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Real estate
for reliable
income
Annual Report
and Accounts 2022
An overview, purpose
and strategy update
1
Creating value
20
A detailed analysis
of our property activity
28
A review of our
financial performance
42
Our sustainability
performance
49
Environmental Social Governance
A review of our risk
70
In this report
Financial statements
Detailed financial
performance
155
Governance
How we govern the business
88
Remuneration
132
Strategic Report
Dividend Growth
+6.9%
Total Accounting Return
+41.9%
Own Manage Collaborate Generate
Patrick Vaughan
Chair
We have delivered a very strong
set of results and the portfolio
provides a solid foundation for
future performance.
Andrew Jones
Chief Executive
LondonMetric is a FTSE 250
REIT that owns one of the UK’s
leading logistics platforms
alongside a grocery-led long
income portfolio. We own
£3.6bn of assets across 17m
sq ft with contracted rental
income of £143m p.a.
The Company has progressed
earnings and NTA significantly,
allowing us to grow the
dividend further.
Martin McGann
Finance Director
Annual Report and Accounts 2022
LondonMetric Property Plc
Own Manage Collaborate Generate
Own desirable real estate that
meets occupiers’ needs.
p02
Manage and enhance responsibly
to improve ourassets and help
occupiers thrive.
p04
Maximise our expertise and
relationships to build on our position
as partner of choice.
p06
Generate reliable, repetitive and
growing income-led totalreturns.
p08
Our purpose is to own and manage desirable real estate that
meets occupiers’ demands, delivers reliable, repetitive and
growing income-led returns and outperforms over the long term.
Strategic report Governance Financial statements
1
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88 -154 155 -208
Our purpose
* Includes developments, based on value
1
— Analysing and understanding
the macro trends aecting
real estate
— Implementing a range of
investment strategies to
ensure we own the right
assets in the right locations
that can deliver reliable,
repetitive and growing
income returns
— Employing the right people
to identify and execute
the right actions to create
a superior portfolio
What this
means
to our
business
An overview, purpose and strategy update
The portfolio’s 74.6%
*
weighting towards
logistics and 22.5%
*
weighting to long
income is ensuring
that our assets
are benefiting
from today’s
macro environment.
We are continually
upscaling the quality of the
portfolio to ensure future
outperformance, with a
strong focus on owning well
located urban logistics.
Valentine Beresford
Investment Director
Positioning the portfolio to
benefit from the medium
and long term drivers of
return and meeting the
needs of our occupiers.
Own
desirable
real estate
Highlights
43.9%
*
Urban logistics exposure
as aproportion of our assets
£575m
Acquisitions in year
LondonMetric Property Plc
Annual Report and Accounts 2022
2
2
— A highly disciplined
acquisitions and disposals
programme over many
years to create a resilient
portfolio that is fit for purpose
— Maintained consistently
high occupancy and
long average lease
lengths through our
investment, asset
management and
development actions
— Delivered strong
total property return
outperformance
against our benchmark
What
we’re
proud of
3
— Ensuring the portfolio
is positioned for the
future to benefit from
macro trends
— Making the correct
property decisions and
acting on our experience
and knowledge minimises
future risk and ensures we
own assets with enduring
occupier appeal
Why it
matters
to us
Total property
return in the year
+28%
Strategic report Governance Financial statements
3
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88 -154 155 -208
— Adopting the right
approach and doing
the right thing for our
stakeholders and the
environment
— Understanding and
responding to the needs
of our occupiers to help
them thrive
— Protecting and improving
our cash flow with long
term planning and
decision making
What this
means
to our
business
Securing and enhancing our
strong income metrics as well
as improving the quality and
sustainability of our assets.
Manage
and enhance
responsibly
Occupier initiatives
undertaken in the year
helping to deliver 5.4% like
for like income growth
166
Highlights in the year
+£10.5m
Additional income per
annum from lettings and
rent reviews
16 years
Average lease lengths
onlettings signed
+1.2m sq ft
BREEAM Very Good / Excellent
certified assets acquired
or developed
LondonMetric Property Plc
Annual Report and Accounts 2022
4
1
An overview, purpose and strategy update
— Consistently delivering
like for like income
growth through our asset
management approach
— Increasing the proportion
of our portfolio with an
EPC rating of A-C to 85%
— Developing high quality
assets which has helped
to increase the proportion
of our portfolio certified
BREEAM Very Good or
Excellent to 29%
What
we’re
proud of
— Ensuring that the portfolio
is fit for purpose and
improve the resilience
ofour assets
— Maximising the
opportunities to improve
the cash flow and quality
of our assets whilst
being strong stewards
ofunderinvested assets
— Minimising the
environmental impact
of our activities
and enhancing the
sustainability of our assets
Why it
matters
to us
We continue to adopt
the right approach in
managing and enhancing
our assets to ensure they are
fit for purpose and deliver
sustainable and growing
income streams.
Mark Stirling
Asset Director
Strategic report Governance Financial statements
5
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88 -154 155 -208
2
3
We are proud of our
employees who we
recognise are vital to
the continued success
of the Company.
Andrew Livingston
Designated workforce
Non Executive Director
Highlights in the year
100%
of employees agreed that they
enjoy working at LondonMetric
98.7%
Occupancy rate
8.5/10
Average score in occupier survey
for whether our occupiers would
recommend LondonMetric
We have a highly
talented, motivated and
aligned team who collaborate
with all stakeholders to build
strong relationships and trust.
Maximise our
expertise and
relationships
— Empowering some of
the most talented minds
in real estate with a
combination of strong
market insight, deep
fundamental analysis
and market leading
relationships
— Adopting a ‘partner
of choice’ approach,
collaborating with all
stakeholders
What this
means
to our
business
LondonMetric Property Plc
Annual Report and Accounts 2022
6
1
An overview, purpose and strategy update
— Consistently high
occupancy and scores
inour occupier survey
— Consistently high levels
of sta satisfaction and
scores in our sta survey
— Strong shareholder,
property and financing
relationships
What
we’re
proud of
2
Equity raise in the
year which was
strongly supported
by shareholders,
allowing us
to transact
on a number
of investments
£175m
— Leveraging our highly
talented, motivated
and aligned team to
make the right decisions
and deliver long term
outperformance
— By working with a wide
range of stakeholders,
we gather a greater
depth of understanding
to deliver a culture
of excellence
Why it
matters
to us
Strategic report Governance Financial statements
7
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88 -154 155 -208
3
— Delivering reliable,
repetitive and growing
income-led cash flows
from fit for purpose assets
— Bringing all our actions
together to deliver
strong, durable cash
flows underpinning highly
attractive total returns
What this
means
to our
business
A high quality real estate
portfolio is the bedrock to
delivering reliable, repetitive
and growing income.
Generate reliable,
repetitive and
growing income
Highlights in the year
£133m
Net rental income
+41.9%
Total accounting return
+5.5%
Growth in EPRA
earnings per share
+6.9%
Growth in dividend
per share
Growth in open
market rent reviews
forurban logistics
+22.4%
LondonMetric Property Plc
Annual Report and Accounts 2022
8
1
An overview, purpose and strategy update
— Seven years of dividend
progression
— 203% total accounting
return over nine years
— 296% total shareholder
return over nine years
What
we’re
proud of
— Delivering on our
progressive and covered
dividend policy
— Outperforming our
benchmarks consistently
over the long term and
winning with integrity
— Attracting and retaining
some of the most
talented people within
real estate
Why it
matters
to us
Our income focus has seen
our EPRA EPS increase 5.5% in
the year, which has allowed
us to progress our dividend for
the seventh year in a row.
Martin McGann
Finance Director
Strategic report Governance Financial statements
9
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88 -154 155 -208
2
3
LondonMetric Property Plc
Annual Report and Accounts 2022
10
An overview, purpose and strategy update
Performance
highlights
IFRS reported profit
£734.5m
734.5
257.3
-5.7
119.7
2022
2021
2020
2019
185%
EPRA EPS
1
10.04
p
10.04
9.52
9.26
8.77
2
022
2
021
2
020
2
019
5.5%
Dividend per share
9.25
p
9.25
8.65
8.3
8.2
2
022
2
021
2
020
2
019
6.9%
IFRS net assets
£2,55
9.7m
2,559.7
1,731.3
1,431.8
1,216.8
2022
2021
2020
2019
47.8%
1.1p
261.1
190.3
170.3
2022
2021
2020
2019
37.2%
Total property return
28.2
%
28.2
13.4
5.1
9.0
2022
2021
2020
2019
1480 bps
Cost of debt
2.6
%
2.6
2.5
2.9
3.1
2022
2021
2020
2019
10bps
Average debt maturity
6.5
yrs
6.5
4.2
4.7
6.4
2022
2021
2020
2019
2.3 years
Loan to value ratio
28.8
%
28.8
32.3
35.9
32.2
2
022
2
021
2
020
2
019
350 bps
WAULT
1
1.9 yrs
11.9
11.4
11.2
12.5
2022
2021
2020
2019
0.5 years
1 Alternative performance measures
The Group financial statements are prepared in
accordance with IFRS where the Group’s interests
in joint ventures and any non-controlling interests
are shown as asingle line item on the consolidated
income statement and balance sheet and all subsidiaries
areconsolidated at 100%.
Management reviews the performance of the
business principally on a proportionately consolidated
basis which includes theGroup’s share of joint ventures
and excludes any non-controlling interest ona line by
line basis. The key financial performance indicators
arealso presented on this basis.
Alternative performance measuresare financial
measures which are not specified under IFRSbut
are used by management as they highlight the
underlying performance of the Group’s property
rental business and are based on the EPRA Best
Practice Recommendations (BPR) reporting
framework which is widely recognised and used
bypublic realestate companies.
Therefore, unless specifically stated, theperformance
metrics and financial results reflected in the Strategic
Report and on this page, reflect the proportionately
consolidated results of the Group and theEPRA BPR
reporting framework.
Further details and reconciliations between EPRA
measures and IFRS equivalents can be found in
theFinancial review and in note 8 to the Group
financial statements.
11
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
An overview, purpose and strategy update
Chair’s
statement
Once again, it is time to
write to you as shareholders
of LondonMetric with my
thoughts on the past year
and our immediate future.
The first and most obvious item on which I
must comment is the results achieved by
the Company, especially the increase in our
EPRA net tangible assets per share of 37.2%.
In the 50 years in which I have been actively
involved in the property industry, this year’s
total accounting return at 41.9% and our total
property return at 28.2% are the highest I have
ever been honoured to be associated with.
On your behalf, may I warmly thank the team
at LondonMetric for their excellent execution of
the Company’s long term business plan. We did
well during the pandemic with outstanding
levels of rent collection reflecting the quality of
our portfolio and our sector selections. Our 75%
weighting towards distribution has put us in a
very strong position and, like everyone with a
high weighting to this sector, this has helped
to deliver some fantastic returns over the last
12 months.
These returns have also been supported
by our long income and other non-logistics
calls, all of which have also performed well
and helped to support a strong and rising
dividend. With current nervousness about
large distribution warehousing, shareholders
will note our preference for and rebalancing
of the portfolio in the past three years away
from big box, which has shrunk from 23% to
12% of our assets, in favour of urban logistics
which has grown from 27% to 44%.
Our focus on income has seen our EPRA
earnings per share increase by 5.5% which
has again given us confidence to increase
our dividend per share for the seventh year
in a row, up by 6.9% over the year and 109%
covered by EPRA earnings. Over the nine
years since our merger, we have delivered a
total shareholder return of 296%, significantly
outperforming the FTSE 350 Real Estate Super
Sector average of 92%, as well as increasing
our earnings by 157% to 10.0p per share.
Our long term track record and performance
continues to support our standing in the equity
markets. Our £175 million equity fundraising in
the year attracted excellent and broad based
support from shareholders, for which I thank
you for your continued support. We were
disciplined in our approach to ensure quick
deployment into accretive opportunities and
the fundraise has allowed us to make a
number of very attractive investments which
have enhanced our portfolio and helped
it to grow from £2.6 billion to £3.6 billion over
the year.
Whilst Covid-19 may thankfully be largely
behind us and prospects have significantly
improved, the world and the real estate
sector continues to face a number of
challenges. Economic growth is threatened
by the highest inflation seen for decades,
which is putting pressure on central banks
to tighten monetary policy. The geopolitical
tensions of the war in Ukraine, along with the
further risk of escalation and its restraints to
trade, have dampened confidence and
pushed up energy, commodity and food
prices. Supply chain issues have been further
impacted by lockdowns in China.
Despite these challenges, we maintain that
well managed real estate in structurally
supported sectors is an asset class which oers
an outstanding ability to provide reliable
and growing dividends over the long term.
We feel that we are well positioned thanks to
our carefully selected portfolio, our ongoing
discipline, inflation protection through a
combination of inherent rental growth and
index linked leases as well as our lower LTV level
today, with much of our debt costs hedged.
We also have a strongly aligned and high
class team who have excellent occupier
and property relationships. On that note,
I would again like to warmly thank the Board
and all of our employees for their hard work
in this exceptional year. I should also like to
confirm that we have also strengthened our
Board with the appointment of Alistair Elliott,
who I would like to welcome on your behalf.
Alistair brings an outstanding depth of property
and leadership experience to our team.
Looking forward, we believe the portfolio is
stronger than ever which will allow us to grow
our income and asset value over the longer
term. This, combined with the experience
of our team, leaves the Company very well
placed to deliver on its core policy of a
sustainable and progressive dividend.
Patrick Vaughan
Chair
26 May 2022
+37. 2 %
EPRA net tangible asset
per share increase
+6.9%
Dividend increase
per share
Patrick
Vaughan
Chair
Highlights
LondonMetric Property Plc
Annual Report and Accounts 2022
12
At a glance
An overview, purpose and strategy update
Our portfolio is located in the UK
and has grown from £1.2 billion in 2013
to £3.6 billion today. It has shifted
significantly away from multi-let retail
parks, oces and residential into
distribution and grocery-led long
income assets.
Property value
£3.6bn
WAULT
11.9 y r s
Total Property Return
28.2%
Our portfolio
Our focus on logistics
and long income
3
4
1
2
Urban logistics
43.9%
Long Income
22.5%
Mega &
Regional logistics
30.7%
Retail Parks
& offices
2.9%
Our property portfolio has
performed exceptionally
well in the year.
Learn
more on
page 28
2022
2
021
2
020
£2.6bn
£2.3bn
£3.6bn
2
022
2
021
2
020
11.4 yrs
11.2 yrs
11.9 yrs
2022
2021
2020
5.1%
13.4%
28.2%
1
3
4
2
* Includes development
Mark
Stirling
Asset Director
13
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
Urban Logistics Mega & Regional
Logistics
Long Income
Mega Distribution
Large scale modern distribution units,
typically greater than 500,000 sq ft and
located close to major arterial routes.
Regional Distribution
Mid size units typically between
100,000 sq ft and 500,000 sq ft serving
as regional hubs and creating the link
in any modern supply chain.
Grocery and Roadside
Consists of grocery, wholesale
and roadside assets.
NNN Retail
Primarily discount, essential,
electrical and home stores.
Trade, DIY & Other
Principally building, trade and DIY
stores as well as car servicing centres.
Leisure
Five out of town cinemas let to
Odeon, two hotels, 3 F&B sites
andone development site.
Smaller logistics units strategically
located in or close to dense areas
of population to meet increasing
consumer demands for next and
same day delivery.
Our exposure to this sector has
increased substantially and has
been our main conviction call.
127 assets
7.7m sq ft
Property value*
£1,577m
WAULT
8.6 yrs
Total property return
33.3%
16 assets
6.1m sq ft
Property value*
£1,106m
WAULT
15.2 yrs
Total property return
28.2%
132 assets
2.8m sq ft
Property value*
£809m
WAULT
14.1 yrs
Total property return
19.0 %
Read more about
urban logistics on
page 33
Read more about mega
& regional distribution on
page 33
Read more about
long income on
page 38
* Including developments
Strategic priorities
1
Align portfolio to real
estate benefiting from
macro trends that are
structurally supported
2
Focus on long let property
in good locations with strong
occupier contentment,
intrinsic value and rental
growth prospects
Long term strategy
Employing a range of investment
strategies to ensure we own the
right asset in the right location
Focus on geography, asset
quality, lease and credit
strength and sector diversity
ofour occupiers
2022/23 priorities
Retain our over weight
exposure to logistics with a
preference for urban logistics
Remain highly disciplined to
ensure each asset remains
fit for purpose delivering
attractive total returns
Strategic priorities
3
Protect and enhance
the asset value and
cash flow with long term
decision making
4
Improve the quality and
sustainability of our assets by
adopting high standards and
supporting our stakeholders
and local communities
Long term strategy
Adopting an active asset
management approach to
deliver value accretive initiatives
Embed sustainability and high
ESG standards across all of
our activities
2022/23 priorities
Retain high occupancy and
long average lease lengths
Continue to improve
the average EPC rating
across the portfolio whilst
recognising our ability to be
a strong steward of under
invested assets
Strategic priorities
5
Adopting a partner of choice
mindset, collaborating with
all stakeholders
6
Having the right people and
using the team’s breadth
and depth of expertise to
make well informed decisions
and act in the best interests
of our stakeholders
Long term strategy
Retain our rational and
disciplined approach driving our
long term decision making
Being a desirable place to work,
attracting and retaining some
of the best talent in the real
estate industry
2022/23 priorities
Retain high levels of employee
and occupier satisfaction
Strategic priorities
7
Generate reliable, repetitive
and growing income
led cash flows from fit
forpurpose assets
8
Bringing all our actions
together to deliver
strong, durable cash
flows underpinning highly
attractive total returns
Long term strategy
Deliver attractive total returns,
underpinned by a reliable,
progressive and covered
dividend policy
2022/23 priorities
Deliver and sustain EPRA
earnings per share growth
facilitating our progressive
and covered dividend
ambitions
Deliver top quartile
performance and
outperform our benchmarks
LondonMetric Property Plc
Annual Report and Accounts 2022
14
An overview, purpose and strategy update
Our strategic
priorities
Learn more on page 2
Learn more on page 4
Own desirable real
estate that meets
occupiers’ needs
Manage and
enhance responsibly
to improve our
assets and help
occupiers thrive
Maximise our
expertise and
relationships to
build on our position
as partner of choice
Generate reliable,
repetitive and
growing income-led
totalreturns
Learn more on page 6
Learn more on page 8
The real estate sector continues to witness
disruption and social change
We are operating in an ever changing
macro environment. The conflict in Ukraine is
adding to the geopolitical uncertainty which,
together with the economic impact from
a re-opening of the global economy and
the lingering eects of Covid-19 lockdowns,
has increased the cost of goods and
resulted in elevated inflation and a cost of
living squeeze.
These macro factors are having a profound
impact on a real estate market that has
already seen a significant acceleration
of evolving consumer habits as a result of
Covid-19, a number of which were already
in the system: increased online shopping,
greater convenience, better experiences
and increased flexibility from working from
home. This has led to a shift in demand
and supply dynamics highlighting material
polarisation in performances across various
real estate subsectors; the gap between
the winners and losers remains wide.
Many landlords have emerged from
the pandemic realising that their assets
are not fit for purpose. They will blame
the pandemic for poor performances,
dividend cuts, share price collapses and
falling rental income, although the truth
is that many failed to embrace a rapidly
changing world and shift their portfolios to
support these emerging trends. A quick look
back shows that, as we emerged from the
Global Financial Crisis, new structural trends
in how we work, shop and interact with
our friends and family began to surface,
largely driven by the introduction of new
technological innovations.
This is evidenced by the enormous rise in
online sales penetration, from 9% a decade
ago to 19% pre-pandemic and 26% today.
This represents an extraordinary acceleration,
and has meant that growth that was
forecast to take five years has taken just two.
However, it is unlikely to stop there with some
of the strongest retailers seeing significantly
higher online sales, including both John
Lewis and Next who have reported online
sales at around 70% and 65% respectively.
Online grocery has also seen a significant
rise, from 8% pre-pandemic to 13% today.
Again, what was expected to take years
hashappened in a matter of months.
In all likelihood, this upward trend will be
maintained as consumers’ appreciation
ofonline convenience, price transparency
and quicker delivery times continues to
grow. Demand for warehousing remains
both broad and deep with online operations
competing with businesses who are reacting
to global trade disruptions by onshoring more
of their operations and also holding higher
inventory levels within the UK. We do believe
that peak globalisation may have passed
and localisation is emerging. It’s no longer
acase of just in time, but now just in case.
Conversely, physical retail assets face
significant challenges with reduced demand
and over supply as the consumer pivots
towards a more omni-channel model,
meaning that there are few hiding places
for those without an online platform, with too
many shops and behind the curve strategies.
Department stores and over built shopping
centres look particularly vulnerable with
prime shopping centres not being the ‘safe
haven’ that many management teams
thought they would be. The eect has been
witnessed in rising vacancies, falling rents,
increasing obsolescence and almost universal
value destruction.
Commentary from retailers, as well as
evidence from property investment
transactions, continues to highlight that
the pricing power has firmly shifted away
from traditional retail owners to the retailers,
with rents continuing to fall and valuations
continuing to drift downwards. However,
there are some bright spots within the retail
space with convenience, grocery and
discount retailers outperforming as consumer
shopping patterns continue to evolve.
In oces, it is hard to ignore that demand is
facing structural disruption and continued
uncertainty. Working from home during the
pandemic has transformed employees’
views on traditional working practices.
Despite a strong re-opening and a ‘buzz’
returning to many city centres, there is
increased demand from employees for
greater flexibility leading to reduced oce
presence and occupancy settling well below
pre-pandemic levels. This is making future
oce demand and rental growth harder
to predict, and at a time when owners are
having to retrofit their oces to meet new
sustainability requirements.
Whilst the post-pandemic economic
recovery is well underway, inflationary
pressures arising from current macro events
and the reopening of the global economy
risk derailing this. We are now faced
with constrained supply chains, surging
commodity, energy and food prices which
are leading to higher interest rates.
Consumers are having to adjust to higher
household bills which will likely suppress non-
essential expenditure. Experiential shopping
increasingly feels like a luxury that few will
be able to aord. We believe that all these
factors will continue to drive the polarisation
in performances across various real estate
subsectors with legacy retail assets likely to
experience further headwinds. After all, the
macro trends accelerated by the pandemic
will almost certainly outpace micro decisions.
97%
Portfolio’s logistics
andlongincome
weighting
+28%
Total property return
15
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An overview, purpose and strategy update
Chief Executive’s review
Andrew
Jones
Chief
Executive
Highlights
Our focus on the structural trends and
disciplined investing are being rewarded
Link to strategic priorities:
1
2
Our very strong set of full year results, which
has delivered a total property return of
28.2%, continues to reflect many years of
forward planning that has seen us pivot into
assets that benefit from the structural shifts
in consumer behaviour, in order to deliver
superior income growth.
