV at beginning of financial year.
2. Including share of joint ventures.
3. For March 2022 quarter, including benefit of rent deposits.
Our approach
We consider that a close relationship with our customers
is vital to our success. As a result, we manage all aspects
of our property portfolio in-house, enabling us to
continually refine our understanding of what customers
want and how we can meet their needs. We aim to
deliver a premium experience, through our high quality
teams, the energised spaces we provide and high
levels of customer service, all supported by technology.
Our portfolio managers work closely with our Leasing and
Marketing teams to ensure the spaces appeal to market
demand and with our Development team to ensure that
vacant possession is achieved on a timely basis ahead
of key development starts, wherever possible relocating
customers to other buildings within our portfolio.
Our portfolio managers, supported by our Occupier
Services team, administer a portfolio of approximately
295 customers, from a diverse range of industries,
in 44 buildings across 32 sites. This diversity limits
our exposure to any one customer or sector, with our
20 largest customers at 31 March 2022 accounting
for 39.9% (2021: 39.3%) of our rent roll.
2021/22 Strategic priority:
3
Continue to grow
our Flex offer
Our Customer first approach
helps us address the key issues
facing today’s customer. We are
offering flexibility through our Flex
spaces, a great service and a strong
amenity provision through all our
designs, including the adoption
of market leading technology.
All of which give our sustainable
spaces that magnetic appeal.”
Dan Nicholson
Executive Director
Strategic Report – Annual review
27Annual Report 2022 Great Portland Estates plc
At The Hickman, Whitechapel E1, we entered into a new
partnership agreement with Runway East, the co-working
and flexible office specialist, who will run 20,500 sq ft
of workspace across the Lower Ground, Ground and First
Floor levels for ten years. This new profit share agreement
is in addition to their existing partnership with GPE for the
operation of 48,400 sq ft of workspace at New City Court
in London Bridge.
Retail recovery in central London
Whilst we have seen significant demand for our high
quality office space we have also seen a continued recovery
of the central London retail market as footfall recovers
to near pre-pandemic levels. The most high profile deal was
the leasing of the entirety of 103/113 Regent Street, W1 held
in our Great Ropemaker Partnership (GRP) to Uniqlo Europe
Limited (Uniqlo). The property, comprising 56,850 sq ft of
mixed-use retail and office, was previously let to C-Retail Ltd
(Superdry). GRP simultaneously surrendered the Superdry
lease for £7.9 million and granted a new lease to Uniqlo.
During the year we have let a total of 203,700 sq ft of retail
space, to a variety of international and domestic retailers,
generating £12.3 million in rent, 12.3% ahead of March 2021
ERVs, demonstrating an increase in confidence in the sector.
Encouraging start to 2022/23
Since 31 March 2022, we have completed a further eleven
lettings generating annual rent of £2.9 million (our share:
£2.4 million), with market lettings 3.3% ahead of March 2022
ERV. We have a further 29 lettings under offer accounting for
£9.4 million p.a. of rent (our share: £8.7 million), 2.5% ahead
of 31 March 2022 ERV.
Improved rent collection
Rent collection challenges remained in the early part of
the year but rates have since returned to more normalised
levels. For the March 2022 quarter, we have so far collected
94.1% of the rent charged. Improved collection rates have
also reduced the level of expected credit loss provision
in the income statement, from £9.6 million to £4.0 million
in the current year (including our share of joint ventures).
At 31 March 2022, we held rent deposits and bank guarantees
totalling £18.6 million (March 2021: £17.2 million).
How we are positioned
Despite heightened levels of uncertainty, we expect current
trends to continue, with demand for best space outstripping
supply and a greater need for smaller spaces to be provided
on a flexible basis. Buildings that are unable to meet this
evolving demand, particularly in the face of competition
from growing secondary supply, will underperform. The gap
between the best and the rest is likely to widen further.
Against this backdrop we remain well positioned: our
leasing record remains strong; our committed development
programme is focused on high quality; well located office-
led schemes that have enduring demand; we are delivering
innovative products that lease well; our average office rent
remains low at £67.50 per sq ft; and 93% of our portfolio is
within walking distance of a Crossrail station.
Plan to grow our Flex offer to 600,000 sq ft
Evolving patterns of work are changing what many customers
want from their office space and we are meeting this demand
with our innovative flexible spaces. Our three flexible offerings
are Fitted, Fully Managed and Flex Partnerships. During the
year we delivered our first Fully Managed offer at 16 Dufour’s
Place, W1. This 16,300 sq ft building provides customers with
fully fitted, fully managed, tech-enabled office space with
flexibility of lease term. We leased the entirety of the building
at an average all-in rent of £195 per sq ft, some 10.5% ahead
of the Valuer’s March 2021 ERV.
During the year, we achieved vacant possession at
2 Aldermanbury Square, EC2 to enable redevelopment.
This brought our Flex partnership with Knotel in the building
to a close. Despite this reduction of 82,300 sq ft, we added
around 65,000 sq ft of new space in the year such that our
Flex offers now total around 250,000 sq ft or 13% of our
office space.
Looking forward, our portfolio is well suited to further
growing this Flex exposure. Our average building size is small
at around 60,000 sq ft and more than 80% of our floors are
sub-10,000 sq ft. Looking forward, we have further ambitions
for growth and are targeting to grow our Flex offer organically
to more than 600,000 sq ft. This growth would take our
Flex offerings to 25% of our office portfolio by 2027 and we
are excited about the opportunity for future growth in this
space. We will supplement this growth through targeting
investment opportunities that lend themselves to our flexible
space products, as demonstrated by our recent acquisitions
of 7/15 Gresse Street, W1 and 6/10 St Andrew Street, EC4.
Enduring magnetism for best-in-class space
In addition to the Inmarsat pre-let (see our development
activities above), we have also seen an increase in demand
for our best-in-class workspace, that places a high value
on sustainability, technology and customer service. This has
resulted in a year of strong leasing activity, across both our
Flex portfolio and at our recently completed developments.
At Hanover Square, W1, we have now completed all the
office leasing. In total we completed six lettings across
the office space (47,700 sq ft), ahead of our expectations,
completing with an average void of just over three months,
at rents ranging up to £127.50 per sq ft and on an average
term of over 13.5 years. We have also made significant
progress with leasing the prime retail units on New Bond Street.
In total we have now completed five retail lettings (14,400
sq ft), with Pronovias joining Canali on New Bond Street and
Moyses Stevens and Watchhouse within the courtyard space.
At our other recently completed development, 1 Newman
Street W1, where we had pre-let the three upper floors
to Exane, we completed a letting of the fourth floor to a
global investment firm, for its new European headquarters.
The investment firm has committed to a ten-year lease for
13,800 sq ft of prime office space and is due to move into
its new workspace later this year. We have one floor under
offer with strong interest in the one remaining office floor.
Our leasing and Flex activities continued
28 Great Portland Estates plc Annual Report 2022
Our investment activities
We continue to monitor the investment market
closely with a clear focus on development
and repositioning opportunities, buildings that
would suit our Flex products and assets that are
challenged from a sustainability perspective.
Since 1 April 2021, we have made two acquisitions
and one disposal.
Sales for the year ended 31 March 2022
Price
1
£m
Premium
to book
value %
Price per
sq ft
£
NIY
%
160 Old Street, EC1 . . , .
1. Including share of joint ventures.
In September 2021, the Great Ropemaker Partnership
(GRP), our 50:50 joint venture with BP Pension Fund, sold
160 Old Street, EC1 to a fund advised by J.P. Morgan Global
Alternatives. The headline price of £181.5 million (our share:
£90.8 million) reflected a 5% premium to the March 2021
valuation. The total contracted annual rental income was
£7.9 million (our share: £4.0 million), with a weighted average
unexpired lease term of approximately 10.3 years to the
earlier of breaks or expiries.
In March 2022, we acquired the long leasehold interests at
7/15 Gresse Street and 12/13 Rathbone Place, W1 for £36.5 million
(equating to £847 per sq ft, 5.6% NIY). The building has been
home to the Fashion Retail Academy since 2005, who we expect
will relocate from the building next year.
Acquisitions for the year ended 31 March 2022
Price
£m
NIY
%
Area
sq ft
Cost
per
sq ft
7/15 Gresse Street, W1 . . ,
In May 2022, we acquired the long leasehold interest
at 6/10 St Andrew Street for £30.0 million (£650 per sq ft).
The 46,200 sq ft building is currently vacant, and benefits
from planning permission for a two-storey extension. It will
provide approximately 48,000 sq ft over lower ground and
eight upper floors, with two private terraces as well as a
communal roof terrace and winter garden.
Following comprehensive refurbishment of both these
acquisitions, we intend to implement our Fully Managed Flex
offering, adding to our growing Flex office portfolio, which
currently provides around 250,000 sq ft of space on Fitted
and Fully Managed terms, across central London.
How we are positioned
We are constantly reviewing acquisition opportunities,
and we currently have £1.0 billion of potential acquisitions
under review, predominantly off market.
We are actively seeking new buildings for our Flex offerings,
opportunities for repositioning or development and we
increasingly expect the sustainability challenge to provide
us with opportunities to acquire orphaned assets needing
a sustainability solution. However, we will remain disciplined.
Any potential purchase needs to outperform the assets we
already own, and with our existing portfolio stacked with
opportunity, the hurdle is high.
Operational measures
1
2022 2021
Purchases £.m £nil
Capital value per sq ft £ –
Sales £.m £.m
Premium to book value
2
.% .%
Capital value per sq ft £, £,
Total investment transactions
3
£.m £.m
Net investment
4
£(.)m £(.)m
1. Including joint ventures at share.
2. Based on book values at start of financial year.
3. Purchases plus sales.
4. Purchases less sales.
Our approach
Buying at the right price and selling at the right time
is central to our business model. Using our extensive
network of market contacts, our Investment team
adopts a disciplined approach with clearly defined
acquisition criteria.
See more on page 12
To supplement our organic Flex growth, we are also
targeting acquisitions suitable for conversion to Flex
office space, with the following requirements:
– amenity rich locations with excellent transport links;
– clustering around existing GPE holdings desirable;
– 30,000 – 60,000 sq ft with divisible floorplates;
– target unit size of 3,000 – 5,000 sq ft;
– ability to create internal and external amenity space;
– high quality ground floor experience;
– product and market appropriate refurbishment
capex; and
– opportunity to deliver stabilised income of 6%+.
Once we have acquired a property, the Investment
team works closely with our Portfolio Management
and Development teams to deliver the business plan
and maximise the property’s potential. Every asset’s
business plan is updated quarterly, providing estimates
of forward look returns under different market
scenarios. These plans also help to inform our sales
activities, with the assets providing the lower risk
adjusted returns often being sold and the proceeds
recycled into better performing opportunities
or returned to shareholders.
The acquisition of Gresse Street
offers a fantastic opportunity
for us to reposition these tired
buildings with high quality,
fully managed flexible spaces
designed with the customer
at its heart and in a location
that is full of opportunity.”
Robin Matthews
Investment Director
Strategic Report – Annual review
29Annual Report 2022 Great Portland Estates plc
Our financial results
As is usual practice in our sector, we use Alternative Performance
Measures (APMs) to help explain the performance of the
business. These include quoting a number of measures on
a proportionately consolidated basis to include joint ventures,
as it best describes how we manage the portfolio, like-for-like
measures and using measures prescribed by EPRA. The measures
defined by EPRA are designed to enhance transparency
and comparability across the European real estate sector.
Reconciliations of APMs are included in note 8 of the
financial statements.
See more about performance measures and
EPRA metrics on page 33 and note 8 to the accounts
Higher IFRS NAV and EPRA NTA per share
driven by valuation gains
IFRS NAV and EPRA NTA per share at 31 March 2022 were
835 pence per share, an increase of 7.2% over the year, largely
due to the 6.1% like-for-like valuation increase in the property
portfolio. When combined with ordinary dividends paid
of 12.6 pence per share, this delivered a Total Accounting
Return of 8.8%.
EPRA NTA pence per share
780
720
700
880
860
840
820
800
900
31 March
2022
740
760
Increase Decrease Total
31 March
2021
779
Revaluation
54
Profit on
disposals
1
Ordinary
dividend
(13)
EPS
11
Other
3
835
The main drivers of the 56 pence per share increase
in EPRA NTA from 31 March 2021 were:
– the increase of 54 pence per share arising from
the revaluation of the property portfolio;
– the profit on disposal of 160 Old Street, EC1
increased NTA by one pence per share;
– EPRA earnings for the year of 11 pence per share
enhanced NTA;
– ordinary dividends paid of 13 pence per share
reduced NTA; and
– other items increased NTA by three pence per share.
At 31 March 2022, the Group’s net assets were £2,112.9 million,
up from £1,971.6 million at 31 March 2021, with the increase
largely attributable to the increase in property valuation
of £136.0 million. EPRA NDV and EPRA NRV were 838 pence
and 911 pence at 31 March 2022 respectively, compared
to 777 pence and 849 pence at 31 March 2021.
See more about our capital strength
on pages 32 and 33
Revenue reduced due to lower rental income
Revenue for the year was £84.2 million, down from £88.5 million
on the prior year, driven by lower gross rental income which
reduced by £7.7 million to £66.1 million and reduced service
charge income. The reduction in gross rental income was
largely attributable to achieving vacant possession of our
committed development at 50 Finsbury Square in the prior
year and 2 Aldermanbury Square ahead of its proposed
development.
Net rental income, after taking account of expected credit
losses (see below), lease incentives and ground rents was
£62.6 million, up from £62.1 million in the prior year as we see
the benefit from the lease commencements at our recently
completed developments.
Adjusting for acquisitions, disposals and transfers to and
from the development programme, like-for-like rental
income (including share of joint ventures) increased
by 4.3% including expected credit losses.
Joint venture fee income for the year was £5.1 million,
an increase of £1.4 million, resulting from fees earned on
the sale of 160 Old Street, EC1 from the Great Ropemaker
Partnership (GRP).
The recovery from COVID-19, and the resultant
bounce back in the London economy and our actions,
have bolstered property values and increased our
EPRA NTA to 835 pence per share, up 7.2%.”
Nick Sanderson Chief Financial & Operating Officer
£2.1bn
Net assets
30 Great Portland Estates plc Annual Report 2022
Expected credit loss for unpaid rent
The year continued to be affected by the economic
impact of COVID-19. However, as the year progressed and
London’s economy reopened and economic activity returned
to more normalised levels, our rent collection performance
improved. Overall we secured 95% of all rents due in the
year, including in our joint ventures. Whilst we have continued
to offer assistance to support our customers through
this difficult period, particularly our smaller independent
retailers, the level of expected credit loss provisions in the
Group reduced to £4.1 million (£4.0 million including our share
of joint ventures) from £7.7 million in the prior year.
At 25 March 2022, we had around 8% of our rent roll on monthly
payment terms (25 March 2021: 28%). Since 1 April 2021,
one of our customers went into administration, representing
less than 0.1% of our rent roll. At 31 March 2022, we held rent
deposits and bank guarantees totalling £18.6 million.
Cost of sales increased
Cost of sales increased from £24.7 million to £30.1 million
for the year ended 31 March 2022. This increase was primarily
driven by increased costs associated with our leasing initiatives
in our record leasing year and greater business rates on empty
space due to higher average levels of portfolio vacancy.
Taken together, net service charge income, other property
costs and expected credit loss provisions for service charges
rose to £17.7 million from £9.7 million in the prior year.
Joint venture earnings
EPRA earnings from joint ventures were £14.5 million, up
from £9.1 million last year, primarily as a result of receiving
a one-off surrender premium of £3.9 million (our share) in GRP,
as well as strong leasing activity at Hanover Square, W1 and
reduced expected credit loss provisions in respect of unpaid
rents which totalled a credit of £0.1 million, down from
a £1.9 million charge last year.
Higher performance related pay
Administration costs were £35.0 million, £9.8 million higher
than the previous year. The increase was primarily due to
increased provisions for performance-related pay, including
share-based payments in respect of our LTIP scheme, given
the strong uplift in the property valuation during the year.
Costs also rose given increased headcount, as we continue
to enhance our teams to deliver on our Customer first and
Flex ambitions.
Increased interest cost from new facilities
Gross interest paid on our debt facilities was £14.3 million,
£2.2 million higher than the prior year. This increase primarily
resulted from the full year impact of drawing on the Group’s
£150 million 2.77% private placement notes which were
issued in November 2020. Capitalised interest increased
by £0.9 million to £7.2 million as our development activity
increased with the start of enabling works at 2 Aldermanbury
Square, EC2. As a result, the Group had net finance costs
(including interest receivable) of £1.7 million (2021: income
of £0.2 million).
EPRA earnings
EPRA earnings were £27.4 million, 31.7% lower than last year as
expected, predominantly due to lower net rental income and
increased property and administration costs offset by lower
expected credit loss provisions made against doubtful debts.
EPRA earnings £m
Increase Decrease Total
31 March
2021
40.1
Rental
income
incl. ECL
provision
0.5
Joint
venture
fees
1.4
Joint
venture
EPRA
earnings
5.4
Property
costs
(8.0)
Admin
costs
(9.8)
31 March
2022
27.4
(2.2)
Interest/
other
10
40
35
45
30
25
20
15
50
Revaluation gains in the Group’s investment properties,
together with reduced EPRA earnings, led to the Group’s
reported IFRS profit after tax of £167.2 million (2021: loss of
£201.9 million). Basic and diluted earnings per share for the
year were 66.1 pence and 66.0 pence respectively, compared
to a 79.8 pence loss for 2021. Diluted EPRA EPS was 10.8 pence
(2021: 15.8 pence), a decrease of 31.6% and cash EPS was
5.7 pence (2021: 12.2 pence).
For the forthcoming year, we anticipate that rental income
will reduce due to the sale of 160 Old Street, EC1 and we do
not anticipate that we will receive similar levels of surrender
premiums. Furthermore, as we create vacancy through
accelerating the conversion of our spaces to our Flex offerings
and committing to the development of our near-term schemes,
we anticipate that for the coming year EPRA EPS will be lower
than that of the current year.
Results of joint ventures
The Group’s net investment in joint ventures decreased
to £582.8 million at 31 March 2022, down from £626.4 million
in the previous year. The decrease is largely due a partner
distribution after the profitable disposal of 160 Old Street,
EC1 partially offset by a 7.8% like-for-like increase in value
of the property portfolio. Our share of joint venture net rental
income was £24.0 million, up 37.9% from last year. This increase
was primarily the result of strong leasing activity at Hanover
Square, W1, reduced expected credit loss provisions in respect
of unpaid rent of £2.0 million, and the receipt of £3.9 million
(our share) in respect of a surrender premium paid by Superdry
on their departure from 101/113 Regent Street, W1.
See more about our joint ventures on page 57
Strategic Report – Annual review
31Annual Report 2022 Great Portland Estates plc
Our financial results continued
Our capital strength
While our primary objective is to deliver returns consistently
ahead of our cost of capital, we also seek to minimise the
cost of our capital through the appropriate mix of equity
and debt finance, and to ensure that we have access to
sufficient financial resources to implement our business plans.
Optimising and flexing the allocation of capital across our
portfolio, including between our investment and development
activities, is key to our business and ensuring that we maximise
returns on a risk-adjusted basis through the property cycle.
Accordingly, we operate with four key ‘givens’:
– conservative leverage to enhance, not drive, returns;
– sustainable ordinary dividends;
– disciplined capital allocation; and
– balance sheet efficiency – track record of accretively
raising and returning capital.
Our preference for low financial leverage helps to provide
downside protection when operating in the cyclical central
London property market and to maintain the financial
flexibility to allow us to act quickly on new investment
opportunities as they arise.
EPRA LTV low at 20.5%
The Group’s consolidated net debt increased to £531.2 million
at 31 March 2022, compared to £477.5 million at 31 March 2021.
The increase was largely due to £79.2 million development
capital expenditure across the Group and the purchase
of 7/15 Gresse Street, W1 for £37.5 million (including costs),
more than offsetting the sales proceeds from 160 Old Street,
EC1 for £90.8 million (our share). As a result, the Group’s
gearing increased to 25.4% at 31 March 2022 from 24.6%
at 31 March 2021.
Including cash balances in joint ventures, total net debt
was £502.3 million (2021: £451.0 million), equivalent to a low
EPRA LTV of 20.5% (2021: 20.0%). At 31 March 2022, we had
no external debt in any of our joint ventures. At 31 March 2022,
the Group, including its joint ventures, had cash (£28 million)
and undrawn committed credit facilities (£363 million)
totalling £391 million.
Debt analysis
March
2022
March
2021
Net debt excluding JVs (£m) . .
Net gearing .% .%
Total net debt including 50%
JV cash balances (£m) . .
EPRA LTV .% .%
Interest cover n/a n/a
Weighted average interest rate .% .%
Weighted average cost of debt .% .%
% of debt fixed/hedged % %
Cash and undrawn facilities (£m)
The Group’s weighted average cost of debt for the year,
including fees and joint venture debt, was 2.9%, marginally
higher than the prior year. The weighted average interest
rate (excluding fees) was 2.5% at the year end, unchanged
over the 12 months. Our weighted average drawn debt maturity
was 6.9 years at 31 March 2022 (31 March 2021: 8.1 years).
At 31 March 2022, 84% of the Group’s total debt was at fixed
or hedged rates (2021: 91%). The Group is operating with
substantial headroom over its debt covenants. At 31 March
2022, given our low levels of leverage, property values would
have to fall by around 56% before covenant breach.
Balance sheet discipline
When considering the appropriate level of financial leverage in
the business, we apply the same capital discipline that we use
when making asset level decisions. Typically, we aim for a loan
to value ratio of between 10% to 35% through the cycle and
today we are at the lower end of the range given our portfolio
activities and market cycle position. Additionally, we have a
track record of accretively raising and returning equity capital
to shareholders at the appropriate time and in the appropriate
circumstances. Our key considerations when making such
capital decisions include:
– the market outlook;
– opportunities for growth (both capital expenditure
and acquisitions);
– opportunities for profitable recycling activity; and
– current and prospective debt ratios (including LTV
and interest cover).
An example of this capital discipline in action is the £616 million
of surplus equity that we returned to shareholders in recent years.
Taxation
The tax credit in the income statement for the year was
£0.5 million (2021: £0.1 million) and the effective tax rate on EPRA
earnings was 0% (2021: 0%). The majority of the Group’s income
is tax-free as a result of its REIT status, and other allowances were
available to set against non-REIT profits. The Group complied
with all relevant REIT tests for the year to 31 March 2022.
As a REIT, the majority of rental profits and chargeable
gains from our property rental business are exempt from
UK corporation tax, provided we meet a number of conditions
including distributing at least 90% of the rental income profits
of this business (known as Property Income Distributions (PIDs))
on an annual basis. These PIDs are then typically treated as
taxable income in the hands of shareholders. During the year,
the Group paid £26.1 million of PIDs.
The Group’s REIT exemption does not extend to either
profits arising from the sale of trading properties or gains
arising from the sale of investment properties in respect
of which a major redevelopment has completed within
the preceding three years.
The Group is otherwise subject to corporation tax. Despite being
a REIT, we are subject to a number of other taxes and certain
sector specific charges in the same way as non-REIT companies.
During the year, we incurred £9.4 million in respect of stamp
taxes, section 106 contributions, community infrastructure
levies, empty rates in respect of vacant space, head office
rates, employer’s national insurance and irrecoverable VAT.
All entities within the Group are UK tax resident; as our business
is located wholly in the UK, we consider this to be appropriate.
The Group maintains an open working relationship with HMRC
and seeks pre-clearance in respect of complex transactions.
HMRC regards the Group as ‘low risk’ and maintaining this
status is a key objective of the Group.
See more about our tax strategy at:
www.gpe.co.uk/about-us/governance
32 Great Portland Estates plc Annual Report 2022
Ordinary dividends
Given the low yielding nature of London real estate, the Group
operates a low and progressive ordinary dividend policy,
with the aim of maintaining average dividend cover of 1.0x
through the cycle. The Board has recommended a final
dividend of 7.9 pence per share (2021: 7.9 pence) which
will be paid, subject to shareholder approval, on 11 July 2022
to shareholders on the register on 27 May 2022. All of this
final dividend will be a REIT PID in respect of the Group’s
tax exempt property rental business.
Together with the interim dividend of 4.7 pence per share,
the total dividend for the year is 12.6 pence per share,
consistent with the prior 12 months.
Ordinary dividends: 12.6 pence per share
2019 20202018
7
13
2022
10
11
12
8
9
11.3
12.2
12.6
12.612.6
2021
EPRA performance measures
Measure Definition of measure
March
2022
March
2021
EPRA earnings* Recurring earnings from core operational activities £.m £.m
EPRA EPS* EPRA earnings divided by the weighted average number of shares .p .p
Diluted EPRA EPS* EPRA earnings divided by the diluted weighted average number of shares .p .p
EPRA costs
(by portfolio value)*
EPRA costs (including direct vacancy costs) divided by market value
of the portfolio .% .%
EPRA capital
expenditure*
The Group’s capital expenditure on the portfolio categorised
between acquisitions, development and on the investment portfolio £.m £.m
EPRA NTA* Assumes that entities buy and sell assets, thereby crystallising certain
levels of unavoidable deferred tax. Diluted net assets per share adjusted
to remove the cumulative fair value movements on interest-rate swaps
and similar instruments, the carrying value of goodwill arising as a result
of deferred tax and other intangible assets £,.m £,.m
EPRA NTA per share* EPRA NTA assets divided by the number of shares at the balance sheet
date on a diluted basis p p
EPRA NDV* Represents the shareholders’ value under a disposal scenario, where
deferred tax, financial instruments and certain other adjustments are
calculated to the full extent of their liability, net of any resulting tax.
Diluted net assets per share adjusted to remove the impact of goodwill
arising as a result of deferred tax and fixed interest rate debt £,.m £,.m
EPRA NDV per share* EPRA NDV assets divided by the number of shares at the balance sheet
date on a diluted basis p p
EPRA NRV* Represents the value of net assets on a long-term basis. Assets and
liabilities that are not expected to crystallise in normal circumstances
such as the fair value movements on financial derivatives, real estate
transfer taxes, and deferred taxes on property valuation surpluses
are therefore excluded £,.m £,.m
EPRA NRV per share* EPRA NRV assets divided by the number of shares at the balance sheet
date on a diluted basis p p
EPRA LTV Debt (including net receivables) divided by market value of the property .% .%
EPRA NIY Annualised rental income based on cash rents passing at the balance
sheet date less non-recoverable property operating expenses,
divided by the market value of the property increased by estimated
purchasers’ costs. See calculation table on page 156 .% .%
EPRA ‘topped-up’ NIY EPRA NIY adjusted to include rental income in rent-free periods
(or other unexpired lease incentives). See calculation table on page 156 .% .%
EPRA vacancy rate ERV of non-development vacant space as a percentage of ERV
of the whole portfolio. See calculation table on page 185 .% .%
* Audited; reconciliation to IFRS numbers included in note 8 to the financial statements.
£391 m
Cash and undrawn facilities
Strategic Report – Annual review
33Annual Report 2022 Great Portland Estates plc
Our portfolio
Our portfolio by value – 69% in West End
1
31%
North of Oxford Street £1,016.1m
Rest of West End £814.1m
City £487.4m
Southwark £194.1m
Midtown £135.7m
7%
5%
38%
19%
1. Including share of joint ventures.
Evolving our strategy
To succeed, we need to provide our customers with great
spaces that are flexible, sustainable and beautifully designed,
offering high quality services to provide an enticing real estate
experience. To achieve this, and meet our customers’ evolving
needs and changing working patterns, we are evolving
our strategy to focus on two complementary, overlapping
activities, and our portfolio is well-suited to deliver both:
– HQ repositioning – developing larger, best-in-class HQ
buildings. Growing demand for very high quality, brand
new space has remained strong and the future supply of
space remains limited. Today our development programme
totals 24% of the Group’s existing portfolio. This pipeline
of opportunity provides raw material, often with poor
sustainability credentials, which we can transform into best-
in-class spaces designed to let well in their local markets,
be future-proofed in a rapidly changing world and have
regard to the wider environment in which they are located.
– Flex spaces – smaller fitted units, often with higher service
levels. Customers in our smaller spaces are increasingly
demanding the provision of flexibility, amenity and service
provision. Accordingly, we have developed a choice of
Flex offerings to meet this need. We provide spaces that
are delivered flexibly on a Fitted, or Fully Managed basis,
making life easier and hassle free. Where the management
of the space is more intensive, delivered by the desk or room,
we partner with another provider to meet this demand.
Our portfolio, with around 87% of our spaces sub-10,000 sq ft,
is perfectly placed to meet this demand.
Both of these business activities are complementary and
primed for growth. Our near-term developments will commit
£1.1 billion of capital, delivering 917,800 sq ft of brand new
space, and we have an ambition to significantly grow our
Flex offerings to more than 600,00 sq ft in the coming years.
Our approach
Our focused business model is based upon repositioning
properties to unlock their often hidden potential. This
repositioning relies on having a deep understanding of the
markets in which we operate, to enable us to unearth new
opportunities, provide spaces that customers demand
and to develop buildings for the customers of tomorrow.
We aim to position our portfolio to maximise the opportunity
for future growth. As a result, every property has a detailed
business plan which forecasts each and every customer’s
future cash flows and, using our own assumptions for future
movements in rents and yields, forecasts the forward look
returns for the portfolio. If a property’s prospective returns
do not meet our required investment hurdles, taking into
account both our cost of capital and the risks, typically
it is sold.
Well located central London portfolio
Our specialist approach requires focus. As a result, we only
operate in central London. Whilst our origins lie in the West
End, we recognise that central London is growing, and as it
grows, new locations will become sought after by customers
seeking new homes for their businesses. As a result, we remain
opportunistic and will invest across central London where
we see both value and opportunities for growth.
See more about our portfolio on pages 04 and 05
We only operate in central London and our portfolio
has its origins in the West End, which accounts for
69% of our properties. We recognise that customer
needs are rapidly evolving and we are shaping the
products and services we provide accordingly.
Operational measures
+6.1%
Property valuation growth
(on a like-for-like basis)
24%
Percentage of portfolio in
development programme
+48.6%
Valuation growth of
committed developments
13%
Percentage of office portfolio
converted to our Flex offerings
100%
Of the portfolio in central London
34 Great Portland Estates plc Annual Report 2022
The overall valuation increase of 6.1% during the year was
largely driven by our office portfolio which increased by 7.9%
in comparison to our retail assets which were flat, as further
restrictions at the start of the year impacted the sector’s
recovery. Our Flex activities also supported our valuation
performance. Buildings with more than 40% of the space
in our Flex offerings grew by 8.6%. Elements of the portfolio
also continued to show greater variation. Short leasehold
properties (<100 years), which represent around 9% of the
portfolio, reduced in value by 2.9% compared to an increase
of 7.0% in the rest of the portfolio, as investor demand for
shorter leasehold assets remained low. Our pipeline properties,
typically on shorter lease terms, reduced in value by 5.9%
during the year, in comparison to our long-dated assets
which increased by 12.1%.
Our joint venture properties rose in value by 7.8% over the
year, driven by leasing successes at our recently completed
development at Hanover Square, W1. The wholly-owned
portfolio increased by 5.7% on a like-for-like basis supported
by our committed developments at 50 Finsbury Square, EC2.
Our relative performance
The Group delivered a Total Property Return (TPR) for the year
of 9.4%, compared to the central London MSCI annual index
of 7.0%, and a capital return of 6.5%, versus 3.8% for MSCI.
This outperformance was driven by our committed and
recently completed development schemes, along with GPE
delivering a record leasing year.
Long-term outperformance
Relative returns vs MSCI
Relative capital growth % p.a.
1
GPE
280
330
230
180
130
80
IPD Central London Universe
’04 ’07’06’05 ’10’09’08 ’13’12’11 ’16’15’14 ’20 ’21 ’22’19’18’17
1. 2004 – first pure comparability to MSCI Central London.
Portfolio value up 6.1%; driven by our committed
development and leasing successes
The valuation of our portfolio, including our share
of joint ventures, increased over the 12 months by 6.1%,
on a like-for-like basis, to £2,647.4 million at 31 March 2022.
The key drivers behind the Group’s valuation increase for
the year, including joint ventures at share, were:
– development gains – the valuation of our committed
development properties increased by 48.6% on a like-for-
like basis to £167.6 million during the year. Our development
returns were supported by securing a major pre-letting,
ahead of the valuer’s assumptions;
See more about our development activities on pages 23 to 26
– rental value increases – since the start of the financial year
rental values increased by 4.4%, or 3.0% on a like-for-like
basis, with our office portfolio up by 4.1% and our retail
portfolio reducing by 0.7%;
See more about our market on pages 21 and 22
– active portfolio management – we delivered a record
leasing year, signing 75 new leases, rent reviews and
renewals, with new lettings 9.8% ahead of ERV. This secured
£36.1 million (our share) of annual income, supporting
the valuation over the year; and
See more about our leasing and Flex activities on pages 27 and 28
– lower investment yields – equivalent yields decreased
by 13 basis points (2021: +11 basis points) during the year
(office: -18 basis points; retail: +3 basis points). At 31 March
2022, the portfolio true equivalent yield was 4.4%.
See more about our markets on pages 21 and 22
Drivers of valuation growth %
Rental value growth
6.0%5.0%4.0%3.0%2.0%1.0%0.0%
Yield shift
Residual
-1.0% 7.0%
2.0% 4.4%(0.4)%
Including rent from pre-lets and leases currently in rent-free
periods, the adjusted initial yield of the investment portfolio
at 31 March 2022 was 3.8%, the same as at the start of the
financial year.
We have been highly active in
a supportive market. As a result,
our portfolio value was up by 6.1%,
driven by a 48.6% rise in the value
of our developments.”
Hugh Morgan
Director of Investment Management
Strategic Report – Annual review
35Annual Report 2022 Great Portland Estates plc
Our portfolio continued
Portfolio performance
Wholly-
owned
£m
Joint
ventures
1
£m
Total
£m
Proportion
of portfolio
%
Valuation
movement
%
North of Oxford Street Office . – . . .
Retail . . . . (.)
Residential . – . . .
Rest of West End Office . . . . .
Retail . . . . .
Residential . – . . (.)
Total West End ,. . ,. . .
City, Midtown and Southwark Office . . . . .
Retail . – . . –
Residential . – . . .
Total City, Midtown and Southwark . . . . .
Investment property portfolio ,. . ,. . .
Development property . – . . .
Total properties held throughout the year ,. . ,. . .
Acquisitions . – . . (.)
Portfolio valuation ,. . ,. . .
1. GPE share.
Portfolio characteristics
Investment
properties
£m
Development
properties
£m
Total
property
portfolio
£m
Office
£m
Retail
£m
Residential
£m
Total
£m
Net
internal
area sq ft
000’s
North of Oxford Street ,. – ,. . . . ,.
Rest of West End . – . . . . .
Total West End ,. – ,. ,. . . ,. ,
City, Midtown and Southwark . . . . . . . ,
Total ,. . ,. ,. . . ,. ,
By use: Office ,. . ,.
Retail . . .
Residential . – .
Total ,. . ,.
Net internal area sq ft 000’s , ,
£2.6bn
Portfolio valuation
36 Great Portland Estates plc Annual Report 2022
Put health
and wellbeing
front and
centre
See page 44
Create a lasting
positive social
impact in our
communities
See page 43
Design climate
change resilient
and adaptable
spaces
See pages 41 to 42
Decarbonise
our business to
become net zero
by 2030
See pages 38 to 40
Sustainability
Creating sustainable spaces sits at the heart of our purpose. Whilst the world
of sustainability can be complicated, our approach is simple and is set out
in our Sustainability Statement of Intent ‘The Time is Now’.
We will:
During the year we…
…and launched our:
Social Impact Strategy
In November 2021, we launched
our Social Impact Strategy setting
out our priorities, how we can make
a difference and how social impact
can bring business benefits
Charity Partnership with XLP
In April 2022, we announced our
new three-year charity partnership
with XLP, focused on helping to
create a lasting and positive impact
for young people growing up in
inner city London estates
…made progress on our Roadmap to Net Zero and outperformed two of our three ESG linked KPIs:
-24.4%
Reduced energy intensity
by 24.4% when compared
to our 2016 baseline
£403k
Invested £403,000 from our
Decarbonisation Fund in
energy efficiency projects
within our portfolio
£631k
Created £631,000
of social value within
our communities
250
Installed over 250 indoor
air quality sensors across
29 buildings
Nov
2021
April
2022
July
2021
To see our full range of reports, including our Sustainability Performance Report, see our sustainability hub at
www.gpe.co.uk/sustainability
www.gpe.co.uk/our-relationships/
community-relationships
www.gpe.co.uk/investors
www.gpe.co.uk/news-media/news/2022/
launch-of-new-charity-partnerships
Sustainable Finance Framework
In July 2021, we set out how we
intend to issue Sustainable Debt
Instruments which have a
positive environmental or social
impact whilst supporting our
business strategy
To increase
Biodiversity
Net Gain
To reduce
Embodied
Carbon
To reduce
Energy
Intensity
See page 41
Strategic Report – Annual review
37Annual Report 2022 Great Portland Estates plc
Sustainability continued
Progress during the year
1. Reduce embodied carbon
-22.0%
Reduction in embodied carbon at our two developments
at 50 Finsbury Square, EC2, and 2 Aldermanbury Square,
EC2, compared to 2020 baseline
We are targeting net zero carbon for all our
developments eight years ahead of our 2030 target
for new buildings. In the absence of an industry-
wide net zero carbon building certification scheme,
we use the UK Green Building Council framework
definition and reporting guidelines.
50 Finsbury Square, EC2, due for completion by the end of
2022, is forecast to be the first net zero carbon building within
our portfolio. Our internal carbon price of £95 per tonne has
substantially accelerated progress, with our project teams
working together to reduce the carbon price payable. As a
result, the building is now fossil fuel free and providing on-site
renewable electricity generation, reducing the projected
energy intensity of the building, in line with our net zero goal.
Our 2 Aldermanbury Square, EC2, development will also be
net zero carbon and deconstruction of the existing building
has commenced. Forecasts suggest that we will achieve
our 2030 embodied carbon target through the inclusion
of alternative materials such as responsible steel and lower
carbon concrete, the use of efficient building techniques
and the implementation of circular economy principles.
2 Aldermanbury Square will also be our first building to secure
a NABERS UK Design for Performance rating and we will pilot
a building materials passport, ultimately making the building
more adaptable and easier to dismantle at the end of its life.
We will also be removing and reconditioning the steel from
City Place House, EC2, (the existing building at 2 Aldermanbury
Square) with the intention to reuse the steel in another GPE
development scheme.
See the case study on page 41
Decarbonising faster
In its first year, £403,000 was invested in our Decarbonisation
Fund. This was generated from our internal carbon price of £95
per tonne levied on both operational energy related emissions
(Scope 1 and 2) and embodied carbon (Scope 3) emissions.
The monies were used to fund energy efficiency projects at our
highest energy consuming building, 200 Gray’s Inn Road, WC1.
Projects included an intelligent building optimisation system
to better control on-site plant and LED lighting upgrades.
With our joint venture partner matching our investment, funds
were able to go further. These projects are expected to save
657 tCO
2
e per year and pay back in an average of two years.
657 tCO
2
e per year
Expected carbon savings through Decarbonisation
Fund projects
Decarbonise
our business to
become net zero
by 2030
Our Roadmap to Net Zero sets out how
we will decarbonise our business to become
net zero and incorporates our carbon
reduction hierarchy:
1. Reduce embodied carbon – the majority of a
building’s embodied carbon is emitted through the
extraction, manufacture and transport of building
materials and the construction process itself.
As a developer, a significant proportion of our carbon
footprint is associated with embodied carbon.
2030 Target: a 40% reduction in embodied carbon
from our 2020 baseline of 954kg CO
2
e per m
2
2. Reduce energy intensity – tackling the energy
consumption of our buildings is essential to reduce
operational carbon emissions and reduce both
the costs and carbon emissions of our customers.
2030 Target: a 40% reduction in energy intensity
from our 2016 baseline of 234 kWh per m
2
3. Increase renewable energy – as more buildings
become fossil fuel free and energy security concerns
continue to grow, there is an increasing focus
on generating more on-site renewable energy.
2030 Target: generate 600 MWh of renewable
energy per annum at our buildings
4. Offset residual emissions and internal carbon
pricing to decarbonise faster – even with meeting
our targets, 50% of our 2030 emissions are likely to
require offsetting in order for us to become net zero.
Our internal carbon price of £95 per tonne is designed
to incentivise us to decarbonise faster and reduce
reliance on offsets. Funds generated feed into our
Decarbonisation Fund which supports the retrofitting
of our portfolio and drives behavioural change.
Funds in the Decarbonisation Fund from
operational carbon emissions for the year
ended 31 March 2022: £522,000
See more on our Sustainability KPIs on pages 14 and 15
and how they link to remuneration on pages 115, 118 and 121
38 Great Portland Estates plc Annual Report 2022
2. Reduce energy intensity
-24.4%
Reduction in energy intensity compared to 2016 baseline
Reducing the energy intensity of our buildings
is crucial to our net zero carbon strategy.
Whilst our absolute energy consumption increased
compared to last year due to our newly occupied,
recently completed developments, we have
reduced our energy intensity by 24.4% since
we set our baseline in 2016.
Technology and innovation is helping us to understand
where efficiencies can be made. During the year, we trialled
four Digital Twin systems and will be rolling out our preferred
system across the portfolio to better control energy and
optimise building performance. Investing in appropriate
metering infrastructure is also key and so we continued
our project to upgrade to automatic metering across
the portfolio.
Our buildings need to work efficiently when in use. During
the year, 26% of our carbon footprint was associated with the
space occupied by our customers – the energy used to heat,
cool, light and power their spaces in our buildings. As such,
collaboration is crucial. Our customer app, sesame®, provides
real time energy consumption data to help enhance our
understanding of building efficiency. We are also establishing
building energy forums to support improved communication
with our customers on reducing building emissions.
At the time of writing, implementation legislation is still
awaited for the introduction of energy performance in-use
ratings and new minimum energy efficiency standards of
an EPC B rating by 2030. We estimate that the investment
required to upgrade our existing buildings to the new
minimum EPC B rating is around £20 million.
See more on pages 41 and 42
With increased focus on operational energy performance
and the need for each building to have a net zero transition
plan, we are piloting the new NABERS UK Energy for Offices
rating scheme. As expected, our initial findings demonstrate
that many buildings have a long way to go to perform as
efficiently in-use as designed.
To understand the challenges and unlock barriers to
building performance, we brought together 25 stakeholders
working with us at every stage of the building lifecycle, for
an ‘Energy Ideathon’. Discussions ranged from the tendering
of works packages to commissioning and feedback – these
discussions will help shape our strategy going forward.
Over the coming year, we are enhancing our costed EPC
plans to include the cost to get our buildings to 90kWh per m
2
,
in line with our Roadmap to Net Zero and our target aligned
with a 1.5 degrees warming scenario.
3. Increase renewable energy
100%
REGO-backed electricity and green gas purchased
Whilst we purchase 100% REGO-backed electricity
and green gas, we recognise that to decarbonise
our buildings, we need to transition away from fossil
fuels, reduce our reliance on the National Grid and
generate more on-site renewable electricity.
Starting with our development at 50 Finsbury Square, EC2,
all future new-build developments and major refurbishments
will have some form of renewable energy on-site, be fossil fuel
free and, where appropriate, be connected to local district
heating and power networks.
Whilst this will support the transition away from reliance on
fossil fuels in new buildings, and potentially provide improved
energy security for our customers, there is also a need to
install renewable energy at our existing buildings. Roof space
is currently being assessed for this work, taking into account
competing demands for these areas such as terraces and
outside space and the need to include biodiversity.
During the year, we generated 27 MWh of electricity through
on-site solar panels and continued to procure REGO-backed
electricity and green gas. A significant increase in onsite
energy generation is needed to reach our ambitious target.
4. Offset residual emissions and internal carbon
pricing to decarbonise faster
£925k
Contributed to Decarbonisation Fund in its first two years
Offsetting is a last resort. Our focus is on providing
incentives for our team, our supply chain and
our customers to decarbonise faster by applying
our internal carbon price of £95 per tonne.
On 1 April 2022, we added £522,000 to our Decarbonisation
Fund due to our operational energy-related emissions for the
year ended 31 March 2022. This accounts for 5,498 tonnes of
carbon, bringing the total raised through our internal carbon
price to £925,000 in its first two years. In addition, we offset
24 tonnes associated with employee business travel and
our Community Day.
www.gpe.co.uk/sustainability/
our-sustainability-statement-of-intent
Strategic Report – Annual review
39Annual Report 2022 Great Portland Estates plc
Sustainability continued
Performance against our Roadmap
to Net Zero
As a signatory of the Better Buildings Partnership’s (BBP)
Climate Commitment, we are required to disclose progress
annually against our Roadmap to Net Zero. Our carbon
footprint and narrative on progress during the last year
is set out below.
Compared to 2021, our total annual carbon emissions
(Scopes 1, 2 and 3) increased by 35% or 6,813 tCO
2
e.
Our direct operational energy emissions (Scope 1 and
2) increased by 16%. This increase was mainly driven by
the energy consumption from Hanover Square, W1, now
fully operational and incorporated in our data for the full
reporting year for the first time. Additionally, increased
occupancy as people returned to the office during the
year post COVID-19 lockdowns also impacted consumption
for the reporting period.
79% of our carbon emissions fall outside our direct control
and form our Scope 3 emissions; these are emitted by
our supply chain and the customers occupying our spaces.
The uplift in Scope 3 emissions for the year was driven
by the sale of 160 Old Street, EC1, with the lifetime energy
use of the building accounted for in this year’s footprint.
When compared with our 2019 baseline, our total carbon
emissions, across Scopes 1, 2 and 3, have decreased by
37%. Whilst there has been significant activity to reduce
carbon emissions during this time, the nature of our business
will also cause our carbon footprint to fluctuate due to
new acquisitions, disposals and the number and stage of
developments on site – the higher emissions generally occur
earlier in the development process (the product stage).
Carbon reporting is becoming progressively more sophisticated,
with significant improvements made each year on data
quality. During the year, the granularity of our procurement
spend improved allowing us to apply more accurate emissions
factors. We also restated our embodied carbon emissions
(capital goods) for the previous year, following significant
advances in the detailed embodied carbon assessments now
being undertaken for each of our developments.
Carbon footprint progress: annual carbon emissions (tCO
2
e)
1
4,894
5,070
6,053
9,320
Scope 1 & 2: Owner generated energy emissions
Scope 3: Occupier generated energy emissions
Scope 3: Embodied carbon emissions from development activities
Scope 3: Corporate emissions
Scope 3: Other (non-energy) emissions from investment portfolio
8,780
42,442
17,921
11,405
2,418
26,453
4,289
3,095
19,726
7,136
7,139
45,000
0
9,000
18,000
27,000
36,000
202120202019
5,685
4,687
8,800
26,539
6,966
2022
368
424
309
401
1. 2021 data has been restated.
A summary of our Roadmap actions over the year is provided below:
Actions
Reduce
embodied
carbon
Reduce
energy
intensity
Increase
renewable energy
supply
Offset
residual
emissions
Target Reduce embodied carbon
(A1–A5) by 40% by 2030,
compared to 2020 baseline
Reduce energy intensity
by 40% by 2030, compared
to 2016 baseline
Generate 600MWh of
renewable energy across
our portfolio and support
UK grid decarbonisation
Net zero
carbon
Progress
to date
– On target to complete
our first net zero carbon
building in autumn 2022.
– Achieving embodied
carbon targets (22%
down on 2020 baseline).
– Piloting the reuse of steel
from one of our projects
within our own portfolio.
– Measuring embodied
carbon of Cat B fit outs
to establish baseline.
– 2 Aldermanbury Square,
EC2, targeting NABERS UK
Design for Performance
4.5 stars.
– NABERS UK Energy for
Offices pilot in progress.
– Invested £640,000 in
energy efficiency initiatives.
– Detailed feasibility studies
commenced to replace
gas boilers and repurpose
plant within portfolio.
– Continued to procure
REGO-backed electricity
and certified green gas for
100% of procured supplies.
– 27 MWh of on-site renewable
energy generation.
– Commenced surveys on
solar PV feasibility.
– Internal carbon price
of £95 per tonne
contributed £925,000 to
our Decarbonisation Fund
in the first two years.
– Carbon offsetting strategy
to be developed to enable
the offsetting of residual
emissions from 50 Finsbury
Square, EC2, our first net zero
carbon development.
40
Great Portland Estates plc Annual Report 2022
Addressing transition risk through EPC upgrades
Dealing with the transitional risk of the increasing legislative
burden is a key aspect of improving the resilience of our
portfolio. Having launched our Roadmap to Net Zero, we have
now created a costed pathway outlining how each building
can be upgraded to an EPC B rating by 2030. We estimate
that the investment required to reach compliance is around
£20 million. This work is already underway. See www.gpe.co.uk/
sustainability/our-performance for our Basis of Reporting
within the Sustainability Performance Report.
With poor correlation between EPC ratings and building
energy consumption, we are also undertaking the same exercise
to understand the cost of decarbonising in line with the Carbon
Risk Real Estate Monitor (CRREM) curve and science-based
targets to reach an energy intensity of 90kWh per m
2
by 2030
in line with our Roadmap to Net Zero.
Enhancing biodiversity
Through our Statement of Intent and ESG-linked RCF,
we have committed to improving biodiversity net gain
across our portfolio by 2030.
Nature-based solutions such as biodiverse roofs, green
walls, trees and pocket parks all help to reduce the urban
heat island effect, contributing to climate change resilience,
whilst improving external air quality and supporting the
health and wellbeing of the local community.
During the year, we increased biodiversity net gain across
our portfolio by 2% primarily due to additional greening at our
development scheme, 1 Newman Street, W1, and additional
works at Hanover Square, W1, and Elm Yard, WC1. However,
we were unable to meet our target of improving biodiversity
net gain by 8% when compared with our 2020 baseline, due to
the delay of anticipated works at Woolyard, SE1, and slower
than anticipated progress in retrofitting of biodiversity
measures across our investment portfolio.
Resilience in design
At 50 Finsbury Square, EC2, considerable progress has
been made in integrating climate change resilience through
design, repurposing and recycling building materials and
considering the longevity and adaptability of the building.
At 2 Aldermanbury Square, EC2, we have targeted a 10% uplift
in urban greening, along with passive cooling measures such
as solar shading. A blue roof will also be installed for rainwater
attenuation which supports passive cooling of the building.
Task Force on Climate-related Financial Disclosures
In line with Listing Rules, our Task Force on Climate-related
Financial Disclosures can be found on pages 45 to 49.
During the forthcoming year, we will launch our refreshed
Sustainable Spaces Brief, which will provide further detail
on creating climate change resilient and adaptable spaces.
Additionally, we plan to provide further details on our
approach to Climate Resilience in the autumn.
Design climate
change resilient
and adaptable
spaces
Leading the circular economy
Globally, construction accounts for approximately
38% of total carbon emissions. It is therefore critical that
the industry embraces the principles of the circular economy,
keeping materials in-use in their original state for as long
as possible.
At our 2 Aldermanbury Square, EC2, development we are
dismantling the building to preserve and reuse the steel.
Around 1,200 tonnes of the existing steel frame can be reused.
We are planning for 700 tonnes to be removed, reconditioned
and reused in another GPE development. This will reduce
the embodied carbon of the steel in the new building
by 99%. The remaining reusable steel will be taken off-site
by a specialist steel recycling contractor for reuse in
other construction projects.
3 7. 2 %
% of buildings now EPC A or B rated
(2030 compliant)
In order to improve the climate resilience of
our buildings we need to transition away from
a reliance on fossil fuels, prioritise renewable
energy, retrofit biodiversity measures and
ensure that we are designing for longevity
and adaptability.
Strategic Report – Annual review
41Annual Report 2022 Great Portland Estates plc
Sustainability continued
Progress on building certification
Focus on building certifications is increasing as demand
from our customers to be in responsibly designed and
managed spaces, that support their employees’ wellbeing,
continues to grow. As such, certifications help us to reduce
the transitional risks associated with climate change and
provide an opportunity to differentiate our buildings.
Our portfolio is fully compliant with 2023 EPC legislation,
with no F or G rated spaces. We are already 37% compliant
with the 2030 requirements for buildings to have a minimum
EPC B or above. On completion of 50 Finsbury Square, EC2,
and 2 Aldermanbury Square, EC2, this will increase to 49%.
During the year, we also surveyed most of our unrated
buildings to understand their EPC performance and
compliance with minimum requirements. As such, the
percentage of our portfolio that is unrated has fallen
from 23% to 6%, with most of the unrated space currently
undergoing major refurbishment.
We worked with an external consultant to review the
potential costs involved to upgrade our existing portfolio
to an EPC B rating. Enhanced EPC models were developed
and multiple scenarios run to understand the optimisations
required to meet the EPC B rating thresholds. Following this
review, we estimate that to make our portfolio compliant
with forthcoming legislation, we will need to invest
around £20 million to meet the 2030 minimum EPC B
rating requirement.
EPCs remain a theoretical indication of building energy
performance and it is widely accepted that there is little
or no correlation with actual operational performance.
To address the gap between how a building is designed
and how it actually consumes energy in practice, we are
NABERS UK Design for Performance Pioneers and have also
been piloting NABERS UK Energy for Offices, a performance-
based rating scheme, launched by the Building Research
Establishment in late 2021. We remain supportive of the
government’s intention to introduce a similar operational
energy performance in-use rating scheme to focus on
driving down operational carbon emissions.
In addition to EPC ratings, there are a variety of sustainability
certification schemes that provide a framework for the
development of sustainable spaces. Depending on the type
and scale of the project, these include BREEAM, the RICS-
led SKA Rating system and residential schemes such as the
Code for Sustainable Homes. Today, 30% of our portfolio by
area is rated BREEAM ‘Very Good’ or ‘Excellent’ with a further
12% currently on-site with BREEAM ‘Excellent’ targeted.
Smaller fit-out projects target SKA Silver or above; currently
22% of space has a SKA rating, up from 16% last year.
Given the heightened focus on healthy buildings and customer
wellbeing, we have piloted ‘Fitwel’, a wellbeing certification,
at one of our Fully Managed offices, with learnings feeding
back into the design of our managed spaces.
EPC ratings: percentage of portfolio (by sq ft)
B ECA
0
35
GFD
15
30
25
20
5
10
Current managed portfolio EPCs Current FRI EPCs
Targeted under development EPCs
7.1
5.2
16.0
0.9
5.0
2.3
3.8
Managed
portfolio
uncertified
8.1
2.5
21.3
5.3
22.4
0.2
0
0
Current floor area certifications
BREEAM rated Excellent/Very Good 749,200 sq ft
SKA rated Bronze/Silver/Gold 555,700 sq ft
WiredScore
rated
Platinum 491,800 sq ft
ActiveScore
rated
Platinum 221,500 sq ft
Committed
buildings
Under development
targeting BREEAM Excellent
303,600 sq ft
55%
1,354,700 sq ft
45%
1,119,000 sq ft
Total certified portfolio
(buildings with 1 or
more ratings)
Uncertified portfolio
(no ratings)
Our business model is to acquire
unloved, poorly performing
buildings and reposition them,
often through refurbishment.
We are therefore well placed
to respond to growing customer
expectations on sustainability
and evolving legislation on
energy performance.”
Janine Cole
Sustainability & Social Impact Director
42
Great Portland Estates plc Annual Report 2022
Social value creation in the year
For GPE, creating social value means supporting the people
and the communities in which we work to have a better
quality of life. During the year, we created £631,000 in social
value (2021: £620,000) through our community programmes
and direct business activities, measured using the National
Social Value Measurement Framework. Year-on-year, we are
looking to increase the ‘additional’ social value that we are
creating beyond financial contributions.
We saw an increase in tangible social value outcomes through
the provision of skills development, employment opportunities
and the donation of space within our buildings.
Actions included donating space to charity partnerships where
opportunity allows. During the year, The Story of Christmas
Appeal, which supports the homeless and disadvantaged
children, was located within our building at Egyptian House,
Piccadilly, W1.
At The Hickman, E1, as part of our target to find opportunities
to bring local community groups into our buildings, we opened
up our amenity space at weekends to a new parent club that
previously had been unable to find a suitable space to meet.
Charity partnerships
In the final year of our four-year partnership with Centrepoint,
we raised over £116,000, part of which was used to fund an
employability trainer to help young people into work. In total,
we have raised over £430,000 for Centrepoint since the start
of our relationship in 2018.
We will continue working with Centrepoint’s Independent
Living team to support them in their goal of providing 300
truly affordable homes for young people to live independently.
The pro bono support we are able to provide through our
expertise as a property developer is supporting them in
navigating the challenges of delivering their biggest
capital project to date.
Our new strategy
In November 2021, we launched our Social Impact Strategy
which sets out how we will generate £10 million of social
value by 2030.
See more about our new strategy on page 59
In April 2022, as part of the strategy, we announced our
new charity partnership with XLP, a charity that unlocks the
potential of young people from disadvantaged backgrounds
growing up in inner city areas within London. In line with
our Social Impact Strategy, we also committed to a three-
year partnership with National Energy Action, to support
households in London communities who are living in
fuel poverty.
Create a lasting
positive social
impact in our
communities
Community Day
In October 2021, we held our fourth Community Day
with 85 of the GPE team participating. Activities included
bringing together 26 members of the GPE team with the
Centrepoint Independent Living team in a ‘Hackathon’
to brainstorm current challenges in delivering Centrepoint’s
biggest ever capital project. Other activities included the
creation of a mural at a Centrepoint service, redecoration
of counselling rooms and two gardening projects located
in London SE1, with Bankside Open Spaces Trust. In total,
390 hours of GPE time were donated.
390 hrs
GPE time donated
£10m
Social value targeted to be created by 2030
Creating a positive social impact is a key
part of our Sustainability Statement of Intent
‘The Time is Now’, as when our community
thrives, our business thrives too.
Strategic Report – Annual review
43Annual Report 2022 Great Portland Estates plc
Healthy spaces
The COVID-19 pandemic increased the focus on health
and wellbeing across our portfolio. We continue to deliver
the internal air quality required by standards introduced
in response to the pandemic and have installed indoor
air quality monitoring sensors across a large proportion
of our buildings, with real time feedback provided to
our customers.
We have continued to evolve our Wellbeing Brief,
updating it to incorporate the latest amendments to
standards such as the WELL Building Standard and Fitwel.
Through our Fitted and Fully Managed spaces we integrate
wellbeing as standard, creating new outdoor spaces
(including terraces, courtyards and public realm), improving
biodiversity and retrofitting cycle and shower facilities.
We are piloting Fitwel, the wellbeing rating, at one of our
Fitted and Fully Managed spaces, 16 Dufour’s Place, W1.
Through this process, we have been able to integrate the
promotion of healthy behaviours such as good nutrition and
physical exercise as well as ensuring responsible cleaning
processes and indoor air quality monitoring to support
the health and wellbeing of our customers. Learnings have
also been incorporated into the design of our Fitted spaces
and the management of our spaces, including encouraging
active movement through use of the stairs and offering
our customers yoga classes on-site.
Enhancing air quality in our communities
In partnership with Groundwork London, we continued
to support local air quality improvements in local schools.
Two Islington schools have received their individual
action plans so far, with GPE part-financing the greening
measures identified through the action plans.
Ethical labour practices
We also actively advocate for ethical labour practices
within our supply chain, for example by ensuring all
people working on our behalf are paid the London
Living Wage and undertaking Labour Practice Audits
to help eradicate modern slavery.
See our Modern Slavery Statement on our website here:
www.gpe.co.uk/our-modern-slavery-statement
Put health
and wellbeing
front and
centre
Sustainability continued
Healthy buildings
The quality of the buildings in which we spend our time
can impact our wellbeing. As part of our commitment to
deliver healthy buildings that support customer wellbeing,
we installed over 250 internal air quality monitoring
sensors during the year.
The sensors, now live across 29 buildings, record
temperature, carbon dioxide, volatile organic compounds,
humidity and particulate matter with real-time feedback
provided to our customers through our app, sesame®.
250
Air quality sensors installed
A sustainable building should also contribute
to the wellbeing of our customers and the
local community, supporting healthier,
happier and more productive lives.
44 Great Portland Estates plc Annual Report 2022
Task Force on Climate-related Financial Disclosures (TCFD)
GPE plc has complied with the requirements of
LR 9.8.6(8)R by including climate-related financial
disclosures consistent with the TCFD Recommendations
and Recommended Disclosures. Additional information
can be found on page 15 (Non-financial KPIs), page 50
in our SECR table (performance) and on pages 64 to 77
(our approach to risks). For further information see
www.gpe.co.uk/sustainability/our-performance.
Governance
Board oversight of climate-related risks
and opportunities
The Board is responsible for oversight of climate and
sustainability risks and opportunities (e.g. acquisition of stranded
assets), with a particular focus on impact on business strategy.
A report is provided by the Sustainability and Social Impact
Director at each Board meeting. This covers implementation
of our Sustainability Strategy, upcoming risks and opportunities
and progress against our Roadmap to Net Zero.
www.gpe.co.uk/sustainability/our-sustainability-
statement-of-intent
In addition, during the year:
– the Audit Committee reviewed findings from the ESG
data assurance process;
– the Remuneration Committee reviewed progress against
ESG-linked KPIs incorporated within the remuneration
of Executive Committee members;
– the Board reviewed the definitive appraisal of
2 Aldermanbury Square, EC2, including the embodied
carbon impact and payment into our Decarbonisation Fund;
– the Board approved the acquisition of 7/15 Gresse Street, W1,
with consideration of the EPC risks and the impact on our
net zero commitments;
– the Board approved the Social Impact Strategy,
(incorporating fuel poverty and urban greening targets); and
– the Chief Executive of the UK Green Building Council
presented to the Board on emerging climate risk themes.
At the half-year and year-end, as part of our robust
risk assessment review, the Executive Committee, Audit
Committee and Board reviewed and assessed the impact
on the business of climate-related risks. Climate change and
decarbonisation is considered a principal risk for the Group.
This process involves consideration of the risks, internal controls,
emerging risks and ongoing monitoring and mitigation of
risks. Opportunities connected with market transition are
also considered. Risks discussed included EPC and energy
performance legislation, changes to planning requirements
(including retrofit challenges and evolving carbon offset
guidance), increased costs and availability of materials.
Management’s role in assessing and managing
climate-related risks and opportunities
The Chief Executive chairs the quarterly Sustainability
Committee meeting, also attended by the Chief Financial and
Operating Officer, Executive Director, Development Director,
Customer Experience and Flex Director, Sustainability and
Social Impact Director and key department heads. It provides
strategic oversight on climate risk and resilience, reviews the
progress and evolution of the Sustainability Strategy, and
monitors performance against our targets. The Committee also
provides oversight of the Decarbonisation Fund. Matters raised
are brought to the attention of the Board by the Chief Executive
and the Sustainability and Social Impact Director.
Our Development and Portfolio Sustainability sub-committees,
report quarterly to the Sustainability Committee, and provide
operational oversight on climate-related issues including
energy efficiency measures, the use of alternative materials
and technological solutions.
The Sustainability and Social Impact Director and Sustainability
Team manage the strategic direction and operational
management of sustainability-related issues. In addition,
there are clear departmental responsibilities for
sustainability including:
– Director of Corporate Finance – oversight of the
ESG-linked RCF and Sustainable Finance Framework;
– Development Director and Director of Projects – integration
of sustainability across all projects irrespective of scope;
– Director of Occupier and Property Services – operational
energy efficiency and the implementation of energy
efficiency measures, including the allocation of
Decarbonisation Fund monies to retrofit projects; and
– Investment Director – ensuring climate risk is considered
when acquiring assets and responding to opportunities
to reposition potentially stranded assets.
Our Sustainability and Social Impact Director, Executive
Director and Director of Projects track, monitor and manage
our business response to expected legislative changes on EPCs.
Our strategy
Our business strategy is to acquire unloved properties,
reposition them through lease restructuring, delivery of flexible
space, refurbishment or redevelopment and then operate them
for income or recycle them. The buildings we develop can be in
use for between 40 to 60 years, we therefore consider the whole
building lifecycle when reviewing risks. Increasing customer
demand for sustainable spaces and investor reporting
requirements has made sustainability a strategic imperative.
Climate-related risks, opportunities,
and financial impacts
To assess how various climate risk drivers may impact GPE, we use
the TCFD framework’s categorisation of transition and physical
climate risks. We consider climate-related risks and opportunities
over three time horizons: short, medium and long term.
Short term Medium term Long term
1–5 years 5–10 years 10+ years
Our risk review process has highlighted the need for a greater
focus on transitional risk connected with legislative change at
EU, UK and local level in the short term. Our customers are also
increasingly demanding net zero carbon and fossil fuel free
buildings, which in turn impacts our supply chains, particularly
in connection with alternative building materials.
In the medium term, given the concentration of our business
activities in London, we expect transitional risks to continue
to have the greatest focus. However, physical risks may already
be impacting our supply chain partners where we are sourcing
products and raw materials from outside of Europe.
In the longer term, we expect the transitional risks outlined
above to be amplified by the greater impact of physical risks,
both within our supply chain and also within London as hotter
summers become more frequent.
The above themes are explored in more detail within the tables on
pages 46 to 47, along with a review of the potential opportunities.
Strategic Report – Annual review
45Annual Report 2022 Great Portland Estates plc
Sustainability continued
Task Force on Climate-related Financial Disclosures (TCFD) continued
Transition risks
Transition risks and impacts Opportunities and impacts Progress to date and next steps
Policy and Legal
– Ability to keep pace with rapidly evolving
legislation on EPCs – leading to increased
costs and the risk of stranded assets.
– Additional legislative burden and impact
on investor and customer behaviour
linked to the proposed introduction
of ‘energy in-use’ performance ratings.
– Evolving local planning requirements
leading to increased complexity of
developing commercial buildings.
– Changes to investor behaviour due to
impact of investor related legislation
such as EU and UK Taxonomy and
Sustainability Disclosure Regulations.
– Increasing complexity of regulatory
environment may present opportunities
to acquire lower rated buildings (stranded
assets) at reduced prices for repositioning.
– Proactive response to legislative
changes improves desirability of GPE
assets for customers and investors.
– Deep knowledge supports transition
of business to a ‘retrofit first’ approach
which is challenging in London and
technically more difficult.
– Potential increased returns and improved
valuation connected with higher demand
for more sustainable space.
– Review of EPC upgrade costs completed.
– Building business plans include steps and
costs to upgrade to EPC B or to divest
where appropriate.
– Active review of stranded assets to acquire
and reposition.
– Piloting NABERS Design for Performance
at two developments and NABERS UK Energy
for Offices at two properties to keep pace
with evolving legislation on ‘energy in-use’.
– Active member of numerous industry groups
to support collective industry response to
climate change.
Technology
– Outdated utility metering impacting
quality of energy consumption data.
– Building systems in new developments
complex or not fully understood – leading
to inefficiencies in building operation.
– Pace of technological change not
responding to evolving legislation and
customer demand for sustainable spaces.
– Increased costs associated with research
and development of technological
solutions.
– Early adoption of technology supports
improved visibility and management
of utility consumption data and
associated reduced costs for our customers.
– Implementation of new technologies
to drive down embodied carbon provides
opportunity to capitalise on customer
appetite for net zero carbon buildings.
– Payback of costs (dependent on energy
consumption and variable energy costs)
likely to be short term and will support
improved collaboration with customers.
– Automatic metering upgrade underway.
– Proactive investment in R&D expenditures in
new and alternative technologies; including
additional hiring of an Innovation Manager.
– Digital Twins pilot completed at four
buildings, technology now being rolled out
to assist in the monitoring and management
of plant and equipment.
– Onboarding of new data platform.
– Air quality sensors and desk occupancy
monitoring in place to understand occupancy
density and fresh air requirements.
– Investment in PiLabs supports innovation
and R&D.
Market
– Volatility in energy market and prices,
energy security concerns leading to
increased energy costs.
– Increased costs of raw materials driven by
growing demand for sustainable products
may impact on ability to reduce embodied
carbon of future developments.
– Increased customer demand for highly
sustainable buildings may lead to the risk
of stranded assets.
– Increased cost of development and
refurbishment driven by increasingly
complex planning regime.
– Increased collaboration with customers
and supply chain supporting faster
progress on energy efficiency.
– Proactive approach to reducing consumption
and improving energy security, including
on-site energy generation, passive cooling
and connection to local heat and power
networks supports customer demand
for sustainable spaces.
– Ability to capitalise on deep knowledge
of London market, where other
developers may not be as well placed
to navigate complexities.
– Energy working groups established
with customers.
– Supply chain workshops underway
to deal with operational energy
efficiency challenges.
– 100% of energy purchased from
renewable sources.
– Sustainable Spaces Brief to be launched.
– All future developments designed to be
fossil fuel free.
Reputation
– Ability to meet increasing requirements
on sustainability disclosure from investors
and lenders.
– Potential for increasing customer
expectations on sustainability
credentials of their spaces to conflict
with increasing requirements on amenity
and service provision.
– Ability to secure sufficient supplies of
sustainable materials to meet embodied
carbon targets for our developments.
– Potential detrimental impact on reputation
of owning lower EPC rated assets.
– Continued transparency of reporting
coupled with frequent investor
engagement results in increased
confidence in ability of business to
deliver on sustainability goals.
– Launch of Sustainable Spaces Brief
will support best practice approach
to sustainable design irrespective
of the product.
– Early engagement and collaborative
relationships with supply chain to
support early warning of supply issues
and potential alternative solutions.
– Continued engagement with investors
on climate-related issues and extensive
disclosure of ESG data through benchmarks,
indices and industry groups – see table on
page 51.
– Sustainability is a standing agenda item
in six-monthly customer meetings with
proactive utility data sharing.
– EPC review being integrated within asset
plans, energy intensity review underway.
– Business model to actively purchase buildings
that need to be repositioned to create value.
– Sustainable Spaces Brief to be launched
to ensure best practice approach adopted.
46
Great Portland Estates plc Annual Report 2022
Physical risks
In 2019, we conducted physical climate risk modelling to quantify the potential impacts of climate change on London under
a range of future emission scenarios for 2045. Following the best practice outlined by the TCFD, we used four IPCC projections,
from a 1.5°C global temperature rise (RCP 2.6) up to 5.4°C (RCP 8.5) and applied a risk rating to each risk. As our entire portfolio
is within central London, the climate-related physical risks profile is consistent across all buildings.
We have energy and carbon targets which have been verified by the Science Based Targets initiative as in line with a 1.5°C
warming scenario. However, we recognise that current projections suggest that a 2°C or 4°C warming scenario is more likely
and have therefore set out our response to both scenarios below. Our business strategy is to acquire poorly performing
assets and reposition them; we do not believe that this strategy will need to change in this eventuality.
Physical risks and impacts Opportunities and impacts Progress to date and next steps
Two-degree warming scenario
Acute risks
– Increased severity of extreme weather
events, like flash floods.
Chronic risks
– Increased annual temperature.
– Increased extreme weather events
such as high winds, extreme rainfall
and high temperatures.
– Reduction in precipitation.
Impacts
– Delay in development process due to
interruptions to development capacity,
e.g. supply chain interruptions or
transport difficulties.
– Increased capital costs from damage
to properties.
– Increased operating costs (e.g. higher
energy demand due to cooling,
inadequate water supply).
– Potential water shortages and
subsidence within London.
– Increased insurance premiums.
– Reduced demand for office spaces
where extreme weather events affect
access to our buildings or comfort
within office spaces.
– Increased demand for buildings with
climate resilience measures such as
passive cooling, nature-based solutions
and sustainable urban drainage
systems incorporated.
– Potential increase in valuation of buildings
that are climate resilient and adaptable.
Our Statement of Intent and Social Impact
Strategy include requirements for:
– increased biodiversity and solar shading,
and the support of community greening;
– drought resistant planting;
– use of sustainable urban draining systems;
– reduced water consumption; and
– designing of climate resilient buildings that
are robust, adaptable and have longevity.
Climate resilience measures are incorporated
within the design of our spaces.
Our Sustainable Spaces Brief, launching shortly,
will outline how climate resilience can be
incorporated in the design of all our spaces
irrespective of size and scale.
Four-degree warming scenario
The above risks and impacts are
significantly increased, particularly
in the case of increased drought and
summer temperature, heatwave duration
and extreme rainfall.
See above. See above.
Impact of climate-related risks and opportunities
on the organisation’s businesses, strategy and
financial planning
Our Sustainability Statement of Intent, and Roadmap
to Net Zero set out our sustainability strategy. However,
our approach to climate risk is integrated across our business
and is incorporated within development appraisals, asset
business plans, financing arrangements, acquisitions and
remuneration arrangements.
Financial planning (operating costs, capital expenditure
and allocation)
Our internal carbon price of £95 per tonne ensures that
embodied carbon is included in all development appraisals;
design decisions are therefore considered in the context
of their impact on carbon emissions.
Our internal carbon price feeds into our Decarbonisation Fund
which is used to bring forward energy efficiency improvements.
We have undertaken a detailed review to understand the
cost of improving our portfolio to an EPC B rating. At today’s
costs and in the current regulatory environment it will cost
approximately £20 million to upgrade our portfolio. These are
works that would have, in any event, been incorporated in our
work to reposition assets as Fitted and Fully Managed space
or HQ buildings. We are undertaking a similar exercise for an
energy intensity trajectory to 90kWh per m
2
by 2030.
We are developing our approach to carbon offsetting,
with costs expected to increase as demand increases.
Strategic Report – Annual review
47Annual Report 2022 Great Portland Estates plc
Access to capital
It is increasingly important to demonstrate how financing
is linked to ESG considerations. During the year, we developed
our Sustainable Finance Framework, setting out how we may
link future debt facilities to our business activities. In addition,
we launched our ESG-linked RCF in 2020 which incorporates
KPIs on energy intensity, embodied carbon and biodiversity.
Acquisitions and divestments
We are actively seeking to acquire assets that are at
risk of being stranded to refurbish and reposition them.
We may also seek to divest from assets where it is not
possible to upgrade to a minimum EPC rating of a B.
When making an acquisition we consider the impact
on our net zero commitments.
Developments
We take a whole life carbon approach, designing for
climate resilience, longevity, and adaptability. All buildings
in our development pipeline will be net zero carbon and
fossil fuel free. At 2 Aldermanbury Square, EC2, where we are
removing steel to be reused in another development, costs
are anticipated to be neutral due to technical challenges
associated with adopting circular economy principles.
Our internal carbon price of £95 per tonne applied at
practical completion of our developments incentivises
the reduction of embodied carbon and supports progress
towards net zero. Our Sustainable Spaces Brief, launching
shortly, will ensure that we set the right design brief for
all our spaces.
Managing assets
Our Roadmap to Net Zero sets out how we can reduce
energy consumption and carbon emissions to reach our
net zero target by 2030. Our internal carbon price of £95
per tonne is applied to operational carbon emissions, with
our Decarbonisation Fund supporting ongoing investment
in energy efficiency projects across our portfolio.
Over the forthcoming year, we will further develop
our Climate Resilience Strategy, including the provision of
a building specific net zero pathway. Our Sustainable Spaces
Brief will also set out how we will ensure that the design
of our spaces supports reductions in carbon emissions.
Performance on the above impacts the remuneration
of our Executive Committee and Board Directors –
see page 121. See our Sustainability Performance Report
at www.gpe.co.uk/sustainability/our-performance
for our progress against our KPIs.
Resilience of organisation’s strategy considering
different climate-related scenarios
Our strategy enables us to build resilience considerations
into the acquisition, design, development and operation
of buildings. As we have a 100% central London-focused
property portfolio, impacts from physical risks are limited
and consistent across all buildings. We do not believe
we will need to change our strategy in a two degree or
four degree warming scenario.
We have outlined on pages 46 and 47 the risks and
opportunities identified by our business and how we are
responding to these risks to ensure business resilience.
Risk management
We undertake materiality reviews of ESG risks.
See www.gpe.co.uk/sustainability/our-approach for
our latest materiality review.
As part of a robust assessment of the principal and emerging
risks facing the Group, at the half-year and year-end, the
Executive Committee, Audit Committee and Board review
and assess the Group’s principal and emerging risks, including
climate-related risks. This process involves consideration
of the risks and associated internal controls in place,
emerging risks and ongoing monitoring.
Assessment of identified risks is based on their potential
impact and likelihood using a defined criteria and is assessed
on a gross, net and target risk basis. Climate change and the
need to decarbonise remained a principal risk for 2022 and
our net risk assessment of this risk remained constant during
the year. Controls for managing our climate-related risks
are outlined on page 68.
Our Sustainability Committee and operational sustainability
sub-committees for our portfolio and developments
also monitor, manage and report on climate related risks.
Our Sustainability and Social Impact Director is a member
of our Executive Committee.
Sustainability is also considered at our Design Review Panel,
and ratings such as BREEAM, SKA and NABERS Design for
Performance and NABERS UK Energy for Performance further
support risk management. Energy action plans are in place
for all assets.
We will also shortly launch our Sustainable Spaces Brief which
incorporates sustainability in design across the whole property
life cycle and all products. This will include requirements to
ensure energy efficiency in operation, such as soft landings,
commissioning and handover. The brief will also support reuse
and repurposing of buildings to ensure that any development
undertaken incorporates circular economy principles and
minimises the associated embodied carbon emissions
associated with development.
Metrics and targets
Metrics used to assess climate-related risks
and opportunities in line with strategy and
risk management processes
Risk adaptation & mitigation metrics Unit 2021/22
EPCs rated A and B by floor area %
EPCs rated F and G by floor area %
Proportion of portfolio with green
building ratings by floor area %
Estimated annual savings from energy
efficiency measures implemented
during the year MWh ,
Internal carbon price £
Amount invested through
Decarbonisation Fund £ ,
Total amount invested in energy
efficiency during the year £ ,
Electricity purchased from
renewable sources %
On-site renewable energy generation MWh
Sustainability continued
Task Force on Climate-related Financial Disclosures (TCFD) continued
48 Great Portland Estates plc Annual Report 2022
Criteria and progress against our ESG-linked
Revolving Credit Facility (RCF)
In 2020, we issued our £450 million sustainability linked
revolving credit facility (RCF) and became the first UK REIT
to issue an RCF with a margin linked to our performance
against ESG-linked KPIs. These KPIs are also incorporated
in remuneration arrangements, see page 121.
Please see our Sustainability Statement of Intent and
our Roadmap to Net Zero for full details on our targets.
www.gpe.co.uk/sustainability/our-sustainability-
statement-of-intent
Our Sustainability Performance Report details our full
performance against our targets for the last financial year.
www.gpe.co.uk/sustainability/our-performance
Disclosure of Scope 1, 2 and where appropriate
Scope 3 related risks
Detailed reporting of our sustainability performance,
including energy consumption and Scope 1, 2 and relevant
Scope 3 metrics, (including carbon emissions associated
with water consumption and waste management) is included
within our Streamlined Energy and Carbon Reporting (SECR)
table on page 50 of this report.
Additional ESG disclosure on a variety of climate-related
metrics, disclosure on our KPIs and exposure to climate-related
risks and opportunities is included in our Sustainability
Performance Report, available at www.gpe.co.uk/
sustainability/our-performance.
Selected emissions data (Scope 1, 2 and some Scope 3)
is independently assured by Deloitte LLP. The assurance
statement, which details the scope of assurance, can be
found at the back of our Sustainability Performance Report.
Targets used by the organisation to manage
climate-related risks and opportunities and
performance against targets
Targets outlined in our Roadmap to Net Zero
1. Reduce embodied
carbon by 40% by 2030
2. Reduce energy intensity
by 40% by 2030, including
occupier emissions
Reduce
embodied
carbon
Reduce
energy
intensity
3. Increase renewable
energy supply to 600MWh
p.a. across our portfolio
by 2030
4. Apply internal carbon
price of £95 per tonne
Increase
renewable energy
supply
Offset
residual
emissions
For progress, please
see pages 38 to 41
KPI 1
Reduction in energy consumption
We will reduce our portfolio energy intensity (kWh per m
2
)
by 25.5% by 2026, when compared to our 2016 baseline of
234kWh/m
2
. This is consistent with our existing stated target
of achieving a 40% reduction in energy intensity by 2030.
This target applies to energy consumed within our portfolio
and applies to all energy purchased by GPE, including electricity
sub-metered to our customers. All information around our
energy consumption and energy intensity (including scope
of independent assurance) can be found in our Sustainability
Performance Report.
For March 2022, we targeted a 11.5% reduction in energy
consumption, when compared to our 2016 baseline,
and achieved a 24.4% reduction.
KPI 2
Reduction in carbon impact
We have set a target to reduce the embodied carbon of our
developments by 40% by 2030. For new developments this is
measured against a 2020 baseline of 954kgCO
2
e per m
2
, and for
major refurbishments against a baseline of 340kgCO
2
e per m
2
.
This target is tested at the design stage (for all developments
currently at Stage 2 or beyond) and at practical completion
to verify reductions.
Embodied carbon reviews will be undertaken by a competent,
independent consultant, using recognised guidance
(currently the RICS Whole Life Carbon Assessment for the
built environment).
For March 2022, we targeted a 10% reduction in embodied
carbon against our 2020 baseline for developments in design
or construction phases. We achieved a reduction of 24%
for 50 Finsbury Square, EC2, and 22% for 2 Aldermanbury
Square, EC2.
A 5% reduction was targeted for completed projects,
however, no developments reached practical completion
during the year to be measured against this KPI.
KPI 3
Increase in biodiversity
We are committing to an increase in biodiversity net gain
across our existing buildings by 18% by 2026 on a 2020 baseline.
To ensure that we do not benefit from the uplift in biodiversity
from new developments in more than one year, once a new
development completes, biodiversity net gain for the building
will be measured on a like-for-like basis.
This is the first year that the KPI was measured in this way.
For March 2022, we aimed for a 8% increase in biodiversity
net gain for existing assets and achieved 2%.
We failed to achieve this KPI due to the delay of planned works
at two of our buildings. Additional biodiversity measures were
implemented at 1 Newman Street, W1, 16 Dufour’s Place, W1,
Hanover Square, W1, and Elm Yard, WC1.
Strategic Report – Annual review
49Annual Report 2022 Great Portland Estates plc
Sustainability continued
Streamlined Energy and Carbon Disclosure (SECR)
Our SECR disclosure presents our Greenhouse Gas (GHG) emissions across Scopes 1, 2 and 3 metrics and associated energy use,
together with an appropriate intensity metric, as required by the Large and Medium-Sized Companies and Groups (Accounts
and Reports) Regulations 2008 (as amended).
Absolute Scope 1 and 2 Greenhouse Gas emissions and energy use
1
Energy consumption
2,3
Carbon emissions
Year ended 31 March
2021/22
D
kWh
2020/21
1
kWh
2021/22
D
tCO
2
e
2020/21
1
tCO
2
e
Scope 1 emissions and energy use
D
Combustion of fuel: gas used for common parts areas
for the managed portfolio ,, ,, , ,
Operation of facilities (refrigerant gas loss) – –
Totals ,, ,, , ,
Scope 2 emissions and energy use
D
Purchased electricity: used for common parts
areas for the managed portfolio
Location-based ,, ,, , ,
Market-based
Total Scope 1 and 2 emissions and energy use
D
Location-based ,, ,, , ,
Market-based ,, ,, , ,
Proportion of emissions and energy use above
assured by an independent third party % % % %
Absolute energy and energy-related carbon intensity metrics
D, 4
(kWh/m
) (kWh/m
) (tCO
e/m
) (tCO
e/m
)
Landlord procured electricity sub-metered to occupiers (Scope 3) ,, ,, , ,
Landlord purchased energy, and energy-related emission,
used for common parts areas and electricity sub-metered
to occupiers (Scope 1, 2 and 3) . .
Absolute Scope 3 Greenhouse gas emissions
1, 5
Year ended 31 March
2021/22
tCO
2
e
2020/21
tCO
2
e
Purchased goods and services Fuels used during construction
Electricity consumption during construction
Water consumption during construction
Water consumption in standing assets
D
Maintenance, repair and replacement materials and services , ,
Operational procurement
Capital goods Construction materials and services for new developments , ,
Construction materials and services for refurbishments ,
Fuel and energy
related activities
Well-to-tank and T&D emissions from electricity , ,
Well-to-tank emissions from natural gas
Upstream transportation
and distribution
Transportation of construction materials for developments
and refurbishments
Waste generated in operations Waste generated during construction
Waste generated during demolition
Waste generated in operations
D
Business travel Employee air, TfL, rail travel and taxi
D
Employee commuting GPE employee commuting and emissions from home working
Use of sold products Expected lifetime energy consumption of assets sold
during reporting year
,
End-of-life treatment
of sold products
Waste generated from demolition of sold assets
Downstream leased assets Landlord procured electricity sub-metered to occupiers
D
, ,
Occupier procured electricity consumption , ,
Total Scope 3 emissions , ,
Total carbon footprint (Scope 1, 2 and 3) , ,
D. Metrics with limited independent assurance provided by Deloitte LLP in accordance with the International Standard on Assurance Engagements (ISAE3000).
1. We have restated 2020/21 assured figures to reflect improved data quality and coverage e.g. replacement of some estimated data with actual meter readings.
Re-stated figures have therefore not been assured by Deloitte LLP.
2. As a business 100% focused on central London, all energy is consumed in the UK.
3. 100% of purchased electricity is REGO-backed and 100% of purchased gas is green gas.
4. The intensity metrics includes energy-related building emissions (location-based), excluding occupier-procured energy. Floor area is an appropriate
intensity metric as it directly relates to our business activities.
5. Scope 3 categories 8 (upstream leased assets), 9 (downstream leased assets), 10 (processing of sold products) and 14 (franchises) are not applicable
to our business and so are not reported above. Category 15 (investments) is captured elsewhere.
50 Great Portland Estates plc Annual Report 2022
Energy performance
In the previous reporting year, our performance was heavily
affected by the impacts of COVID-19, resulting in lower energy
consumption due to reduced occupancy of our buildings.
Whilst performance continues to be affected by the ongoing
impacts of COVID-19, occupancy levels increased during
the reporting period.
Energy consumption in landlord spaces (Scope 1 and 2)
increased 22% during the year, as expected. This was driven
by two recently completed developments which are now
operational and included within our reporting – Hanover
Square, W1, which was included in our data for the full
reporting year, and 1 Newman Street, W1, which completed
in June 2021 and was included for nine months of the reporting
year. When electricity consumption sub-metered to our
customers is included (Scope 3), our total energy consumption
(Scope 1, 2 and 3) increased by 13% during the year.
The reduction in carbon intensity was driven by an increase
in floor area and a change in carbon emissions factors.
Energy efficiency actions
In the previous reporting period, we undertook energy audits
at our largest energy consuming buildings to support our
understanding of the deep retrofitting required to achieve
our 40% energy intensity reduction target. We built on these
over the reporting year and invested in energy efficiency
measures identified through the audits. This included:
– upgrade of the Building Management System (BMS) at
our largest energy consuming site, 200 Gray’s Inn Road, W1,
to enable better control of building plant – this project
is expected to save 2,195 MWh per year and pay back
in 18 months;
– trial of digital twin systems to optimise building performance
at four buildings, with our preferred system being rolled out
across the portfolio;
– invested £340,000 in LED lighting projects which are
expected to save a combined 984 MWh per year and pay
back in two years; and
2021:
Standing Investments:
81/100 – 4*
Development:
93/100 – 5*
2020:
Standing Investments:
80/100 – 4*
Development:
88/100 – 5*
2021:
Climate Change: B
Supplier Engagement: B
2020:
Climate Change: B
Supplier Engagement: B-
2022:
ESG Rating: AAA
2021:
ESG Rating: AAA
2022:
Current ESG Rating: B-
2022:
Percentile ranking: 89
2021:
Percentile ranking: 90
Gold Award received
for consecutive years
from 2014 for reporting
in line with EPRA
Sustainability Best Practice
Recommendations
– invested in automatic meter upgrades across our
portfolio to better understand consumption and
improve data quality.
Following the estimation of the costs to upgrade our portfolio
to an EPC B rating, during the coming year we will develop
fully costed building-level net zero carbon transition plans,
in line with our Roadmap to Net Zero.
See pages 38 to 40 for more detail on our performance
Independent assurance
Deloitte LLP have provided limited independent assurance
over the published metrics, identified by ‘D’ in the SECR table
on page 50, in accordance with the International Standard
on Assurance Engagements (ISAE3000).
Deloitte’s full unqualified Assurance Statement can be
found in our annual Sustainability Performance Report at
www.gpe.co.uk/sustainability/our-performance.
Our methodology
Emissions are calculated using the UK government’s
Environmental Reporting Guidelines and the Greenhouse
Gas (GHG) Protocol. We have used the operational control
approach for consolidating our GHG emissions; included in this
are emissions and energy usage from our managed properties
(including 100% of emissions from joint venture properties)
and head office usage. Where we have purchased electricity,
which is sub-metered to customers, this is itemised separately
under our Scope 3, though is included within our energy
intensity target.
Our full Sustainability Performance Report, aligned with EPRA
Sustainability Best Practice Recommendations and SASB
Real Estate indicators, can be found at www.gpe.co.uk/
sustainability/our-performance. This includes more extensive
reporting on our emissions and our Basis of Reporting. This
report also includes emissions from our development sites.
Extending our data coverage to include FRI let properties
and customer-procured energy is an area that we are
addressing as part of our Roadmap to Net Zero.
We participate in:
We are signatories of:
Strategic Report – Annual review
51Annual Report 2022 Great Portland Estates plc
Our people and culture
GPE is powered by people. Our ambition is to unlock
and realise our human potential, creating opportunities
for our people, and ultimately our customers to thrive.
We aspire to be the place where the best people do
their best work.”
Carrie Heiss Human Resources Director
How we fulfil our purpose starts
with our people
Our people are the key to our success. Their expertise,
performance and wellbeing have a significant impact on
everything we do, and ultimately on our financial performance.
We focus our efforts on what we consider to be the key
fundamentals: attracting and retaining the right talent,
exceptional leadership, and the creation of a unique culture.
Our culture is underpinned by a clear alignment of purpose,
strategy, values and incentives.
Our values
Our values are not simply words on a page. They define who
we are and how we act, and they are at the heart of what
we do and what makes us special. They give us direction
and describe how everyone at GPE is expected to behave
and how we do business.
These values are firmly embedded into our people practices.
Each value has been translated into behaviours which support
the value and conversely, behaviours which do not. In this way,
we are able to assess and hold ourselves to account and this
is a key feature of our annual and mid-year performance
appraisal process. On a quarterly basis, we also publicly
acknowledge and reward individuals who have demonstrated
that they, in some specific way, ‘live our values’. Our CEO makes
these awards, which are peer nominated, and recipients
exemplify the ‘best of the best’. There were 40 individual
‘Living Our Values’ awards made in FY22.
Our culture
Our culture is progressive. It comprises an entrepreneurial spirit
and an open, pragmatic approach combined with innovative
thinking and intellectual rigour to deliver compelling results
for our customers. Teamwork and pulling together for a
common objective are core to how we operate, both within
and across teams and however large the task at hand.
Innovation is also core to our corporate identity. Our Bright
Ideas Committee meets monthly to review employee idea
submissions which come through our intranet. Many of the
130 ideas submitted in the year have been implemented and
all are followed up no matter how small the suggestion. We are
constantly challenging ourselves to do better, and innovation
is central to improving how we work and serve our customers.
Employer of choice
GPE aspires to be the place where the best people in our
sector do their best work.
Unlocking potential and giving our people the tools and
environment in which to do their best work, enables GPE
to deliver its strategic aims.
Being the employer of choice for the best people relies
on our ability to hire and retain exceptional, diverse talent.
We have successfully on-boarded 47 new joiners since the start
of lockdown in 1 March 2020, including 35 in the last financial
year. In the last financial year we had 22 leavers, including
some very long servers entering well-earned retirements.
Our workforce is simultaneously relatively new and very
long serving. As at 31 March 2022, our workforce comprised
131 employees, 44% of whom had joined within the previous
three years while just over 25% had worked for GPE for longer
than ten years. This means that we have the benefit from
each end of the tenure spectrum and this both refreshes
and reinforces our unique and positive culture.
Collaboration,
support, challenge
and contribution
Inclusion, open-
mindedness, and
transparency
Diversity, diligence,
focus and pride
Forward-thinking,
energy, boldness
52 Great Portland Estates plc Annual Report 2022
Our retention rate of 82% as a measure of stability (down
from 91% in 2021) reflects some additional market movement
in the workforce since the return to the office post lockdown.
This internal operational measure has been above 80% since
2017 and reflects a generally steady and stable workforce.
Current population length of service % as at March 2022
44%
20%
25%
11%
< 3 years
3 to 6 years
6 to 10 years
> 10 years
Flexibility and hybrid working
We recognise the importance of flexibility at GPE. To ensure
our people have the best environment to work in, we have
moved to a formalised hybrid way of operating.
As the COVID Response Team and the GPE@Home Team
wound down their efforts in early 2022, we continued to
support our people through our Hybrid|GPE Committee.
This cross-functional committee has focused on how we
connect, collaborate and support each other through the
transition from a pandemic to an endemic environment.
In September 2021 we began to transition back into the
office, in line with government guidelines. We instituted
a ‘voluntary trial’ whereby employees who wanted to return
were encouraged to attend the office three days per week
and work from home for the other two days of their choice.
We created an anchor day mid-week called ‘Greater Together
Wednesdays’. We encouraged team meetings and other
social and collaborative events. We also offered increased
support through our occupational health specialists during
this time.
In our October 2021 Pulse Survey (to which 96% of all employees
responded), we confirmed that 71% of the population responded
that the trial was working well. We therefore conducted further
focus groups to gain a better understanding of individual
and team views and developed guidelines which considered
specific differences between roles and responsibilities.
The result of this consultation and trial period was a new
Hybrid Working Policy, now in effect, which is inclusive and
fit for our people, our business and our customers.
Health and wellbeing
We have continued to support our people throughout
the pandemic including the transition into an endemic
environment. Part of this is staying close and continuing
to ask people how they are and what they need.
– 100% of our people have access to the Employee Assistance
Programme (EAP);
– 11 trained as mental health first aiders;
– 27 managers attended two training sessions on ‘Recognising
Mental Health Challenges’ in an effort to support their teams
and identify signs of concern;
– 83% of our people (in October 2021) characterised their
mental health as being the same or better than in the
previous six months;
– 55% of our people have registered with Headspace, the
virtual mental health and wellbeing support platform; and
– we supported and sponsored a three-month ‘Wellbeing
Challenge’ (commencing July 2021) for people with specific
personal wellbeing goals. An external partner (Superwellness)
was engaged to advise on and support this initiative.
We continue to listen closely to our people
Our employees’ feedback plays a crucial role in our pursuit
of creating a desirable employee experience and continuing
to retain top talent. We can only tell if we are successful
by asking our people, so we empower them to share their
feedback on a regular basis.
Assessing engagement
At the mid-year point of our financial year, our regular
‘Pulse’ survey in October had a record 96% response rate.
We surveyed again in respect of the 2021/22 financial year
and our engagement levels remain overwhelmingly positive,
with a 92% response rate.
86%
Employee Engagement
Index (EEI)
93% in March 2021
89%
of our employees
would recommend GPE
as a great place to work
95% in March 2021
88%
of our employees
believe in what GPE
is trying to achieve
97% in March 2021
81%
say their work gives
them a personal feeling
of accomplishment
87% in March 2021
While absolute scores for some questions have reduced year
on year, the overall results remain extremely positive. Two new
questions scored particularly high in our most recent survey with
90% of respondents stating both, ‘I am proud to work for GPE’
and ‘GPE is in a strong position to really succeed over the next
three years’, which is extremely encouraging. Helpful feedback
was received across a broad range of areas, which included
opportunities to further develop internal systems, to simplify
and streamline processes, to further strengthen collaboration
and to enhance our head office physical workspace. Action
plans are now being developed, in consultation with employees,
to address the key areas of feedback.
Strategic Report – Annual review
53Annual Report 2022 Great Portland Estates plc
Our people and culture continued
GPE: Powered by People
Our stated people ambition is to unlock potential, creating
opportunities for our people and our customers to thrive.
In doing so, we know our business will continue to thrive.
To achieve this, we have set out six key strategic people
priorities over the next three years in our new People Plan
which was endorsed by the Board in January 2022. We refer
to the People Plan internally as ‘OneGPE.’ to signify that
we are united in our intention to achieve our business and
people purpose. Our main areas of focus include:
– Diversity & Inclusion;
– Employee Experience;
– Leadership Capability;
– Health & Wellbeing;
– Rewarding & Recognising Excellence; and
– Performance, Development & Growth.
Diversity & inclusion (D&I)
At the heart of OneGPE. is our commitment to increase
diversity and further cultivate inclusion as a significant
aspect of our culture. Our D&I ambition is further informed
by our employee feedback, including through our surveys
and Board engagement.
At GPE, we believe that diversity gives us strength, but we
know this strength is only fully realised if our environment
is truly inclusive; where people feel safe, respected
and appreciated for who they are and what they bring.
Where they feel they belong. Our culture is grounded
in genuine and mutual respect and we do not tolerate
discrimination of any kind.
Diversity and difference power creativity and engagement
– from gender, race and ethnicity to sexual orientation,
age, religion, neurodiversity, disability, family status, lived
experience and so much more.
To succeed, we continue to seek out people who can bring
more of these different perspectives, ways of thinking,
and experiences to GPE.
Since achieving the National Equality Standard Accreditation
in April 2020, we have continued our journey in D&I and in
2021/2022 specifically we have:
– established a framework of four pillars to review our actions
and progress in D&I, building on and superseding our initial
Inclusion and Diversity strategy which was launched in 2019.
These are Systems, Talent, Culture and Community as part
of our OneGPE. People Plan;
– increased the gender diversity of our Executive Committee
with the appointment of Carrie Heiss as HR Director in
September 2021. Our Executive Committee now comprises
two women and eight men;
– introduced an Inclusion Committee to provide oversight and
coordination for activity specifically related to culture;
– 88% of our employees attended a bespoke and thought-
provoking training seminar entitled ‘Bias – Why it Matters’;
– received endorsement to launch several Employee Impact
Groups under the umbrella banner of ‘GPE.Connect’ which
we will be developing further in the new financial year.
We anticipate our initial impact groups to be in support
and recognition of women, race and ethnicity, and
working parents;
– published our inaugural OneGPE. Newsletter to coincide
with International Women’s Day in March 2022. This will
be a vehicle we use every six to eight weeks to highlight
important aspects of diversity, inclusion and culture;
– held a social event to celebrate the cultural and social
contribution of the Afro-Caribbean community in the UK;
– held a ‘bake-off’ during Pride Month which raised funds
for AKT, a charity supporting LGBTQ+ youth homelessness;
– continued with our Documentary Club during Black
History Month, highlighting a film for discussion dealing
with the history of race in London;
– confirmed offers to two interns in support of the
10,000 Black Interns Programme; and
– continued our support and sponsorship of Pathways
to Property and Real Estate Balance.
A framework for measuring progress was established and
endorsed by the Board in January 2022. Specific actions
have been defined under each of the four main pillars:
Systems
Integrate D&I into core organisational structure, policies
and practices to promote equitable advancement,
retention and reward.
Talent
Ensure the diversity of GPE’s workforce becomes more
reflective of the communities and customers we serve.
Culture
Educate and challenge ourselves to achieve the D&I
competence needed to foster and further sustain
an inclusive culture.
Community
Connect our people with our communities; partnering
where we can to increase our impact and to support
a more inclusive industry.
54 Great Portland Estates plc Annual Report 2022
Gender diversity
We are convinced that diverse leadership teams have a
competitive advantage and are drivers of business success.
GPE is committed to ensuring equitable representation across
all diversity dimensions in leadership positions which includes
enhancing our current focus on gender.
Number of people as at 31 March 2022
All
Employees Board
Senior
Management
Men
Women
Executive Committee and Senior Management Team
direct reports as at 31 March 2022
64%
36%
41%
Male 23
Female 13
Executive Committee
and their direct reports
59%
Male 32
Female 22
Senior Management Team
and their direct reports
The Executive Committee and their direct reports include Executive Directors,
other Executive Committee members, the General Counsel and Company
Secretary and their direct reports comprising individuals for whom they have
direct line management responsibility, excluding administrative or support
roles. As at 31 March 2022, the Executive Committee itself comprised seven
men and two women.
The Senior Management Team represents the level below the Executive
Committee, comprising Directors and Heads of Department who have
direct line management responsibility for approximately 35% of the business.
The data includes all permanent and fixed-term contract employees and
is calculated on a full-time equivalent basis.
For FTSE Women Leaders (previously Hampton Alexander) reporting purposes,
women represent 32% of the Executive Committee and their direct reports,
comprising individuals for whom they have direct line management
responsibility, excluding administrative or support roles.
Our leaders
Exceptional leadership is a fundamental ingredient for
success at any company and GPE is no exception. Our senior
leaders are trusted, inspire confidence and perhaps most
importantly, care about the people they lead. In turn, we take
care to ensure they are up to the task of leading. In our most
recent employee engagement survey, 91% said they ‘have
confidence in the leaders at GPE’. In addition to a rigorous and
effective performance management process, we undertake
a comprehensive 360-degree feedback process on an annual
basis with all department heads and above (our ‘Senior
Management’ population). Our leaders and managers also
have access to coaching and skills development as required.
In 2021, we partnered with Arrival Education to undertake
a six-month executive leadership development programme
aimed at improving our inclusive leadership skills and our
ability to lead change. Internally referred to as the Inclusive
Leadership Programme, it commenced in April 2022.
Developing talent
We understand the importance of developing talent
within our business and investing in future talent. Succession
planning is central to our discipline, and we focus our attention
here on roles we consider business critical. Additionally, we
undertake an annual Talent Review of the entire Company,
focusing on people as opposed to the roles they undertake.
This review covers everyone, at all levels of seniority and
we create and action individual development plans as
a result. These plans include skill specific training, coaching
and mentoring as appropriate. We recognise that having
a mentor can make a significant impact in developing
an individual’s career. Our most recent Talent Review was
in November 2021 and 17 individuals were identified and
matched with mentors to further their career development.
These are formal mentorships which are monitored and
supported by Human Resources.
We will continue to take opportunities to invest in learning
and development opportunities for our employees, including
supporting employees to receive professional qualifications
which further support their career ambitions.
Customer first
As we refine and expand the choice of spaces we provide,
we are taking actions to ensure our team is aligned and able to
deliver. We have recently made several management changes
to support the delivery of our Customer first approach to meet
today’s key occupier themes of flexibility, service delivery
and amenity provision in well-designed, tech-enabled and
sustainable spaces.
– Steven Mew assumes the newly created role of Customer
Experience and Flex Director, with overall responsibility
for our flexible office space activities;
– Simon Rowley has been promoted to Director of Office
Leasing and Flex;
– Dan Nicholson assumes leadership of the Portfolio
Management Team whilst retaining overall responsibility
for the Group’s Development activities; and
– Anisha Patel has been promoted to Director of Marketing
to support and broaden both our customer and
stakeholder engagement.
In addition, we have recently recruited Katie Lin, Workplace
Design Lead, Jack Kelly, Senior Operations Manager focusing
on Flex, and Felix Streeton, Workplace Project Manager,
to further support the acceleration of our flexible office
space roll-out.
Looking ahead to 2023
We look forward to continuing to progress our People Plan
through OneGPE. We anticipate further automation in our
use of technology to enhance the employee experience in
the areas of data collection, employee insight, and learning
and development. We will focus on embedding a ‘Customer
first’ mindset and approach. We will also expand our focus
on diversity to include an emphasis on race and ethnicity
and we look forward to continuing to cultivate an inclusive,
positive and winning culture. Further information on our
approach to diversity and inclusion is included on page 103.
Strategic Report – Annual review
55Annual Report 2022 Great Portland Estates plc
Our stakeholder relationships
Approach and objectives
The role of the property owner is rapidly changing as the
needs of our customers evolve. An attractive office is now
considered more than simply a location in which to do
business. It serves a broader purpose. It needs to enhance
the productivity of the workforce, align to the business’
brand and to play a key role in attracting and retaining
talent in a competitive marketplace.
We know that every business is different, so we aim to provide
choice to allow our customers to create their space the way
they want it. Our Ready to Fit offering provides flexibility
for customers to design and build the space that is just right
for them and their people. We also provide spaces that are
fitted and designed by our in-house experts. Customers
can also choose to have their space Fully Managed by us,
meaning we take care of everything. Making life easier
and hassle free.
Whichever offer our customers choose, they are all developed
with sustainability at its core. We provide the spaces of the
future, incorporating latest technology to drive our customer
experience, such as our smart workplace app, sesame®,
as well as promoting health and wellbeing for our customers
and local communities, with open plan configurations and
outdoor spaces.
To ensure we can deliver and maintain the highest standards,
we have a ‘Customer first’ approach, focusing on what we
consider to be key customer requirements of:
– Quality;
– Flexibility;
– Sustainability;
– Service;
– Health and wellbeing;
– Technology; and
– Social impact.
We also recognise that to deliver a high quality service,
we need a direct relationship with our customers. Therefore,
we have a dedicated in-house Occupier and Property
Services team whose role is to manage the day-to-day
operation of our buildings and deliver enhanced service
provision for all of our customers.
Knowledge of the changing needs of our customers requires
a close relationship and regular engagement. A key element
of our approach, in addition to frequent day-to-day
interaction, is to require our portfolio managers to formally
meet with every customer twice a year and at least one
Executive Committee member will meet with our top 20
customers at least annually. These meetings, combined with
the independent customer satisfaction surveys we undertake,
provide an understanding of how our customers’ real estate
needs are developing and provide valuable insight into
the health of the industries in which they operate.
Customers
Understanding our customers’ businesses and having a
deep appreciation of what they require enables us to deliver
a workplace environment in which they can focus on their own
business activities. Having a strong, enduring relationship with
our customers means we can work with them to ensure they
remain satisfied within their existing space, and allows us to
retain or relocate them when their occupational requirements
change or their leases expire. Our ‘Customer first’ approach is
vital to help us design and deliver spaces and services in which
their businesses thrive. Our customers know that we focus
on understanding and supporting their needs, their people
and their business.
GPE customer mix %
13%
30%
16%
25%
Retail, hospitality and leisure
1
Professional
Banking and finance
Corporates
Technology, media and telecoms
Government
14%
2%
1. 20% in retail units, 10% in offices.
Building and nurturing the relationships we have with our
stakeholders is critical to our success and too valuable to
outsource. As a result, we manage all aspects of our property
portfolio in-house. We aim to build lasting relationships
based on professionalism, fair-dealing and integrity.
See more on our people and culture on pages 52 to 55
See more on engaging with our investors on pages 90 and 91
Operational measures
+27. 8
Customer satisfaction
(Net Promoter Score)
£631k
Social value created
2 7.6 %
Of net assets in
joint venture
30day s
Average supplier
payment period
56 Great Portland Estates plc Annual Report 2022
We will also need to collaborate across the property industry.
As part of our ongoing research into how office spaces may
evolve, our partnership with six continental European office
REITS undertook research into how to retrofit buildings to
reduce carbon and directly surveyed European customers
to understand how their attitudes to sustainability and
wellbeing were changing. Coupled with our own ‘Future
of the Workplace’ research, the findings are influencing
the design of our unique spaces allowing us to create
the workplace of tomorrow.
Our joint venture partners
Joint ventures are an important part of our business and
today they comprise three active partnerships with BP
Pension Fund (GRP), the HKMA (GHS) and Threadneedle
(GVP). Our joint ventures are built on long-term relationships
with trusted, high quality partners. At 31 March 2022, they
made up 21.1% of the portfolio valuation, 27.6% of net assets
and 22.8% of rent roll (at 31 March 2021: 24.6%, 31.8% and
25.2% respectively).
Approach and objectives
Our approach has been to seek joint venture partners to
help us unlock real estate opportunities that might not have
been available to GPE alone, either through sharing risk or
providing access to new properties. The success of our joint
venture activities relies on strong relationships with our
partners, based on frequent engagement. Each partnership
has a joint board (including at least one GPE Executive
Director) that meets quarterly on a formal basis with frequent
ad hoc engagement throughout the year. The joint venture
properties are valued quarterly, with detailed management
information being provided to the joint venture board.
Examples of topics raised during the year
– Whether to hold or sell 160 Old Street, EC1 in GRP;
– Approval of a number of leasing transactions at
Hanover Square, W1 in GHS; and
– Approval of Superdry lease surrender and new letting
to Uniqlo in GRP.
How did we respond
– 160 Old Street sold for a headline price of £181.5 million
(our share: £90.8 million);
– Leasing of offices at Hanover Square, W1 completed,
further retail lettings approved; and
– Superdry lease surrender and new lease to Uniqlo approved.
Next steps
Looking forward, we are working closely with our partners
to advance our business plans, including completion of the
retail leasing at Hanover Square, W1, in our GHS joint venture
and progressing the planning application for our proposed
development at Mount Royal, W1, in GVP.
Examples of topics raised during the year
– Rent concessions to provide continued financial support,
particularly for retail customers;
– Ensuring safety of buildings and health and wellbeing
of people and supporting the safe return to the office;
– Opportunities to improve service charge and Flex processes;
– Greater utilisation of our sesame® app; and
– Swift communication of building issues.
How did we respond
– Financial support on a case-by-case basis;
– Senior Management tours of all development sites
and the managed portfolio exclusively focusing on
health and safety;
– Service charge and Flex process
improvements implemented;
– An aligned rebranding of sesame® including simplification
of the user experience and navigation tools; and
– Utilising sesame’s ‘chat and support’ function alongside
conventional communication tools to keep our customers
fully informed.
High levels of customer satisfaction
We commission an annual independent customer satisfaction
survey which consists of 16 core questions and is designed
to determine what our customers think about their building,
its location and the services and amenities we provide.
The output of the survey is a Net Promoter Score (NPS), which
is best translated as the willingness to recommend GPE. It is
expressed as an absolute number between -100 and +100.
Our NPS remains high, at +27.8 in 2022 (2021: +42.0). Whilst lower
than our very high score last year, which was driven by our
COVID-19 response, it remains materially ahead of the industry
average of +2.0, and equates to upper quartile performance
against London office property peers. From the valuable
feedback and comments we receive, we are preparing
building-specific action plans to further improve our services.
The plans are produced within four weeks of the results and
implemented as soon as possible, demonstrating that we
have listened and, more importantly, acted on their feedback.
Next steps
For many of our customers, the energy consumed in their
building represents a significant proportion of their carbon
footprint. This energy consumption also accounts for a
quarter of our own footprint. Together, we have an incentive
to lower our impact. We are therefore partnering with
some of our more energy-intensive customers to identify
opportunities to improve building energy performance,
utilising sesame® to provide real-time feedback and
encourage behavioural change. Similarly through sesame®,
we will be able to monitor the effectiveness of our health
and wellbeing measures providing valuable feedback to
our customers, helping them provide the healthy, productive
and efficient spaces their employees want to work in.
Strategic Report – Annual review
57Annual Report 2022 Great Portland Estates plc
Our stakeholder relationships continued
Communities
To enable us to deliver spaces in central London we
need to create enduring, sustainable relationships with
the communities where we are working. We consider our
communities to be London as a whole, the boroughs in which
we work and the streets in which our buildings are located.
Approach and objectives
As a business 100% focused on central London, we have
always worked hard to support our local communities
and to help address some of London’s social and
environmental challenges.
We partner with a number of charities and community
organisations to deliver our strategy at a grass-roots level.
Key issues and inequality vary considerably across our
boroughs; through regular engagement with our partners,
supported by community consultations with local residents
and businesses, we are able to deliver a hyper-local
approach that responds to local needs.
Progress during the year
Conversations continued to be dominated by the lasting
impacts of the pandemic, particularly the need for training
and employability support to help our communities recover.
As such, we aligned our funding to support this need.
Through Groundwork London, we supported ‘Westminster
Wheels’ by funding four bike mechanic training work
placements for people facing significant barriers to
employment. We also built upon the charity relationships
established through our COVID-19 Community Fund and
continued our support of Young Westminster Foundation’s
‘Mastering My Future’ programme which provides free
workshops, work experience and mentoring.
Examples of topics raised during the year
– Funding instability due to the ongoing impact of COVID-19;
– Increased need for mental health support and the
importance of nature for our mental health;
– Importance of helping Afghani refugees and asylum
seekers integrate into the community; and
– London’s poor quality housing with some of the highest
concentrations of fuel poverty.
How did we respond
– Maintained the increase to our annual financial donation
to our charity partners’ Centrepoint and Groundwork
London due to the ongoing uncertainty caused by
the pandemic;
– Provided 190 hours of pro bono support to Centrepoint’s
Independent Living programme;
– Continued our support of Bankside Open Spaces
Trust (BOST), a charity supporting the maintenance
of green spaces in SE1, with a financial donation
and 120 volunteering hours;
– Opened up our buildings for use by the community
with a ‘new parents’ group meeting weekly; and
– Created a new three-year partnership with National
Energy Action to help alleviate fuel poverty within
our communities.
Creation of Social Impact Strategy
Our new Social Impact Strategy, launched in November 2021,
sets out our clear focus areas around the wider objective
to improve the quality of life for disadvantaged Londoners.
It is an organisational level framework covering all areas
of our business activities, whilst providing the flexibility
to respond to local needs. Delivery will require us to partner
with all our stakeholders, using their skills and experience,
to make the most of the significant opportunities that exist
to create social value throughout the property life cycle.
It aligns with our Roadmap to Net Zero and the need to
support a just transition, champion green skills and help
improve climate resilience within our communities.
Diversity, equity and inclusion are also central to our
approach, recognising that the property industry needs
to better reflect the diversity of our local communities.
The strategy creation process was overseen by our Social
Impact Committee and involved:
– evidence-based research to understand the demographic,
socioeconomic and educational needs of our six key
London boroughs. This highlighted the level of inequality
within boroughs and reinforced our hyper-local approach;
– interviews with Heads of Department, supply chain
partners and community organisations through a series
of one-to-one sessions;
– wider employee feedback gained through a survey to
maximise perspectives and understand the social issues
which mattered most to our people as a whole; and
– using the findings from the desktop needs analysis
and stakeholder engagement to identify the four key
pillars and develop commitments, targets and activities
(read more opposite). These tangible commitments,
underpinned by measurable actions, will enable us
to monitor progress against each pillar and hold
ourselves accountable.
Next steps
For the coming year, our priority is to embed our new Social
Impact Strategy and further develop the implementation
plan, ensuring that we continue to focus support on delivering
improved outcomes for the people who need it most. This will
include embarking on new three-year charity partnerships
with XLP, focused on creating positive futures for young people
growing up on inner-city London estates, and National Energy
Action. We will also continue to develop our social value
reporting and baseline data, aligned with our commitment
to create £10 million in social value by 2030.
58 Great Portland Estates plc Annual Report 2022
Creating a lasting positive
social impact
We want to build a sustainable legacy for our great capital city
with positive social impact at its heart, whilst also supporting
a thriving economy for London’s future.
At XLP, we are delighted to be
partnering with GPE. We know
that the challenges facing
disadvantaged young people
today in London need long-term
relationships to bring about
that shared goal of social
transformation, and we are so
pleased to be working together
for the next three years.”
Luke Watson
CEO, XLP
Our Social Impact Strategy
Our strategy focuses on four pillars
which will contribute to addressing
the needs of the London boroughs
in which we are working.
These pillars, clear commitments
and actions are set within the
wider context of our Sustainability
Statement of Intent and are
focused through three lenses:
Our people – connecting our
people with our communities and
using their knowledge and experience
to create a more inclusive industry.
Our spaces – working with partners
to create shared value throughout
all stages of the property life cycle.
Our lasting impact – creating
a lasting legacy through long-
term relationships.
The health and happiness of the
wider community is key to a thriving
and resilient society and therefore
a thriving economy. Unlocking the
diverse knowledge, skills and creativity
of people within our communities is
fundamental to tackling inequality.
GPE commitments include:
– Increasing our understanding
of the broad social and cultural
diversity within our communities;
– Ensuring inclusive, accessible
design and placemaking; and
– Proactively listening to our
communities to nurture a culture
of trust and transparency.
Inequalities begin before primary
school and continue to cumulate
through education and work, impacting
all aspects of life. To promote social
mobility, and to address known skills
gaps, we need to provide inclusive
employment and training opportunities.
GPE commitments include:
– Champion new and varied routes
into sustainable employment;
– Address barriers to employment
for under-represented groups; and
– Advocate responsible business
practices through our supply chain.
A strong connection with urban
nature is essential to support
improved climate resilience and
the holistic health and wellbeing
of our communities.
GPE commitments include:
– Provide opportunities for our
people and our customers
to interact with nature;
– Support organisations dedicated
to improving green spaces and
access to nature; and
– Increase climate resilience
through nature-based solutions.
For more see www.gpe.co.uk/
our-relationships/community-
relationships/
Diversifying businesses and
supply chains is crucial to boosting
overall social value creation.
Targeted opportunities for small
and medium-sized businesses are
critical to levelling the playing field.
GPE commitments include:
– Evaluate broader social and
environmental impacts in
our procurement of products
and services;
– Engage, train and mentor our
local business community; and
– Enable social enterprise to thrive
through the provision of space
or other services.
1
Enabling
healthy and
inclusive
communities
2
Championing
diverse skills
and accessible
employment
opportunities
3
Supporting the
growth of local
business and social
enterprise
4
Connecting
people with
urban nature
Our four pillars:
Strategic Report – Annual review
59Annual Report 2022 Great Portland Estates plc
Our stakeholder relationships continued
Our suppliers
We work with a diverse range of suppliers, from small
independents to large multinationals. The successful and
profitable delivery of our larger projects requires the effective
management of a multitude of factors, including maintaining
strong relationships and collegiate working. Whilst most
procurement is subject to a tender process to ensure we
obtain value for money, we aim to partner with suppliers
who share our values and work to secure the best people
with an established track record and, where possible,
retain key team members on successive projects.
Approach and objectives
The close relationship we foster with our suppliers, alongside
a track record of successful project delivery and a deep
pipeline of future work, means that people want to work with
us, and ensures that we have good access to quality partners.
For our development and refurbishment projects, regular
communication is paramount. This starts with the design
process, where we encourage our design team to consider
the art of the possible and work with our contractors to
explore new and innovative ways of working. Involvement of
our agents throughout the process also helps us to ensure that,
with their input, our buildings are optimally designed and,
where appropriate, evolve over the project to remain relevant.
We also aim to treat our suppliers fairly through prompt
payment, including bi-monthly payment terms with some
of our largest contractors. Whilst we expect all our suppliers
to comply with standards and codes that may be specific
to their industry, our Supplier Code of Conduct sets out
the standards that we require. Furthermore, in order for
us to achieve our goal of reaching net zero carbon by 2030,
we will need to work closely with our suppliers. We therefore
ensure that the sustainability goals of our suppliers are
taken into account when tendering our contracts.
Examples of topics raised during the year
– Prompt payment terms;
– COVID-19 implications on development costs and time lines;
– Support for site safety;
– Impacts of inflationary pressures and supply chain
disruption; and
– Greater collaboration to reduce carbon footprint.
How did we respond
– 30 days’ average payment terms, bi-monthly payments
to largest suppliers maintained and contractor support;
– Sites operated on a COVID Secure basis; timetables
amended to accommodate new working practices;
– Working with suppliers on information sharing and initiatives
to reduce carbon through the supply chain; and
– Working with suppliers to manage procurement,
labour and costs.
Next steps
We are currently in the latter stages of procuring
the construction contract for the redevelopment of
2 Aldermanbury Square, EC2. Elements of the scheme
are being tendered separately with the intention of
appointing the main contractor later this year.
Local planning authorities
Developing new buildings in central London is appropriately
challenging, particularly in the West End. Large areas are
protected by conservation areas, building heights are
restricted, development needs to be considerate to local
residents and the planning process is stringent. As a result,
our relationships with local planning authorities are key
to the delivery of new spaces in London.
Approach and objectives
Navigating the planning process is key to our success.
We aim to engage with local authorities and residents in
an open, transparent and non-adversarial manner to enable
us to secure planning consents that are both beneficial
to us and the local communities in which they are built.
We are committed to creating a lasting positive social impact.
As a matter of course, we liaise with community stakeholders
to understand their needs and, where possible, we will adjust
our proposals to take account of comments received.
Examples of topics raised during the year
– Provision of high quality sustainable spaces to deliver
benefits to the local environment and economy;
– Delay by London Borough of Southwark to determine
the planning applications for New City Court, SE1;
– Building design that is of appropriate scale and sensitive
to its location and the history of the area; and
– Appropriate consultation with local communities
and interest groups.
How did we respond
– Proactive engagement in design and development of
schemes, with changes made to incorporate feedback;
– We explored all avenues to have the applications
at New City Court, SE1 approved, or even refused,
by Southwark without success, resulting in an ongoing
appeal for non-determination;
– Planning performance agreements with local authorities;
and
– Utilising technology to help engage with local communities,
including using dedicated web portals, social media,
targeted leafleting and virtual ‘town hall’ meetings.
Next steps
Communicating the social impact of our proposals
continues to increase in importance as we seek to ensure
our schemes are positively contributing to the needs of the
local community. We will continue to regularly meet with
officers, elected members and residents in our key local
authorities to ensure that we continue to discuss how our
proposed schemes can positively contribute to their ‘good
growth’ and climate emergency plans.
Over the next 12 months we will be launching consultations
for further development projects, with the priority for
the forthcoming year being to resolve the planning status
at New City Court, SE1.
60 Great Portland Estates plc Annual Report 2022
Health and safety incidents by year
Where accidents occur, we aim to support and collaborate with our supply chain
to understand and maximise opportunities for improvement so that any future
risk can be mitigated and to ensure a no-blame culture for workers is maintained.
There was a small increase in first aid injuries in our occupied buildings, likely a
result of building utilisation returning to more normalised levels as the COVID-19
pandemic abated.
2022 2021 2020
Enforcement notices or fines received – – –
Employees
Work-related fatalities – – –
Reportable injuries/incidents – – –
First aid injuries –
Number of days off due to accidents
and incidents – – –
At our occupied buildings
Work-related fatalities – – –
Reportable injuries/incidents –
First aid injuries
At our developments
Work-related fatalities – – –
Reportable injuries/incidents –
First aid injuries
Providing safe, healthy
and secure environments
We are committed to maintaining the highest standards of
health and safety across both our developments and occupied
portfolios and aim to be an industry leader setting the best
standards of health, safety and wellbeing for our communities
and people. We continue to promote proactive improvement
and attitudes towards health and safety, ensuring our strategy
promotes a collaborative approach with all our customers,
employees and within the supply chain.
During the year, we kept our
buildings open, safe for access
for our customers, employees
and those needing to complete
any works, including maintaining
COVID-19 recommended protocols.
We continued with enhanced
cleaning, air quality monitoring and
introduced additional water flushing
regimes. We encouraged personal
COVID-19 testing to support the
health and safety of those using our
spaces and our head office. Critically,
all our buildings remained open,
and all statutory inspections and
risk assessments were completed
within the allocated time frame.
We also ensured that we worked
to government guidelines and
completed a review of the COVID
Secure Safe Building Certificates
which were displayed in all
our properties.
We improved the monitoring
of health and safety across the
portfolio by incorporating a set
of proactive key Board approved
performance indicators allowing us
to understand how we are performing
on health and safety management.
During the year, we used these
indicators to drive improvement on
leadership, we assigned risk ratings
to our buildings, in conjunction with
a third-party audit, while increasing
refresher training and monitoring
the performance of our supply chain.
Looking ahead, we aim to continue
our focus on fire safety management
to ensure that the golden thread
of information is available and
accessible for every building in
our portfolio and we will continue
to support customers, staff and
visitors to our buildings.
With the Fire Safety Act coming into
force during the year, we believe
that many of the proposed changes
in this legislation are suitable for
our commercial properties, as well
as the recommended residential
sector. We have focused on improving
the knowledge of fire safety through
one-to-one training for our Occupier
Services Managers, which was
delivered on-site. We have also ensured
we have up-to-date and compliant fire
strategies for every building. We have
completed fire door inspections across
our all our buildings and refreshed our
existing Fire Management Policy.
Finally, we have supported our
customers by providing educational
advice on their own fire safety duties
within their demised areas and how
they can improve their assessment
of fire risk.
Part of our proactive approach also
includes understanding the impact
that climate and culture has in relation
to our Health and Safety Strategy
for the business. Therefore, we have
continued to ask our employees, via
an engagement survey, if they believe
we support them on health and safety.
Encouragingly 95% of our people
agreed that ‘GPE cares about their
health and safety’. While this remains
a positive result, we will continue to
work with each team to ensure that
they have the technical support they
require throughout the year to ensure
health and safety remains high on
the agenda.
We will continue to work closely
with our suppliers and expect them
to comply with all health and safety
legislation and codes of best practice
specific to their industry. We will also
work together to maintain focus on
driving a positive health and safety
culture including to help reduce stress
and anxiety in the workplace and
support positive mental health.
Strategic Report – Annual review
61Annual Report 2022 Great Portland Estates plc
Engaging with our stakeholders
You can read more about our approach to s.172(1) matters
and stakeholder engagement as follows:
See more
Key decisions and
long-term consequences
Our strategy is evolving, shaped by our purpose,
principles and strength
on pages 02 and 03
How we create value
on pages 12 and 13
Impact on decisions
on page 94
Letter from the Chair of the Board
on pages 81 to 83
What we did in 2021/22
on pages 96 and 97
Employees
Our people and culture
on pages 52 to 55
Leadership and purpose
on pages 88, 89, 92 and 93
Fostering business relationships with
suppliers, customers and others
Our stakeholder relationships
on pages 56 to 61
Leadership and purpose
on page 89
Communities
Our stakeholder relationships
on pages 56 to 61
Leadership and purpose
on page 89
Environment
Sustainability
on pages 37 to 51
Our stakeholder relationships
on pages 56 to 61
High standards
of business conduct
Our people and culture
on pages 52 to 55
Our stakeholder relationships
on pages 56 to 61
Letter from the Chair of the Board
on pages 81 to 83
Anti-bribery and corruption, ethics and whistleblowing
on pages 95 and 110
Investors
Letter from the Chair of the Board
on page 83
Leadership and purpose
on pages 89 to 91
Our engagement
Our extensive engagement efforts help to ensure that
the Board can understand, consider and balance broad,
and sometimes conflicting, stakeholder interests when
making decisions to deliver long-term sustainable success.
Every decision the Board makes will not necessarily result in
a positive outcome for all stakeholders, however the Board
aims to treat stakeholders fairly and consistently, guided
by GPE’s purpose, values, strategic priorities and the
long-term interests of the Company.
Board processes
While the Board will engage directly with stakeholders
on certain issues, stakeholder engagement will often
take place at an operational level with the Board receiving
regular updates on stakeholder views from the Executive
Directors and senior management.
As part of our Director induction process, Directors receive
a briefing and induction materials regarding their duties
under s.172. Training has further been delivered by the
Corporate Secretariat team to management to ensure that
they understand the duties of the Board and the importance
of s.172(1) matters in GPE’s strategy discussions and decision
making. Board papers for all key decisions are required
to include a specific section reviewing the impact of the
proposal on relevant stakeholder groups as well as other
s.172(1) considerations.
Page 94 sets out some examples of how the Board has
considered s.172(1) matters in its decision making in 2021/22.
Section 172(1) statement
The Directors have acted in the way that they considered,
in good faith, would be most likely to promote the success
of the Company for the benefit of its members as a whole
and, in doing so, have had regard, amongst other matters,
to those matters set out in section 172(1)(a) to (f) of the
Companies Act 2006, being:
– the likely consequences of any decision in the long term;
– the interests of the Company’s employees;
– the need to foster the Company’s business relationships
with suppliers, customers and others;
– the impact of the Company’s operations on the
community and the environment;
– the desirability of the Company maintaining a reputation
for high standards of business conduct; and
– the need to act fairly as between members of the Company.
Our stakeholders
As explained on pages 56 to 61, GPE has identified its key
stakeholders as being its: investors, people, customers,
JV partners, communities, local planning authorities and
suppliers. Building and nurturing these relationships based
on professionalism, fair dealing and integrity is critical
to our success.
62 Great Portland Estates plc Annual Report 2022
Non-Financial Information Statement
This table is disclosed on a voluntary basis and signposts related non-financial information in this report and further reading
on our website.
Reporting area
1
Policies Website Reference in 2022 Annual Report
1. Environmental
matters
Sustainability Policy Statement
Creating Sustainable Spaces –
Sustainable Development Brief
Our Guiding Principles of Design
Sustainability Statement of Intent
Our Roadmap to Net Zero
www.gpe.co.uk/sustainability/
our-approach
www.gpe.co.uk/sustainability/
developing-sustainable-buildings
www.gpe.co.uk/sustainability/
our-sustainability-statement-
of-intent/
See more about our Roadmap
to Net Zero on pages 38 to 40
See more about sustainability
on pages 37 to 51
2. Employees
Our values
Diversity Policy
Our People Plan
Personal Development Plans
www.gpe.co.uk/about-us/
our-purpose-values
www.gpe.co.uk/about-us/
governance
www.gpe.co.uk/our-relationships/
our-employees
See more about our values
on page 52
See more about people and
culture on pages 52 to 55
See more about diversity
and inclusion on pages 54, 55,
100 and 103
3. Human rights
Supplier Code of Conduct
Annual Modern
Slavery Statement
www.gpe.co.uk/our-relationships/
our-suppliers
www.gpe.co.uk/sustainability/
our-approach
www.gpe.co.uk/our-modern-
slavery-statement
See more about how we behave,
human rights and supplier
stewardship on page 95
See more about mitigating
the risk of modern slavery on
pages 44 and 95
See more about our suppliers
on pages 60 and 61
4. Social
Social Impact Strategy
Creating Sustainable
Relationships
GPE Standard Supply Terms
Health and Safety Policy
www.gpe.co.uk/our-relationships/
community-relationships
www.gpe.co.uk/our-relationships/
our-suppliers
www.gpe.co.uk/sustainability/
working-safely
See more about our stakeholder
relationships on pages 56 to 61
See more about communities
on pages 58 and 59
See more about our Social Impact
Strategy on pages 11 and 59
See more about our suppliers
on pages 60 and 61
See more about providing safe,
healthy and secure environments
on page 61
5. Anti-corruption
and anti-bribery
Anti-Fraud, Bribery &
Corruption Policy
Ethics Policy
Whistleblowing Policy
Gifts and Hospitality Policy
Use of GPE Suppliers Policy
Conflicts of Interest Policy
Inside Information and Share
Dealing Policy
www.gpe.co.uk/our-relationships/
our-suppliers
www.gpe.co.uk/about-us/
governance
See more about anti-corruption
and anti-bribery matters on page 95
See more about our Anti-Fraud,
Bribery & Corruption, Ethics and
Whistleblowing Policies on page 110
6. Business model
www.gpe.co.uk/about-us/
our-strategy
See more about how we create
value on pages 12 and 13
7. Principal risks
and uncertainties
Group Risk Management Policy www.gpe.co.uk/about-us/
governance
See more about our approach
to risk on pages 64 to 77
8. Non-financial
key performance
indicators
www.gpe.co.uk/investors/
investment-case/key-
performance-indicators-2021
See more about our KPI
benchmarks on pages 14 and 15
See more about our near-term
strategic priorities on pages 16 and 17
1. Board oversight of these policies and matters is also covered through ‘What we did in 2021/22’ on pages 96 and 97.
Strategic Report – Annual review
63Annual Report 2022 Great Portland Estates plc
Our approach to risk
The successful management of risk is critical
for the Group to deliver its strategic priorities.