Our real estate decisions continue to be
influenced by trends that originate outside
the property sector but that fundamentally
shape its future. We pride ourselves
on recognising new trends, identifying
pricing ineciencies and acting quickly to
create new opportunities or exit old ones.
We believe that there is no substitute for
being aware, open minded and prepared
to act. Our decision four years ago to focus
on urban logistics and shift away from big
box logistics has allowed us to capture strong
rental growth, drastically reducing binary
occupation risks and materially increasing
our income granularity.
Our portfolio is firmly placed on the right
side of structural change having recognised
these macro trends early, tactically shifting
away from the legacy real estate sectors of
general merchandise retailing and oces
into logistics and grocery-led long income
assets which now account for 74.6% and
22.5% of our portfolio respectively. We remain
highly confident that the portfolio provides
a solid foundation for future performance
and income progression, delivering on
our ‘collect, compound and compress’
approach.
Our investment strategy is about owning
quality assets in the best geographies
andthe winning sectors
Our long term view remains that owning
strong assets, in the winning sectors and in
the best geographies, allows us to avoid
owning dicult assets and the valuable
thinking time that comes with owning
‘cheap’ assets. When you choose real
estate for its quality and location, you are
more likely to be a price setter. Occupiers will
need you more and you can attract quality
companies, be more confident of future
rental growth and feel safe in the knowledge
that there is high intrinsic value to your land.
We continue to believe that the importance
of geography is wildly misunderstood by the
markets, which fails to appreciate that great
locations are more reliable when measuring
returns over longer hold periods.
This rigorous approach tempers our
acquisition activity, ensuring that we remain
disciplined to pursue excellent returns and
not just grow assets under management.
Our investment activity is based on proper
process, discipline and rationality. We remain
obsessed with ‘winning the losers game’;
selling the laggards and running the winners.
In the year, we continued to align to
our chosen sectors with £575 million of
investments, 75% of which were logistics
assets. These acquisitions were in strong
geographies, with 57% located in London
and the South East, a WAULT of 15 years
and attractive income growth prospects.
Sales in the year of £208 million were higher
than last year. Whilst we try not to trade
unnecessarily, high investor demand for our
assets persuaded us to monetise some of
our investments. All of our sales have been
characterised by a long period of attractive
returns, and an assessment that the best
returns have already been captured and
thatfuture returns may flatten.
The investment market for our assets
remains extremely healthy and we continue
to receive many approaches. We will
sometimes react to these approaches and
our decision post year end to sell our DHL
asset in Reading was largely down to the
fact that the sale price was far in excess
of our perceived view of valuation. It is a
good asset, but we achieved an excellent
price and, whilst it will have a mildly dilutive
impact on earnings, we will always prioritise
the correct real estate decisions. We will
now work harder to find more attractive
opportunities to recycle the capital into.
Logistics continues to experience
strong tailwinds from attractive
demand/supply dynamics
UK logistics was once again the strongest
performing property sector in the year,
with favourable structural trends resulting
in superior rental growth and further yield
compression. As a result, investors continue
to target the sector with investment volumes
totalling an impressive £16 billion, assisted
by both further rotation of capital out of
legacy real estate and rising demand
from overseas investors.
In my previous statements, I referenced
that the UK would eventually run out of
logistics warehousing. Recent supply and
demand dynamics have certainly tested
this prediction, with record take up and
falling vacancy rates to just 1.6%. The first
quarter of 2022 alone saw 10.4 million sq ft
taken up and, whilst speculative supply has
increased in response, pent up and new
demand continues to absorb new product.
Whilst Amazon recently announced that it
was no longer chasing physical capacity,
ithas enjoyed phenomenal growth over the
last 25 years, building its fulfilment network and
then doubling that platform over the last two
years. It has set a very high bar for customer
expectations that their competitors are still
trying to match.
Our exposure to urban logistics
has increased further and is
delivering strong returns
At 44% of our portfolio, urban logistics is
our largest sub sector exposure, valued at
£1.6 billion and up from £1.0 billion a year
ago. It remains our strongest conviction call
and despite fierce investment competition,
we were able to acquire £243 million of high
quality and fairly priced urban assets in the
year, leveraging our occupier insights and
sector contacts. Some of these acquisitions
have given us exposure to occupiers in new,
high growth sectors including dark kitchens,
data centres and life sciences.
Urban warehouse demand has been rising
for a number of years, accelerated by rapid
growth in online shopping, growing customer
expectations and the arrival of new industries
such as Q-commerce and dark kitchens.
Companies have been forced to evolve
operationally by locating closer to their end
customer, in order to minimise delivery times.
£575m
WAULT on acquisitions
14.9 yrs
Urban logistics exposure*
43.9%
LondonMetric Property Plc
Annual Report and Accounts 2022
16
An overview, purpose and strategy update
Chief Executive’s review
Acquisitions
Own desirable real estate
* Including developments, based on value
Our real estate strategy is underpinned by
income to deliver highly attractive returns
Link to strategic priorities:
7
8
We continue to believe that income and
income growth are the defining characteristics
of today’s investing environment and that real
estate strategies focused on income-led total
returns will deliver future outperformance.
Collecting and growing income is fundamental
to successful long term investing and we
appreciate the true benefit of compounding
over longer terms with an absolute focus on
the quantity, quality and timing of when cash
will be returned. After all, investing is about
laying out money today, with the expectation
that more will be returned to you over time.
Even with rising interest rates, real estate can offer
excellent inflation protection and total returns
significantly higher than many alternatives.
We believe that certain subsectors of real
estate, particularly convenience long income
and urban logistics, can continue to perform
well in the current economic environment.
We believe this demand is set to continue
for a number of years due to an acute lack
of supply, particularly in London, where
alternative uses continue to diminish the
supply of available industrial space. This is
driving rents up as occupiers compete for
suitable space. Over the year, our open
market rent reviews on our urban logistics
assets were 22% above previous passing
rent and ERV growth over the year was 13%,
with the most pronounced growth in London
and the South East at 15%, where over half
of our urban logistics portfolio is located.
We believe that there is further rental growth
in the system, particularly as the supply side
of the equation continues to fall.
We remain confident that our investment
in urban logistics across our chosen
geographies gives us a greater degree
of certainty of achieving income growth
and benefiting from rising intrinsic values,
where returns can be levered by time
and compounding.
Long income assets continue to grow in
appeal and our opportunistic approach
continues to deliver strong returns
It is our long held belief that long income
assets with low operational requirements
have for a number of years been mispriced
by the real estate market and oer attractive
propositions. These are well located assets,
let on long leases to strong operators such
as convenience grocers, discounters,
home retailers and DIY stores. Most of these
operators have resilient business models that
stayed open, performed strongly during the
various lockdowns and consistently paid
their rents.
The consumer is more than ever driven by
convenience and value, and their non-
discretionary qualities and low susceptibility
to online migration ensure that these assets
remain desirable. As the cost of living crisis
pushes shoppers to seek cheaper grocery
options, Aldi and Lidl have continued to
gain market share, with Aldi adding one
million new customers in the last year. We
also expect roadside and auto to perform
well as the trend towards staycations remain
and the lack of new car supply places a
greater emphasis on car maintenance.
Unsurprisingly, their strong metrics are now
being appreciated by real estate investors
with yields for the very strongest and longest
let assets seeing material yield compression.
Our investment activity over the last few
years has ensured that grocery and roadside
assets (drive-thru and auto) now account
for almost half of our long income portfolio;
we refer to them as the ‘retail winners’.
Our long income acquisitions in the year
totalled £143 million, let on average for
11 years to strong credits such as Aldi, B&M,
Dunelm, McDonalds, The Range and Screwfix,
with half located in London and the South
East. These acquisitions were partly oset by
£59 million of long income disposals where
values had reached a level that exceeded
our own expectations. Post year end, we
have sold a further £34.2 million (£25.2 million
at share) which includes the sale of our Lidl in
Ashford at a very low 3.0% NIY.
Our long income portfolio is 100% let o low
and sustainable rents, oering a topped up
NIY of 4.7%, a WAULT of 14 years and 68%
of income subject to contractual rental
uplifts. This oers a strong income bedrock
benefiting from both capital and inflation
protection characteristics.
Strategic priorities
1
Align portfolio to macro trends
2
Focus on long-let property with rental growth
3
Enhance asset value and cash flow
4
Improve quality and sustainability of our assets
5
Partner of choice mindset
6
Use the team’s expertise to make informed decisions
7
Generate reliable, repetitive and growing income
8
Deliver strong cash flows and attractive total returns
17
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Own desirable real estate continued Generate income
We continue to strengthen our income
andthe quality of our assets
Link to strategic priorities:
3
4
The portfolio continues to achieve its objective
of delivering reliable, repetitive and growing
income as part of a total return strategy.
Its metrics remain very strong with occupancy
at 98.7%, WAULT rising to 11.9 years and a gross
to net income ratio of 98.8% that reflects our
very low income leakage. 61% of our income
benefits from contractual rental uplifts providing
certainty ofincome growth.
During the year, 166 occupier initiatives
added £10.5 million per annum of rent
and delivered like for like income growth
of 5.4%. Lettings across 1.3 million sq ft were
signed on average lease lengths of 16 years.
Rent reviews were agreed on 4.4 millionsqft,
delivering a 13% uplift on a five yearly
equivalent basis, with urban logistics open
market reviews at 22%.
We completed two BREEAM Excellent
developments in Bedford and Tyseley.
At Bedford Link, we delivered 355,000 sq ft
of space that was quickly let for 25 years to
Movianto, a dedicated healthcare logistics
company. At Tyseley, 120,000 sq ft was
completed and let to Amazon for 15years.
Our development activity currently underway
is 86% pre-let and represents £8.7 million of
expected income per annum. These activities
are increasing the quality of our portfolio
and providing new and attractive future
income streams.
We continue to embed sustainability and
high ESG standards across our activities, driven
by our own aspirations as well as those of
our customers, occupiers and shareholders.
EPC ratings improved significantly over the
year, with 85% now rated A-C compared
to 74% last year and 89% of our current
developments will be certified BREEAM Very
Good, which is expected to increase the
percentage of the portfolio that is certified
BREEAM Very Good or Excellent to 29%.
In addition, a further 0.9 MWp of solar PV
was installed in the year.
We maintained our GRESB green star with a
score of 65%, which is in line with the previous
year and we continue to make good progress
in implementing our Net Zero Carbon strategy.
Expertise and relationships
We continue to benefit from our
strongteamand their relationships
Link to strategic priorities:
5
6
Our team’s strong economic alignment
to our success ensures an ownership
culture and a strong conviction to make
the right property and financial decisions.
We work with all of our stakeholders to
deliver longer term benefits to our investors,
occupiers, people, local communities and
contractors. We maintain a highly rational
and disciplined property approach, selling
assets that don’t meet our strict investment
criteria and waiting patiently for attractive
new opportunities.
In the year, £175 million of equity was raised
through a significantly oversubscribed placing
which enabled us to tap attractive property
investments. Whilst size should always be the result
of a successful strategy and not just an ambition
in itself, our increased scale will deliver further
eciencies as our operationally light model
allows us to sustain a larger portfolio without
requiring additional resource. Reflecting this,
our EPRA cost ratio fell by 110bps over the year
to 12.5%.
The £780 million refinancing of debt facilities
extended the maturity of our debt at
attractive margins, further diversified our
lending base and added a green financing
framework to our borrowings. A further new
£150 million credit facility strengthened our
financing position and we have no material
refinancing until the end of 2023.
Our recent employee survey again
demonstrated our high levels of sta
satisfaction, with all employees agreeing
thatthey enjoy working at LondonMetric.
We continue to put our occupiers at the
forefront of our decision making, and this
is reflected in the strength of feedback
from our recent occupier survey, where we
achieved an average score of 8.5 out of 10.0
for whether occupiers would recommend
LondonMetric as a landlord.
Outlook
As we continue to live in a period
of increased uncertainty across the
world, we believe that real estate can
continue to deliver reliable, repetitive
and growing income streams.
We have a high conviction that this
thesis is more dependable within
structurally supported sectors that are
located in the strongest geographies.
This is why we continue to pivot our
portfolio to take advantage of the
strongest demand/supply dynamics
to deliver the most attractive income
and rental growth.
Looking ahead, we retain our firm
view that the logistics market will
continue to oer attractive returns
and we remain wide eyed for future
opportunities that allow us to increase
and improve our urban warehouse
portfolio further. In the biggest cities,
we are seeing very limited new land
supply coming on stream to meet
the rapidly changing behaviour
and growing expectations of the
UK consumer.
We have strengthened and enlarged
our portfolio, selling our weaker assets
and replacing them with better assets
that are more fit for purpose through
our acquisitions and developments.
Over the next 12 months we expect
market volatility to oer up even more
opportunities which will allow us, once
again, to improve our financial and
portfolio metrics as we continue to
collect, grow and compound our
rental income to deliver a progressive
dividend. We believe that this is best
achieved by investing in the winning
sectors and owning the best buildings.
After all, when you invest in quality,
time will help you to create wealth.
LondonMetric Property Plc
Annual Report and Accounts 2022
18
An overview, purpose and strategy update
Manage and enhance
Chief Executive’s review
Upgrading assets through
investment and development activity
Extending economic life of buildings through environmental
improvements as well as helping to meet occupier ‘E’ requirements
Overview
Our strategy supports a low
carbon approach
The portfolio is operationally
light with a low carbon intensity
We are a strong steward
ofunderinvested assets
120,000 sq ft urban warehouse development in Tyseley completed in the year which
is let to Amazon and BREEAM Excellent certified with solar PV and EV charging.
Cost eective improvements such as LED
lighting, new HVAC systems, removing gas,
better insulation and glazing are helping
to significantly improve EPC ratings.
Working with our occupiers to add solar
across our portfolio is helping to address
their ambitions to be Net Zero Carbon
and mitigate energy costs.
refurbishment in Bicester which improved the
EPC rating to ‘A’. The addition of solar PV would
enable the building to be Net Zero Carbon.
300 kWp
solar PV scheme in Milton Keynes,
funded by LondonMetric.
30,000 sq ft
Our investments are focused on high quality buildings or assets
where we can use our expertise to materially upgrade the building.
Our developments are typically BREEAM Very Good or Excellent
and we work with contractors to ensure sustainability is properly
considered as part of the project.
19
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Our environmental focus
Manage and enhance
Manage and enhance
An overview, purpose and strategy update
Read more on page 57
LondonMetric Property Plc
Annual Report and Accounts 2022
20
Our markets
Creating value
Real estate remains an attractive investment class that
can generate reliable, repetitive and growing income.
However, with asignificant polarisation in performances
and rapidly evolving mega trends, owning the right real
estate in strong locations has never been more important.
Income from
real estate is
attractive
Technology
continues
to disrupt
Sustainability
increasingly
impacting
decisions
Demand for
urban real estate
increasing
The demand for real assets such
as property which could deliver
attractive income and income
growth with a hedge against
inflation remains attractive.
In today’s environment, despite
global uncertainties, these assets
remain highly desirable, particularly
as the number of retirees who require
reliable and repetitive income
continues to grow rapidly.
We believe that real estate strategies
focused on income-led total returns
and supported by the macro trends
are well placed to succeed.
The continued migration to online
shopping and services requires
real estate infrastructure to meet
consumer demands.
Competing land use creates supply
pressures with scarce urban logistics
real estate often commanding
premium rental levels.
As online adoption continues
to grow and become further
embedded in every day life,
expectations grow for faster and
more accurate delivery times which
is fuelling further demand for the right
urban logistics assets.
We are all more mindful of our
impact on the planet with the
UK government and corporates
leading the way on Net Zero
Carbon ambitions.
Ensuring real estate is fit for purpose
with enduring occupier appeal
increasingly requires buildings to be
more energy ecient and better
adapted to climate change.
Recent energy price inflation is
serving to accelerate the ambitions
of occupiers and landlords
further to drive forward the
sustainability agenda.
Technology continues to power
change across society in the way
we work, live and shop. As we have
emerged from the pandemic, it is
clear that technology has been a
true enabler to allow many to work
from home and it has created a
trend that is unlikely reverse.
The scaling up of technology to
service the UK economy from
online platforms was truly amazing
– something that simply wouldn’t
have been possible only ten years
ago. As a result, penetration and
adoption of online shopping has
never been higher and will continue
to influence decisions and real
estate portfolios into the future.
Structural trends in real estate
21
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Logistics
Elevated investment volumes
Investment volumes for UK logistics in 2021
were very strong at £16 billion. Driven by
continued strong sector dynamics, logistics
benefitted from further rotation of capital
out of legacy real estate as well as an influx
of overseas money.
As a result, yields have compressed
significantly over the year with prime logistics
yields at c.3.5%.
Strong occupational demand
Occupational take up in 2021 of 42 million
sq ft significantly exceeded the long term
average. Occupiers are continuing to
focus on new stock, reflecting their need
forquality accommodation.
Q1 2022 alone saw 10 million sq ft taken
up, which has led to vacancy rates falling
to just 1.6%. Whilst speculative supply
has increased in response, pent up and
new demand continues to absorb newly
built product.
Urban logistics seeing strongest growth
Logistics continues to generate attractive
rental growth but urban logistics is seeing
the strongest growth due to a perfect
condition of rising demand and falling
supply, accentuated by strong competition
from more valuable alternative landuses.
This is particularly the case around
majorconurbations, with the SouthEast
continuing to experience the highest
rental growth.
Outlook remains highly supportive
The supportive trend for logistics is likely to
be maintained as consumers’ appreciation
of online convenience, price transparency
and quicker delivery times continues to
grow. Demand for warehousing remains
both broad and deep, with businesses
continually having to improve online
operations as well as react to global
trade disruptions which are forcing higher
inventory levels to be held within the UK.
Long Income
Long income real estate in demand
Structurally supported long income assets
with low operational requirements and
let to high quality occupiers at yields
significantly higher than Government bonds
remain an attractive proposition in today’s
investment environment.
Grocery real estate, in particular, has seen
significant investor demand with long-let
grocery yields in good locations transacting
at yields as lows as 3.0%. Similarly, discount/
essential stores long-let to strong credits
have seen an ever growing pool of
investors appreciating their many qualities.
Consumers driven by
convenience and value
The consumer is more than ever driven
by convenience and value, and their non-
discretionary qualities and low susceptibility
to online migration ensure that our long
income real estate remain desirable.
As the cost of living crisis pushes shoppers
to seek cheaper grocery options, Aldi and
Lidl have continued to gain market share.
We expect grocery and discount retail to
continue to perform well, with other sub
sectors such as roadside and auto also
delivering strong returns.
42m sq ft
Logistics take up in 2021,
materially higher than
the long term average
3.0%
Recent transactional
yields on long-let,
well located grocery
1.6%
Vacancy rate for logistics
at the end of Q1 2022
LondonMetric Property Plc
Annual Report and Accounts 2022
22
Creating value
Business
model
Our key stakeholders
are critical to our success
Our people
Our success is dependent on
employing atalented, motivated
and diverse team withstrong
property and finance expertise.
Our occupiers
We engage with occupiers across
allofouractivities to provide real
estate solutions that deliver mutually
beneficial outcomes adopting
a partner of choice mindset.
Our local communities
We recognise the importance of
supporting and properly engaging
with local communities. We work
closelywith local authorities,
residents and businesses toensure
that our activities consider and
bring benefits tolocal communities.
Our contractors and suppliers
Delivering developments and asset
management initiatives on time, on
budget and in adherence with our
standards is a high priority. We select
high quality and robust contractors
who have a proven track record
and we work in collaboration
with them.
Our investors
We value our good relationships
with investorsand debt
providers toensure we have
wide access tocapital markets.
We also work closely with our
joint venture partners to fulfil their
business objectives.
Learn more on page 24
Owning the right asset in the
right sector is increasingly
criticalto deliver future
outperformance. Wehave
aligned our portfolio towards
the logistics and long income
sectors andcontinue to upscale
the quality ofourportfolio.
We aim to deliver real
estate solutions that will
help occupiers’ businesses
thrive. Our focus on ESG
and Responsible Business
is helping to grow and
improve the quality of
our income and the
sustainability of our assets.
Underpinned by our strategic priorities on page 14
Own Manage
Total property return
28.2%
Additional income per annum
from occupier transactions
£10.5m
Our purpose drives our income
growth and value creation
Generating value and long-term returns
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Governance Financial statements
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1-87
Strategic report
155 -208
23
Financial statementsGovernance
88 -154
Additional income per annum
from occupier transactions
Our purpose drives our income
growth and value creation
Using our expertise to
work closely withoccupiers
and wider stakeholders
to understand their needs
results inhigh satisfaction
andoccupancylevels.
Income is central to our
business model. The income
from our assets is passed
toourshareholders in the
form of a well covered and
progressive dividend.
See our principal risks on page 70
Collaborate Generate
Occupancy
98.7%
Net rental income
£133.1m
Total accounting return
+41.9%
Dividend growth
+6.9%
BREEAM Very Good / Excellent
buildings added in year
+1.2m sq ft
Generating value and long-term returns
LondonMetric Property Plc
Annual Report and Accounts 2022
24
Creating value
Engaging with stakeholders
Our occupiers
Our occupiers are at the heart of our purpose, and we are highly
focused on understanding what they need and how to meet their
requirements in order to successfully grow our partnership with them.
How we engage
Regular liaison and meetings
with all of our occupiers
Annual occupier surveys
Outcomes
98.7%
Occupancy rate
across portfolio
8.3/10.0
Average property
satisfaction score
in occupier survey
8.5/10.0
Average landlord recommendation
in occupier survey
We work closely with occupiers
to provide fit for purpose
real estate that creates high
occupational satisfaction.
How we engage
Employee surveys
Regular updates from CEO
Designated work NED group meetings
Inclusive culture
Annual one to one appraisals
Outcomes
6% average sta turnover
High sta participation in LTIPs
100% of our people feel that they
are proud to work for LondonMetric
We hold sta group
meetings annually
to ensure high
employee satisfaction.
Our people
Our small and dedicated team of 35 employees is
critical to our success and delivering our strategy.
We strive to employ the best and motivate our people,
providing opportunities to develop their careers.
Building and nurturing relationships with our
stakeholders is integral to our business model
and the way we work. We focus on understanding
the views of our stakeholders and take account
of what is important to them.