Whilst the ultimate responsibility for risk
management rests with the Board, the effective
day-to-day management of risk is integral in the
way we do business and the culture of our team.
Our attitude to risk is one of collective responsibility, with the
identification and management of risks and opportunities
being part of the mindset of the GPE team. Our organisational
structure, including close involvement of senior management
in all significant decisions and in-house management of our
development, portfolio and occupational service activities,
together with our prudent and analytical approach, is designed
to align the Group’s interests with those of shareholders.
Setting and monitoring our ‘risk appetite’
The Group’s overarching risk appetite is set in the context that we
focus on a single market, that of central London, operating out of
a single head office within close proximity to all of our activities.
Central London’s real estate markets have historically been
highly cyclical and, as a result, we apply a disciplined approach
to our capital allocation and managing our operational risk,
in particular our development exposure, in tune with prevailing
market conditions. Furthermore, we aim to operate with low
financial risk by maintaining conservative financial leverage.
We use a suite of key operational parameters as an
important tool to set and then measure the Group’s risk
profile. These parameters consider, amongst other matters,
the Group’s size, financial gearing, interest cover, level of
speculative and total development exposure, and single asset
concentration risk. These parameters are revisited annually
as part of the Board’s strategy review and reviewed at each
Board meeting. We monitor the Group’s actual and forecast
position over a five-year period against these parameters.
We set a target risk position for each of our principal risks
to determine whether the net risk position of each principal
risk is within the Board’s risk appetite level, and to determine
any appropriate risk response.
Our risk culture and how we manage our risks
Our over-arching risk management process is comprised
of four main stages as summarised in the diagram below.
We believe that effective management of risk is based on
a ‘top-down’ and ‘bottom-up’ approach with appropriate
controls and oversight as outlined on page 65, which include:
14
2
3
Risk identification
– Identification and description of
significant and emerging risks that
could affect GPE’s key objectives
– Risks categorised with assignment
of accountabilities and executive
ownership of principal risks
Risk monitoring, reporting and escalation
– Risks documented, reported and monitored
on a regular basis by management,
Executive Committee, Audit Committee
and Board
– New risks and significant changes to
risk profiles escalated as appropriate
Risk assessment
– Potential impact and likelihood of
risk assessed using defined criteria
– Principal risks assessed on a gross,
net and target risk basis
Risk response
– Appropriate response determined
with reference to risk appetite
– Risk response may include Treat,
Transfer, Terminate or Tolerate
Communication
and
consultation
– our strategy setting process;
– the quality of our people and culture;
– established procedures and internal controls;
– policies for highlighting and controlling risks;
– oversight by the Board, Committees and management; and
– ongoing review of market conditions and the property cycle.
Moreover, risk management is an integral part of all our
activities. We consider risks and, more positively, where these
might also provide opportunities, as part of every business
decision we make, including how they would affect the
achievement of our strategic priorities and the long-term
performance of our business.
Six-monthly assessment of principal and emerging
risks, opportunities and effectiveness of controls
As part of a robust assessment of the principal and
emerging risks facing the Group, at the half-year and year
end, the Executive Committee, Audit Committee and Board
formally review the Group’s principal and emerging risks,
including those that would threaten its business model,
future performance, solvency and liquidity. Importantly,
part of this review is the consideration of:
– the internal operational controls in place to mitigate
the principal risks, how key controls have operated in the
preceding six months and additional activities and controls to
further reduce risks where desirable, including any instances
where net risk assessments may exceed the target risk position;
– consideration of any emerging risks and opportunities; and
– the Board’s ongoing monitoring of these risks.
Whilst emerging risks and opportunities are considered
as part of this formal six-monthly assessment, the Board
spends additional time at scheduled Board meetings on
‘blue sky’ thinking and consideration of possible emerging
risks. Executive Committee members are tasked to provide a
summary in their regular Board updates of the three ‘things’
concerning and exciting them the most. We also ask our Heads
of Department the same question to continually challenge
ourselves as to how we should evolve. Emerging risks are also
considered by the Board as part of its annual strategy review.
While risks relating to structural market changes, pandemic
and short and medium-term climate change are considered
within our principal risks, we have also spent time this year
discussing emerging risks across a number themes such as
long-term climate change, fire safety, advances in technology,
de-globalisation, de-urbanisation, evolving working patterns
and behaviours, fiscal policies and energy security.
64 Great Portland Estates plc Annual Report 2022
Board oversight of risk
Business risk
Nomination Committee Audit Committee
Board
Remuneration Committee
Operational Committee oversight
Weekly/Monthly
Development management
Portfolio management
Investment management
Financial management
Occupier and property services
Quarterly
Living our values
Health and safety
Development management review
Portfolio management review
Sustainability
Social impact
Executive Committee
High-level risk assessment
framework
Strict approval requirements
Extensive documentation
to support decisions
Formal policies and procedures
consistently applied
Defined performance indicators
with sensitivity analysis
External review of key
controls/internal audit
Observations from the
external auditor
Whistleblowing Policy
Focused market expertise
Open communication
Transparent disclosure
with stakeholders
Integrity in business conduct
Interests aligned with shareholders
Qualified and experienced
personnel with specific roles
Intense development,
portfolio management and
occupier services teams
Conservative attitude
to capital deployment
Analytical rigour
Investment return benchmarks
Debt leverage, covenant
compliance and liquidity limits
Regular review of business plans,
dashboard lead indicators
and operational parameters
Occupancy targets
Development appraisal parameters
Leasing objectives and customer
covenant testing
People and culture
guided by our values
Procedures and
internal controls
Policies for highlighting
and controlling risk
65Annual Report 2022 Great Portland Estates plc
Strategic Report – Annual review
Our approach to risk continued
The uncertainties, disruption and challenges of the
COVID-19 pandemic continued into the year, impacting
our markets and our operations. The Board and the Audit
Committee have overseen the Company’s response to the
pandemic, the actions taken to mitigate its impacts, and
also the opportunities arising from the pandemic, including
in relation to potential longer-term structural changes in
working and retail practices.
As our markets recovered over 2021/22 as the impacts
of COVID-19 abated, recent tragic events in Ukraine have
impacted the global economy and supply chains and
accelerated inflationary pressures. The Board and Audit
Committee continue to monitor the risks arising from the
Russia-Ukraine conflict and geopolitical tensions, as well as the
ongoing uncertainties in relation to the UK’s international trade
arrangements, and their potential impacts on the UK economy,
our operations and London’s attractiveness. Further details
on market impacts can be found in ‘Our markets’ on pages
21 and 22 and our viability assessment on page 78.
Our principal risks remain largely unchanged from the
prior year, save for the inclusion of one new principal risk as
described below (‘Flex operational capabilities and service
provision’). In addition, we have amended the descriptions
of some of our principal risks to reflect how they have evolved
over the past 12 months. Key changes include the following:
– as we drive our Flex strategy and scale-up our Flex
operations, our ability to deliver this operationally intensive
part of our business, control costs and generate appropriate
risk adjusted returns has grown in significance. At the same
time, our ability, directly and through our partners, to deliver
quality services that meet the needs of our customers has
also become increasingly important. ‘Flex operational
capabilities and service provision’ has therefore been added
to the Group risk register this year as a new principal risk;
– the risks associated with longer-term structural changes
in working practices now subsist outside of the ‘Pandemic’
risk and have therefore been incorporated into our
‘Meeting customer needs’ risk. More generally, we now
refer to our ‘customers’ rather than ‘occupiers’ in line
with our Customer first approach;
– our risk assessment of ‘Pandemic’ has reduced as
the impacts of COVID-19 have subsided. Nevertheless,
uncertainty remains as to the future trajectory of the
pandemic, including the emergence of new strains of
the virus, and ‘Pandemic’ therefore remains a principal
risk at the current time;
– following the occurrence of structural retail changes,
our structural retail change risk has been updated to
refer to ‘Retail market uncertainties’ more broadly and
has also been updated to reference the risk of inflation
and higher interest rates adversely impacting consumer
spending and potentially demand for retail space in London.
Our assessment of the risk has reduced overall following
recently improved retail activities;
– the ‘London attractiveness’ risk has been expanded for
the impacts of the macro environment, including the
risk of recession, driven by factors such as geopolitical
tensions, supply chain disruption and inflationary
pressures, potentially impacting London’s appeal;
– the ‘Failure to profitably deliver the development
programme’ risk description has also been updated
to expressly reference the heightened risks arising
from supply chain disruption and inflation;
Likelihood
Net risk rating as assessed after existing controls and mitigation
Negligible Minor Moderate Major
Unlikely Possible Probable
Almost
certain
Impact
1
Principal risk
1 Meeting customer needs
2 Retail market uncertainties
3 Climate change and decarbonisation
4 Pandemic
5 Macro environment and London attractiveness
6 Impact of property market dislocation on
financial leverage and banking covenants
7 Failure to maximise returns from prevailing
market conditions
8 Failure to profitably deliver the development programme
9 Challenging planning environment
10 People
11 Poor capital allocation decisions
12 Health and safety
13 Cyber security and infrastructure failure
14 Flex operational capabilities and service provision
Risk severity
MediumLow High Very high
Net risk heatmap
2
3
4
5
7
13
12
9
10
1
8
11
6
14
66 Great Portland Estates plc Annual Report 2022
– our inclusive culture is considered an important factor in
GPE being able to develop and deliver its evolving business
plan, and this has now been reflected in our ‘People’ risk.
As variable pay outcomes have reduced in uncertain
markets, this has caused our ‘People’ risk to increase
over the year; and
– the ‘Poor capital allocation decisions’ risk now captures
the risk of over-allocating capital expenditure to upgrade
buildings to meet minimum energy efficiency standards
in place of alternative asset strategies, along with the risk
of over-paying for assets in volatile markets.
A description of the Group’s principal risks and a summary
of the key controls and steps taken to mitigate those risks,
together with how the net risk rating for each risk has
changed in the year, is shown on pages 68 to 77. The risks are
not set out in priority order. The likelihood and impact of
each principal risk is assessed on a gross, net (taking account
of the Group’s existing controls and mitigations) and target
risk basis (to determine whether the net risk position is within
the Board’s appetite level). The net risk assessment for each
principal risk is shown on the heatmap on page 66.
The Board’s ongoing monitoring of the
Group’s principal risks and controls
Ongoing monitoring of our principal risks and controls
by the Board is undertaken through:
– relatively low levels of authority for transactions
requiring Board approval, with investment transactions
and development approvals requiring, amongst other
matters, consideration of the impact on financial
leverage, interest cover and portfolio risk/composition;
– the Executive Committee’s oversight of all day-to-day
significant decisions;
– the Chief Executive reporting on the market conditions
dashboard, operational parameters and sustainability,
as appropriate, at each scheduled Board meeting;
– members of the Executive Committee regularly providing
a review of the development programme, occupational
markets and key property matters to the Board;
– the Chief Financial & Operating Officer reporting
on Group forecasts, including actual and prospective
leverage metrics, the customer watch list and delinquencies,
HR matters, cyber and IT initiatives, social impact and
health and safety matters at scheduled Board meetings;
– the Executive Directors communicating with the Board
on any significant market and operational matters
between Board meetings;
– senior managers attending the Board and Committee
meetings as appropriate to discuss specific risks either
across the business, such as sustainability, health and
safety, people and cyber, or relating to transactions;
– the Audit Committee meeting with the valuers at least
twice a year to better understand market conditions
and challenge the assumptions underlying the
valuation; and
– the Audit Committee receiving internal audit reports
on key risk and control areas and observations from
the external auditor.
Our focus during the year
In light of market disruptions and uncertainties, the focus
of our strategy and business model, with a clear linkage of
our risks to overarching strategic priorities and operational
parameters, has again been revisited this year at all of
our scheduled Board meetings. Areas of significant focus
have included:
See
more
GPE’s response to the pandemic to mitigate risks
throughout our business, including in respect
of employees, operations, customers, suppliers
and the development programme;
on pages
17, 31, 53, 57,
58 and 61
The completion of our developments at 1 Newman
Street & 70/88 Oxford Street, W1, the progress of
our development at 50 Finsbury Square, EC2 and
the approval and commencement of enabling
works at 2 Aldermanbury Square, EC2;
on pages
23 to 25
The development planning and planning status
of our near-term schemes at New City Court, SE1,
Minerva House, SE1 and French Railways House
and 50 Jermyn Street, SW1;
on pages
24 and 25
The continued leasing activity across our portfolio,
including lettings achieved at Hanover Square, W1,
1 Newman Street, W1 and the pre-let at 50 Finsbury
Square, EC2;
on pages
27 and 28
Continuing to crystallise profits through the sale
of 160 Old Street, EC1 for £181.5 million (our share
£90.8 million) while continuing to assess our
individual asset strategies;
on page 29
Enhancing the debt maturity profile of the Group
by extending the maturity of £400 million of its
£450 million unsecured revolving credit facility
to January 2027;
on page 158
Given our risks of ‘Failing to maximise returns
from prevailing market conditions’ and ‘Meeting
customer needs’, further developing and rolling
out our Flex offer, including at 16 Dufour’s Place, W1,
augmenting our Flex office offer with the acquisition
of 7/15 Gresse Street, W1, and developing our
Customer first approach;
on pages
19, 27, 28,
56 and 57
Further implementing market-leading technology
solutions across our portfolio, including our
sesame® app. The Board also approved our new
one-year Innovation Strategy;
on pages
08, 10, 16,
39, 44, 57
and 82
Recruitment, succession planning and talent
development to ensure that GPE has the skills,
capabilities and diversity required to execute
its evolving strategy;
on pages
54, 55, 102
and 103
Progressing our diversity and inclusion objectives
and approving our People Plan;
on pages
54, 55
and 103
Overseeing progress against GPE’s Sustainability
Statement of Intent and Roadmap to Net Zero
along with actions to quantify and mitigate
the impacts of new minimum energy efficiency
rating requirements;
on pages
37 to 55
and 59
Implementing our Health and Safety Strategy and
strengthening our procedures across the portfolio;
on pages
61 and 77
Continued focus on our cyber governance both
at head office and in relation to IT equipment
across our portfolio.
on pages
77 and 110
Strategic Report – Annual review
67Annual Report 2022 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Meeting customer needs
We fail to identify and react
effectively to shifting patterns of
work space use and/or understand
and provide spaces that meet quickly
evolving customer needs, including
potential longer-term structural
changes in working practices,
accelerated by the COVID-19
pandemic, that change the level
and nature of demand for space
in central London. This could lead
to GPE failing to deliver space and
lease terms that customers want
and/or an inappropriate mix of flex
versus traditional space, resulting
in poor investment returns,
potentially stranded assets and
losing customers to competitors.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Quarterly review of individual property business plans and the market
more generally.
– Portfolio Management, Leasing and Flex quarterly updates to the
Executive Committee with reporting at scheduled Board meetings.
– Board and management review of GPE’s flexible space offer across
the portfolio, including broadening our product offering.
– The Group’s in-house Occupier and Property Services teams have proactive
engagement with customers to understand their occupational needs and
requirements with a focus on retaining income, including through meetings and
regular customer surveys which help us track our Net Promoter Score. Executive
Committee members meet with our top 20 customers at least annually.
– Working with potential customers to address their needs and aspirations
during the planning application and design stages of developments.
– Board and management oversight of the development and implementation
of our Innovation Strategy and related initiatives.
– Design (supported by a specialist fit-out team) and innovation activities
in the areas of sustainability, technology, wellbeing and experience.
– Board and management oversight of the development of our Customer
first approach.
– Board annual strategy review, including market updates received from
third parties.
No change
In an environment in which our customer needs are evolving rapidly, our close relationship with our customers is vital to
our success. To ensure we are delivering the spaces our customers want, we are developing our Customer first approach
with the aim of embedding this across our business operations. This has included, amongst other things, the refresh
of the GPE brand, the appointment of Steven Mew as our Customer Experience & Flex Director and the restructuring
of roles and teams to support and enhance the delivery of our market-leading Customer first approach.
Testament to our approach, we had a record leasing year, completing 65 new lettings and securing £38.5 million
of rent at a 9.8% premium to March 2021 ERVs, whilst continuing the successful roll-out of our flexible space offering.
Over the past 12 months, we have continued to develop our flexible office spaces, including further roll-out of our
Fully Managed offer following the successful leasing programme at 16 Dufour’s Place, W1. Looking forward, we have
a significant ambition to grow our Flex office offering to more than 600,000 sq ft within our existing portfolio and
we will also look to supplement this growth through acquisitions.
We continue to design and innovate in the areas of sustainability, technology, wellbeing and service provision to meet
evolving customer needs. We were very encouraged by this year’s independent customer satisfaction survey which
updated our understanding of how our customers view their buildings and the services we provide. Encouragingly,
our Net Promoter Score remained high at +27.8, which placed us in the upper quartile of our London office peer group.
Retail market uncertainties
Market uncertainties following a
structural shift in the retail industry,
accelerated by the COVID-19
pandemic and compounded by
the impact of inflation and higher
interest rates on consumer spending,
force changes to leasing requirements
and structures (e.g. turnover rents or
shorter lease terms) and/or reduce
the demand for, or profitability of
retail space in central London. This
increases vacancy and reduces rental
values and income, asset values and
returns from retail space.
2
Drive innovation
and change
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Strategic financial forecasts updated prior to each Board meeting
including scenario planning for different economic cycles.
– Quarterly review and proactive monitoring of asset-by-asset business
plans to assess exposures and inform hold/sell strategies.
– Regular reporting to Executive Committee and Board on negotiations
and marketing campaigns, cash and rent collection.
– Regular updates received from central London retail agencies to understand
current market trends and anticipating future changes to deal structures.
– Proactive engagement with retail customers to understand their
occupational needs with a focus on retaining income.
– Design Review Panel reviews building design and specification to ensure
the scheme can accommodate flexibility of unit sizes appropriate for
future retail customer demand.
– In-house Leasing and Marketing teams liaise with external advisers on
a regular basis, creating marketing campaigns, agreed budgets and
timelines in accordance with our leasing/marketing objectives.
– Active participation in industry groups to promote London.
– Board annual strategy review, including market updates received
from third parties.
Decreased
Our retail focus is to deliver high quality, modern retail units into locations with enduring appeal, with the bulk of
our activities centred on the prime shopping streets of Oxford Street, Regent Street, Bond Street and Piccadilly.
Retail space comprises 20% of our portfolio by value.
Through the pandemic, UK retail has suffered from a combination of lower retail sales and an accelerated structural
shift as increasing volumes of sales move online. Central London retail has been impacted as tourists have been absent
and consumers have avoided busy locations during the pandemic, particularly where reliant on public transport. As
the pandemic has abated, retail market uncertainties remain and the full impact of rising inflation, and interest rates,
remains unclear. However, levels of footfall on London’s key retail streets have recovered in recent months, and in some
cases are back to near pre-pandemic levels. These improved conditions have slowed the decline in retail rental and
capital values and have increased transactional activity over the year, supporting a reduction in our overall net risk
assessment for this risk at the current time.
Our current focus is on leasing the retail space in our developments at 70/88 Oxford Street, at the eastern end of
Oxford Street, and Hanover Square, at the northern end of New Bond Street. In both cases we aim to deliver new
retail experiences into locations that will benefit from the planned opening of Crossrail in 2022.
We continue to proactively monitor individual asset plans and our exposure to any underperforming retail assets.
Climate change and decarbonisation
The need to decarbonise our business
increases the cost of our activities
through the need to retrofit buildings
to improve their sustainability
credentials (e.g. minimum energy
efficiency standards and building
ratings). This also reduces our ability to
redevelop due to planning restrictions,
increased regulation and stakeholder
expectations, the increased cost
of low carbon technology/materials
and potentially the pricing of carbon.
Failure to meet the climate challenge
could impact our ability to raise
capital, deliver buildings, reduce
the demand for the buildings we
own, cause significant reputational
damage and result in exposure
to environmental activism and
potentially stranded assets.
1
Progress
sustainability
agenda
2
Drive innovation
and change
4
Embed our
Customer
first approach
6
Prepare
the pipeline
– Regular Board and Executive review of Sustainability Policy and climate
change commitments.
– Sustainability Committee meets quarterly to consider strategy in respect
of climate change and environmental and Social Impact Strategy and risks.
Its Portfolio and Development sub-committees meet monthly and report
to the Sustainability Committee on progress.
– Dedicated Sustainability & Social Impact Director on the Executive Committee
supported by Sustainability Managers.
– Design Review Panel reviews design brief for all buildings to ensure that
forthcoming sustainability risks are considered.
– Sustainable Development Brief and Sustainability Strategy in place.
– Net Zero Carbon Roadmap with embodied carbon targets established
and approved by the Board. Decarbonisation Fund established to support
energy efficiency retrofitting in existing buildings.
– ESG-linked RCF and annual bonus measures for Executive Committee
members to support delivery of decarbonisation within the business.
– Programme of ESG investor engagement in place, with regular review
of reporting requirements and participation in investor indices.
– Steering group to assess, manage and monitor EPC risks across the portfolio
both to estimate compliance costs and to inform our buy, hold and sell
strategy and decisions.
– Participation in industry bodies to influence policy and drive innovation.
No change
With the built environment contributing approximately 40% of the UK’s carbon footprint and the climate change
debate being both a moral and economic imperative, particularly for our customers and other stakeholders, we have
been further expanding our sustainability commitments and activities. Our Sustainability Statement of Intent ‘The Time
is Now’, and our Roadmap to Net Zero, set out how we will address the first pillar of the statement to decarbonise our
business to become net zero carbon by 2030.
In July 2021, we published a Sustainable Finance Framework in respect of potential future debt issuance, to finance
projects that have positive environmental and/or social impact. This builds on our ESG-linked revolving credit facility
which includes targets to reduce embodied carbon from our new developments and major refurbishments by 40% and
to improve biodiversity net gain across our portfolio by 25%, in each case by 2030. The rate of interest we pay on this
facility will depend on our performance against these targets. Furthermore, sustainability targets have been included
within the objectives of many of our senior executives and are being used to assess levels of remuneration. Good
progress has been made against the 2021/22 annual targets, as set out on pages 38 to 44.
We continue to work to improve the number of our buildings rated for their sustainability credentials. Further to existing
requirements for most commercial buildings to have at least an EPC ‘E’ rating by 1 April 2023, in December 2020, the
UK government announced its intention that all buildings will require an Energy Performance Certificate (EPC) rating
of ‘B’ or above by 2030. We estimate that 80%–90% of London’s buildings do not currently meet this standard. As a
result, during the year we compiled individual asset plans to proactively improve our EPC ratings to meet government
and broader stakeholder expectations, to assess potential exposures (we estimate that the investment required to
upgrade our existing buildings to the new minimum EPC B rating is circa £20 million) and inform our hold/sell strategies.
Furthermore, we expect the sustainability challenge to provide us with potential opportunities to acquire orphaned
assets needing a sustainability solution.
For further details of how we are innovating to develop sustainable spaces, see pages 26 and 37 to 44.
68 Great Portland Estates plc Annual Report 2022
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Meeting customer needs
We fail to identify and react
effectively to shifting patterns of
work space use and/or understand
and provide spaces that meet quickly
evolving customer needs, including
potential longer-term structural
changes in working practices,
accelerated by the COVID-19
pandemic, that change the level
and nature of demand for space
in central London. This could lead
to GPE failing to deliver space and
lease terms that customers want
and/or an inappropriate mix of flex
versus traditional space, resulting
in poor investment returns,
potentially stranded assets and
losing customers to competitors.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Quarterly review of individual property business plans and the market
more generally.
– Portfolio Management, Leasing and Flex quarterly updates to the
Executive Committee with reporting at scheduled Board meetings.
– Board and management review of GPE’s flexible space offer across
the portfolio, including broadening our product offering.
– The Group’s in-house Occupier and Property Services teams have proactive
engagement with customers to understand their occupational needs and
requirements with a focus on retaining income, including through meetings and
regular customer surveys which help us track our Net Promoter Score. Executive
Committee members meet with our top 20 customers at least annually.
– Working with potential customers to address their needs and aspirations
during the planning application and design stages of developments.
– Board and management oversight of the development and implementation
of our Innovation Strategy and related initiatives.
– Design (supported by a specialist fit-out team) and innovation activities
in the areas of sustainability, technology, wellbeing and experience.
– Board and management oversight of the development of our Customer
first approach.
– Board annual strategy review, including market updates received from
third parties.
No change
In an environment in which our customer needs are evolving rapidly, our close relationship with our customers is vital to
our success. To ensure we are delivering the spaces our customers want, we are developing our Customer first approach
with the aim of embedding this across our business operations. This has included, amongst other things, the refresh
of the GPE brand, the appointment of Steven Mew as our Customer Experience & Flex Director and the restructuring
of roles and teams to support and enhance the delivery of our market-leading Customer first approach.
Testament to our approach, we had a record leasing year, completing 65 new lettings and securing £38.5 million
of rent at a 9.8% premium to March 2021 ERVs, whilst continuing the successful roll-out of our flexible space offering.
Over the past 12 months, we have continued to develop our flexible office spaces, including further roll-out of our
Fully Managed offer following the successful leasing programme at 16 Dufour’s Place, W1. Looking forward, we have
a significant ambition to grow our Flex office offering to more than 600,000 sq ft within our existing portfolio and
we will also look to supplement this growth through acquisitions.
We continue to design and innovate in the areas of sustainability, technology, wellbeing and service provision to meet
evolving customer needs. We were very encouraged by this year’s independent customer satisfaction survey which
updated our understanding of how our customers view their buildings and the services we provide. Encouragingly,
our Net Promoter Score remained high at +27.8, which placed us in the upper quartile of our London office peer group.
Retail market uncertainties
Market uncertainties following a
structural shift in the retail industry,
accelerated by the COVID-19
pandemic and compounded by
the impact of inflation and higher
interest rates on consumer spending,
force changes to leasing requirements
and structures (e.g. turnover rents or
shorter lease terms) and/or reduce
the demand for, or profitability of
retail space in central London. This
increases vacancy and reduces rental
values and income, asset values and
returns from retail space.
2
Drive innovation
and change
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Strategic financial forecasts updated prior to each Board meeting
including scenario planning for different economic cycles.
– Quarterly review and proactive monitoring of asset-by-asset business
plans to assess exposures and inform hold/sell strategies.
– Regular reporting to Executive Committee and Board on negotiations
and marketing campaigns, cash and rent collection.
– Regular updates received from central London retail agencies to understand
current market trends and anticipating future changes to deal structures.
– Proactive engagement with retail customers to understand their
occupational needs with a focus on retaining income.
– Design Review Panel reviews building design and specification to ensure
the scheme can accommodate flexibility of unit sizes appropriate for
future retail customer demand.
– In-house Leasing and Marketing teams liaise with external advisers on
a regular basis, creating marketing campaigns, agreed budgets and
timelines in accordance with our leasing/marketing objectives.
– Active participation in industry groups to promote London.
– Board annual strategy review, including market updates received
from third parties.
Decreased
Our retail focus is to deliver high quality, modern retail units into locations with enduring appeal, with the bulk of
our activities centred on the prime shopping streets of Oxford Street, Regent Street, Bond Street and Piccadilly.
Retail space comprises 20% of our portfolio by value.
Through the pandemic, UK retail has suffered from a combination of lower retail sales and an accelerated structural
shift as increasing volumes of sales move online. Central London retail has been impacted as tourists have been absent
and consumers have avoided busy locations during the pandemic, particularly where reliant on public transport. As
the pandemic has abated, retail market uncertainties remain and the full impact of rising inflation, and interest rates,
remains unclear. However, levels of footfall on London’s key retail streets have recovered in recent months, and in some
cases are back to near pre-pandemic levels. These improved conditions have slowed the decline in retail rental and
capital values and have increased transactional activity over the year, supporting a reduction in our overall net risk
assessment for this risk at the current time.
Our current focus is on leasing the retail space in our developments at 70/88 Oxford Street, at the eastern end of
Oxford Street, and Hanover Square, at the northern end of New Bond Street. In both cases we aim to deliver new
retail experiences into locations that will benefit from the planned opening of Crossrail in 2022.
We continue to proactively monitor individual asset plans and our exposure to any underperforming retail assets.
Climate change and decarbonisation
The need to decarbonise our business
increases the cost of our activities
through the need to retrofit buildings
to improve their sustainability
credentials (e.g. minimum energy
efficiency standards and building
ratings). This also reduces our ability to
redevelop due to planning restrictions,
increased regulation and stakeholder
expectations, the increased cost
of low carbon technology/materials
and potentially the pricing of carbon.
Failure to meet the climate challenge
could impact our ability to raise
capital, deliver buildings, reduce
the demand for the buildings we
own, cause significant reputational
damage and result in exposure
to environmental activism and
potentially stranded assets.
1
Progress
sustainability
agenda
2
Drive innovation
and change
4
Embed our
Customer
first approach
6
Prepare
the pipeline
– Regular Board and Executive review of Sustainability Policy and climate
change commitments.
– Sustainability Committee meets quarterly to consider strategy in respect
of climate change and environmental and Social Impact Strategy and risks.
Its Portfolio and Development sub-committees meet monthly and report
to the Sustainability Committee on progress.
– Dedicated Sustainability & Social Impact Director on the Executive Committee
supported by Sustainability Managers.
– Design Review Panel reviews design brief for all buildings to ensure that
forthcoming sustainability risks are considered.
– Sustainable Development Brief and Sustainability Strategy in place.
– Net Zero Carbon Roadmap with embodied carbon targets established
and approved by the Board. Decarbonisation Fund established to support
energy efficiency retrofitting in existing buildings.
– ESG-linked RCF and annual bonus measures for Executive Committee
members to support delivery of decarbonisation within the business.
– Programme of ESG investor engagement in place, with regular review
of reporting requirements and participation in investor indices.
– Steering group to assess, manage and monitor EPC risks across the portfolio
both to estimate compliance costs and to inform our buy, hold and sell
strategy and decisions.
– Participation in industry bodies to influence policy and drive innovation.
No change
With the built environment contributing approximately 40% of the UK’s carbon footprint and the climate change
debate being both a moral and economic imperative, particularly for our customers and other stakeholders, we have
been further expanding our sustainability commitments and activities. Our Sustainability Statement of Intent ‘The Time
is Now’, and our Roadmap to Net Zero, set out how we will address the first pillar of the statement to decarbonise our
business to become net zero carbon by 2030.
In July 2021, we published a Sustainable Finance Framework in respect of potential future debt issuance, to finance
projects that have positive environmental and/or social impact. This builds on our ESG-linked revolving credit facility
which includes targets to reduce embodied carbon from our new developments and major refurbishments by 40% and
to improve biodiversity net gain across our portfolio by 25%, in each case by 2030. The rate of interest we pay on this
facility will depend on our performance against these targets. Furthermore, sustainability targets have been included
within the objectives of many of our senior executives and are being used to assess levels of remuneration. Good
progress has been made against the 2021/22 annual targets, as set out on pages 38 to 44.
We continue to work to improve the number of our buildings rated for their sustainability credentials. Further to existing
requirements for most commercial buildings to have at least an EPC ‘E’ rating by 1 April 2023, in December 2020, the
UK government announced its intention that all buildings will require an Energy Performance Certificate (EPC) rating
of ‘B’ or above by 2030. We estimate that 80%–90% of London’s buildings do not currently meet this standard. As a
result, during the year we compiled individual asset plans to proactively improve our EPC ratings to meet government
and broader stakeholder expectations, to assess potential exposures (we estimate that the investment required to
upgrade our existing buildings to the new minimum EPC B rating is circa £20 million) and inform our hold/sell strategies.
Furthermore, we expect the sustainability challenge to provide us with potential opportunities to acquire orphaned
assets needing a sustainability solution.
For further details of how we are innovating to develop sustainable spaces, see pages 26 and 37 to 44.
Strategic Report – Annual review
69Annual Report 2022 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties continued
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Pandemic
COVID-19 potential new variants
and/or a future pandemic leads to
a major and prolonged economic
recession and associated fiscal
response, significant decreases
in demand in our markets, reduced
footfall in central London, impairs
our customers’ ability to meet their
rental obligations, adversely impacts
our rental values and rent collection,
reduces the availability, health and
wellbeing of our workforce and/or
disrupts our supply chains resulting
in a decreased ability to maintain
the consistency of our operations.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Business Continuity Plans and IT Business Continuity Plans in place.
– Pandemic Response Committee to manage and report on risks and concerns.
Its work has now been transitioned to our Hybrid|GPE Committee to focus on
the return to the office and hybrid working, but will be reinstated as required.
– Monitoring of impacts and developments by the Board and
Executive Committee. Risk assessments undertaken as control
measures change.
– Stakeholder engagement mechanisms, particularly with customers,
contractors, shareholders and employees.
– Health and safety plans to support employees, customers and contractors
through a lockdown and return to work, and to keep buildings safe and open.
– Health and wellbeing programme in place to support employees’ physical
and mental health.
– The Group aims to maintain a consistent policy of low financial leverage.
– Selection of contractors and suppliers based on creditworthiness.
Decreased
The COVID-19 pandemic brought disruption and challenges to the global economy, our markets and operations.
The closure of offices and shops, and reduced tourism, increased customer failures, impacted rent collection and
reduced customer demand and property valuations. The impact of COVID-19 has abated due to the successful
vaccination programme and, as a result, we have downgraded our ‘Pandemic’ net risk assessment. However,
we remain mindful of the risk of further waves of the pandemic and the emergence of new variants.
The Board, Audit and Executive Committees have overseen the Company’s response to the pandemic including
our extensive engagement with all our stakeholders to offer appropriate support and to prioritise the safety
and wellbeing of our employees, customers and contractors.
All our office properties have remained open throughout the year, operating to government guidelines.
Macro environment and London attractiveness
The appeal of London real estate to
customers and investors diminishes
due to macro-economic conditions,
including the risk of a recession
driven by events such as geopolitical
tensions, challenging international
trading relationships, supply chain
disruption, lower GDP forecasts,
inflationary pressures, increasing
interest rates, energy prices and/
or rising costs of living. London’s
relative appeal may also be impacted
by reduced appetite to travel to,
work and shop in London following
COVID-19, changes in government
policies, the rise of alternative
destinations for international
trade, the impact of civil unrest and
terrorism, the impact of long-term
climate change (including risk of
flooding) and the relative expense
of operating in London. This results
in reduced international capital
flows into London leading to a
lack of investment and/or capital
flight, lower leasing demand as
businesses defer decisions or are
unwilling to commit to new space,
decreasing income, asset values
and development viability.
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board annual strategy review with regular economic and market updates
received from third parties.
– Strategic financial forecasts are updated prior to each Board meeting
with scenario planning for different economic cycles and eventualities.
– Regular review of strategic priorities and transactions in light of the
Group’s dashboard of lead indicators and operational parameters.
– Key London indicators are monitored to help inform GPE’s view of
London’s recovery following COVID-19.
– The impact of international trading relationships, supply chain disruption
and geopolitical issues continue to be monitored and reported to the
Executive Committee and Board.
– The Group aims to maintain a consistent policy of low financial leverage.
– Active participation in industry groups to promote London.
No change
London generates around 24% of UK GDP, with the largest economy of any city in Europe, and is one of the world’s
leading commercial, creative and financial centres, with a deep pool of talent.
Central London has one of the world’s largest commercial real estate markets, with around 440 million sq ft of office
and retail property attracting a deep and diverse mix of customers and property investors, many from overseas.
London’s markets are also highly liquid and remain one of the leading global destinations for real estate investment
due to its combination of relative value, strong legal system, time zone advantages, international connectivity and
a welcoming attitude to global businesses.
Whilst we continue to monitor the fading impact of COVID-19, the outlook for macro-economic conditions in London
remains unclear, including the risk a recession driven by factors such as the UK’s global trading relationships, the impact
of geopolitical tensions, supply chain disruption, lower GDP forecasts, inflationary pressures, increasing interest rates
and rising costs of living. However, London is resilient and has a long history of reinvention and innovation, and we
anticipate that London’s magnetism as a global cultural and business centre will be undiminished.
Impact of property market dislocation on financial leverage and banking covenants
Capital markets disruption,
macro-economic shock and/
or an adverse change in market
conditions, including the impact
of significantly higher interest
rates, reduces asset values and
curtails income which increases
GPE’s financial leverage and results
in our breaching banking covenants.
2
Drive innovation
and change
3
Deliver on our
Flex ambition
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Quarterly review of capital structure, including gearing levels, by
the Chief Financial & Operating Officer and Executive Committee.
– Board annual strategy review with regular economic and market
updates received from third parties.
– Regular review of strategic priorities and transactions in light of the
Group’s dashboard of lead indicators and operational parameters.
– Quarterly review of current and forecast debt, hedging levels and
financing ratios under various market scenarios.
– The Group aims to maintain a consistent policy of low financial leverage.
– The Group’s funding measures are diversified across a range of bank
and bond markets. Sustainable Finance Framework introduced in
respect of potential future debt issuance.
– Proactive balance sheet management.
– Investor relations programme, with regular broker consultation, to
build a supportive shareholder base in the event of future fundraisings.
– Regular review of financing by the Chief Financial & Operating Officer
and Executive Committee with reporting at each Board meeting.
No change
Over the long term, real estate markets have historically been cyclical and London has been no exception to this.
As a result, we have consistently adopted a conservative approach to financial leverage.
As at 31 March 2022, our property LTV was 20.5%, net gearing was 25.4% and interest cover was not measurable.
As a result, we have substantial headroom above our Group debt covenants. We estimate property values
could fall around 56% before Group debt covenants could be endangered, even before factoring in mitigating
management actions.
The Group also has significant financial capacity with liquidity of £391 million, comprising cash of £28 million
and undrawn committed facilities of £363 million. During the year, we enhanced the debt maturity profile of the
Group by extending the maturity of £400 million of its £450 million unsecured revolving credit facility to January
2027. In addition, the Group’s weighted average interest rate remains low at only 2.5% (falling to 2.1% on a fully
drawn basis), with an attractive debt maturity ladder and diverse funding sources, predominantly borrowing
on an unsecured basis.
70 Great Portland Estates plc Annual Report 2022
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Pandemic
COVID-19 potential new variants
and/or a future pandemic leads to
a major and prolonged economic
recession and associated fiscal
response, significant decreases
in demand in our markets, reduced
footfall in central London, impairs
our customers’ ability to meet their
rental obligations, adversely impacts
our rental values and rent collection,
reduces the availability, health and
wellbeing of our workforce and/or
disrupts our supply chains resulting
in a decreased ability to maintain
the consistency of our operations.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Business Continuity Plans and IT Business Continuity Plans in place.
– Pandemic Response Committee to manage and report on risks and concerns.
Its work has now been transitioned to our Hybrid|GPE Committee to focus on
the return to the office and hybrid working, but will be reinstated as required.
– Monitoring of impacts and developments by the Board and
Executive Committee. Risk assessments undertaken as control
measures change.
– Stakeholder engagement mechanisms, particularly with customers,
contractors, shareholders and employees.
– Health and safety plans to support employees, customers and contractors
through a lockdown and return to work, and to keep buildings safe and open.
– Health and wellbeing programme in place to support employees’ physical
and mental health.
– The Group aims to maintain a consistent policy of low financial leverage.
– Selection of contractors and suppliers based on creditworthiness.
Decreased
The COVID-19 pandemic brought disruption and challenges to the global economy, our markets and operations.
The closure of offices and shops, and reduced tourism, increased customer failures, impacted rent collection and
reduced customer demand and property valuations. The impact of COVID-19 has abated due to the successful
vaccination programme and, as a result, we have downgraded our ‘Pandemic’ net risk assessment. However,
we remain mindful of the risk of further waves of the pandemic and the emergence of new variants.
The Board, Audit and Executive Committees have overseen the Company’s response to the pandemic including
our extensive engagement with all our stakeholders to offer appropriate support and to prioritise the safety
and wellbeing of our employees, customers and contractors.
All our office properties have remained open throughout the year, operating to government guidelines.
Macro environment and London attractiveness
The appeal of London real estate to
customers and investors diminishes
due to macro-economic conditions,
including the risk of a recession
driven by events such as geopolitical
tensions, challenging international
trading relationships, supply chain
disruption, lower GDP forecasts,
inflationary pressures, increasing
interest rates, energy prices and/
or rising costs of living. London’s
relative appeal may also be impacted
by reduced appetite to travel to,
work and shop in London following
COVID-19, changes in government
policies, the rise of alternative
destinations for international
trade, the impact of civil unrest and
terrorism, the impact of long-term
climate change (including risk of
flooding) and the relative expense
of operating in London. This results
in reduced international capital
flows into London leading to a
lack of investment and/or capital
flight, lower leasing demand as
businesses defer decisions or are
unwilling to commit to new space,
decreasing income, asset values
and development viability.
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board annual strategy review with regular economic and market updates
received from third parties.
– Strategic financial forecasts are updated prior to each Board meeting
with scenario planning for different economic cycles and eventualities.
– Regular review of strategic priorities and transactions in light of the
Group’s dashboard of lead indicators and operational parameters.
– Key London indicators are monitored to help inform GPE’s view of
London’s recovery following COVID-19.
– The impact of international trading relationships, supply chain disruption
and geopolitical issues continue to be monitored and reported to the
Executive Committee and Board.
– The Group aims to maintain a consistent policy of low financial leverage.
– Active participation in industry groups to promote London.
No change
London generates around 24% of UK GDP, with the largest economy of any city in Europe, and is one of the world’s
leading commercial, creative and financial centres, with a deep pool of talent.
Central London has one of the world’s largest commercial real estate markets, with around 440 million sq ft of office
and retail property attracting a deep and diverse mix of customers and property investors, many from overseas.
London’s markets are also highly liquid and remain one of the leading global destinations for real estate investment
due to its combination of relative value, strong legal system, time zone advantages, international connectivity and
a welcoming attitude to global businesses.
Whilst we continue to monitor the fading impact of COVID-19, the outlook for macro-economic conditions in London
remains unclear, including the risk a recession driven by factors such as the UK’s global trading relationships, the impact
of geopolitical tensions, supply chain disruption, lower GDP forecasts, inflationary pressures, increasing interest rates
and rising costs of living. However, London is resilient and has a long history of reinvention and innovation, and we
anticipate that London’s magnetism as a global cultural and business centre will be undiminished.
Impact of property market dislocation on financial leverage and banking covenants
Capital markets disruption,
macro-economic shock and/
or an adverse change in market
conditions, including the impact
of significantly higher interest
rates, reduces asset values and
curtails income which increases
GPE’s financial leverage and results
in our breaching banking covenants.
2
Drive innovation
and change
3
Deliver on our
Flex ambition
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Quarterly review of capital structure, including gearing levels, by
the Chief Financial & Operating Officer and Executive Committee.
– Board annual strategy review with regular economic and market
updates received from third parties.
– Regular review of strategic priorities and transactions in light of the
Group’s dashboard of lead indicators and operational parameters.
– Quarterly review of current and forecast debt, hedging levels and
financing ratios under various market scenarios.
– The Group aims to maintain a consistent policy of low financial leverage.
– The Group’s funding measures are diversified across a range of bank
and bond markets. Sustainable Finance Framework introduced in
respect of potential future debt issuance.
– Proactive balance sheet management.
– Investor relations programme, with regular broker consultation, to
build a supportive shareholder base in the event of future fundraisings.
– Regular review of financing by the Chief Financial & Operating Officer
and Executive Committee with reporting at each Board meeting.
No change
Over the long term, real estate markets have historically been cyclical and London has been no exception to this.
As a result, we have consistently adopted a conservative approach to financial leverage.
As at 31 March 2022, our property LTV was 20.5%, net gearing was 25.4% and interest cover was not measurable.
As a result, we have substantial headroom above our Group debt covenants. We estimate property values
could fall around 56% before Group debt covenants could be endangered, even before factoring in mitigating
management actions.
The Group also has significant financial capacity with liquidity of £391 million, comprising cash of £28 million
and undrawn committed facilities of £363 million. During the year, we enhanced the debt maturity profile of the
Group by extending the maturity of £400 million of its £450 million unsecured revolving credit facility to January
2027. In addition, the Group’s weighted average interest rate remains low at only 2.5% (falling to 2.1% on a fully
drawn basis), with an attractive debt maturity ladder and diverse funding sources, predominantly borrowing
on an unsecured basis.
Strategic Report – Annual review
71Annual Report 2022 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties continued
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Failure to maximise returns from prevailing market conditions
We fail to adequately read market
conditions and respond accordingly.
This results in making leasing
decisions or buying, selling or
developing buildings at the incorrect
time leading to insufficient returns
on our investment. Additionally,
in periods of stable and/or high
value markets we fail to effectively
adjust our business model to
maximise returns from prevailing
market conditions.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Strategic financial forecasts are updated prior to each Board meeting
including scenario planning for different economic cycles and eventualities.
– Regular review of property cycle by reference to a dashboard of
lead indicators.
– Board annual strategy review including regular economic
and market updates received from third parties.
– Dedicated in-house team with remit to research sub-markets in central
London seeking the right balance between investment and development
opportunities for current and prospective market conditions.
– Detailed due diligence undertaken for all prospective acquisitions prior
to purchase to ensure appropriate risk adjusted returns.
– Quarterly review of asset-by-asset business plans to assess future
performance and to inform hold/sell decision making.
No change
Despite the continued economic uncertainties, the Group has been active in its key markets and has completed its
development scheme at 1 Newman Street & 70/88 Oxford Street, W1 and we anticipate the completion of our substantial
repositioning of 50 Finsbury Square, EC2 later this year. We also commenced the enabling works at 2 Aldermanbury
Square, EC2.
We continue to assess potential acquisition opportunities across central London. However, the type of assets we
typically look to buy, in particular, assets with repositioning and/or development opportunities at prices that, in our view,
fairly reflect their risk adjusted returns, continue to be limited. During the year, we crystallised our development returns
on the sale of 160 Old Street, EC2 and purchased 7/15 Gresse Street, W1 to augment our growing Flex offer, further
supplemented by our recent acquisition of 6/10 St Andrew Street, EC4. We expect further acquisition opportunities
to emerge over the coming year.
Failure to profitably deliver the development programme
We fail to translate the development
pipeline and current committed
schemes into profitable developments
through poor development
management (including of supply
chain disruption and the impact
of inflation), an inappropriate level
of development undertaken as a
percentage of the portfolio, failure
to agree acceptable terms with
freeholders/adjoining owners/other
stakeholders, poor timing of activity
and/or inappropriate products for an
evolving market and customer needs
(including sustainability expectations).
This results in reduced development
activity, weak leasing performance,
reputational damage and reducing
property returns.
1
Progress
sustainability
agenda
2
Drive innovation
and change
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Updated strategic financial forecasts reviewed at each scheduled
Board meeting including scenario planning for different economic cycles.
– Development management quarterly updates to the Executive Committee
with reporting to each scheduled Board meeting.
– Regular review of portfolio mix and asset concentration. Adjustment
of the portfolio as appropriate through undertaking acquisitions and/or
development projects in joint venture or forward funding.
– Regular meetings with key cost advisers, main contractors and
subcontractors to monitor market conditions. Procurement routes
and when to fix prices kept under close review.
– Prior to committing to a development, the Group conducts a detailed
financial and operational appraisal process which evaluates the expected
returns from a development in light of likely risks. During the course
of a development, the actual costs and estimated returns are regularly
monitored to signpost prompt decisions on project management,
leasing and ownership.
– Working with stakeholders, including agents, potential customers
and purchasers, to identify and address their needs and aspirations,
including in respect of safety, sustainability, wellbeing and technology
during the planning application and design stages.
– Regular pipeline review meetings between Development and Portfolio
Management teams and quarterly asset review sessions.
– Selection of contractors and suppliers based on their track record
of delivery and creditworthiness, corporate responsibility and
sustainability credentials.
– In-house Project Management team closely monitor construction and
manage contractors to ensure adequate resourcing to meet the programme.
– Post-completion reviews undertaken through Final Appraisal process on
all developments to identify best practice and areas for improvement.
– Regular review of the prospective performance of individual assets and
their business plans with joint venture partners.
No change
We currently have one committed scheme on-site, 50 Finsbury Square, EC2, set to deliver 129,200 sq ft of high quality
space, and targeting BREEAM ‘Excellent’. The office element of the building is 100% pre-let, and due for completion
later this year.
Beyond this, the Group is preparing a further seven schemes set to deliver more than 1.1 million sq ft across the
coming decade, which are being designed to meet the highest standards of sustainable design, embrace technology
and provide a variety of adaptable and flexible working environments.
At our most recently completed development at 1 Newman Street & 70/88 Oxford Street, W1, office leasing in the period
was strong, with only one office floor remaining as detailed on page 23. However, given recent challenges in the retail
market, on completion of the scheme it delivered a loss on cost. Today, we have good interest in both the remaining
office floor and the majority of the retail space and, as such, we expect the scheme’s financial performance to improve
as the retail environment recovers.
Given the inflationary backdrop, we continue to monitor construction pricing, and the resilience of supply chains, and we
are working closely with our suppliers to mitigate this risk as we embark on the development of 2 Aldermanbury Square, EC2.
See more on pages 23 to 26
72 Great Portland Estates plc Annual Report 2022
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Failure to maximise returns from prevailing market conditions
We fail to adequately read market
conditions and respond accordingly.
This results in making leasing
decisions or buying, selling or
developing buildings at the incorrect
time leading to insufficient returns
on our investment. Additionally,
in periods of stable and/or high
value markets we fail to effectively
adjust our business model to
maximise returns from prevailing
market conditions.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Strategic financial forecasts are updated prior to each Board meeting
including scenario planning for different economic cycles and eventualities.
– Regular review of property cycle by reference to a dashboard of
lead indicators.
– Board annual strategy review including regular economic
and market updates received from third parties.
– Dedicated in-house team with remit to research sub-markets in central
London seeking the right balance between investment and development
opportunities for current and prospective market conditions.
– Detailed due diligence undertaken for all prospective acquisitions prior
to purchase to ensure appropriate risk adjusted returns.
– Quarterly review of asset-by-asset business plans to assess future
performance and to inform hold/sell decision making.
No change
Despite the continued economic uncertainties, the Group has been active in its key markets and has completed its
development scheme at 1 Newman Street & 70/88 Oxford Street, W1 and we anticipate the completion of our substantial
repositioning of 50 Finsbury Square, EC2 later this year. We also commenced the enabling works at 2 Aldermanbury
Square, EC2.
We continue to assess potential acquisition opportunities across central London. However, the type of assets we
typically look to buy, in particular, assets with repositioning and/or development opportunities at prices that, in our view,
fairly reflect their risk adjusted returns, continue to be limited. During the year, we crystallised our development returns
on the sale of 160 Old Street, EC2 and purchased 7/15 Gresse Street, W1 to augment our growing Flex offer, further
supplemented by our recent acquisition of 6/10 St Andrew Street, EC4. We expect further acquisition opportunities
to emerge over the coming year.
Failure to profitably deliver the development programme
We fail to translate the development
pipeline and current committed
schemes into profitable developments
through poor development
management (including of supply
chain disruption and the impact
of inflation), an inappropriate level
of development undertaken as a
percentage of the portfolio, failure
to agree acceptable terms with
freeholders/adjoining owners/other
stakeholders, poor timing of activity
and/or inappropriate products for an
evolving market and customer needs
(including sustainability expectations).
This results in reduced development
activity, weak leasing performance,
reputational damage and reducing
property returns.
1
Progress
sustainability
agenda
2
Drive innovation
and change
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Updated strategic financial forecasts reviewed at each scheduled
Board meeting including scenario planning for different economic cycles.
– Development management quarterly updates to the Executive Committee
with reporting to each scheduled Board meeting.
– Regular review of portfolio mix and asset concentration. Adjustment
of the portfolio as appropriate through undertaking acquisitions and/or
development projects in joint venture or forward funding.
– Regular meetings with key cost advisers, main contractors and
subcontractors to monitor market conditions. Procurement routes
and when to fix prices kept under close review.
– Prior to committing to a development, the Group conducts a detailed
financial and operational appraisal process which evaluates the expected
returns from a development in light of likely risks. During the course
of a development, the actual costs and estimated returns are regularly
monitored to signpost prompt decisions on project management,
leasing and ownership.
– Working with stakeholders, including agents, potential customers
and purchasers, to identify and address their needs and aspirations,
including in respect of safety, sustainability, wellbeing and technology
during the planning application and design stages.
– Regular pipeline review meetings between Development and Portfolio
Management teams and quarterly asset review sessions.
– Selection of contractors and suppliers based on their track record
of delivery and creditworthiness, corporate responsibility and
sustainability credentials.
– In-house Project Management team closely monitor construction and
manage contractors to ensure adequate resourcing to meet the programme.
– Post-completion reviews undertaken through Final Appraisal process on
all developments to identify best practice and areas for improvement.
– Regular review of the prospective performance of individual assets and
their business plans with joint venture partners.
No change
We currently have one committed scheme on-site, 50 Finsbury Square, EC2, set to deliver 129,200 sq ft of high quality
space, and targeting BREEAM ‘Excellent’. The office element of the building is 100% pre-let, and due for completion
later this year.
Beyond this, the Group is preparing a further seven schemes set to deliver more than 1.1 million sq ft across the
coming decade, which are being designed to meet the highest standards of sustainable design, embrace technology
and provide a variety of adaptable and flexible working environments.
At our most recently completed development at 1 Newman Street & 70/88 Oxford Street, W1, office leasing in the period
was strong, with only one office floor remaining as detailed on page 23. However, given recent challenges in the retail
market, on completion of the scheme it delivered a loss on cost. Today, we have good interest in both the remaining
office floor and the majority of the retail space and, as such, we expect the scheme’s financial performance to improve
as the retail environment recovers.
Given the inflationary backdrop, we continue to monitor construction pricing, and the resilience of supply chains, and we
are working closely with our suppliers to mitigate this risk as we embark on the development of 2 Aldermanbury Square, EC2.
See more on pages 23 to 26
Strategic Report – Annual review
73Annual Report 2022 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties continued
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Challenging planning environment
The increasingly stringent planning
environment limits the ability to
create appropriate new spaces,
increases costs and results
in our failure to obtain viable
planning consents and deliver
the development pipeline.
1
Progress
sustainability
agenda
2
Drive innovation
and change
6
Prepare
the pipeline
– Prior to committing to a development, the Group conducts a detailed
financial and operational appraisal process which evaluates the expected
returns from a development in light of likely risks.
– Active engagement with planning authorities.
– Early engagement with local residents and community groups, adjoining
owners and freeholders.
– Third-party expertise used to support in-house teams, where appropriate.
– Regular updates to the Executive Committee and Board on regulatory
and planning policy developments.
– The Head of Planning Strategy leads a holistic approach to planning
across the portfolio.
– Sustainable building design, including climate change mitigation and
adaptation and growing preferences to reuse and refurbish buildings,
is considered at an early design stage. All our major developments
are subject to a minimum BREEAM rating requirement of ‘Excellent’.
No change
To successfully deliver our developments, we work closely with both local authorities and communities to secure
planning consents to create great new sustainable spaces, helping London to thrive. The London Plan includes a number
of further challenging requirements. Moreover, our substantial and flexible pipeline of seven uncommitted schemes
totals 1.1 million sq ft across four London boroughs, all of which will likely be subject to planning approval requirements.
We aim to engage with local authorities in an open, transparent and non-adversarial manner to enable us to
secure planning consents that are both beneficial to us and the local communities in which they are built. In line
with our Social Impact Strategy, as a matter of course, we liaise with community stakeholders to understand their
needs and, where possible, we will adjust our proposals to take account of comments received. We use planning
performance agreements with the local planning authority to ensure that our planning applications are determined
in a timely manner.
Moreover, sustainability is becoming ever more important in the planning process with key local authorities declaring
climate emergencies. We will look to work with them to support their principles of ‘good growth’ and continue to
evolve our strategies for reducing the carbon footprint of our development activities.
See more on pages 23 to 26
People
Failure to attract, incentivise and
retain high quality, suitably diverse
and experienced individuals
negatively impacts our ability
to deliver our strategic objectives
and has a detrimental impact on
our values and inclusive culture.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Regular review is undertaken of the Group’s resourcing requirements,
performance management, talent review and succession planning.
– The Group has a competitive and attractive employee value proposition
that is strongly linked to performance and values and a formal six-monthly
appraisal system to provide regular assessment of individual performance.
– Regular benchmarking of remuneration packages to ensure competitive
financial and non-financial packages in line with market rates.
– Personal development planning and ongoing training support for employees
together with focused initiatives to nurture potential successors, including
mentoring and coaching programmes.
– Clear articulation of GPE values and behaviours which are embedded in
key people practices with Board and management monitoring of culture.
– Board and Nomination Committee oversight of our diversity and inclusion
strategy. New People Plan in place linked to GPE’s purpose and strategy
with a strong focus on diversity and inclusion.
– Comprehensive health and wellbeing programme to support
employees’ physical and mental health, including mental health first aiders.
– Hybrid Working Policy to give employees appropriate flexibility to perform
their roles.
– Focus on people engagement with regular two-way communication
and responsive employee-focused activities.
Increased
The motivation of our people and maintaining our strong inclusive culture remains fundamental to the delivery of our
strategic priorities. The strength of our values and appeal of our culture was highlighted with our most recent employee
pulse survey showing 86% of our people would ‘recommend GPE as a great place to work’. We continue to develop our
talent from within including making several internal promotions to our Senior Management Team. We also continue to
build our skills and capabilities to support the delivery of our ‘Customer first’ approach.
We continue to progress our diversity and inclusion strategy which forms an integral part of our new People Plan.
During the year we established an Inclusion Committee to oversee the implementation of initiatives and have set clear
priorities for the Executive Committee with the incorporation of specific diversity and inclusion targets within their
annual bonus objectives.
The physical and mental wellbeing of our people has been a key priority as we transition to increased flexible working.
We seek to be a caring and supportive employer with a comprehensive Wellbeing Programme to support physical and
mental health with a focus on de-stigmatising the reality of mental health challenges. We have trained mental health
first aiders and have introduced innovative tools to support the mental health of our employees and family members.
We have continued our Board Engagement Programme to enable the Board to listen and respond to feedback from
employees and to discuss important matters impacting the business.
We continue to focus on growing the breadth, depth and diversity of our talent, providing focused development support
where needed in an inclusive environment. While our employee retention rate for the year was high at 82%, we are
cognisant of the potential impact of lower variable pay outcomes on retention in uncertain markets which has resulted
in an increase in our overall net risk assessment of our ‘People’ risk. Retention and incentivisation remain important areas
of focus under our People Plan.
Poor capital allocation decisions
We make poor decisions regarding
the allocation of capital such
that we buy, sell, hold or develop
(including retrofitting to meet
minimum energy efficiency standards)
the incorrect buildings, or do so
at inappropriate cost, resulting
in inadequate investment returns.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
6
Prepare
the pipeline
– Regular reviews conducted of individual property IRRs, including quarterly
review of individual property dashboards and the market generally.
– Weekly investment meetings held and regular dialogue maintained with
key intermediaries.
– Portfolio Management, Flex, Development and Leasing quarterly updates
to the Executive Committee with reporting at scheduled Board meetings.
– Strategy review forecast on an asset-by-asset basis provides a business plan
for each individual property which is reviewed against the performance of
the business as a whole.
– Detailed due diligence processes in place to help ensure appropriate returns.
No change
We continue to assess potential acquisition opportunities across central London and regularly review the forward-look
performance of our portfolio to maximise returns. During the year, we crystallised our development profit on the sale
of 160 Old Street, EC2 and purchased 7/15 Gresse Street, W1 to augment our growing Flex offer, further supplemented
by our recent acquisition of 6/10 St Andrew Street, EC4. We expect further acquisition opportunities to emerge over
the coming year.
During the year, we established a steering group to assess, manage and monitor EPC risks across the portfolio, both
to estimate compliance costs and to inform our buy, hold and sell strategy and decisions.
We also commenced the enabling works at 2 Aldermanbury Square, EC2.
74 Great Portland Estates plc Annual Report 2022
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Challenging planning environment
The increasingly stringent planning
environment limits the ability to
create appropriate new spaces,
increases costs and results
in our failure to obtain viable
planning consents and deliver
the development pipeline.
1
Progress
sustainability
agenda
2
Drive innovation
and change
6
Prepare
the pipeline
– Prior to committing to a development, the Group conducts a detailed
financial and operational appraisal process which evaluates the expected
returns from a development in light of likely risks.
– Active engagement with planning authorities.
– Early engagement with local residents and community groups, adjoining
owners and freeholders.
– Third-party expertise used to support in-house teams, where appropriate.
– Regular updates to the Executive Committee and Board on regulatory
and planning policy developments.
– The Head of Planning Strategy leads a holistic approach to planning
across the portfolio.
– Sustainable building design, including climate change mitigation and
adaptation and growing preferences to reuse and refurbish buildings,
is considered at an early design stage. All our major developments
are subject to a minimum BREEAM rating requirement of ‘Excellent’.
No change
To successfully deliver our developments, we work closely with both local authorities and communities to secure
planning consents to create great new sustainable spaces, helping London to thrive. The London Plan includes a number
of further challenging requirements. Moreover, our substantial and flexible pipeline of seven uncommitted schemes
totals 1.1 million sq ft across four London boroughs, all of which will likely be subject to planning approval requirements.
We aim to engage with local authorities in an open, transparent and non-adversarial manner to enable us to
secure planning consents that are both beneficial to us and the local communities in which they are built. In line
with our Social Impact Strategy, as a matter of course, we liaise with community stakeholders to understand their
needs and, where possible, we will adjust our proposals to take account of comments received. We use planning
performance agreements with the local planning authority to ensure that our planning applications are determined
in a timely manner.
Moreover, sustainability is becoming ever more important in the planning process with key local authorities declaring
climate emergencies. We will look to work with them to support their principles of ‘good growth’ and continue to
evolve our strategies for reducing the carbon footprint of our development activities.
See more on pages 23 to 26
People
Failure to attract, incentivise and
retain high quality, suitably diverse
and experienced individuals
negatively impacts our ability
to deliver our strategic objectives
and has a detrimental impact on
our values and inclusive culture.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Regular review is undertaken of the Group’s resourcing requirements,
performance management, talent review and succession planning.
– The Group has a competitive and attractive employee value proposition
that is strongly linked to performance and values and a formal six-monthly
appraisal system to provide regular assessment of individual performance.
– Regular benchmarking of remuneration packages to ensure competitive
financial and non-financial packages in line with market rates.
– Personal development planning and ongoing training support for employees
together with focused initiatives to nurture potential successors, including
mentoring and coaching programmes.
– Clear articulation of GPE values and behaviours which are embedded in
key people practices with Board and management monitoring of culture.
– Board and Nomination Committee oversight of our diversity and inclusion
strategy. New People Plan in place linked to GPE’s purpose and strategy
with a strong focus on diversity and inclusion.
– Comprehensive health and wellbeing programme to support
employees’ physical and mental health, including mental health first aiders.
– Hybrid Working Policy to give employees appropriate flexibility to perform
their roles.
– Focus on people engagement with regular two-way communication
and responsive employee-focused activities.
Increased
The motivation of our people and maintaining our strong inclusive culture remains fundamental to the delivery of our
strategic priorities. The strength of our values and appeal of our culture was highlighted with our most recent employee
pulse survey showing 86% of our people would ‘recommend GPE as a great place to work’. We continue to develop our
talent from within including making several internal promotions to our Senior Management Team. We also continue to
build our skills and capabilities to support the delivery of our ‘Customer first’ approach.
We continue to progress our diversity and inclusion strategy which forms an integral part of our new People Plan.
During the year we established an Inclusion Committee to oversee the implementation of initiatives and have set clear
priorities for the Executive Committee with the incorporation of specific diversity and inclusion targets within their
annual bonus objectives.
The physical and mental wellbeing of our people has been a key priority as we transition to increased flexible working.
We seek to be a caring and supportive employer with a comprehensive Wellbeing Programme to support physical and
mental health with a focus on de-stigmatising the reality of mental health challenges. We have trained mental health
first aiders and have introduced innovative tools to support the mental health of our employees and family members.
We have continued our Board Engagement Programme to enable the Board to listen and respond to feedback from
employees and to discuss important matters impacting the business.
We continue to focus on growing the breadth, depth and diversity of our talent, providing focused development support
where needed in an inclusive environment. While our employee retention rate for the year was high at 82%, we are
cognisant of the potential impact of lower variable pay outcomes on retention in uncertain markets which has resulted
in an increase in our overall net risk assessment of our ‘People’ risk. Retention and incentivisation remain important areas
of focus under our People Plan.
Poor capital allocation decisions
We make poor decisions regarding
the allocation of capital such
that we buy, sell, hold or develop
(including retrofitting to meet
minimum energy efficiency standards)
the incorrect buildings, or do so
at inappropriate cost, resulting
in inadequate investment returns.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
6
Prepare
the pipeline
– Regular reviews conducted of individual property IRRs, including quarterly
review of individual property dashboards and the market generally.
– Weekly investment meetings held and regular dialogue maintained with
key intermediaries.
– Portfolio Management, Flex, Development and Leasing quarterly updates
to the Executive Committee with reporting at scheduled Board meetings.
– Strategy review forecast on an asset-by-asset basis provides a business plan
for each individual property which is reviewed against the performance of
the business as a whole.
– Detailed due diligence processes in place to help ensure appropriate returns.
No change
We continue to assess potential acquisition opportunities across central London and regularly review the forward-look
performance of our portfolio to maximise returns. During the year, we crystallised our development profit on the sale
of 160 Old Street, EC2 and purchased 7/15 Gresse Street, W1 to augment our growing Flex offer, further supplemented
by our recent acquisition of 6/10 St Andrew Street, EC4. We expect further acquisition opportunities to emerge over
the coming year.
During the year, we established a steering group to assess, manage and monitor EPC risks across the portfolio, both
to estimate compliance costs and to inform our buy, hold and sell strategy and decisions.
We also commenced the enabling works at 2 Aldermanbury Square, EC2.
Strategic Report – Annual review
75Annual Report 2022 Great Portland Estates plc
Our approach to risk continued
How we manage principal risks and uncertainties continued
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Health and safety
A health and safety incident
(including by our contractors) results
in loss of life, significant injury or
widespread infection, and financial
and/or reputational damage to GPE.
Furthermore, significant changes
in health and safety (including fire
safety) regulations and practice
driven by government intervention
following events such as COVID-19
and Grenfell increases compliance
and development costs and/or
risks of non-compliance.
1
Progress
sustainability
agenda
2
Drive innovation
and change
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Quarterly Health and Safety Committee meetings are held with formal
quarterly reporting on health and safety to the Executive Committee and
regular reporting to the Board, including on progress against our Health
and Safety Strategy.
– Regular health and safety site checks are undertaken by Executive Committee
members, the Development and Project Management teams and
third parties, along with regular senior leadership tours of buildings.
– Pre-qualification and competency checks are undertaken for contractors
and consultants with contractor management processes in place.
– Formal reporting on near misses/significant incidents and accidents.
– Proactive health and safety KPIs to monitor and track performance and
drive behaviours.
– Annual cycle of health and safety audits.
– Online health and safety management system in place for the business.
– Comprehensive fire safety management procedures in place.
– Activities are undertaken to monitor and raise employee awareness
and understanding of health and safety matters, including through
employee engagement surveys.
– Comprehensive health and wellbeing programme in place for employees
with mental health first aiders and an employee assistance programme.
– Pandemic policies and procedures in place for head office and
portfolio buildings.
No change
We continue to focus on ensuring that we have a best-in-class and proactive health and safety culture. During the
year, we kept our buildings open and safe for access by our customers and employees and those needing to complete
any works, including maintaining all COVID-19 recommended protocols when needed. We continued with enhanced
cleaning, air quality monitoring and introduced additional water flushing regimes. Critically, notwithstanding COVID-19,
all our buildings remained open and all statutory inspections and risk assessments were completed within the
allocated timeframe.
With the forthcoming introduction of the Fire Safety Act, we have proactively strengthened our fire safety practices
and procedures to meet the new requirements and developed up-to-date and compliant fire strategies for
every building.
The Group had two reportable accidents during the year. Where accidents do occur, we work with our supply chain
on accident investigation to understand lessons learned and opportunities for improvement, to consider how the
work could have been set up differently and to understand how, as a client, we can better support our suppliers.
We continue to undertake activities to raise employee awareness and understanding of health and safety requirements
and have improved the monitoring of health and safety across the portfolio through the introduction of a set of
proactive key performance indicators. In our most recent employee pulse survey, 95% of respondents agreed or
strongly agreed that the organisation takes health and safety seriously.
Cyber security and infrastructure failure
A cyber attack or infrastructure
failure leads to business or network
disruption within our portfolio or
loss of information or customer data.
There is the potential for greater
impact on Fully Managed customers,
to which we provide increased
infrastructure support, and high-risk
customers. This results in litigation,
reputational damage, financial or
regulatory penalties.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– IT and cyber security updates are regularly reported to the Executive
Committee and the Board which oversee the implementation of our
three-year IT strategy adopted in March 2021.
– Cyber security systems and controls are in place and regularly reviewed,
with external support, against best practice.
– A head office and portfolio IT risk register is maintained.
– The Group’s IT Disaster Recovery Plan is regularly reviewed and tested
and recovery of data at an off-site recovery centre is tested during the year.
– Regular testing of IT security is undertaken including penetration testing
of key systems.
– The Group’s data is regularly backed up and replicated.
– The Group’s Cyber Third Party Management and Security Policy and
processes are designed to identify and control cyber-related risks arising
from our third-party relationships.
– Employee awareness training on cyber risk is undertaken regularly.
– Cyber risk insurance is in place.
– Each building has a bespoke Emergency Action Plan, maintaining
appropriate systems to mitigate any infrastructure failure.
No change
Cyber security risk has remained elevated due to the rise in attempted cyber crime during the COVID-19 pandemic
and more recent cyber risks arising from recent geopolitical tensions, combined with greater reliance on technology
and increased vulnerabilities created by remote and hybrid working. We have continued to invest time and resource
into our cyber security measures, both in our head office and across our portfolio.
Our three-year IT Strategy is designed in part to further enhance our IT and cyber controls as we continue to innovate
and digitise our business.
Flex operational capabilities and service provision
The failure to maximise operational
expertise and efficiencies or to
appropriately control costs impacts
the delivery of our Flex office
strategy and our ability to generate
appropriate risk adjusted returns.
Further, as we scale up our Flex office
delivery and increase our focus
on service provision, the failure by
GPE and/or its partners/suppliers to
deliver high quality service impacts
customer satisfaction, demand,
retention and asset values.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board and management oversight of the development and implementation
of the Flex strategy and business plan.
– Board annual strategy review with regular market updates.
– Quarterly Flex updates to the Executive Committee with reporting
at scheduled Board meetings.
– Dedicated Flex leadership in place from March 2022 with regular review
of team skills and capabilities to support the effective delivery of customer
service and experience.
– Board and management oversight of the development of our Customer
first approach.
– Dedicated team within the Group’s in-house Occupier and Property Services
teams with a focus on proactive engagement, including through meetings and
regular customer surveys, to ensure customers’ occupational needs are met.
– Quarterly review of individual assets plans and the market generally.
– Close management oversight of costs and services, including design
and delivery.
– Design (supported by a specialist fit-out team) and innovation activities
in the areas of sustainability, technology, wellbeing and experience.
– Board and management oversight of our Innovation Strategy and related
initiatives to support customer needs.
New As we drive our Flex strategy and scale-up our Flex operations, our ability to deliver this operationally intensive side
of our business, control costs and generate appropriate risk adjusted returns has grown in significance. During the
year, we appointed Steven Mew as our Customer Experience & Flex Director alongside the restructuring of roles and
teams to support and enhance the delivery of our Flex operations. We have also recruited additional expertise to
focus on improving procurement, design and delivery.
We continue to evolve our operating model and closely monitor costs and prospective risk adjusted returns as we
refine and expand the choice of spaces we provide.
To date, we are very encouraged by the feedback we have had for our products, which was reflected in this year’s
independent customer satisfaction survey where our Net Promoter Score remained high. The ongoing development
of our Customer first strategy is designed to ensure continuous feedback and provide valuable insight to help us
deliver the type and quality of services our customers’ demand.
76 Great Portland Estates plc Annual Report 2022
Principal risk Strategic priorities How we monitor and manage risk
Net risk movement
over the last 12 months Commentary
Health and safety
A health and safety incident
(including by our contractors) results
in loss of life, significant injury or
widespread infection, and financial
and/or reputational damage to GPE.
Furthermore, significant changes
in health and safety (including fire
safety) regulations and practice
driven by government intervention
following events such as COVID-19
and Grenfell increases compliance
and development costs and/or
risks of non-compliance.
1
Progress
sustainability
agenda
2
Drive innovation
and change
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Quarterly Health and Safety Committee meetings are held with formal
quarterly reporting on health and safety to the Executive Committee and
regular reporting to the Board, including on progress against our Health
and Safety Strategy.
– Regular health and safety site checks are undertaken by Executive Committee
members, the Development and Project Management teams and
third parties, along with regular senior leadership tours of buildings.
– Pre-qualification and competency checks are undertaken for contractors
and consultants with contractor management processes in place.
– Formal reporting on near misses/significant incidents and accidents.
– Proactive health and safety KPIs to monitor and track performance and
drive behaviours.
– Annual cycle of health and safety audits.
– Online health and safety management system in place for the business.
– Comprehensive fire safety management procedures in place.
– Activities are undertaken to monitor and raise employee awareness
and understanding of health and safety matters, including through
employee engagement surveys.
– Comprehensive health and wellbeing programme in place for employees
with mental health first aiders and an employee assistance programme.
– Pandemic policies and procedures in place for head office and
portfolio buildings.
No change
We continue to focus on ensuring that we have a best-in-class and proactive health and safety culture. During the
year, we kept our buildings open and safe for access by our customers and employees and those needing to complete
any works, including maintaining all COVID-19 recommended protocols when needed. We continued with enhanced
cleaning, air quality monitoring and introduced additional water flushing regimes. Critically, notwithstanding COVID-19,
all our buildings remained open and all statutory inspections and risk assessments were completed within the
allocated timeframe.
With the forthcoming introduction of the Fire Safety Act, we have proactively strengthened our fire safety practices
and procedures to meet the new requirements and developed up-to-date and compliant fire strategies for
every building.
The Group had two reportable accidents during the year. Where accidents do occur, we work with our supply chain
on accident investigation to understand lessons learned and opportunities for improvement, to consider how the
work could have been set up differently and to understand how, as a client, we can better support our suppliers.
We continue to undertake activities to raise employee awareness and understanding of health and safety requirements
and have improved the monitoring of health and safety across the portfolio through the introduction of a set of
proactive key performance indicators. In our most recent employee pulse survey, 95% of respondents agreed or
strongly agreed that the organisation takes health and safety seriously.
Cyber security and infrastructure failure
A cyber attack or infrastructure
failure leads to business or network
disruption within our portfolio or
loss of information or customer data.
There is the potential for greater
impact on Fully Managed customers,
to which we provide increased
infrastructure support, and high-risk
customers. This results in litigation,
reputational damage, financial or
regulatory penalties.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– IT and cyber security updates are regularly reported to the Executive
Committee and the Board which oversee the implementation of our
three-year IT strategy adopted in March 2021.
– Cyber security systems and controls are in place and regularly reviewed,
with external support, against best practice.
– A head office and portfolio IT risk register is maintained.
– The Group’s IT Disaster Recovery Plan is regularly reviewed and tested
and recovery of data at an off-site recovery centre is tested during the year.
– Regular testing of IT security is undertaken including penetration testing
of key systems.
– The Group’s data is regularly backed up and replicated.
– The Group’s Cyber Third Party Management and Security Policy and
processes are designed to identify and control cyber-related risks arising
from our third-party relationships.
– Employee awareness training on cyber risk is undertaken regularly.
– Cyber risk insurance is in place.
– Each building has a bespoke Emergency Action Plan, maintaining
appropriate systems to mitigate any infrastructure failure.
No change
Cyber security risk has remained elevated due to the rise in attempted cyber crime during the COVID-19 pandemic
and more recent cyber risks arising from recent geopolitical tensions, combined with greater reliance on technology
and increased vulnerabilities created by remote and hybrid working. We have continued to invest time and resource
into our cyber security measures, both in our head office and across our portfolio.
Our three-year IT Strategy is designed in part to further enhance our IT and cyber controls as we continue to innovate
and digitise our business.
Flex operational capabilities and service provision
The failure to maximise operational
expertise and efficiencies or to
appropriately control costs impacts
the delivery of our Flex office
strategy and our ability to generate
appropriate risk adjusted returns.
Further, as we scale up our Flex office
delivery and increase our focus
on service provision, the failure by
GPE and/or its partners/suppliers to
deliver high quality service impacts
customer satisfaction, demand,
retention and asset values.
1
Progress
sustainability
agenda
2
Drive innovation
and change
3
Deliver on our
Flex ambition
4
Embed our
Customer
first approach
5
Deliver and lease
the committed
schemes
6
Prepare
the pipeline
– Board and management oversight of the development and implementation
of the Flex strategy and business plan.
– Board annual strategy review with regular market updates.
– Quarterly Flex updates to the Executive Committee with reporting
at scheduled Board meetings.
– Dedicated Flex leadership in place from March 2022 with regular review
of team skills and capabilities to support the effective delivery of customer
service and experience.
– Board and management oversight of the development of our Customer
first approach.
– Dedicated team within the Group’s in-house Occupier and Property Services
teams with a focus on proactive engagement, including through meetings and
regular customer surveys, to ensure customers’ occupational needs are met.
– Quarterly review of individual assets plans and the market generally.
– Close management oversight of costs and services, including design
and delivery.
– Design (supported by a specialist fit-out team) and innovation activities
in the areas of sustainability, technology, wellbeing and experience.
– Board and management oversight of our Innovation Strategy and related
initiatives to support customer needs.
New As we drive our Flex strategy and scale-up our Flex operations, our ability to deliver this operationally intensive side
of our business, control costs and generate appropriate risk adjusted returns has grown in significance. During the
year, we appointed Steven Mew as our Customer Experience & Flex Director alongside the restructuring of roles and
teams to support and enhance the delivery of our Flex operations. We have also recruited additional expertise to
focus on improving procurement, design and delivery.
We continue to evolve our operating model and closely monitor costs and prospective risk adjusted returns as we
refine and expand the choice of spaces we provide.
To date, we are very encouraged by the feedback we have had for our products, which was reflected in this year’s
independent customer satisfaction survey where our Net Promoter Score remained high. The ongoing development
of our Customer first strategy is designed to ensure continuous feedback and provide valuable insight to help us
deliver the type and quality of services our customers’ demand.
Strategic Report – Annual review
77Annual Report 2022 Great Portland Estates plc
Our approach to risk continued
Viability statement
Assessment of the Group’s prospects
In accordance with provision 31 of the 2018 UK Corporate
Governance Code, the Board has assessed the prospects
of the Group over a longer period than the 12 months required
by the ‘Going Concern’ provision. The work conducted for
this longer-term assessment supports the Board’s statements
on both viability, as set out below, and going concern as set
out on page 142.
The Group’s future prospects are assessed regularly and
at an annual strategy review in late March. This review is led
by the Chief Executive drawing on expertise across the Group.
This year it included an assessment of macro-economic
environment including London’s recovery from COVID-19,
forecasts of key property market metrics (including yields and
rental value movements), annual valuation movements for
each of our properties, forecast cash collection rates based on
our experience to date, the impact of climate change and a
selection of development scenarios. It also included a number
of market assumptions, including base, upside and downside
scenarios, to reflect different potential economic outcomes,
including the trajectory of COVID-19 and further disruption from
current geopolitical tensions, and a number of business activity
responses including development activity, sales and acquisitions.
The key outputs from this process are full financial statements
for a five-year forecast period, with a primary focus on the
first three years. The forecasts are summarised in a dashboard,
which analyses profits, cash flows, funding requirements, key
financial ratios, compliance with the REIT rules and headroom
in respect of the financial covenants contained in the Group’s
various loan arrangements. The strategy review was considered
by the Board in March 2022, with updated forecasts, including
a Going Concern market scenario to reflect the impact of
an event similar to the 2008/09 financial crisis in severity,
presented to the Board in May.
The forecasts contain a number of assumptions, including:
– estimated year on year movements in rental values and yields
for each of our key sub-markets under a number of scenarios;
– the continued conversion of some of our office space
to our Flex offerings;
– the refinancing of the Group’s debt facilities as they
fall due in 2024 as disclosed in note 15;
– estimated cash collection rates based on a customer
by customer basis;
– the completion of the Group’s committed development
programme, in line with our most recent estimated
completion dates and the commencement of selected
pipeline projects; and
– forecast interest rates.
Assessment of risks
The Group’s principal risks are subject to regular review by
the Executive Committee, Audit Committee and the Board.
The review conducted for the preparation of the Annual Report
and the Viability Statement demonstrated limited change in
our principal risks over the year.
The risks with the greatest potential impact on the Group’s
viability were considered as follows (see pages 68 to 77 above):
– Macro environment and London attractiveness: we rely
on London’s macro-economic strength and relative appeal
to continue to attract global capital, businesses and talent
from around the world to support demand for our properties;
– Impact of property market dislocation on financial
leverage and banking covenants: financial stress
in our key markets could materially reduce property
values and the Group’s income risking a breach of
our banking covenants;
– Climate change and decarbonisation: a changing
climate could impact the resilience of our buildings,
impact our ability to deliver new developments and
reduce the demand for the buildings we own; and
– Pandemic: leading to a major and prolonged
economic recession and associated fiscal response,
significantly decreasing in demand in our markets.
Assessment of viability
A three-year viability period is considered an optimum balance
between our need to plan for the long term and the shorter-term
nature of our active business model, which often includes high
levels of recycling of our property portfolio, an average lease
length of around three years and a near-term development
programme which will be commenced over the same period.
The assessment of viability included stress testing the resilience
of the Group, and its business model, to the potential impact of
the risks set out above. Specifically, given the ongoing economic
disruption from geopolitical tensions, high inflationary
environment and rising interest rates, our assessment of viability
was based on the Group’s performance under a Going Concern
market scenario, with further sensitivity analysis to understand
the resilience of the Group to a significant economic shock.
The Going Concern market scenario reduced rental values
by 27% from March values and assumed an outward yield
shift of 140 basis points for offices and 60 basis points for retail.
When combined, over the three-year period, this scenario
reduced property values by around 40%. The assessment
demonstrated that given the Group’s low levels of debt
and high liquidity, it would be able to withstand the impact
of this scenario over the period of the financial forecast
and continue to operate with headroom above the financial
covenants contained in its various loan arrangements. Moreover,
this was before any mitigating actions such as property sales
or pausing of the Group’s development activities.
In addition, reverse stress tests were performed, to understand
how extensive any valuation and income fall would be required
to extinguish the Group’s liquidity and/or breach the Group’s
gearing, interest cover ratio or inner borrowing covenants. In the
three-year period, before any mitigating actions, rental income
would need to fall by around 42% and property values would
need to fall by more than 41%, or 45% if we were not to proceed
with the redevelopment of 2 Aldermanbury Square, reducing
capital expenditure by around £250 million, before the Group
breached its banking covenants.
The assessment also included a review of the potential impact of
climate change on the Group. Whilst it would be unlikely to affect
the viability of the Group within the three-year review period,
we ran a scenario to assess the impact of significant inflation
(an additional £83 million) in the cost of maintaining our
portfolio. This did not impact our viability assessment.
Viability statement
Whilst the Directors have no reason to believe that the
Group will not be viable over a longer period, based on this
assessment of the prospects and viability of the Group, the
Directors confirm that they have a reasonable expectation
that the Group will be able to continue in operation and
meet its liabilities as they fall due over the three-year
period ending 31 March 2025.
78 Great Portland Estates plc Annual Report 2022
In this section:
80 Overview
81 Introduction from the Chair
84 The Board
86 Leadership and purpose
90 Engaging with our investors
92 Engaging with our employees
94 Board consideration of stakeholder interests and s.172(1)
98 Division of responsibilities
100 Composition, succession and evaluation
106 Audit, risks and internal controls
114 Directors’ remuneration report
134 Report of the Directors
136 Directors’ responsibilities statement
Governance
Medici Courtyard, W1
Governance
79Annual Report 2022 Great Portland Estates plc
Overview
Statement by the Directors on compliance with the provisions of the UK Corporate Governance Code
The UK Corporate Governance Code 2018 (the Code) applied to GPE’s financial year ended 31 March 2022. The Board
considers that it has complied in full with the provisions of the Code during the year with the exception of Provision
38 which requires the alignment of Executive Director pension contributions with the wider workforce. As explained
in the Directors’ remuneration report on page 120, we have committed to align the contribution levels of the current
Executive Directors with the average workforce contribution rate by the end of the 2022 calendar year with any new
Executive Directors to be aligned on appointment, as was the case for Dan Nicholson who was appointed to the
Board in September 2021. The Code is publicly available at www.frc.org.uk. A summary of the system of governance
adopted by the Company and how we have applied the principles of the Code is set out on pages 81 to 134.
Leadership
and purpose
Provides an overview of
the activities undertaken
by the Board in the year,
how the Board has
considered its s.172
responsibilities and its
governance framework.
– A review of the year from the Chair
– The Board’s attendance and activities during the year
– Setting the Company’s standards
– Purpose, values and culture
– Stakeholder engagement and how the Board has
considered its s.172 and stakeholder responsibilities
– Our conflicts of interest procedures
– Board induction and development
See more about our approach to leadership
and purpose on pages 81 to 97
Division of
responsibilities
Explains the roles of the
Board and its Directors.
– The role and interaction of the Board and
its Committees during the year
– The roles of the individual Directors
See more about our approach to division
of responsibilities on pages 98 and 99
Composition,
succession
and evaluation
Sets out the key processes
which ensure that the
Board and its Committees
can operate effectively.
– Composition and diversity
– Nomination Committee report
– This year’s Board evaluation
See more about our approach to effectiveness
on pages 100 to 105
Audit, risks and
internal controls
Explains the role of
the Board and the Audit
Committee in ensuring
the integrity of the
financial statements and
maintaining effective
systems of internal controls.
– Internal controls and ongoing risk management
– Fair, balanced and understandable
– Audit Committee report
See more about our approach to accountability
on pages 106 to 113
Remuneration
Describes the Company’s
remuneration arrangements
in respect of its Directors
and how these have been
implemented in 2021/22.
– Statement by the Remuneration Committee Chair
– Annual report on remuneration
See more about our approach to remuneration
on pages 114 to 133
80 Great Portland Estates plc Annual Report 2022
Introduction from the Chair
Dear fellow shareholder
I am delighted to introduce this year’s Corporate Governance
report for the financial year ended 31 March 2022.
The Board recognises that how the Group does business
is as important as what it does. A strong governance
framework with robust supporting processes across the
Group, and with high standards set from the top, is a key
factor in our delivering sustainable business performance,
generating value for shareholders and contributing to
wider society.
A key part of the Board’s role is to provide entrepreneurial
leadership, with appropriate oversight, challenge and
support to management. At GPE, the Board’s support,
advice and interaction extends beyond the boardroom,
supporting our efforts to promote and monitor culture and
ensure its alignment with our purpose, values and strategy.
Board focus and oversight
Key areas of the Board’s focus during the year included
the evolution of our strategy and operations, stakeholder
engagement, supplementing our experienced team
with new skills and diverse talent, advancing our Roadmap
to Net Zero Carbon and our Social Impact Strategy, and
enhancing our culture through our ‘Customer first’ approach
and our diversity and inclusion agenda. Further details can
be found in ‘What we did in 2021/22’ on pages 96 and 97.
2018 UK Corporate Governance Code
and s.172 reporting
This report demonstrates how we have applied the principles
and complied with the provisions of the UK Corporate
Governance Code 2018 (the Code) during the year and our
approach to governance in practice. Our Code compliance
statement can be found on page 80. Details of how the Board
has discharged its duty under section 172 of the Companies
Act 2006 can be found on pages 62, 94, 96 and 97.
Board composition
Succession planning is an important part of our governance
processes. Furthermore, as our strategy evolves, so too do the
skills and expertise required for our Board. Having identified
a need to strengthen the Board’s operational, customer service
and digital expertise, we were pleased to welcome Mark
Anderson and Emma Woods to the Board from 1 September
2021 and 1 February 2022 respectively. Search processes are
ongoing for at least one additional Non-Executive Director
to bring additional technology and data experience and with
the aspiration of further strengthening the Board’s diversity.
Wendy Becker will be stepping down from the Board, and as
Chair of the Remuneration Committee, from the conclusion
of the 2022 AGM to focus on her other commitments. On behalf
of the Board, I would like to thank Wendy for her significant
contributions to the Board and its Committees over the past
five years.
From the conclusion of the 2022 AGM, Wendy will be succeeded
as Chair of the Remuneration Committee by Emma Woods
and, as we announced in August 2021, Vicky Jarman will
succeed Nick Hampton as Chair of the Audit Committee.
Emma and Vicky will each bring valuable experience to
their new respective roles.
I would also like to thank Nick for his excellent leadership of
the Audit Committee since 2016. Nick will remain a member
of the Audit Committee, the Remuneration Committee
(to which he was appointed from 1 September 2021) and
the Nomination Committee.
We were also delighted to welcome Dan Nicholson to the
Board from 6 September 2021 as an additional Executive
Director with responsibility for Portfolio Management
and Development Management. Dan has extensive real
estate experience and brings further operational firepower
and strategic support to the executive team as we grow
both our development and flexible office activities.
Further details regarding these changes, and our Board
appointment processes, can be found in the Nomination
Committee report on page 102.
Diversity and inclusion
The Board continues to focus on strengthening diversity
and inclusion at GPE, both in relation to the Board and
more broadly throughout the organisation. A diverse
Board and workforce, which is representative of our
customers, is a strategic imperative as we enhance our
customer approach and develop our operations to meet
the evolving needs of a diverse customer base. We believe
that strengthening our diversity and inclusion will lead to
a more profitable, successful and innovative organisation.
A strong governance framework with robust supporting
processes across the Group, and with high standards
set from the top, is a key factor in our delivering
sustainable business performance, generating value
for shareholders and contributing to wider society.”
Richard Mully Chair
Governance
81Annual Report 2022 Great Portland Estates plc
We have made good progress in a number of areas, however
there is much still to do. The Board therefore approved a new
People Plan in early January 2022 which centres on our diversity
and inclusion ambitions and which supersedes our previous
Inclusion & Diversity Strategy. To further drive momentum, we
have also incorporated specific diversity and inclusion metrics
within the 2022/23 annual bonus objectives of our Executive
Committee members. Diversity is also a key consideration
in ongoing Board recruitment.
See our Nomination and Remuneration Committee reports
on pages 103 and 114 for further details.
Board effectiveness review
This year we conducted an internal evaluation which was
led by Charles Philipps, our Senior Independent Director.
Details of this process, the findings of the review and our
progress against the actions arising from the 2020/21 Board
evaluation can be found on pages 104 and 105. We are
planning for next year’s review to be an externally facilitated
evaluation in accordance with Code recommendations.
Purpose, strategy and consideration of the likely
consequences of decisions for the long-term
In the context of changing markets and evolving customer
needs, the Board has spent significant time this year
considering the development of our strategy to ensure we
are well positioned to maximise the opportunity we have to
generate long-term value across our business in line with our
purpose – to unlock potential, creating sustainable space for
London to thrive. As part of these discussions, we challenge
our purpose and strategic ‘givens’ and reflect on customers’
changing needs, the optimum size for our business, whether
our risk profile is appropriate and on our investment and
disposal strategies. The Group’s business model and strategy
are outlined on pages 12, 13, 16 and 17.
We remain confident that London’s commercial property
market has enduring appeal for customers and investors
and we expect customers to be increasingly drawn to
best-in-class assets that offer flexible, tech-enabled,
amenity-rich office space with the highest sustainability
and wellbeing credentials.
Listening to what customers and the market are telling us,
we are pivoting our strategy to centre on two complementary,
overlapping activities, providing quality, choice and flexibility.
We continue to focus on the delivery of our prime HQ
office space and the Board has progressed our £1.1 billion
development programme this year, including with the
commencement of enabling works at 2 Aldermanbury Square.
At the same time, we are seeking to grow organically our
Flex business to more than 600,000 sq ft by 2027, and to
supplement this growth through acquisitions. To this end,
the Board was pleased to approve the acquisition of
7/15 Gresse Street, W1 in March 2022 and, more recently,
the acquisition of 6/10 St Andrew Street, EC4 in May 2022.
While the retail market has improved, we continue to
monitor individual asset plans and GPE’s exposure to any
underperforming retail assets.
Our customers are at the heart of what we do, and we believe
that better customer outcomes will lead to better shareholder
returns for the long-term. The Board has therefore been
overseeing the development of our ‘Customer first’ approach
to respond to developing themes and to shape the spaces
and services we provide. This is underpinned by our refreshed
corporate brand, and brand pillars, which were launched in
November 2021. We have also overseen the restructuring of
senior management roles and team structures, including the
appointment of Steven Mew as Customer Experience and
Flex Director, to further develop our customer service culture.
Embedding our Customer first culture and ensuring GPE has
the necessary skills, diversity and operational capabilities to
execute its Customer first approach will remain important
areas of focus for the coming year.
Sustainability is integral to our offer. Driven by our purpose,
the Board sees sustainability as a differentiator and an
opportunity area for GPE, including the acquisition of
perceived stranded assets where GPE’s skills and credentials
could potentially allow us to address sustainability demands
and requirements that existing owners cannot.
The Board recognises the importance of innovation and
technology in enhancing our operations and our customer
offer, and in future-proofing for tomorrow’s working patterns.
The Board was pleased to approve a new one-year Innovation
Strategy for the coming year, which will focus on: our Customer
first approach and providing a seamless digital experience;
smart building technology to optimise occupation by reducing
energy consumption; improving productivity through healthy
workplaces; and exploring new technology to understand
its risks and opportunities.
Stakeholder engagement and support
Building and nurturing strong working relationships with our
stakeholders is critical to our success and the development
of our strategy and is intrinsic in our day-to-day activities.
As well as direct engagement, a key part of the Board’s role is,
therefore, the oversight of work undertaken by the GPE team
to maintain and enhance these relationships.
Much of the year was again impacted by the COVID-19
pandemic, and we continued to engage extensively with
stakeholders to offer support, where appropriate, to those
that needed it. The wellbeing of our customers and people
has remained a priority, and our progressive culture and
clear values has once again helped to deliver strong employee
engagement and customer satisfaction levels, as set out on
pages 53 and 56. These outcomes are a great credit to the
continual hard work and dedication of the entire GPE team.
We continue to focus on customer and supplier engagement
as we look to strengthen our Customer first approach
and progress our sustainability ambitions, as further
described below.
Further details of how we engage with our stakeholders
are set out on pages 52 to 62 and 89 to 94.
Introduction from the Chair continued
82 Great Portland Estates plc Annual Report 2022
Sustainability and the impact of the
Company’s operations on the community
and the environment
Sustainability is a key priority for GPE and a part of our
purpose. As well as being a moral obligation, the Board sees
sustainability as an economic and strategic imperative.
Sustainability touches everything we do and we continue
to integrate ESG considerations into all of our activities.
During the year, the Board has received regular reports and
updates from our Sustainability & Social Impact Director and
has held detailed discussions regarding our sustainability
objectives, strategy, risks and opportunities. The Board has
continued to monitor the progress of our Roadmap to Net
Zero and the deployment of monies from our Decarbonisation
Fund to finance the reduction of emissions from our buildings
and initiatives to drive meaningful behavioural change across
the business. The Board continues to oversee the development
of our Climate Resilience Strategy which we expect to adopt
later this year.
Working collaboratively with our stakeholders will be key
to achieving our sustainability ambitions. As a Board, we
regularly discuss ongoing work to partner with our customers
to reduce the carbon impacts from our buildings, along
with work with our suppliers to reduce supply chain impacts
and to innovate and drive improvements in the design and
development of sustainable buildings.
Reflecting our sustainability aspirations and those of the
investor community, the Board approved our new Sustainable
Finance Framework in July 2022, providing the framework
for potential future debt issuances to (re)finance projects
that have a positive environmental and/or social impact.
ESG metrics, including sustainability, also continue to feature
as an important element of our Executive Committee’s
annual bonus targets, as further explained in the Directors’
remuneration report on pages 115 and 118.
The Board adopted our new Social Impact Strategy in the
year, which is designed to create a lasting positive social
impact in our communities with a target of creating
£10 million of social value by 2030. Our Community and
Charity Committee has now been reconstituted as our
Social Impact Committee, chaired by the Chief Financial
& Operating Officer, to oversee the implementation of
this important strategy. We are delighted that, for 2021/22,
GPE generated £631,000 in social value through our
community programmes and direct business activities.
See page 43 for further details regarding the social value
we created in the year.
We also commenced new three-year strategic partnerships
with XLP, a charity focused on creating positive futures for
young people growing up on inner city estates in London,
and National Energy Action, a charity which focuses on
alleviating fuel poverty.
Maintaining a reputation for high standards
of business conduct
We aspire to the highest standards of conduct and, together
with a culture of continuous improvement in standards and
performance, this helps to ensure that good governance
extends beyond the boardroom.
Annually, the Board approves the Group’s Ethics and
Whistleblowing Policies, both of which are also reviewed
in advance by the Audit Committee. These policies are now
supported by our new, over-arching Anti-Fraud, Bribery
& Corruption Policy which was adopted in March 2022.
Each of these policies is available on our website at
www.gpe.co.uk/about-us/governance.
In September each year, the Board considers and approves
our Modern Slavery Statement, which explains the activities
we have undertaken during the year to demonstrate our
commitment to seeking to ensure that there is no slavery,
forced labour or human trafficking within any part of our
business or in our supply chains. A copy of our Modern
Slavery Statement is available at www.gpe.co.uk/our-
modern-slavery-statement. More on how we behave
can be found on pages 44 and 95.
We seek sustainable long-term, two-way relationships with
our supply chain, building mutual trust to deliver exceptional
results in a responsible way. Our Supplier Code of Conduct,
which is available on our website at www.gpe.co.uk/
our-relationships/our-suppliers, sets out the standards
we require of our suppliers to help ensure they operate
ethically and responsibly.
I am delighted that the efforts of our team have been rewarded
with our winning a number of awards and recognitions,
including Property Company of the Year and Commercial
Property Developer of the Year at the Property Awards 2021
and IR Magazine’s 2021 award for ‘Best in Sector: Real Estate’.
I am also very pleased to report on our achieving a gold award
in relation to EPRA’s 2021 Best Practice Recommendations
and Sustainability Best Practice Recommendations.
Engaging with our shareholders
We believe that communication with our shareholders
is key. To this end, in addition to our comprehensive
investor relations programme led by Toby Courtauld and
Nick Sanderson as detailed on pages 90 and 91, as Chair
of GPE, I proactively seek periodic engagement with many
of our institutional shareholders. During the financial year,
I was pleased to correspond and meet with a number of
our largest shareholders to discuss and hear their views
on GPE’s business and governance arrangements.
I, together with Charles Philipps as Senior Independent Director,
am available to meet with shareholders as appropriate.
Each of our Committee chairs is also available to engage with
shareholders on significant matters related to their areas
of responsibility.
The AGM provides the Board with an opportunity to engage
with and answer questions from shareholders. We hope
to see shareholders in person once again at our 2022 AGM.
Arrangements for the 2022 AGM can be found in our 2022
AGM Notice.
On behalf of the Board, I would like to thank all our of
shareholders and other stakeholders for their continued
support as we work to evolve and execute GPE’s strategy
to deliver long-term sustainable success.
Richard Mully
Chair
19 May 2022
Governance
83Annual Report 2022 Great Portland Estates plc
Richard Mully
BSc (Hons), MBA
Chair
Committees:
N
Date appointed to the Board:
December 2016
Date appointed as Chair:
February 2019
Independent: Yes, on
appointment as Chair
Relevant skills
and experience:
Richard is currently Senior
Advisor to TPG Real Estate.
He has extensive property,
banking and private equity
experience. This, combined
with his Senior Independent
and Non-Executive Director
experience, enables him
to provide constructive
leadership, challenge and
support to the Board and
wider business for the benefit
of all stakeholders. Richard
was formerly Chairman
of Arlington Business Parks
Partnership Ltd and Campus
Living (a TPG company),
Vice Chairman and member
of the Supervisory Board
of Alstria Office REIT-AG,
founder and Managing
Partner of Soros Real Estate
Partners LLC, a Non-Executive
Director and Chairman of the
Remuneration Committee
of Standard Life Aberdeen
plc and Senior Independent
Director at ISG, Hansteen
Holdings and St Modwen
Properties.
Current external
commitments:
Senior Advisor to
TPG Real Estate.
Toby Courtauld
MA, MRICS
Chief Executive
Committees:
E
S
Joint venture directorships:
Director of the GHS Limited
Partnership
Date appointed to the Board:
April 2002
Independent: No
Relevant skills
and experience:
Toby joined the Group in
April 2002 as Chief Executive
and has nearly three decades
of extensive experience in
real estate. He was previously
with the property company
MEPC for 11 years where he
gained broad experience
ranging from portfolio
management through to
corporate transactions
and general management
as a member of the Group
Executive Committee. He is
past President of the British
Property Federation. Toby’s
significant knowledge of
the Company and the sector
enables him to provide broad
leadership of the business
internally and externally,
through the successful design
and implementation of the
Company’s strategy, values
and business plans and their
exemplary communication to
a wide range of stakeholders.
Current external
commitments:
Member of the British Property
Federation Board and Policy
Committee, Director of
The New West End Company,
Non-Executive Director
of Liv-ex Limited, Member
of the Council of Imperial
College and Chair of their
Property Committee.
Nick Sanderson
BA (Hons), ACA
Chief Financial &
Operating Officer
Committees:
E
S
H
S
I
Joint venture directorships:
Director of the GHS Limited
Partnership, the Great
Ropemaker Partnership and
the Great Victoria Partnership
Date appointed to the Board:
July 2011
Independent: No
Relevant skills and experience:
Nick joined the Group in
July 2011 as Finance Director,
was subsequently promoted to
Finance & Operations Director
and is now Chief Financial
& Operating Officer. He was
formerly Partner, Head of Real
Estate Corporate Finance
Advisory at Deloitte, following
ten years of real estate
investment banking experience
in Europe and Asia with Nomura,
Lehman Brothers and UBS
Investment Bank. Nick’s wide
range of property-related
financial experience combined
with strategic and corporate
finance skills enables him to
provide valuable support in
developing, implementing and
articulating the Company’s
strategy, and taking leadership
over the delivery of a wide range
of financial, new business and
operational matters.
Current external
commitments:
Member of the Reporting and
Accounting Committee of EPRA
and Trustee of the Outward
Bound Trust.
Dan Nicholson
MA (Cantab), MA, MRICS
Executive Director
Committees:
E
S
Date appointed to the Board:
September 2021
Independent: No
Relevant skills and experience:
Dan joined the Group in
September 2021 as an Executive
Director with responsibility
for Portfolio Management and
Development Management.
He has extensive knowledge
of the real estate industry,
most recently spending over
ten years with Tishman Speyer,
for the majority of which he
ran their UK business. Dan
started his career as a surveyor
at Lambert Smith Hampton
before gaining broad property
investment, development and
asset management experience
in a number of organisations,
including at City & West End
Property Group, Quintain
Estates & Development and
real estate private equity
firm, Three Delta LLP. Dan’s
significant sector and business
expertise enables him to
provide valuable support in
developing and implementing
the Company’s strategy with
responsibility for Portfolio
Management and Development
Management matters.
Current external
commitments:
Non-Executive Director of
Bioregional Homes Limited.
Chair Executive Directors
The Board
R
N S S
A E H
Committee memberships:
Committee Chair:
A
Audit Committee
E
Executive Committee
N
Nomination Committee
S
Sustainability Committee
R
Remuneration Committee
H
Health & Safety Committee
S
Social Impact Committee
I
Inclusion Committee
84 Great Portland Estates plc Annual Report 2022
Non-Executive Directors
his knowledge of risk assessment
and management systems,
provides a strong basis for his
effective performance as the
Audit Committee Chair. He also
brings a strong customer-centric
approach to the Board.
Current external commitments:
Chief Executive Officer of
Tate & Lyle PLC.
* Nick Hampton will be stepping down as Chair of the Audit
Committee from the conclusion of the Company’s 2022
AGM and will be succeeded in that role by Vicky Jarman.
Vicky Jarman BEng, ACA
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
February 2020
Independent: Yes
Relevant skills and experience:
Vicky is currently a Non-Executive
Director of Entain plc and Melrose
Industries plc. She is a chartered
accountant who qualified at
KPMG before spending over ten
years with Lazard Ltd working in
the Investment Banking team and
then as Chief Operating Officer
for the London and Middle East
operations until 2009. Vicky has
previously been a Non-Executive
Director and Chair of the Audit
Committees of Equiniti Group
plc, Hays plc and De La Rue plc,
a Non-Executive Director of
Signature Aviation plc and Senior
Independent Director at Equiniti
Group plc. Vicky’s significant
financial, commercial and non-
executive experience enable her
to contribute to the strategy of
the business and its long-term
sustainable success.
Current external commitments:
Non-Executive Director of Entain
plc and Melrose Industries plc.
* Following the Company’s 2022 AGM, Vicky will
become Chair of the Audit Committee.
Alison Rose BA (Hons)
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
April 2018
Independent: Yes
Relevant skills and experience:
Alison is currently Chief Executive
Officer of NatWest Group plc
and was previously Deputy
Chief Executive Officer of
NatWest Holdings and Chief
Executive Officer of Royal Bank
of Scotland Commercial and
Private Banking. She has also
held a number of other banking
and finance roles within Royal
Bank of Scotland and NatWest
Markets. Alison’s significant
experience of real estate
financing, capital markets and
customer relations through her
different roles at Royal Bank
of Scotland enables her to
provide an informed view and
helpful challenge to Board and
Committee discussions.
Current external commitments:
Chief Executive Officer of
NatWest Group plc, Trustee
of BITC and Chair of the
Scottish BITC Advisory Board,
Member of the International
Business Council for the World
Economic Forum, Member
of the Board of the Institute
of International Finance
and Trustee of the Coutts
Charitable Foundation.
Emma Woods MA (Hons)
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
February 2022
Independent: Yes
Relevant skills and experience:
Emma is currently a
Non-Executive Director,
Senior Independent Director
and Chair of the Remuneration
Committee of The Gym Group
plc, Non-Executive Director
of Huel Limited (a nutritional
food company), Chair of
Tortilla Mexican Grill plc and
an Advisory Board Member
of the Wagamama Brand
Board. Emma was formerly
Chief Executive Officer at
Wagamama between 2018 and
2021 and held senior marketing
roles at Merlin Entertainments,
Pizza Express and Unilever.
Emma’s extensive operational,
customer service, digital and
marketing skills, combined with
her non-executive experience,
allow her to provide valuable
strategic insight and challenge,
including to further enhance
delivery on our customers’ needs.
Current external commitments:
Chair of Tortilla Mexican Grill
plc, Non-Executive Director
of The Gym Group plc and Huel
Limited and an Advisory Board
Member of the Wagamama
Brand Board.
* Following the Company’s 2022 AGM, Emma
will succeed Wendy Becker as Chair of the
Remuneration Committee.
Wendy Becker BASc, MBA
Non-Executive Director
Committees:
N
R
Date appointed to the Board:
February 2017
Independent: Yes
Relevant skills and experience:
Wendy is currently Chairperson
of Logitech International S.A.
and a Non-Executive Director
of Sony Corporation and Oxford
Nanopore Technologies plc. She
is also a member of the Council at
the University of Oxford and some
of its subsidiaries. Wendy was
formerly a Non-Executive Director
of Whitbread PLC and NHS
England, Chief Executive of Jack
Wills Ltd, a partner of McKinsey &
Company Inc, and on the board
of the Design Museum. Wendy’s
management consultancy
skills, retail CEO experience and
current technology and previous
remuneration non-executive
roles provide her with a wealth
of employee and business
understanding and serve as
a strong foundation for her
effective performance as
Remuneration Committee Chair.
Current external commitments:
Chairperson, Logitech
International S.A., Non-Executive
Director of Sony Corporation and
Oxford Nanopore Technologies
plc, and a member of the Council
at the University of Oxford and
subsidiaries.
* Following the Company’s 2022 AGM, Wendy will
be stepping down from the Board, and will be succeeded
by Emma Woods as Chair of the Remuneration Committee.
Nick Hampton MA (Hons)
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
October 2016
Independent: Yes
Relevant skills and experience:
Nick is currently Chief Executive
Officer (previously Chief
Financial Officer) of Tate & Lyle
PLC, and prior to this spent
20 years with PepsiCo in a
number of financial, commercial
and operational roles. Nick’s
strong financial background
and various operational and
commercial roles, in particular
Charles Philipps
Senior Independent Director
Committees:
A
N
R
Date appointed to the Board:
April 2014
Independent: Yes
Relevant skills and experience:
Charles is currently Chairman
of the Outward Bound Trust.
He was formerly Chief Executive
Officer of MS Amlin plc and
a director of NatWest Markets.
Charles’ significant financial,
commercial and general
management experience
gained within the banking and
insurance industries provide
him with a good understanding
of others’ views, significantly
contributing to his ability to
offer wise counsel in his role
of Senior Independent Director.
Current external commitments:
Chairman of the Outward
Bound Trust.
Mark Anderson Dip Mgmt,
MBA, FRICS
Non-Executive Director
Committees:
A
N
R
Date appointed to the Board:
September 2021
Independent: Yes
Relevant skills and experience:
Mark is currently Property and
International Managing Director
of Whitbread Plc and leads its
international businesses and
M&A activities. Mark previously
spent 16 years at J Sainsbury
PLC in a variety of senior
positions, finally managing all
aspects of its property estate.
Mark’s significant property,
operational and customer
service knowledge and
expertise, gained over many
years, enable him to provide
valuable strategic insight
and challenge to Board and
Committee discussions.
Current external commitments:
Property and International
Managing Director of
Whitbread Plc and Trustee
of Tourism For All UK.
Governance
85Annual Report 2022 Great Portland Estates plc
Audit
Committee
See Committee
report on pages
106 to 113
Nomination
Committee
See Committee
report on pages
100 to 105
Leadership and purpose
The Board’s attendance in 2021/22
Attendance at scheduled Board and Committee meetings during the year was as follows:
1. There were six scheduled Board meetings in 2021/22. The Board also
held a strategy review session and additional meetings to consider
matters of a time-sensitive nature – see Board activities on pages 87,
96 and 97.
2. Executive Directors are not members of the Audit, Nomination or
Remuneration Committees. However, they are invited to attend
for parts or all of certain Committee meetings where appropriate.
3. Non-Executive Directors (including the Chair), where not a member
of a Committee, have a standing invitation to attend meetings of
that Committee where appropriate.
4. Mark Anderson and Emma Woods were appointed to the Board
and also the Audit, Nomination and Remuneration Committees
with effect from 1 September 2021 and 1 February 2022 respectively.
In each case the number in (parenthesis) is the number of meetings
they could have attended in the year.
5. Dan Nicholson was appointed to the Board with effect from
6 September 2021. The number in (parenthesis) is the number
of meetings he could have attended in the year.
6. Nick Hampton will be stepping down as Chair of the Audit Committee
from the conclusion of the 2022 AGM and will be succeeded in that
role by Vicky Jarman. Nick Hampton will continue as a member of the
Audit Committee from that time. Nick Hampton became a member
of the Remuneration Committee with effect from 1 September 2021
and the number in (parenthesis) is the number of meetings he could
have attended in the year.
7. Alison Rose was unable to attend the Board meeting on 8 July 2021
due to the unexpected ill-health of a family member. Alison received
papers in advance and was able to provide comments to the Chair.
100%
Attendance
100%
Attendance
100%
Attendance
98%
Attendance
7
4
Scheduled meetings
5
Scheduled meetings
4
Scheduled meetings
6
Scheduled meetings
1
Chair
3
Richard Mully
– –
Executive Directors
2
Toby Courtauld
– – –
Nick Sanderson
– – –
Dan Nicholson
5
(3/3)
– – –
Non-Executive
Directors
3
Charles Philipps
Mark Anderson
4
(4/4) (3/3) (4/4) (3/3)
Wendy Becker
–
Nick Hampton
6
(3/3)
Vicky Jarman
Alison Rose
7
Emma Woods
4
(1/1) (1/1) (1/1) (1/1)
Board meetings attended
Board meetings not attended
Committee meetings attended
Board
Remuneration
Committee
See Committee
report on pages
114 to 133
86 Great Portland Estates plc Annual Report 2022
Board activities
The Board typically meets for scheduled Board meetings six times a year in addition to an annual strategy review session.
The Board also meets as necessary to consider matters of a time-sensitive nature.
The role and interaction of the Board and its Committees during the year
The Board has a duty to promote the long-term sustainable success of the Company for its shareholders. The Board
is responsible for establishing and monitoring the Company’s purpose, values and strategy and ensuring that these and
its culture are aligned. Its role includes the oversight of human resource levels and succession planning, approval of major
acquisitions, disposals, capital expenditure and financing arrangements and of the Group’s systems of internal control,
governance and risk management. The Board provides and promotes effective and entrepreneurial leadership across
the business within the Group’s governance framework.
2021/22 May July September November January March
Purpose, strategy and implementation
Purpose and strategic review, discussion and setting of business plan
–
Chief Executive’s report including market conditions dashboard, operational
parameters, asset strategies, strategic risks and opportunities, sustainability,
team resourcing and development
–
Board reports on valuation, leasing activity, major developments summary,
approved vs. actual development spend, longer-term pipeline and sales review
–
Chief Financial & Operating Officer’s report including forecasts, investment
market and propositions, finance initiatives, debt and equity markets update
and operational matters including health and safety, HR, ESG and IT
–
Shareholder analysis and/or investor relations updates
–
Board property tour
– – – – –
Risks
Formal review of risk management and internal controls
– – – –
Ongoing monitoring of risks
Governance
Review of half-year or annual results, going concern,
viability statement, dividend policy and analyst presentation
– – – –
Stakeholder feedback, including shareholders and analysts,
employees, customers, communities, suppliers, joint venture partners,
local planning authorities
Reports from Board Committees
Corporate governance matters including authority levels,
Terms of Reference, UK Corporate Governance Code compliance
– – –
Health and safety reports including strategy and updates
– – – –
Sustainability updates including vision, strategy, targets and roadmap
–
Corporate Responsibility including approval of the Company’s Modern
Slavery Statement, Anti-Fraud, Bribery & Corruption, Ethics, Gifts and
Hospitality and Whistleblowing Policies
– – – –
Evaluation
Board evaluation
– – – – –
Conflicts of interest
Board meeting matter
Other ad hoc matters for consideration by the Board at
both scheduled and unscheduled Board meetings in addition
to the above include:
– major potential acquisitions and disposals;
– significant leasing arrangements;
– approval of major developments;
– significant financing arrangements;
– Board and senior management appointments; and
– appointments of principal advisers.
A forward agenda for the Board is maintained to ensure that
all necessary and appropriate matters are covered during the
year and to allow sufficient time for discussion and debate.
The Board receives papers and presentations from the Executive
Directors, and senior managers are regularly invited to attend
to provide further insight and feedback on specific matters.
Significant matters discussed and major transactions approved
by the Board in the year are shown on pages 96 and 97.
Where Directors are unable to attend meetings, their comments,
as appropriate, are provided to the Board or Committee
Chair prior to the meeting.
At least annually, the Board reviews the nature and scale
of matters reserved for its decision.
Governance
87Annual Report 2022 Great Portland Estates plc
Our purpose, strategy, values and culture
Our purpose is to unlock potential, creating sustainable space
for London to thrive. In setting our purpose, we believe our
role relates not only to our buildings, but also to the people
who live and work there and what and how we contribute
to the wider public realm, community and environment.
The Board sets our strategy and strategic priorities to align
with our purpose, which informs our decisions regarding our
acquisition, repositioning, operation or sale of properties.
Our purpose is underpinned by our values and behaviours,
which encapsulate who we are and how we do business.
Our purpose, values and behaviours were articulated through
a Board sponsored, employee-driven initiative, and engaging
all our employees in this process meant we were able to
develop a unifying purpose and set of values which are
well understood and regularly discussed. At GPE, everyone
is accountable for living by our shared set of behaviours,
which form an important part of our workforce policies
and remuneration processes.
Our culture is underpinned by a clear alignment of purpose,
strategy, values and incentives. It is our culture that makes
us unique. Further details regarding our culture, values
and behaviours can be found on page 52.
Our culture inspires us to go further for our customers,
partners, each other and the business. As we innovate and
adapt in a fast-changing market to deliver our customer,
sustainability, technology and flexible space ambitions,
our strong culture has never been more important and
we must therefore work hard to preserve and enhance it.
A key objective for the Board is to monitor our culture,
and to address any instances where there is a misalignment
between our purpose, culture, values and behaviours.
Our culture is not about rules, but about actions and
the Board and Senior Management Team seek to lead by
example in communicating and demonstrating the values
and behaviours which lie at the heart of our culture.
How the Board monitors culture
The Board is committed to ensuring
that the tone of our values is set
from the top by both the Board
and senior management. Our size
and the high level of regular Board
interaction with employees facilitates
the Board’s monitoring of culture
and the implementation of our values
which we do in a number of ways:
– inclusion of culture, values and
behaviour-led questions within
employee surveys with Board
analysis of the results;
– regular face-to-face engagement
with employees as part of our
Non-Executive Director breakfast
programme, our programme of
employee engagement sessions,
Board and Committee presentations,
property tours and other meetings and
engagements throughout the year
(see ‘Engaging with our employees’
on pages 92 and 93 for more details);
– ‘Living Our Values’ is an integral part
of every individual’s objective setting
and annual performance reviews,
with outcomes being reported
via the Remuneration Committee.
360-degree feedback reviews for
senior management prompt open
feedback on culture and values
which then feeds into an individual’s
personal development plan. Our bonus
structure ensures a strong link between
the values and remuneration with
a proportion of each employee’s
personal bonus explicitly based on
values and behaviours;
– the Executive Committee holds
regular ‘Living Our Values’ meetings
with Heads of Department which
are then discussed with the Board;
– policies, pay and diversity and
inclusion activities are reviewed
to ensure they appropriately
capture and reflect our values;
– reviews of compliance, whistleblowing
statistics, health and safety incidents
and internal audit reports to identify
and address any areas not meeting
expected standards of conduct
or behaviour;
– feedback from our stakeholder
engagement programmes, including
our customer survey results, helps
the Board to assess how the values
and behaviours are embedded
in our interactions with third parties
and the way we do business; and
– review of supplier payment practices.
The Group’s response to the COVID-19
crisis has demonstrated the strength
of our collaborative culture and the
commitment of our people to serve in
the best interests of GPE, each other,
and our wider stakeholders.
The Board is satisfied that there
remains a high level of engagement
with our values. However, safeguarding
our culture and further embedding our
values remains a continuous area of
focus. Following this year’s feedback,
a number of actions have been taken
or are planned to help further strengthen
our culture and drive the right behaviours
through our activities. These include:
– the adoption of our People Plan which,
amongst other things, addresses
opportunities to positively impact our
culture through a focus on diversity,
equity and inclusion;
– the launch of our new Hybrid Working
Policy to allow employees greater
flexibility and the option to work
from home whilst seeking to maintain
the benefits of office working and
our collaborative culture;
– embedding our new performance
review process which places
greater emphasis on ‘how’
objectives are achieved and which
is designed to further distinguish
exceptional performance;
– further developing our managers
to role-model and celebrate positive
behaviour and to strengthen our
culture of open, continuous and
constructive feedback;
– enhancing our mechanisms for
speaking up about wellbeing
and mental health; and
– embedding a Customer first
approach across all our operations
and business activities.
Leadership and purpose continued
88 Great Portland Estates plc Annual Report 2022
Stakeholder engagement
Understanding the views of all our stakeholders and fostering of business relationships
The Board oversees and receives regular updates throughout the year on engagement activities with our key stakeholders.
The Board develops its understanding of these key stakeholder views in a number of different ways, including the following:
Investors The Chair engages with major shareholders on matters of governance and strategy and
Committee Chairs engage, as appropriate, on their areas of responsibility. Formal and
informal discussions are held with shareholders in the context of the Company’s AGM. In 2021,
shareholders were once again invited to attend the AGM in person. Those unable to attend
in person were given the opportunity to ask questions of the Board via email in advance of
the meeting and to view AGM proceedings via a webcasting facility. Members of the Board
attend investor events to hear views and questions first hand. We have a comprehensive
investor relations programme with regular reporting of feedback to the Board.
Our people High levels of direct engagement are maintained throughout the year through numerous
mechanisms, including our formal programmes of Non-Executive Director breakfast meetings
and ‘An Audience with…’ employee engagement sessions, our Non-Executive Director
mentoring programme, property tours, employee presentations and other meetings and events.
The Board also receives regular reports on employee feedback, including from employee
engagement surveys and ‘Living Our Values’ meetings. It will also receive updates from the
HR Director on the work of the Inclusion Committee.
Customers The Board meets customers where possible as part of its cycle of property tours. Board papers
include regular updates on customer engagement activities, including feedback from
customer meetings which are periodically attended by Executive Directors, discussions with
property agents, industry forums, events and marketing campaigns. The Board discusses
Net Promoter Scores and feedback from independent customer surveys. External presenters
also present to the Board from time to time on occupier trends and market research
and developments.
Joint venture partners Frequent engagement with joint venture partners throughout the year is led by our Executive
Directors, at least one of whom serves on each joint venture board, with regular updates
and reporting of key matters to the Board.
Communities Our Social Impact Strategy, which is designed to create a lasting positive social impact
in our communities, is set by the Board with implementation overseen by our Social Impact
Committee which is chaired by the Chief Financial & Operating Officer. The Board receives
regular updates on activities and initiatives, including the measurement of the social value
we create.
Local planning
authorities
Our relationships with key planning authorities are critical to the delivery of new spaces
in London. Our Development Director regularly reports to the Board on recent engagement
activities, including planning discussions, community considerations and any development
consultations involving key stakeholders and local residents.
Suppliers Engagement is led through our Development, Leasing, Occupier Services, Health and Safety
and Sustainability teams with information received through regular Board reports and
presentations. The Board engages directly with contractors during development site visits and
may also receive external presentations from suppliers such as property agents and valuers.
The Audit Committee reviews GPE’s supplier payment practices and performance twice-yearly.
Further details of our relationships and engagement with key stakeholders, how stakeholder issues have been monitored
and considered by the Board through our scheduled Board meetings, and discussion of matters between these meetings,
is explained in more detail in:
Our stakeholder relationships on pages 56 to 62
Our people and culture on pages 52 to 55
Our approach to risk on pages 64 to 77
Engaging with our investors on pages 90 and 91
Engaging with our employees on pages 92 and 93
Impact of engagement on Board decisions on page 94
What we did in 2021/22 on pages 96 and 97
Governance
89Annual Report 2022 Great Portland Estates plc
What we did in 2021/22
– Virtual roadshows: US
– Virtual conference:
Morgan Stanley
(London), Goldman
Sachs (London),
EPRA (Asia)
– Equity sales force
meetings x1
– Virtual roadshow: US
– In person conference:
UBS (London)
– In person conferences:
Citi (US): Bank of
America (London)
– Equity sales force
meetings x1
June
May
November
January
December
March
– Virtual roadshows:
London & Netherlands
– Equity sales force
meetings x3
– In person/hybrid
roadshow: London,
– Virtual roadshow:
Netherlands
– Equity sales force
meetings x2
– Virtual conference:
Barclays (London)
July
– Annual General
Meeting
– Equity sales force
meetings x1
– Virtual conferences:
Bank of America
(New York), EPRA
September
Institutional shareholders by geography at 31 March 2022
3%
<1%
27%
39%
United Kingdom
United States
Europe
Asia Pacific
Rest of World
30%
Investor contact by method
61
55
14
4
134
meetings
Call
Conference
Meeting
Tour
2021
2022
Engaging with our investors
The Board aims to maintain an open relationship with our shareholders based on a clear investment case and transparent
disclosure. As a result we maintain a regular dialogue with shareholders, potential shareholders, debt providers and analysts
through a comprehensive investor relations programme.
See more about our largest shareholders on page 137
Sustainability indices 2021/22
Given the increased focus on sustainability, the Board
believes that it is essential to provide transparent
reporting and, therefore, we participate in a number
of sustainability indices:
– CDP
– EPRA
– MSCI
– FTSE4Good
– ISS
– GRESB
See more about our approach to sustainability on pages 37 to 51
250+
Investors met during the year
Leadership and purpose continued
90 Great Portland Estates plc Annual Report 2022
Our approach
Our Investor Relations programme is executed across
a number of geographies, reflecting the international
nature of our share register, and through a variety
of routes including roadshows, meetings at industry
conferences, investor and analyst events, property
tours and presentations to analysts and investment
banks’ equity sales teams.
The Board is also committed to providing investors
with regular announcements of significant events
affecting the Group, including its business activity
and financial performance. These announcements are
available on the Group’s website at www.gpe.co.uk
along with results webcasts, analyst presentations,
property videos, press releases and interviews with
the management team.
The Executive Directors and the Director of Financial
Reporting and Investor Relations are the Company’s
principal representatives with investors, analysts,
fund managers, press and other interested parties,
and independent feedback on presentations by the
Executive Directors to shareholders and analysts is
provided to the Board on a regular basis.
The Executive Directors and Corporate Finance team
also have regular dialogue with our debt providers,
including relationship banks, private placement
investors and debenture holders and report back
to the Board as appropriate.
Activities during the year
Our engagement with our shareholders was conducted in
a hybrid format during the year, with meetings increasingly
face-to-face as COVID-19 restrictions were eased.
The Executive Directors and senior management had 134
virtual and in-person meetings with over 250 shareholders,
and potential shareholders, from a broad range of institutions
during the year. This included participating in eight virtual
and two in-person industry conferences, which provided the
management team with the ability to meet a large number of
investors on a formal and informal basis, five virtual roadshows
and one in-person roadshow to meet with investors from
London, the US and the Netherlands. We also held a ‘Customer
first’ Capital Markets Event in April 2022. We actively seek
feedback after every roadshow which is provided to the
Board on a regular basis.
Examples of topics raised in the year
– Our view on the markets in which we operate;
– The expansion of our Flex offers, our ambition for growth
and their respective financial returns;
– The growing importance of sustainability on customer
and investor demand;
– The prospects for our development pipeline given the
imminent start of 2 Aldermanbury Square, EC2; and
– Changing customer requirements including the impact
of working from home, technology and design.
We used these topics to shape both the content of subsequent
investor presentations and the agenda of our ‘Customer first’
Capital Markets Event.
Next steps
Following the announcement of our year-end results, we will
be embarking on our post-results IR programme over the early
summer. We will be conducting in-person roadshows in London
and the US, with virtual roadshows in Holland and Scotland,
and we will also be attending the Morgan Stanley Conference
in London.
‘Customer first’ Capital Markets Event
We hold a biennial Capital Markets
Event to provide an opportunity for
the investment community to have a
deeper dive on some of our activities
and have the opportunity to hear
from the wider GPE team. This year
the title of the event, which took place
in April 2022, was ‘Customer first’
and was intended to highlight how
customer needs are changing and
how we are evolving our products
to meet this changing demand.
We had seven presentations from the
GPE team as well as a tour of some
recently completed buildings and
a networking lunch. We set out what
we mean by ‘Customer first’, how it is
shaping the spaces that we provide
and how the portfolio is well suited
to support this evolution.
We also provided greater detail on our
Flex offers and their financial returns.
Janine Cole also provided an update
on key sustainability topics and how
we are responding. All of the content
is available to view on our website
at www.gpe.co.uk/investors/2022-
capital-markets-event.
We had around 70 attendees and
feedback from the event was positive
and will contribute to our thinking
for 2022.
The easing of COVID-19 restrictions
was very welcome in allowing
face-to-face meetings to resume
in the year. It was great to see
many of our investors in person
and to hold a Capital Markets
Event that was well attended.”
Stephen Burrows
Director of Financial Reporting
and Investor Relations
Governance
91Annual Report 2022 Great Portland Estates plc
An audience
with Vicky
Jarman
One of our ‘Audience
with…’ sessions this year
was held with Vicky
Jarman, hosted by Janine
Cole, our Sustainability
& Social Impact Director.
Janine opened the session by exploring
how Vicky’s career evolved into that
of a Non-Executive Director, which led
to an engaging discussion on diversity,
equality and inclusion in the workplace,
the benefits this brings and how GPE
can drive further progress in this area,
also learning from other industries.
The feedback received has supported
the development of GPE’s new People
Plan and ongoing Board discussions
on this subject.
Vicky discussed sustainability in the
property sector, the challenges this
presents and the opportunities for
GPE, working closely with its suppliers,
to innovate and take a market lead
on sustainability matters.
Vicky also provided her insights
on the future of the workplace, the
importance of GPE’s Customer first
approach and the increasing role
that technology and data can play
in supporting our customers and
differentiating GPE from its
competitors.
Vicky answered employee questions
and discussed views on the benefits of
hybrid working. Following subsequent
feedback from separate focus group
sessions, we were pleased to launch
our new Hybrid Working Policy from
1 April 2022.
There was an opportunity for
employees to ask questions and share
views across a broad range of topics
that affected them, making it an
engaging and interactive session.
The event, which received positive
feedback, was well attended by
employees and a number of members
of the Board.
Engaging with our employees
Being a relatively small company of approximately
130 employees operating in one location, there is a high
level of visibility of the Board by employees and vice versa.
Given this high level of visibility, the Board has decided not
to adopt any of the three specific employee engagement
methods referred to in the 2018 UK Corporate Governance
Code at this time. Instead, we have adopted the following
employee engagement arrangements which the Board
believes have operated effectively during the year to provide
it with regular formal and informal employee feedback for
consideration as part of the Board’s decision making process:
– a formal programme of breakfast meetings between the
Non-Executive Directors and members of the Executive
Committee and senior management. These meetings
have no fixed agenda and provide a useful forum to
discuss what is happening in day-to-day operations and
the associated challenges which might not be significant
enough individually to warrant formal reporting at
Board meetings; and
– a Non-Executive Director, on a rotational basis, presenting
to all employees in a discursive format approximately twice
yearly on a particular theme, followed by a Q&A session.
To facilitate these sessions we have set up an online portal
for employees to raise questions, anonymously if they wish,
in advance of the event. Employees are also invited to ask
questions and to share their views on the day. These sessions
are also designed for Board members to provide the Board’s
views, as appropriate, on matters raised through employee
engagement, and feedback from the sessions is reported
to the Board. Our latest sessions were led by Vicky Jarman
in December 2021 and by Nick Hampton in April 2022,
each of which are described below.
Leadership and purpose continued
The session with Vicky Jarman was
a great opportunity for all employees
to hear first-hand the views of a
NED on the key challenges currently
faced by GPE. Furthermore, it was
inspiring to hear how Vicky, as a
successful female business leader,
proactively progressed her career
at the same time as raising a family.”
Hilary Baikie
Tax Compliance Manager
92
Great Portland Estates plc Annual Report 2022
An audience
with Nick
Hampton
Our latest ‘Audience
with…’ session was held
with Nick Hampton,
hosted by Steven Mew,
our Customer Experience
and Flex Director.