Read more in Responsible Business and
ESG review page 60 and Governance
page 100
Read more in Responsible Business
and ESG review page 59
Andrew Livingston
Designated workforce
Non Executive Director
Mark Stirling
Asset Director
25
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Our Investors
Our investors are critical to
the Company and its ability
to access capital, eciently
and quickly.
How we engage
Regular calls and briefings
Annual General Meetings
Annual and half year
presentations and roadshows
Investor surveys and visits
Open dialogue with CEO,
Finance Director and Head
of IR and Sustainability
Investors value both meetings
as well as site visits and we
ensure we are fully engaged
throughout the year.
Our communities
Considering and supporting communities local to where we work,
along with focused charitable giving is important to us.
We look to consider the
needs of all communities
close to our assets as well
as involve all employees in
our charitable activities.
How we engage
Ongoing local community liaison
Public consultations prior to
and during developments
Engagement with and support of
schools, charities & organisations
local to our assets
Donations by the company and
support for charitable sta activities
Outcomes
£66,766 spent on charitable
and community giving in year
32 charitable causes supported
LandAid Foundation Partner
Employee participation in charity
events and fundraising
Outcomes
c.250
equity investors met in year
£175m
equity raised in year
£930m
new debt facilities
completed in the year
We need contractors
we can trust and work
as an extension of our
small team.
How we engage
Day to day contact with our
development/ contractor teams
Annual contractor review and audits
Health and safety policy
and annual audits
Regular presentations form external
advisors to the Board
Outcomes
100% compliance
with our RDR checklist
Health and safety policy updates
Eective long-term partnerships
Read more on in Responsible
Business and ESG review
page63
Our contractors and suppliers
We rely on the support of a diverse group of key suppliers
including contractors, professional advisors and agents.
Martin McGann
Head of charity and
communities working group
Nick Heath
Head of Development
Creating value
Key
performance
indicators
We continue to track seven key performance indicators (‘KPIs’)to monitor theperformance
of the business, which includes our share of joint ventures. TheKPIsare also used to determine
how Executive Directors and senior managementareevaluated andremunerated.
Objective
Deliver long term
shareholder returns
Maximise long term
total accounting return
Maximise property
portfolio returns
Deliver sustainable
growth in EPRAearnings
Drive like for like
incomegrowth
Maintain a higher than
market benchmark WAULT
Maintain strong
occupier contentment
KPI
Total shareholder return (%)
33.7
28.7
-7.6
2022
2021
2020
Total accounting return (%)
41.9
16.7
2.9
2
022
2
021
2
020
Total property return (%)
28.2
13.4
5.1
2
022
2
021
2
020
EPRA earnings per share (p)
10.04
9.52
9.26
2
022
2021
2020
Like for like income growth (%)
5.4
3.1
3.8
2
022
2021
2020
WAULT (years)
11.9
11.4
11.2
2
022
2021
2020
EPRA vacancy (%)
1.3
1.3
1.4
2
022
2021
2020
Performance Total Shareholder Return
(‘TSR’), being the share price
movement together with the
dividend, in the nine years
post merger was 296%, over
three times that of the FTSE 350
Real EstateSuper Sector index
movement of 92%.
12 month TSR delivered 33.7%
compared to the FTSE350
RealEstate Super Sector
returnof 20.8%.
Total Accounting Return
(‘TAR’)of EPRA net tangible
assets per share movement
together with dividend paid
inthe year.
12 month TAR delivered
areturnof 41.9%.
The full calculation can
befound in Supplementary
noteviii on page 196.
Unlevered Total Property Return
(‘TPR’), including capital and
income return, of the portfolio
as calculated by IPD.
12 months TPR delivered areturn
of 28.2% compared tothe
IPD All Property benchmark
of19.6%.
EPRA earnings per share from
operational activities have
grown by 5.5% over the last
12months.
In the nine years post merger,
EPRA earnings per share has
grown by 157% from 3.9p to
10.04ppershare.
The movement in the
contracted rental income
onproperties owned through
the period increased by5.4%.
Additional income of
£10.5 million was generated
from asset management
activity following lettings,
regears andrent reviews.
Weighted average unexpired
lease term across the investment
portfolio (excluding residential
and development) of 11.9 years
asat31March2022.
Occupancy rate of investment
portfolio at31March 2022
was98.7%, maintaining
ourvacancy at 1.3%.
Remuneration Under the Remuneration Policy
37.5% of LTIP awards are subject
to TSR growth compared with
the FTSE 350 Real Estate Super
Sector excluding agencies
and operators.
The TSR component of the 2018
LTIP award vested in full in the
year and the TSR component of
the 2019 LTIP award is expected
to vest in full.
The three year TSR for the 2019
LTIPs was 59.5% compared to
the FTSE 350 Real Estate Super
Sector excluding agencies
andoperators of19.8%.
Under the Remuneration Policy
37.5% of LTIP awards are subject
to TAR growth compared with
the FTSE 350 Real Estate Super
Sector excluding agencies
and operators.
The TAR component of the 2018
LTIP award vested in full in the
year and the TAR component of
the 2019 LTIP award is expected
to vest in full.
The three year TAR for the 2019
LTIP was 65.1% compared
to the FTSE 350 Real Estate
Sector excluding agencies
andoperators of -0.2%.
35% of the annual bonus
awardis subject to
TPR outperforming the
IPD benchmark.
This year TPR outperformed the
IPD benchmark delivering a
72% bonus payout.
35% of the annual bonus award
is subject to an EPRA EPSgrowth
target. This year EPRA EPS
outperformed itsgrowth target
securing afull bonus payout.
25% of LTIP awards vest after
three years subject to anEPRA
EPS growth target. 100% of the
EPRA EPS component of the
2018LTIP award vested inthe
year and 83% oftheEPRA EPS
component of the 2019 LTIP
award is expected to vest.
Forms part of EPRA earnings
per share, which as noted
above, isakey financial
performance measure for
the Company’s variable
incentive arrangements.
Linked to individual personal
objectives, representing
30% of the annual bonus
performance conditions.
Linked to individual personal
objectives, representing
30% of the annual bonus
performance conditions.
2022/23 ambition Three year TSR performance
to be in the upper quartile
of the FTSE350 Real Estate
SuperSector, excluding
agencies and operators.
Three year total accounting
return to be in the upper quartile
of FTSE 350 Real Estate Super
Sector, excluding agencies
and operators.
One year TPR outperformance
against IPD benchmark.
Deliver and sustain EPRA
earnings per share growth
anddividend progression.
Deliver like for like
incomegrowth ahead
of inflation plus 1.5%.
Maintain high weighted
average unexpired lease
termtargeting >10 years.
Maintain high occupancy
across the investment portfolio,
targeting in excess of 95%.
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
3
Enhance assetvalue
and cash flow
4
Improve quality
and sustainability
of our assets
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
LondonMetric Property Plc
Annual Report and Accounts 2022
26
Objective
Deliver long term
shareholder returns
Maximise long term
total accounting return
Maximise property
portfolio returns
Deliver sustainable
growth in EPRAearnings
Drive like for like
incomegrowth
Maintain a higher than
market benchmark WAULT
Maintain strong
occupier contentment
KPI
Total shareholder return (%)
33.7
28.7
-7.6
2022
2021
2020
Total accounting return (%)
41.9
16.7
2.9
2
022
2021
2020
Total property return (%)
28.2
13.4
5.1
2
022
2021
2020
EPRA earnings per share (p)
10.04
9.52
9.26
2
022
2
021
2
020
Like for like income growth (%)
5.4
3.1
3.8
2
022
2
021
2
020
WAULT (years)
11.9
11.4
11.2
2
022
2
021
2
020
EPRA vacancy (%)
1.3
1.3
1.4
2
022
2
0 21
2
0 20
Performance Total Shareholder Return
(‘TSR’), being the share price
movement together with the
dividend, in the nine years
post merger was 296%, over
three times that of the FTSE 350
Real EstateSuper Sector index
movement of 92%.
12 month TSR delivered 33.7%
compared to the FTSE350
RealEstate Super Sector
returnof 20.8%.
Total Accounting Return
(‘TAR’)of EPRA net tangible
assets per share movement
together with dividend paid
inthe year.
12 month TAR delivered
areturnof 41.9%.
The full calculation can
befound in Supplementary
noteviii on page 196.
Unlevered Total Property Return
(‘TPR’), including capital and
income return, of the portfolio
as calculated by IPD.
12 months TPR delivered areturn
of 28.2% compared tothe
IPD All Property benchmark
of19.6%.
EPRA earnings per share from
operational activities have
grown by 5.5% over the last
12months.
In the nine years post merger,
EPRA earnings per share has
grown by 157% from 3.9p to
10.04ppershare.
The movement in the
contracted rental income
onproperties owned through
the period increased by5.4%.
Additional income of
£10.5 million was generated
from asset management
activity following lettings,
regears andrent reviews.
Weighted average unexpired
lease term across the investment
portfolio (excluding residential
and development) of 11.9 years
asat31March2022.
Occupancy rate of investment
portfolio at31March 2022
was98.7%, maintaining
ourvacancy at 1.3%.
Remuneration Under the Remuneration Policy
37.5% of LTIP awards are subject
to TSR growth compared with
the FTSE 350 Real Estate Super
Sector excluding agencies
and operators.
The TSR component of the 2018
LTIP award vested in full in the
year and the TSR component of
the 2019 LTIP award is expected
to vest in full.
The three year TSR for the 2019
LTIPs was 59.5% compared to
the FTSE 350 Real Estate Super
Sector excluding agencies
andoperators of19.8%.
Under the Remuneration Policy
37.5% of LTIP awards are subject
to TAR growth compared with
the FTSE 350 Real Estate Super
Sector excluding agencies
and operators.
The TAR component of the 2018
LTIP award vested in full in the
year and the TAR component of
the 2019 LTIP award is expected
to vest in full.
The three year TAR for the 2019
LTIP was 65.1% compared
to the FTSE 350 Real Estate
Sector excluding agencies
andoperators of -0.2%.
35% of the annual bonus
awardis subject to
TPR outperforming the
IPD benchmark.
This year TPR outperformed the
IPD benchmark delivering a
72% bonus payout.
35% of the annual bonus award
is subject to an EPRA EPSgrowth
target. This year EPRA EPS
outperformed itsgrowth target
securing afull bonus payout.
25% of LTIP awards vest after
three years subject to anEPRA
EPS growth target. 100% of the
EPRA EPS component of the
2018LTIP award vested inthe
year and 83% oftheEPRA EPS
component of the 2019 LTIP
award is expected to vest.
Forms part of EPRA earnings
per share, which as noted
above, isakey financial
performance measure for
the Company’s variable
incentive arrangements.
Linked to individual personal
objectives, representing
30% of the annual bonus
performance conditions.
Linked to individual personal
objectives, representing
30% of the annual bonus
performance conditions.
2022/23 ambition Three year TSR performance
to be in the upper quartile
of the FTSE350 Real Estate
SuperSector, excluding
agencies and operators.
Three year total accounting
return to be in the upper quartile
of FTSE 350 Real Estate Super
Sector, excluding agencies
and operators.
One year TPR outperformance
against IPD benchmark.
Deliver and sustain EPRA
earnings per share growth
anddividend progression.
Deliver like for like
incomegrowth ahead
of inflation plus 1.5%.
Maintain high weighted
average unexpired lease
termtargeting >10 years.
Maintain high occupancy
across the investment portfolio,
targeting in excess of 95%.
Financial performance indicators
We monitor other financial
performanceindicators in respect
of LTV, debt maturity and cost
ofborrowing.
Risk management
The achievement of our
seven KPIsisinfluenced by the
identification andmanagement
of risks which might otherwise
prevent the attainment
ofourstrategic priorities.
The relationship between our
principal risks, strategic priorities
and KPIs is reviewed in the Risk
management section.
Remuneration
The table on page 139 shows
how ourKPIs are reflected in and
therefore aligned to remuneration
and incentivearrangements.
ESG and Sustainability
Our Responsible Business and
ESG review on page 49 sets out
our performance over the year
including information on our
Net Zero Carbon ambitions,
green financing, EPC ratings,
BREEAM rating on our portfolio
and developments and carbon
reductionperformance.
27
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Annual Report and Accounts 2022
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1-87 88 -154 155 -208
Read more in Financial
review page 42
Read more in Risk
management page 70
Read more in Remuneration
Committee report page 132
Read more in Responsible
Business and ESG review
page 49
A detailed analysis of our property activity
Overview
We invest in real estate that can deliver repetitive,
reliable and growing incomereturns. Our actions
aim tocontinuouslyimprove the portfolio’s quality,
sustainability and income longevity.
Acquisitions &
Disposals
£783m
WAULT
(acquisitions)
15 years
Investment
activity
Occupancy
(portfolio)
99%
WAULT
(lettings)
16 years
Portfolio
activity
Highlights
Highlights
We continue to focus on
strengthening our portfolio
metrics and are signing long
leases and delivering highly
attractive rental growth. Our
portfolio delivered a record
total return in the year.
Mark Stirling
Asset Director
Our acquisition activity has
continued to focus on urban
logistics where we believe
demand/supply dynamics
continue to oer strong long
term growth prospects.
Valentine Beresford
Investment Director
LondonMetric Property Plc
Annual Report and Accounts 2022
28
Delivering strong total property returns,
driven by distribution
The portfolio delivered a strong total
property return of 28.2% over the year,
significantly outperforming the IPD All
Property index of 19.6%:
– Distribution delivered 31.1% with urban
and regional seeing the strongest
performances; and
– Long income delivered 19.0%.
Capital growth of 22.9% was driven by
management actions, yield compression
and rental growth:
– Distribution delivered a 26.5% capital
return; and
– Long income delivered a 13.7%
capital return.
The investment portfolio’s EPRA topped
up net initial yield is 3.7% and the
equivalent yield is 4.4% with a like for like
valuation yield compression of 61bps over
the year.
ERV growth over the year was 10%,
driven by distribution assets which
increased by 14%.
Our asset management activity added
£10.5 million of rental income and further
improved the quality of our income
During the year, we undertook 166 occupier
initiatives adding £10.5 million per annum of
rent and delivering like for like income growth
of 5.4%. These consisted of:
– Leasing activity, where we signed 77 new
leases and regears, mostly on logistics
assets, delivering £8.5 million of increased
rent with a WAULT of 16 years;
– Contractual rental uplifts, where 56 fixed
and index linked reviews were settled
delivering £1.3 million of increased rent
at an average of 13% above passing
on a five yearly equivalent basis; and
– Open market rent reviews, where
33 reviews were settled delivering
£0.7 million of increased rent at an
average of 19% above passing.
Open market reviews on urban
logistics were particularly strong at 22%
above passing.
Total property return Lease expiry profile Rent review profile
1 0-3 years 10.6%
2 4-10 years 36.7%
3 11-15 years 23.6%
4 16-20 years 16.2%
5 > 20 years 12.9%
28.2%
Our portfolio metrics continue toreflect
our focus on income quality and growth
The portfolio’s WAULT increased from
11.4years to 11.9 years, continuing to provide
good income security with only 10.6% of
income expiring within three years.
Occupancy remains high at 98.7% and
our gross to net income ratio of 98.8%
continues to reflect the portfolio’s very
lowoperational requirements.
Contractual rental uplifts apply to 60.9% of
our income, which provides high certainty
ofincome growth:
– 46.6% index linked: 30.2% RPI, 12.3% CPI
or CPIH and 4.1% CPI+1 or CPIH+1; and
– 14.3% subject to fixed uplifts, with
average uplifts of 2.1% per annum.
Our index linked rent reviews have a range
of collars and caps which are typically
between 1% to 4% over a five year period.
At 16% inflation over a five year period
(equivalent to 3% p.a.), 99% of inflation is
captured under our RPI linked rent reviews
(100% for CPI reviews). At 22% inflation over
a five year period (equivalent to 4% p.a.),
92% of inflation is captured under our RPI
linked rent reviews (86% for CPI reviews).
These reviews are mostly five yearly rather
than annually compounded meaning that
higher inflation in a particular year is often
oset with a lower rate of inflation in another
to result in the blended average rate over
the five year period being within the cap
and collar provisions.
1
2
3
4
5
Income expiring
within 3 yrs
10.6%
1
3
4
2
1 Fixed Uplift 14.3%
2 RPI Linked 30.2%
3 CPI Linked 16.4%
4 Market Review 39.1%
Contractual
rental uplifts
60.9%
28.2%
13.4%
5.1%
9.0%
2
022
2
021
2
020
2
019
29
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Annual Report and Accounts 2022
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1-87 88 -154 155 -208
1
3
4
2
1
3
4
2
5
6
1
2
3
4
5
6
A detailed analysis of our property activity
Overview
Investment activity continues to improve
the portfolio’s quality and resilience
During the year, we were a significant net
acquirer of assets.
Acquisitions in the year totalled £575 million,
with urban logistics warehousing accounting
for nearly half of purchases. They had a
WAULT of 14.9 years and were acquired at a
NIY of 4.4% and a reversionary yield of 5.0%.
Reflecting our focus on income growth and
strong geographies, 64.2% of the income
was subject to contractual rental uplifts and
57.1% was located in London and the South
East. 93.8% of acquisitions had an EPC rating
of A-C.
Disposals in the year totalled £208 million and
were transacted at a NIY of 5.2% and with a
WAULT of 9.6 years. They were mostly located
in the Midlands, North East and Yorkshire.
The largest disposal was a mega distribution
warehouse let to Primark for £102 million whilst
£59 million of sales from our long income
portfolio accounted for the majority of the
remaining disposals.
We also sold £38 million of non-core assets
which consisted of:
– A retail park in Leeds sold for £25 million
with a WAULT to first break of six years;
– Two oces in Birmingham and Solihull
sold for £12 million with a WAULT of six
years; and
– Four residential flats sold for £1 million at
share, which completed the sale of our
remaining residential flats.
Post year end, we have acquired a further
£43 million of assets, with a WAULT of 13 years,
and sold £86 million with a WAULT of 8 years.
Continued alignment to structurally
supported distribution and long income
Assisted by a strong capital performance
and significant net investment into the sector,
our distribution portfolio increased in value to
£2,684 million, representing 74.6% of the total
portfolio, up from 70.8% at the start of the
year. Our urban logistics weighting has grown
to represent 43.9% of the portfolio, up from
38.5% at the start of the year.
Long income reduced to 22.5% of the
portfolio, with grocery and roadside
continuing to represent just under half of
this segment.
The remaining 2.9% of the portfolio is
deemed non-core and is split between
fiveoces and four remaining retail parks.
Geographical focus
Our focus on owning assets in strong
geographies, particularly around major
urban conurbations, has increased the
portfolio’s London and South East weighting
to 47.1% with the Midlands accounting for a
further 31.4% of the portfolio.
£3.6bn portfolio*
1 Urban Logistics 43.9%
2 Regional Distribution 18.9%
3 Mega Distribution 11.8%
4 Long Income 22.5%
5 Retail Parks 2.0%
6 Oces & Residential 0.9%
Acquired*
£575m
Disposed**
£208m
Investment activity in the year
* Excludes £35.7 million of acquisitions that exchanged in the previous year but completed in the year.
Includes £72.4 million of acquisitions, predominantly urban logistics, that exchanged in the year but
that complete post year end
** Excludes £15.2 million of disposals that exchanged in the previous year but completed in the year.
Includes £21.2 million of disposals that exchanged in the year but complete post year end
Urban logistics
43.9%
1 Urban Logistics £242.9m
2 Mega & Regional
Distribution
£188.9m
3 Long Income – Other £84.2m
4 Long Income – Grocery
& Roadside
£59.2m
1 Mega Distribution £102.0m
2 Long Income – Grocery
& Roadside
£44.2m
3 Retail Parks £25.2m
4 Long Income – Other £14.6m
5 Oce & Residential £13.1m
6 Urban Logistics £8.5m
* Including development, based on value
LondonMetric Property Plc
Annual Report and Accounts 2022
30
We continue to have a strong focus on
income diversification and occupier credit
Our investment and asset management
actions over a number of years have
increased the resilience of our portfolio by
investing in structurally supported sectors
and improving our income diversification,
granularity and security.
We have a diverse occupier base by type
of activity:
– Business Services & Trade accounts for
36% of income, spread across a broad
range of sectors;
– Retail Logistics accounts for21%;
– Third Party & Parcel Logistics accounts
for 15%;
– Grocery & Roadside accounts for 12%;
– Electrical, Home & Discount Stores
account for 11%; and
– Leisure and other sectors account for 5%.
Our top ten occupiers account for 29% of
contracted income which is down from 51%
in 2019 and 36% in 2021.
Contracted rent increased over the year
from £124.3 million to £143.3 million.
Our latest occupier survey again
demonstrated strong contentment
Our annual occupier survey was carried out
in March 2022 and we continue to receive
very good feedback.
138 occupiers representing 81% by income
were contacted and responses were
received from 55 occupiers representing
42% of income.
We scored an average of 8.5 out of 10.0
in terms of whether occupiers would
recommend us as a landlord, with our top
10occupiers scoring us higher at 9.1.
In terms of how well our properties meet our
occupiers’ needs, we scored 8.3 out of 10.0,
which is in line with our 2021 survey score.
Occupier base by type of occupier (% of rental income)
Income from
top ten occupiers
29%
2021: 36%
2019: 51%
Top ten occupiers (%)
1 Business Services & Trade 36%
Manufacturing & Packaging 13%
Building, Trade & DIY 5%
Aerospace, Auto & Transport 6%
TMT 5%
Food, Healthcare & Chemicals 5%
Education 2%
2 Retail Logistics 21%
Online & Omni Retail 17%
Store only Retail 4%
4 Grocery & Roadside 12%
Grocery 8%
Roadside 4%
5 Electrical, Home & Discount 11%
Electrical & Home 8%
Essential/Discount 3%
6 Leisure & Other 5%
Leisure 3%
Other 2%
3 Third Party & Parcel Logistics 15%
2.3%
2.4%
2.5%
2.5%
2.7%
2.9%
2.9%
2.8%
3.4%
4.1%
Waitrose
Odeon
Currys
DHL
DFS
Eddie Stobart
THG
Argos
Amazon
Primark
6
1
3
4
2
5
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Annual Report and Accounts 2022
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1-87 88 -154 155 -208
Our Net Zero Carbon (‘NZC’) framework
In the previous year, we set three specific
NZC ambitions as part of our longer term
target of becoming NZC:
1. Our operations will be NZC by 2023
Operationally, we continue to make
good progress and have achieved a 92%
reduction in our absolute landlord energy
consumption since 2015.
We continue to reduce our own emissions
where possible and ensure that our
energy supplies are all from renewable
sources, aligned to industry procurement
best practice. From 2023 onwards, we
have committed to oset residual carbon
to ensure our operations are NZC and,
during the year, we put in place a carbon
oset strategy.
2. We will continue to reduce emissions
from development activity and new
developments will be NZC by 2030
Our development activity continues to
focus on building highly ecient buildings.
All of our completed developments in the
year totalling 475,000 sq ft were certified
BREEAM Excellent and we will add a further
845,000 sq ft of BREEAM Very Good assets
through our current development activity.
As part of our eorts to reduce carbon on
developments, we continue to challenge
our supply chains to minimise waste and
select low carbon materials. At our recently
completed Bedford Link development, we
have reduced embodied carbon over the
dierent phases of development by 27%
through on site carbon reduction measures
and amendments to material specification.
We have introduced shadow carbon pricing
on select direct flagship developments such
that carbon is either oset or an equivalent
value is reinvested into green initiatives.
3. We will assist occupiers to help them
meet their NZC targets and, from 2035,
wewill oset any of their residual carbon
As part of our drive to upgrade the quality
of our assets, we continue to invest in high
quality buildings as well as progress energy
eciency and clean energy initiatives
including solar PV, LED lighting upgrades,
roof works and electric vehicle charging.
Our activity in the year has materially
improved the proportion of our assets
with an EPC ‘A–C’ rating from 74% to 85%.
As covered more fully in the Distribution
review section, we see the potential to
upgrade the quality of our urban assets
through relatively straightforward initiatives
which can materially improve value, income
and occupier appeal, particularly as we
continue to focus on providing fit for purpose
and NZC ready buildings.
In addition, following completion of
developments underway, we expect to
increase the proportion of assets built to a
BREEAM Very Good or Excellent standard
from 26% at the start of the year to 29%.
Furthermore, in the year we added 0.9 MWp
of solar PV and continue to engage with
occupiers on adding further solar installations.
As part of progressing our NZC targets, we
are increasingly focused on understanding
how we can increase the number of NZC
ready buildings we own. In the year, we
undertook NZC assessments on several
assets. An important part of this focus is
measuring emissions from all occupiers and,
in the year, we increased occupier energy
data coverage from 43% last year to 59%.
As we recognise the growing importance
of clean energy and EV charging, we signed
an EV framework agreement with Motor Fuel
Group, which will see a programme of Ultra-
Rapid 150kWh charging hubs installed across
our assets. In addition, we continue to install
EV charging on new developments and
properties where we are undertaking asset
management initiatives.
Further reporting on ESG is
provided on pages 50 to 69
A detailed analysis of our property activity
Overview
We continue to improve our
ESG focus, particularly on
environmental matters
Our aim is to minimise the
environmental impact ofour
business, maximise energy eciency
and improve the resilience of
our properties. We recognise the
importance of a comprehensive
ESG focus and each year set
specific corporate targets.
As part of our environmental focus,
during the year, we:
– Undertook a comprehensive
climate risk assessment;
– Progressed our Net Zero Carbon
framework; and
– Completed on £450 million
of debt facilities with a green
financing framework.
Over the year, we maintained our
Green Star status in the Global Real
Estate Sustainability Benchmark
(‘GRESB’) survey. Our score of 65%
is unchanged but significantly up
from the 34% score in 2014. We also
maintained our:
– BBB rating by MSCI;
– Gold Award by EPRA sBPR; and
– Inclusion in the FTSE4Good Index.
Climate-related risks and
opportunities
During the year, we undertook a
comprehensive climate-related risk
assessment, in which we identified
our key physical and transition risks
over the short, medium and long
term. Key opportunities were also
analysed as part of the assessment.
This was done at a portfolio level
using dierent climate change
scenarios and we also analysed
climate-related risks on a number
of representative assets.
The third party assessment
concluded that our sustainability
strategy is well positioned to
manage climate-related risks
and opportunities.
LondonMetric Property Plc
Annual Report and Accounts 2022
32
1
2
3
1 Urban Logistics 59%
2 Regional Distribution 25%
3 Mega Distribution 16%
Distribution
£2,684m
A detailed analysis of our property activity
Distribution
Our warehouses provide critical infrastructure to
our occupiers and continue to benefit from highly
attractive supply/demand dynamics.
Strong performance from distribution
Our distribution assets are spread across
the urban, regional and mega sub-sectors.
Including developments, we increased our
exposure to distribution over the year from
£1,829 million to £2,684 million, accounting
for 74.6% of our portfolio. The WAULT on these
assets is 11.3 years and occupancy is high at
98.1%, with our mega and regional assets fully
let. Our urban logistics occupancy remained
at 96.9% and vacancies relate mainly to
assets which we are improving.
Our distribution assets performed well over
the year, delivering a total property return of
31.1% which was driven by continued strong
yield compression, rental growth and further
gains on developments. Urban and regional
delivered 33.3% and 34.0% respectively, whilst
mega delivered 20.7%.
Distribution acquisitions in the year totalled
£432 million and were acquired with a WAULT
of 16.7 years and a NIY of 4.1%, which is
expected to rise to 4.7% after five years from
expected income growth. Disposals totalled
£111 million, reflecting a NIY of 4.1% and a
WAULT of 10.7 years.
Post year end, in addition to further
acquisitions, we sold a 229,000 sq ft
regionalwarehouse let to DHL for a further
3.1 years for £61 million at a 20% premium
tobook value.
Increased weighting to urban logistics
In urban logistics, rental growth remains
strongest, driven by severely restricted supply
and strong occupier demand.
Urban logistics has been our strongest
conviction call for several years and, over the
year, our urban logistics portfolio increased
from £994 million to £1,577 million across
127 locations, accounting for 58.8% of our
distribution assets. Whilst the WAULT on these
assets of nine years is lower than for mega or
regional, these assets benefit from significant
rental reversion, with average ERVs 17.3%
above average rents.
Furthermore, with 53% of our urban portfolio
located in London and the South East and
a further 34% in the Midlands, we expect
continued market rental growth in these
areas to increase our urban portfolio’s
market rents.
Urban warehousing acquisitions totalled
£243 million across 26 assets. 84% of assets
by value were in London and the South
East, demonstrating our continued focus
on the best urban centres. The NIY on these
investments was 4.0% but with contractual
rental uplifts and embedded rental reversion,
this is expected to rise to 4.7% over five years.
In the year, we sold one multi-let urban estate
for £8.5 million, reflecting a NIY of 3.5%.
As at 31 March 2022
1
2
3
Urban Regional Mega
Typical warehouse size
Up to
100,000 sq ft
100,000 to
500,000 sq ft
In excess of
500,000 sq ft
Value
1
£1,577.3m £681.2m £425.2m
WAULT 8.6 yrs 13.7 yrs 17.8 yrs
Average rent (psf) £7.50 £6.70 £5.80
ERV (psf) £8.80 £8.00 £6.70
Topped up NIY 3.5% 3.4% 3.1%
Contractual uplifts 41.7% 82.1% 100.0%
Total property return in 2022 33.3% 34.0% 20.7%
* Including developments
Distribution Portfolio*
Selective investment activity in larger box
Whilst we continue to see better return
prospects in urban logistics, we will always
look at selective investment and forward
funding opportunities in the larger distribution
warehousing sector.
In the year, we acquired £189 million of
regional and mega box warehouses across
three assets at an attractive NIY of 4.1% rising
to 4.6% over five years from inflation linked
rental uplifts. These highly modern and well
specified assets were acquired on long
leases with a WAULT of 23 years and are
all certified BREEAM Very Good.
The majority of this larger box investment
activity was funded by the disposal of a
785,000 sq ft warehouse in Northamptonshire
let to Primark for a further 11 years. The sale
price of £102 million reflected a NIY of 4.1%.
With fixed rental uplifts capped at 1.5% per
annum and a declining lease length on an
older property, we felt that future returns from
the building would be limited.
33
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
– 686,000 sq ft mega warehouse
acquired for £97.0 million with a WAULT
of 23 years, let to THG in Warrington*.
The asset is reversionary and has further
development potential of c.180,000 sq ft
– 345,000 sq ft of urban logistics acquired
for £86.2 million as part of the larger
£122.2 million Savills IM acquisition
– 300,000 sq ft new regional warehouse
acquired for £53.4 million pre-let to AM
Fresh for 25 years in Huntingdon*
– 296,000 sq ft new regional warehouse
acquired for £38.5 million, pre-let for
20years to an ecommerce company
and located at Port One Logistics Park
in Ipswich*
– 168,000 sq ft urban warehouse acquired
for £15.5 million with redevelopment
potential and located close to Luton town
centre and the M1
– 130,000 sq ft warehouse acquired for
£19.0 million through a 15 year sale
and lease back with Bowers & Wilkins
in Worthing
– 119,000 sq ft urban warehouse acquired
for £11.1 million, let to Global Life Science
Solutions, trading as Cytiva, for ten years
in Cardi
– 115,000 sq ft urban warehouse acquired
for £43.8 million, let for 23 years to
Reynolds and located in Waltham Cross
– 50,000 sq ft urban warehouse acquired
for £10.3 million, let to John Lewis for a
further 15 years in Uckfield
– 47,000 sq ft urban warehouse acquired
for £6.1 million with redevelopment
potential, let to Jewson for a further
17years in Exeter
– 43,000 sq ft new urban warehouse
acquired for £8.4 million in Preston, pre-let
to Sainsbury’s for 15 years*
– 34,000 sq ft new urban warehouse in
Ashford acquired for £7.2 million, pre-let
to Blue Chyp for 15 years*
– 28,000 sq ft highly reversionary urban
warehouse acquired for £5.2 million, let to
HTC Group for four years in Croydon
– 23,000 sq ft urban warehouse acquired
for £7.2 million in Tottenham with
significant refurbishment plans
– 19,000 sq ft urban warehouse acquired
for £3.0 million and let to Deralam
Laminates for four years in Dunstable
– 9,500 sq ft urban warehouse acquired for
£3.5 million, let to Pai Skincare in Acton
– 8,000 sq ft urban warehouse acquired for
£2.7 million in Thamesmead let to Archive
UK on a new 10 year lease
– 9.25 acre vehicle parking site with
consent for development acquired for
£9.2 million, let to Amazon in Droitwich
– three urban sites acquired in
Walthamstow, Stockwell and Cardi for
£4.6 million with development potential
* denotes BREEAM Very Good certification
Post year end
6 assets
0.2m sq ft
Value
£43m
WAULT
13 yrs
– 125,000 sq ft forward funding
development in Leicester acquired for
£19.6 million. 90,000 sq ft is pre-let on a
new 15 year lease*
– 33,000 sq ft urban warehouse let to
Jewson with a WAULT of ten years
acquired in Ipswich for £5.3 million
– 28,500 sq ft urban warehouse in Canvey
Island acquired for £5.4 million, let to a
hygiene supplies company on a new
15 year lease
– 11,000 sq ft urban warehouse in
Stratford acquired for £6.0 million with
vacant possession
– 11,000 sq ft urban warehouse
redevelopment in Colliers Wood
acquired for £4.1 million with
vacant possession
– 6,000 sq ft urban warehouse acquired
in Hackney for £2.6 million let to a dark
kitchens operator on a 20 year lease
A detailed analysis of our property activity
Distribution
Distribution Acquisitions
Worthing
130,000 sq ft
In year
29 assets
2.4m sq ft
Value
£432m
WAULT
17 yrs
Waltham Cross
115,000 sq ft
LondonMetric Property Plc
Annual Report and Accounts 2022
34
Overview highlights
15 assets
c.490,000 sq ft
WAULT
11 y r s
Contracted Rent
£5.4m
74% of the assets are located in London
& South East. Key locations including
Croydon, Farnborough, Hounslow,
Greenwich, Guildford, Maidstone and
Stevenage. A further 12% is located in
the Midlands.
Strong locations
74%
In London &
the South East
Portfolio overview
In December 2021 LondonMetric acquired
Savills IM UK Income & Growth Fund in a
corporate acquisition valued at £122.2 million.
This acquisition was in line with our strategy
of acquiring urban logistics assets in strong
locations at attractive yields and with
good rental growth potential. The portfolio
had a high weighting to London and the
South East where we continue to see high
occupier demand and diminishing supply
drive rental growth.
Our strong credentials as well as our
thorough and speedy due diligence
process put us in a strong position to be the
preferred bidder and acquire the portfolio.
The acquisition was a key pipeline asset
for our £175 million equity placing and was
transacted within a month of the raise.
Key occupier activity
Attractive income
with growth
The portfolio was acquired at
ablended yield of 4.3% and
areversionary yield of 4.9%.
It has a WAULT of 11 years and
generates £5.4m of rent per
annum, with a diverse list of
occupiers. 43% of the income
benefits from contractual uplifts.
The assets are under-rented,
oering significant rental growth
prospects as well as other asset
management potential through
lease regears and refurbishment.
Acquisition case study – Savills IM portfolio
LONDON
Kent
Surrey
Oxford
Hertford
Norfolk
Birmingham
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Annual Report and Accounts 2022
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1-87 88 -154 155 -208
Key occupier activity
Distribution
Distribution lettings and regears
Distribution lettings and regears in the year
were signed on 1.2 million sq ft, adding
£6.9 million per annum of income, with a
WAULT of 15.3 years:
– 355,000 sq ft letting to Movianto for
25 years at our recently completed
regional warehouse at Bedford Link
Logistics Park;
– 172,000 sq ft letting to Carlton Packaging
for 15 years at Bedford Link;
– 116,000 sq ft of break removals with
Grupo Antolin and DHL, extending term
certain by an average of seven years;
– 86,000 sq ft letting to My 1st Years for
15 years at our recently refurbished
warehouse in Grange Park,
Northampton, where the rent increased
27% compared to previous passing;
– 121,000 sq ft of lettings and regears on
multi-let warehousing with a WAULT of
five years;
– 65,000 sq ft of regears at Crawley where
leases were extended by five years;
– 62,000 sq ft of lettings at Mucklow Park,
Tyseley with a WAULT of 10 years;
– 56,000 sq ft of lettings at Wednesbury
One with a WAULT 11 years;
– 45,000 sq ft regear to Topgrade,
increasing term certain to ten years;
– 30,000 sq ft letting to Greencore
Construction for ten years in Bicester.
The warehouse was refurbished to
an enhanced specification which
increased the EPC rating to ‘A’ from ‘C’.
Installation of a solar PV system would
allow the building to become net zero.
The new letting resulted in a 31% rental
uplift compared to previous passing; and
– 16,000 sq ft of lettings with a WAULT of
17 years to Screwfix and Jacuna, a dark
kitchens operator, at our substantially
refurbished unit in Streatham.
As part of our focus on solar PV, we funded
a 300 kWp installation at our asset in Milton
Keynes let to Speedy Hire. Under the
arrangement, LondonMetric will receive an
RPI linked income strip, delivering a minimum
7% IRR. The EPC rating is expected to have
increased from ‘C’ to ‘A’.
Distribution rent reviews
Distribution rent reviews in the year were
settled across 3.6 million sq ft, adding
£1.4 million per annum of income at 13%
above previous passing rent, on a five yearly
equivalent basis.
37 urban reviews were settled at 20% above
passing rent on a five yearly equivalent basis,
with open market reviews achieving 22%
uplifts on average and ranging from
7% to 88%.
Two fixed mega reviews settled at 8% above
passing rent on a five yearly equivalent basis.
Three index-linked regional reviews were
settled at 16% above previous passing.
Distribution lettings and regears
(Additional Income p.a.)
+£6.9m
Distribution rent reviews
(Additional Income p.a.)
+£1.4m
A detailed analysis of our property activity
Streatham
– 19,000 sq ft refurbished
– EPC upgrade ‘D’ to ‘B’
– Solar enabled roof
Milton Keynes
– 300 kWp solar PV
– Minimum 7% IRR
– EPC ‘A’ expected
Environmental asset management
See page 57
Distribution asset managementactivity
LondonMetric Property Plc
Annual Report and Accounts 2022
36
Total lettings
715,000 sq ft
Income
£5.5m p.a.
Environmental considerations
– 100% certified BREEAM Very Good
or Excellent and rated EPC A
– 450kWp of solar PV installed on
two units with further potential
– 27% reduction in embodied
carbon on last phase compared
to first phase
– 30 EV charging points installed
– Building design facilitated Net Zero
Carbon in operation
– High quality landscaping
Social considerations
– Creation of a softer and contemporary
logistics park, respectful of local
residents in layout and landscaping
– c.450 permanent jobs created locally
with a strong focus on employee
wellbeing: high quality stang areas,
green surroundings, enhanced cycle
routes and footpaths
– High scoring of contractor on its local
community activities
– Regular liaison with the local authority
as well as various community
and charity initiatives throughout
the development
A high quality sustainable
logistics park, let to strong
and growing businesses
The high quality development
was certified BREEAM Very Good
or Excellent and consists of five
buildings totalling 715,000 sq ft and
ranging in size from 30,000 sq ft up to
355,000 sq ft.
The final stage of the phased
development completed in
December 2022 and, in the year, we
let the two largest buildings totalling
527,000 sq ft.
This is LondonMetric’s flagship asset
and was built at a total cost of
£68 million. It generates £5.5 million of
rent per annum, which reflects a yield
on cost of 7.4%, and has been let with
an average lease length of 20 years
to high quality occupiers.
Four of the occupiers are now
operational, with Carlton Packaging
the latest occupier to commence
operations in April 2022 at its
172,000 sq ft warehouse (as pictured).
Lettings case study – Bedford Link
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LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
1
2
3
4
A detailed analysis of our property activity
Long income
Our long income assets are typically
single tenant assets with low operational
requirements that are benefiting from
the changes in the way people live and
shop. They are insulated from structural
dislocation, continue to oer long leases
and are predominantly focused on grocery,
wholesale, roadside services, discount and
essential retail, trade and DIY.
The value of our long income assets
increased from £635 million at the start of the
year to £809 million, representing 22.5% of our
total portfolio.
They are 100% let to strong occupiers with
a WAULT of 14.1 years, average rents of
£15.90 psf and a topped up NIY of 4.7%.
Average asset size is c.£6 million with 68% of
income subject to contractual rental uplifts.
Long income delivered a total property
return of 19.0%. Strong performers were NNN
Retail and Trade which delivered a return of
24.9% and 24.4% respectively.
NNN Retail
These are primarily single or cluster
assets let to discount, essential,
electrical and home retail occupiers.
48% of the assets are located in
London and the South East, with
the largest located in New Malden,
London. These assets typically benefit
from high alternative use values.
Trade, DIY & Other
A significant proportion of this
segment consists of assets that are
trade/DIY focused. A recent addition
to this sub-sector has been a portfolio
of Halfords Autocentres situated
around the South East.
1 2 3 4
As at 31 March 2022
Grocery &
Roadside
NNN
Retail
Trade, DIY
&Other Leisure
Value
1
£362.9m
£221.0m £137.9m £86.7m
WAULT 16.2 years 10.2 years 13.6 years 18.3 years
Average rent (psf) £18.80 £19.80 £7.90 £17.70
Topped up NIY 4.3% 5.5% 4.0% 6.3%
Contractual uplifts 86% 36% 66% 92%
Total property return in 2022 14.9% 24.9% 24.4% 11.0%
1 Including developments
2 Leisure primarily consists of five out of town cinemas let to Odeon
Long Income portfolio breakdown
Key occupiers
– Aldi – EG Group
– BP – Lidl
– Co-op – M&S
– Costco – Waitrose
Key occupiers
– Howdens – Safestore
– Jewson – Selco
– Kwik Fit – Topps Tiles
– MKM – Wickes
Key occupiers
– B&M – Halfords
– Currys – Home Bargains
– DFS – Pets at Home
– Dunelm – The Range
Long income
£809m
1 Grocery & Roadside 45%
2 NNN Retail 27%
3 Trade, DIY & Other 17%
4 Leisure 11%
Long income portfolio split*
Grocery & Roadside
Grocery-led convenience forms c.65%
of this segment with the remainder
made up of convenience stores with
attached petrol filling stations, drive-
thru coee outlets and automated
car washes, all located in high density
urban areas. We have been significant
net acquirers in this segment.
* Including development, based on value
LondonMetric Property Plc
Annual Report and Accounts 2022
38
Acquisitions
£143.4 million of long income assets were
purchased at a NIY of 5.5% and a WAULT
of 11 years. Half are in London and the
South East:
– £36.0 million portfolio of grocery-led,
trade/DIY and leisure assets as part of
the £122.2 million Savills IM acquisition;
– £23.3 million portfolio of two NNN Retail
assets in Burton and Evesham with
a WAULT of six years;
– £18.0 million grocery-led asset in South
Ruislip let to Aldi and B&M for a further
nine years and located on a 3.5 acre site;
– £14.5 million grocery-led development
funding in Uckfield pre-let to M&S and
Home Bargains;
– £13.0 million site in Fulham with
vacant possession and significant
refurbishment plans;
– £8.0 million NNN retail asset in
Birmingham let to Dunelm and Currys;
– £6.9 million portfolio of five drive thru
McDonald’s with a WAULT of 16 years;
– £6.6 million NNN retail asset in Truro let to
The Range for a further ten years;
– £5.8 million sale and leaseback portfolio
of four Halfords Autocentres with a WAULT
of 15 years in the South East;
– £5.0 million roadside asset in Tonbridge,
let to BP for a further nine years;
– £3.8 million NNN retail asset in Thanet,
let to DFS for a further nine years; and
– £2.5 million trade park in Bognor with a
WAULT of six years.
Disposals
£72.8 million (Group share: £58.8 million) was
sold at a NIY of 5.9% and with a WAULT of
ten years:
– £15.0 million car showroom in Solihull,
Midlands, let to Johnsons VW for
17 years. This asset formed part of the
Savills IM acquisition;
– £14.2 million (Group share: £7.1 million)
portfolio of three properties, located
in Speke, Barnsley and Beverley let to
Wickes and Dunelm with a WAULT of
ten years;
– £12.8 million grocery-led asset in Newport,
let to M&S for five years;
– £11.9 million (Group share: £6.0 million)
NNN retail asset in North Shields with a
WAULT of five years;
– £10.2 million grocery asset in Liverpool let
to Aldi and M&S with a WAULT of 13 years;
– £6.2 million grocery asset in Derby let to
M&S for 15 years;
– £2.0 million (Group share: £1.0 million)
NNN Retail asset in Inverness let for less
than one year; and
– £0.5 million trade & DIY asset in Aylesford,
let to Halfords for 14 years.
Lettings and regears
In the year, we signed 12 lettings with
aWAULT of 18 years adding £1.3 million
of income.