Steven commenced the session by
asking Nick about his career path
and motivations.
Nick explained his continuous
focus on learning and development
throughout his career and discussed
how everyone at GPE could look to
solve problems and make a difference
in an inclusive culture.
Following the pandemic and global
events, Nick spoke about leading
with courage, humility and trust in
an uncertain world. He also shared
his insights on the power of a strong
purpose and vision to drive and
differentiate a business whilst
making a positive societal impact.
In view of changing patterns
of working behaviours, there was
an interesting conversation about
the evolving role of the office as
a place for connection, creativity
and collaboration.
Employees were keen to discuss
the challenges and opportunities
of business transformation as GPE
continued to evolve its operations.
Topics discussed included the need
to work differently and innovate, to
develop new skills and capabilities,
to execute at pace and to embed
a Customer first mindset and culture.
Nick highlighted how Board discussions
had evolved over recent years and
how the composition of the Board
had developed to align with GPE’s
future strategic needs.
Nick talked about the role of
technology in supporting business
transformation and enhancing
customer service, noting that it was
important to focus on technology
that could add real business and
customer value.
Nick also discussed and answered
questions on a range of matters
including customer service,
branding, climate change, his
role as a Non-Executive Director,
the UK’s economic outlook and
London’s magnetic appeal.
The event was well received with
high levels of employee attendance,
as well as attendance by the Chair
and other members of the Board.
In addition to these arrangements, direct Board engagement
with employees during the year has included the following:
– in September, property tours of Newman Street,
16 Dufour’s Place and Hanover Square as part of the
annual Board Property tour involving our Development,
Project Management, Leasing and Occupier and
Property Services teams;
– presentations made to the Board by the Executive
Committee team at scheduled Board meetings;
– Board presentations and Q&A sessions by Heads
of Department and other employees on key matters
including acquisitions, our flexible office model, cyber
security, health and safety, sustainability, financing,
leasing, investor relations, diversity and inclusion
and corporate governance;
– Charles Philipps and Emma Woods attended our
Capital Markets Day with employees, stakeholders
and analysts in April 2022;
– mentoring sessions between Non-Executive Directors
and members of senior management as part of our
Non-Executive Director Mentoring Programme;
– all-staff Quarterly Review meetings led by our
Chief Executive which provide an informal forum for
employees to discuss and raise questions regarding
key events at GPE; and
– following the success of the initiative introduced during
the pandemic, all employees are invited to attend
a weekly update call on Monday mornings, led by
our Chief Executive and other Executive Directors,
to discuss key developments and concerns.
While the impact of COVID-19 continued to present
operational challenges for all businesses, we adopted
a number of initiatives and activities to maintain levels
of employee engagement, wellbeing and feedback
throughout the year which we continue to evolve to
further support our people.
See more on pages 52 to 55
The event was a fantastic
opportunity to hear and discuss
views on how GPE can evolve
and make a real difference for our
customers in an inclusive culture, and
it was great to engage with Nick as
one of our Non-Executive Directors.”
Leila Gadsden-Chaiboub
Company Secretarial Assistant
Governance
93Annual Report 2022 Great Portland Estates plc
Board consideration of stakeholder interests and s.172(1) matters
Impact on decisions
Some examples of how the Board has considered stakeholder interests and s.172(1) matters in its decision making in 2021/22
are set out below and in ‘What we did in 2021/22’ on pages 96 and 97. Further details on our stakeholder engagement,
and our response, can also be found on pages 52 to 62.
Acquisition of 7/15 Gresse
Street & 12/13 Rathbone Place,
W1 (Gresse Street)
In January 2022, the Board approved
the acquisition of Gresse Street
for £36.5 million.
In reviewing the proposal,
the Board considered how
the acquisition presented
the opportunity to further
its strategy to grow GPE’s
Flex office portfolio, serving
the longer-term interests
of GPE and its stakeholders.
This was supported by feedback
from customers, agents, flexible
space operators and market data,
as well as from GPE’s successful roll-out of its Flex offer
at eight buildings, indicating increasing customer
demand for flexibility, experience and service provision.
The Board considered the financial impact of the
acquisition, including the anticipated income and
capital returns, returns for shareholders and the
further upside potential for the Group.
It was discussed that, following the relocation of the
Fashion Retail Academy, it was planned to undertake
a substantial upgrade to the building to bring it in line
with customer demands and to improve its sustainability
and wellbeing credentials in accordance with GPE’s
Net Zero Carbon commitment and stakeholder
expectations. The Board also considered opportunities
to support local community needs.
From an employee perspective, it was considered
that the acquisition would drive further momentum
in the business whilst a flexible space business plan
would provide employees with additional development
opportunities, including in the area of customer
service provision.
It was concluded, having regard to stakeholder interests,
that the acquisition was likely to generate long-term
sustainable value for stakeholders. At the same time,
it would provide further opportunity to innovate
across our operations and work with our customers
and communities to create sustainable space for
London to thrive.
See more on page 29
Redevelopment of
2 Aldermanbury Square,
EC2 (2AS)
In November 2021, the Board committed in principle
to the redevelopment of 2AS, and the incurrence of
additional expenditure for demolition and enabling works.
The Board discussed the strong business case,
prospective performance metrics and development
returns for the scheme and shareholders, along with
wider stakeholder impacts.
The Board considered recent customer and agent
feedback and market analysis, which had highlighted
strong customer demand for best-in-class offices in
terms of flexibility, amenity, technology, wellbeing and
sustainability. The proposed development would represent
the next generation of exemplary modern offices and
deliver in each of these areas in a prime location.
The Board discussed GPE’s sustainability agenda and
stakeholder expectations and the aim for the project
to deliver GPE’s second net zero carbon building and its
first NABERS UK rating for energy performance. The Board
also considered GPE’s ongoing work with suppliers to
achieve stretching embodied carbon targets, to reuse
(and source more sustainable) construction materials,
and the need to partner with customers to minimise
their carbon impacts.
The Board had regard to the impacts
on communities and the public realm
and amenity improvements under
the scheme that would have
a positive impact on the local
area and improve accessibility
to the western entrance of the
Liverpool Street Crossrail station.
The impact for the Group’s
employees was also considered,
noting that the scheme would offer
employees both development and
innovation opportunities.
Having weighed up the balance of risks and potential
returns, and after taking into account wider stakeholder
interests, it was concluded that GPE should commit in
principle to the development and proceed to the next
stage of the project.
See more on page 24
Leadership and purpose continued
94 Great Portland Estates plc Annual Report 2022
How we behave, human rights, supplier
stewardship and anti-corruption and
anti-bribery matters
We aspire to the highest standards of conduct based on
honesty and transparency in everything we do. Our Executive
Committee has a high level of oversight over the Group’s day-
to-day policies and procedures and carries out regular reviews
of the appointment of contractors, consultants and suppliers.
We support the principles of the UN Declaration of Human
Rights and core conventions of the International Labour
Organization. Our expectations on human rights are set out
across a number of our policies and procedures as we seek
to avoid causing or contributing to adverse human rights
impacts through our activities. In our business relationships,
we look to demonstrate a commitment to fundamental
human rights through our own behaviours and look to
engage suppliers whose values and business principles are
consistent with our own. Whilst we require all our suppliers
to comply with standards and codes that may be specific
to their industry, our Supplier Code of Conduct also sets out
the additional standards that we require of our suppliers in
this regard. GPE team members regularly meet with main
contractors to share information on industry best practice,
including in relation to human rights, health and safety and
responsible sourcing.
In September 2021, we published our latest Modern Slavery
Act Statement, which can be found at www.gpe.co.uk/
our-modern-slavery-statement, setting out the steps we
have taken over the past year, and intend to take over the
next 12 months, to ensure our suppliers and their supply chains
adopt similar standards to our own to prevent slavery and
human trafficking taking place within our supply chain.
Formal policies in place in relation to human rights, anti-bribery
and corruption and fraud matters include our new overarching
Anti-Fraud, Bribery & Corruption (‘Financial Crime’) Policy
which was adopted in March 2022, together with our Ethics,
Gifts and Hospitality, Whistleblowing, Use of GPE Suppliers,
Conflicts of Interest and our Inside Information and Share
Dealing Policies. All new employees receive training on these
policies as part of their induction process. A formal compliance
statement relating to these policies (which will include our
new Financial Crime Policy from 2022/23) is required to be
signed-off by employees annually with any matters of concern
reported to the Audit Committee. There were no significant
matters to report to the Audit Committee in relation to
these policies in the year ended 31 March 2022. The Audit
Committee also reviews our Ethics, Gifts and Hospitality and
Whistleblowing Policies (and will review our Financial Crime
Policy) and processes annually. Our policies can be found at
www.gpe.co.uk/about-us/governance.
Whilst we consider our industry to be relatively low risk
with regard to money laundering, we also have a formal
Anti-Money Laundering Policy in place and specific training
is provided to employees as appropriate.
Our conflict of interest procedures
The Company’s Articles of Association allow the Board to
authorise potential conflicts of interest that may arise and to
impose such limits or conditions as it thinks fit. The Company
has established a procedure whereby any actual or potential
conflicts of interest that may arise must be authorised by
the Board, maintained on a register and periodically reviewed,
with Directors required to update the Board with any changes
to the nature of any conflicts disclosed.
A Director who has a conflict of interest is not counted in the
quorum or entitled to vote when the Board considers the matter
in which the Director has an interest and the Director may be
excluded from the meeting where appropriate. The Board
considers these procedures to be working effectively.
Our approach to Board induction
and development
All new Directors receive a comprehensive induction
programme over a number of months which is facilitated
by the Chair and the General Counsel & Company Secretary
and tailored to the Director’s individual roles and needs.
The induction process is designed to develop the Director’s
knowledge and understanding of the Group covering key
areas including GPE’s purpose, values, culture and strategy,
its corporate governance, risks and internal controls and
the markets in which it operates. Our induction programme
for new Directors is delivered through:
– meetings with the Chair, wider Board, General Counsel
& Company Secretary and relevant Committee Chairs;
– a structured programme of meetings with executives
and senior managers to provide a deeper understanding
of risks and opportunities and stakeholder interests;
– meetings with advisers, including the internal and
external auditors and brokers, to provide a valuable
external perspective;
– property tours to see assets first-hand and to learn
more about GPE’s asset and development plans;
– access to a library of reference materials covering
key areas including strategy, finance and operations,
governance, risk management and internal controls; and
– training as appropriate on key policies, statutory duties
and legal and governance requirements.
To enable the Board to discharge its duties, all Directors
receive appropriate and timely information, including briefing
papers distributed in advance of Board meetings and regular
property tours conducted by the relevant GPE teams.
The Board strongly supports the ongoing development of
its Directors. The Directors may, at the Company’s expense,
take independent professional advice and are encouraged to
continually update their professional skills and knowledge of
the business and wider industry. Senior managers and external
advisers presented to the Board during the year on a range of
subjects, including macro-economic and political risks along
with impacts arising from COVID-19 and the Russia-Ukraine
conflict; industry themes and developments; the global and
UK real estate investment market; the flexible space market
and GPE’s flexible space offer; property technology; health
and safety; climate change and sustainability; cyber risk;
and accounting and governance developments.
Directors also individually attend seminars or conferences
associated with their expertise or responsibility and are provided
each quarter with a list of relevant upcoming seminars by various
firms. Director training is reviewed by the Nomination Committee
and development areas are discussed with individual Directors
as part of the annual performance evaluation process.
Governance
95Annual Report 2022 Great Portland Estates plc
May July
August/
September November
January/
February March
Strategy,
governance, risk
and opportunity
management
– Discussion of 2021/22 key
priorities, themes, strategic
actions and team resourcing
– Discussion of the progress
of GPE’s Inclusion & Diversity
Strategy
– Received an update on
activities being undertaken
in relation to the development
pipeline
– Consideration of GPE’s asset
and investment strategy
and review of a potential
acquisition
– Discussion of customer
rent collection, arrears
and delinquencies
– Support given for GPE’s
brand refresh to align with
the vision to meet customer
needs and build a sustainable
legacy for London
– Approval of the progression
of the 2 Aldermanbury Square
(‘2AS’) development project
to secure vacant possession
and complete Stage 4
design works
– Discussion of potential
post-Brexit related risks,
including supply chain
and labour disruption and
inflationary pressures
– Update on Executive
Committee ‘Away Day’
including discussions
on market dynamics,
the risks and opportunities
regarding sustainability
and Flex and the future
shape of the business
– Approval of our Sustainable
Finance Framework for
potential future debt
issuances to (re)finance
projects that have a
positive environmental
and/or social impact
– Approval of appointments
of Dan Nicholson and
Mark Anderson to the
Board, Vicky Jarman as
the next Audit Committee
Chair and Carrie Heiss as
HR Director
– Approval of Wendy Becker’s
external appointment
to Oxford Nanopore
Technologies
– Approval of 160 Old Street
disposal for £181.5m to
J.P. Morgan
– Review of market trends,
evolving working patterns and
customer demand for prime,
sustainable and flexible
space and the impacts on
GPE’s business model and
asset strategy
– Discussion of climate change
and decarbonisation risks,
and actions to quantify and
mitigate the impacts of new
EPC rating requirements
– Review of the investment
market and potential
acquisition opportunities
– Discussion of the risks of
construction costs inflation and
mitigating actions with suppliers
– Received a health and safety
update and approved new
proactive KPIs
– Approval of the pre-let
at 50 Finsbury Square
to Inmarsat
– Received a deep dive
presentation on the
development of GPE’s
Flex operations
– Approval of extension
of the Group’s Revolving
Credit Facility
– Approval of the launch of
the GPE rebrand alongside
the interim results
– Review and commitment
in principle to the
redevelopment of 2AS and
expenditure for demolition
and enabling works
– Approval of Grant
Thornton as GPE’s new
internal auditor from
2022/23
– Approval of Equiniti
as GPE’s new registrar
– Noted an IT security
update and results
and recommendations
from a PwC-conducted
technology maturity
assessment of systems
and processes
– Discussion with the CEO
of Pi Labs on property
technology risks, potential
disruptors and opportunities
– Review of key themes and
priorities to be addressed
as part of the March 2022
strategy review
– Approval of the acquisition
of 7/15 Gresse Street &
12/13 Rathbone Place, W1
– Discussion of organisational
design, skills and capabilities
and approval of senior
management role changes
to enhance the delivery of
our Customer first approach
– Review of potential asset sales
– Approval of Numis as an
additional joint corporate
broker
– Approval of the GPE People
Plan to enable and support
the delivery of our purpose
and strategy
– Approval of the appointment
of Emma Woods to the Board
and discussion of ongoing
Board recruitment
– External presentations
on (i) macro-economic
conditions, including
the impacts of the
Russia-Ukraine conflict;
and (ii) global equity and
UK real estate markets
– Review of our portfolio
response to customer
demands and approval of
the target to grow our Flex
office space to 600,000 sq ft
by March 2027
– Update on our three-year
IT strategy, including cyber
security governance
– Review of health and
safety governance, risks
and controls
– Approval of our new one-year
Innovation Strategy
Understanding
the views of
stakeholders,
the interests of
employees and
the fostering
of business
relationships
– Consideration of employee
wellbeing and communications
as the business emerged
from the pandemic crisis.
Reviewed employee pulse
survey results and next steps,
including consultation on the
development of the wellbeing
programme and a new Hybrid
Working Policy
– Update on customer feedback
as GPE supported customers’
return to the office
– Update on wider stakeholder
relationships, including
discussions with freeholders
on leasing and development
pipeline activities
– Noted continuing activities
to target Net Zero Carbon for
near-term schemes in line with
stakeholder expectations and
considered GPE’s sustainability
ratings in investor indices
and opportunities for
improvements
– Recommendation of the
payment of a final dividend
to shareholders
– Discussion of social value
created by GPE during 2020/21
and development of a new
Social Impact Strategy
– Consideration of feedback
from planners regarding 2AS
and, the design response,
including public realm and
affordable workspace
provisions
– Noted activities to deepen
freeholder and JV partner
relationships
– Noted plans for continued
customer engagement
and to address feedback
in the 2021 Customer
Satisfaction Survey, including
through service charge
process improvements.
Noted lessons learned and
positive feedback from Flex
customers at 16 Dufour’s
Place, following its launch
in March 2021
– Consideration of feedback
from investor meetings
following the year-end results,
including on development
plans, the future of the
office, the Flex opportunity,
prospects for rent, the
retail market, GPE’s buy/sell
aspirations and sustainability
– Discussion of processes
for deployment of the
Decarbonisation Fund
to reduce carbon emissions
in the portfolio
– Consideration of reports
from institutional shareholder
advisory bodies and their
voting recommendations
for the AGM
– Discussion of actions to
address feedback from GPE’s
flexible office customers,
including to strengthen
operational design and
capabilities and to further
embed a Customer
first culture
– Discussion of market and
local planning views on
the political and social
acceptability of new builds
– Discussion of ongoing
partnering with customers
and suppliers on delivery
of carbon commitments
– Update on Investor Relations
activities and common
investor themes
– Update on planning
authority and local
community engagement
regarding development
schemes, including at New
City Court, Minerva House
and Piccadilly Estate
– Approval of GPE’s 2021
Modern Slavery Statement
– Consideration of a 60-Day
Review from GPE’s new
HR Director and proposed
activities to simplify
processes and strengthen
diversity and inclusion
– Review of results of October
2021 employee engagement
survey. Supported actions
to be taken in response,
including to further support
employee wellbeing and
flexible working
– Discussion of how GPE
could achieve greater
customer insight and
enhance engagement,
including through
data and technology,
to support its Customer
first approach
– Approval of the interim
dividend
– Approval of Social
Impact Strategy to create
a lasting positive social
impact in our communities
and £10 million of social
value by 2030
– Discussion of refinement of
2AS scheme to meet evolving
customer needs, including
in respect of sustainability
– Update on discussions
with freeholders in respect
of development pipeline
buildings
– Discussion of the progress
being made against GPE’s
diversity and inclusion agenda
and approval of related
People Plan objectives,
including the establishment
of an Inclusion Committee
– Discussion of opportunities
to enhance supplier
engagement, particularly
in the areas of sustainability
and technology
– Review of feedback from
an institutional investor
roadshow in November,
which included strong
support for Flex opportunities
and development pipeline
prospects
– Support given for plans
for a Capital Markets
Day in April to focus on
GPE’s response to evolving
markets with a Customer
first approach
– Consideration of an
update on evolving
sustainability requirements,
the development of GPE’s
Climate Resilience Strategy
and a new Sustainable
Development Brief
– External presentation on
the emerging climate risk
themes connected with
the built environment
and stakeholder impacts
and expectations
– Update on results
of the recent customer
satisfaction survey
– Support given for our
new three-year charity
partnerships with XLP and
National Energy Action
What we did in 2021/22
Leadership and purpose continued
Consideration of stakeholder engagement
2021
16 Dufour’s Place
50 Finsbury
Square
96 Great Portland Estates plc Annual Report 2022
May July
August/
September November
January/
February March
Strategy,
governance, risk
and opportunity
management
– Discussion of 2021/22 key
priorities, themes, strategic
actions and team resourcing
– Discussion of the progress
of GPE’s Inclusion & Diversity
Strategy
– Received an update on
activities being undertaken
in relation to the development
pipeline
– Consideration of GPE’s asset
and investment strategy
and review of a potential
acquisition
– Discussion of customer
rent collection, arrears
and delinquencies
– Support given for GPE’s
brand refresh to align with
the vision to meet customer
needs and build a sustainable
legacy for London
– Approval of the progression
of the 2 Aldermanbury Square
(‘2AS’) development project
to secure vacant possession
and complete Stage 4
design works
– Discussion of potential
post-Brexit related risks,
including supply chain
and labour disruption and
inflationary pressures
– Update on Executive
Committee ‘Away Day’
including discussions
on market dynamics,
the risks and opportunities
regarding sustainability
and Flex and the future
shape of the business
– Approval of our Sustainable
Finance Framework for
potential future debt
issuances to (re)finance
projects that have a
positive environmental
and/or social impact
– Approval of appointments
of Dan Nicholson and
Mark Anderson to the
Board, Vicky Jarman as
the next Audit Committee
Chair and Carrie Heiss as
HR Director
– Approval of Wendy Becker’s
external appointment
to Oxford Nanopore
Technologies
– Approval of 160 Old Street
disposal for £181.5m to
J.P. Morgan
– Review of market trends,
evolving working patterns and
customer demand for prime,
sustainable and flexible
space and the impacts on
GPE’s business model and
asset strategy
– Discussion of climate change
and decarbonisation risks,
and actions to quantify and
mitigate the impacts of new
EPC rating requirements
– Review of the investment
market and potential
acquisition opportunities
– Discussion of the risks of
construction costs inflation and
mitigating actions with suppliers
– Received a health and safety
update and approved new
proactive KPIs
– Approval of the pre-let
at 50 Finsbury Square
to Inmarsat
– Received a deep dive
presentation on the
development of GPE’s
Flex operations
– Approval of extension
of the Group’s Revolving
Credit Facility
– Approval of the launch of
the GPE rebrand alongside
the interim results
– Review and commitment
in principle to the
redevelopment of 2AS and
expenditure for demolition
and enabling works
– Approval of Grant
Thornton as GPE’s new
internal auditor from
2022/23
– Approval of Equiniti
as GPE’s new registrar
– Noted an IT security
update and results
and recommendations
from a PwC-conducted
technology maturity
assessment of systems
and processes
– Discussion with the CEO
of Pi Labs on property
technology risks, potential
disruptors and opportunities
– Review of key themes and
priorities to be addressed
as part of the March 2022
strategy review
– Approval of the acquisition
of 7/15 Gresse Street &
12/13 Rathbone Place, W1
– Discussion of organisational
design, skills and capabilities
and approval of senior
management role changes
to enhance the delivery of
our Customer first approach
– Review of potential asset sales
– Approval of Numis as an
additional joint corporate
broker
– Approval of the GPE People
Plan to enable and support
the delivery of our purpose
and strategy
– Approval of the appointment
of Emma Woods to the Board
and discussion of ongoing
Board recruitment
– External presentations
on (i) macro-economic
conditions, including
the impacts of the
Russia-Ukraine conflict;
and (ii) global equity and
UK real estate markets
– Review of our portfolio
response to customer
demands and approval of
the target to grow our Flex
office space to 600,000 sq ft
by March 2027
– Update on our three-year
IT strategy, including cyber
security governance
– Review of health and
safety governance, risks
and controls
– Approval of our new one-year
Innovation Strategy
Understanding
the views of
stakeholders,
the interests of
employees and
the fostering
of business
relationships
– Consideration of employee
wellbeing and communications
as the business emerged
from the pandemic crisis.
Reviewed employee pulse
survey results and next steps,
including consultation on the
development of the wellbeing
programme and a new Hybrid
Working Policy
– Update on customer feedback
as GPE supported customers’
return to the office
– Update on wider stakeholder
relationships, including
discussions with freeholders
on leasing and development
pipeline activities
– Noted continuing activities
to target Net Zero Carbon for
near-term schemes in line with
stakeholder expectations and
considered GPE’s sustainability
ratings in investor indices
and opportunities for
improvements
– Recommendation of the
payment of a final dividend
to shareholders
– Discussion of social value
created by GPE during 2020/21
and development of a new
Social Impact Strategy
– Consideration of feedback
from planners regarding 2AS
and, the design response,
including public realm and
affordable workspace
provisions
– Noted activities to deepen
freeholder and JV partner
relationships
– Noted plans for continued
customer engagement
and to address feedback
in the 2021 Customer
Satisfaction Survey, including
through service charge
process improvements.
Noted lessons learned and
positive feedback from Flex
customers at 16 Dufour’s
Place, following its launch
in March 2021
– Consideration of feedback
from investor meetings
following the year-end results,
including on development
plans, the future of the
office, the Flex opportunity,
prospects for rent, the
retail market, GPE’s buy/sell
aspirations and sustainability
– Discussion of processes
for deployment of the
Decarbonisation Fund
to reduce carbon emissions
in the portfolio
– Consideration of reports
from institutional shareholder
advisory bodies and their
voting recommendations
for the AGM
– Discussion of actions to
address feedback from GPE’s
flexible office customers,
including to strengthen
operational design and
capabilities and to further
embed a Customer
first culture
– Discussion of market and
local planning views on
the political and social
acceptability of new builds
– Discussion of ongoing
partnering with customers
and suppliers on delivery
of carbon commitments
– Update on Investor Relations
activities and common
investor themes
– Update on planning
authority and local
community engagement
regarding development
schemes, including at New
City Court, Minerva House
and Piccadilly Estate
– Approval of GPE’s 2021
Modern Slavery Statement
– Consideration of a 60-Day
Review from GPE’s new
HR Director and proposed
activities to simplify
processes and strengthen
diversity and inclusion
– Review of results of October
2021 employee engagement
survey. Supported actions
to be taken in response,
including to further support
employee wellbeing and
flexible working
– Discussion of how GPE
could achieve greater
customer insight and
enhance engagement,
including through
data and technology,
to support its Customer
first approach
– Approval of the interim
dividend
– Approval of Social
Impact Strategy to create
a lasting positive social
impact in our communities
and £10 million of social
value by 2030
– Discussion of refinement of
2AS scheme to meet evolving
customer needs, including
in respect of sustainability
– Update on discussions
with freeholders in respect
of development pipeline
buildings
– Discussion of the progress
being made against GPE’s
diversity and inclusion agenda
and approval of related
People Plan objectives,
including the establishment
of an Inclusion Committee
– Discussion of opportunities
to enhance supplier
engagement, particularly
in the areas of sustainability
and technology
– Review of feedback from
an institutional investor
roadshow in November,
which included strong
support for Flex opportunities
and development pipeline
prospects
– Support given for plans
for a Capital Markets
Day in April to focus on
GPE’s response to evolving
markets with a Customer
first approach
– Consideration of an
update on evolving
sustainability requirements,
the development of GPE’s
Climate Resilience Strategy
and a new Sustainable
Development Brief
– External presentation on
the emerging climate risk
themes connected with
the built environment
and stakeholder impacts
and expectations
– Update on results
of the recent customer
satisfaction survey
– Support given for our
new three-year charity
partnerships with XLP and
National Energy Action
The table below provides examples of our significant discussions, transactions and appointments over and above the
scheduled matters outlined on page 105, together with examples of our oversight of engagement with stakeholders
and consideration of s.172(1) matters since April 2021. You can read our s.172(1) statement on page 62.
2022
2 Aldermanbury
Square
7/15 Gresse Street
Governance
97Annual Report 2022 Great Portland Estates plc
Division of responsibilities
Audit Committee
four scheduled meetings a year
oversees financial reporting
monitors risk management
and internal controls
scrutinises activities and performance
of the external auditor
evaluates internal auditor
and audit plan
Remuneration Committee
four scheduled meetings a year
establishes remuneration policy
sets executive remuneration schemes
reviews Executive Committee member
objectives and achievements
approves senior management
remuneration and LTIP awards
approves bonus and LTIP targets
approves the Directors’ remuneration report
reviews wider workforce pay policies and
alignment of incentives with culture
Executive
Committee
meets fortnightly
implements the
Group’s strategy
oversees transactions
monitors risks and
opportunities
responsible for succession
planning, resourcing and
people development
Sustainability
Committee
meets four times a year
manages climate change
risk and resilience
reviews progress and
development of sustainability
strategy
monitors environmental
compliance
oversees allocation of
Decarbonisation Fund
net zero carbon development
sub-committee focuses on
innovation and opportunities of
net zero carbon development
and refurbishment
portfolio sub-committee focuses
on reducing carbon emissions
in the existing portfolio
Social Impact
Committee
meets four times a year
sets direction for the Group’s
social value creation
oversees implementation
of the Group’s Social
Impact Strategy, charitable
partnerships and donations
Health and Safety
Committee
meets four times a year
reviews the Group’s health
and safety compliance
and performance
provides oversight on Health
and Safety Strategy
identifies and reviews
opportunities for improvement
Nomination Committee
five scheduled meetings a year
recommends Board appointments
approves senior management appointments
oversees succession planning and
development of a diverse pipeline
responsible for Board
effectiveness evaluation
six scheduled meetings a year
sets strategy
provides oversight of
purpose, culture and risk
approves major transactions
provides oversight of governance
oversees climate change risk
and sustainability strategy
The role of the Board
and its Committees
during the year
Board
Board
Committees
Management
Committees
See Nomination Committee report
on pages 100 to 105
See Strategic Report
on pages 02 to 78
See Strategic Report
on pages 02 to 78
See Sustainability on our
website www.gpe.co.uk/
sustainability/working-safely
See Sustainability on our
website www.gpe.co.uk/
sustainability
See Directors’ remuneration report
on pages 114 to 133
See Audit Committee report
on pages 107 to 113
See risk management report
on pages 64 to 77
See Board activities on pages 87 to 97
See biographies of the Directors on pages 84 and 85
See the division of responsibilities of the Directors on page 99
98 Great Portland Estates plc Annual Report 2022
The division of responsibilities of the Directors
The Board currently comprises the Non-Executive Chair, three Executive Directors and seven independent Non-Executive
Directors and is supported by the General Counsel & Company Secretary. The Chair and the other Non-Executive Directors
meet regularly without the Executive Directors, and at least once a year the Non-Executive Directors meet without the Chair.
In addition, individual Directors meet routinely outside the formal Board meetings as part of each Director’s contribution
to the delivery of the Company’s strategy and review of operations.
The Executive Directors meet every two weeks with senior management as the Executive Committee, chaired by the
Chief Executive, to attend to the ongoing management of the Group. The Executive Committee makes decisions within the
parameters set out in the Group’s Delegated Authorities which govern the taking and escalation of significant decisions.
Significant operational and market matters are communicated to the Non-Executive Directors on a timely basis outside
of the Board meetings. All Directors have access to the advice and services of the General Counsel & Company Secretary,
who is responsible to the Chair on matters of corporate governance.
Each year the Schedule of Board Responsibilities and terms of reference for the roles of Chair, Chief Executive and Senior
Independent Director are revisited by the whole Board and are available on our website at www.gpe.co.uk/about-us/governance.
Roles and responsibilities of the Directors:
Chair Richard Mully
Richard is responsible for leading the Board and for its effectiveness, meeting
with shareholders as appropriate, ensuring a culture of openness, transparency
and debate and helping the Chief Executive ‘to set the tone from the top’ on the
Company’s purpose, values and culture. As part of his role in leading the Board,
he ensures that the Board provides constructive input into the development of
strategy, understands the views of the Company’s key stakeholders and provides
appropriate oversight, challenge and support.
As Chair, Richard also leads the Nomination Committee.
Chief Executive Toby Courtauld
Toby is responsible for setting the Group’s strategic direction, implementing the
agreed strategy, the operational and financial performance of the Group and
the day-to-day management of the Company, including setting the tone for,
and ensuring oversight of, the Company’s culture through ‘living our values’ and
ensuring the Board is aware of key stakeholders’ views. As part of his role, Toby
is responsible for leading the Executive and Sustainability Committees and has
executive responsibility for climate change and sustainability matters.
Chief Financial &
Operating Officer
Nick Sanderson
Nick supports the Chief Executive in developing and implementing the Group
strategy and all financial matters. As part of his operations role, Nick has
responsibility for oversight of the valuation process, corporate marketing and
the HR, IT, and New Business functions. Nick leads the Health and Safety and
Social Impact Committees and has Board responsibility for health and safety.
Executive Director
responsible
for Portfolio
Management
and Development
Management
Dan Nicholson
Dan further supports the Chief Executive in developing and implementing the
Group strategy while he has specific responsibility for portfolio management
and development management matters. Dan leads the Portfolio Management
team, has overall responsibility for the Group’s development activities and line
management responsibility for flexible office activities.
Senior
Independent
Director
Charles Philipps
Charles acts as a sounding board for the Chair, leads the other independent
Non-Executive Directors in the performance evaluation of the Chair and is
available to shareholders as required. As part of his role, he also acts as an
intermediary for the Non-Executive Directors if necessary and is an independent
point of contact in the Group’s whistleblowing procedure. As Senior Independent
Director, Charles is also responsible for the Chair’s succession process, working
closely with the Nomination Committee.
Non-Executive
Directors
Mark Anderson
Wendy Becker
Nick Hampton
Vicky Jarman
Alison Rose
Emma Woods
Responsible for bringing an external perspective and providing constructive
challenge and support to the Board’s deliberations and decision making,
using their broad mix of business skills, knowledge and experience acquired
across different business sectors. They are also responsible for monitoring
the delivery of the agreed strategy within the risk management framework
set by the Board and promoting high standards of integrity and corporate
governance. Wendy Becker (or, from the conclusion of the 2022 AGM, Emma
Woods) is responsible for leading the Remuneration Committee, while Nick
Hampton (or, from the conclusion of the 2022 AGM, Vicky Jarman) is responsible
for leading the Audit Committee. Each Committee Chair seeks engagement
with shareholders, as appropriate, on significant matters relating to their
areas of responsibility.
Governance
99Annual Report 2022 Great Portland Estates plc
Composition, succession and evaluation
Directors’ tenure (as at 31 March 2022)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Toby Courtauld
19 yrs 11 mths
Nick Sanderson
10 yrs 8 mths
Dan Nicholson
7 mths
Richard Mully
5 yrs 5 mths
Charles Philipps
8 yrs
Mark Anderson
7 mths
Wendy Becker
5 yrs 2 mths
Nick Hampton
5 yrs 6 mths
Vicky Jarman
2 yrs 2 mths
Alison Rose
4 yrs
Emma Woods
2 mths
Executive Directors Non-Executive Directors
Board diversity and tenure
Gender
Male – 64%
Female – 36%
Age
45–50
51–56
57+
Ethnic group
1
White – 100%
Board balance
Chair
Executive Directors
Independent Non-Executive Directors
1. It is our firm intention to meet the
Parker Review target to have at least one
Director from a minority ethnic background
by 2024 at the latest. We are therefore
giving specific focus to ethnic diversity
in our ongoing Board recruitment process.
Further information can be found on
page 103.
6
3
2
4
7
3
1
7
11
P
a
r
k
e
r
R
e
v
i
e
w
Diversity
characteristics
F
T
S
E
W
o
m
e
n
L
e
a
d
e
r
s
Board composition and diversity
The diagrams below show the Board’s composition, tenure and diversity characteristics.
The biographical details of the Directors can be found on pages 84 and 85 which show the breadth of their skills
and experience, why their contribution is important to the Company’s long-term sustainable success, and their
membership of the Company’s various Committees.
Further details regarding diversity and inclusion at GPE can be found on pages 54, 55 and 103.
100 Great Portland Estates plc Annual Report 2022
In making any recommendations for Board appointments,
the Nomination Committee consults with the Chief
Executive and other members of the Board as appropriate.
During the year, Toby Courtauld was invited to attend
Nomination Committee meetings to provide the Committee
with updates on human resourcing, inclusion and diversity
activities, talent development and succession planning.
Toby Courtauld and Nick Sanderson also provided their
input into Board recruitment processes.
In making recommendations to the Board on Non-Executive
Director appointments, the Nomination Committee
specifically considers the expected time commitment of the
proposed Non-Executive Director and other commitments
they already have. Agreement of the Board is also required
before a Director may accept any additional commitments
to ensure possible conflicts of interest are identified and that
the Directors will continue to have sufficient time available
to devote to the Company. During the year, the Board has
carefully considered the appointment of Wendy Becker as a
Non-Executive Director of Oxford Nanopore Technologies plc,
which was admitted to listing on the London Stock Exchange
on 5 October 2021, and the appointment of Vicky Jarman as
a Non-Executive Director of Melrose Industries plc from 1 June
2021. The Board was satisfied that these changes would not
impact Wendy’s or Vicky’s independence and that in each
case they would continue to be able to devote appropriate
time and add significant value to their respective roles at GPE.
Non-Executive Directors are not appointed for specific terms
but, in accordance with the UK Corporate Governance Code,
are subject to annual re-election. All proposed re-elections
to the Board are formally considered by the Nomination
Committee taking account of each individual’s effectiveness
and commitment to the role.
The Nomination Committee also reviews the recommendations
of the Board evaluation process and progress against the
recommendations from the previous year.
Our process
The Nomination Committee Terms of Reference are
available on the Company website at www.gpe.co.uk/
about-us/governance.
The Nomination Committee membership generally
includes all of the Non-Executive Directors. At the start of
the financial year, the Nomination Committee comprised
the Chair of the Board, Richard Mully, and five independent
Non-Executive Directors, namely Charles Philipps, Wendy
Becker, Nick Hampton, Vicky Jarman and Alison Rose.
Mark Anderson and Emma Woods became members
of the Committee on 1 September 2021 and 1 February
2022 respectively.
Our approach
The key objectives of the Committee are to
regularly review the skills and experience of the
Board to ensure that it is the right size, structure
and composition taking into account the skills,
experience, independence, knowledge and diversity
of Directors and the future strategy of the Group.
It is the Committee’s role to consider succession
planning for the Board and senior executives below
Board level, to oversee the development of a diverse
pipeline for succession and to lead on the process
for Board appointments.
As part of its objectives, the Committee reviews and
recommends to the Board the compositions of the
Audit, Nomination and Remuneration Committees,
taking into consideration individuals’ experience,
ongoing training and development and time
commitments, and the re-election of Directors
by shareholders at the Annual General Meeting.
Nomination
Committee
Nomination Committee members
and attendance at scheduled meetings
in 2021/22
Chair
Richard Mully /
Members
Charles Philipps /
Mark Anderson /
Wendy Becker /
Nick Hampton /
Vicky Jarman /
Alison Rose /
Emma Woods /
Further details regarding Committee
memberships, meetings and attendance
can be found on page 86.
Governance
101Annual Report 2022 Great Portland Estates plc
Composition, succession and evaluation continued
Dear fellow shareholder
On behalf of the Nomination Committee, welcome to the
report of the Nomination Committee for the year ended
31 March 2022. In a busy year for the Committee, our focus
has been on Board recruitment and succession planning
and the progression of our diversity and inclusion agenda.
Board and Committee composition
There have been a number of changes to the Board during
the year as we have continued to focus on appropriate
ongoing succession of the Non-Executive Directors. As part
of this process, the Nomination Committee regularly reviews
the composition of the Board and its Committees to ensure
they have the requisite skills, experience, diversity and
knowledge in alignment with the Group’s strategy.
As explained last year, having identified the need to strengthen
the Board’s operational, customer service, technology and
data expertise in line with our strategy, the Committee
instructed executive search firm, Russell Reynolds, to support
with searches for additional Non-Executive Directors to
bring a combination of the desired skills and experience
to the Board. Russell Reynolds has no connection with the
Company or any individual Directors other than to assist
with Executive and Non-Executive succession planning
and appointment processes.
As part of the recruitment processes, the Committee
considered diverse long lists from which refined short lists of
candidates were selected for interview. Following a detailed
selection process, the Committee recommended two new
appointments. We were delighted to welcome Mark Anderson
and Emma Woods to the Board, and each of its Committees,
from 1 September 2021 and 1 February 2022 respectively.
Mark’s significant property, operational and customer service
experience and Emma’s extensive customer, digital and
marketing expertise will enable each of them to contribute
to the development and implementation of our strategy
and the long-term sustainable success of the Group.
The search for at least one additional Non-Executive Director,
to bring additional technology and data expertise and with
the aspiration of enhancing the gender and ethnic diversity
of the Board, is ongoing and we hope to announce a further
appointment shortly.
During the year, given the Company’s expected growth in
both development and flexible office activities, the Committee
also identified the need to appoint an additional Executive
Director to provide further operational firepower, oversight
and strategic support to the executive team in the areas of
property management and development. We considered the
experience, knowledge and leadership characteristics required
for this position and worked with Bohill Partners in connection
with the search. Open advertising was not used. Following the
consideration of a diverse list of candidates and an in-depth
recruitment process, the Committee made a unanimous
decision to recommend to the Board the appointment of
Dan Nicholson as Executive Director. Dan joined the Board
with effect from 6 September 2021.
As explained on page 81, Wendy Becker will be stepping down
from the Board and as Chair of the Remuneration Committee,
and Nick Hampton will be stepping down as Chair of the
Audit Committee, from the conclusion of the 2022 AGM. The
Committee has overseen the succession planning for these
positions and was pleased to recommend the appointments
of Vicky Jarman and Emma Woods as the next Chairs of the
Audit and Remuneration Committees respectively, each of
whom will bring valuable relevant experience to their roles.
Nick Hampton was also appointed to the Remuneration
Committee from 1 September 2021.
Succession planning and talent development
During the year, in addition to the Board processes described
above, we have considered the development plans and
succession planning for Executive Directors, the Executive
Committee and senior leaders. As part of this process, the
Committee considers the depth and quality of the succession
pipeline, the skills and capabilities required for the future
strategic needs of the business, retention and succession
planning risks, personal development needs and the
strengthening of diversity and inclusion.
Recognising and developing our top talent is key to ensuring
that we have a healthy and diverse pipeline of current and
potential future leaders and this remains a key area of focus
for the Board and Committee. We have progressed our
Non-Executive Director mentoring programme for selected
members of the GPE team and continue to oversee our wider
talent development programme. This includes our Executive
Committee Rotating Seats programme, whereby two
members of senior management join the Executive Committee
on a six-month rotating basis, helping individuals to develop
their skills and exposure whilst supporting the development
of a diverse talent pipeline.
In a busy year for the Committee, our focus
has been on Board recruitment and succession
planning and the progression of our diversity
and inclusion agenda.”
Richard Mully Chair of the Nomination Committee
102 Great Portland Estates plc Annual Report 2022
To support and enhance the delivery of our market-leading,
Customer first approach, we were delighted to endorse
several senior management role changes and promotions
in the year. This included: the appointment of Steven Mew
to Customer Experience and Flex Director with Dan Nicholson
assuming leadership of the Portfolio Management team and
overall responsibility for Development; the promotion of Simon
Rowley to Director of Office Leasing and Flex; the promotion
of Anisha Patel to Director of Marketing; and the promotion
of Charlie Turrell to Head of Financial Planning & Analysis.
We also strengthened our senior team through the external
appointment of Carrie Heiss as HR Director and a member
of the Executive Committee to drive GPE’s People Strategy
and help ensure that GPE has the right skills, capabilities,
diversity and culture to deliver our evolving strategy.
In addition, Darren Lennark, our General Counsel & Company
Secretary, was appointed to the Executive Committee
with effect from 1 April 2022.
Our approach to diversity and inclusion
We recognise the strategic importance of a diverse Board
and workforce which is representative of our stakeholders
and which provides different perspectives to support the
development and delivery of our strategy.
Under our Diversity Policy, we expect our search consultants
to ensure, where possible, a gender-balanced list of potential
candidates, in line with our overall intention to strive for
improved gender balance on the Board. This approach to
recruitment is mirrored across the business. The benefits of
broader diversity characteristics such as age, ethnicity, skills,
experience and educational and professional background
also continue to be an active consideration in all recruitment,
as well as in our talent development programme.
From a gender perspective, the Committee supports the
new recommendations set out in the FTSE Women Leaders
Review published in February 2022. As at the date of this
report, 36% of the Board are female. Although Wendy
Becker will be stepping down from the Board in July, we
are giving specific focus in our ongoing near-term Board
recruitment to the importance of enhancing both the gender
and ethnic diversity of the Board. We hope to announce an
appointment shortly.
Since March 2021, we have increased the gender diversity of
our Executive Committee through two female appointments.
There are now eight men and two women on the Executive
Committee, or nine men and three women including
participants in our Executive Committee Rotating Seats
programme. As at 1 May 2022, women represented 36% of
the population comprising the Executive Committee and
their direct reports and 36% of the Senior Management Team
below the Executive Committee. Details regarding GPE’s
gender diversity can be found on page 55. We are pleased
our progress on gender diversity was recognised in the
FTSE Women Leaders Review but recognise there is much
work still to do.
The Board does not currently have any Directors from
an ethnic minority background and we are therefore giving
specific focus to ethnic diversity in ongoing Board recruitment.
It is our firm intention to meet the Parker Review target to
have at least one Director from a minority ethnic background
by 2024 at the latest. More broadly, the development
of diverse top talent will play a key role in GPE’s diversity
and inclusion journey and ethnic diversity is an important
part of this discussion.
Diversity and inclusion remain a key priority and the Board
and its Committees continue to drive and oversee our progress
in these areas under our new People Plan. To inject further
pace, as part of their annual bonus objectives for 2022/23,
each Executive Committee member has been set specific and
consistent objectives to actively support GPE’s ambitions for
diversity and inclusion. Executive Committee members will
also be participating in an executive leadership development
programme aimed at improving their inclusive leadership skills.
Further details regarding our diversity and inclusion initiatives,
and our new People Plan, can be found on pages 54 and 55.
Committee and Director effectiveness review
This year, the Committee oversaw an internal Board and
Committee effectiveness review. The review concluded that
the Board and its Committees, including the Nomination
Committee, continue to operate efficiently and effectively.
Details of the review and its findings can be found on pages
104 and 105.
All proposed elections and re-elections to the Board are
formally considered by the Nomination Committee, taking
account of each individual’s continued effectiveness and
commitment to the role. Following this review, I can confirm
that each of the Non-Executive Directors is considered
effective in their roles and both independent of the Executive
Management and free from any business or other relationship
which could materially interfere with their exercising of
independent judgement. The Senior Independent Director
also met with the Directors to appraise my own performance.
Richard Mully
Chair of the Nomination Committee
19 May 2022
Governance
103Annual Report 2022 Great Portland Estates plc
Composition, succession and evaluation continued
Our 2021/22 Board evaluation process
In accordance with the recommendations of the Code, we undertake a review of the effectiveness of the Board’s performance
and that of its Committees and Directors every year, with an external evaluation held at least every three years. We are planning
for our next external review to be in 2022/23. Our progress against the actions identified through the 2020/21 internal review
is set out below:
An internal Board and Committee effectiveness review was
undertaken in 2021/22 which was led by Charles Philipps,
our Senior Independent Director, with the support of
the General Counsel & Company Secretary. The process,
which was agreed by the Nomination Committee, involved
completion of an online questionnaire followed by meetings
with Directors, a detailed report of findings and discussion
at the January 2022 Board meeting.
The aim of the review was to assess the effectiveness of
the Board, its Committees and individual Directors in order
to identify any actions to improve how Directors fulfil their
duties and become a more effective Board. The review
covered the following key themes:
– the Board’s role, composition and operation;
– the Board’s protocols and behaviours and how effectively
Directors work together to achieve the Board’s objectives;
– the performance of the Board and its Committees;
– progress against the key actions arising from the 2020/21
evaluation; and
– focused questions on the Board’s strategic oversight,
stakeholder feedback, succession planning and diversity
and inclusion.
Progress against 2020/21 Board evaluation actions for 2021/22
Actions Progress
To broaden the Board’s
operational, customer service
and related technology,
digital and data expertise
– Mark Anderson was appointed to the Board on 1 September 2021 bringing
significant operational and customer service expertise. Emma Woods, who has
extensive operational, customer service, digital and marketing experience,
was appointed to the Board on 1 February 2022.
– A search is underway for an additional Non-Executive Director to increase the
Board’s technology and data skills.
Allocating additional Board
time to strategy development
and implementation in view
of accelerated trends in a
fast-evolving market
– Additional time allocated at scheduled Board meetings to discuss strategy
development and implementation, including the growth of our flexible office
offer alongside our HQ repositioning business.
Continuing to increase the Board’s
understanding of developing
customer and supplier views in
a changing market to further
support strategy development
and decision making
– Regular updates on customer feedback, customer survey results and market trends.
This feedback has, in particular, informed our Customer first approach, the
development of our Flex strategy and our sustainability ambitions.
– Customer first vision, strategy and implementation plan under development.
– Updates received on supplier views in key areas including sustainability, social
impact, the flexible space customer journey, supply chain disruption and inflation.
Continued focus by the
Nomination Committee and
Board on talent management,
succession planning and Board
and Executive Committee
diversity
– Presentations received from the Chief Executive and HR Director on senior
management talent development and succession planning.
– New People Plan adopted.
– Non-Executive Director, and wider mentoring programmes in place.
– Appointment of Carrie Heiss to Executive Committee in September 2021.
Gender and ethnic diversity a key consideration in ongoing Board recruitment.
Audit and Remuneration Committee Chair successors identified.
Further assessment of evolving
technology in real estate and
construction to identify those
areas with the greatest potential
to disrupt GPE’s business model,
together with the potential risks
and opportunities
– Board session held in April 2021 with a panel of external speakers to consider
the future of work and the role of technology.
– External guest speaker invited to attend September Board dinner to discuss
property technology risks and opportunities.
– Presentations to the Board by GPE’s Director of Innovation and Board adoption
of updated Innovation Strategy.
104 Great Portland Estates plc Annual Report 2022
2021
2022
The process also considered the effectiveness of individual
Directors and one-to-one performance feedback was
given by the Senior Independent Director to the Chair and
by the Chair to the other Directors at the end of the process.
The review concluded that the Board, its Committees and
individual Directors continue to operate effectively.
Some of the key strengths identified included:
– an open and inclusive Board culture with a continued
emphasis on collaboration and transparency;
– high levels of engagement and commitment from
all Directors and a strong approach to strategic
development, with significant progress having been
made in the year to advance GPE’s strategy;
– a strong and diverse range of depth and talent providing
valuable insights and perspectives, further supported
by recent additions to the Board;
– constructive discussion with good debate and an
appropriate balance of challenge and support; and
– well-managed Board and Committee meetings with
effective leadership from their respective Chairs and
a clear focus on priorities.
The review identified some recommendations and
opportunities and the key actions for 2022/23 are as follows:
What we did in 2021/22
Nomination Committee
– The Committee discussed
Executive Committee talent
planning and development.
– The Committee discussed
GPE’s diversity and
inclusion progress.
– Richard Mully provided
an update on the search
process for additional
Non-Executive Directors.
– The Committee discussed
and approved the search
process for an additional
Executive Director.
Nomination Committee
– Richard Mully provided the
Committee with an update
on the additional Non-
Executive Director search.
– The Committee discussed
the findings from the
2021/22 Board and Board
Committee evaluation.
– The Committee reviewed
Board Committee
memberships and
Board training.
– The Committee received an
update on governance and
regulatory requirements,
including in relation
to diversity.
– The Committee supported
proposed changes to
GPE’s organisational design
and senior role changes
to enhance our Customer
first approach.
– The Committee approved
changes to its Terms
of Reference.
Board meeting
– The Board and Committee
memberships were
approved.
Nomination Committee
– The Committee discussed
senior management talent
planning and development
and the development of
a diverse pipeline.
– The Committee discussed
GPE’s diversity and inclusion
agenda and received
an update on evolving
requirements.
– Richard Mully provided
an update on the
Non-Executive Director
search process and Board
succession planning.
Nomination Committee
– The Committee
recommended the
appointment of Emma
Woods as a Non-Executive
Director.
– The Committee discussed
the search for an additional
Non-Executive Director
with technology and data
experience and to enhance
Board diversity.
– The Committee discussed
the findings from a senior
management talent
development, retention
and succession planning
review and Executive Director
succession planning.
Board
– The Board approved the
appointment of Emma
Woods as a Non-Executive
Director.
– The Board considered
the findings from the
2021/22 Board and Board
Committee evaluation.
Nomination Committee
– The Committee and
Board recommended the
appointment of (i) Mark
Anderson as a Non-Executive
Director; (ii) Dan Nicholson
as an Executive Director; (iii)
Carrie Heiss as HR Director;
(iv) Nick Hampton to the
Remuneration Committee;
and (v) Vicky Jarman as the
next Audit Committee Chair
from the end of the 2022 AGM.
Nomination Committee
– The Committee discussed
and refined the additional
Non-Executive Director
search criteria with a focus
on Board diversity.
– The Committee reviewed the
status of recommendations
from the 2020/21 Board
evaluation.
– The Committee reviewed
and approved the process
for the 2021/22 Board
and Board Committee
evaluation.
Recommendations from the
2021/22 Board evaluation
1
Closer oversight of strategic
implementation and ensuring that
GPE has the right people and skills
to deliver on its ambitions.
2
Broadening the Board’s skillsets in
line with GPE’s technology, data and
customer objectives.
3
Continuing to enhance diversity and
inclusion across the Board, Executive
Committee and wider organisation.
4
Increasing Board engagement on
technology and innovation to further
develop its understanding of the
challenges and opportunities.
April May
July
September
November
January
February
Governance
105Annual Report 2022 Great Portland Estates plc
Audit, risks and internal controls
Together, the Audit Committee and the Board are responsible
for ensuring the Group has an effective internal control and
risk management system and that the Annual Report provides
a fair reflection of the Group’s activities during the year.
Internal controls and ongoing risk management
The Board is responsible for maintaining and monitoring
the Group’s system of internal control and, at least annually,
reviewing its effectiveness.
Such a system can only provide reasonable, and not absolute,
assurance against material misstatement or loss, as it is
designed to manage rather than eliminate the risk of failure
to achieve business objectives.
The identification and management of risks and opportunities
is part of the GPE mindset, underpinned by evolving processes
and procedures in place for identifying, evaluating and
managing the principal and emerging risks faced by the
Group. These processes and procedures have been in place
for the year under review and up to the date of this report, are
regularly reviewed by the Board and accord with the Financial
Reporting Council’s Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting.
Key features of our system of internal control include:
– a comprehensive system of financial reporting and
business planning;
– a defined schedule of matters reserved for Board decision,
which is reviewed by the Board at least annually;
– an organisational structure with clearly defined levels
of authority and division of responsibilities;
– formal documentation of procedures;
– the close involvement of the Executive Directors and the other
Executive Committee members in day-to-day operations,
including regular meetings with senior managers to review
operational activities and risk management systems;
– Executive Committee reporting on control systems to the
Audit Committee and Board, including to annually confirm
its view on whether GPE’s internal controls, and broader
control environment, are appropriate and operating
effectively. Again, in 2021/22, the Audit Committee
considered the impact of COVID-19 on GPE’s internal
controls, risk profile and risk management systems;
– regular Board review of Group strategy, including forecasts
of the Group’s future performance and progress on the
Group’s development projects;
– formal sign-off on the Group’s Ethics, Gifts and Hospitality
and Whistleblowing Policies by all employees annually.
From 2022/23, this will also include sign-off on our new
Anti-Fraud, Bribery & Corruption Policy which was
adopted in March 2022; and
– review by the Audit Committee of internal audit reports
and reports from the external auditor.
Twice a year, the Audit Committee carries out, on behalf
of the Board, a review of the Group’s risk management
framework, its principal and emerging risks, key controls and
their oversight during the year. The Group’s systems of risk
management and internal controls involves the identification
of business and financial market risks including social,
ethical and environmental issues which may impact on the
Group’s objectives, together with the controls and reporting
procedures designed to minimise those risks.
As part of its review, the Audit Committee formally considers
the key controls forming the Group’s system of internal control
and whether these are considered to be operating effectively.
The Committee considers a management report, the work of
internal audit, as described on page 110, and feedback from
the external auditor. Key control observations, exceptions
and management actions are reviewed and discussed and
identified risk areas are considered for inclusion in the internal
audit plan where appropriate. Once complete, the Audit
Committee’s review of the Group’s risks and internal controls is
considered by the full Board. No significant control weaknesses
or failures were identified as part of this year’s internal controls
effectiveness review. During the year, the Audit Committee
oversaw the development of a new fraud risk assessment
process to more formally document and assess GPE’s key fraud
risks and controls, with the aim of enhancing the efficiency
of GPE’s internal control framework. This process will continue
to be developed as the business evolves.
The Audit Committee and Board have also continued
to oversee the implementation and development of the
Company’s risk management framework and processes
to ensure these remain fit for purpose.
During the year, the Board and the Audit Committee have
continued to regularly review and monitor the risks, potential
impacts and controls associated with COVID-19, the UK
government’s progress in resolving its international trading
relationships after its exit from the EU, and more recently
geopolitical tensions arising from Russia’s invasion of Ukraine,
including the impact of inflation and supply chain pressures.
This has included a review of the impacts on GPE’s operations,
development delivery and costs, valuations, financial forecasts
and business plans. The Group’s business plans continue to
be prepared under a variety of market scenarios to reflect
a number of potential outcomes.
While the immediate short-term impacts of COVID-19
appear to have subsided, the potential threat and disruption
of COVID-19 on the business and wider economy remain
uncertain. ‘Pandemic’ therefore remains a principal risk for
GPE following its addition to the principal risk register in 2020.
We continue to monitor potential longer term structural
changes in working and retail practices and the level and
nature of demand for space in central London.
The Board and the Audit Committee have remained focused
on climate change and decarbonisation risks, the steps
being taken by GPE to mitigate these risks, including the
implementation of our New Zero Carbon Roadmap and
Social Impact Strategy and the ongoing development of
our Climate Resilience Strategy, and the potential impact
of these risks on our business and operations.
The Group’s principal risks relating to ‘Pandemic’, ‘Climate
change and decarbonisation’, ‘Macro environment and
London attractiveness’, and the ‘Impact of property market
dislocation on financial leverage and banking covenants’ have
been identified as the risks which the Board believes could
have the greatest potential impact on the Group’s viability.
The Group’s viability statement can be found on page 78.
The Group’s principal risks and the processes in place to manage
those risks are described in more detail on pages 64 to 77.
106 Great Portland Estates plc Annual Report 2022
Audit
Committee
Audit Committee members and
attendance at scheduled meetings
in 2021/22
Chair
Nick Hampton /
Members
Charles Philipps /
Mark Anderson /
Vicky Jarman /
Alison Rose /
Emma Woods /
Further details regarding Committee
memberships, meetings and attendance
can be found on page 86.
Our process
The Audit Committee Terms of Reference are available on the
Company website at www.gpe.co.uk/about-us/governance.
At the beginning of the financial year, the Committee
comprised four independent Non-Executive Directors, namely
Nick Hampton as Chair, Charles Philipps, Vicky Jarman and
Alison Rose. Mark Anderson and Emma Woods joined the
Committee with effect from their appointments to the Board
on 1 September 2021 and 1 February 2022 respectively. Nick
Hampton will step down, and will be succeeded by Vicky Jarman,
as Chair of the Audit Committee from the conclusion of
the 2022 AGM. Nick Hampton will remain a member of the
Audit Committee.
The biographies of the Committee members are set
out on pages 84 and 85. Nick Hampton, Vicky Jarman,
Charles Philipps and Alison Rose have recent and relevant
financial experience and are considered suitably competent
in accounting and/or auditing. The Committee, as a whole,
has competence relevant to the real estate sector.
The Audit Committee provides a forum for review of the
Group’s financial external reporting, including its accounting
policies. In respect of the Group’s half-year and year-end
results, this includes discussions with the Group’s external
valuer, CBRE, on the valuation process and conditions in
London’s real estate markets and with the Group’s external
auditor, Deloitte LLP (Deloitte), on any accounting or audit
matters. The Committee reviews the Company’s Task Force
on Climate-related Financial Disclosures in the Annual Report
and discusses sustainability assurance activities more broadly
with Deloitte. The Audit Committee also reviews the adequacy
and effectiveness of the Group’s internal financial controls
and internal control and risk management systems, and is
responsible for the selection and review of the effectiveness
of the internal and external auditors.
The Chair of the Board, Richard Mully, attends the meetings
reviewing the half-year and year-end results and has a
standing invitation to attend any other meetings as
appropriate. The Chief Executive, Chief Financial & Operating
Officer, Executive Director, Director of Financial Reporting
and Investor Relations, other members of senior management
and representatives from the external auditor and internal
auditor also attend Committee meetings as appropriate.
The Committee typically meets four times a year, with the
meetings aligned with our financial reporting timetable.
Our approach
The key objectives for the Audit Committee are to
review and report to the Board and shareholders on
the Group’s financial reporting, internal control and
risk management systems, and on the independence
and effectiveness of the auditor.
Governance
107Annual Report 2022 Great Portland Estates plc
The Committee has continued to play a vital role in
providing comfort to the Board on the integrity of
the Group’s processes and procedures in relation to
financial reporting, internal control and risk management.”
Nick Hampton Chair of the Audit Committee
Valuation of the portfolio, accounting
considerations and key areas of judgement
As expected of a listed property REIT, the most significant
financial judgement is GPE’s property valuation which is
central to the Group’s performance and net asset value and
is inherently subjective. A key responsibility of the Committee
is, therefore, to satisfy ourselves that the valuation process
in relation to the Group’s property portfolio has been carried
out appropriately. CBRE was reappointed as GPE’s valuer
for a further three-year term in April 2021. Following the
comprehensive process which is outlined in more detail below,
as a Committee we are satisfied that the valuation process
is sufficiently robust.
Given the impact of the pandemic on customers’ ability
to meet their rental commitments, particularly in the retail,
hospitality and leisure sectors, another key area that
continued to be considered in the year was the process
followed and the accounting for the non-payment of rents
and rental concessions under IFRS 16 ‘Leases’ and expected
credit loss provisioning under IFRS 9 ‘Financial Instruments’.
At 31 March 2022, an expected credit loss of £4.0 million,
including our share of our joint ventures, has been provided
for in the Group’s accounts. This is significantly lower than
the £9.6 million provision for uncollected rents in the prior
year and, as a result, expected credit loss provisioning
is no longer considered to be a key source of estimation
uncertainty at this time.
During the year, the Committee considered a number
of further items that impacted on the presentation of the
Group’s financial statements, including:
– the methodologies used to value both our Flex space and
our retail leases where the rent includes a turnover element
which is dependent upon the performance of the store;
– the application of IFRS 15 ‘Revenue from Contracts with
Customers’ to the service revenue generated from our
Fully Managed spaces; and
– the adoption of EPRA’s new Loan to Value metric in its
Best Practice Recommendations. With the additional
inclusion of net current payables and receivables,
our EPRA LTV is marginally higher (1.4%) than when
using our historical methodology.
The Committee has also considered the sustainability and
TCFD disclosures in the Annual Report and the introduction
of additional sustainability assurance activities to
support disclosures.
Dear fellow shareholder
On behalf of the Audit Committee, I am pleased to present
my report as Chair of the Committee for the year ended
31 March 2022. After over five years in the role, this will be my
final report as Chair of the Committee and I will be succeeded
by Vicky Jarman, an experienced Audit Committee Chair,
with effect from the conclusion of the 2022 AGM. This follows
a period of transition and has been timed to coincide with
the recent appointment of a new internal auditor and the
upcoming appointment of a new external auditor. I wish
Vicky well in her new role as Chair of the Audit Committee
and I look forward to remaining a member of the Committee
and providing my continued input and support.
During a year which was again impacted by COVID-19,
the Committee has continued to play a vital role in providing
comfort to the Board on the integrity of the Group’s processes
and procedures in relation to financial reporting, internal
control and risk management.
The report is intended to provide insight into the Committee’s
activities in the year and sets out how we have performed
against our key objectives.
As outlined on pages 107 and 113, the Committee meets
four times a year to:
– plan the external audit;
– agree the internal audit plan;
– identify key accounting matters and areas of judgement
as early as possible;
– review reports from the external and internal auditors
and valuer;
– consider how risks and internal controls have operated
in the preceding six months in respect of the half-year
and year-end results;
– monitor the integrity of the Group’s financial
reporting and consider any significant judgements
by management; and
– review the independence and effectiveness of the
external and internal auditors.
The Committee spent additional time this year leading
the process to appoint a new internal auditor and initiating
an external audit tender process to appoint a new external
auditor for the 2023/24 financial year.
Audit, risks and internal controls continued
108 Great Portland Estates plc Annual Report 2022
Accounting and key areas of judgement
Significant matter Action taken
Valuation of the Group’s portfolio
The valuation of the Group’s property
portfolio is a key determinant of
the Group’s net asset value as well
as indirectly impacting executive
and employee remuneration.
The valuation is conducted externally
by independent valuers, however,
the nature of the valuation process
is inherently subjective due to
the assumptions made on market
comparable yields, estimated rental
values, void periods and the costs
to complete development projects.
The Audit Committee, together with the Chair of the Board, meets with the valuer,
the Executive Directors and senior management involved in the valuation process
along with the external auditor in November and May to discuss the valuation included
within the half-year and year-end financial statements. This review includes the
valuation process undertaken, changes in market conditions, including the receding
impact of COVID-19, recent transactions in the market and how these have impacted
our portfolio, the valuation of individual buildings and the valuer’s expectations in
relation to future rental growth and yield movement. The Committee asks the valuer
to highlight significant judgements or disagreements with management during the
valuation process.
The external auditor, Deloitte, using its real estate experts, separately meets the valuer
and provides the Audit Committee with a summary of its work as part of its report on
the half-year and year-end results.
As a result of these reviews, the Committee concluded that the valuation had been
carried out appropriately and independently and was suitable for inclusion in the
Group’s accounts.
External audit process
A significant element of the 2019/20 and 2020/21 external
audit processes were performed remotely as a consequence
of the COVID-19 pandemic. Notwithstanding this, the
Committee, management and Deloitte have ensured the
delivery of effective external audits with minimal disruption,
and a number of planning and communication enhancements
have been made to further improve the audit process. Deloitte
was once again able to perform the majority of the 2021/22
year-end audit in person at GPE’s offices.
External audit tender process
During the year, the Committee commenced the process to
retender the external audit. Deloitte has been GPE’s auditor
since 2003 and, in view of this length of service, was not
invited or permitted to participate under applicable FRC
rules. A selection committee will meet in the second half of
2022/23 with a view to selecting the preferred audit firm to
be recommended to the Board and then put to a shareholder
vote at the 2023 AGM. The firm to be appointed will shadow
the 2022/23 half-year process and the 31 March 2023 year-end
audit, which will be Deloitte’s final audit. The newly appointed
firm will, subject to shareholder approval at the 2023 AGM,
be GPE’s auditor for the 2023/24 financial year.