These included:
– four pre-lets with Dunelm, B&M,
McDonald’s and Costa with a WAULT of
16 years at our Weymouth development;
– a 25 year letting with Lidl at Ashford,
Middlesex, on a former 32,000 sq ft
Hitchcock & King unit;
– a 20 year letting to Lidl at Totton to
extend its representation to 21,000 sq ft,
occupying space let to Poundstretcher;
– a regear with Co-op, where we
extended the lease to 20 years;
– a 15 year pre-let of a new Costa; and
– two 30 year lease regears at a petrol
filling station and convenience store.
Rent reviews
Rent reviews were settled on 44 assets in the
year generating an uplift of £0.5 million at
15% above previous passing on a five yearly
equivalent basis.
The largest review was on a Costco
in Coventry where a five yearly fixed
review increased the rent by £0.2 million.
The remaining reviews were inflation linked
or fixed uplifts, mostly relating to our Grocery
and Roadside assets.
Long income – asset management activity
Long Income investment activity
Post year end
We sold £34.2 million (Group share:
£25.2 million) of assets at a NIY of 4.4%
and with a WAULT of 16 years:
– a grocery store in Ashford recently
let to Lidl on a new 25 year lease;
– a NNN Retail asset in Cardi with
a WAULT of eight years;
– a pub in Greenwich, previously,
part of the Savills IM portfolio; and
– a petrol filling station in Rushden.
Long income acquisitions
£143m
39
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
A detailed analysis of our property activity
Developments
Bedford
The 355,000 sq ft distribution development let
to Movianto completed in December and
is BREEAM Excellent certified with a 200 kWp
solar PV scheme installed.
Tyseley
Construction of the 120,000 sq ft distribution
warehouse completed in July and is let to
Amazon on a 15 year lease. The building is
BREEAM Excellent and a 105 kWp solar PV
scheme was installed.
Huntingdon
Development of a 300,000 sq ft regional
warehouse, pre-let for 25 years, is expected
to complete in December 2022. The building
is expected to be BREEAM Very Good with
the benefit of solar PV.
Ipswich
Development of a 296,000 sq ft distribution
warehouse, pre-let to an ecommerce
company for 20 years, is expected to
complete in June 2022. The building is
expected to be BREEAM Very Good.
Leicester
Development of a 125,000 sq ft distribution
warehouse is expected to complete at the
start of 2023. The building is c.70% pre-let to
EM Pharma and is expected to be BREEAM
Very Good with the benefit of solar PV.
Weymouth
At our long income development site,
construction of a further 51,000 sq ft
expected to complete in October 2022.
The BREEAM Very Good buildings are 100%
pre-let with a WAULT of 16 years.
Preston
Development of a 43,000 sq ft distribution
warehouse, pre-let to Sainsbury’s for 15 years,
which is expected to complete in the next
12 months. The building is expected to be
BREEAM Very Good.
Uckfield
Development of a 41,000 sq ft grocery-led
funding pre-let to M&S and Home Bargains is
expected to complete in Q1 2023.
London redevelopments
Following recent acquisitions, we are
redeveloping or refurbishing four London
sites, consisting of:
– 23,000 sq ft in Tottenham, which we have
acquired vacant and are undertaking
a comprehensive refurbishment;
– 21,000 sq ft in Fulham, which we acquired
vacant and are comprehensively
refurbishing with terms agreed on
a letting;
– 11,000 sq ft in Colliers Wood, where we
are redeveloping the site; and
– 4,000 sq ft in Stockwell, where we are
undertaking a redevelopment of the site.
In the year, we completed 0.5 million sq ft of BREEAM
Excellent developments representing £4.5 million of rent
per annum at a yield on cost of 7.0%. 0.9 million sq ft
is under development which is expected to generate
£8.7 million of rent per annum. 89% of developments
underway are BREEAM Very Good.
Completed inyear
Area sq ft
’000
Income
£m
Yield on cost
%
Bedford (Unit 1) 355 2.9 7.8
Tyseley (Phase 2) 120 1.6 6.0
Total 475 4.5 7.0
Under construction
Huntingdon
1
300 2.0 3.7
Ipswich
1
296 1.9 4.5
Leicester
1,2
125 0.9 4.5
London redevelopments (x4)
2
59 1.9 5.0
Weymouth 51 0.9 6.6
Preston
1,2
43 0.3 3.9
Uckfield
1
41 0.8 5.5
Total 915 8.7 4.6
1 Forward fundings
2 Anticipated yield on cost and rents
Completed in the year
0.5m sq ft
100% BREEAM Excellent
Under construction
0.9m sq ft
89% BREEAM Very Good
LondonMetric Property Plc
Annual Report and Accounts 2022
40
Pre-let development in Huntingdon
The 300,000 sq ft development was acquired during the year and
represents a £53.4 million total investment for LondonMetric. It is
located at Alconbury Weald, Huntingdon, on the A1(M), with the
nearby A14 interchange providing a direct link to Felixstowe port.
The building is pre-let on a 25 year lease to AM Fresh, an international
agri-tech company that supplies the majority of UK supermarkets.
The rent is £2.0 million p.a. and has CPI+1 linked rent reviews.
Development is expected to complete in December 2022.
Building overview
Occupies a 13 acre site with 46% site
coverage. The building will have
a minimum 12.5m eaves height
Highly specified cold storage,
production and logistics warehouse
used to supply fresh fruit to UK food
retailers and wholesalers
Fitted out with market leading
automation, including an innovation
centre and incubator for agri-tech R&D
Development
300,000 sq ft
Pre-let lease
25 years
Building features
Temperature
controlled storage
Laboratory
for R+D
25 dock
level doors
6 level
access doors
Environmental features
BREEAM Very Good
Energy-ecient lighting,
space and water heating
Roof designed to accommodate
significant solar PVs
Water saving devices
10 charging spaces
for electric vehicles
Whole life carbon
assessment undertaken
18% reduction in carbon
emissions rate against
notional target emissions
41
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
IFRS net assets
£2.6bn
2021: £1.7bn
IFRS reported profit
£734.5m
2 0 21: £ 2 5 7. 3 m
Highlights
We have produced a very strong set of
results, delivering significant earnings and
NAV progression, allowing us to continue to
grow our dividend by 6.9% for shareholders
whilst maintaining strong cover of 109%.
Our financial position was strengthened by
a £175 million equity placing in November
that was significantly oversubscribed,
and our strong banking relationships have
enabled us to agree new debt facilities.
This supported significant new investment into
our preferred sectors of distribution and long
income which have also seen substantial
growth in value, increasing our portfolio by
39% to £3.6 billion.
Although we have returned to more normal
conditions as we emerge from the Covid-19
pandemic, the macro environment is
continually changing. Geopolitical risk, the
conflict in Ukraine, elevated inflation and
a cost of living squeeze create uncertainty.
However, we remain very well placed, with
an enlarged portfolio of high quality assets
in structurally supported sectors with robust
financing metrics.
EPRA earnings increased by 9.2% to
£93.5 million and by 5.5% on a per share
basis to 10.04p, driven by a 7.9% increase in
net rental income and supported by strong
rent collection performance, with 99.5% of
rent due in the year having been collected.
IFRS reported profit has almost trebled
to £734.5 million and is predicated on
an unprecedented valuation uplift of
£632.2 million, driven by a 61 bps yield
compression and 10% ERV growth.
IFRS net assets have increased by 47.8%
to £2,559.7 million and 97.1% of our assets
continue to be in our preferred sectors.
EPRA net tangible assets (‘NTA’) per share
increased by 37.2% to 261.1p (2021: 190.3p)
and our total accounting return was 41.9%
(2021: 16.7%).
We completed new debt facilities of
£930 million in the year, comprising a
£380 million private debt placement and
three unsecured credit facilities totalling
£550 million.
Our strong performance
delivered significant
earnings and NAV
progression, allowing
us to continue to grow
our dividend.
Our £380 million debt
private placement
and £175 million equity
raise were significantly
oversubscribed thanks
to the support of
our investors.
Certain of these new facilities replaced
existing short dated debt and increased
maturity and hedging at the year end
to 6.5 years (2021: 4.2 years) and 71%
(2021: 45%) respectively, whilst maintaining
alow average cost of 2.6% (2021: 2.5%).
Our loan to value has fallen to 28.8%
(2021: 32.3%), providing flexibility to execute
our property strategy whilst maintaining
ample headroom under banking covenants.
Alongside this, we have significant available
facilities and cash of £299 million providing
capacity for further accretive investment
and development opportunities.
LondonMetric Property Plc
Annual Report and Accounts 2022
42
Financial review
A review of our financial performance
Martin
McGann
Finance Director
EPRA earnings
per share
10.04p
2021: 9. 52p
Net rental income
£133.1m
2021: £123.3m
Presentation of financial information
The Group financial statements have been prepared in accordance with IFRS.
Management monitors the performance of the business principally on a proportionately
consolidated basis, which includes the Group’s share of joint ventures (‘JV’) and excludes
any non-controlling interest (‘NCI’) on a line by line basis.
The figures and commentary in this review are presented on a proportionately
consolidated basis, consistent with our management approach, as we believe this
provides a meaningful analysis of overall performance. These measures are alternative
performance measures, as they are not defined under IFRS.
The Group uses alternative performance measures based on the European Public Real
Estate Association (‘EPRA’) Best Practice Recommendations (‘BPR’) to supplement IFRS,
in line with best practice in our sector, as they highlight the underlying performance of
the Group’s property rental business and exclude property and derivative valuation
movements, profits and losses on disposal of properties and financing break costs,
all of which may fluctuate considerably from year to year.
These are adopted throughout this report and are key business metrics supporting the
level of dividend payments.
Further details, definitions and reconciliations between EPRA measures and the IFRS
financial statements can be found in note 8 to the financial statements, Supplementary
notes i to vii and in the Glossary.
Income statement
EPRA earnings for the Group and its share of joint ventures are detailed as follows:
For the year to 31 March
100%
owned
£m
JV
£m
NCI
£m
Total
2022
£m
100%
owned
£m
JV
£m
NCI
£m
Total
2021
£m
Gross rental income 131.5 4.5 (1.3) 134.7 121.3 5.3 (1.5) 125.1
Property costs (1.5) (0.1) – (1.6) (1.6) (0.2) – (1.8)
Net rental income 130.0 4.4 (1.3) 133.1 119.7 5.1 (1.5) 123.3
Management fees 1.3 (0.5) – 0.8 0.9 (0.4) – 0.5
Other income 0.4 – – 0.4 – – – –
Administrative costs (16.0) (0.1) – (16.1) (15.8) – – (15.8)
Net finance costs (23.9) (1.0) 0.2 (24.7) (21.5) (1.2) 0.2 (22.5)
Tax (0.1) – 0.1 – (0.1) – 0.2 0.1
EPRA earnings 91.7 2.8 (1.0) 93.5 83.2 3.5 (1.1) 85.6
Net rental income
We continue to focus on growing our
income to deliver earnings and dividend
progression for our shareholders and once
again we are pleased to report an increase
of 7.9% in net rental income to £133.1 million.
The detailed movements are reflected in the
table opposite.
Income from lettings, rent reviews and
regears of existing properties and completed
developments generated significant
additional rent of £6.7 million, oset by a
reduction in surrender premiums received
of £0.4 million. Income from net investment
activity added a further £3.3 million
and property cost savings of £0.2 million
contributed to a further fall in our cost
leakage ratio to 1.2% (2021: 1.4%).
£m £m
Net rental income 2021 123.3
Additional rent from existing properties
1
2.7
Additional rent from developments
1
4.0
Movement in surrender premium income (0.4)
Additional rent from acquisitions
1
15.2
Rent lost through disposals
1
(11.9)
Additional rent from net acquisitions 3.3
Movement in property costs 0.2
Net rental income 2022 133.1
1 Properties held, developments completed and acquisitions and disposals since 1 April 2020
43
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
EPRA cost ratio
12.5%
2021: 13.6%
Dividend for the year
9.25 p
2021: 8.65p
Rent collection inthe year
99. 5%
2021: 98.1%
Rent collection
As rent collection levels across the real
estate sector are now reverting to pre-
pandemic levels, our collection rates
remain exceptionally strong, reflecting the
quality of our covenants and eorts of our
team. Very few occupiers are now asking
for concessions beyond some requests for
monthly payment arrangements.
We have collected 99.5% of rent due in the
year and just 0.5% remains unpaid or has
been forgiven.
We have assessed the recoverability of our
year end trade debtor and lease incentive
balances in accordance with IFRS 9 and
have reduced our rent provisions for the
Group and our share of joint ventures by
£0.2 million to £1.2 million.
Administrative costs and EPRA cost ratio
Administrative costs have increased by
£0.3 million to £16.1 million and are stated
after capitalising sta costs of £2.5 million
(2021: £2.2 million) in respect of time spent
on development projects in the year.
Although inflationary cost increases are
aecting not only our own sta costs but fees
of advisors and contractors we work with, the
EPRA cost ratio which we use to monitor and
manage our operational costs has fallen 110
bps in the year to 12.5%. We have a low and
transparent cost base and our EPRA cost
ratio remains one of the lowest in our sector.
For the year to 31 March
2022
%
2021
%
EPRA cost ratio including
direct vacancy costs 12.5 13.6
EPRA cost ratio excluding
direct vacancy costs 11.8 13.0
The ratio reflects total operating costs as
apercentage of gross rental income.
The fullcalculation is shown in Supplementary
note iv.
Net finance costs
Net finance costs, excluding fair value
movements in derivatives and financing
break costs, were £24.7 million, an increase
of£2.2 million over the year.
This reflected higher interest charges of
£3.5 million due to higher average debt
balances over the year compared to last
year, and less interest receivable from
forward funded investments of £0.1 million.
This increase was oset by lower fees on new
facilities of £1.1 million and higher amounts
of interest capitalised on developments of
£0.3 million.
The average interest rate payable over the
year was broadly in line with last year.
Further detail is provided in notes 5 and 10
tothe financial statements.
Share of joint ventures
EPRA earnings from joint venture investments
were £2.8 million, a decrease of £0.7 million
over the year as reflected in the table below.
For the year to 31 March
2022
£m
2021
£m
Metric Income Plus
Partnership (MIPP) 2.8 3.6
LSP London Residential
Investments
(Moore House) – (0.1)
EPRA earnings 2.8 3.5
Income from our MIPP joint venture fell by
£0.8 million due to sales at the start of the
year reducing rental income.
In October, the Group’s residential JV disposed
of its remaining four flats at Moore House.
In addition, the Group received net
management fees of £0.8 million for acting as
property advisor to each of its joint ventures,
which have risen by £0.3 million as a result of
additional sales fees and property valuation
gains increasing NAV and therefore fees.
Taxation
As the Group is a UK REIT, any income and
capital gains from our qualifying property
rental business are exempt from UK
corporation tax.
Any UK income that does not qualify as
property income within the REIT regulations
issubject to UK tax in the normal way.
The Group’s tax strategy is compliance
oriented; to account for tax on an
accurate and timely basis and meet all REIT
compliance and reporting obligations.
We seek to minimise the level of tax risk
and to structure our aairs based on sound
commercial principles.
We strive to maintain an open dialogue with
HMRC with a view to identifying and solving
issues as they arise. There were no issues
raised in the year.
We continue to monitor and comfortably
comply with the REIT balance of business
tests and distribute as a Property Income
Distribution (‘PID’) 90% of REIT relevant
earnings to ensure our REIT status
is maintained.
The Group paid the required PID for the year
to 31 March 2021 ahead of the deadline
of 31 March 2022 and has already paid a
large part of its expected PID for the year
to 31 March 2022. The balance is expected
to be paid in July 2022 as part of the fourth
quarterly dividend.
In accordance with REIT regulations,
£8.7 million was withheld from distributions
and paid directly to HMRC in the year.
The tax charge in the year relates to the
Group’s non-controlling interest.
Our tax strategy was updated and approved
by the Board in the year and can be found
on our website at www.londonmetric.com.
LondonMetric Property Plc
Annual Report and Accounts 2022
44
Financial review
A review of our financial performance
Property portfolio
£3.6bn
2021: £2.6bn
Property revaluation
£632.2m
2021: £173.7m
New debt facilities
£930m
with £450m incorporating a Green use
of proceeds or framework
The Group’s reported profit for the year was £734.5 million compared with £257.3 million in the previous year. The £477.2 million increase was
primarily due to the property revaluation gain being £458.5 million higher, increased profit from property disposals of £7.5 million and increased
EPRA earnings of £7.9 million. Disposals are discussed in detail in the Property Review.
Last year, we cancelled all of our Group interest rate swaps and fully amortised finance costs prepaid on cancelled debt facilities at a total
cost of £7.5 million. The Group continues to hedge its exposure to interest rate movements by way of fixed rate loans, which has increased
to 71% of drawn debt as at the year end (2021: 45.0%).
Balance sheet
EPRA net tangible assets (‘NTA’) is a key performance measure that includes both income and capital returns but excludes the fair valuation
of derivative instruments that are reported in IFRS net assets. A reconciliation between IFRS and EPRA NTA is detailed in the table below and in
note 8(c) to the financial statements.
IFRS reported profit
A reconciliation between EPRA earnings and IFRS reported profit is reflected in note 8(a) to the accounts and is summarised in the
table below.
For the year to 31 March
100%
owned
£m
JV
£m
NCI
£m
Total
2022
£m
100%
owned
£m
JV
£m
NCI
£m
Total
2021
£m
EPRA earnings 91.7 2.8 (1.0) 93.5 83.2 3.5 (1.1) 85.6
Revaluation of property 615.2 19.7 (2.7) 632.2 169.9 3.4 0.4 173.7
Fair value of derivatives – 0.7 – 0.7 4.7 0.1 – 4.8
Profit/(loss) on disposal 8.0 0.2 – 8.2 0.8 (0.1) – 0.7
Debt/hedging costs – (0.1) – (0.1) (7.5) – – (7.5)
IFRS reported profit 714.9 23.3 (3.7) 734.5 251.1 6.9 (0.7) 257.3
As at 31 March
100%
owned
£m
JV
£m
NCI
£m
Total
2022
£m
100%
owned
£m
JV
£m
NCI
£m
Total
2021
£m
Investment property 3,494.6 96.6 (15.1) 3,576.1 2,504.6 94.4 (11.4) 2,587.6
Assets held for sale 21.2 – – 21.2 – – – –
Trading property 1.1 – – 1.1 1.1 – – 1.1
3,516.9 96.6 (15.1) 3,598.4 2,505.7 94.4 (11.4) 2,588.7
Gross debt (1,027.2) (26.5) – (1,053.7) (839.5) (37.5) – (877.0)
Cash 51.3 3.6 (0.6) 54.3 51.4 3.4 (0.2) 54.6
Other net liabilities (43.8) (1.2) 5.6 (39.4) (39.1) (0.5) 5.2 (34.4)
EPRA NTA 2,497.2 72.5 (10.1) 2,559.6 1,678.5 59.8 (6.4) 1,731.9
Derivatives – 0.1 – 0.1 – (0.6) – (0.6)
IFRS net assets 2,497.2 72.6 (10.1) 2,559.7 1,678.5 59.2 (6.4) 1,731.3
45
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
Both IFRS reported net assets and EPRA NTA
have increased by 47.8% over the year to
£2.6 billion, largely due to the revaluation
gain of £632.2 million and the net proceeds
from the equity raise of £170.2 million.
The increase in IFRS NAV per share and EPRA
NTA per share was 37.1% and 37.2% to 262.3p
and 261.1p respectively. The movement
in EPRA NTA and EPRA NTA per share is
reflected in the table below.
EPRA
NTA
£m
EPRA
NTA
p/share
EPRA NTA at 1 April 2021 1,731.9 190.3
EPRA earnings 93.5 10.0
Dividends
2
(81.7) (8.8)
Property revaluation 632.2 67.9
Equity raise 170.2 –
Other movements
1
13.5 1.7
EPRA NTA at 31 March 2022 2,559.6 261.1
1 Other movements include profit on sales
(£8.2 million), share based awards (£1.1 million)
andscrip share issue savings (£4.2 million)
2 Dividend per share is based on the weighted
average number of shares in the year. The actual
dividend paid in the year was 8.85p as reflected
innote 7 to the financial statements
The increase in EPRA NTA per share was
principally due to the property revaluation
gain of 67.9p, as EPRA earnings covered the
dividend paid in the year.
The movement in EPRA NTA per share,
together with the dividend paid in the year,
results in a total accounting return of 79.7p
per share or 41.9% which is significantly
ahead of last year’s return of 16.7%.
Total accounting return is a key performance
indicator and component of the variable
element of Directors’ remuneration
arrangements. The full calculation can be
found in Supplementary note viii.
Equity raise
In November 2021, we successfully raised gross
proceeds of £175 million through an equity
placing that was substantially oversubscribed.
A total of 67.3 million new ordinary shares
were issued at a price of 260.0p per share,
representing a discount of 3.0% to the
previous day’s closing share price.
The net proceeds after issue costs of
£170.2 million were deployed within three
months to acquire income producing assets
as set out in the Property review.
Dividend
Throughout the year, we have continued
to declare quarterly dividends and oer
shareholders a scrip alternative to cash
payments. The dividend remains well
covered by EPRA earnings and our policy
of paying a sustainable and progressive
dividend remains unchanged.
In the year to 31 March 2022, the Company
paid the third and fourth quarterly dividends
for the year to 31 March 2021 and the first
two quarterly dividends for the year to
31 March 2022, at a total cost of £81.7 million
or 8.85p per share as reflected in note 7
to the financial statements. The Company
issued 1.7 million ordinary shares under the
terms of the Scrip Dividend Scheme, which
reduced the cash dividend payment by
£4.2 million to £77.5 million.
The first two quarterly payments for the
current year of 4.4p per share were paid as
a Property Income Distributions (PIDs) in the
year. The third quarterly dividend of 2.2p was
paid as a PID in April 2022 and the Company
has approved a fourth quarterly payment
of 2.65p in July 2022, of which 1.15p will be
a PID.
The total dividend payable for 2022 of 9.25p
represents an increase of 6.9% over the
previous year.
The Board took the following into account
when considering its dividend payments:
– Its REIT obligations to distribute 90% of
property rental business profits;
– Its desire to pay a sustainable, covered
and progressive return to shareholders;
– Its EPRA earnings for 2022; and
– The outlook for 2023.
At the year end the Company had
distributable reserves of £1,136.7 million
(2021: £1,006.7 million), providing substantial
cover for the dividend payable for the year.
When required and at least six monthly,
the Company receives dividends
from its subsidiaries which increase
distributable reserves.
Portfolio valuation
Our portfolio including share of joint ventures grew by over £1 billion or 39.0% in the year to £3.6 billion as reflected in the table below. The portfolio
closing valuation includes the value of assets held for sale and trading properties that are reflected separately in the balance sheet.
As at 31 March
100%
owned
£m
JV
£m
NCI
£m
2022
£m
2021
£m
Opening valuation 2,500.6 94.4 (11.4) 2,583.6 2,346.5
Acquisitions
1
457.5 – – 457.5 212.4
Developments
2
88.9 – – 88.9 38.1
Capital expenditure
3
16.0 1.1 (1.0) 16.1 12.2
Disposals (165.8) (18.6) – (184.4) (199.3)
Revaluation 615.2 19.7 (2.7) 632.2 173.7
Property portfolio value 3,512.4 96.6 (15.1) 3,593.9 2,583.6
Head lease and right of use assets 4.5 – – 4.5 5.1
Closing valuation 3,516.9 96.6 (15.1) 3,598.4 2,588.7
1 Group acquisitions include purchase costs and represent completed investment properties as shown in note 9 to the financial statements
2 Group developments include acquisitions, capital expenditure and movements in lease incentives on properties under development as reflected in note 9
3 Group capital expenditure and movements in lease incentives on completed properties as reflected in note 9 to the financial statements
LondonMetric Property Plc
Annual Report and Accounts 2022
46
Financial review
A review of our financial performance
The portfolio has delivered a strong total property return of 28.2%, significantly outperforming
the IPD All Property index of 19.6%, with distribution assets again delivering the largest increase
of 31.1%. A breakdown of the property portfolio by sector is reflected in the table below.
As at 31 March
2022
£m
2022
%
2021
£m
2021
%
Mega distribution 425.2 11.8 351.9 13.6
Regional distribution 665.3 18.5 483.5 18.7
Urban logistics 1,551.5 43.2 941.9 36.5
Distribution 2,642.0 73.5 1,777.3 68.8
Long income 785.3 21.8 629.4 24.3
Retail Parks 70.6 2.0 73.9 2.9
Oces 27.3 0.8 41.1 1.6
Investment portfolio 3,525.2 98.1 2,521.7 97.6
Development
1
67.8 1.9 59.8 2.3
Residential 0.9 – 2.1 0.1
Property portfolio value 3,593.9 100.0 2,583.6 100.0
Head lease and right of use assets 4.5 5.1
3,598.4 2,588.7
Assisted by strong capital growth and net
acquisitions, investment in our preferred
sectors of distribution and long income has
increased further to 97.1% from 95.3% in
March 2021, with our distribution exposure
increasing from 70.8% to 74.6%.
Having completed our developments
at Bedford and Tyseley in the year, our
development exposure remains modest at
1.9% of the portfolio and includes forward
funded acquisitions in Huntingdon and
Preston of £23.7 million as well as urban
developments in London of £30.1 million.
Further detail on property acquisitions, sales,
asset management and development can
be found in the Property Review.
Financing
The key performance indicators used to
monitor the Group’s debt and liquidity
position are shown in the table below.
The Group and joint venture split is shown
inSupplementary note iii.
As at 31 March
2022
£m
2021
£m
Gross debt 1,053.7 877.0
Cash 54.3 54.6
Net debt 999.4 822.4
Loan to value
1
28.8% 32.3%
Cost of debt
2
2.6% 2.5%
Undrawn facilities 245.0 170.5
Average debt maturity 6.5 years 4.2 years
Hedging
3
71% 45%
1 LTV at 31 March 2022 includes the impact of sales
and acquisitions that exchanged in the year
and will complete next year of £21.2 million and
£72.4 million respectively (2021: £15.2 million and
£35.7 million respectively), and excludes the fair value
debt adjustment of £2.2 million (2021: £2.5 million).
See Supplementary note xviii for detailed calculations
2 Cost of debt is based on gross debt and including
amortised costs but excluding commitment fees
3 Based on the notional amount of existing hedges
and total debt drawn
Net debt has increased by £177.0 million in
the year to fund net property acquisitions
and our development programme. Loan to
value has fallen to 28.8% (2021: 32.3%) and
our average debt cost remains low at 2.6%
(2021: 2.5%).
We completed four new unsecured debt
facilities in the year totalling £930 million,
comprising a £380 million private debt
placement, two revolving credit facilities
for £400 million and a new £150 million short
term facility.
The private placement and revolving credit
facilities replaced existing short dated debt,
which was partly unsecured, allowing us
to increase debt maturity to 6.5 years from
4.2 years at the start of the year despite the
passage of time, as well as our flexibility to
execute transactions.
As part of the £380 million private debt
placement, we agreed a £50 million green
tranche to fund qualifying expenditure on
buildings which have high sustainability
standards. Post year end, expenditure
has been allocated to this green tranche.
The green notes were priced two basis points
inside the equivalent non green 15 year
tranche and represented the first of its kind
announced by a UK REIT.
We invested £457.5 million into distribution and
long income assets, which included a corporate
portfolio acquisition of 15 assets for £122.2 million
and a distribution warehouse in Warrington
let to THG for £97.0 million. We sold 21 assets
generating net proceeds of £199.8 million at
share and reducing the book value of property
by £191.6 million (including the cost of lease
incentives written o for the Group of £6.7 million
and its share of joint ventures of £0.5 million).
The disposals included our last four residential
flats at Moore House for £2.4 million (£1.0 million
at share). We also exchanged to sell assets
totalling £21.2 million and to acquire assets for
£72.4 million in the year. These transactions will
be accounted for on completion next year.
Four disposals which generated net proceeds
of £15.2 million and three acquisitions for
£35.7 million had exchanged last year.
Property values increased by £632.2 million
this year, driven by yield compression, rental
growth and management actions, largely on
distribution assets.
1 Represents regional distribution £15.9 million (0.4%), urban logistics £25.8 million (0.7%), long income £23.2 million
(0.7%), office and other land £2.9 million (0.1%) at 31 March 2022. Split of prior year comparatives was urban
logistics £51.8 million (2.0%), long income £5.8 million (0.2%), office and other land £2.2 million (0.1%)
1
2
3
4
5
6
£3.6bn portfolio
Urban logistics
43.9%
* Including development, based on value
1 Urban Logistics 43.9%
2 Regional Distribution 18.9%
3 Mega Distribution 11.8%
4 Long Income 22.5%
5 Retail Parks 2.0%
6 Oces & Residential 0.9%
47
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
The two revolving credit facilities also
incorporate a green framework and
preferential pricing for compliance with
ESG targets linked to EPC ratings, renewable
installations and developments meeting
a minimum BREEAM Very Good standard.
These targets will be tested following the
announcement of these results and are
expected to be achieved. Margin savings
will be added to funds allocated for
charitable giving. We have recently agreed
the first one year extension for these two
revolving credit facilities.
Our most recent credit facility for £150 million
was drawn immediately to fund acquisitions.
The new credit facilities in the year are all
on a SONIA basis and in January 2022, we
transitioned our MIPP joint venture loan from
a LIBOR to a SONIA basis with minimal impact
on pricing and cost.
At 31 March 2022, the Group had headroom
available from undrawn facilities and cash
balances held of £299 million, providing
ample cover for its contracted capital
commitments of £127.4 million and optionality
for further investment opportunities.
The Group has comfortably complied
throughout the year with the financial
covenants contained in its debt funding
arrangements and has substantial levels of
headroom within these. Covenant compliance
is regularly stress tested for changes in capital
values and income. The Group’s unsecured
facilities and private placement loan notes,
which together account for 92% of debt drawn
at the year end, contain gearing and interest
cover financial covenants.
At 31 March 2022, the Group’s gearing ratio
as defined within its private placement and
RCF funding arrangements was 39%, which is
significantly lower than the maximum limit of
125%, and its interest cover ratio was 5.2 times,
comfortably higher than the minimum level
of 1.5 times. Property values would have to
fall by 49% and rents by 64% before banking
covenants are breached.
The Group’s policy is to de-risk the impact
of movements in interest rates by entering
into hedging and fixed rate arrangements.
Following the refinancing this year, the
proportion of debt hedged by fixed coupon
private placement facilities and existing fixed
rate debt has increased to 71% (2021: 45%).
We are advised by Chatham Financial and
continue to monitor our hedging profile in
light of interest rate projections.
Cash flow
During the year, the Group’s cash balances
decreased by £0.1 million as reflected in the
table below.
For the year to 31 March
2022
£m
2021
£m
Net cash from
operating activities 119.5 99.6
Net cash used in
investing activities (367.2) (46.4)
Net cash from/(used in)
financing activities 247.6 (83.6)
Net decrease in cash
and cash equivalents (0.1) (30.4)
The net cash inflow from operating activities
of £119.5 million reflects an increase of
£19.9 million compared to last year, which
was due to increased net rents received
and changes in working capital.
The Group spent £500.6 million acquiring
property in the year and received net
cash proceeds of £189.7 million from
property disposals and joint ventures.
Capital expenditure on asset management,
developments and other investments cost
the Group £56.3 million.
Cash inflows from financing activities reflect
new borrowing of £188.0 million and net
proceeds from the equity raise of £170.2 million,
oset by dividend payments of £77.5 million,
financing costs of £30.8 million and share
purchases and awards of £2.3 million.
Further detail is provided in the Group cash
flow statement.
Average debt maturity
1 Debt expiring within
0-2 years
23%
2 Debt expiring within
3-10 years
50%
3 Debt expiring 10+ years 27%
Total facilities
1 Private Placement 51%
2 Unsecured facilities 42%
3 Secured SWIP fixed
rate debt
5%
4 MIPP joint venture 2%
1
2
3
6.5 yrs
1
2
3
4
£1.3bn
LondonMetric Property Plc
Annual Report and Accounts 2022
48
Financial review
A review of our financial performance
LondonMetric Property Plc
Annual Report and Accounts 2022
49
155 -208
Financial statements
88 -154
Governance
Strategic report
1-87
Overview and progress 50
Environmental 52
Social 58
Governance and TCFD disclosure 65
Our Responsible Business activities are
embedded into our investment, asset
management, development and
corporate activities and aim to deliver
on our ESG targets. We work with all our
stakeholders to bring benefits to society
more widely.
Martin McGann
Finance Director & Responsible Business
Board representative
Responsible Business
and ESG review
LondonMetric Property Plc
Annual Report and Accounts 2022
50
The Company recognises the need to
consider and address all environmental,
social and governance matters relevant to
its business.
As well as meeting legislation, environmental
improvements are starting to translate into
real asset value enhancement as occupiers
value these improvements more highly than
before and valuers begin to dierentiate
assets based on environmental attributes.
Our Responsible Business framework guides
us in mitigating climate change risks,
identifying and progressing environmental
and stakeholder related opportunities
as well as ensuring a high standard of
corporate governance.
Responsible Business is embedded
across all of corporate, investment, asset
management and development activities
with a policy in place and ESG targets set
every year.
Progress against targets ismonitored at
Working Group meetings held several
times a year and attended by key business
representatives, a Board member and our
external sustainability advisor.
ESG performance is reported to the
Boardat regular intervals with the Audit
Committee responsible for overseeing ESG
progress. Executive Directors and relevant
employees are set individual ESG targets
and remuneration is linked to achieving
those targets.
Our sustainability performance
Responsible Business and ESG review
Our Responsible Business activities aim
to address thematerialESG risks and
opportunities that impactourbusiness.
Through our activities we look
to minimise the environmental
impact ofour business, maximise
opportunities to improve the
eciency of our assets and
improve the resilience of our
assetstoclimate change and
theimpact of transitioning to
a low carbon economy.
Our actions consider the
long term interests of all
our stakeholders including
those of our employees,
suppliers, customers and
localcommunities as well
as ensuring that we maintain
a highstandard of business
conduct.
The Board is committed to
upholding high standards
of corporate governance.
Inparticular, it ensures that
appropriate health and safety
procedures and supply chains
are in place.
Key progress in 2022
– Material improvement in
portfolio’s EPC rating and
a number of environmental
initiatives implemented
– Carbon oset strategy
formalised and climate risk
assessment undertaken
– 100% of main developments
BREEAM Very Good/Excellent
– Significant reduction in embodied
carbon seen on developments
Key progress in 2022
– Green debt financing completed
post year end and reporting
obligations met
– Strong occupier feedback
from survey
– Continued high sta satisfaction
levels from employee survey
– Continued charitable and local
community focus
Key progress in 2022
– Full TCFD compliance and
climate risk governance gap
analysis undertaken
– 100% compliance by
contractors with our contractor
development checklist
– Health and safety audits
undertaken on projects
– Annual contractor
compliance audit
Environmental
Social
Governance
Read more on pages 52 to 57
Read more on pages 58 to 64
Read more on pages 65 to 69
51
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
Our sustainability benchmarking, targets and financing
We have maintained our ratings in external benchmarks, made good progress
against our internal ESG targets and have put in place green financing solutions.
Maintained our Green Star
Achieved a score of 65% in the 2021 Global
Real Estate Sustainability Benchmark survey,
maintaining our Green Star status. This score is
up from 34% in 2014 and unchanged on the
prior year.
Continued inclusion in the
FTSE4Good Index
In the latest assessment, weachieved a
score of 3.4 out of 5.0 compared to 2.6 for
the peer group and continue to be included
in the index.
BBB rating
In the latest assessment we continued
to be rated BBB, which is in line with the
sector average.
Maintained our Gold
In EPRA’s last review, we maintained our
Gold Award in their Sustainability Best
Practice Recommendation assessment.
Improved our score
We continued to respond and improve our
score over the year from D to C-, above the
peer group average.
Targets achieved in 2022
81%
with the remainder
partially achieved
or inprogress
Our 16 Responsible Business targets in the
year focused on:
– Further reducing our energy usage,
environmental improvements to our
buildings and greater scrutiny on physical
climate and transition risks;
– Formalising a carbon oset strategy as
part of our net zero carbon framework;
– Working in partnership with occupiers
to reduce their energy consumption and
improve their occupational satisfaction;
– Ensuring developments are built to a
high environmental standard and our
supply chain acts in accordance with
ourprocedures and policies;
– Developing community and other
stakeholder relationships; and
– Climate change risks and opportunities
assessment undertaken.
We made good progress against these
targets with 81% achieved and the
remainder partially achieved or in progress.
A full review of performance against our
2022 targets will be detailed in our separate
Responsible Business and ESG report which
will be made available on our website.
Many of the targets remain relevant for
next year and will be rolled forward with
modifications to further align with our Net
Zero Carbon framework. Once set, these
updated targets will be available on
our website.
External benchmarking ESG targets Green financing
Sustainability linked refinancing
£450m
Over the year, we completed significant
debt refinancings across our debt facilities.
£50 million of Green Notes
As part of a £380 million private debt
placement with UK and US investors, a
£50 million green tranche was put in place
with a 15 year term maturity. This tranche is
subject to a green framework under which
spend has been allocated to buildings which
have high sustainability standards.
The green notes were priced two basis
points inside the equivalent non green
15 year tranche.
£400 million of new revolving credit facilities
completed with a green framework
Simultaneously with the completion of the
private placement, we completed two new
revolving credit facilities totalling £400 million.
These facilities have a green framework
structured in accordance with the Loan
Market Association’s sustainability linked
loan principles. Sustainability performance
targets (‘Targets’) were set and are aligned
to LondonMetric’s corporate ESG targets.
The Targets focus on:
– Improvements in EPC ratings;
– Renewable installations; and
– Developments meeting a minimum
BREEAM Very Good standard.
The pricing of the facilities is subject to a two
basis point adjustment for compliance/non
compliance with the Targets which is tested
each year of the facility. Where targets are
met, the margin paid will be reduced and
LondonMetric will use this saving to add to
its funds allocated for charity giving.
We continue to look at further green
financing facilities.
LondonMetric Property Plc
Annual Report and Accounts 2022
52
Our sustainability performance
Responsible Business and ESG review
Environmental
Climate risk assessment
As covered in more detail on pages 67 to 68,
we undertook an assessment of our climate-
related risks, assessing our resilience to these
risks at the portfolio and asset level.
For the portfolio, two climate change
scenarios were used to test a range of
outcomes and identify material climate-
related risks over the short, medium and
long term with likelihood and impact scores
assigned to each risk.
The table below shows that under the less
extreme scenario (RCP4.5), transition risks are
the most significant, whereas under the more
extreme scenario (RCP8.5), physical risks are
the most prevalent.
At the asset level, an in-depth review
was undertaken on representative assets,
assessing their resilience to physical and
transition risks. Again, transition risks were
higher for the assets we assessed.
Overview
Through our activities we look
to minimise the environmental
impact ofour business,
maximise building eciency
opportunities whilst improving
business and asset resilience
to climate change and the
impact of transitioning to
a low carbon economy.
Net Zero Carbon
We understand the importance
of addressing climate change
and the significant impact that
reducing emissions from real
estate can have on the UK’s
2050 Net Zero Carbon target.
LondonMetric recognises that
it can have a material impact
by reducing its emissions as well
as supporting its occupiers in
reducing theirs.
In the previous year, we
formalised our Net Zero Carbon
Framework through internal
workshops and adviser input.
Net Zero Carbon is a rapidly
evolving area and, during
this year, as well as preparing
to be fully Net Zero from our
operations in 2023, we also
analysed the Net Zero potential
across several assets.
Climate risk
Our ESG focus has increasingly
turned to understanding the
climate risks on our portfolio.
During the year, we undertook
a significant assessment
of our business and asset
resilience against climate-
related risks. The third party
assessment concluded that our
sustainability strategy is well-
positioned to manage climate-
related risks and opportunities.
Occupier/market demand changes
Increased building standards
Financial markets impact
Fuel source transition
7.5
15.1
19.0
16.4
7.6
17.6
13.7
13.8
8.4
Extreme weather events
Heat Stress
Flooding (coastal, fluvial)
Heavy rainfall & pluvial flooding
13.3
9.9
13.9
12.8
16.6
13.1
17.1
IPCC RCP4.5 global emissions scenario (1.7-3.2°C of warming by 2100)
IPCC RCP8.5 global emissions scenario (3.2-5.4°C of warming by 2100)
* Risks shown in graphs are top risks for IPCC RCP 4.5. Under RCP 8.5, risks from insurance challenges and increased
energy demand and cost would have been included as top four transition risk with scores of 14.0 and 13.0
Our operations will
be net zero by 2023*
We will work with our
occupiers to ensure our
buildings are netzero
by 2035***
We will continue to
reduce emissions from
developments which will
be fully netzero by 2030**
Net Zero Carbon (‘NZC’) ambitions:
Physical risks (risk scoring on key risks) Transition risks* (risk scoring on key risks)
1 2
3
* Encompasses Scope 1,2 and 3 emissions. Includes landlord-controlled energy, water, waste, refrigerants and
purchased goods and services at our assets, along with energy, waste, refrigerants and business travel relating
tocorporate activity and offsetting residual carbon to achieve net zero
** Encompasses Scope 3 emissions, includes embodied carbon, supply chain emissions and offsetting residual
carbon to achieve net zero
*** Encompasses Scope 3 emissions, includes emissions from occupier-controlled energy use at our asset and
offsetting residual carbon to achieve net zero
53
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
Excluding void assets, consumption fell by
10% over the year from 664 MWh to 599 MWh
and, on a like for like basis, consumption was
8%lower.
The high level of green tari supplies now in
place have seen our GHG emissions remain
low at 1tCO
2
e per £million net income or
5tCO
2
e per million sq ft.
With only a small proportion of the portfolio
now with landlord controlled energy supply,
this limits our ability to further reduce our
energy consumption. However, we continue
to look to further mitigate our consumption
where possible by identifying energy
eciency improvements.
As we prepare to become operational Net
Zero in 2023, we put in place a carbon oset
strategy as described below.
LondonMetric
assets where it
has control and
management
Corporate
(including
head oce)
Energy
(electricity,
fuels & heat)
Water
Waste generated
Refrigerants
Purchaser of
goods and
services
Business travel
Energy consumption (MWh) Operational NZC Scope
20192018
0
4
000
35
00
30
00
25
00
20
00
15
00
1
000
2020 2021 2022
Distribution/Industrial
500
Oces
Long income/Retail
Our environmental performance
Our energy consumption andgreenhouse
gas emissions have fallen significantly
overrecent years.
This reduction has, in part, been due to the
Company’s strategic shift away from oces
and retail parks into distribution warehousing
and long income assets that are typically
single tenanted. Consequently, together
with our portfolio actions, the operational
intensity of our portfolio, along with our carbon
footprint, where there is landlord supply has
fallen significantly.
Since 2015, our absolute energy consumption
has fallen by 92% from 9,056 MWh to 726 MWh
despite the portfolio’s area increasing by nearly
60% over that period. In the year, consumption
fell by 33% from 1,081 MWh to 726 MWh.
* 1 Offsetting excludes renewably sourced electricity
consumed and non landlord occupier activities
2 Through recognised offset schemes
Carbon offset strategy
During the year, we considered the best way
to oset residual carbon that cannot be
mitigated. We looked at both our near term
and medium term needs and concluded
that we should adopt a carbon removal
scheme with long lived storage that is in
line with the Oxford Principles for Net Zero
Aligned Carbon Osetting, achieving the
Gold Standard accreditation.
Looking forward, there is a risk that the
price of carbon credits will rise and so we
recognise that we should fully consider
insetting schemes where we take active
control of carbon credits as opposed to an
‘o the shelf’ package.
Therefore, in addition to looking at
commercial opportunities, we will review the
International Carbon Reduction & Osetting
Alliance (ICROA).
NZC – Progress to date
– 92% reduction in absolute energy
consumption since 2015.
– 100% of our landlord supplies
from renewable sources.
– Significant like for like
energy reductions, mainly
from external LED lighting
replacement programmes.
– Nearly eliminated landlord water,
waste and gas consumption.
NZC – Future actions
– Extract further energy eciencies
across our estate where there is
landlord consumption, extending
smart metering coverage.
– Ensure energy supplies are from
renewable sources (including for
void assets) aligned to industry
procurement best practice.
– Look to install solar PVs to meet
our direct electricity consumption
and explore PPA opportunities.
– Oset all residual carbon through
recognised oset schemes.
Our operations will be net zero by 2023*
Our operations will be NZC by 2023,
with all residual carbon oset.
1
LondonMetric Property Plc
Annual Report and Accounts 2022
54
Data qualifying notes
This is the Company’s ninth year of disclosure under
the Mandatory Greenhouse Gas Emissions Reporting
regulations and second under the recently introduced
Streamlined Energy and Carbon Reporting regulations.
Data for the year to 31 March 2020/21 has been restated,
including associated intensity metrics, as additional
energy consumption data has been obtained since the
previous report was published.