Fair, balanced and understandable
The Committee considered this Annual Report and Financial
Statements 2022, taken as a whole, and concluded that the
disclosures, as well as the process and controls underlying
its production, were appropriate and recommended to
the Board that the Annual Report and Financial Statements
2022 is fair, balanced and understandable while providing
the necessary information to assess the Company’s position
and performance, business model and strategy.
Viability and going concern statements
The Committee considered the viability and going concern
statements and their underlying assumptions. This included
management’s work on assessing the potential risks
to the business and the impact of the macro-economic
environment on London’s attractiveness (including the risk
of recession driven by factors including the UK’s international
trade relationships, supply chain disruption, lower growth
forecasts and geopolitical tensions) and climate change
and decarbonisation risks, and the appropriateness of the
Company’s choice of a three-year viability assessment
period. Following this review, the Committee was satisfied
that management had conducted robust viability and going
concern assessments and recommended the approval of
the viability and going concern statements to the Board.
Internal controls and risk management
The Audit Committee’s role in supporting the Board’s
oversight and review of the Group’s principal and emerging
risks, internal controls and risk management processes is
covered on pages 64 to 67 and page 106.
The Committee has discussed the proposals set out in the
BEIS white paper on ‘Restoring trust in audit and corporate
governance’. The Committee continues to consider and
monitor developments in the areas of internal controls
assurance and risk management.
Governance
109Annual Report 2022 Great Portland Estates plc
Audit, risks and internal controls continued
Internal audit
Our outsourced internal audit function provides independent
assurance as to the adequacy and effectiveness of the
Company’s internal controls and risk management systems,
and reports on its findings to the Committee. As discussed
in last year’s Annual Report, and in accordance with the
FRC’s Revised Ethical Standard 2019, PwC stepped down
as the Group’s internal auditor to allow it to participate in
our external audit tender process, which is now underway.
Following a detailed internal audit tender process, the
Committee was pleased to appoint Grant Thornton as the
Group’s new internal auditor from January 2022.
In November 2021, the Committee discussed a PwC internal
audit review of core financial processes, including People and
Payroll processes, ‘UK SOx’ readiness, fraud risk management
controls and processes and a review of employee wellbeing
during the COVID-19 period. The reviews did not identify
any major causes for concern and concluded that, overall,
financial controls were robustly designed and operating
effectively. Like many companies, GPE is progressing a number
of actions towards achieving compliance with a ‘UK SOx’
regime which may develop in response to BEIS proposals and
we continue to monitor developments in this area. In response
to PwC’s findings, steps have also been taken to strengthen
GPE’s risk management framework with the adoption of
a dedicated Anti-Fraud, Bribery & Corruption Policy and the
further development of a fraud risk assessment to formally
assess GPE’s key fraud risks and controls.
The Committee receives regular updates on the
implementation of agreed actions arising from internal
audit findings. In November 2021, the Committee discussed
an update from PwC on the status of actions arising from
its prior year review of GPE’s cyber security and the results
of a red team penetration testing exercise. The Committee
was satisfied with the progress being made. Six-monthly
reports on IT general controls and cyber governance are
also presented to the Board by the Head of IT.
At the Audit Committee meeting in May 2022, the Committee
reviewed and agreed with Grant Thornton the internal
audit plan for 2022/23, having regard to the Company’s
risk management framework. It was concluded that, for
the current financial year, Grant Thornton should carry
out an internal audit of:
– risk management and assurance mapping;
– development risk;
– Flex space and technology; and
– cyber security.
The Committee believes that the process for determining
the internal audit plan is appropriate and effective with
scope for the Committee to react to events, new information
and situations which become known during the year and to
include them as necessary. In light of the COVID-19 pandemic
and ongoing geopolitical tensions, the internal audit plan
for 2022/23 will continue to be reviewed and adapted, if
appropriate, to meet the changing needs of the business.
Supplier payment practices
The Committee reviews the Group’s supplier payment
practices twice per year along with opportunities to further
enhance processes. For the period to 31 March 2022, the
average supplier payment period of the Group’s largest
subsidiary was 30 days (2021: 26 days).
Our Anti-Fraud, Bribery & Corruption
and Whistleblowing Policies
Each year, as part of the year-end planning meeting, the
Committee considers the Group’s Ethics and Whistleblowing
Policies, both of which address the Company’s policies on
bribery and fraud, for reporting to the Board. The Board
has a zero tolerance for bribery and corruption of any kind.
Annually, all employees are required to confirm their
compliance with the Group’s Anti-Fraud, Bribery & Corruption,
Ethics, Gifts and Hospitality and Whistleblowing Policies as
outlined on page 95 and any non-compliance is escalated to
the Committee as appropriate. No matters were escalated
to the Committee in the year.
The Company’s whistleblowing processes include a confidential
hotline, operated by an independent third party, through which
employees can anonymously raise matters of concern relating
to suspected wrongdoings or dangers at work. Any matters
reported are investigated by the General Counsel & Company
Secretary or the Senior Independent Director. During the year,
there were no whistleblowing incidents reported.
Auditor reappointment
Deloitte was appointed as external auditor to Great
Portland Estates plc in 2003 and the lead audit partner,
Judith Tacon, took responsibility for the audit in June 2018.
Auditor effectiveness is reviewed every year. A competitive
tender process is currently being undertaken to coincide
with the end of Judith Tacon’s five-year tenure as audit
partner. Deloitte’s final audit will be in respect of the
2022/23 financial year.
Based on the Committee’s recommendation, the Board
is proposing that Deloitte be reappointed at this year’s
AGM and will notify the public via a London Stock Exchange
announcement once the audit tender process has concluded
and it has made its decision on which firm to appoint from
the 2023/24 financial year.
Committee effectiveness
I believe that the quality of discussion and level of challenge
by the Committee with management, the internal and external
audit teams and the valuer, together with the timeliness and
quality of papers received by the Committee, ensures the
Committee is able to perform its role effectively. The formal
review of the Committee’s effectiveness was covered as
part of this year’s internal Board and Committee evaluation
process and I am pleased that the review confirmed that the
Committee continues to operate effectively. Further details
on the process and its broader findings can be found on
pages 104 and 105.
Nick Hampton
Chair of the Audit Committee
19 May 2022
110
Great Portland Estates plc Annual Report 2022
The external audit and review
of its effectiveness
The Audit Committee advises the Board on the appointment
of the external auditor, negotiates and agrees its remuneration
for audit and non-audit work, reviews its effectiveness,
independence and objectivity and discusses the nature,
scope and results of the audit with the external auditor. As
part of the review of the effectiveness of the external audit,
a formal evaluation incorporating views from the Committee
and relevant members of management is considered by
the Committee. Feedback from the review undertaken in
September 2021 was provided to Deloitte as part of the
annual planning meeting.
Areas covered by the review included:
– the calibre of the external audit firm, Deloitte –
including reputation, coverage and industry presence;
– quality controls – including review processes, partner
oversight, reports on Deloitte generally from the Audit
Quality Review Team (AQRT) and regulators and use
of specialists;
– the audit team – covering quality of individuals, knowledge,
resources, partner involvement, team rotation, the audit
scope including planning and execution, scope adequacy
and specialist areas;
– audit fee – reasonableness and scope changes;
– audit communications and effectiveness – planning,
new developments and regulations, approach to
critical accounting policies, issues and risks, quality
of processes, timely resolution of issues, freedom of
communication with the Audit Committee and feedback
on management performance;
– governance and independence – internal governance
arrangements, lines of communication with the Audit
Committee, integrity of the audit team, Audit Committee
confidence in the audit team and transparency;
– ethical standards – including conflicts of interest;
– non-audit work and partner rotation; and
– potential impairment of independence by non-audit
fee income.
Overall, the Committee agreed that Deloitte remained both
effective and efficient, with strong and open communications,
appropriate challenge and judgement and a solid understanding
of the Company, its industry and commercial risks. It was
felt that Deloitte had performed a smooth and effective
2021/22 audit.
The Committee also considered the effectiveness of the
Group’s management during the external audit process in
relation to the timely identification and resolution of areas
of accounting judgement, as well as the timely provision of
the draft results to Deloitte and the Committee for review.
Feedback was also sought from Deloitte on the conduct
and responsiveness of members of the Finance team
which confirmed that there had remained a good level
of interaction and communication between the GPE team
and Deloitte.
The Committee requested that Deloitte continue to provide
feedback on how the Company was responding to governance
requirements and, in February 2022, the Deloitte Governance
Team provided an in-depth update on recent corporate
governance developments and their impact on the Company.
Following a tender process, Deloitte has been the Group’s
auditor since 2003. It is a requirement that the audit partner
responsible for the Group and subsidiary audits is rotated
every five years. Under the Company’s interpretation of
the transitional arrangements for mandatory audit rotation,
the Company will be required to change external auditor
for the financial year ended 31 March 2024, to coincide with
the end of Judith Tacon’s five-year tenure as audit partner.
The Committee believes that the relationship with the
external auditor is effective and remains satisfied with
Deloitte’s independence and believes it to be in the best
interests of shareholders to align the external auditor
rotation with the expiry of the current audit partner’s tenure.
The Committee has, therefore, recommended to the Board
that Deloitte be reappointed as auditor at the 2022 Annual
General Meeting. There are no contractual obligations
restricting the Company’s choice of external auditor.
During the year, the Committee initiated a competitive
tender process to transition to a new external auditor for
2023/24. This process is expected to conclude within the
first half of 2022/23, and an announcement regarding the
outcome of the process will be made at the appropriate time.
The Company has complied during the year ended 31 March
2022, and up to the date of this report, with the provisions
of the Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes
and Audit Committee Responsibilities) Order 2014.
Non-audit services
The external auditor, Deloitte, is responsible for the
annual statutory audit and also provides certain other
services which the Audit Committee believes Deloitte is
best placed to undertake due to its position as auditor.
These arrangements are governed by the Group’s policy
for provision of non-audit services by the external
auditor which is available on the Company’s website
at www.gpe.co.uk/investors/governance. The policy,
which is reviewed annually, reflects the FRC’s Revised
Ethical Standard that came into force on 15 March 2020.
The purpose of this policy is to ensure that auditor
independence and objectivity are maintained and under
the policy, prior approval is required by the Committee for
any permitted non-statutory assignments over £50,000,
or where such an assignment would take the cumulative
total of non-audit fees paid to the external auditor over
50% of that year’s audit fees. The appointment of Deloitte
to undertake any non-audit services also requires the prior
approval of the Chief Financial & Operating Officer and,
importantly, he is required to consider whether it is in the
interests of the Company that the services are provided
by Deloitte, rather than another supplier.
Governance
111Annual Report 2022 Great Portland Estates plc
Audit, risks and internal controls continued
The policy also applies a fee cap on permitted non-audit
services whereby such fees in any financial year must not
exceed 70% of the average statutory audit fee for the prior
three consecutive financial years. This fee cap has also been
monitored for those firms that have put themselves forward for
the external audit tender process that is currently underway.
During the year, activities undertaken by Deloitte for the
Group outside of the main audit included:
– the interim review;
– reporting on the income cover in connection with the
debenture trust deed compliance certificate; and
– assurance of 2021/22 sustainability and energy
consumption data.
In each case, Deloitte was considered the most appropriate
service provider due to its position as auditor and given
its detailed knowledge and understanding of our business
and industry.
Payments made by the Group for audit and non-audit fees for
the year are disclosed on page 147. The Group’s audit fees are
presented to, discussed and approved by the Audit Committee
at its February year-end planning meeting. In addition, audit
and non-audit fees paid to Deloitte in respect of joint ventures
totalled £87,300 (GPE share: £43,700) (2021: £82,100) and £nil
(2021: £nil) respectively. The non-audit fees for the year ended
31 March 2022 as a percentage of the prior three-year average
audit fees are 39%, as set out in the table below. The year
on year increase primarily arose from Deloitte undertaking
additional assurance work on our sustainability and energy
consumption data.
Audit and non-audit fees
2022
£000
2021
£000
2020
£000
Audit fees
Non-audit fees including
the interim review
Ratio of non-audit fees
to audit fees % % %
Audit fees of joint ventures
(GPE share)
In addition to ensuring compliance with the Group’s policy
in respect of non-audit services, the Committee also receives
confirmation from Deloitte that it remains independent
and has maintained internal safeguards to ensure
its objectivity.
Internal audit
An Internal Audit Charter approved by the Board governs
the internal audit remit and provides the framework for the
conduct of the internal audit function, which was outsourced
to PwC and, from January 2022, Grant Thornton, as explained
above. The Committee approved an updated Internal Audit
Charter in February 2022, which reflects market practice and
recommendations in the Internal Audit Code published by
the Chartered Institute of Internal Auditors in 2020.
The Committee reviews and approves the internal audit plan
annually which is closely aligned to the review by management
and the Committee of the Group’s risk management
framework. In addition, the Committee Chair meets with
the internal auditor separately to the Committee to discuss
planned internal audit activities and the results of internal
audit reviews.
The Committee meets annually with the internal auditor
without management present to discuss the effectiveness
of the internal audit function, and also to seek feedback
from the internal auditor on the conduct of members of the
GPE team during the internal audit process. The external
audit partner also meets separately with the internal
auditor at least annually.
The Committee would have usually conducted an annual
formal assessment of the effectiveness of internal audit in
early 2022. Given Grant Thornton’s recent appointment in
January 2022, the next formal assessment will be undertaken
in early 2023 when Grant Thornton will have been in situ for
a year.
Where it is proposed to appoint Grant Thornton in any advisory
role, careful consideration must first be given to any potential
conflict with its internal audit role. The Audit Committee will
also specifically consider Grant Thornton’s independence
when annually reviewing and approving the internal audit
plan to ensure that there are no conflicts in Grant Thornton
undertaking the proposed internal audit work.
112 Great Portland Estates plc Annual Report 2022
Review of half-year results
Met with CBRE to consider the September 2021 valuation.
Met with Deloitte and management to consider:
– Deloitte’s independence;
– their review of the September 2021 valuation
and the half-year results announcement;
– Deloitte’s sustainability assurance;
– significant accounting and key areas of judgement
including going concern – see page 109;
– the principal and emerging risks, monitoring of
internal controls and risk management processes;
– the half-year results announcement; and
– the relationship between Deloitte and GPE
management with feedback provided by Deloitte
without management present.
Other matters
Considered the findings from PwC’s internal audit
review of core financial processes, including People
and Payroll processes, ‘UK SOx’ readiness, fraud risk
management controls and processes and a review
of employee wellbeing during the COVID-19 period.
Received the FRC’s annual review of Corporate
Reporting 2020/21 and an update on supplier
payment practices.
Received an update on the re-tender of the external
audit process.
What we did in relation to the financial year ended 31 March 2022
Review of year-end results
Met with CBRE to consider the March 2022 valuation
– see pages 35 and 36.
Met with Deloitte and management to review:
– Deloitte’s audit of the March 2022 valuation –
see pages 35 and 36;
– Deloitte’s sustainability assurance;
– significant accounting and key areas of judgement
including going concern and viability work –
see page 109;
– an update on Group tax matters;
– an update on GPE’s supplier payment practices;
– the principal and emerging risks, monitoring of
internal controls and risk management processes –
see pages 64 to 77;
– the preliminary results announcement and
Annual Report;
– the relationship between Deloitte and GPE
management with feedback provided by Deloitte
without management present; and
– reappointment of the auditor – see page 110.
Other matters
Met with Grant Thornton and approved the 2022/23
internal audit plan.
September
February
Annual planning meeting
Met with CBRE to receive an update ahead of the
half-year valuation.
Met with the external auditor, Deloitte, and management
to review:
– the effectiveness and independence of the auditor –
see page 111;
– significant accounting and key areas of judgement –
see page 109; and
– Deloitte’s 2021/22 audit plan.
Other matters
Considered additional sustainability-related assurance
work required from Deloitte and internally at GPE.
Received an update on the external auditor
tender process.
Internal audit
Met with the new internal auditor, Grant Thornton,
and approved an updated internal audit charter.
Year-end planning update
Met with Deloitte and management to consider/approve:
– significant accounting and key areas of judgement;
– proposed changes to disclosures planned for the
2022 Annual Report;
– developments in corporate reporting presented
by Deloitte;
– the 2021/22 audit plan update; and
– the 2021/22 audit fee – see page 112.
Other matters
Corporate governance update received from the
General Counsel & Company Secretary and Deloitte.
External audit tender process update.
Review of GPE’s Anti-Fraud, Bribery & Corruption Policy and
fraud risk assessment and Ethics, Gifts and Hospitality and
Whistleblowing Policies – see page 110.
Reviewed the Audit Committee Terms of Reference.
Reviewed the Provision of Non-Audit Services Policy.
Reviewed the Finance team.
Reviewed the Committee’s effectiveness.
2021
2022
November
May
Governance
113Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report
Our process
The Committee’s Terms of Reference are available on the
Company website at www.gpe.co.uk/about-us/governance.
The Committee is comprised of seven independent
Non-Executive Directors. Wendy Becker as Chair, Charles
Philipps, Vicky Jarman and Alison Rose each served on the
Committee throughout the financial year. Mark Anderson
and Nick Hampton joined the Committee on 1 September
2021 and Emma Woods joined the Committee on 1 February
2022. Non-Executive Directors who are not members of
the Committee each have a standing invitation to attend
meetings of the Committee as appropriate.
The Committee was advised during the year by FIT
Remuneration Consultants LLP (FIT Rem) as independent
remuneration consultants. FIT Rem, which was appointed
by the Committee in August 2014 following a review of
advisers, attends Committee meetings and provides advice
on remuneration for the Executive Directors, analysis on all
elements of the remuneration policy and regular market and
best-practice updates. Further information on FIT Rem and
other Committee adviser fees is available on page 132.
FIT Rem reports directly to the Committee and does not
provide any other services to the Company.
At the request of the Committee, Toby Courtauld, the Chief
Executive, attends Committee meetings where appropriate
and provides input with regard to the achievement of personal
objectives for senior executives. He also attends discussions on
remuneration as considered appropriate by the Committee,
including on new appointments and promotions and to
provide his input on the development of the remuneration
policy. Carrie Heiss, HR Director, attends Committee meetings
where appropriate to present proposals regarding Executive
Director and workforce remuneration and related policies
and the alignment of remuneration across the organisation,
as well as to voice the perspectives of employees on
relevant matters.
No Director or employee is involved in discussions on their
own pay.
Compliance with the 2018 UK Corporate
Governance Code
Throughout the year the Committee has considered the
provisions set out in paragraph 40 of the 2018 UK Corporate
Governance Code. In the Committee’s view, the Company’s
Directors’ remuneration policy (the Policy) and current
practices address these factors as set out below:
Our approach
The key objectives of the Remuneration Committee
(the Committee) are to ensure that the Executive
Directors are appropriately incentivised and
remuneration arrangements are fully aligned with
the Company’s strategy to generate superior portfolio
and shareholder returns.
As outlined on page 14, we currently measure our
absolute and relative performance using a small
number of key financial performance indicators:
– Relative Total Property Return (TPR) demonstrating
our portfolio’s relative performance;
– Relative Total Shareholder Return (TSR) reflecting
relative shareholder value; and
– Total Accounting Return (TAR) showing our
absolute performance.
Over the medium term, we aim to outperform
our benchmarks.
The Group’s Annual Bonus Plan for the Executive
Directors and employees generally uses financial
targets based on TAR and the capital growth element
of TPR, together with a review of the attainment
of strategic and personal objectives to achieve
operational excellence. For 2020/21 and 2021/22,
given the level of market uncertainty and volatility
arising from the COVID-19 pandemic, TAR was replaced
by TSR. The TAR element has been reinstated for the
Annual Bonus Plan 2022/23 for which, in line with our
strategic priorities, we have also introduced a new
financial measure linked to the growth of our Flex offer.
Following our shareholder consultation and
Directors’ remuneration policy update in 2020, the
Long Term Incentive Plan (the LTIP) uses two of our
key performance indicators to measure the Group’s
performance, namely TSR (50%) and TAR (50%).
Under the LTIP, the level of reward to Executive
Directors and senior management depends on the
performance of the Group over a three-year period.
As well as being responsible for determining the
remuneration of the Executive Directors, the Committee
is responsible for setting the remuneration of the Chair
of the Board, the members of the Executive Committee
and other senior executives. The Committee also
reviews the broad operation of remuneration policy
and practices for all employees.
Remuneration
Committee
Remuneration Committee members
and attendance at scheduled meetings
in 2021/22
Chair
Wendy Becker /
Members
Charles Philipps /
Mark Anderson /
Nick Hampton /
Vicky Jarman /
Alison Rose /
Emma Woods /
Further details regarding Committee
memberships, meetings and
attendance can be found on
page 86.
114 Great Portland Estates plc Annual Report 2022
Strategic alignment of pay
As described on pages 14 and 15, GPE focuses on specific key
performance indicators, the achievement of which is driven
by our strategic priorities. We remain focused on creating
value in our portfolio, generating capital and income growth
and shareholder value creation over time. Alongside these
key financial metrics, sustainability is an important strategic
priority for the Group, customer satisfaction remains critical to
our business plans, including the expansion of our Flex product,
and we believe that our people are fundamental to the
success of our business and its long-term sustainable growth.
For 2022/23, a proportion of the annual bonus for Executive
Directors has also been linked to GPE’s diversity and inclusion
priorities, as explained on page 118.
The measures and targets within our Annual Bonus Plan
and LTIP align with our KPIs and strategic priorities to
ensure strong linkage between these and Executive Director
remuneration, as shown in the table opposite. Operating
with a clear bias to variable pay linked to our KPIs, with
an appropriate mix of absolute and relative performance
goals, ensures that management can only achieve near
maximum levels of reward for achievement of both significant
outperformance compared with other real estate companies
and real absolute returns for our shareholders.
KPI
Long Term
Incentive Plan
1
Annual
Bonus Plan
1
TSR
2
TAR
2
TPR
3 4
Flex growth
5
Sustainability
Customer satisfaction
Employee engagement
(including D&I component)
1. Appropriate actions also captured through Directors’ personal objectives
under the Annual Bonus Plan.
2. For the 2020/21 and 2021/22 bonuses, TAR was replaced with relative TSR
due to the uncertainties of real estate values arising from the COVID-19
crisis and the potential for highly volatile valuations.
3. Applicable to the unvested 2019 LTIP awards.
4. Capital growth element of TPR.
5. Introduced as an additional annual bonus financial measure for 2022/23.
The Committee regularly reviews pay structures and incentive
arrangements to ensure strong alignment between business
performance and remuneration arrangements.
Clarity Remuneration arrangements
should be transparent and
promote effective engagement
with shareholders and the
workforce
The Committee proactively engages with shareholders and their representative
bodies as part of the Policy renewal process (engaging with shareholders
representing over 50% of the share register as part of the 2020 Policy review). It is
also regularly updated on developments in market practice and receives reports
on pay and conditions across the business. In 2021, the Chair of the Committee
led an interactive all-employee event to discuss the 2020 Policy revisions and
broader remuneration matters. Groups of employees were separately consulted
on proposed revisions to the methodology for setting objectives and assessing
outcomes for the personal element of the annual bonus which has been applied
to all employees, including Executive Directors, from 2021/22. Further consultation
is also envisaged as part of the 2023 Policy renewal process.
Simplicity Remuneration structures
should avoid complexity and
their rationale and operation
should be easy to understand
The Company operates a simple pay model which is biased to variable pay but
only permits significant payments where the Company outperforms on both
an absolute and relative basis against clear KPIs. The Annual Bonus Plan also
includes a variety of strategic and personal objectives, with at least 50% of
these combined elements being objectively measurable.
Risk Remuneration arrangements
should ensure reputational and
other risks from excessive rewards,
and behavioural risks that can
arise from target-based incentive
plans, are identified and mitigated
There is broad discretion to reduce variable pay if the Committee does not
consider the formulaic outcome to be appropriate in the circumstances and
all plans include the ability to operate malus and clawback where appropriate.
A proportion of Executive Director bonuses is deferred into shares for three years
and post-cessation shareholding guidelines apply to mitigate the risk of
short-termist behaviours.
Predictability The range of possible reward
values to individual directors and
any other limits or discretions
should be identified and explained
at the time of approving the policy
The Policy includes a scenario chart showing potential pay levels on various
assumptions and all awards are subject to maximum grant levels as set out
in the Policy, together with the discretions set out under ‘Risk’ above.
Proportionality The link between individual
awards, the delivery of strategy
and the long-term performance
of the Company should be clear.
Outcomes should not reward
poor performance
The outturn in respect of variable pay is clearly set out in this Report
on pages 120 to 127 with payment clearly linked to our strategic and
financial priorities. As indicated under ‘Risk’, the outturn can be reduced
by the Committee as appropriate.
Alignment
to culture
Incentive schemes should
drive behaviours consistent
with Company purpose,
values and strategy
Equivalent incentive plans apply to the wider workforce to engender a
high-performance culture, albeit that the weighting on personal performance
increases as the bonus plans cascade through the workforce. All objectives
are directly linked to the Group’s KPIs while a proportion of objectives must be
values-led. An individual’s commitment to GPE’s values and behaviours is also
reviewed as part of the personal performance assessment process.
Governance
115Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report continued
Dear fellow shareholder
On behalf of the Committee, I am pleased to present the
Directors’ remuneration report for the year ended 31 March
2022 (the Report). This will be my final report as Chair of
the Committee and I will be succeeded by Emma Woods,
an experienced Remuneration Committee Chair, with effect
from the conclusion of the 2022 AGM. I wish Emma every
success in her new role.
The Committee has continued to implement the Directors’
remuneration policy (the Policy) which was approved by
our shareholders at the 2020 AGM with over 98% of votes
in favour. No changes to the Policy are proposed for 2022/23.
A full copy of the Policy can be found on our website at
www.gpe.co.uk/investors. The key policy tables can be
found on pages 155 to 159 of the 2021 Annual Report.
At the 2021 AGM, our Directors’ remuneration report was
approved with over 99% of votes in favour.
Wider context and key decisions
We are conscious that some shareholders are interested in
companies’ take-up of COVID-19 related reliefs. The Company
has, again, not availed itself of such government sponsored
arrangements and has not placed any employees on
furlough or made redundancies. We have also maintained
the payment of our ordinary dividends.
In the midst of rising inflation and costs of living, the
Committee was pleased to oversee an average like-for-
like salary increase of 6.1% for employees for 2022/23.
All employees received a minimum increase of 3.5%, or 5%
in the case of colleagues on lower salaries in view of the
greater relative impact of inflationary pressure.
The Committee has had regard to business performance
alongside this wider context when considering reward and
incentive outcomes. Key Committee decisions for the year,
as more fully described in this Report, include:
– determining annual bonus and LTIP outcomes;
– agreeing salary and fee increases for the Executive
Directors and the Chair of the Board in line with the
minimum employee increase;
– introducing a new Flex growth financial measure into
the 2022/23 annual bonus in line with our near-term
strategic priority to deliver our Flex ambition;
– incorporating specific diversity and inclusion targets
within Executive Director and Executive Committee
annual bonuses for 2022/23;
– setting stretching targets for the Annual Bonus
and LTIP, including the refocusing and simplification
of sustainability measures; and
– agreeing the joining terms for Dan Nicholson.
Business outcomes in respect of the year
ended 31 March 2022
Despite the continued disruption of COVID-19, GPE has
continued to progress its strategy and delivered strong
operational performance while maintaining our financial
strength and capital discipline.
During the year, we delivered record volumes of leasing,
including pre-letting all the offices at our 50 Finsbury Square,
EC2 development and, despite the challenging retail
backdrop, we leased the entirety of 103/113 Regent Street,
W1. We also completed our 1 Newman Street development,
commenced our £1.1 billion near-term development
programme and completed our first Flex acquisition
of Gresse Street, W1.
Our leasing success, combined with our portfolio
performance, delivered strong financial results. EPRA NTA
increased by 7.2% over the year which, when combined
with the dividend, delivered a TAR of +8.8%. EPRA EPS
was 10.8 pence, a decline of 31.6% which was anticipated,
in part driven by the rental income foregone through
the profitable sale of 160 Old Street, EC1.
The like-for-like property valuation across our portfolio
was up 6.1% over the year, ahead of our central
London benchmarks. We delivered a TSR of 6.6% albeit
underperforming the FTSE 350 Real Estate Index following
the strong share price performance of other real estate
sectors including industrial and logistics space.
We have continued to innovate and evolve our strategy
in response to market trends and the changing needs
and aspirations of our customers, people and wider
stakeholders. During the year, we enhanced our Customer
first approach, refreshed our corporate brand, further
developed our Flex product, adopted our Sustainable
Finance Framework and launched our Social
Impact Strategy.
Moreover, we have maintained our financial strength,
with our loan-to-property value ratio being only 20.5%.
Our liquidity position remains strong, with £391 million
of available cash and undrawn facilities. We have also
maintained the payment of our ordinary dividends.
Taken as a whole, we continue to be well positioned to
deliver both our purpose and long-term shareholder value.
The Committee regularly reviews pay structures
and incentive arrangements to ensure strong
alignment between business performance and
remuneration arrangements.”
Wendy Becker Chair of the Remuneration Committee
116
Great Portland Estates plc Annual Report 2022
Remuneration outcomes in respect of the
year ended 31 March 2022
Against the backdrop of this business performance,
the Company’s variable pay was assessed as set out
in the following sections.
Annual Bonus Plan
As explained in last year’s report, the 2021/22 annual bonus
was subject to relative TSR over the financial year instead of
the usual TAR measure, together with the usual MSCI Capital
Growth Index outperformance measure. The Committee
did not consider it possible to set a suitable TAR target range
given the uncertainty of real estate values in the midst of the
COVID-19 crisis and the potential for highly volatile valuations.
Under our 2021/22 Annual Bonus Plan, our relative share price
performance compared with the FTSE 350 Real Estate Index
was below the median of our peer group, thereby resulting in
a zero payout for the TSR measure. It is of course disappointing
that, had the usual TAR measure been retained, this would
have likely resulted in a high performance outturn given our
TAR of +8.8% is the strongest for six years.
The Group’s portfolio capital growth is estimated to have
performed above the MSCI Capital Growth Index (we await
final confirmation of the results), resulting in an estimated
100% payout for that measure.
The Company performed well against the customer
satisfaction and employee engagement metrics in the
ESG/strategic measures. Whilst the Company exceeded
its targets for the carbon impact and energy consumption
sustainability measures, it did not meet the biodiversity
target and, as such, this resulted in a zero payout for the
sustainability measures.
Each of the Executive Directors performed very well against
their personal objectives, making a significant contribution
to the development and implementation of the Group’s
strategic priorities. Once again, in line with the Policy approved
by shareholders at the 2020 AGM, the Committee applied
a tougher stance to performance assessment than in previous
years and awarded the Chief Executive, Chief Financial
& Operating Officer and Executive Director an outturn
of 75%, 75% and 50% respectively. See pages 122 and 123
for further details.
The formulaic outturn, therefore, was felt to be appropriate
and was approved without the exercise of further discretion.
The 2021/22 annual bonus outturn was 56.3%, 56.3% and
52.5% of the maximum (84.4%, 84.4% and 78.8% of eligible
salary) respectively for the Chief Executive, Chief Financial
& Operating Officer and Executive Director.
As announced on 21 September 2021, Dan Nicholson took
a short leave of absence to recuperate from a road traffic
accident and his annual bonus payment has therefore been
pro-rated to reflect this.
In accordance with the Policy approved at the 2020
AGM, 40% of Executive Directors’ annual bonuses will be
deferred into shares for three years through the Company’s
Deferred Share Bonus Plan. Please refer to page 126 of this
Report for further details.
2019 LTIP vesting
The performance under the 2019 LTIP was significantly
impacted by the onset of COVID-19 in early 2020 and
geopolitical and market uncertainties. The economic impact,
and associated behavioural changes, impaired property
values in the performance period, particularly for retail space.
This resulted in a 18 pence per share EPRA NTA decline over
the three years, equating to a TAR of +2.3% or +0.8% p.a. and
a nil vesting of the TAR measure for the Group’s three-year
2019 LTIP award.
Against this challenging backdrop, our relative share price
performance has underperformed against the FTSE 350 Real
Estate Index, with many of the constituents investing in other
asset classes which outperformed London offices, including
logistics and self-storage space. As a result, we expect a
0% vesting of the TSR measure based on the information
available as at 31 March 2022.
However, we anticipate that we outperformed the TPR
benchmark for the three year period to 31 March 2022 by
0.04% per annum resulting in an estimated 22.1% vesting
of the TPR measure.
2018 LTIP vesting
The figures disclosed in the 2021 Annual Report for the 2018
LTIP vesting were based on an estimated TSR performance
outcome of 38.4% based on the information available as at
31 March 2021. Disappointingly, at the end of the applicable
performance period, GPE’s TSR performance ranked on
the 49.4th percentile (one place below median), resulting
in a nil vesting for the 2018 LTIP awards.
Appointment of new Executive Director
As announced by the Company in September 2021,
Dan Nicholson was appointed to the Board with effect from
6 September 2021 as Executive Director with responsibility
for Portfolio Management and Development Management.
The reward package for Dan Nicholson was set in line with
the existing Policy. His gross basic salary on appointment was
£350,000 and he receives standard benefits and incentive
awards commensurate with his position. Dan’s employer
pension contribution rate is 15% of basic salary in line with
the average rate available to all GPE employees. There was
no buyout of, or compensation for, his previous remuneration
packages. As an Executive Director, Dan will be required
to build up a shareholding of 300% of base salary and retain
all shares that are vested to him, net of any tax liabilities,
until the requirement is satisfied. He is also subject to GPE’s
post-cessation shareholding requirement. Further details
can be found on page 126 of this Report.
Governance
117Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report continued
2022/23 implementation of our Policy
Annual Bonus Plan
In line with expectations, the Annual Bonus Plan for 2022/23 will
revert to the usual measures of TAR and performance against
the MSCI Capital Growth Index. In addition, in view of our
near-term strategic priority to grow our Flex space to more
than 600,000 sq ft within our existing portfolio, which we will
look to supplement through acquisitions, the Committee has
added a new financial measure to the 2022/23 Annual Bonus
Plan related to the growth of our Flex offer. The weightings
of the financial measures for 2022/23 will be: TAR – 30%
(previously 35%); Capital Growth – 30% (previously 35%);
and Flex -10%. Further details can be found on page 127.
In accordance with the Policy, the Committee sets the
appropriate Annual Bonus (and LTIP) target ranges each
year having regard to business plans, external forecasts
and such other factors as the Committee considers
relevant at the time.
The Committee has set appropriate ESG/strategic measures
based upon the achievement of objectively measurable
sustainability, customer satisfaction and employee
engagement targets, as further detailed on page 127.
The Committee has simplified the sustainability measures
to focus on one high priority measure, to reduce our energy
intensity, which aligns with our Net Zero Carbon Roadmap
and which management has the ability to impact year
on year across a significant proportion of the portfolio
(by square feet). Embodied carbon and biodiversity
targets will continue to be measured separately.
For 2022/23, and representative of our focus in this area,
management incentives have been directly linked to progress
against our diversity and inclusion (D&I) agenda through
the annual bonus, with the inclusion of specific D&I personal
objectives for each of the Executive Directors. An inclusion
component has also been incorporated into the Employee
Engagement measure under the ESG/strategic measures.
The Annual Bonus target ranges will be clearly reported
retrospectively following the financial year end.
LTIP award
The 2022 LTIP award will continue to be subject to the two
equally weighted performance measures of relative TSR and
absolute TAR, both of which are explained in the main body
of this Report. Details of the applicable performance targets
can be found on page 127.
Salaries
For the year commencing 1 April 2022, the average like-for-
like salary increase will be 6.1% with all employees receiving
a minimum increase of 3.5%. The Committee increased
Toby Courtauld’s, Nick Sanderson’s and Dan Nicholson’s
salaries by 3.5% in line with that minimum level.
Employee remuneration and engagement
As explained overleaf, the Committee applies consistent
remuneration principles for employees across the
Group. As part of its responsibilities, the Committee
reviews GPE’s wider employee remuneration policies
and practices and the alignment of incentives and
rewards with the Company’s culture.
The Committee takes into account pay and conditions
across the Group when determining the remuneration
of the Executive Directors and other members of
senior management. Prior to the annual pay review,
the Committee receives a report setting out changes
to employee remuneration levels and proposed
discretionary bonus awards. The Committee also
discusses GPE’s gender pay gap statistics alongside
our D&I objectives and related policies.
In March 2021, the Committee Chair led an interactive
all-employee event to discuss a range of remuneration
matters, including the 2020 Policy changes, GPE’s
broader remuneration principles and approach,
alignment of pay, the workings of the Committee and
changes to the personal bonus methodology which
were implemented for 2021/22 following consultation
with employees.
We continued to hold our ‘Audience with…’ employee
engagement sessions during the year which provide
an opportunity to hear directly from employees.
Employee views on Executive remuneration and
related matters will be considered in our review of
the Policy which is due for renewal at the 2023 AGM.
More broadly, remuneration is regularly discussed
with employees. GPE’s annual review process and how
this links to employees’ remuneration is incorporated
into our new joiner induction process, along with
an introduction to GPE’s all-employee share plan.
Briefing sessions are also held with employees from
time to time to discuss pay policies and the work
of the Committee, as well as to enable employees
to find out more about GPE’s pension scheme and
all-employee share plan offer.
Policy review
Our Policy was last approved by shareholders in 2020
and must be submitted to shareholders for approval at
the 2023 AGM. The Committee will therefore be considering
the renewal of our Policy during 2022/23 and will consult
with major shareholders and proxy advisory firms regarding
any proposed revisions to it. This process will be led by
Emma Woods as the incoming Chair of the Committee.
I hope you find this Report clear and informative and I look
forward to receiving your support for the resolution approving
the Report at the 2022 AGM.
Wendy Becker
Chair of the Remuneration Committee
19 May 2022
118
Great Portland Estates plc Annual Report 2022
Our overarching remuneration policy principles
and a fair and consistent approach
The Executive Directors’ total pay is analysed by looking
across each of the different elements of remuneration
including salary, benefits, pension, the Annual Bonus Plan and
long-term incentives to provide the Committee with a view
of total remuneration rather than just the competitiveness
of the individual elements. It is important that the Group’s
remuneration policy reinforces the Company’s purpose,
culture and values providing effective incentives for
exceptional Group and individual performance. As well as
providing motivation to perform, remuneration plays an
important retention role and needs to be appropriately
competitive without being excessive.
To achieve the aims of the Company’s remuneration policy,
the Committee generally seeks to position fixed remuneration,
including benefits and pension, around mid-market, taking
into account the size and complexity of the business as
compared with other peer companies in the sector, and,
using a significant proportion of variable reward, offers
the ability to increase total potential remuneration for
superior performance through the Annual Bonus Plan
and long-term incentives.
The Committee seeks to apply consistent principles
to remuneration across the organisation. Our approach
to salary reviews is to consider each employee’s level of
responsibility, experience, individual performance, salary
levels in comparable companies and the Company’s
ability to pay. Remuneration surveys and meetings
with sector specialists are used, where appropriate,
to establish market rates.
The weighting of the different components of an
employee’s remuneration will vary depending on their
role, responsibilities and seniority, with senior employees
having a higher proportion of their remuneration linked
to variable reward and Company performance. However,
we apply our overarching remuneration principles, and
provide a competitive and consistent remuneration
and benefits package, as appropriate, throughout GPE.
This is made up of the following key components:
All employees Executive Directors
All employees receive a market-competitive
base salary reflective of the individual’s role,
responsibilities and experience, which is subject
to an annual external benchmarking review
for approximately 90% of our roles.
Salary
Executive Directors receive a market-
competitive base salary reflective of their
responsibilities, which is subject to an annual
external benchmarking review to ensure
salaries remain at an appropriate level to
attract and retain talent in our industry.
All employees receive market-competitive
benefits, including private medical insurance.
Benefits
Executive Directors receive market-competitive
benefits, including private medical insurance.
No car allowance is provided.
All employees are eligible and encouraged
to join the GPE pension scheme to save
for their retirement, with an employer
contribution of 15%.
Pension
The Company has committed to align
Executive Director and wider workforce
contribution levels by the end of 2022. Newly
appointed Executive Directors’ contribution
levels are aligned with the wider workforce.
All employees can join the Company’s
Share Incentive Plan, allowing employees to
purchase Company shares in a tax efficient
way and to receive matching shares, thereby
encouraging employee share ownership.
73% of GPE’s employees participate in the
Share Incentive Plan.
All-
employee
share
plans
The Executives Directors are also eligible
to participate in the Company’s share
incentive plan.
All employees participate in the Annual Bonus
Plan and are subject to the same corporate
financial measures alongside individual
personal objectives which are assessed using
a consistent methodology. A proportion of the
bonus entitlement of certain members of senior
management will additionally be subject to
the Company’s ESG/strategic measures.
Annual
Bonus
Plan
The maximum bonus potential for Executive
Directors is 150% of base salary. At least 40%
of any bonus outcome will be deferred into
shares, typically through the Deferred Share
Bonus Plan to provide further alignment
with the shareholder experience.
Those able to influence long-term performance,
generate significant sustainable returns
or managing major capital budgets may
participate in the LTIP and will be subject to
the same pre-vest performance metrics as
Executive Directors. Approximately one-third
of all employees participate in the LTIP.
Awards vest after three years.
Long Term
Incentive
Plan (LTIP)
The Executive Directors have a larger
potential maximum opportunity, being
eligible to receive an award of up to 300%
of base salary. Awards since 2017 are subject
to a three-year performance period followed
by a two-year holding period.
Governance
119Annual Report 2022 Great Portland Estates plc
The Annual Remuneration Report sets out how the Directors’ remuneration policy was applied in 2021/22 and how it will be
applied for the forthcoming year. It is divided into four sections:
Section of Report Page numbers
Executive Directors’ remuneration for the year ended 31 March 2022 See pages 120 to 126
Executive Directors’ remuneration for the year ending 31 March 2023 See pages 126 and 127
Chair and Non-Executive Directors’ remuneration See page 128
Other disclosures See pages 129 to 133
The Company’s auditor has reported on specific sections of this Report and stated, where applicable, that in its opinion those
sections have been properly prepared. The sections that have been subject to audit are marked with an asterisk (*).
The Directors’ remuneration policy was approved by shareholders at the 2020 AGM and is available on the Company’s website
at www.gpe.co.uk/investors. The key policy tables can be found on pages 155 to 159 of the 2021 Annual Report.
Executive Directors’ remuneration for the year ended 31 March 2022
Executive Directors’ single figure table*
Base
salary
1
Benefits
10
Pension
3
SIP
4
Fixed
Total
Annual
Bonus
5
LTIP
Variable
Total Total
8,9
Executive
Directors
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
£000
2022
£000
2021
6,7
£000
2022
£000
2021
£000
2022
£000
2021
£000
Toby
Courtauld – ,
Nick
Sanderson –
Dan
Nicholson
2
– – – – – – – – – – –
1. Please refer to the ‘Salary’ table on page 126 for details of Executive Directors’ annual salaries.
2. Dan Nicholson joined the Board on 6 September 2021. Details of his joining arrangements are set out on page 117. He is entitled to a pro-rated bonus
for his period of service from 4 October 2021 to 31 March 2022.
3. Toby Courtauld and Nick Sanderson currently receive a pension allowance of 20% of their basic salary. Dan Nicholson receives an employer pension
contribution of 15% of his basic salary, in line with the wider workforce.
4. The value of the matching shares awarded under the SIP are calculated using the share price on the date the shares were purchased.
5. 40% of the annual bonus will be deferred into shares for three years under the Deferred Share Bonus Plan. Deferred bonus shares are not subject to any
further performance conditions.
6. The estimated value of the 2019 LTIP awards expected to vest in June 2022, based on the information available as at 17 May 2022 and calculated at the
average share price for the three months to 31 March 2022. The estimated value attributable to share price growth is -£535 and -£368 for Toby Courtauld
and Nick Sanderson respectively. This has been calculated using the difference between the share price at grant of £7.18 and the three-month average
share price of £7.15 at 31 March 2022. The awards made in 2019 are subject to a three-year performance period followed by a further two-year holding period.
The 2019 LTIP awards will become exercisable on the fifth anniversary of the date of grant.
7. The figures disclosed in the 2021 Annual Report for the 2018 LTIP vesting were based on an estimated 0% TPR performance outcome and an estimated
TSR performance outcome of 38.4%. The actual TPR vested at 0% and, disappointingly, the TSR element also vested at 0% as GPE ended the period on
the 49.4th percentile which was just one place below median. This resulted in a nil vesting for the 2018 LTIP awards.
8. The single figure for the total remuneration due to the Directors for the year ended 31 March 2022.
9. The aggregate emoluments (being salary, benefits, cash allowances in lieu of pension, bonus and LTIPs) of all three Executive Directors for the year
ended 31 March 2022 was £2,790,000 (2021: £1,662,000).
10. Executive Directors’ taxable benefits have been updated from 31 March 2022. Taxable benefits include: private medical insurance, membership subscriptions,
travel expenses, luncheon vouchers, Employee Assistance Programme and entertainment. Prior years included death in service, life assurance and
permanent health insurance which are not taxable benefits in line with HMRC guidelines.
Fixed pay:
Taxable benefits
Benefits principally comprise private medical insurance, membership subscriptions, travel expenses, luncheon vouchers,
Employee Assistance Programme and entertainment. No individual benefit provided has a value which is significant enough
to warrant separate disclosure.
Pensions
None of the Executive Directors participate in the Group’s defined benefit final salary pension plan, which was closed
to new entrants in 2002. Toby Courtauld and Nick Sanderson have agreed that their employer pension contribution rates
will be reduced from 20% to 15%, being the average rate available to all employees, by the end of the 2022 calendar year.
Dan Nicholson’s employer pension contribution was set at 15%, in line with the wider workforce, from his appointment date.
All-employee Share Incentive Plan
In line with the wider workforce, Executive Directors may participate in the GPE Share Incentive Plan, which is an HMRC
tax-advantaged plan. Participants may save up to £150 from their monthly pre-tax salary to purchase shares. For every
share purchased, GPE grants two matching shares. Shares acquired attract dividends paid by the Company, typically
at the half-year and year end.
Directors’ remuneration report continued
120 Great Portland Estates plc Annual Report 2022
Variable pay:
Executive Directors’ 2022 bonus outcome
The financial, ESG/strategic and Operational Excellence targets for the bonus for the year ended 31 March 2022, and the extent
to which they were achieved, are set out in the table below. The Committee did not exercise discretion in respect of any of the
financial or non-financial performance measures.
Key elements
of strategy
Maximum
percentage
of salary Measured by
Threshold
performance
target
Maximum
performance
target
(100% payout)
Actual
performance
achieved
Actual
performance
level as a
percentage
of maximum
Bonus receivable (£000)
Toby
Courtauld
Nick
Sanderson
Dan
Nicholson
1
Market
competitiveness
(35% weighting)
52.5% Growth of
the Group’s
property
portfolio
against MSCI’s
relevant
Capital Growth
Index (for
the year to
31 March 2022)
– on a straight-
line basis
Annual
percentage
rate of portfolio
capital growth
to meet annual
percentage
rate of capital
growth of the
central London
MSCI Index
(16.67%
payout)
Annual
percentage
rate of
portfolio
capital growth
to exceed
annual
percentage
rate of capital
growth of
the central
London MSCI
Index by 2%
Estimated
Index +
2.75%
100%
(estimated)
£, £, £,
Absolute
performance
(35% weighting)
52.5% Total
Shareholder
Return (based
on a one-year
performance
period)
Median
(20% payout)
Upper
quartile
42nd
percentile
0% £ £ £
ESG/strategic
measures
(15% weighting):
Sustainability 7.5% Reduce energy
consumption
by 11.0–12.0%;
Reduce carbon
impact at
developments
by 9.5–10.5%;
and
Increase
biodiversity
by 7.5–8.5%
All 3 within
Target
(50% payout)
All 3 above
Target
2 above
Target and 1
(bio-diversity)
below Target
0% £ £ £
Occupier
satisfaction
7.5% London Office
Net Promoter
Score
Median
(20% payout)
Upper
quartile
Upper
quartile
100% £, £, £,
Employee
engagement
7.5% Achieve an
Employee
Engagement
Index (EEI)
score of at
least 75%
EEI score
between
75%–79%
(20% payout)
EEI score
above 85%
86% 100% £, £, £,
Operational
excellence
(15% weighting)
22.5% Achievement
against
personal
objectives
(for the year to
31 March 2022)
Partial
achievement
of personal
objectives
Exceeding
personal
objectives
See pages
122 and 123
Toby Courtauld
75%
Nick Sanderson
75%
Dan Nicholson
50%
£, £, £,
Total £, £, £,
1. Dan Nicholson joined the Board on 6 September 2021 and is entitled to a pro-rated bonus for his period of service from 4 October 2021 to 31 March 2022.
Governance
121Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report continued
Executive Directors’ personal objectives
The Executive Directors’ personal objectives, approved by the Committee, are designed to focus on the delivery of the
strategic priorities and the successful management of risk for both 2021/22 and the longer term. Following consideration
of achievement against the Executive Directors’ personal objectives set at the beginning of the year as listed below,
the Committee awarded Toby Courtauld, Nick Sanderson and Dan Nicholson 75%, 75% and 50% respectively of the
full potential bonus for Operational Excellence.
Measure
Score Key achievements
Key achievements
CEO CF&OO CEO CF&OO Shared
Evolve GPE’s strategy to capitalise
on changing conditions, including
driving acquisitions strategy into
new areas
%/% %/% – Driven strategic pivot to focus on HQ repositioning and Flex spaces.
– Driven brand refresh; launched and product lines redefined.
– Developed Customer first approach and led restructuring to support
customer service culture.
– Retail and wider sales plans reappraised. Led disposal of 160 Old Street
for £181.5m.
– New one-year Innovation Strategy adopted. Awarded a SmartScore
‘platinum’ rating at the Hickman, a world-first.
– Led the acquisition of Gresse Street for our Flex offering.
– Developed acquisitions pipeline and strategy with focus
on sustainability and Flex.
– Flex ambitions agreed and roll-out progressed. Successful letting
of Dufour’s Place and Flex partnership entered at the Hickman.
– Good progress on developments. Completed 1 Newman Street.
Obtained planning permissions at 2 Aldermanbury Square and
French Railways House. Further progress needed at New City Court.
– Won Property Awards’ 2021 Property Company of the Year and
Commercial Property Developer of the Year.
– Record year for leasing with £38.5m of leases signed. All offices
pre-let at 50 Finsbury Square.
– Positive shareholder feedback and clear articulation of strategy.
Won IR Magazine’s 2021 Award for ‘Best in Sector’.
Champion sustainability and
embed into strategy, operations
and culture as a core discipline,
including developing social impact
%/% %/%
– 50 Finsbury Square construction progressed to deliver on
Sustainability Statement of Intent and expected to be GPE’s first
certified Net Zero Carbon building.
– Progress made against Net Zero Carbon Roadmap.
– Innovation in development to deliver sustainability ambitions,
including initiatives at 2 Aldermanbury Square and Minerva House.
– Decarbonisation fund protocols established and funds deployed.
– EPC compliance analysis completed for each building across the
portfolio and ‘stranded asset’ acquisition opportunities strategy
developed.
– Launch of new Social Impact Strategy. £631,000 of social value
created in the year.
– Visible and committed internal leadership: CEO Chair of Sustainability
Committee and CF&OO Chair of Social Impact Committee.
– Also building market-leader recognition for the Group.
Develop the team and an
inclusive and progressive people
strategy while maintaining
strong engagement
%/% %/% – Led material hires throughout the year.
– Led restructuring of senior management roles, including creation
of Flex leadership positions.
– Supported progression and promotion of diversity and inclusion.
– Launched new strategic People Plan with a focus on diversity
and inclusion.
– Oversaw launch of Inclusion Committee.
– Strong ratings in all employee engagement surveys.
– Increased the number of women on the Executive Committee.
– Introduced and reinforced a coaching and development
culture culminating in a number of internal promotions.
Review our purpose, champion
our values and deliver operational
excellence and resilience
%/% %/%
– Successful launch of revised strategy and refreshed corporate
brand including clearer articulation of vision and purpose.
– Supported customers with successful return to work programmes.
– Strong customer experience and satisfaction with upper quartile
NPS for London offices.
– Hybrid Working Policy adopted to allow for permanent flexibility
in working patterns, without disruption to productivity.
Maintain our financial
strength and control
– %/% – Improved rent collections.
– Implementation of IT strategy.
– Maintained one of the lowest loan-to-property value ratios
in the UK REIT sector.
– Launched Sustainable Finance Framework.
– Enhanced debt position with extension of the Group’s revolving
credit facility.
– Led new internal auditor appointment.
– Finance team further strengthened.
– Dividend maintained.
– Additional corporate broker appointment following review.
– Adoption of new Anti-Fraud, Bribery & Corruption Policy.
Total %/% %/%
While each of the Chief Executive and Chief Financial & Operating Officer were separately assessed, they inevitably
had a number of common objectives so the above table identifies both individual and shared objectives. In each case,
their contribution to the delivery of those objectives was considered.
122 Great Portland Estates plc Annual Report 2022
Executive Directors’ personal objectives
The Executive Directors’ personal objectives, approved by the Committee, are designed to focus on the delivery of the
strategic priorities and the successful management of risk for both 2021/22 and the longer term. Following consideration
of achievement against the Executive Directors’ personal objectives set at the beginning of the year as listed below,
the Committee awarded Toby Courtauld, Nick Sanderson and Dan Nicholson 75%, 75% and 50% respectively of the
full potential bonus for Operational Excellence.
Measure
Score Key achievements
Key achievements
CEO CF&OO CEO CF&OO Shared
Evolve GPE’s strategy to capitalise
on changing conditions, including
driving acquisitions strategy into
new areas
%/% %/% – Driven strategic pivot to focus on HQ repositioning and Flex spaces.
– Driven brand refresh; launched and product lines redefined.
– Developed Customer first approach and led restructuring to support
customer service culture.
– Retail and wider sales plans reappraised. Led disposal of 160 Old Street
for £181.5m.
– New one-year Innovation Strategy adopted. Awarded a SmartScore
‘platinum’ rating at the Hickman, a world-first.
– Led the acquisition of Gresse Street for our Flex offering.
– Developed acquisitions pipeline and strategy with focus
on sustainability and Flex.
– Flex ambitions agreed and roll-out progressed. Successful letting
of Dufour’s Place and Flex partnership entered at the Hickman.
– Good progress on developments. Completed 1 Newman Street.
Obtained planning permissions at 2 Aldermanbury Square and
French Railways House. Further progress needed at New City Court.
– Won Property Awards’ 2021 Property Company of the Year and
Commercial Property Developer of the Year.
– Record year for leasing with £38.5m of leases signed. All offices
pre-let at 50 Finsbury Square.
– Positive shareholder feedback and clear articulation of strategy.
Won IR Magazine’s 2021 Award for ‘Best in Sector’.
Champion sustainability and
embed into strategy, operations
and culture as a core discipline,
including developing social impact
%/% %/%
– 50 Finsbury Square construction progressed to deliver on
Sustainability Statement of Intent and expected to be GPE’s first
certified Net Zero Carbon building.
– Progress made against Net Zero Carbon Roadmap.
– Innovation in development to deliver sustainability ambitions,
including initiatives at 2 Aldermanbury Square and Minerva House.
– Decarbonisation fund protocols established and funds deployed.
– EPC compliance analysis completed for each building across the
portfolio and ‘stranded asset’ acquisition opportunities strategy
developed.
– Launch of new Social Impact Strategy. £631,000 of social value
created in the year.
– Visible and committed internal leadership: CEO Chair of Sustainability
Committee and CF&OO Chair of Social Impact Committee.
– Also building market-leader recognition for the Group.
Develop the team and an
inclusive and progressive people
strategy while maintaining
strong engagement
%/% %/% – Led material hires throughout the year.
– Led restructuring of senior management roles, including creation
of Flex leadership positions.
– Supported progression and promotion of diversity and inclusion.
– Launched new strategic People Plan with a focus on diversity
and inclusion.
– Oversaw launch of Inclusion Committee.
– Strong ratings in all employee engagement surveys.
– Increased the number of women on the Executive Committee.
– Introduced and reinforced a coaching and development
culture culminating in a number of internal promotions.
Review our purpose, champion
our values and deliver operational
excellence and resilience
%/% %/%
– Successful launch of revised strategy and refreshed corporate
brand including clearer articulation of vision and purpose.
– Supported customers with successful return to work programmes.
– Strong customer experience and satisfaction with upper quartile
NPS for London offices.
– Hybrid Working Policy adopted to allow for permanent flexibility
in working patterns, without disruption to productivity.
Maintain our financial
strength and control
– %/% – Improved rent collections.
– Implementation of IT strategy.
– Maintained one of the lowest loan-to-property value ratios
in the UK REIT sector.
– Launched Sustainable Finance Framework.
– Enhanced debt position with extension of the Group’s revolving
credit facility.
– Led new internal auditor appointment.
– Finance team further strengthened.
– Dividend maintained.
– Additional corporate broker appointment following review.
– Adoption of new Anti-Fraud, Bribery & Corruption Policy.
Total %/% %/%
Dan Nicholson joined part way through the year and, therefore, he did not participate in the objective setting process
alongside colleagues. Instead, the Committee looked at his performance in the round and noted his strong start and particular
contribution to the development and execution of the Flex strategy. While he contributed to an overall above-target corporate
performance, as he was involved for less than a full year, the Committee awarded him an on-target level of 50% of maximum
for the personal component.
Governance
123Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report continued
Executive Directors’ LTIPs
Anticipated vesting of 2019 LTIP awards
The tables below set out the alignment of LTIP awards with Company strategy and the anticipated vesting for those awards in
June 2022, together with indicative payouts for the Executive Directors. The anticipated value of these awards at vesting reflects
the disclosure in the single figure table on page 120.
Anticipated vesting of LTIP awards granted in the year ended 31 March 2020, vesting in the year ending 31 March 2023, is included
in the 2022 single figure table.
Key elements
of strategy % of award Measured by
Threshold
performance
target (20%)
Maximum
performance
target (100%)
Estimated
performance
Estimated
vesting level as at
17 May 2022
as a percentage
of maximum by
vesting date
1
Shareholder
value
.% Total Shareholder Return
(based on a three-year
performance period)
Median Upper
quartile
.
nd
percentile
%
Absolute
performance
.% Total Accounting Return
(based on a three-year
performance period)
% p.a. % p.a. .% p.a.
(actual)
%
Portfolio
performance
.% Total Property Return against IPD
(central London Index) (based on
a three-year performance period)
Index Index +
.% p.a.
Index +
.% p.a.
.%
Total (estimated) .%
1. Toby Courtauld and Nick Sanderson’s 2019 LTIP is due to vest on 3 June 2022. For the TAR and TPR targets, the performance period for the 2019 awards is the
three-year period to 31 March 2022. TPR performance against the IPD Index is awaited at the date of this Report and performance is therefore estimated.
For the TSR element, the vesting period is the three-year period from the award date (3 June 2019) and compares the Company’s TSR to that of the
constituents, at the date of grant, of the FTSE 350 Real Estate Index excluding agencies.
Confirmed vesting of 2018 LTIP awards
The figures provided in last year’s Annual Report for the 2018 LTIP awards were disclosed on an estimated basis. The table below
sets out the confirmed performance outcomes of the 2018 LTIP awards that resulted in a nil vesting following the expiry of the
three-year performance period on 3 June 2021.
Key elements
of strategy % of award Measured by
Threshold
performance
target (20%)
Maximum
performance
target (100%) Performance
Confirmed
percentage
of maximum
at end of
performance
period
(3 June 2021)
Shareholder
value
.% Total Shareholder Return
(based on a three-year
performance period)
Median Upper
quartile
.
th
percentile
%
Absolute
performance
.% Total Accounting Return
(based on a three-year
performance period)
% p.a. % p.a. Minus
.% p.a.
%
Portfolio
performance
.% Total Property Return against IPD
(central London Index) (based on
a three-year performance period)
Index Index +
.% p.a.
Index minus
.% p.a.
%
Total %
Number of shares at the end of the performance period for 2018 LTIP awards
No. of shares awarded
as nil cost options % overall vesting
No. of shares under
option at the end of the
performance period
1
Toby Courtauld ,
Nick Sanderson ,
1. The LTIP awards made in 2018 were subject to a five-year release period, comprising a three-year performance period (to 3 June 2021) followed by a further
two-year holding period. No options will become exercisable on the fifth anniversary of the date of award because no options vested after the three-year
performance period.
124 Great Portland Estates plc Annual Report 2022
Unvested share awards
The following tables provide details of outstanding share awards under the LTIP and the performance measures that apply to the
awards. All awards were granted in the form of nil cost options.
Executive Director
4
Date of grant Basis of award
Face value
of award
made
£000
Number
of shares
under
award
1,2
Percentage
of award
receivable for
threshold
performance
End of
performance
period
Performance
measures
Toby Courtauld June
% of salary , , % June TSR – .%
TPR – .%
TAR Target – .%
July % of salary , , % July TSR – %
TAR Target – %
June % of salary , , % June TSR – %
TAR Target – %
Total ,
Nick Sanderson June
% of salary , , % June TSR – .%
TPR – .%
TAR Target – .%
July % of salary , , % July TSR – %
TAR Target – %
June % of salary , , % June TSR – %
TAR Target – %
Total ,
1. For the 2019, 2020 and 2021 LTIP awards, the face value is calculated on the five-day average share price prior to the date of grant of the LTIP award.
For the 2019 LTIP, this was up to and including 31 May 2019, being £7.18. For the 2020 LTIP, this was up to and including 28 July 2020, being £5.81.
For the 2021 LTIP, this was up to and including 4 June 2021, being £7.33.
2. In addition, a cash sum equivalent to the value of dividends on the number of plan shares which vest in respect of the period from the award date
to the expiry of the applicable two-year holding period will be payable at the end of that period.
3. The estimated overall outcome for the 3 June 2019 LTIP as at 17 May 2022 is 7.4%. This would equate to 18,577 and 12,781 shares vesting for Toby Courtauld
and Nick Sanderson respectively.
4. Dan Nicholson will be entitled to his first LTIP award in 2022 and therefore has no unvested share awards at the date of this Report.
2019 LTIP award – performance measures
Performance measure over three years % of award
Vesting
level
Start of
measurement period
% Straight-line vesting
between these points
%
Total Accounting Return .% % p.a. % p.a. April prior to grant date
TSR against constituents of FTSE 350
Real Estate Sector (excluding agencies)
.% Median Upper
quartile
Grant date
Total Property Return against IPD
Total Property Return – central London Index
.% Index Index +
.% p.a.
April prior to grant date
2020 and 2021 LTIP awards – performance measures
Performance measure over three years % of award
Vesting
level
Start of
measurement period
% Straight-line vesting
between these points
%
2020 LTIP Award
Total Accounting Return % p p April prior to grant date
TSR against constituents of FTSE 350
Real Estate Sector (excluding agencies)
% Median Upper
quartile
Grant date
2021 LTIP Award
Total Accounting Return % % p.a. % p.a. April prior to grant date
TSR against constituents of FTSE 350
Real Estate Sector (excluding agencies)
% Median Upper
quartile
Grant date
Payment to past Directors*
No payments to past Directors were made during the year.
Payment for loss of office*
No payments were made to Directors during the year for loss of office.
Governance
125Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report continued
Executive Director remuneration from other roles
Executive Directors are able to accept external Board appointments with the consent of the Board. Any fees received by
an Executive Director for such an external appointment can be retained by the individual. Toby Courtauld is a Non-Executive
Director of Liv-ex Limited, for which he received no remuneration during the year. He also received no remuneration for
serving as a Director of the New West End Company.
Nick Sanderson was appointed a Trustee of the Outward Bound Trust in September 2021 for which he received no remuneration
during the year.
Statement of Executive Directors’ shareholdings and share interests*
Executive Directors are required to hold a minimum of 300% of base salary in shares. The table below sets out their holdings
against the requirement and their beneficial and conditional ownership as at 31 March 2022. Dan Nicholson joined the Board
on 6 September 2021. As with the other Executive Directors, Dan will be required to build up a shareholding of 300% of base
salary and to retain all shares that are vested to him, net of any tax liabilities, until the requirement is satisfied.
Director
Beneficial ownership Conditional ownership
5
Shareholding
requirement
met
8,9
Comparator
to 2021
Number
of shares
owned
1
SIP
Matching
shares
subject to
forfeiture
Total
beneficial
ownership
2,3,4
LTIP
subject to
performance
conditions
LTIP not
subject to
performance
conditions
6
Deferred
Share
Bonus
Plan
7
Total
beneficial
and
conditional
ownership
as at
31 March
2022
Total
beneficial
and
conditional
ownership
as at
31 March
2021
Toby
Courtauld ,, , ,, , , , ,, ,, ,% – Yes ,%
Nick
Sanderson , , , , , , , , % – Yes %
Dan
Nicholson – – – %
10
–
1. Excludes SIP shares that are subject to forfeiture.
2. Holdings are calculated based on the share price as at 31 March 2022 of £7.12.
3. Beneficial interests include shares held directly or indirectly by connected persons.
4. No share options were exercised during the year. Between 1 April 2022 and 17 May 2022, Toby Courtauld and Nick Sanderson each acquired 21 Partnership
shares and 42 conditional Matching shares respectively under the SIP. Dan Nicholson acquired 22 Partnership shares and 44 conditional Matching shares
during that period. In addition, under the SIP, 80 Matching shares vested to each of Toby Courtauld and Nick Sanderson. Otherwise there were no changes
in their shareholdings during that period.
5. 40% of the Executive Directors’ annual bonuses for the year ended 31 March 2022 will be deferred into shares for three years under the Deferred Share Bonus
Plan (DSBP). The number of shares awarded will be disclosed following the awards, in the 2023 Annual Report. In respect of their annual bonuses for the year
ended 31 March 2021, Toby Courtauld and Nick Sanderson were granted DSBP awards over 12,410 and 9,075 shares respectively.
6. Consistent with best practice, estimated after-tax shares that will be retained after the cessation of the two-year holding period are included in the
shareholding requirement (51.75% of shares retained).
7. Consistent with best practice, estimated after-tax shares retained are included in the shareholding requirement (51.75% of shares retained).
8. Post-cessation shareholding guidelines came into effect following the approval of the Policy at the 2020 AGM. Executive Directors are expected to retain
the lower of actual shares held at cessation and shares equal to 300% of salary for two years post-cessation. Shares retained following vesting of LTIP
and/or DSBP awards granted after the 2020 AGM will be held in escrow to enable enforcement of the post-cessation guidelines.
9. Executive Directors are required to hold 300% of their base salary and are expected to retain the after-tax shares received on the vesting of awards
until they have acquired the necessary shares to meet their shareholding requirement.
10. Dan Nicholson joined the Board with effect from 6 September 2021 and is working towards his minimum shareholding requirement.
Executive Directors’ remuneration for the year ending 31 March 2023
Statement of implementation of Directors’ remuneration policy for the year ending 31 March 2023
The Policy and its implementation for the Executive Directors for the forthcoming financial year is summarised below.
For information on the Chair of the Board and Non-Executive Directors, please refer to page 128.
Salary
Executive Director
Year ending
31 March 2023
£000
Year ended
31 March 2022
£000
Base salary
increase
Toby Courtauld .%
Nick Sanderson .%
Dan Nicholson .%
Executive Directors have received an increase in salary below the average awarded to all employees. This increase reflected
the minimum increase provided to employees across the Group of 3.5%. In reviewing the salaries of the Executive Directors,
the Committee has also taken account of both the individual’s and Company’s performance and the employment conditions
and salary increases awarded to employees across the Group.
126 Great Portland Estates plc Annual Report 2022
Pension and benefits
There have been no changes to the benefits and pension provision for the Executive Directors. Toby Courtauld and Nick
Sanderson have agreed their pension contribution rates will be aligned with the average rate available to all employees
(being 15% of base salary) by the end of the 2022 calendar year. Dan Nicholson’s employer pension contributions were
set at this rate on his appointment.
Bonus for the year ending 31 March 2023
The target and maximum annual bonus potentials will remain unchanged at 75% and 150% of salary respectively for the
Executive Directors. Under the remuneration policy, 40% of any annual bonus outcome will be deferred into shares for three years
under the Deferred Share Bonus Plan. The table below sets out the performance measures and their respective weightings for
the year ending 31 March 2023.
Performance measures
2
Weighting Description
Capital growth 30% Growth of the Company’s property portfolio against MSCI’s relevant Capital Growth Index for the year
to 31 March 2023 with 16.67% of this element payable at Index and 100% for a pre-determined level
of outperformance.
Total Accounting
Return
1
30% Growth of EPRA NTA plus dividends paid against a target range for the year to 31 March 2023.
20% of this element is payable at threshold.
Flex growth 10% Growth of the Company’s Flex office space paid against a target range for the year to 31 March 2023.
20% of this element is payable at threshold.
ESG/strategic
measures
15% This element will be dependent upon the achievement of objectively measurable targets,
each of which have an equal 5% weighting, as follows:
(i) Sustainability – energy consumption reduction against a target with 20% of this element payable
at threshold and 100% for a pre-determined level of outperformance;
(ii) Customer satisfaction – Net Promoter Score achievement with 20% of this element payable
at threshold and 100% for a pre-determined level of outperformance; and
(iii) Employees – 20% of this element will be payable on achievement of an Employee Engagement
and Inclusion Index score and 100% payable for a pre-determined level of outperformance.
Personal/team
performance
15% Assessment of the personal element of the bonus focusing on key objectives and behaviours.
The assessed outturn, and details of delivery against the objectives, will again be disclosed in next
year’s report.
1. Any dividends will be deducted from the base figure from the point of distribution (as it is not realistic to deliver growth after capital has been repaid
to shareholders), except where reflected in some other way such as through a share consolidation.
2. The Committee is of the opinion that, given the commercial sensitivity around GPE’s business, disclosing precise targets for the Annual Bonus Plan in advance
would not be in the best interests of shareholders or the Company. Objectives, performance achieved and awards made will be published at the end of the
performance period so shareholders can fully assess the basis for any payouts.
LTIP awards for the year ending 31 March 2023
Performance measure over three years % of award
Vesting
level
Start of
measurement period
% Straight-line vesting
between these points
%
TAR % % p.a. % p.a. April prior to grant
TSR against constituents of FTSE 350
Real Estate Sector (excluding agencies)
% Median Upper quartile Grant date
The maximum potential award for the 2022 LTIP is 300% of base salary. Practice has been to grant at this level each year.
The awards, granted in the form of nil cost options, will be subject to a 50:50 mix of relative (to a predetermined group of other
real estate companies) TSR and absolute TAR measures. Following a three-year performance period, the 2022 LTIP awards will
be subject to a two-year holding period, whereby participants will not be permitted to exercise any performance-vested awards
until the fifth anniversary of the award date. The holding period will generally continue to operate post-cessation of employment.
Governance
127Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report continued
Chair and Non-Executive Directors’ remuneration
Single figure table annual fees for year ended 31 March 2022*
This section of the Report contains details of how the Policy for the Chair and Non-Executive Directors was implemented during
the financial year ended 31 March 2022.
Name
Fees
1
Benefits Totals
2022 2021 2022 2021 2022 2021
Richard Mully
–
Charles Philipps – –
Mark Anderson
1
– – – –
Wendy Becker – –
Nick Hampton
2
– –
Vicky Jarman – –
Alison Rose – –
Emma Woods
3
– – – –
Total –
1. Mark Anderson joined the Board on 1 September 2021.
2. Nick Hampton joined the Remuneration Committee on 1 September 2021.
3. Emma Woods joined the Board on 1 February 2022.
4. Richard Mully’s benefit of less than £1,000 related to reimbursed travel (and related tax) for GPE meetings.
Shareholdings*
31 March 2022 31 March 2021
Richard Mully , ,
Charles Philipps , ,
Mark Anderson – –
Wendy Becker , ,
Nick Hampton , ,
Vicky Jarman , ,
Alison Rose – –
Emma Woods – –
There were no changes in the shareholdings of the Chair and Non-Executive Directors in office as at 31 March 2022 or between
1 April 2022 and 17 May 2022.
Annual fees for year ending 31 March 2023
The table below sets out the fee rates for the Chair of the Board and Non-Executive Directors for the year ending 31 March 2023.
The fees of the Chair and the base fees of the Non-Executive Directors have been increased by approximately 3.5%, in line with
the minimum base increase for employees. Fee levels for the Chair and Non-Executive Directors are assessed having regard
to individual responsibility and fees paid to Non-Executive Directors in the wider FTSE 250.
1 April 2021 to
31 March 2022
£
From
1 April 2022
(per annum)
£
Chair fee , ,
Non-Executive Director base fee , ,
Senior Independent Director fee , ,
Audit or Remuneration Committee Chair
1
, ,
Audit or Remuneration Committee Member , ,
Nomination Committee Member , ,
1. Vicky Jarman will succeed Nick Hampton as Chair of the Audit Committee with effect from the conclusion of the 2022 AGM scheduled for 7 July 2022.
Nick Hampton will remain a member of the Audit Committee following his retirement as Chair. Wendy Becker will step down from the Board with effect
from the conclusion of the 2022 AGM and, from that time, will be succeeded as Chair of the Remuneration Committee by Emma Woods.
128 Great Portland Estates plc Annual Report 2022
Other disclosures
Percentage change in Board remuneration vs Group employees
The table below shows the percentage change in remuneration/fees for the years ended 31 March 2021 to 31 March 2022
for each of the Directors who served during the year (including salary, taxable benefits and annual bonus) compared to that
for an average Group employee.
Name
Base salary/fees Taxable benefits
5
Bonus
6
Change Change Change
2020/21 2021/22 2020/21 2021/22 2020/21 2021/22
Average employee
1
+.% +.% +.% -.% -. % +.%
Executive Directors
Toby Courtauld +.% +.% -.
%
-.% -.% +.%
Nick Sanderson +.% +.% -.% -.% -.% +.%
Dan Nicholson
3
n/a n/a n/a n/a n/a n/a
Non-Executive Directors
3
Richard Mully (Chair) -.% % -% +% n/a n/a
Charles Philipps -.% % – – n/a n/a
Mark Anderson
2
n/a n/a n/a – n/a n/a
Wendy Becker -.% % – – n/a n/a
Nick Hampton
4
-.% % -% – n/a n/a
Vicky Jarman -.% % – – n/a n/a
Alison Rose -.% % – – n/a n/a
Emma Woods
2
n/a n/a n/a – n/a n/a
1. Based on all employees who have been employed for the full 2020/21 and 2021/22 financial years. Average employee pay has been calculated on a full-time
equivalent basis.
2. Mark Anderson and Emma Woods joined the Board on 1 September 2021 and 1 February 2022 respectively.
3. Dan Nicholson joined the Board on 6 September 2021.
4. Nick Hampton joined the Remuneration Committee on 1 September 2021. The numbers above are annualised.
5. Taxable benefits from 31 March 2022, in line with the Single Figure Table on page 120, have been updated to include: private medical insurance, membership
subscriptions, travel expenses, luncheon vouchers, Employee Assistance Programme and entertainment. Prior years included death in service, life assurance
and permanent health insurance which are not taxable benefits in line with HMRC guidelines.
6. Executive Directors have a higher proportion of their remuneration linked to variable pay and Company performance for greater alignment with
shareholders. The percentage change in bonus payments will therefore fluctuate according to variable pay outcomes each year. The payout for the 2020/21
Annual Bonus financial measures was nil, resulting in the higher percentage change in bonuses for 2021/22.
Ten-year Chief Executive remuneration package
The table below shows the Chief Executive’s remuneration package over the past ten years, together with incentive payout/vesting
as compared to the maximum opportunity.
2013
1
2014 2015 2016 2017 2018 2019 2020 2021 2022
Single figure of total remuneration (£000) , , , , , , ,
1
,
Bonus payout (as % of
maximum opportunity) % % % % % % % % .% .%
Long-term incentive vesting rates
(as % of maximum opportunity) % % % % % % % .% % .%
1. Includes a one-off SMP award made in 2010 of 100% of salary.
2. Restated to reflect the actual LTIP performance outcome of 0% as referred to in the single figure table on page 120. The figure provided in last year’s
Annual Report was disclosed on an estimated basis.
3. Based on estimated performance as at 17 May 2022.
Governance
129Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report continued
Total shareholder return performance
The following graph shows the total shareholder returns for the Company for each of the last ten financial years compared
to the FTSE 350 Real Estate Index (excluding agencies). The Company is a constituent of the FTSE 350 Real Estate Index
and the Committee considers this benchmark to be the most appropriate for illustrating the Company’s performance.
Total shareholder return over ten years (indexed) £
31 March
2012
31 March
2013
31 March
2014
31 March
2015
31 March
2016
31 March
2017
31 March
2018
31 March
2022
31 March
2021
31 March
2020
31 March
2019
Great Portland Estates plc
Source: Refinitiv Datastream
FTSE 350 Real Estate – Sector (Excluding Agencies)
300
250
200
150
100
CEO pay ratio
Although the Company has less than 250 employees and is not, therefore, subject to any legal requirement to include such
ratios, the Committee considers inclusion of the ratio to be reflective of best practice and includes this on a voluntary basis.
The Committee notes the general preference of institutional shareholders for companies to use statutory Method A and prepared
the calculations on that basis. However, for a company with a relatively small number of employees (131 as at 31 March 2022),
the ratios can be unduly impacted by joiners and leavers who may not participate in the full suite of remuneration arrangements
in the year of joining or leaving. Accordingly, the Committee modified the statutory basis to exclude any employee not employed
throughout the financial year. In all other respects, Method A was followed so the following tables refer to modified Method A
being adopted.
The Company believes that a bias in senior executive pay to variable pay is the most appropriate means of both incentivising
the Executives and aligning them with shareholders. The ratios will therefore fluctuate according to variable pay outcomes
each year.
Ratio of the pay of the Chief Executive to that of the UK lower quartile, median and upper quartile employees
Year Method
Pay ratio
25th percentile 50th percentile (median) 75th percentile
31 March 2022 Modified Method A .: .: . :
31 March 2021
1
Modified Method A .: .: .:
31 March 2020 Modified Method A .: .: .:
31 March 2019 Modified Method A .: .: .:
1. The 2021 ratios have been updated to reflect the actual vesting outcome of the 2018 LTIP awards at 0%.
Additional information on the ratio of the pay of the Chief Executive to that of employees
– Employee pay data is based on full-time equivalent pay for UK employees as at 31 March 2022. For each employee, total pay
is calculated in line with the single figure methodology (i.e. fixed pay accrued during the financial year and the value of
performance-based incentive awards vesting in relation to the performance year).
– Employee pay data excludes leavers and joiners to help ensure data is on a like-for-like basis. No other calculation adjustments
or assumptions have been made.
– Chief Executive pay is as per the single total figure of remuneration for 2022, as disclosed on page 120.
– The 2022 ratio will be re-stated in the 2023 Directors’ remuneration report to take account of the final LTIP vesting data
for eligible employees and for the Chief Executive.
130 Great Portland Estates plc Annual Report 2022
The Committee has considered the pay data for the three individuals identified for 2022 and believes that it fairly reflects pay
at the relevant quartiles among the UK employee population. Each of the individuals identified was a full-time employee during
the year and received remuneration in line with the Policy.
Salary and total remuneration used to calculate the pay ratio
Chief Executive
£000
25th percentile
£000
50th percentile (median)
£000
75th percentile
£000
Total salary
Total remuneration (single figure) ,
Employee Share Trust
Upon the vesting of share awards, shares used to satisfy awards under the LTIP and DSBP are transferred out of the Great
Portland Estates plc LTIP Employee Share Trust (the Trust), a discretionary trust established to facilitate the operation of the
Company’s share plans. The shares to satisfy vested awards have been purchased by the Trustees of the Trust in the open market.
The number of shares held by the Trust as at 31 March 2022 was 877,335 (2021: 877,335).
Dilution
The Company currently funds the Trustees to purchase all of the shares required to satisfy awards under the Company’s share
plans and no shares have been issued to satisfy any grants made in the last ten years. However, if the Company decided to issue
new shares to meet these awards, the Company would operate all of its share incentive arrangements within The Investment
Association (IA) Guidelines on dilution. The following table sets out the level of dilution against the IA limits for all share plans
and discretionary plans in respect of the outstanding awards should the Company issue shares rather than use purchased
shares held in Trust.
Maximum As at 31 March 2022
1
10% dilution in ten years (all plans) .%
5% dilution in ten years (discretionary plans) .%
1. This figure shows the number of shares required to satisfy all outstanding awards as at 31 March 2022 as a percentage of the Company’s issued share
capital were these to be satisfied by the issue of new shares. This does not include vested awards that have been satisfied using market purchased shares.
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in 2020, 2021 and 2022:
Relative importance of spend on pay £m
Overall spend on pay Overall spend on dividend
2021 202220202021 20222020
+23%
-13%
21.3
18.6
22.9
0%
-4%
33.2
31.8
31.9
35
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
Governance
131Annual Report 2022 Great Portland Estates plc
Directors’ remuneration report continued
Committee advisers
The Committee is satisfied that the advice received from FIT Rem is independent and objective as FIT Rem complies with
the Code of Conduct for Remuneration Consultants (which can be found at www.remunerationconsultantsgroup.com)
and provides no other advice to the Group. FIT Rem’s fees for the year to 31 March 2022 were £68,137 which were charged
on its normal terms.
Independent and objective performance certificates are provided to the Committee by:
– Aon Hewitt on measurement of TSR performance targets for the LTIP and 2021/22 Annual Bonus Plan awards together
with IFRS 2 calculations. Fees paid to Aon Hewitt in respect of this were £15,500. Aon Hewitt also provides gender pay
gap assistance to the Group and fees paid in relation to this totalled £7,000; and
– Morgan Stanley Capital International (MSCI) on measurement against its property benchmark, for the Executive
and Employee Annual Bonus Plan and measurement of TPR performance targets for the LTIP awards as part of its
MSCI membership. Fees paid in relation to this membership totalled £64,284.
Statement of voting at the AGM
The following table shows the results of:
– the advisory vote on the Directors’ remuneration report at the 8 July 2021 AGM; and
– the binding vote on the Directors’ remuneration policy commencing from the 24 July 2020 AGM.
It is the Committee’s policy to consult with major shareholders prior to any major changes to its Executive remuneration.
For Against Abstentions
2021 Directors’ remuneration report ,, (.%) , (.%) ,
2020 Directors’ remuneration policy ,, (.%) ,, (.%) ,
Consideration of shareholder views
When determining remuneration, the Committee takes into account the guidelines of investor bodies and shareholder views.
The Committee is always open to feedback from shareholders on remuneration policy and arrangements, and commits to
undertaking shareholder consultation in advance of any significant changes to the remuneration policy. An extensive shareholder
consultation process took place during 2019/20 in connection with the changes to the remuneration policy which were approved
by shareholders at the 2020 AGM. A further shareholder consultation process will commence during 2022/23 in connection with
any changes to the policy which will be submitted to shareholders for approval at the 2023 AGM.
Deliberation and process
The Committee ensures it seeks independent advice as appropriate and the Committee also has access to HR and Corporate
Secretariat without the executives present. Consistent with good practice, any decisions are taken without the affected
individual present. This Report will be submitted to shareholders for approval at the 2022 AGM which is scheduled to be held
on 7 July 2022.
Service agreements and payments for loss of office
The policy of the Company is to have service contracts for Executive Directors with notice periods of one year. It is sometimes
necessary when recruiting a new Executive Director to give a service contract with an initial term of up to 18 months in which
case a 12-month notice period may be given no earlier than six months from the start date or the contract.
Non-Executive Directors, who have letters of appointment, are subject to the provisions of the Articles of Association.
In accordance with the UK Corporate Governance Code they are subject to annual re-election and have a notice period
of three months by either party. They are not eligible for payment in lieu of notice or any other payment on termination.
132 Great Portland Estates plc Annual Report 2022
The following table sets out the dates of each of the Directors’ service agreements or appointment letters and their
unexpired terms.
Executive Date of service agreement Unexpired term (months)
Toby Courtauld 18 March 2002 (amended 2017) 12
Nick Sanderson 7 June 2011 (amended 2017) 12
Dan Nicholson 6 September 2021 12
Non-Executive Date of appointment letter Unexpired (months)
Richard Mully 12 October 2016 3
Charles Philipps 10 January 2014 3
Mark Anderson 1 September 2021 3
Wendy Becker
1
12 January 2017 3
Nick Hampton 28 September 2016 3
Vicky Jarman 22 January 2018 3
Alison Rose 4 April 2018 3
Emma Woods 1 February 2022 3
1. Wendy Becker will be stepping down from the Board from the conclusion of the 2022 AGM which is scheduled to be held on 7 July 2022 and will not be putting
herself forward for re-election.
Approved by the Board on 19 May 2022 and signed on its behalf by:
Wendy Becker
Chair of the Remuneration Committee
19 May 2022
Governance
133Annual Report 2022 Great Portland Estates plc
Report of the Directors
Strategic Report
The Group’s Strategic Report on pages 02 to 78 includes
the Company’s business model and strategy, the principal
risks and uncertainties facing the Group and how these
are managed and mitigated, an indication of likely future
developments in the Company and details of important
events since the year ended 31 March 2022.
The purpose of the Annual Report is to provide information
to the members of the Company, as a body. The Company,
its Directors, employees, agents or advisers do not accept
or assume responsibility to any other person to whom this
document is shown or into whose hands it may come and
any such responsibility or liability is expressly disclaimed.
The Annual Report contains certain forward-looking
statements with respect to the operations, performance
and financial condition of the Group. By their nature,
these statements involve uncertainty since future events
and circumstances can cause results and developments
to differ from those anticipated. The forward-looking
statements reflect knowledge and information available
at the date of preparation of this Annual Report. Nothing in
this Annual Report should be construed as a profit forecast.
Results and dividends for the year
The Group’s results for the year are set out on pages 138 to 164.
An interim dividend of 4.7 pence per share (2021: 4.7 pence)
was paid on 5 January 2022, and the Directors propose to
pay a final dividend of 7.9 pence per share on 11 July 2022
to shareholders on the register of members as at the close
of business on 27 May 2022. This makes a total of 12.6 pence
per share (2021: 12.6 pence) for the year ended 31 March 2022.
Directors
Biographical details of the current Directors of the Company
are shown on pages 84 and 85.
In accordance with the UK Corporate Governance Code,
all the Directors will retire and those who wish to continue
to serve will offer themselves for election or re-election
at the forthcoming Annual General Meeting. Wendy Becker
will be stepping down from the Board, and as the Chair of the
Remuneration Committee, from the conclusion of the Annual
General Meeting to focus on her other commitments.
Directors’ shareholdings
The interests of the Directors of the Company (and of their
connected persons) in the shares of the Company, which
have been notified to the Company in accordance with
the UK Market Abuse Regulation, are set out in the Directors’
remuneration report on pages 126 and 128. The Directors’
remuneration report also sets out details of any changes
in those interests between 31 March 2022 and 17 May 2022.
Directors’ indemnities and insurance
On 14 September 2007, an indemnity was given by the Company
to the Directors in terms which comply with company law.
The indemnity was in force during the year and remains
in force at the date of this Report of the Directors.
The Company maintains directors’ and officers’ liability
insurance and pension trustee liability insurance, both of
which are reviewed annually.
Directors’ powers
The powers of the Directors are contained in the Company’s
Articles of Association. These include powers, subject to relevant
legislation, to authorise the issue and buyback of the Company’s
shares by the Company, subject to authority being given to
the Directors by the shareholders in a general meeting.
Appointment and replacement of Directors
The rules about the appointment and replacement of Directors
are contained in the Company’s Articles of Association. Under
the Articles of Association, every Director who held office on the
date seven days before the date of notice of the Annual General
Meeting (AGM) shall retire from office. A retiring Director shall
be eligible for re-election at the AGM, and a Director who
is re-elected will be treated as continuing in office without
a break. This is in line with the UK Corporate Governance Code,
which recommends that all Directors should be subject to
annual re-election.
Changes to the Articles of Association must be approved by
the Company’s shareholders in accordance with legislation
in force from time to time.
Corporate governance statement
The information fulfilling the requirements of the corporate
governance statement can be found in this Report of the
Directors and on pages 79 to 133, all of which are incorporated
into this Report of the Directors by reference.
Political donations
It is the Company’s policy not to make political donations
or undertake any activities incurring political expenditure.
Annual General Meeting
Details of the Company’s AGM can be found in the Notice
of AGM 2022, which will be made available on the Company’s
website at www.gpe.co.uk/investors/shareholder-
information/agmgm.
Additional disclosures
Disclosures required by Schedule 7, Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations
2008 (as amended), to the extent not already disclosed
or referred to in this Report of the Directors, can be found
on the following pages, all of which are incorporated into
this Report of the Directors by reference:
Page/s
Financial instruments , to
Greenhouse gas emissions, energy
consumption and energy efficiency
action to
Engagement with suppliers,
customers and others
to
to
Research and development
, , to , ,
, , , to
Disclosures required by the Financial Conduct Authority’s
Listing Rule 9.8.4R can be found on the following pages:
Page/s
Capitalised interest and
Waiver of dividends
134 Great Portland Estates plc Annual Report 2022
The Directors’ responsibilities statement is on page 136 and
is incorporated into this Report of the Directors by reference.
Significant shareholdings
As at 31 March 2022, the Company had been notified, in
accordance with the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules (DTR 5), of the following
interests in the voting rights in its ordinary share capital:
Number of
voting rights
1
%
1
Nature of
holding
1
Norges Bank
Investment
Management
,, . Direct
T.Rowe Price
Associates, Inc.
,, . Indirect
KKR Investment
Management LLC
,, . Indirect
BlackRock Inc. ,,
,,
.
.
Indirect
Financial
instruments
1. As at date of notification.
In the period from 31 March 2022 to 17 May 2022, the Company
received one further notification from T. Rowe Price Associates,
Inc. disclosing that its indirect holding had increased to
35,608,863 ordinary shares (14.02% of the total voting rights
in the Company). Information provided to the Company under
the Financial Conduct Authority’s Disclosure Guidance and
Transparency Rules is publicly available via the regulatory
information service and on the Company’s website.
Share capital and control
As at 31 March 2022, the issued share capital of the Company
was 253,867,911 (2021: 253,867,911) ordinary shares of 15
5
/
19
pence
each, all fully paid up and listed on the London Stock Exchange.
At the 2021 AGM, shareholders authorised the Company to
make market purchases of up to 38,054,799 ordinary shares
of 15
5
/
19
pence each, representing 14.99% of the issued share
capital of the Company as at 27 May 2021, such authority
to expire at the earlier of the conclusion of the 2022 AGM
or 1 October 2022. No shares were purchased under that
authority during the financial year. The Company is seeking
to renew the authority at the forthcoming AGM, within the
limits set out in the Company’s Notice of AGM 2022.
There are no restrictions on transfer or limitations on the
holding of the ordinary shares. None of the shares carry
any special rights with regard to the control of the Company.
There are no known arrangements under which financial
rights are held by a person other than the holder of the shares
and no known agreements on restrictions on share transfers
and voting rights. The Great Portland Estates plc LTIP Employee
Share Trust (the Trust) is an employee share scheme which
holds ordinary shares in the Company on trust for the benefit
of employees within the Group. The Trustee of the Trust has
the power to exercise all the rights and powers (including rights
with regard to control of the Company) incidental to, and to
generally act in relation to, the ordinary shares subject to the
Trust in such manner as the Trustee in its absolute discretion
thinks fit as if it were absolutely entitled to those ordinary
shares. The Trustee has waived the right to receive dividends
on the shares held in the Company.
Change of control
The Company has a number of unsecured borrowing facilities
provided by various lenders. These facilities generally include
provisions that may require any outstanding borrowings
to be repaid or the alteration or termination of the facilities
upon the occurrence of a change of control of the Company.
The Company’s Long Term Incentive Plan and Executive
Annual Bonus Plan contain provisions relating to the vesting
of awards in the event of a change of control.
Going concern
The Group’s business activities, together with the factors
affecting its performance, including the impact of the recent
geopolitical tensions and the receding COVID-19 pandemic,
are set out in the Strategic Report on pages 19 to 78. Details of
the finances of the Group, including its strong liquidity position,
attractively priced borrowing facilities and favourable debt
maturity profile are set out in ‘Our financial results’ on pages 30
to 33, including ‘Our capital strength’ on page 32 and in notes
15 and 16 of the financial statements on pages 158 to 160.
The Directors have reviewed the current and projected
financial position of the Group, making reasonable assumptions
about future trading performance, with particular focus on
macro-economic conditions in which the Group is operating,
including the ongoing economic disruption from geopolitical
tensions, high inflationary environment and rising interest
rates. This included a going concern scenario to consider the
impact of market disruption on the Group’s cash balances,
its capital commitments, its debt maturity profile, including
undrawn facilities, its levels of rent collection and the long-
term nature of customer leases. The Directors also conducted
extensive stress testing, including sensitising the potential
impact of climate change as detailed further in the viability
statement. Further information on the assumptions contained
in the going concern scenario is on page 142. On the basis of
this review, and after making due enquiries, the Directors have
a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence
for a period of at least 12 months from the date of approval
of the financial statements. Accordingly, they continue
to adopt the going concern basis in preparing the Annual
Report and financial statements.
Viability statement
The Company’s viability statement is on page 78.
Statement as to disclosure of information
to the auditor
So far as the Directors who held office at the date of approval
of this Report of the Directors are aware, there is no relevant
audit information of which the auditor is unaware and each
Director has taken all steps that he or she ought to have taken
as a Director to make himself or herself aware of any relevant
audit information and to establish that the auditor is aware
of that information. This confirmation is given and should be
interpreted in accordance with the provisions of section 418
of the Companies Act 2006.
By order of the Board
Darren Lennark
General Counsel & Company Secretary
Great Portland Estates plc
Company number: 596137
19 May 2022
Governance
135Annual Report 2022 Great Portland Estates plc
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
conformity with the requirements of the Companies Act 2006
and UK adopted international accounting standards, and have
elected to prepare the parent company financial statements
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards
and applicable law), including FRS 101 ‘Reduced Disclosure
Framework’. Under Company law the Directors must not
approve the accounts unless they are satisfied that they give
a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that period.
In preparing the parent company 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 whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements; and
– prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that directors:
– properly select and apply accounting policies;
– present information, including accounting policies,
in a manner that provides relevant, reliable, comparable
and understandable information;
– provide additional disclosures when compliance with
the specific requirements in IFRSs are insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity’s financial position
and financial performance; and
– make an assessment of the Company’s ability to continue
as a going concern.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
– the financial statements, prepared in accordance with
the relevant financial reporting framework, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole;
– the Strategic Report includes a fair review of the
development and performance of the business and the
position of the Company and the undertakings included
in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties
that they face; and
– the Annual Report and financial statements, taken
as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to
assess the Company’s position, performance, business
model and strategy.
This responsibility statement was approved by the Board
of Directors and is signed on its behalf by:
Toby Courtauld Nick Sanderson
Chief Executive Chief Financial & Operating Officer
19 May 2022 19 May 2022
136
Great Portland Estates plc Annual Report 2022
In this section:
138 Group income statement
138 Group statement of comprehensive income
139 Group balance sheet
140 Group statement of cash flows
141 Group statement of changes in equity
142 Notes forming part of the Group financial statements
165 Independent auditor’s report
175 Company balance sheet
176 Company statement of changes in equity
177 Notes forming part of the Company financial statements
Financial
statements
The office reception space
at 1 Newman Street, W1
Financial statements
137Annual Report 2022 Great Portland Estates plc
Group income statement
For the year ended 31 March 2022
Notes
2022
£m
2021
£m
Revenue
2
Cost of sales
3
(30.1 )
(24.7 )
Administration expenses
4
(35.0 )
(25.2 )
Expected credit losses
13
(4.1 )
(7.7 )
Development management losses
(0.4 )
(0.1 )
Operating profit before surplus/(deficit) from property and results of joint ventures
Surplus/(deficit) from investment property
9
(156.8 )
Share of results of joint ventures
10
(76.2 )
Operating profit/(loss)
(202.2 )
Finance income
5
Finance costs
6
(9.1 )
(7.8 )
Profit/(loss) before tax
(202.0 )
Tax
7
Profit/(loss) for the year
(201.9 )
Basic earnings/(loss) per share
8
(79.8 p)
Diluted earnings/(loss) per share
8
(79.8 p)
Basic EPRA earnings per share
8
Diluted EPRA earnings per share
8
All results are derived from continuing operations in the UK and are attributable to ordinary equity holders.
Group statement of comprehensive income
For the year ended 31 March 2022
Notes
2022
£m
2021
£m
Profit/(loss) for the year
(201.9 )
Items that will not be reclassified subsequently to profit and loss
Actuarial gain on defined benefit scheme
24
Deferred tax on actuarial gain/(loss) on defined benefit scheme
7
(0.5 )
(0.1 )
Total comprehensive income/(expense) for the year
(201.2 )
138 Great Portland Estates plc Annual Report 2022
Group balance sheet
At 31 March 2022
Notes
2022
£m
2021
£m
Non-current assets
Investment property
9
Investment in joint ventures
10
Property, plant and equipment
11
Pension asset
24
Other investments
12
Current assets
Trade and other receivables
13
Corporation tax
7
Cash and cash equivalents
Total assets
Current liabilities
Interest-bearing loans and borrowings
(0.2 )
Trade and other payables
14
(55.2 )
(55.1 )
(55.4 )
(55.1 )
Non-current liabilities
Interest-bearing loans and borrowings
15
(531.0 )
(488.6 )
Obligations under head leases
17
(55.6 )
(40.7 )
Obligations under occupational leases
18
(2.9 )
(3.9 )
Deferred tax
7
(589.5 )
(533.2 )
Total liabilities
(644.9 )
(588.3 )
Net assets
Equity
Share capital
19
Share premium account
Capital redemption reserve
Retained earnings
Investment in own shares
20
Total equity
Basic net assets per share (diluted)
8
EPRA NTA (diluted)
8
Approved by the Board on 19 May 2022 and signed on its behalf by:
Toby Courtauld Nick Sanderson
Chief Executive Chief Financial & Operating Officer
Annual Report 2022 Great Portland Estates plc 139
Financial statements
Group statement of cash flows
For the year ended 31 March 2022
Notes
2022
£m
2021
£m
Operating activities
Operating profit/(loss)
(202.2 )
Adjustments for non-cash items
21
(149.7 )
Increase in receivables
(1.6 )
(3.4 )
Increase/(decrease) in payables
(6.3 )
Cash generated from operations
Interest paid
(13.9 )
(10.3 )
Interest received
Tax repaid
Cash flows from operating activities
Investing activities
Distributions from joint ventures
Funds to joint ventures
(45.3 )
Funds from joint ventures
Purchase of other investments
(0.8 )
Purchase and development of property
(120.6 )
(60.8 )
Purchase of plant and equipment
(0.3 )
(0.4 )
Sale of properties
(0.2 )
Investment in joint ventures
(10.8 )
Cash flows from investing activities
(24.1 )
(110.0 )
Financing activities
Revolving credit facility repaid
15
(202.5 )
(202.0 )
Revolving credit facility drawn
15
Issue of private placement notes
15
Payment of lease obligations
(3.0 )
(2.8 )
Dividends paid
22
(32.7 )
(31.7 )
Cash flows from financing activities
Net decrease in cash and cash equivalents
(11.1 )
(83.8 )
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
140 Great Portland Estates plc Annual Report 2022
Group statement of changes in equity
For the year ended 31 March 2022
Notes
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Investment
in own
shares
£m
Total
equity
£m
Total equity at 1 April 2021
Profit for the year
Actuarial gain on defined benefit scheme
24
Deferred tax on defined benefit scheme
(0.5 )
(0.5 )
Total comprehensive income for the year
Employee Long-Term Incentive Plan charge
20
Dividends to shareholders
22
(31.9 )
(31.9 )
Transfer to retained earnings
20
(0.5 )
Total equity at 31 March 2022
Group statement of changes in equity
For the year ended 31 March 2021
Share Capital Investment
Annual Report 2022 Great Portland Estates plc 141
Financial statements
Notes
Share
capital
£m
premium
account
£m
redemption
reserve
£m
Retained
earnings
£m
in own
shares
£m
Total
equity
£m
Total equity at 1 April 2020
(0.6 )
Loss for the year
(201.9 )
(201.9 )
Actuarial gain on defined benefit scheme
24
Deferred tax on defined benefit scheme
(0.1 )
(0.1 )
Total comprehensive expense for the year
(201.2 )
(201.2 )
Employee Long-Term Incentive Plan charge
20
Dividends to shareholders
22
(31.8 )
(31.8 )
Transfer to retained earnings
20
(0.7 )
Total equity at 31 March 2021
Notes forming part of the Group financial statements
1 Accounting policies
Basis of preparation
shares incorporated and domiciled in the United Kingdom
(England and Wales). The address of the registered office
is given on page 189. The financial statements have been
prepared in accordance with United Kingdom adopted
international accounting standards and the requirements
of the Companies Act 2006.
The financial statements have been prepared on the historical
cost basis, except for the revaluation of properties and
certain financial instruments which are held at fair value.
The consolidated financial statements, including the results
and financial position, are expressed in sterling (£), which is
the functional and presentation currency of the Group.
The Directors have considered the appropriateness of
adopting the going concern basis in preparing the financial
statements for the year ended 31 March 2022, with particular
focus on the impact of geopolitical tensions on macro-
economic conditions in which the Group is operating.
This assessment is for the 12-month period following the
date of approval of the accounts and is based on the Group’s
financial forecasts, including a going concern scenario
which included the following key assumptions:
– a 25% decline in the valuation of the property portfolio; and
– an overall decline of around 41% in EPRA earnings.
The going concern scenario demonstrates that the Group
over the next 12 months:
– has significant liquidity to fund its ongoing operations;
– is operating with significant headroom above its Group
debt financing covenants:
– property values would have to fall by a further 30%
before breach (or 56% from 31 March 2022 values);
– due to the measurement of its income related bank
covenants, in particular the treatment of capitalised
interest, for the year ended 31 March 2022, the Group
did not have a net interest charge. As a result, its interest
cover covenant was not measurable. Absent the benefit
of capitalised interest, as assumed in the going concern
assessment, earnings before interest and tax would
need to fall by a further 33% before breach (or 71% from
31 March 2022 levels); and
– has no debt maturities.
The Directors also conducted extensive stress testing
sensitising the potential impact of climate change as detailed
further in the viability statement as well as the impact of
removing non-committed disposal proceeds and capital
expenditure. Based on these considerations, together with
available market information and the Directors’ knowledge
and experience of the Group’s property portfolio and markets,
the Directors have adopted the going concern basis in
preparing the accounts for the year ended 31 March 2022.
The Group has adopted a number of alternative performance
measures, see note 8 for further detail.
Critical judgements and key sources of estimation uncertainty
In the process of preparing the financial statements,
the Directors are required to make certain judgements,
assumptions and estimates. Not all of the Group’s accounting
policies require the Directors to make difficult, subjective
or complex judgements or estimates. Any estimates
and judgements made are continually evaluated and
are based on historical experience and other factors,
including expectations of future events that are believed
to be reasonable under the circumstances. Although these
estimates are based on the Directors’ best knowledge of
the amount, event or actions, actual results may differ
from those estimates.
No critical judgements have been made.
The following is intended to provide an understanding of
the estimates that management consider critical because
of the level of complexity, judgement or estimation involved
in their application and their material impact on the
financial statements.
Key source of estimation uncertainty: property
portfolio valuation
The valuation to assess the fair value of the Group’s investment
properties is prepared by its external valuer. The valuation
is based upon a number of assumptions including future rental
income, anticipated maintenance costs, future development
costs and an appropriate discount rate. The valuers also
make reference to market evidence of transaction prices for
similar properties. An adjustment to any of these assumptions
could lead to a material change in the property valuation.
For the current year and prior year the Directors adopted the
valuation without adjustment – further information is provided
in the accounting policy for investment property and note 9.
142 Great Portland Estates plc Annual Report 2022
1 Accounting policies continued
New accounting standards
In the current year, the Group has applied a number of
new standards and amendments to IFRSs issued by the
International Accounting Standards Board (IASB) that are
mandatorily effective for an accounting period that begins
on or after 1 January 2021. Their adoption has not had
any material impact on the disclosures or on the amounts
reported in these financial statements. These new standards
and amendments are listed below:
– Amendment to IFRS 16 on COVID-19 related rent concessions
– Amendments to IFRS 9, IAS 29, IFRS 7, IFRS 4 and IFRS 16 –
interest rate benchmark reform phase 2
At the date of authorisation of these financial statements,
the Group has not applied the following new and revised
IFRSs that have been issued but are not yet effective:
– Amendment to IFRS 16 – COVID-19 related rent concessions
beyond 30 June 2021
– Amendments to IAS 16 – Property, plant and equipment
proceeds before intended use
– Annual improvements to IFRS Standards 2018–2020
(May 2020)
– Amendments to IFRS 3 (May 2020) – Reference to the
conceptual framework
– Amendments to IAS 37 (May 2020) – Onerous contracts,
cost of fulfilling a contract
– IFRS 17 – Insurance contracts
– Amendments to IAS 1 – Classification of liabilities as
current or non current (including deferral of effective date)
– Amendments to IFRS 4 – Extension of the temporary
exemption from applying IFRS 9
– Amendments to IAS 1 and IFRS Practice Statement 2 –
Disclosure of accounting policies
– Amendments to IAS 12 – Deferred tax related to assets
and liabilities arising from a single transaction
– Amendments to IAS 8 – Definition of accounting estimates
– Amendments to IFRS 10 and IAS 28 – Sale or Contribution
of Assets between an investor and its Associate or
Joint Venture
The Directors do not expect that the adoption of the
standards listed above will have a material impact on
the financial statements of the Group in future periods.
Basis of consolidation
The Group’s financial statements consolidate the financial
statements of the Company and all its subsidiary undertakings
for the year ended 31 March 2022. Subsidiary undertakings
are those entities controlled by the Group. Control exists
when the Company is exposed, or has rights, to variable
returns from its involvement with the entity and has the ability
to affect those returns through its power over the investee.
Revenue
Gross rental income comprises rental income and premiums
on lease surrenders on investment properties for the year,
exclusive of service charges receivable, on a straight-line
basis. Initial direct costs incurred in arranging a lease are
added to the carrying value of investment properties and
are subsequently recognised as an expense over the lease
term on the same basis as the lease income.
Lease incentives, including rent-free periods and payments
to customers, are allocated to the income statement on
a straight-line basis over the lease term or on another
systematic basis, if applicable. The value of resulting accrued
rental income is included within the respective property
with the aggregate cost of the incentive recognised as
a reduction in rental income on a straight-line basis over
the term of the lease.
Service charge income is recorded over the period when
the services are provided and benefit the customer.
Cost of sales
Service charge expenses represent the costs of operating
the Group’s portfolio and are expensed as incurred.
Other property expenses represent irrecoverable running
costs directly attributable to specific properties within
the Group’s portfolio. Costs incurred in the improvement
of the portfolio which, in the opinion of the Directors,
are not of a capital nature are written-off to the income
statement as incurred.
Administration expenses
Costs not directly attributable to individual properties
are treated as administration expenses.
Share-based payments
The cost of granting share-based payments to employees
and Directors is recognised within administration expenses
in the income statement. The Group has used the Stochastic
model to value the grants, which is dependent upon factors
including the share price, expected volatility and vesting
period, and the resulting fair value is amortised through
the income statement over the vesting period. The charge
is recognised over the vesting period and reversed if it is
likely that any non-market-based performance or service
criteria will not be met. Any cost in respect of share-based
payments relating to the employees of a subsidiary company
is recharged accordingly.
Segmental analysis
The Directors are required to present the Group’s financial
information by business segment or geographical area.
This requires a review of the Group’s organisational structure
and internal reporting system to identify reportable segments
and an assessment of where the Group’s assets or customers
are located.
Financial statements
143Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
1 Accounting policies continued
All of the Group’s revenue is generated from investment and
trading properties located in central London. The properties
are managed as a single portfolio by a portfolio management
team whose responsibilities are not segregated by location
or type, but are managed on an asset-by-asset basis.
The majority of the Group’s assets are mixed-use, therefore
the office, retail and any residential space is managed
together. Within the property portfolio, the Group has a
number of properties under development. The Directors
view the Group’s development activities as an integral part
of the life cycle of each of its assets rather than a separate
business or division. The nature of developing property means
that whilst a property is under development it generates no
revenue and has no operating results. Once a development
has completed, it returns to the investment property portfolio,
or if it is a trading property, it is sold. The Directors have
considered the nature of the business, how the business is
managed and how they review performance and, in their
judgement, the Group has only one reportable segment.
The components of the valuation, as provided by the
external valuer, are set out in note 9.
Investment property
Both leasehold and freehold investment properties and
investment properties under development are professionally
valued on a fair value basis by qualified external valuers
and the Directors must ensure that they are satisfied that
the valuation of the Group’s properties is appropriate for
inclusion in the accounts without adjustment. The valuation
of the property portfolio reflects its fair value taking into
account the market view of all relevant factors including
the climate related risks associated with the properties.
This includes the impact of expected regulatory changes.
The valuations have been prepared in accordance with the
current versions of the RICS Valuation – Global Standards
(incorporating the International Financial Reporting Standards
(IFRS)) and the UK national supplement (the Red Book)
and have been primarily derived using comparable recent
market transactions on arm’s length terms.
For investment property, this approach involves applying
market-derived capitalisation yields to current and market-
derived future income streams with appropriate adjustments
for income voids arising from vacancies or rent-free periods.
These capitalisation yields and future income streams are
derived from comparable property and leasing transactions
and are considered to be the key inputs in the valuation.
Other factors that are taken into account in the valuations
include the tenure of the property, tenancy details, non-
payment of rent, planning, building and environmental
factors that might affect the property.
In the case of investment property under development,
the approach applied is the ‘residual method’ of valuation,
which is the investment method of valuation as described
above with a deduction for the costs necessary to complete
the development, together with an allowance for the
remaining risk.
The Group recognises sales and purchases of property when
control passes on completion of the contract. Gains or losses
on the sale of properties are calculated by reference to the
carrying value at the end of the previous year, adjusted
for subsequent capital expenditure.
Lease obligations
Where the Group is a lessee, a right of use asset and lease
liability are recognised at the outset of the lease. The lease
liability is initially measured at the present value of the
lease payments based on the Group’s expectations of the
likelihood of the lease term. The lease liability is subsequently
adjusted to reflect an imputed finance charge, payments
made to the lessor and any lease modifications.
The right of use asset is initially measured at cost, which
comprises the amount of the lease liability, direct costs
incurred, less any lease incentives received by the Group.
The Group has two categories of right of use assets: those
in respect of head leases related to its leasehold properties
and an occupational lease for its head office. The right of
use asset in respect of head leases is classified as investment
property and is added to the carrying value of the leasehold
investment property. The right of use asset in respect of
its occupational leases is classified as property, plant and
equipment and is subsequently depreciated over the length
of the lease.
Depreciation
No depreciation is provided in respect of freehold investment
properties and leasehold investment properties. Plant and
equipment is held at cost less accumulated depreciation.
Depreciation is provided on plant and equipment, at rates
calculated to write off the cost, less residual value prevailing
at the balance sheet date of each asset evenly over its
expected useful life, as follows:
Fixtures and fittings – over three to five years.
Leasehold improvements – over the term of the lease.
Joint ventures
Joint ventures are accounted for under the equity method
where, in the Directors’ judgement, the Group has joint
control of the entity. The Group’s level of control in its joint
ventures is driven both by the individual agreements which
set out how control is shared by the partners and how that
control is exercised in practice. The Group balance sheet
contains the Group’s share of the net assets of its joint
ventures. Balances with partners owed to or from the Group
by joint ventures are included within investments. The Group’s
share of joint venture profits and losses are included in the
Group income statement in a single line. All of the Group’s
joint ventures adopt the accounting policies of the Group
for inclusion in the Group financial statements. There have
been no new joint ventures during the year and no changes
to any of the agreements in place.
144 Great Portland Estates plc Annual Report 2022
1 Accounting policies continued
Income tax
Current tax is the amount payable on the taxable income
for the year and any adjustment in respect of previous years.
Deferred tax is provided in full on temporary differences
between the tax base of an asset or liability and its carrying
amount in the balance sheet. Deferred tax is determined
using tax rates that have been enacted or substantively
enacted by the balance sheet date and are expected to
apply when the asset is realised or the liability is settled.
Deferred tax assets are recognised when it is probable that
taxable profits will be available against which the deferred
tax assets can be utilised. No provision is made for temporary
differences arising on the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit.
Tax is included in the income statement except when it relates
to items recognised directly in other comprehensive income
or equity, in which case the related tax is also recognised
directly in other comprehensive income or equity.
Pension benefits
The Group contributes to a defined benefit pension plan
which is funded with assets held separately from those of
the Group. The full value of the net assets or liabilities of the
pension fund is brought on to the balance sheet at each
balance sheet date. Actuarial gains and losses are taken
to other comprehensive income; all other movements
are taken to the income statement.
Capitalisation of interest
Interest associated with direct expenditure on investment
and trading properties under development is capitalised.
Direct expenditure includes the purchase cost of a site
if it has been purchased with the specific intention to
redevelop, but does not include the original book cost of a
site where no intention existed. Interest is capitalised from
the start of the development work until the date of practical
completion. The rate used is the Group’s weighted average
cost of borrowings or, if appropriate, the rate on specific
associated borrowings.
Other investments
Other investments comprise investments in Pi Labs European
PropTech venture capital fund which is measured at fair value,
based on the net assets of the fund, this is a Level 2 valuation
as defined by IFRS 13. Changes in fair value are recognised
in profit or loss.
Financial instruments
i Borrowings The Group’s borrowings in the form of its
debentures, private placement notes and bank loans are
recognised initially at fair value, after taking account of any
discount or premium on issue and attributable transaction
costs. Subsequently, borrowings are held at amortised
cost, with any discounts, premiums and attributable costs
charged to the income statement using the effective
interest rate method.
ii Cash and cash equivalents Cash and cash equivalents
comprise cash in hand, demand deposits and other short-term
highly liquid investments that are readily convertible into a
known amount of cash and are subject to insignificant risk
of changes in value.
iii Trade receivables and payables Trade receivables
and payables are initially measured at fair value, and are
subsequently measured at amortised cost using the effective
interest rate method. See note 13 for further information on
trade receivables and associated expected credit losses.
2 Revenue
2022
£m
2021
£m
Gross rental income . .
Spreading of lease incentives . (.)
Service charge income . .
Joint venture fee income . .
. .
The table below sets out the Group’s net rental income, please see note 8 for the Group’s alternative performance measures:
2022
£m
2021
£m
Gross rental income . .
Expected credit loss (.) (.)
. .
Spreading of lease incentives . (.)
Ground rents (.) (.)
Net rental income . .
Financial statements
145Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
3 Cost of sales
2022
£m
2021
£m
Service charge expenses . .
Other property expenses . .
Ground rent . .
. .
The table below sets out the Group’s property costs, please see note 8 for the Group’s alternative performance measures:
2022
£m
2021
£m
Service charge income (.) (.)
Service charge expenses . .
Other property expenses . .
Expected credit loss . –
Property costs . .
4 Administration expenses
2022
£m
2021
£m
Employee costs . .
Depreciation . .
Other head office costs . .
. .
Included within employee costs is an accounting charge for the Employee Long-Term Incentive Plan and deferred bonus
shares of £2.3 million (2021: £1.5 million). Employee costs, including those of Directors, comprise the following:
2022
£m
2021
£m
Wages and salaries (including annual bonuses) . .
Share-based payments . .
Social security costs . .
Other pension costs . .
. .
Less: recovered through service charges (.) (.)
Less: capitalised into development projects (.) (.)
. .
Key management compensation
The emoluments and pension benefits of the Directors are set out in detail within the Directors’ remuneration report on
pages 114 to 133. The Directors and the Executive Committee are considered to be key management for the purposes
of IAS 24 ‘Related Party Transactions’ with their aggregate compensation set out below:
2022
£m
2021
£m
Wages and salaries (including annual bonuses) . .
Share-based payments . .
Social security costs . .
Other pension costs . .
. .
The number of people considered key management totalled 17 (2021: 12). The Group had loans to key management of
£7,206 outstanding at 31 March 2022. The Group’s key management, its pension plan and joint ventures are the Group’s
only related parties.
146 Great Portland Estates plc Annual Report 2022
4 Administration expenses continued
Employee information
The monthly average number of employees of the Group, including Directors, was:
2022
Number
2021
Number
Head office and property management
Auditor’s remuneration
2022
£000
2021
£000
Audit of the Company’s annual accounts
Audit of subsidiaries
Audit-related assurance services, including the interim review
Sustainability assurance
Total audit and audit-related services
5 Finance income
2022
£m
2021
£m
Interest on balances with joint ventures . .
Interest on cash deposits . .
. .
6 Finance costs
2022
£m
2021
£m
Interest on revolving credit facilities . .
Interest on private placement notes . .
Interest on debenture stock . .
Interest on obligations under occupational leases . .
Interest on obligations under head leases . .
Gross finance costs . .
Less: capitalised interest at an average rate of 2.9% (2021: 2.6%) (.) (.)
. .
7 Tax
2022
£m
2021
£m
Current tax
UK corporation tax – current period – –
UK corporation tax – prior periods – –
Total current tax – –
Deferred tax (.) (.)
Tax credit for the year (.) (.)
Financial statements
147Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
7 Tax continued
The effective rate of tax is lower (2021: lower) than the standard rate of tax. The difference arises from the items set out below:
2022
£m
2021
£m
Profit/(loss) before tax . (.)
Tax charge/(credit) on profit/(loss) at standard rate of 19% (2021: 19%) . (.)
REIT tax-exempt rental profits and gains (.) (.)
Changes in fair value of properties not subject to tax (.) .
Other . .
Tax credit for the year (.) (.)
During the year, £0.5 million (2021: £0.1 million) of deferred tax was debited directly to equity. The Group recognised a net
deferred tax asset at 31 March 2022 of £nil (2021: £nil). This consists of deferred tax assets of £0.8 million (2021: £0.2 million)
and deferred tax liabilities of £0.8 million (2021: £0.2 million).
Deferred tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date
(including Finance Act 2021 which increases the standard rate of tax on 1 April 2023 (from 19% to 25%)).
Movement in deferred tax
At 1 April
2021
£m
Recognised
in the income
statement
£m
Recognised
in equity
£m
At 31 March
2022
£m
Net deferred tax asset/(liability) in respect of other temporary differences – . (.) –
A further deferred tax asset of £5.9 million (2021: £3.5 million), mainly relating to revenue losses and contingent share awards,
was not recognised because it is uncertain whether future taxable profit will arise against which this asset can be utilised.
As a REIT, the majority of rental profits and chargeable gains from the Group’s property rental business are exempt from UK
corporation tax. The Group is otherwise subject to corporation tax. In particular, the Group’s REIT exemption does not extend
to either profits arising from the sale of trading properties or gains arising from the sale of investment properties in respect
of which a major redevelopment has completed within the preceding three years.
In order to ensure that the Group is able to both retain its status as a REIT and to avoid financial charges being imposed,
a number of tests (including a minimum distribution test) must be met by both Great Portland Estates plc and by the Group
as a whole on an ongoing basis. These conditions are detailed in the Corporation Tax Act 2010.
8 Alternative performance measures and EPRA metrics
As is usual practice in our sector, we use Alternative Performance Measures (APM) to help explain the performance of the
business. These include quoting a number of measures on a proportionally consolidated basis to include joint ventures, as it
best describes how we manage the portfolio, and using measures prescribed by European Public Real Estate Association (EPRA).
The measures defined by EPRA are designed to enhance transparency and comparability across the European real estate sector
in accordance with their Best Practice Recommendations. The Directors consider these EPRA metrics, and the other metrics
provided, to be the most appropriate method of reporting the value and performance of the business. A summary of our
EPRA measures is on page 33. EPRA capital expenditure and EPRA NIY are included in note 9 and EPRA vacancy is set out on
page 185.
Earnings per share:
Weighted average number of ordinary shares
2022
Number of
shares
2021
Number of
shares
Issued ordinary share capital at 1 April ,, ,,
Investment in own shares (,) (,)
Weighted average number of ordinary shares at 31 March – basic ,, ,,
148 Great Portland Estates plc Annual Report 2022
8 Alternative performance measures and EPRA metrics continued
Basic and diluted earnings per share
Profit
after tax
2022
£m
Number
of shares
2022
million
Earnings
per share
2022
pence
Loss
after tax
2021
£m
Number
of shares
2021
million
Loss
per share
2021
pence
Basic . . . (.) . (.)
Dilutive effect of LTIP shares – . (.) – . –
Diluted . . . (.) . (.)
Basic and diluted EPRA earnings per share
Profit
after tax
2022
£m
Number
of shares
2022
million
Earnings
per share
2022
pence
Loss
after tax
2021
£m
Number
of shares
2021
million
(Loss)/
Earnings
per share
2021
pence
Basic . . . (.) . (.)
(Surplus)/deficit from investment property net of tax (note 9) (.) – (.) . – .
(Surplus)/deficit from joint venture investment property
(note 10) (.) – (.) . – .
Debt redemption costs from joint ventures (note 10) – – – . – .
Deferred tax (note 7) (.) – (.) (.) – –
Basic EPRA earnings . . . . . .
Dilutive effect of LTIP shares (note 20) – . – – . (.)
Diluted EPRA earnings . . . . . .
Net assets per share:
In October 2019, EPRA issued new Best Practice Recommendations for Net Asset Value (NAV) metrics, these recommendations are
effective for accounting periods starting on 1 January 2020 and have been adopted by the Group. The recommendations include
three NAV metrics: EPRA Net Tangible Assets (NTA), Net Reinvestment Value (NRV) and Net Disposal Value (NDV). We consider
EPRA NTA to be the most relevant measure for the Group and the primary measure of net asset value.
Number of ordinary shares
2022
Number of
shares
2021
Number of
shares
Issued ordinary share capital ,, ,,
Investment in own shares (,) (,)
Number of shares – basic ,, ,,
Dilutive effect of LTIP shares , ,
Number of shares – diluted ,, ,,
EPRA net assets per share at 31 March 2022
IFRS
£m
EPRA
NTA
£m
EPRA
NDV
£m
EPRA
NRV
£m
IFRS basic and diluted net assets ,. ,. ,. ,.
Fair value of financial liabilities (note 16) – – . –
Real estate transfer tax – – – .
Net assets used in per share calculations ,. ,. ,. ,.
IFRS
EPRA
NTA
EPRA
NDV
EPRA
NRV
Net assets per share (pence)
Diluted net assets per share (pence)
Financial statements
149Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
8 Alternative performance measures and EPRA metrics continued
EPRA net assets per share at 31 March 2021
IFRS
£m
EPRA
NTA
£m
EPRA
NDV
£m
EPRA
NRV
£m
IFRS basic and diluted net assets ,. ,. ,. ,.
Fair value of financial liabilities (note 16) – – (.) –
Real estate transfer tax – – – .
Net assets used in per share calculations ,. ,. ,. ,.
IFRS
EPRA
NTA
EPRA
NDV
EPRA
NRV
Net assets per share (pence)
Diluted net assets per share (pence)
Total Accounting Return (TAR)
2022
Pence per
share
2021
Pence per
share
Opening EPRA NTA (A) . .
Closing EPRA NTA . .
Increase/(decrease) in EPRA NTA . (.)
Ordinary dividends paid in the year . .
Total return (B) . (.)
Total Accounting Return (B/A) .% (.%)
EPRA cost ratio (including share of joint ventures)
2022
£m
2021
£m
Administration expenses . .
Property costs . .
Joint venture management fee income (note 2) (.) (.)
Joint venture property and administration costs (note 10) . .
EPRA costs (including direct vacancy costs) (A) . .
Direct vacancy costs (.) (.)
Joint venture direct vacancy cost (.) (.)
EPRA costs (excluding direct vacancy costs) (B) . .
Net rental income (note 2) . .
Joint venture net rental income (note 10) . .
Gross rental income (C) . .
Portfolio at fair value including joint ventures (D) ,. ,.
Cost ratio (including direct vacancy costs) (A/C) .% .%
Cost ratio (excluding direct vacancy costs) (B/C) .% .%
Cost ratio (by portfolio value) (A/D) .% .%
150 Great Portland Estates plc Annual Report 2022
8 Alternative performance measures and EPRA metrics continued
EPRA Loan-to-Value and net debt
We consider loan-to-property value, including our share of joint ventures, to be the best measure of the Group’s risk
from financial leverage. We also present net gearing as it is a key covenant on our loan facilities (see note 15).
2022
£m
2021
£m
£21.9 million 5
5
⁄
8
% debenture stock 2029 . .
£450.0 million revolving credit facility . .
Private placement notes . .
Current interest bearing loans and borrowings . –
Net payables . .
Less: cash balances – (.)
Net debt excluding joint ventures . .
Joint venture bank loans (at share) – –
Joint venture net payables (at share) . .
Less: joint venture cash balances (at share) (.) (.)
Net debt including joint ventures (A) . .
Group properties at market value ,. ,.
Joint venture properties at market value . .
Properties at fair value including joint ventures (B) ,. ,.
EPRA Loan-to-Value (A/B) .% .%
Net gearing
2022
£m
2021
£m
Nominal value of interest-bearing loans and borrowings (see note 15) . .
Obligations under occupational leases . .
Less: cash balances – (.)
Adjusted net debt (A) . .
Net assets ,. ,.
Pension asset (.) (.)
Adjusted net equity (B) ,. ,.
Net gearing (A/B) .% .%
Cash earnings per share
Profit
after tax
2022
£m
Number
of shares
2022
million
Earnings
per share
2022
pence
Profit
after tax
2021
£m
Number
of shares
2021
million
Earnings
per share
2021
pence
Diluted EPRA earnings . . . . . .
Capitalised interest (.) – (.) (.) – (.)
Capitalised interest in joint ventures – – – (.) – (.)
Spreading of lease incentives (.) – (.) . – .
Spreading of lease incentives in joint ventures (.) – (.) (.) – (.)
Employee Long-Term Incentive Plan charge . – . . – .
Cash earnings per share . . . . . .
Financial statements
151Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
9 Investment property
Investment property
Freehold
£m
Leasehold
£m
Total
£m
Book value at 1 April 2020 . ,. ,.
Costs capitalised . . .
Transfer from investment property under development . – .
Transfer to investment property under development (.) – (.)
Net valuation deficit on investment property (.) (.) (.)
Book value at 31 March 2021 . . ,.
Costs capitalised . . .
Acquisitions – . .
Transfer from investment property under development . – .
Net valuation surplus on investment property . . .
Book value at 31 March 2022 . ,. ,.
Investment property under development
Freehold
£m
Leasehold
£m
Total
£m
Book value at 1 April 2020 . – .
Costs capitalised . – .
Interest capitalised . – .
Transfer from investment property . – .
Transfer to investment property (.) – (.)
Net valuation deficit on investment property under development (.) – (.)
Book value at 31 March 2021 . – .
Costs capitalised . – .
Interest capitalised . – .
Transfer to investment property (.) – (.)
Net valuation surplus on investment property under development . – .
Book value at 31 March 2022 . – .
Total investment property ,. ,. ,.
The book value of investment property includes £55.6 million (2021: £40.7 million) in respect of the present value of future
ground rents. The market value of the portfolio (excluding these amounts) is £2,088.8 million. The total portfolio value
including joint venture properties of £558.6 million (see note 10) was £2,647.4 million. At 31 March 2022, property with a
carrying value of £119.5 million (2021: £113.1 million) was secured under the first mortgage debenture stock (see note 16).
Surplus from investment property
2022
£m
2021
£m
Net valuation surplus/(deficit) on investment property . (.)
Profit on sale of investment properties – .
. (.)
The Group’s investment properties, including those held in joint ventures (note 10), were valued on the basis of Fair Value by
CBRE Limited (CBRE), external valuers, as at 31 March 2022. The valuations have been prepared in accordance with the current
versions of the RICS Valuation – Global Standards (incorporating the International Financial Reporting Standards (IFRS)) and
the UK national supplement (the Red Book) and have been primarily derived using comparable recent market transactions
on arm’s length terms.
The total fees, including the fixed fee for this assignment, earned by CBRE (or other companies forming part of the same group
of companies within the UK) from the Group are less than 5.0% of total UK revenues. CBRE has continuously been carrying out
valuation instructions for the Group for in excess of 20 years. CBRE has carried out valuation, agency and professional services
on behalf of the Group for in excess of 20 years.
152 Great Portland Estates plc Annual Report 2022
9 Investment property continued
Real estate valuations are complex and derived using comparable market transactions which are not publicly available and involve
an element of judgement. Therefore, in line with EPRA guidance, we have classified the valuation of the property portfolio as Level 3
as defined by IFRS 13. There were no transfers between levels during the year. Inputs to the valuation, including capitalisation yields
(typically the true equivalent yield) and rental values, are defined as ‘unobservable’ as defined by IFRS 13.
Key inputs to the valuation at 31 March 2022
ERV True equivalent yield
Average
£ per sq ft
Range
£ per sq ft
Average
%
Range
%
North of Oxford Street Office – . . – .
Retail – . . – .
Rest of West End Office – . . – .
Retail – . . – .
City, Midtown and Southwark Office – . . – .
Retail – . . – .
Key inputs to the valuation at 31 March 2021
ERV True equivalent yield
Average
£ per sq ft
Range
£ per sq ft
Average
%
Range
%
North of Oxford Street Office – . . – .
Retail – . . – .
Rest of West End Office – . . – .
Retail – . . – .
City, Midtown and Southwark Office – . . – .
Retail – . . – .
Everything else being equal, there is a positive relationship between rental values and the property valuation, such that an increase
in rental values will increase the valuation of a property and a decrease in rental values will reduce the valuation of the property.
Any percentage movement in rental values will translate into approximately the same percentage movement in the property
valuation. However, due to the long-term nature of leases, where the passing rent is fixed and often subject to upwards only rent
reviews, the impact will not be immediate and will be recognised over a number of years. The relationship between capitalisation
yields and the property valuation is negative and more immediate; therefore an increase in capitalisation yields will reduce
the valuation of a property and a reduction will increase its valuation. A decrease in the capitalisation yield by 25 basis points
would result in an increase in the fair value of the Group’s investment property by £160.3 million, whilst a 25 basis point increase
would reduce the fair value by £143.0 million. There are interrelationships between these inputs as they are determined by
market conditions, and the valuation movement in any one period depends on the balance between them. If these inputs move
in opposite directions (i.e. rental values increase and yields decrease) valuation movements can be amplified, whereas if they
move in the same direction they may offset, reducing the overall net valuation movement. Additionally, investment property
under development is sensitive to income, cost and developer’s profit assumptions included in the valuations.
The valuation of the property portfolio reflects its fair value taking into account the market view of all relevant factors
including the climate related risks associated with the properties. This includes the impact of expected regulatory changes.
At 31 March 2022, the Group had capital commitments of £28.9 million (2021: £60.5 million). At 31 March 2022, £27.0 million
of investment property was held for sale. For further detail see Our development activities on pages 23 to 26.
Financial statements
153Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
9 Investment property continued
EPRA capital expenditure
2022
£m
2021
£m
Group
Acquisitions . –
Developments . .
Interest capitalised . .
Investment properties: incremental lettable space – –
Investment properties: no incremental lettable space . .
Lease incentives . (.)
Group total . .
Joint ventures (at share)
Developments – .
Interest capitalised – .
Investment properties: incremental lettable space – –
Investment properties: no incremental lettable space . .