This statement has been prepared in line with the main
requirements of the GHG Protocol Corporate Accounting
and Reporting Standard and ISO 14064-1:2006.
Within Scope 1 emissions, refrigerant-related emissions
forthe period were de minimis
Scope 2 dual reporting is undertaken, which discloses
one Scope 2 emission figure according to a location-
based method and another according to a market-
based method.
For the ‘location-based’ method of emissions calculations,
standard emissions factors from the UK Government
Emissions Conversion Factors for Greenhouse Gas
Company Reporting 2021 were used.
For the ‘market-based’ method, the Company’s
contractual instruments for the purchase of certified
renewable electricity were accounted for, resulting in a
significant reduction in the Company’s carbon footprint
in practice.
Emissions from employee business travel (by vehicle) have
been calculated and reported under Scope 3 emissions
for the second time. Emissions have been calculated on
a distance travelled basis, where the relevant vehicle
emissions factor has been applied to expensed mileage.
Scope 3 Landlord-obtained energy sub-metered to tenants,
is calculated through submeter recharge. These emissions
are not included under scope 2 to prevent double
counting however a scope 2 conversion factor is applied
to calculations.
An operational control consolidation approach has
been adopted.
Additional information has been provided through the
breakdown of void asset emissions in both scope 1 and
scope 2. This is to clearly demonstrate where LondonMetric
have operational control throughout the year, and how
void data impacts the overall total emissions.
Our sustainability performance
Responsible Business and ESG review
Sources of greenhouse gas emissions
3
2021/22 2020/21
Tonnes
of CO
2
e
(location-
based
calculation)
1
Tonnes
of CO
2
e
(market-
based
calculation)
2
Tonnes
of COe
(location-
based
calculation)
1
Tonnes
of COe
(market-
based
calculation)
2
Scope 1
Energy Landlord-controlled gas 16 16 12 12
Void Energy Void asset gas
5 5 31 31
Fugitive emissions Refrigerant emissions
De minimis De minimis De minimis De minimis
Scope 2
Energy
Landlord-controlled
electricity 34 15 62 20
Void Energy Void asset electricity
36 23 70 42
Scope 3
Energy
Transmission and
distribution losses 11 0 17 0
Tenant Energy Landlord-obtained
energysub-metered
to tenants
60 0 66 0
Travel Emissions from employee
business travel for which
the company does not
own or control
4 4 3 3
Total 166 63 260 108
Total (Ex voids) 131 40 190 66
Intensity (Scope 1 & 2)
tCO2e/£m net income after
administration costs
0.79 0.51 1.66 1.00
Environmental
Energy consumption
-8%
Over the year on
a like for like basis
Energy consumption fell 8% to
171MWh on assets that were owned
during both the 2020/21 and 2021/22
periods. The reductions can be
attributed to the ongoing asset
upgrades to incorporate energy
eciency measures. Absolute energy
consumption across the whole
portfolio decreased by 33%.
Greenhouse gas
(GHG) emissions
-16%
Over the year on
a like for like basis
Emissions fell by 16% on assets that
were owned during both the 2020/21
and 2021/22 periods. All of these
assets have a renewable energy
tari and so market based emissions
is 0tCO
2
e.
Absolute emissions have decreased
overall from 47tCO
2
e to 40tCO
2
e.
Environmental performance highlights for 2022
1 For the ‘location-based’ method of emissions calculations, standard emissions factors from the UK Government
Emissions Conversion Factors for Greenhouse Gas Company Reporting 2021 were used
2 For the ‘market-based’ method, the Company’s contractual instruments for the purchase of certified renewable
electricity were accounted for, resulting in a significant reduction in the Company’s carbon footprint in practice
3 Disclosed emissions are 100% UK based
55
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
Our development performance
Our development activity continues to focus
on building highly ecient buildings. All of our
main completed developments in the year
were certified as BREEAM Excellent.
As part of our eorts to reduce emissions,
we are measuring embodied carbon and
challenging our supply chains to minimise
waste and select low carbon materials.
At Bedford Link, we have seen progressive
reductions in embodied carbon over each of
the development phases. We applied learning
from the initial phase of construction to the
second and third phase of the project which
totalled 0.5 million sq ft.
This resulted in a 27% reduction in carbon
across the final phase compared to the
first phase.
As part of our letting of the second and third
phase, we have installed 450 kWp of solar
PV capacity as part of tenant incentive
arrangements. This is beneficial in enabling
the unit to achieve EPC A+ as well as NZC
in operations. Across the completed units at
Bedford, we have installed energy monitoring
systems to allow us to monitor energy
performance post construction and are
reviewing performance.
In the year, and in line with our shadow pricing
initiative, the carbon oset cost associated with
the second and third phase at Bedford Link
has been re-invested into green initiatives on
the portfolio.
* 1 Offset through recognised offset schemes
2 Initiatives across LondonMetric’s portfolio
that reduce either landlord or occupier
operational carbon
We will continue to reduce emissions from
developments which will be fully netzero by 2030*
We will reduce emissions from developments
and oset residual carbon to ensure developments
are fully NZC by 2030.
2
Carbon reduction at Bedford Link
Through on-site reduction measures
and material specification
amendments to more carbon
friendly methods, we have achieved
a 27% reduction in carbon across
the last phase of our Bedford Link
development. Carbon reductions
have been achieved mainly
from better selection of steel and
plasterboard supplies.
The percentage of recycled materials
has increased across the phases.
The first phase saw c.15% of recycled
materials used and this has increased
to 23% on the last phase.
Similarly, whereas we achieved a
c.15% improvement on Building
Emission Rates against Building
Regulations on the first phase, on
the last phase we achieved a
25%improvement.
NZC – Progress to date
Measuring embodied carbon, with
significant reductions seen since 2019
on our phased Bedford Link project.
Encouraging refurbishment instead
of redevelopment.
Challenging supply chains to
minimise waste and select low
carbonmaterials.
Minimum BREEAM Very Good target
and, where possible, looking to
demonstrate operational NZC
ready buildings.
NZC – Current and future action
Benchmark embodied carbon
on developments.
Undertake whole life carbon
assessments where possible.
Align developments to supply chains
that target minimising embodied
carbon and selection oflow
carbon materials.
Embed NZC aligned operational
performance targets in design,
monitoring asset performance
post construction.
Shadow carbon pricing on select
flagship developments such that
carbon iseither oset or an
equivalent value isreinvested
into green initiatives.
Percentage of developments
completed that were
BREEAM Excellent
100%
LondonMetric Property Plc
Annual Report and Accounts 2022
56
Our sustainability performance
Responsible Business and ESG review
The increase in the year reflects the benefit
from our investment activity, where we have
acquired or developed higher rated assets
and disposed of poorer quality buildings.
It also reflects environmental improvements
at our buildings and subsequently refreshing
of EPCs. In addition, our development activity
continues to upscale the portfolio’s quality.
BREEAM rating and solar PV
The proportion of assets built to a BREEAM
Very Good or Excellent standard is currently
26%, which is up from 10% in 2015 and
unchanged on last year. This is expected to
increase further to over 29% once current
developments are complete.
In the year, 0.9MWp of solar PV was added
which increased our built solar capacity
across the portfolio to 3.4MWp.
Net Zero Carbon in operation
As part of progressing our NZC targets, we
are increasingly focused on understanding
how we can increase the number of NZC
ready buildings that we own. In the year, we
undertook NZC assessments on several assets.
An important part of this focus is measuring
emissions from all of our occupiers and, in the
year, we increased occupier energy data
coverage from 43% to 59%. It is encouraging
to see a much greater interest and willingness
to engage from occupiers on how we can
help them to become NZC in operation.
EPC 2022 2021
A 29.5% 23.3%
B 17.6% 28.5%
C 37.7 % 22.2%
D 9.7% 10.5%
E 2.7% 2.6%
Below E 0.0% 0.0%
Unknown/Expired 1.1% 12.9%
Overview
As part of our drive to upgrade the quality
of our assets, we continue to explore and
progress energy reduction and clean energy
initiatives across our portfolio. These include
solar PV installations, LED lighting upgrades,
building improvement works, removal
of gas and EV charging points all of
which we consider as part of leasing and
regears to enhance our properties, extend
their economic life, increase occupier
contentment and ultimately allow our
occupiers to become NZC in operation.
LED lighting upgrades and occupier survey
In our recent occupier survey where we
asked a number of environmental questions,
82% of those that responded reported
that they have now installed LED lighting
in their buildings, compared to 73% in last
year’s survey. Our own analysis suggests
that occupier energy consumption can
be reduced by up to 40% and EPC ratings
improved from an E to as high as a B just as
a result of LED lighting upgrades.
We will use the survey results to help our
continual eorts to engage with our
occupiers on environmental improvements.
EPC rating of portfolio
We are conscious of the regulatory changes
to EPCs and are actively targeting a
minimum C rating on all assets.
85% of our assets have an EPC rating of ‘A’-
’C’, which is upmaterially from 59% in 2015
and 74% in 2021.
NZC – Progress to date
Upgrading quality of our
assets through investment and
development activity, owning
more energy ecient buildings.
Improving buildings’ energy
eciency through refurbishment
and better internal fit out such as
LED lighting and sensors.
Engaging with occupiers to
understand their energy usage
in our buildings and how we can
assist in reducing their carbon
footprint.
Implementing solar PV
installations and EVcharge point
opportunities.
NZC – Future actions
Measure emissions across all
of the portfolio by increasing
occupier data coverage (where
possible through green leases)
and estimating where data is
unavailable.
Continue programme of energy
assessments and develop energy
reduction plans with occupiers.
Measure and monitor
improvements/ progress at our
buildings against NZC targets.
Increase number of NZC ready
buildings.
Continue to progress renewable,
EV and battery storage
opportunities with occupiers.
* 1 Excludes renewably sourced electricity consumed
2 Offset through recognised offset schemes
3 Where occupier hasn’t offset its operational carbon
from our building (excludes occupier’s wider
operational activity unrelated to the building)
4 Does not apply to leases signed before 2024
andwhere that lease hasn’t expired by 2035
Environmental
We will work with our occupiers to
ensure our buildings are netzero by 2035*
We will assist our occupiers to help them meet their NZC
targets and focus on providing NZC ready buildings.
From 2035, we will aim to oset occupier residual carbon.
3
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Improving the quality of our assets
With a portfolio aligned to distribution, our assets have a much lower carbon intensity than
other real estate such as oces, residential and shopping centres. As we have significantly
increased our urban logistics exposure, our asset base has moved away from larger and
newer big box logistics to well located but typically older urban buildings.
This provides significant scope for us to make relatively cost-eective improvements that can
materially improve the building’s energy eciency and extend its life instead of completely
redeveloping the asset, which also reduces LondonMetric’s embodied carbon emissions.
We also see investment activity as a key way of upgrading our assets. Through our acquisition
process and disposals analysis we factor in environmental considerations.
Solar PV installations
In the year, 0.9MWp capacity of solar PV
was installed taking our total portfolio solar
capacity to 3.4MWp. A third of this added
capacity related to a 300kWp installation in
Milton Keynes which we funded and where,
under the arrangement with the occupier,
LondonMetric will receive an income strip for
the remainder of the lease.
We are looking at further solar opportunities
at several of our current developments as
well as across our existing estate.
Improving energy eciency at Bicester
We continue to improve buildings through
accretive expenditure. At our 30,000 sq ft
asset in Bicester (opposite), following the
occupier vacating, we refurbished the
warehouse to an enhanced specification,
including removal of gas heating, installation
of electrical mechanical ventilation cooling
and heating, air source heat pump and
improvements to roofing and oce space.
As a result, the EPC rating improved from a
C to an A. Installation of a solar PV system
would allow the building to be Net Zero.
EV car charging
As we recognise the growing importance of
EV charging, we signed an EV partnership
deal with Motor Fuel Group which will see a
programme of Ultra-Rapid 150kWh charging
hubs installed across a number of our assets.
In addition, we continue to install EV
charging points on new developments
and properties where we are undertaking
significant asset management activities.
BREEAM Very Good/
Excellent standard
29%
of portfolio (including
developments underway)
up from 10% in 2015
Occupier Energy
Data collected on
59%
Portfolio Flood Risk
We continue to increase our
assessment of the potential impact
of physical changes on our portfolio,
such as extreme weather and longer
term shifts in climate pattern.
During the year, we continued to
manage and mitigate our portfolio
flood risk assessment. We sold one
asset that was most at risk to flooding
and undertook further analysis on the
other high risk assets.
We believe that, in most instances,
proper flood mapping or better
consideration of building levels would
lower the risk profile further, both
across our ‘high’ risk assets but also
our ‘medium’ risk assets. We continue
to look at risk reduction actions.
Fluvial/coastal
flood risk level
% of assets
by value
High risk
1%
Medium risk
15%
Low risk
84%
LondonMetric Property Plc
Annual Report and Accounts 2022
58
Our sustainability performance
Responsible Business and ESG review
Social
Building and nurturing relationships with our stakeholders
is integral to our business model and the way we work.
Occupiers
We work closely with our
occupiers to create high
occupational contentment
1
People
Our team of 35 employees is critical
to our success and delivering on
our strategy
2
Contractors and Advisers
We rely on the support of a diverse
group of contractors and advisers
3
Investors
Strong relationships with our investors are
critical to us accessing capital eciently
4
Communities
Supporting local communities
and charitable causes is highly
important to us
5
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Strong customer focus
We recognise that when our occupiers’
businesses thrive, our business also thrives.
We treat our occupiers as customers and put
them at the centre ofour decision making.
Our occupier-led approach provides
us with market knowledge to better
understand future trends and make
informed decisions. Our high occupancy
rate, rent collection and customer
satisfaction scores demonstrate the
strengthofthese relationships.
Extending existing relationships and
developing new contactscontinue
tobeakey focus for us.
Develop trusted relationships
Our strong occupier relationships reflect
ourdierentiated proposition where we:
– Are approachable and actively
engagewith our occupiers;
– Strive to listen, fully understand
occupierrequirements and create
solutions that are mutually beneficial; and
– Make quick decisions, act swiftly
anddeliver on our promises.
Customer satisfaction
We undertake regular surveysacross ourkey
occupiers. Following surveys in 2018, 2019
and 2021, we undertook a further survey in
March 2022.
Responses were received from occupiers
representing 42% of ourincome and the
feedback continued to be strong with
an average score of 8.5 out of 10.0 for
whether our occupiers would recommend
LondonMetric as a landlord.
The survey has provided very helpful
information for us to follow up on and include
in our wider decision making.
Occupier survey (March 2022)
Recommend LondonMetric as a landlord Satisfaction with our properties138 of our occupiers were
surveyed, representing 81% of rent.
Responses were received from 55
occupiers representing 42% of rent.
Questions were asked about occupiers’
satisfaction with our properties and their
locations, how satisfied they were with
LondonMetric and whether they would
recommend us as a landlord.
We asked specific environmental
questions and for some occupiers
we asked enhanced environmental
questions that went into greater detail
about their property.
As for the previous year’s survey, we will
address the results of the survey and
any specific feedback through our
ongoing occupier engagement.
We scored an average of 8.5 out of 10.0 for
whether our occupiers would recommend
LondonMetric as a landlord. For our top
10 occupiers, the average was higher at
9.1, which is in line with our 2021 score.
We scored an average of 8.3 out of 10.0 for
satisfaction with our properties. This score
was in line with the 2021 result.
1
2
Average
8.5/10
1
2
Average
8.3/10
Social
Our occupier relationships
are crucial to the success
of LondonMetric. We work
closely with our occupiers
to understand their
requirements and our
ambition is to be their real
estate partner of choice.
Mark Stirling
Asset Director at LondonMetric
Occupiers
1
LondonMetric Property Plc
Annual Report and Accounts 2022
60
Our sustainability performance
Responsible Business and ESG review
Our people are critical to the
success of the Company
The Company is highly focused
with 35employees and seven Non
Executive Directors. Since merger
in2013, employee and Director
numbers have fallen despite
a significant increase inassets
managed. This reflects improved
eciencies and the lower operational
requirements ofour portfolio.
Culture and approach
We have successfully attracted and
retained a talented and loyalteam.
This is reflected inourlow annual
voluntary sta turnover rate which
hasaveraged 6% sincemerger.
We believe this reflects our:
– Culture of empowerment,
inclusion, openness
and teamwork;
– Fair and performance
based remuneration; and
– Small number of sta,
which allows aflexible
and individual approach.
How we continue to improve our approach to our people
Inclusion and
communication
We have a flat management structure with clear responsibilities. We strongly
encourage input on decision making from all sta and wide participation in
committee meetings. There is strong collaboration across teams which enables good
sharing of information and ideas. Regular strategy and performance updatesare
provided to employees fromthe Executive Directors.
Working
practices
We have implemented more flexible working arrangements covering dress code,
holiday buy back, improved systems to enable home working and a core hours policy.
Fair
remuneration
Employee remuneration is aligned to personal and Company performance with
longer term incentivisation plans in place that replicate arrangements for Executive
Directors. All employees receive a pension contribution of 10% of salary, medical
insurance with access to childcare and cycle to work vouchers.
In the year, we put in place a company car scheme with Tusker which allows
employees to access electric and hybrid vehicles.
Diversity
and equal
opportunity
We promote diversity across knowledge, experience, gender, ageand ethnicity
with a published diversity and inclusion policy in place. Whilst overall female
employee representation is good, we recognised that we needed to specifically
promote greater gender diversity. Our female Board representation is now 33% and,
in the year, we made several female appointments in our property team including
a recent graduate who we are now supporting as she gains her relevant real estate
qualifications. Recognising the significant diversity imbalance in therealestate
sector, we continue to support the Real Estate Balance group tofurther promotion of
diversity both internally and externally.
Employee
development
andtraining
An annual appraisal process is undertaken where training needs and performance are
discussed. We actively encourage training and we continue to monitor our sta training
each year. We continue to undertake ESG training across our employees, encourage
participation in Young Property Professionals’ groups andoer secondment and work
placement opportunities.
Health
andsafety
In 2016, we formalised a policy to provide and maintain safe and healthy working
conditions for all employees, providing appropriate equipment, workplace
assessments, operational processes and safe systems of work.
See page 65 forfurther details on health and safety.
Wellbeing
and employee
satisfaction
Over recent years, we have significantly reduced our oce space, undertaken
amajor oce refurbishment and modernisation, as well as carried out a wellbeing
review of our oce and employees.
The results of our 2022 employee survey are shown on the next page and reflect
continued high levels of employee satisfaction. Andrew Livingston, the Company’s
designated workforce Non Executive Director, continues to be closely involved in
monitoring employee satisfaction.
Employee gender diversity
Directors
The number of Directors
by gender:
Senior Leadership Team
The number of members of the Senior
Leadership Team by gender:
All employees
The number of employees
by gender:
3 6 2 6 17 18
Social
People
2
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Enjoy working
at LMP
Confidence in
management decisions
Cares about the
environment
Feel proud to work
for LMP
Would recommend
LMP as an employer
Recognised for the
contribution made
CompanyEmployee
100
100
2021
2020
2022
100
58
67
56
100
93
96
2021
2020
2022
2021
2020
2022
2021
2020
2022
100
100
100
84
83
85
2021
2020
2022
2021
2020
2022
90
80
100
Overview of satisfaction survey
In February 2022, we undertook our fifth
annual employee survey to track changes
in sta satisfaction.
In total, we asked 40 questions receiving
responses from all employees on an
anonymous basis. The survey focused on
three key areas being: the company; the
working environment and the individual.
In total we had 30 responses across the
organisation with an engagement of 94%.
Results of survey
Overall the survey was very positive with 100%
of employees responding that they continue
to enjoy working at LondonMetric.
Employees remain highly supportive of the
Company as a whole and, in the year, we
saw the highest scores in:
– They have confidence in the decisions
made by the senior management team
(score of 93%); and
– They feel informed on relevant business
activity to do their job (score of 90%).
In terms of home working, the oce
continues to be seen as a desirable place
of work with the oce environment getting
83% positive feedback. 100% of respondents
confirmed they valued flexible working.
The company has been very successful in
getting everyone back into the oce and
have enjoyed the benefits this brings. Overall,
we believe we are stronger together, but
people are empowered to work from home
where it is good for the business.
Board consideration
Andrew Livingston is thedesignated workforce
NonExecutive Director.
In the year, he considered the survey results
and held an informal session with a select
number of employees from dierent areas
of the Company to discuss the survey
feedback and wider employee thoughts
inmore depth.
Andrew updated the Board on the survey
results and feedback from the session.
Survey breakdown of scores
(percentage of employees that responded with agree or strongly agree)
Social
LondonMetric Property Plc
Annual Report and Accounts 2022
62
Our sustainability performance
Responsible Business and ESG review
Our development team monitors progress
and tracks all elements of our projects
including sub-contracted works. We stay
in close contact with our contractors and
arrange regular visits and detailed reviews
and checks of their systems and processes.
Our Responsible Development Requirements
checklist is used on all projects and sets
minimum requirements for contractors.
Compliance with this checklist is mandatory
for all projects and sets minimum standards
that our contractors must meet. The checklist
covers environmental, responsible supply
chain and H&S standards. We also specify
compliance by contractors with the
ConsiderateConstructors Scheme on most
of our projects where we deem it appropriate.
At project meetings, we challenge all of our
contractors to consider the environment,
biodiversity, local community involvement
and local sourcing.
Our Responsible Procurement Policy
This policy outlines our approach to
implementing supply chain and procurement
standards on developments and our existing
estate through our contractors and suppliers.
It focuses on areas such as labour, human
rights, health and safety, resource, pollution
risk and community.
Contractors
Our contractor relationships are highly
important in allowing us to deliver on
our developments and refurbishments.
In conjunction with our external project
managers, our development team ensures
that we select high quality and robust
contractors with a proven track record.
We regularly review the financial robustness
ofour contractors and work closely with
them throughout projects.
Contractor compliance
100%
with our Responsible Development
Requirements checklist
Managing Agents and other suppliers
Managing Agents are an important part of
the supply chain on our assets where there
are multiple occupiers in place. We select
a few and highly competent companies to
deliver our managing agent services.
Whilst our spend on these services is relatively
small, wecontinue to monitor their compliance
against our Managing Agents’ policies
and ensure that their sub-contractors are
properly appointed and compliant with
our standards.
Over recent years, we have undertaken
a number of reviews of material sub-
contractors employed by our key Managing
Agents with a specific focus on sustainability,
community, legislation and employment.
We also rely on many other adviser
relationships as part of our activities.