Lease incentives . .
Total capital expenditure . .
Conversion from accrual to cash basis (.) .
Total capital expenditure on a cash basis . .
EPRA net initial yield (NIY) and topped-up NIY
2022
£m
2021
£m
Properties at fair value including joint ventures ,. ,.
Less: properties under development including joint ventures (.) (.)
Less: residential properties (.) (.)
Like-for-like investment property portfolio, proposed and completed developments ,. ,.
Plus: estimated purchasers’ costs . .
Grossed-up completed property portfolio valuation (B) ,. ,.
Annualised cash passing rental income
1
. .
Net service charge expense including joint ventures (.) (.)
Other irrecoverable property costs including joint ventures (.) (.)
Annualised net rents (A) . .
Plus: rent-free periods and other lease incentives including joint ventures . .
Topped-up annualised net rents (C) . .
EPRA net initial yield (A/B) .% .%
EPRA topped-up initial yield (C/B) .% .%
1. Annualised passing rental income as calculated by the Group’s external valuers including joint ventures at share.
See note 8 for further detail on EPRA measures.
154 Great Portland Estates plc Annual Report 2022
10 Investment in joint ventures
The Group has the following investments in joint ventures:
Equity
£m
Balances
with
partners
£m
2022
Total
£m
2021
Total
£m
At 1 April . . . .
Movement on joint venture balances – (.) (.) .
Additions – – – .
Share of profit of joint ventures . – . .
Share of revaluation surplus/(deficit) of joint ventures . – . (.)
Share of profit on disposal of joint venture properties . – . .
Share of results of joint ventures . – . (.)
Distributions (.) – (.) (.)
At 31 March . . . .
All of the Group’s joint ventures operate solely in the United Kingdom and comprise the following:
Country of registration
2022
ownership
2021
ownership
The GHS Limited Partnership Jersey % %
The Great Ropemaker Partnership United Kingdom % %
The Great Victoria Partnerships United Kingdom % %
The Group’s share in the assets and liabilities, revenues and expenses for the joint ventures is set out below:
The GHS
Limited
Partnership
£m
The Great
Ropemaker
Partnership
£m
The Great
Victoria
Partnerships
£m
2022
Total
£m
2022
At share
£m
2021
At share
£m
Balance sheets
Investment property . . . ,. . .
Current assets . . . . . .
Cash . . . . . .
Balances from partners (.) (.) (.) (.) (.) (.)
Current liabilities (.) (.) (.) (.) (.) (.)
Head lease obligations – (.) – (.) (.) (.)
Net assets . . . . . .
The GHS
Limited
Partnership
£m
The Great
Ropemaker
Partnership
£m
The Great
Victoria
Partnerships
£m
2022
Total
£m
2022
At share
£m
2021
At share
£m
Income statements
Net rental income . . . . . .
Surrender premium – . – . . –
Property and administration costs (.) . (.) (.) (.) (.)
Net finance costs (.) (.) – (.) (.) (.)
Debt redemption costs – – – – – (.)
Profit from joint ventures . . . . . .
Revaluation of investment property . . (.) . . (.)
Profit on sale of investment property – . – . . .
Share of results of joint ventures . . (.) . . (.)
At 31 March 2022, the joint ventures had no debt facilities.
Financial statements
155Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
10 Investment in joint ventures continued
Transactions during the year between the Group and its joint ventures, which are related parties, are disclosed below:
2022
£m
2021
£m
Movement on joint venture balances during the year . (.)
Balances receivable at the year end from joint ventures (.) (.)
Interest on balances with partners (see note 5) . .
Distributions . .
Joint venture fees paid (see note 2) . .
The joint venture balances are repayable on demand and bear interest as follows: the GHS Limited Partnership at 5.3%
on balances at inception and 4.0% on any subsequent balances and the Great Ropemaker Partnership at 2.0%.
The investment properties include £5.2 million (2021: £5.2 million) in respect of the present value of future ground rents; net of
these amounts the market value of our share of the total joint venture properties is £558.6 million. The Group earns fee income
from its joint ventures for the provision of management services. All of the above transactions are made on terms equivalent
to those that prevail in arm’s length transactions. See note 9 and note 13 for more information on the valuation of investment
properties and expected credit losses in joint ventures.
At 31 March 2022, the Group had £nil contingent liabilities arising in its joint ventures (2021: £nil). At 31 March 2022, the Group
had capital commitments in respect of its joint ventures of £1.4 million (2021: £3.3 million).
11 Property, plant and equipment
Right of use
asset for
occupational
leases
£m
Leasehold
improvements
£m
Fixtures and
fittings/
other
£m
Total
£m
Cost
At 1 April 2020 – . . .
Adoption of IFRS 16 . – – .
Costs capitalised – – . .
At 31 March 2021 . . . .
Costs capitalised – – . .
At 31 March 2022 . . . .
Depreciation
At 1 April 2021 . . . .
Charge for the year . . . .
At 31 March 2022 . . . .
Carrying amount at 31 March 2021 . . . .
Carrying amount at 31 March 2022 . . . .
12 Other investments
2022
£m
2021
£m
At 1 April . .
Acquisitions . .
Return of capital (.) –
At 31 March . .
In January 2020, the Group entered into a commitment of up to £5 million to invest in Pi Labs European PropTech venture capital
fund. At 31 March 2022, the Group had made net investments of £1.0 million. Launched in 2014, Pi Labs is Europe’s longest standing
PropTech VC and this third fund has a primary focus to invest in early stage PropTech start-ups across Europe and the UK that use
technology solutions to enhance any stage of the real estate value chain. Key areas of focus for the fund include sustainability,
future of work, future of retail, commercial real estate technologies, construction technology and smart cities.
156 Great Portland Estates plc Annual Report 2022
13 Trade and other receivables
2022
£m
2021
£m
Trade receivables . .
Expected credit loss allowance (.) (.)
. .
Prepayments . .
Amounts due on development management contracts – .
Other taxes . –
Other trade receivables . .
. .
Trade receivables consist of rent and service charge monies, which are typically due on the quarter day with no credit period.
Interest is charged on trade receivables in accordance with the terms of the customer’s lease. Trade receivables are provided
for based on the expected credit loss, which uses a lifetime expected loss allowance for all trade receivables based on an
assessment of each individual customer’s circumstance. This assessment reviews the outstanding balances of each individual
customer and makes an assessment of the likelihood of recovery, based on an evaluation of their financial situation. Where the
expected credit loss relates to revenue already recognised this has been recognised immediately in the income statement.
For the portion of the expected credit loss that relates to future revenue which is no longer considered fully recoverable,
the relevant amount of rent received in advance has been released.
Debtors past due but not impaired were £6.6 million (2021: £14.8 million) of which £2.0 million (2021: £8.7 million) is over 30 days.
2022
£m
2021
£m
Movements in expected credit loss allowance
Balance at the beginning of the year (.) (.)
Expected credit loss allowance during the year (see below) (.) (.)
Expected credit loss allowance in respect of future years . .
Amounts written-off as uncollectable . .
(.) (.)
The expected credit loss allowance during the year comprises:
Gross
2022
£m
Net of VAT
2022
£m
Gross
2021
£m
Net of VAT
2021
£m
Expected credit loss allowance during the year
Group . . . .
Joint ventures (.) (.) . .
. . . .
The expected credit loss for the year represents 72% of the trade receivables balance at the balance sheet date.
Each 5% increase, or decrease, to the expected credit loss would impact the Group loss provision by £0.4 million and joint
venture loss provision by £0.1 million.
14 Trade and other payables
2022
£m
2021
£m
Rents received in advance . .
Accrued capital expenditure . .
Other accruals . .
Other payables . .
. .
The Directors consider that the carrying amount of trade payables approximates their fair value.
Financial statements
157Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
15 Interest-bearing loans and borrowings
2022
£m
2021
£m
Non-current liabilities at amortised cost
Secured
£21.9 million 5
5
⁄
8
% debenture stock 2029 . .
Unsecured
£450.0 million revolving credit facility . .
£175.0 million 2.15% private placement notes 2024 . .
£40.0 million 2.70% private placement notes 2028 . .
£30.0 million 2.79% private placement notes 2030 . .
£30.0 million 2.93% private placement notes 2033 . .
£25.0 million 2.75% private placement notes 2032 . .
£125.0 million 2.77% private placement notes 2035 . .
Non-current interest-bearing loans and borrowings . .
In January 2022, the Group extended the maturity of £400 million of its £450 million unsecured revolving credit facility (RCF)
to January 2027. The headline margin was unchanged at 90.0 basis points over SONIA (plus or minus 2.5 basis points subject
to a number of ESG-linked targets in future years).
At 31 March 2022, the nominal value of the Group’s interest-bearing loans and borrowing was £533.9 million (2021: £492.1 million)
and the Group had £363.0 million (2021: £405.0 million) of undrawn credit facilities.
16 Financial instruments
Categories of financial instrument
Carrying
amount
2022
£m
Amounts
recognised in
income
statement
2022
£m
Gain/(loss)
to equity
2022
£m
Carrying
amount
2021
£m
Amounts
recognised in
income
statement
2021
£m
Gain/(loss)
to equity
2021
£m
Other investments . – – . – –
Assets at fair value . – – . – –
Balances with partners . . – . . –
Trade receivables . (.) – . (.) –
Cash and cash equivalents – . – . . –
Loans and receivables . . – . . –
Trade and other payables (.) – – (.) – –
Interest-bearing loans and borrowings (.) (.) – (.) (.) –
Obligations under occupational leases (.) (.) – (.) (.) –
Obligations under finance leases (.) (.) – (.) (.) –
Liabilities at amortised cost (.) (.) – (.) (.) –
Total financial instruments (.) (.) – (.) (.) –
Financial risk management objectives
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has a policy of reviewing the financial information of prospective customers and only dealing with those that are
creditworthy and obtaining sufficient rental cash deposits or third-party guarantees as a means of mitigating financial loss
from defaults. The concentration of credit risk is limited due to the large and diverse customer base, with no one customer
providing more than 10% of the Group’s rental income. COVID-19 has had a significant impact on the Group’s credit risk, with rent
collection rates greatly reduced. As a result, the reliance on historical collection performance has been less relevant, with greater
weight placed on the assessment of individual customers’ financial status, prospects for the reopening of the economy and the
sector in which the customer operates particularly in the retail, hospitality and leisure sectors. Details of the Group’s receivables,
and the associated expected credit loss, are summarised in note 13 of the financial statements. The Directors believe that
there is no further expected credit loss required in excess of that provided.
158 Great Portland Estates plc Annual Report 2022
16 Financial instruments continued
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents
the Group’s maximum exposure to credit risk.
The Group’s cash deposits are placed with a diversified range of banks, and strict counterparty limits ensure the Group’s
exposure to bank failure is minimised.
Capital risk
The Group manages its capital to ensure that entities in the Group will be able to operate on a going concern basis and as such
it aims to maintain an appropriate mix of debt and equity financing. The current capital structure of the Group consists of a mix
of equity and debt. Equity comprises issued share capital, reserves and retained earnings as disclosed in the Group statement
of changes in equity. Debt comprises long-term debenture stock, private placement notes and drawings against committed
revolving credit facilities from banks. The Group aims to maintain a loan-to-property value of between 10–35% (see note 8).
The Group operates solely in the United Kingdom, and its operating profits and net assets are sterling denominated. As a result,
the Group’s policy is to have no unhedged assets or liabilities denominated in foreign currencies. The currency risk on overseas
transactions has historically been fully hedged through foreign currency derivatives to create a synthetic sterling exposure.
Liquidity risk
The Group operates a framework for the management of its short-, medium- and long-term funding requirements. Cash flow
and funding needs are regularly monitored to ensure sufficient undrawn facilities are in place. The Group’s funding sources
are diversified across a range of bank and bond markets and strict counterparty limits are operated on deposits.
The Group meets its day-to-day working capital requirements through the utilisation of its revolving credit facility.
The availability of this facility depends on the Group complying with a number of key financial covenants; these covenants
and the Group’s compliance with them are set out in the table below:
Key covenants Covenant
March 2022
actuals
Group
Net gearing (see note 8) <% .%
Inner borrowing (unencumbered asset value/unsecured borrowings) >.x .x
Interest cover >.x n/a
Due to low levels of consolidated Group debt, there was no net interest charge (as measured under our debt covenants) in the
year, as a result interest cover was not measurable. The Group has undrawn credit facilities of £363.0 million and has substantial
headroom above all of its key covenants. As a result, the Directors consider the Group to have adequate liquidity to be able to
fund the ongoing operations of the business.
The following tables detail the Group’s remaining contractual maturity on its financial instruments and have been drawn up
based on the undiscounted cash flows of financial liabilities, including associated interest payments, based on the earliest
date on which the Group is required to pay, and conditions existing at the balance sheet date:
At 31 March 2022
Carrying
amount
£m
Contractual
cash flows
£m
Less than
one year
£m
One to
two years
£m
Two to
five years
£m
More than
five years
£m
Non-derivative financial liabilities
Short-term Interest-bearing loans
and borrowings . . . – – –
£21.9 million 5
5
⁄
8
% debenture stock 2029 . . . . . .
£450.0 million revolving credit facility . . . . . –
Private placement notes . . . . . .
. . . . . .
At 31 March 2021
Carrying
amount
£m
Contractual
cash flows
£m
Less than
one year
£m
One to
two years
£m
Two to
five years
£m
More than
five years
£m
Non-derivative financial liabilities
£21.9 million 5
5
⁄
8
% debenture stock 2029 . . . . . .
£450.0 million revolving credit facility . . . . . –
Private placement notes . . . . . .
. . . . . .
Financial statements
159Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
16 Financial instruments continued
Interest rate risk
Interest rate risk arises from the Group’s use of interest-bearing financial instruments. It is the risk that future cash flows arising
from a financial instrument will fluctuate due to changes in interest rates. It is the Group’s policy to reduce interest rate risk in
respect of the cash flows arising from its debt finance either through the use of fixed rate debt or through the use of interest
rate derivatives such as swaps, caps and floors. It is the Group’s usual policy to maintain the proportion of floating interest rate
exposure to between 20–40% of forecast total debt. However, this target is flexible, and may not be adhered to at all times
depending on, for example, the Group’s view of future interest rate movements. At 31 March 2022, the Group had no interest
rate derivatives.
Interest rate sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates for financial instruments at the
balance sheet date, and represents management’s assessment of possible changes in interest rates based on historical trends.
For the floating rate liabilities, the analysis is prepared assuming the amount of the liability at 31 March 2022 was outstanding
for the whole year:
Impact on profit Impact on equity
2022
£m
2021
£m
2022
£m
2021
£m
Increase of 100 basis points (.) (.) (.) (.)
Increase of 50 basis points (.) (.) (.) (.)
Decrease of 25 basis points . n/a . n/a
Decrease of 50 basis points . n/a . n/a
Fair value of interest-bearing loans and borrowings
Book value
2022
£m
Fair value
2022
£m
Book value
2021
£m
Fair value
2021
£m
Items not carried at fair value
Short-term Interest-bearing loans and borrowings . . – –
£21.9 million 5
5
⁄
8
% debenture stock 2029 . . . .
£450.0 million revolving credit facility . . . .
Private placement notes . . . .
. . . .
The fair values of the Group’s private placement notes were determined by comparing the discounted future cash flows using
the contracted yields with those of the reference gilts plus the implied margins, representing Level 2 fair value measurements
as defined by IFRS 13 ‘Fair Value Measurement’. The fair values of the Group’s cash and cash equivalents and trade payables
and receivables are not materially different from those at which they are carried in the financial statements.
17 Head lease obligations
Head lease obligations in respect of the Group’s leasehold properties are payable as follows:
Minimum
lease
payments
2022
£m
Impact of
discounting
2022
£m
Present value
of minimum
lease
payments
2022
£m
Minimum
lease
payments
2021
£m
Impact of
discounting
2021
£m
Present value
of minimum
lease
payments
2021
£m
Less than one year . (.) – . (.) –
Between two and five years . (.) . . (.) .
More than five years . (.) . . (.) .
. (.) . . (.) .
During the year, the Group regeared the head lease at 31/34 Alfred Place, WC1 and purchased the leasehold interest of
7/15 Gresse Street, W1.
160 Great Portland Estates plc Annual Report 2022
18 Occupational lease obligations
Obligations in respect of the Group’s occupational leases for its head office are payable as follows:
Minimum
lease
payments
2022
£m
Impact of
discounting
2022
£m
Present value
of minimum
lease
payments
2022
£m
Minimum
lease
payments
2021
£m
Impact of
discounting
2021
£m
Present value
of minimum
lease
payments
2021
£m
Less than one year . (.) . . (.) .
Between two and five years . – . . (.) .
More than five years – – – – – –
. (.) . . (.) .
19 Share capital
2022
Number
2022
£m
2021
Number
2021
£m
Allotted, called up and fully paid ordinary shares
of 15
5
⁄
19
pence
At 1 April and 31 March ,, . ,, .
At 31 March 2022, the Company had 253,867,911 ordinary shares with a nominal value of 15
5
⁄
19
pence each.
20 Investment in own shares
2022
£m
2021
£m
At 1 April (.) .
Employee Long-Term Incentive Plan charge and deferred bonus shares (.) (.)
Transfer to retained earnings . .
At 31 March (.) (.)
The investment in the Company’s own shares is held at cost and comprises 877,335 shares (2021: 877,335 shares) held by the
Great Portland Estates plc LTIP Employee Share Trust which will vest for certain senior employees of the Group if performance
conditions are met. During the year, no shares (2021: 231,968 shares) were awarded to Directors and senior employees in respect
of the 2018 LTIP award and no additional shares were acquired by the Trust (2021: nil shares). The fair value of shares awarded
and outstanding at 31 March 2022 was £10.5 million (2021: £7.9 million).
21 Notes to the Group statement of cash flows
Reconciliation of financing liabilities
1 April
2021
£m
New
obligations
£m
Inflows/
(outflows)
£m
Other
£m
31 March
2022
£m
Long-term interest-bearing loans and borrowings . – . . .
Short-term interest-bearing loans and borrowings – – . – .
Obligations under leases . . (.) . .
. . . . .
1 April
2020
£m
New
obligations
£m
Inflows/
(outflows)
£m
Other
£m
31 March
2021
£m
Long-term interest-bearing loans and borrowings . . (.) . .
Obligations under leases . – (.) . .
. . (.) . .
Financial statements
161Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
21 Notes to the Group statement of cash flows continued
Adjustment for non-cash items
2022
£m
2021
£m
(Surplus)/deficit from investment property (.) .
Employee Long-Term Incentive Plan charge . .
Spreading of lease incentives (.) .
Share of results of joint ventures (.) .
Depreciation . .
Other (.) (.)
Adjustments for non-cash items (.) .
22 Dividends
2022
£m
2021
£m
Dividends paid
Interim dividend for the year ended 31 March 2022 of 4.7 pence per share . –
Final dividend for the year ended 31 March 2021 of 7.9 pence per share . –
Interim dividend for the year ended 31 March 2021 of 4.7 pence per share – .
Final dividend for the year ended 31 March 2020 of 7.9 pence per share – .
. .
A final dividend of 7.9 pence per share was approved by the Board on 19 May 2022 and, subject to shareholder approval,
will be paid on 11 July 2022 to shareholders on the register on 27 May 2022. The dividend is not recognised as a liability at
31 March 2022. The 2021 final dividend and the 2022 interim dividend are included within the Group statement of changes
in equity.
23 Lease obligations
Future aggregate minimum rentals receivable under non-cancellable leases are:
2022
£m
2021
£m
The Group as a lessor
Less than one year . .
Between two and five years . .
More than five years . .
. .
The Group leases its investment properties under operating leases. The weighted average length of lease at 31 March 2022
was 3.4 years (2021: 3.3 years). All investment properties, except those under development, generated rental income and
£nil contingent rents were recognised in the year (2021: £nil).
24 Employee benefits
The Group operates a UK-funded approved defined contribution plan. The Group’s contribution for the year was £1.3 million
(2021: £0.9 million). The Group also contributes to a defined benefit final salary pension plan (the Plan), the assets of which
are held and managed by trustees separately from the assets of the Group. The Plan has been closed to new entrants since
April 2002. The most recent actuarial valuation of the Plan was conducted at 1 April 2020 by a qualified independent actuary
using the projected unit method. The Plan was valued using the following key actuarial assumptions:
2022
%
2021
%
Discount rate . .
Expected rate of salary increases . .
RPI inflation . .
Rate of future pension increases . .
162 Great Portland Estates plc Annual Report 2022
24 Employee benefits continued
Life expectancy assumptions at age 65:
2022
Years
2021
Years
Retiring today age 65
Retiring in 25 years (age 40 today)
The amount recognised in the balance sheet in respect of the Plan is as follows:
2022
£m
2021
£m
Present value of unfunded obligations (.) (.)
Fair value of the Plan assets . .
Pension asset . .
Amounts recognised as administration expenses in the income statement are as follows:
2022
£m
2021
£m
Current service cost (.) (.)
Net interest cost – –
(.) (.)
Changes in the present value of the pension obligation are as follows:
2022
£m
2021
£m
Defined benefit obligation at 1 April . .
Service cost . .
Interest cost . .
Effect of changes in demographic assumptions – (.)
Effect of changes in financial assumptions (.) .
Effect of experience adjustments – .
Benefits paid (.) (.)
Present value of defined benefit obligation at 31 March . .
Changes to the fair value of the Plan assets are as follows:
2022
£m
2021
£m
Fair value of the Plan assets at 1 April . .
Interest income . .
Actuarial (loss)/gain (.) .
Employer contributions . .
Benefits paid (.) (.)
Fair value of the Plan assets at 31 March . .
Net pension asset (.) (.)
The amount recognised immediately in the Group statement of comprehensive income was £2.6 million (2021: £0.8 million).
Virtually all equity and debt instruments have quoted prices in active markets. The fair value of the Plan assets at the balance
sheet date is analysed as follows:
2022
£m
2021
£m
Cash . .
Equities . .
Bonds . .
. .
Financial statements
163Annual Report 2022 Great Portland Estates plc
Notes forming part of the Group financial statements continued
24 Employee benefits continued
Other than market and demographic risks, which are common to all retirement benefit schemes, there are no specific risks
in the relevant benefit schemes which the Group considers to be significant or unusual. Detail on two of the more specific risks
is detailed below:
Changes in bond yields
Falling bond yields tend to increase the funding and accounting liabilities. However, the investment in corporate and government
bonds offers a degree of matching, i.e. the movement in assets arising from changes in bond yields partially matches the
movement in the funding or accounting liabilities. In this way, the exposure to movements in bond yields is reduced.
Life expectancy
The majority of the obligations are to provide a pension for the life of the member on retirement, so increases in life expectancy
will result in an increase in the liabilities. The inflation-linked nature of the majority of benefit payments increases the sensitivity
of the liabilities to changes in life expectancy.
The effect on the defined benefit obligation of changing the key assumptions, calculated using approximate methods based
on historical trends, is set out below:
2022
£m
2021
£m
Discount rate -0.25% . .
Discount rate +0.25% . .
RPI inflation -0.25% . .
RPI inflation +0.25% . .
Post-retirement mortality assumption – one year age rating . .
The Group expects to contribute £0.6 million to the Plan in the year ending 31 March 2023. The expected total benefit payments
for the year ending 31 March 2023 is £0.8 million, with £5.6 million expected to be paid over the next five years. A funding plan
has been agreed committing the Group to cash contributions of £248,000 p.a. over five years as well as a contribution rate
of 52.9% p.a. of member pensionable salaries to eliminate any funding shortfalls and the ongoing benefit accrual.
25 Reserves
The following describes the nature and purpose of each reserve within equity:
Share capital
The nominal value of the Company’s issued share capital, comprising 15
5
⁄
19
pence ordinary shares.
Share premium
Amount subscribed for share capital in excess of nominal value, less directly attributable issue costs.
Capital redemption reserve
Amount equivalent to the nominal value of the Company’s own shares acquired as a result of share buyback programmes.
Retained earnings
Cumulative net gains and losses recognised in the Group income statement together with other items such as dividends.
Investment in own shares
Amount paid to acquire the Company’s own shares for its Employee Long-Term Incentive Plan less accounting charges.
164 Great Portland Estates plc Annual Report 2022
Independent auditor’s report
to the members of Great Portland Estates plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
– the financial statements of Great Portland Estates plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true
and fair view of the state of the Group and of the Parent Company’s affairs as at 31 March 2022 and of the Group profit for
the year then ended;
– the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
– the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
– the Group income statement;
– the Group statement of comprehensive income;
– the Group and Parent Company balance sheets;
– the Group and Parent Company statements of changes in equity;
– the Group cash flow statement; and
– the related notes 1 to 25 for the Group financial statements and i to vi for the Parent Company financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable
law and United Kingdom adopted international accounting standards. The financial reporting framework that has been applied
in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services provided to the Group and Parent Company for the year are disclosed in note 4 to the financial statements.
We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the
Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters The key audit matter that we identified in the current year was:
– the valuation of the property portfolio.
The key audit matter has a similar level of risk as the prior year.
Materiality The materiality that we used for the Group financial statements was £29.0m which was determined
on the basis of approximately 1% of net assets.
Scoping Our Group audit scope comprises the audit of Great Portland Estates plc as well as the Group’s
subsidiaries and joint ventures.
The Group audit team performs full scope audits for all of the subsidiaries and joint venture which
are subject to statutory audit requirements. Those entities not subject to an underlying statutory
audit are audited based on component materiality. 100% of Group revenue, profit before tax
and net assets are covered by auditing these entities.
Significant changes
in our approach
Due to the improving collection of rent compared to the prior year, we have removed “Expected
credit losses on rent receivables” as a key audit matter. There is lower judgement associated with
this balance, therefore there is a lower level of audit effort required for the FY22 audit compared
to the prior year.
Financial statements
165Annual Report 2022 Great Portland Estates plc
Independent auditor’s report continued
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
– Obtaining an understanding of the relevant controls relating to the going concern process;
– Understanding the financing facilities available to the Group and Parent Company, including the associated covenants;
– Assessing all bank covenants and facility expiry dates, and recalculating current and forecast covenant compliance;
– Obtaining an understanding of the going concern forecast prepared by Management including changes from the
FY21 scenario as well as evaluating any plans for future actions;
– Testing the mathematical accuracy of the model used to prepare the going concern forecast;
– Challenging the key assumptions, including forecast valuation movements and rental income cash flows,
on which the assessment is based and evaluating the consistency of assumptions with other assumptions within
the going concern assessment as well as related assumptions used in other areas;
– Evaluating Management’s assessment of the impact of Covid-19, Brexit and Climate change within the forecast;
– Assessing the level of headroom in the forecast (with regard to both liquidity and debt covenant tests);
– Assessing the outcome of the reverse stress testing performed by Management;
– Assessing whether any additional facts or information has become available since the date Management made
its assessment; and
– Evaluating the appropriateness of the going concern disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability
to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether
the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
166 Great Portland Estates plc Annual Report 2022
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included 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.
5.1 Valuation of property portfolio
Key audit matter
description
The Group owns a portfolio of property assets in central London. The portfolio is valued at
£2,647.4 million (2021: £2,457.1 million), including its share of joint venture properties, as at
31 March 2022.
The valuation of the investment and development property portfolio is a key source of estimation
uncertainty and includes a number of assumptions including capitalisation yields and estimated
rental values as well as forecast cost to complete, the level of developer’s profit and financing costs
in relation to development properties. Due to the high level of estimation required in determining
the valuation, we have determined that there is a potential fraud risk in the balance.
The Group uses a professionally qualified external valuer to fair value the Group’s wholly-owned
portfolio bi-annually and the joint venture portfolio quarterly. The valuer is engaged by the
directors and performs their work in accordance with the Royal Institution of Chartered Surveyors
(‘RICS’) Valuation – Professional Standards.
In addition to this, and consistent with the market conditions observed in the prior year, there
continued to be a higher level of estimation associated with certain asset valuations, notably those
with a significant retail element, those held under short leaseholds and those where the Group is
increasing their Flex offering.
Through our risk assessment procedures, we have identified the valuation of the property portfolio
as the area on which climate change would have the greatest impact, specifically the capex that
will be required to bring buildings up to required energy efficiency standards, and the valuer’s
approach to concluding future capex relating to climate change in the valuation.
Please see key source of estimation uncertainty on page 142, accounting policy on page 144, note 9
to the financial statements and discussion in the report of the Audit Committee on page 109.
Financial statements
167Annual Report 2022 Great Portland Estates plc
Independent auditor’s report continued
How the scope
of our audit
responded to the
key audit matter
Our procedures in relation to the valuation of property portfolio involved the following:
Understanding of the process and relevant controls
We inquired and gained an understanding of Management’s processes and the oversight
and governance of the processes relating to the valuation estimate.
We met with key management to enhance our knowledge of the portfolio and to enable
us to identify specific key assumptions for certain properties including property vacancies,
leases nearing maturity or break clauses and significant ongoing tenant negotiations with
existing and prospective tenants.
Data provided to the valuer
We assessed Management’s process for providing data to the external valuer and the process
for evaluating the output.
We tested the integrity of a sample of the data provided to the external valuer. This included
tracing a sample of information provided to the external valuer to underlying lease agreements,
and testing costs to complete.
We assessed the Group’s development appraisal process through meeting with project managers,
testing management’s process to forecast costs to complete and inspecting commitments of
key developments.
External valuation
We assessed the competence, capabilities and objectivity of the external valuer.
We obtained the external valuation reports and met with the external valuer to discuss the results
of their work on a sample of properties. With the assistance of an expert member of the audit
team, who is a chartered surveyor, we met with the external valuer and discussed and challenged
the valuation process, performance of the portfolio and significant judgements and assumptions
applied in their valuation model, including yields, estimated rental values, occupancy rates,
lease incentives and break clauses. Our challenge included benchmarking the key assumptions
to external market data and comparable property transactions, in particular the yield.
We challenged management and the valuer in relation to assumptions made about climate
change, in particular the capex that will be required to bring buildings up to required energy
efficiency standards. In addition, we challenged the valuer’s approach to including future
capex in relation to climate change in the valuation and whether this was reasonable.
We assessed the valuation methodology being used and considered any departures from
the Red Book guidance. We have also tested the integrity of the model which is used by the
external valuer.
We compared the property specific assumptions made to assess whether there is consistency
within the portfolio as well as consistency with related assumptions used in other estimates.
Disclosures
We assessed the appropriateness of the disclosures included in the Financial Statements and
considered if the specific disclosures in relation to the estimate are considered reasonable.
Key observations We considered the assumptions applied in arriving at the fair value of the Group’s investment
and development property portfolio to be reasonable and the valuations to be suitable for
inclusion in the financial statements at 31 March 2022.
5. Key audit matters continued
168 Great Portland Estates plc Annual Report 2022
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person 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.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Parent company financial statements
Materiality £29.0 million (2021: £27.0 million) £17.9m (2021: £19.1 million)
Basis for
determining
materiality
We determined materiality for the Group
based on approximately 1% of net assets
(2021: approximately 1% of net assets).
We determined materiality for the Parent
Company based on 3% of net assets
(2021: 3% of net assets).
Rationale for
the benchmark
applied
We consider net assets to be a critical
financial performance measure for
the Group on the basis that it is a key
metric used by management, investors,
analysts and lenders.
We consider net assets to be a critical financial
performance measure on the basis that the Parent
Company holds all the investments therefore
making the Balance Sheet the relevant primary
statement for management and lenders.
In addition to net assets, we consider EPRA earnings to be a critical financial performance measure for the Group and we
applied a lower threshold of £1.4 million (2021: £1.9 million) based on 5% (2021: 5%) of that measure for testing of all balances
impacting this financial performance measure.
Performance measures (£m)
Net Assets Group materiality
Group materiality
£29m
Audit Committee
reporting threshold
£1m
Highest component
materiality
£26m
Net Assets
£2,112.9m
6.2 Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Parent company financial statements
Performance
materiality
70% (2021: 70%) of Group materiality 70% (2021: 70%) of Parent Company materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following factors:
– our risk assessment, including our assessment of the Group’s overall control environment and
that we consider it appropriate to rely on controls over a number of business processes; and
– our past experience of the audit, which has indicated a low number of corrected and uncorrected
misstatements identified in prior periods.
6.3 Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.0 million
(2021: £1.0 million), as well as differences below that threshold that, 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.
Financial statements
169Annual Report 2022 Great Portland Estates plc
Independent auditor’s report continued
7. An overview of the scope of our audit
7.1 Identification and scoping of components
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.
One audit team, led by the Senior Statutory Auditor, audits the Group. The audit is performed centrally, as the books and records
for each entity within the Group are maintained at head office.
We have also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there
were no significant risks of material misstatement of the aggregated financial information.
We perform full scope audits for all of the Group’s subsidiaries and joint ventures which are subject to statutory audit
requirements at company specific materiality levels which are lower than Group materiality, these materiality levels range
from £2,000 to £26 million (2021: £4,000 to £24 million). Those entities not subject to an underlying statutory audit are audited
based on component materiality. Our audit scope covers 100% (2021: 100%) of the Group’s revenue and profit (2021: loss)
before tax and 100% (2021: 100%) of net assets.
7.2 Our consideration of the control environment
From our understanding of the entity and after testing relevant controls, we relied on controls in performing our audit of:
– Rental income;
– Operating expenses;
– Payroll;
– Pension assets;
– Capital expenditure; and
– Service charge and property expenditure.
There were no areas where we had planned to rely on controls, other than the balances above.
In addition, we have obtained an understanding of the relevant controls such as those relating to the financial reporting cycle,
and those in relation to our key audit matter.
Where we identified a control deficiency in relation to the rental income process, we were able to identify sufficient mitigating
controls in place to allow us to continue with our planned approach to testing this area.
During the year, an upgrade to the IT system was undertaken by management. Together with our IT specialists, we obtained
an understanding of the controls applied to this upgrade in addition to obtaining an understanding of the general IT
control environment.
7.3. Our consideration of climate-related risks
As part of our audit we have made enquiries of management to understand the process they have adopted to assess the
potential impact of climate change on the financial statements. Management consider climate change to be a principal
risk within the business which particularly impacts the cost of retrofitting buildings to improve their sustainability credentials
and comply with future regulations, the ability to deliver new buildings and the risk that they are left with a stranded asset.
These risks are consistent with those identified through our own risk assessment process.
As part of our identification of key audit matters, we therefore assessed there to be an element of risk in relation to climate
change as part of the Valuation of the Property Portfolio. There is a risk that the valuation does not include appropriate
assumptions relating to climate change, for example, capital expenditure which will be required to bring a building to
a certain environmental standard, to the extent assumed by a third party when determining fair value.
As detailed in our procedures in section 5.1 above, we challenged the valuer and management as to the assumptions included,
and considered their reasonableness with the assistance of our real estate specialists. We have reviewed the disclosures
in the principal risk section and Note 9 of the annual report and concur that they appropriately disclose the current risk
that management has identified.
170 Great Portland Estates plc Annual Report 2022
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
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.
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 course of 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
this gives rise to a material misstatement in the financial statements themselves. 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.
9. Responsibilities 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 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’s and the 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 or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
10. 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 (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including the design of the
Group remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
– the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error;
– results of our enquiries of management, internal audit and the Audit Committee about their own identification
and assessment of the risks of irregularities;
– any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances
of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
– the matters discussed among the audit engagement team and relevant internal specialists, including tax, IT and real estate
valuation specialists regarding how and where fraud might occur in the financial statements and any potential indicators
of fraud.
Financial statements
171Annual Report 2022 Great Portland Estates plc
Independent auditor’s report continued
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in the valuation of the property portfolio. In common with all audits
under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules as well as
relevant provisions of tax legislation, including the REIT rules.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty, most notably
health and safety regulations.
11.2 Audit response to risks identified
As a result of performing the above, we identified the Valuation of the Property Portfolio as a key audit matter related to
the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes
the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
– enquiring of management, the audit committee and external legal counsel concerning actual and potential litigation
and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks
of material misstatement due to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing
correspondence with HMRC; and
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries
and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of
a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the
normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained
in the course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud continued
172 Great Portland Estates plc Annual Report 2022
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identified set out on page 135;
– the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why
the period is appropriate set out on page 78;
– the directors’ statement on fair, balanced and understandable set out on page 136;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 64;
– the section of the annual report that describes the review of effectiveness of risk management and internal
control systems set out on page 106; and
– the section describing the work of the audit committee set out on pages 107 to 113.
14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
– the Parent Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2 Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration
have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1 Auditor tenure
Following the recommendation of the audit committee, we were appointed by the Shareholders on 15 July 2003 to audit the
financial statements for the year ending 31 March 2004 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is 19 years, covering the years ending 31 March 2004
to 31 March 2022.
15.2 Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance
with ISAs (UK).
Financial statements
173Annual Report 2022 Great Portland Estates plc
Independent auditor’s report continued
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these
financial statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed
on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’).
This auditor’s report provides no assurance over whether the annual financial report has been prepared using the single
electronic format specified in the ESEF RTS.
Judith Tacon
FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
19 May 2022
174
Great Portland Estates plc Annual Report 2022
Notes
2022
£m
2021
£m
Non-current assets
Fixed asset investments iii ,. ,.
Amounts owed by subsidiary undertakings . .
Amounts owed by joint ventures . .
,. ,.
Current assets
Other debtors . .
Deferred tax vi . .
Cash at bank and short-term deposits . .
. .
Total assets ,. ,.
Current liabilities iv (.) (.)
Non-current liabilities
Interest-bearing loans and borrowings v (.) (.)
(.) (.)
Total liabilities (,.) (,.)
Net assets . .
Capital and reserves
Share capital . .
Share premium account . .
Capital redemption reserve . .
Retained earnings . .
Investment in own shares . .
Shareholders’ funds . .
Notes: The loss within the Company financial statements was £20.7 million (2021: £15.6 million). References in roman numerals refer
to the notes to the Company financial statements, references in numbers refer to the notes to the Group financial statements.
The financial statements of Great Portland Estates plc (registered number: 00596137) were approved by the Board on
19 May 2022 and signed on its behalf by:
Toby Courtauld Nick Sanderson
Chief Executive Chief Financial & Operating Officer
Company balance sheet
At 31 March 2022
Financial statements
175Annual Report 2022 Great Portland Estates plc
Notes
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Investment
in own
shares
£m
Total
equity
£m
Total equity at 1 April 2021 . . . . . .
Loss for the year and total
comprehensive expense – – – (.) – (.)
Dividends to shareholders – – – (.) – (.)
Employee Long-Term Incentive Plan charge – – – – . .
Transfer to retained earnings – – – . (.) –
Total equity at 31 March 2022 . . . . . .
At 31 March 2022, the Company had realised profits available for distribution in excess of £160.0 million.
Company statement of changes in equity
For the year ended 31 March 2021
Notes
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Investment
in own
shares
£m
Total
equity
£m
Total equity at 1 April 2020 . . . . (.) .
Loss for the year and total
comprehensive expense – – – (.) – (.)
Dividends to shareholders – – – (.) – (.)
Employee Long-Term Incentive Plan charge – – – – . .
Transfer to retained earnings – – – . (.) –
Total equity at 31 March 2021 . . . . . .
Company statement of changes in equity
For the year ended 31 March 2022
176 Great Portland Estates plc Annual Report 2022
Notes forming part of the Company financial statements
i Accounting policies
Accounting convention
Great Portland Estates plc is a public company limited by shares incorporated and domiciled in the United Kingdom
(England and Wales). The address of the registered office is given on page 189. The financial statements have been prepared
on the historical cost basis except for the re-measurement of certain financial instruments to fair value. Historical cost is
generally based on the fair value of the consideration given in exchange for the goods and services. There were no significant
judgements made or critical estimates applied in the preparation of the financial statements.
Disclosure exemptions adopted
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets
the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council.
Accordingly, the financial statements have therefore been prepared in accordance with FRS 101 (Financial Reporting Standard
101) Reduced Disclosure Framework as issued by the Financial Reporting Council incorporating the Amendments to FRS 101
issued by the FRC in July 2015 and July 2016.
In preparing these financial statements Great Portland Estates plc has taken advantage of all disclosure exemptions conferred
by FRS 101. Therefore these financial statements do not include:
– certain comparative information as otherwise required by EU endorsed IFRS;
– certain disclosures regarding the Company’s capital;
– a statement of cash flows;
– certain disclosures in respect of financial instruments;
– the effect of future accounting standards not yet adopted; and
– disclosure of related party transactions with wholly-owned members of the Group.
The above disclosure exemptions have been adopted because equivalent disclosures are included in the consolidated Group
accounts into which Great Portland Estates plc is consolidated.
Subsidiary undertakings and joint ventures
The Company is a holding and financing company for the Great Portland Estates plc Group. Shares in subsidiary undertakings
and joint ventures are carried at amounts equal to their original cost less any provision for impairment.
Other
Accounting policies for share-based payments, other investment, deferred tax and financial instruments are the same as those
of the Group and are set out on pages 142 to 145.
The Company participates in a Group defined benefit scheme which is the legal responsibility of Great Portland Estates Services
Limited as the sponsoring employer. There is no contractual agreement or stated policy for charging the net defined benefit
cost. In accordance with IAS 19 (Revised 2011), the Company accounts for the contributions to the scheme as if it were a defined
contribution scheme. Details of the Group’s pension plan can be found on pages 162 to 164.
The auditor’s remuneration for audit and other services is disclosed in note 4 to the Group accounts.
ii Profit attributable to members of the parent undertaking
As permitted by section 408 of the Companies Act 2006, the Company has not presented its own profit and loss account.
The loss dealt within the financial statements of the Company was £20.7 million (2021: £15.6 million). The employees of the
Company are the Directors and the Company Secretary. Full disclosure of the Directors’ remuneration can be found on
pages 114 to 133.
Financial statements
177Annual Report 2022 Great Portland Estates plc
Notes forming part of the Company financial statements continued
iii Fixed asset investments
Investment in
joint ventures
£m
Shares in
subsidiary
undertakings
£m
Total
£m
At 1 April 2021 . ,. ,.
Additions – . .
31 March 2022 . ,. ,.
Shares in subsidiary undertakings and joint ventures are carried at cost less any provision for impairment. The historical cost
of the shares in subsidiary undertakings and joint ventures at 31 March 2022 was £1,243.2 million (2021: £1,219.5 million).
The subsidiaries of the Company at 31 March 2022 were:
Direct subsidiaries
The Company has a 100% interest in the ordinary share capital of the following entities:
Principal activity Principal activity
Great Portland Estates
Services Limited
Property management G.P.E. (St Thomas Street) Limited Property investment
Collin Estates Limited Property investment J.L.P. Investment Company Limited Property investment
Courtana Investments Limited Property investment Knighton Estates Limited Property investment
G.P.E. (Bermondsey Street) Limited Property investment Pontsarn Investments Limited Property investment
73/77 Oxford Street Limited Property investment Portman Square Properties
Holdings Limited
Holding company
GPE (Brook Street) Limited Property investment GPE Pension Trustee Limited Corporate trustee
GPE (GHS) Limited Property investment G.P.E. (Marcol House) Limited Holding company
Gresse Street Limited Property investment G.P.E. (Rathbone Place 1) Limited Property investment
G.P.E. Construction Limited Development
management
G.P.E. (Rathbone Place 2) Limited Property investment
The Rathbone Place Partnership
(G.P. 1) Limited
Property investment G.P.E. (Rathbone Place 3) Limited Property investment
178 Great Portland Estates plc Annual Report 2022
iii Fixed asset investments continued
Indirect subsidiaries
Principal activity Principal activity
The Rathbone Place Partnership
(G.P. 2) Limited
Holding company Portman Square Properties Limited Property investment
The Rathbone Place
Limited Partnership*
Property investment G.P.E. (Newman Street) Limited Property investment
Rathbone Square No.1 Limited Property investment Rathbone Square No.2 Limited Property investment
The Newman Street Unit Trust Property investment Marcol House Jersey Limited Property investment
* The Group has taken advantage of the exemption, which is conferred by The Partnerships (Accounts) Regulations 2008, for preparing financial statements
for The Rathbone Place Limited Partnership.
Directly held joint venture entities
Principal activity Principal activity
The Great Victoria Partnership
(G.P.) Limited
Property investment The Great Victoria Partnership
(G.P.) (No. 2) Limited
Property investment
Great Ropemaker Partnership
(G.P.) Limited
Property investment GHS (GP) Limited Property investment
Indirectly held joint venture entities
Principal activity Principal activity
Great Victoria Property Limited Property investment The Great Victoria Partnership Property investment
The Great Victoria Partnership (No. 2) Property investment Great Victoria Property (No. 2) Limited Property investment
Great Ropemaker Property Limited Property investment The Great Ropemaker Partnership Property investment
Great Ropemaker Property
(Nominee 1) Limited
Property investment Great Ropemaker Property
(Nominee 2) Limited
Property investment
The GHS Limited Partnership Property investment GPE (Hanover Square) Limited Property investment
14 Brook Street Management
Company Limited
Property investment GHS (Nominee) Limited Property investment
All of the above companies are registered at 33 Cavendish Square, London W1G 0PW and operate in England and Wales
except for: Marcol House Jersey Limited, GHS (GP) Limited, GHS (Nominee) Limited and The GHS Limited Partnership which are
registered at 44 Esplanade, St Helier, Jersey, JE4 9WG; The Newman Street Unit Trust which is registered at 11 Old Jewry, London,
EC2R 8DU. Great Portland Estates plc is the ultimate parent undertaking of the GPE Group.
Financial statements
179Annual Report 2022 Great Portland Estates plc
Notes forming part of the Company financial statements continued
iv Current liabilities
2022
£m
2021
£m
Amounts owed to subsidiary undertakings . .
Other taxes and social security costs – .
Other creditors . .
Accruals . .
. .
v Interest-bearing loans and borrowings
2022
£m
2021
£m
Bank loans . .
Debentures . .
Private placement notes . .
. .
At 31 March 2022, property with a carrying value of £119.5 million (2021: £113.1 million) was secured under the first mortgage
debenture stock. Further details of the Company’s loans and borrowings can be found on notes 15 and 16 of the Group accounts.
vi Deferred tax
1 April
2021
£m
Recognised in
the income
statement
£m
Recognised
in equity
£m
31 March
2022
£m
Net deferred tax asset in respect of other temporary differences . . – .
. . – .
A further deferred tax asset of £3.5 million (2021: £1.6 million) relating to revenue losses and contingent share awards was
not recognised because it is uncertain whether future taxable profits will arise against which this asset can be utilised.
180 Great Portland Estates plc Annual Report 2022
The public square at
Hanover Square, W1
In this section:
182 Five-year record
183 Our properties and customers
185 Portfolio statistics
186 Glossary
188 Shareholders’ information
190 Financial calendar
Other
information
Other information
181Annual Report 2022 Great Portland Estates plc
Based on the Group financial statements for the years ended 31 March
Balance sheet
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
Property portfolio ,. ,. ,. ,. ,.
Joint ventures . . . . .
Trading property . . – – –
Loans and borrowings (.) (.) (.) (.) (.)
Other assets/(liabilities) (.) . . (.) (.)
Net assets ,. ,. ,. ,. ,.
Financed by
£m £m £m £m £m
Issued share capital . . . . .
Reserves ,. ,. ,. ,. ,.
Total equity ,. ,. ,. ,. ,.
Net assets per share p p p p p
EPRA NTA p p p p p
Income statement
£m £m £m £m £m
Revenue . . . . .
Cost of sales (.) (.) (.) (.) (.)
. . . . .
Administration expenses (.) (.) (.) (.) (.)
Estimated credit loss (.) (.) (.) (.) (.)
Development management losses – (.) (.) (.) (.)
Operating profit before surplus/(deficit) from property
and results of joint ventures
. . . . .
Surplus/(deficit) on investment property . . (.) (.) .
Share of results of joint ventures . . . (.) .
Operating profit/(loss) . . . (.) .
Finance income . . . . .
Finance costs (.) (.) (.) (.) (.)
Fair value movement on convertible bond . . – – –
Fair value movement on derivatives (.) – – – –
Non-recurring items (.) – – – –
Profit/(loss) before tax . . . (.) .
Tax (.) (.) . . .
Profit/(loss) for the year . . . (.) .
Earnings/(loss) per share – basic .p .p .p (.)p .p
Earnings/(loss) per share – diluted .p .p .p (.)p .p
EPRA earnings per share – diluted .p .p .p .p .p
Dividend per share .p .p .p .p .p
Five-year record
182 Great Portland Estates plc Annual Report 2022
Our properties
In value order (GPE share)
Location Tenure
Rent roll
(GPE share)
£
Net
internal area
sq ftOwnership Property name
£200 million plus
50% Hanover Square Rest of West End FH/LH ,, ,
100% 1 Newman Street & 70/88 Oxford Street Noho FH ,, ,
100% The Piccadilly Buildings Rest of West End LH ,, ,
£100 million – £200 million
100% 50 Finsbury Square City FH – ,
100% Wells & More Noho FH ,, ,
100% City Tower City LH ,, ,
100% Elsley House Noho FH ,, ,
50% 200 & 214 Gray’s Inn Road Midtown LH ,, ,
100% Kent House Noho FH ,, ,
£75 million – £100 million
100% Walmar House Noho LH ,, ,
100% 2 Aldermanbury Square City LH – ,
£50 million – £75 million
100% New City Court, 14/20 St Thomas Street Southwark FH ,, ,
100% 35 Portman Square Noho LH ,, ,
100% Minerva House Southwark FH ,, ,
100% The Hickman City FH , ,
100% Carrington House, 126/130 Regent Street Rest of West End LH ,, ,
100% Woolyard Southwark FH ,, ,
100% Challenger House City FH ,, ,
£30 million – £50 million
50% Mount Royal, 508/540 Oxford Street Noho LH ,, ,
100% 31/34 Alfred Place Noho LH ,, ,
100% 48/54 Broadwick Street and 16 Dufour’s Place Rest of West End FH ,, ,
100% Orchard Court Noho LH ,, ,
100% 7/15 Gresse Street Noho LH ,, ,
100% Pollen House Rest of West End LH ,, ,
£10 million – £30 million
50% 103/113 Regent Street Rest of West End LH ,, ,
100% 6/10 Market Place Noho FH ,, ,
50% Elm Yard Midtown FH , ,
100% 95/96 New Bond Street Rest of West End LH , ,
100% Kingsland House, 122/124 Regent Street Rest of West End LH ,, ,
Below £10 million
100% 6 Brook Street Rest of West End LH , ,
100% Poland Street Rest of West End FH , ,
100% 183/190 Tottenham Court Road Noho LH , ,
100% 23/24 Newman Street Noho LH , ,
FH = Freehold or Virtual Freehold.
LH = Leasehold.
183Annual Report 2022 Great Portland Estates plc
Other information
Top ten customers
Customer Use
Rent roll
(our share)
£m
% of rent roll
(our share)
1 Kohlberg Kravis Roberts LLP Office . .
2 Glencore UK Limited Office . .
3 Runway East Office . .
4 Exane SA Office . .
5 New Look Office . .
6 Richemont UK Limited Office . .
7 Winckworth Sherwood LLP Office . .
8 Fashion Retail Academy Office . .
9 Carlton Communications Limited Office . .
10 Uniqlo Retail . .
Total . .
Our top ten customers
184 Great Portland Estates plc Annual Report 2022
Rental income
Wholly-owned Share of joint ventures
Rent roll
£m
Reversionary
potential
£m
Rental
values
£m
Rent roll
£m
Reversionary
potential
£m
Rental
values
£m
Total rental
values
£m
London North of Oxford Street Office . . . – – – .
Retail . (.) . . . . .
Rest of West End Office . (.) . . . . .
Retail . . . . (.) . .
Total West End . . . . . . .
City, Midtown and Southwark Office . . . . . . .
Retail . (.) . – – – .
Total City, Midtown and Southwark . . . . . . .
Total let portfolio . . . . . . .
Voids . . .
Premises under refurbishment and development . . .
Total portfolio . . .
EPRA vacancy
Wholly-
owned
£m
Joint
ventures
£m
Total
£m
Void
%
Investment void . . . .
Premises under refurbishment . . . .
EPRA vacancy rate . . . .
Premises under development . – . .
Total void . . . .
Rent roll security, lease lengths and voids
Wholly-owned Joint ventures
Rent roll
secure for
five years
%
Weighted
average
lease length
Years
Void
%
Rent roll
secure for
five years
%
Weighted
average
lease length
Years
Void
%
London North of Oxford Street Office . . . – – –
Retail . . . . . .
Rest of West End Office . . . . . –
Retail . . . . . .
Total West End . . . . . .
City, Midtown and Southwark Office . . . . . .
Retail . . – – – –
Total City, Midtown and Southwark . . . . . .
Total portfolio . . . . . .
Rental values and yields
Wholly-owned Joint ventures Wholly-owned Joint ventures
Average
rent
£psf
Average
ERV
£psf
Average
rent
£psf
Average
ERV
£psf
Initial
yield
%
True
equivalent
yield
%
Initial
yield
%
True
equivalent
yield
%
London North of Oxford Street Office . . – – . . – –
Retail . . . . . . . .
Rest of West End Office . . . . . . – .
Retail . . . . . . . .
Total West End . . . . . . . .
City, Midtown and Southwark Office . . . . . . . .
Retail . . – – . . – –
Total City, Midtown and Southwark . . . . . . . .
Total portfolio . . . . . . . .
Portfolio statistics at 31 March 2022
185Annual Report 2022 Great Portland Estates plc
Other information
Building Research Establishment Environmental
Assessment Methodology (BREEAM)
Building Research Establishment method of assessing,
rating and certifying the sustainability of buildings.
Cash EPS
EPRA EPS adjusted for certain non-cash items (including our
share of joint ventures): lease incentives, capitalised interest
and charges for share-based payments.
Core West End
Areas of London with W1 and SW1 postcodes.
Development profit on cost
The value of the development at completion, less the value
of the land at the point of development commencement and
costs to construct (including finance charges, letting fees,
void costs and marketing expenses).
Development profit on cost %
The development profit on cost divided by the land value
at the point of development commencement together
with the costs to construct.
Earnings Per Share (EPS)
Profit after tax divided by the weighted average number
of ordinary shares in issue.
EPRA metrics
Standard calculation methods for adjusted EPS and NAV
and other operating metrics as set out by the European
Public Real Estate Association (EPRA) in their Best Practice
and Policy Recommendations.
EPRA Net Disposal Value (NDV)
Represents the shareholders’ value under a disposal scenario,
where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability,
net of any resulting tax. Diluted net assets per share adjusted
to remove the impact of goodwill arising as a result of
deferred tax and fixed interest rate debt.
EPRA Net Reinstatement Value (NRV)
Represents the value of net assets on a long-term basis.
Assets and liabilities that are not expected to crystallise in
normal circumstances such as the fair value movements on
financial derivatives, real estate transfer taxes and deferred
taxes on property valuation surpluses are therefore excluded.
EPRA Net Tangible Assets (NTA)
Assumes that entities buy and sell assets, thereby crystallising
certain levels of unavoidable deferred tax. Diluted net assets
per share adjusted to remove the cumulative fair value
movements on interest-rate swaps and similar instruments,
the carrying value of goodwill arising as a result of deferred
tax and other intangible assets.
Estimated rental value (ERV)
The market rental value of lettable space as estimated
by the Group’s valuers at each balance sheet date.
Fair value – investment property
The amount as estimated by the Group’s valuers for
which a property should exchange on the date of valuation
between a willing buyer and a willing seller in an arm’s-length
transaction after proper marketing wherein the parties
had each acted knowledgeably, prudently and without
compulsion. In line with market practice, values are stated
net of purchasers’ costs.
Ready-to-fit
For businesses typically taking larger spaces on longer leases
who want to fit out the space themselves.
Fitted spaces
Where businesses can move into fully furnished, well designed
workspaces, with their own front door, furniture, meeting
rooms, kitchen and branding.
Fully Managed
Fitted space where GPE handles all day-to-day running
of the workplace in one monthly bill.
Flex space partnerships
Revenue share agreements with flexible space operators,
these are typically structured via lease arrangements with
the revenue share recognised within rental income.
Internal rate of return (IRR)
The rate of return that if used as a discount rate and applied
to the projected cash flows that would result in a net present
value of zero.
MSCI
Morgan Stanley Capital International (MSCI) is a company
that produces an independent benchmark of property returns.
MSCI central London
An index, compiled by MSCI, of the central and inner London
properties in their March annual valued universes.
Like-for-like (Lfl)
The element of the portfolio that has been held for the whole
of the period of account.
EPRA Loan-to-Value (LTV)
The nominal value of total bank loans, private placement
notes, debenture stock and any net liabilities/assets, net
of cash (including our share of joint ventures balances),
expressed as a percentage of the market value of the
property portfolio (including our share of joint ventures).
Net assets per share or net asset value (NAV)
Equity shareholders’ funds divided by the number
of ordinary shares at the balance sheet date.
Glossary
186 Great Portland Estates plc Annual Report 2022
Net debt
The book value of the Group’s bank and loan facilities,
private placement notes and debenture loans plus the nominal
value of the convertible bond less cash and cash equivalents.
Net gearing
Total Group borrowings at nominal value plus obligations
under occupational leases less short-term deposits and
cash as a percentage of equity shareholders’ funds adjusted
for value of the Group’s pension scheme, calculated in
accordance with our bank covenants.
Net initial yield
Annual net rents on investment properties as a percentage
of the investment property valuation having added notional
purchasers’ costs.
Net rental income
Gross rental income adjusted for the spreading of lease
incentives less expected credit losses and ground rents.
Non-PIDs
Dividends from profits of the Group’s taxable residual business.
Property costs
Service charge income less service charge costs plus other
property expenses.
Property Income Distributions (PIDs)
Dividends from profits of the Group’s tax-exempt
property rental business.
REIT
UK Real Estate Investment Trust.
Rent roll
The annual contracted rental income.
Reversionary potential
The percentage by which ERV exceeds rent roll on let space.
Topped-up initial yield
Annual net rents on investment properties as a percentage
of the investment property valuation having added
notional purchasers’ costs and contracted uplifts from
tenant incentives.
Total potential future growth
Portfolio rent roll plus the ERV of void space, space under
refurbishment and the committed development schemes,
expressed as a percentage uplift on the rent roll at the
end of the period.
Total Accounting Return (TAR)
The growth in EPRA NTA per share plus ordinary dividends
paid, expressed as a percentage of EPRA NTA per share
at the beginning of the period.
Total Property Return (TPR)
Capital growth in the portfolio plus net rental income
derived from holding these properties plus profit on sale
of disposals expressed as a percentage return on the
period’s opening value.
Total Shareholder Return (TSR)
The growth in the ordinary share price as quoted on the
London Stock Exchange, plus dividends per share received
for the period expressed as a percentage of the share
price at the beginning of the period.
True equivalent yield
The constant capitalisation rate which, if applied to all
cash flows from an investment property, including current
rent, reversions to current market rent and such items as
voids and expenditures, equates to the market value having
taken into account notional purchasers’ costs. Assumes
rent is received quarterly in advance.
Ungeared IRR
The ungeared internal rate of return (IRR) is the interest
rate at which the net present value of all the cash flows
(both positive and negative) from a project or investment
equal zero, without the benefit of financing. The internal
rate of return is used to evaluate the attractiveness of
a project or investment.
Vacancy rate
The element of a property which is unoccupied but
available for letting, expressed as the ERV of the vacant
space divided by the ERV of the total portfolio.
Weighted Average Unexpired Lease Term (WAULT)
The Weighted Average Unexpired Lease Term expressed
in years.
Whole life surplus
The value of the development at completion, less the
value of the land at the point of acquisition and costs
to construct (including finance charges, letting fees,
void costs and marketing expenses) plus any income
earned over the period.
187Annual Report 2022 Great Portland Estates plc
Other information
Shareholder enquiries
Enquiries relating to shareholdings, such as the transfer
of shares, change of name or address, lost share certificates
or dividend cheques, should be referred to the Company’s
Registrar at:
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: +44 (0) 371 384 2030
(Lines are open 8.30am to 5.30pm, Monday to Friday,
excluding bank holidays in England and Wales).
See help.shareview.co.uk for additional information.
Managing your shares online
Shareholders and employees can manage their
Great Portland Estates plc holdings online by registering
with Shareview, a secure online platform provided by
Equiniti Limited. Registration is a straightforward process
and allows shareholders to:
– access information on their shareholdings, including
share balance and dividend information;
– sign up for electronic shareholder communications;
– buy and sell shares;
– update their records following a change of address;
– have dividends paid into their bank account; and
– vote by proxy online in advance of general meetings
of the Company.
Electronic communication
Shareholders are encouraged to elect to receive all
shareholder documentation electronically by registering
with Shareview at www.shareview.co.uk. Shareholders
who have registered for this option will receive an email
notification when shareholder documents are available
on the Company’s website and a link will be provided
to that information.
When registering, shareholders will need their shareholder
reference number which can be found on their share
certificate or proxy form.
Equiniti Limited offers a range of shareholder information
and services online at www.shareview.co.uk.
A textphone facility for those with hearing difficulties
is available by calling: 0371 384 2255. Lines are open
8.30am to 5.30pm, Monday to Friday (excluding bank
holidays in England and Wales).
Unsolicited telephone calls – boiler room scams
In recent years, some of our shareholders have received
unsolicited telephone calls or correspondence concerning
investment matters from organisations or persons
claiming or implying that they have some connection
with the Company.
These are typically from overseas based ‘brokers’ who target
UK shareholders offering to sell them shares that often turn
out to be worthless or non-existent, or an inflated price for
shares they own. These operations are commonly known as
‘boiler rooms’. Shareholders are advised to be very wary of
any offers of unsolicited advice, discounted shares, premium
prices for shares they own or free reports into the Company.
If you receive any unsolicited investment advice:
– ensure you get the correct name of the person and firm;
– check that the firm is on the Financial Conduct Authority
(FCA) Register to ensure they are authorised at
https://register.fca.org.uk;
– use the details on the FCA Register to contact the firm;
– call the FCA Consumer Helpline (0800 111 6768) if there
are no contact details in the Register or you are told
they are out of date; and
– if the calls persist, hang up.
If you use an unauthorised firm to buy or sell shares, you will
not have access to the Financial Ombudsman Service or the
Financial Services Compensation Scheme.
Dividends
Dividends can be paid by BACS directly into a UK bank
account, with the dividend confirmation being sent to the
shareholder’s address. This is the easiest way for shareholders
to receive dividend payments and avoids the risk of lost or
out-of-date cheques. A dividend mandate form is available
from Equiniti Limited or online at www.shareview.co.uk/info/
directdividends.
Dividends payable in foreign currencies
Equiniti is able to pay dividends to shareholder bank accounts
in over 83 currencies worldwide through the Overseas Payment
Service. An administrative fee will be deducted from each
dividend payment. Further details can be obtained from
Equiniti or online at www.shareview.co.uk/info/ops.
Dividend Reinvestment Plan
Our Dividend Reinvestment Plan (DRIP) enables shareholders
to use their dividends to buy further Great Portland Estates plc
shares. Full details of the DRIP can be obtained from Equiniti
Limited or online at www.shareview.co.uk/info/drip.
Shareholders’ information
188 Great Portland Estates plc Annual Report 2022
Tax consequences of REIT status
As a REIT, dividend payments may be split between PIDs and
non-PIDs. Information in respect of the tax consequences
for shareholders of receiving dividends can be found on
the Company’s website at www.gpe.co.uk/investors/
shareholder-information/reits.
Share dealing
Great Portland Estates plc shares can be traded through
most banks, building societies or stock brokers. Equiniti Limited
offers a telephone and internet dealing service. Terms and
conditions and details of the commission charges are
available on request.
For telephone dealing, please telephone 0345 603 7037
between 8.00am and 4.30pm, Monday to Friday (excluding
bank holidays in England and Wales), and for internet dealing
visit www.shareview.co.uk/dealing.
Shareholders will need their reference number which can
be found on their share certificate.
Website
The Company has a corporate website, which holds, amongst
other information, a copy of our latest Annual Report and
financial statements, a list of properties held by the Group
and copies of all press announcements released over the
last 12 months. The site can be found at www.gpe.co.uk.
General Counsel & Company Secretary
Darren Lennark
Registered office
33 Cavendish Square
London W1G 0PW
Tel: 020 7647 3000
Registered number: 596137
189Annual Report 2022 Great Portland Estates plc
Other information
2022
26 May
Ex-dividend date for 2021/22 final dividend
27 May
Registration qualifying date for 2021/22 final dividend
7 July
Annual General Meeting
11 July
2021/22 final dividend payable
17 November
Announcement of 2022/23 interim results
24 November
Ex-dividend date for 2022/23 interim dividend (provisional)
1
25 November
Registration qualifying date for 2022/23
interim dividend (provisional)
1
2023
4 January
2022/23 interim dividend payable (provisional)
1
23 May
Announcement of 2022/23 full-year results (provisional)
1, 2
1. Provisional dates will be confirmed in the half-year results
announcement 2022.
2. The timetable for the potential final dividend will be confirmed
in the 2023 Annual Report.
Financial calendar
190 Great Portland Estates plc Annual Report 2022
Design and production by Radley Yeldar | ry.com
Key photography taken by Steve Bates
and Andy Wilson
Printed by Pureprint Group, using
pureprint environmental print technology,
a CarbonNeutral® company certified to
FSC® and IS0 14001.
This Annual Report is printed on RECYCO 100%
Recycled, an environmentally-friendly stock
made with 100% recycled fibres and it is
ECF (Elemental Chlorine Free). This paper
is FSC® certified.
If after reading, you no longer wish to
retain this report, please pass it on to other
interested readers or dispose of it in your
recycled paper waste.
For more information on how we are working to
decarbonise our business please visit our website:
www.gpe.co.uk/sustainability
Great Portland Estates plc
Tel: 020 7647 3000
www.gpe.co.uk