Social
Contractors
3
Responsible development at Weymouth
As part of our responsible development
at Weymouth where we are building out
the second phase totalling 51,000 sq ft
of NNN Retail space, our development
teams and contractors have incorporated
a number of ecological initiatives into
the development.
A specialist ecology team visited the
site 67 times during the summer of 2021,
during which a total of 368 slow worms,
11 common lizards and 4 grass snakes
were captured and relocated by hand
to a receptor area. This also included the
construction of hibernacula to provide
a reptile suitable environment and the
creation of a meadow mix and tussocky
grass. A small number of mammals
including shrews, voles and wood mice
were also relocated.
Where trees were removed, the timber has
been retained on site in the ecological
areas to create habitats with replacement
trees planted. Further biodiversity
enhancement works undertaken during
the development of the site include the
installation of bird and bat boxes, insect
nesting boxes and hedgehog domes with
log piles and compost heaps to enhance
the natural environment for wildlife.
Surface water is now channelled into
swales and a new open pond that was
formed in discussions with the local
authority to enhance the ecological
environment but also to provide resilience
to flooding and climate change.
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Equity Investors
We value our good relationships
withour shareholders.
Over the year, as covered in detail on
pages 109 to 111, we met with c.250 equity
investors through individual and group virtual
meetings. Feedback remains very supportive
of our strategy and there has been an
increasing focus from equity investors on
ESG matters.
As Covid-19 restrictions have now been fully
lifted, this is allowing us to undertake more
face to face meetings, conferences and
site visits.
In addition to our regular investor contact
during our half and full year reporting periods,
we undertook extensive pre-marketing
ahead of our £175 million equity placing in
November 2021.
The fundraising was very well received and
supported which allowed the placing to
be priced at a tight discount with a strong
aftermarket following completion
of the raise.
Investor ESG survey
As shareholder expectations on corporate
governance and sustainability increase, we
continue to engage with our investors on
ESG matters.
In the previous year, weundertook our
second ESG survey of investors, following
on from our previous survey in 2018. In the
2021 survey, we engaged with our top
ten investors representing nearly 40% of
our shareholder register and shared our
Net Zero Carbon framework with them.
Feedback was very positive with our ESG
performance to date seen as either good
or very good and our disclosure in line with
expectations. We will undertake our next
survey at the start of 2023.
Following on from feedback from the last
survey and subsequent follow up discussions,
we have decided to provide a summary of
our compliance with CDP reporting in our
upcoming Responsible Business Report.
Equity investors met
during the year
c.250
shareholders, analysts
and potential investors
North Circular, Brent Cross, investor site visit (2022)
As part of a conference organised by one
of our brokers, we recently undertook an
investor site visit for c.15 investors to an
asset that we had recently purchased
near Brent Cross, London.
The 18,000 sq ft warehouse visited is let
to Jacuna and will accommodate up
to 37 dark kitchens once operational.
In addition to a walk round the unit, an
update was provided on LondonMetric’s
urban acquisition and redevelopment
strategy, with Jacuna also presenting their
strategy and business.
The visit was very well received with
good feedback on Jacuna, the dark
kitchens concept and LondonMetric’s
innovative approach to accessing
this market.
As part of the conference, LondonMetric’s
CEO also hosted a discussion on listed
property companies with a panel of fund
managers, all of whom are shareholders.
Debt investors and joint ventures
We continue to enjoy good relationships
across the debt capital markets and
continue to broaden our base of debt
providers. Inaddition, we continue to enjoy
strongrelationships with our remaining joint
venture partners.
In the year, we completed a £780 million
debt financing which involved five
banks and 11 other debt investors.
The refinancing added six new lending or
debt investor relationships with most of our
existing lending base actively involved.
As set out in more detail on page 51, for
the first time, we incorporated a green
framework in respect of £450 million out
of the £780 million refinanced. We have
complied with reporting requirements under
the green framework and will complete
our compliance reporting over the
coming months.
In addition, we completed a further
£150 million short term debt facility, which
was drawn immediately, to fund acquisitions.
We also continue to engage on further green
financing opportunities.
Social
Investors
4
LondonMetric Property Plc
Annual Report and Accounts 2022
64
Our sustainability performance
Responsible Business and ESG review
We recognise the importance of supporting
our local communities and engaging
with all local stakeholders. Our published
Communities Policy outlines our approach
and we aim to maximise the local benefits
of our activities through:
– Investing in local infrastructure through
regeneration and creation of fit for
purpose buildings;
– Creating jobs during development
and refurbishment, typically using local
contractors and employment;
– Bringing in long term occupiers who
create significant local employment;
– Partnering with local authorities
and councils;
– Engaging with local residents and
communities, particularly during and
post developments to ensure that they
are fully involved; and
– Ongoing involvement in areas local to
our properties by funding of local events
and facilities and engaging with schools.
Our Charity and Communities Working
Group implements charity giving and
co-ordinates community involvement.
LondonMetric aims to allocate £100,000 per
year for charitable giving.
At the start of the year, we set out a four pillar
plan to allocate that money, which consisted
of a budget for:
– Employees to either support a charitable
cause of their choice or receive funds to
match their own charitable activity;
– Development linked giving, supporting
causes near our development activity;
– Occupier or asset related giving,
supporting causes in conjunction with
occupiers or near our local assets; and
– Specific causes identified at a
corporate level.
Over the year, we spent £66,766 on
charitable and local community initiatives.
Further donations in respect of our 2022
charitable allocation are in process.
Highlight charitable activity in the year
As part of our development at Bedford Link, we contributed £12,000 to the Forest of
Marston Vale, a community forest between Bedford and Milton Keynes. Along with
our development contractor, we funded various works to improve footpaths, signage
and seating on Marston Vale land that adjoins our development.
We continue to support LandAid and contributed £10,000 to LandAid in the year.
Our participation in various LandAid initiatives allowed us to become a Foundation
Partner. Most notably, 85% of our employees participated in LandAid’s Steptober
event, taking 5.1 million steps for the challenge. We also were active in LandAid’s ‘Live
and Work’ Village project (see below).
As part of our focus on youth and inclusion, five employees from dierent areas of our
business hosted an online teach in for senior school pupils. The event was organised by
Speakers for Schools and we had a number of children from dierent schools join the
event to better understand what property companies do, what LondonMetric’s focus is
and how they can start a career in the property industry.
Throughout the year we donated £6,000 to food banks in communities local to our
assets and people including in Kingston, Tyseley, Weymouth and Dagenham. As the
cost of living challenge grows, we will continue to support a number of foodbanks.
In support of the Ukraine humanitarian crisis, we donated £15,000 including to the
Goods for Goods charity which set up a UK Humanitarian Aid Hub at one of our
occupier’s warehouses in Northampton.
We continue to support employee chosen charitable causes, including Macmillan
Cancer Support and football kits for young teams.
This year, we commenced support for Project Turn-Over, a charity that supports ‘at risk’
youth groups via three month programmes combining rugby, sports and life skills. They
help children return to school full time as well as young adults access job opportunities.
St Basils ‘Live and Work’ Scheme
St Basils works with valuable support from
LandAid to prevent youth homelessness.
It oer apprenticeships and aordable rents
to young people in the West Midlands area.
Our asset manager local to the area has
had close contact with the organisation
and recently visited their West Bromwich
facility. St Basils are currently raising funds to
develop phase two of the scheme, which
LondonMetric are supporting and consists of
a Young Workers’ Village across three further
buildings on St Basils’ existing site.
The refurbishment works complete in
12 months’ time and will be capable
of providing entirely self-contained
accommodation and support for a further
54 young people.
Social
Communities
5
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Health and safety in focus
Responsibility and procedures
The Board is responsible for ensuring that
appropriate health and safety procedures
are in place. Mark Stirling, Asset Director,
isresponsible for overseeing implementation
of our procedures and reporting back to the
Board. RP&P Management Ltd (‘RP&P’) acts
as our Corporate Healthand Safety Advisor.
H&S risks assessment and training
Where risks need to be assessed under
a specific duty or regulation, we ensure
that an assessment is carried out and that
all necessary actions are implemented.
Health and safety training is carried out
for employees and additional training
isconsidered on a case by case basis.
Health and safety policy
Our policy is regularly reviewed and
addresses three key areas of:
I. Employment – The policy ensures
our employees are oered a safe and
healthy working environment. In the
year, we appointed RP&P to undertake
Covid-19 risk assessments at our oces and
implemented a policy accordingly which
isreviewed regularly.
II. Construction – Procedures and processes
have been developed to ensure we comply
with current legislation with a Project
Manager, Principal Designer and Principal
Contractor appointed on all projects
tooversee, manage and monitor health
and safety.
III. Managed properties – The majority
of ourassets are let on full repairing and
insuring leases. For single occupier assets, the
occupier is responsible for managing health
and safety matters at the property and the
wider estate.
Where there are multiple occupiers on
thesame estate, we appoint a Managing
Agent to manage health and safety matters
relating to common parts. The Managing
Agent is responsible for ensuring health and
safety assessments arecompleted and
regularly reported back to us.
Our contractor requirements
We have implemented robust processes
toensure that our contractors uphold
our high standards and minimise the
environmental impact from developments.
All of our contractors adhere to our
Responsible Development Requirements
checklist, which sets minimum requirements
for our main developments on
areas including:
– Health and safety;
– BREEAM Very Good or better standard
(where appropriate);
– Considerate Constructors
Scheme compliance;
– Environmental impact monitoring;
– Management and reporting of progress;
– Promoting local employment
opportunities;and
– Fair remuneration for workers.
We continue to monitor compliance
andlook at ways of improving our
contractors’ performance.
During 2022,as part of our annual contractor
compliance audit, we reviewed Mildren
Construction, one ofour key contractors in
the South, to ensure that they were adhering
to our requirements. A particular emphasis
was placed on their compliance with our
supply chain standards, including matters
related to modern slavery and anti-bribery.
Governance
Governance and compliance
The Board is committed to
upholding the highstandards
of corporate governance
and Responsible Business is an
important part of ensuringthat
we deliver on those high
standards.
Overview
Board representation
forResponsibleBusiness
Martin McGann, Finance Director,
represents the Board at Responsible
Business Working Group meetings
and hisremuneration is linked
to the Company achieving
certain Responsible Business
related objectives.
Policies and statements
The Company’s overall Responsible
Businesspolicy is available on its
website along with other related
documents including:
– The Responsible Business Working
Group’sterms of reference;
– Responsible Business targets;
– Full Responsible Business reports;
– Our approach to health
and safety;
– Compliance and anti-
corruption procedures;
– Responsible Procurement Policy;
– Community Policy; and
– Modern Slavery Act Statement.
Confirmations
The Company confirms that no
human rights’ concerns have arisen
within its directoperations or supply
chains and thatit has notincurred
any fines, penalties or settlements in
relation to corruption.
The Company continually reviews
andupdates all of these documents
as required.
Health and safety in 2022
– Quarterly internal meetings
– Half yearly project audits at
Weymouth and Derby
– Two reportable incidents
on projects
– Zero accident rate for employees
– No health and safety prosecutions
or enforcements
– Health and safety policy updated
and published
LondonMetric Property Plc
Annual Report and Accounts 2022
66
Our sustainability performance
TCFD Recommendation
and Alignment
Governance
Describe the Board’s
oversight of climate-
related risks and
opportunities
The Board provides oversight of the Company’s Environmental, Social and Governance (ESG) matters and has overall
responsibility for the risk management framework, in which climate-related risks and opportunities are integrated. All principal
risks, including those which are climate-related, are contained within the Company’s risk register which is updated and
reviewed at least annually. The Audit Committee assists the Board by reviewing the register and providing assurance on the
robustness of the systems in place for the identification, assessment and mitigation of the principal risks facing the Company.
As part of this function, the Audit Committee monitors and oversees progress against objectives and targets for addressing
climate-related issues, ensuring that climate-related matters are escalated to the Board as necessary. The Audit Committee
is informed by members from the Company’s Responsible Business Working Group (Working Group) which feeds back on
climate-related issues facilitating proactive climate-related risk management. During Board meetings, risks are considered
at a strategic level, including via a high-level dashboard which ensures that new and emerging risks, inclusive of those which
are climate-related, are identified and appropriate action is taken to remove or reduce their likelihood and impact.
For wider corporate governance reporting see page 88
Describe
management’s role
in assessing and
managing risks and
opportunities
The Working Group and the Senior Leadership Team (Senior Team) work closely to ensure risks are monitored and
managed, including those which are climate-related. This collaboration is led by the Head of Investor Relations and
Sustainability and the Finance Director, who are members of both and are ultimately responsible for implementing
responsible business matters. Senior Team members report directly to the Board and Audit Committee. The Senior
Team meets once a month and is responsible for ongoing risk identification, as well as the design, implementation and
maintenance of internal controls to mitigate identified risks. The Working Group supports the Senior Team in identifying
climate-related risks by escalating potential risks. The Audit Committee is responsible for monitoring progress on responsible
business initiatives as well as the eectiveness of risk management systems, internal controls and viability.
As part of our climate risk assessment, a detailed climate risk governance gap analysis was undertaken during the year in
alignment with the TCFD recommendations. This analysis, undertaken by JLL, will help us ensure that proper governance
structures are in place to manage and oversee climate-related risks across the business into the future.
For more information on the Audit Committee see page 124
In our previous year’s Annual Report, we stated that we would
aimto ensure full TCFD alignment in our 2022 disclosure. This
year, we are able to confirm that our TCFD Statement, provided
below, isconsistent with the TCFD Recommendations and
RecommendedDisclosures.
67
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1-87 88 -154 155 -208
Describe the climate-
related risks and
opportunities the
organisation has
identified over the
short, medium, and
long term
As part of the comprehensive climate risk assessment, we have identified the potential climate risks and opportunities
facing our business. The table below outlines the key physical and transition risks we have identified over the short term
(2022-2023), medium term (2023-2030) and long term (>2035). Our heightened understanding of our climate-related risks
will enable us to robustly manage them and address their potential impact. We will be working to further improve our risk
management processes in line with these findings.
Timescale Risk Description
Short term
(2022-2023)
Occupier/market
demand
Occupier and market demand is shifting from unsustainable products to
low or net zero carbon assets with embedded on-site climate resilience.
Demand may also shift away from certain geographies or sectors, while
changing consumer preferences could create occupier risk.
Increased building
standards /
regulation
Increasing policy mandates in the built environment that improve energy
and resource eciency and on-site climate resilience, may potentially
result in significant capex costs to meet the new standards. Failure to meet
the regulations could result in reduced asset value, known as a ‘brown
discount’, tenancy default risk and loss of income.
Medium term
(2023-2030)
Financial market
impacts
As markets shift in favour of low-carbon solutions and climate resilience,
failure to adapt could create competitive risk. Climate events could also
harm market conditions.
Increased energy
demand/costs
Changes to seasonal patterns, temperature extremes and carbon
taxation each could increase the operational costs of buildings and
impact the rental value of inecient assets.
Supply chain &
resources
Physical impacts may cause widespread disruption to production within
supply chains and resources, potentially resulting in business disruption and
tenant default risk, generating loss of income.
Long term
(2035 and
beyond)
Insurance
challenges
Physical climate events or risks may cause the insurance industry to
reassess premiums and cover whereby premiums could rise significantly
or become dicult to secure.
Flooding (coastal,
fluvial)
Rising sea levels threaten coastal regions with flooding, erosion, salinisation
and permanent land loss; excessive rainfall or snow melt may cause rivers
to exceed their capacity, triggering high capex costs to install resilience
measures and potentially significant repair costs to damaged assets which
experience flooding.
Heavy rainfall &
pluvial flooding
There are increases in annual mean rainfall, where typically wet periods of
the year see a further increase in daily rainfall. Heavy rainfall or rainfall over
a prolonged period may lead to more regular pluvial flooding (surface
water flooding) events, potentially causing business disruption and
reduced asset values.
Heat stress Rising mean temperatures and extreme temperature highs put pressure
on both people and infrastructure. Significant cost may be incurred to
install cooling systems while poorly ventilated/cooled assets may see
a downward pressure on value and demand.
Extreme weather
events
Storms, heavy winds, heavy precipitation, drought and snow are more
frequent and severe, potentially leading to significant clean-up and repair
costs, capex costs for installing resilience measures and stranded asset risk
for at-risk assets.
Key opportunities have been identified as: securing premium tenants, enhancing LondonMetric’s reputation
and increasing asset values by investing further in renewable energy, utilising low carbon technology and further
improving the energy eciency of buildings. This includes the opportunities we expect to realise as we implement
our Net Zero Carbon Framework. Additionally, these opportunities include further improving asset and business
strategy climate resilience by proactively assessing and managing identified climate-related risks; gaining a
competitive advantage and subsequently securing our long-term sustainability.
Transition risks
Physical risks
Strategy
LondonMetric Property Plc
Annual Report and Accounts 2022
68
Strategy continued
Describe the impact
of climate-related
risks and opportunities
on the organisation’s
businesses, strategy,
and financial
planning
Business strategy and financial planning are overseen by the Board, which recognises the importance of climate-
related considerations in conducting these activities. A key aspect of LondonMetric’s asset management strategy is
sustainability performance improvement. We improve existing assets to make them more resilient to climate change
through maintenance, energy eciency upgrades and the provision of renewable energy, which help to mitigate both
physical and transition risks material to LondonMetric, as outlined above. During our investment process we assess flood
risk, along with building fabric and the energy eciency of assets to understand the climate and carbon related risks and
costs involved in mitigating those risks. Furthermore, as we implement our Net Zero Carbon strategy, the robustness of this
approach in mitigating climate-related risks will improve as we implement further eciency upgrades, ensure energy
sources are from certified renewable sources or generated renewably on-site and oset remaining consumption. As part
of this strategy, we are collaborating with occupiers to assist them in mitigating their own exposure to climate-risks, through
measures such as greater encouragement towards green lease agreements and improved awareness of their own
practices at our assets.
Whilst development is only a small part of our activities, we are focusing on enhancing the sustainability features of
our developments as part of our Net Zero Carbon strategy, which will see us undertake whole life embodied carbon
assessments, minimise embodied carbon and oset remaining emissions. These actions will help to future proof our
buildings and allow us to take advantage of opportunities from the shift to a low carbon economy by improving occupier
contentment, commanding higher rents and enhancing the value of our assets.
Having conducted a comprehensive climate risk assessment in the year, we are well-positioned to further embed strong
sustainability performance into our overall strategy. As part of this assessment, we conducted climate scenario analysis
to model our climate-related risks in two likely scenarios. We chose the Intergovernmental Panel on Climate Change
(IPCC) Representative Concentration Pathways (Pathways) (IPCC RCPs) which model distinct and plausible pathways for
greenhouse gas emissions and average global temperatures over the coming years and is in alignment with best practice.
These scenarios are outlined in the section below. We will begin implementing further climate resilience planning and
continue with our Net Zero Carbon approach, which will further assist in future-proofing our strategy and financial planning
in light of climate-related risks and opportunities.
For our NZC strategy see page 52
Describe the
resilience of the
organisation’s
strategy, taking into
consideration
dierent climate-
related scenarios,
including a 2°C or
lower scenario
Our strategy is to be agile in response to shifting market conditions. This approach is conducive to improving our climate
resilience as the prominence of climate-related issues grow. The Company’s shift out of multi-let retail parks and oces
into distribution assets that have lower energy requirements means that the overall carbon footprint of our buildings is
significantly lower today. Furthermore, our significant investment and disposal activity over recent years has upscaled the
quality of our portfolio. Where we have acquired lower energy eciency assets, principally in urban logistics, our approach
has ensured that asset improvement is embedded in our business case and/or there is a high intrinsic value of the land
which makes highly sustainable redevelopment or repurposing commercially attractive.
The detailed climate risk assessment we undertook in the year has resulted in a thorough understanding of our material
climate-related risk and provided us with awareness of the mitigation measures required to reduce our vulnerability and
exposure to these risks, which will enable us to proactively manage them. Additionally, a number of climate-related risks
(transition climate risks as well as heat stress) will be mitigated as we implement our Net Zero Carbon strategy, in which
we aim to reach zero carbon in operation by 2023, in development by 2030 and in tenant emissions by 2035.
Risk management
Describe the
organisation’s
processes for
identifying and
assessing climate-
related risks
In the year, we undertook two climate-related risk exercises, carried out by JLL, applying two key IPCC RCP scenarios.
One exercise was conducted at portfolio level to assess its resilience to these climate-related risks whilst the second parallel
exercise looked at the resilience of certain representative portfolio assets.
The portfolio exercise used the IPCC RCP4.5 and RCP8.5 scenarios, which represent a lower global emissions scenario
(1.7-3.2°C of warming by 2100) and a higher emissions scenario (3.2-5.4°C of warming by 2100), respectively. The scenarios
were selected to test a range of likely outcomes and identify material climate-related risks over the short (2022-2023),
medium (2023-2030) and long term (2035 and beyond). This assessment involved in-depth analysis of up-to-date, peer-
reviewed scientific literature and was used to determine the frequency, duration, velocity and financial impacts of a range
of potential climate-related risks and an overall likelihood and impact score was assigned to our business’ principal climate
risks. The second exercise involved an in-depth review of representative assets’ characteristics and geographic location to
determine resilience to physical and transition risks, identifying where those assets are most at risk. Both exercises were then
used to identify robust risk management recommendations.
Our sustainability performance
TCFD Recommendation
and Alignment
69
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Describe the
organisation’s
processes for
managing climate-
related risks
As outlined in the Governance section above, climate-related risks are managed collaboratively between the Board,
Audit Committee, Senior Team and Working Group. The risk register is updated at least annually and is used to monitor
identified principal risks, along with corresponding mitigation measures. Risks are evaluated on the basis of likelihood and
impact, which allows evaluation of an overall measure of each risk which is communicated to relevant levels across the
business.
Acquisition surveys undertaken as part of our due diligence process for new investments evaluate climate related risks,
such as flood risk and energy eciency. They enable us to avoid purchasing assets with an elevated risk and no viable
mitigating measures to protect the portfolio from heightened climate-related risk. We use third party professionals to
provide regular updates and advice associated with regulatory changes to minimise non-compliance risk. In response
to the incoming tightening of EPC requirements as outlined in the Minimum Energy Eciency Standards (MEES), we
continue to proactively undertake EPC reviews across our portfolio, to ensure that the business is well prepared for the
new standards. Our Net Zero Carbon strategy will allow us to mitigate several climate-related risks, for example increased
cost ofenergy and carbon taxation, shifts in market demand and heat stress. To enhance our ability to manage climate-
related risks in tenant-controlled spaces, we seek to incorporate green lease clauses on lettings and are engaging with
occupiers around their operational behaviour, energy eciency and data sharing.
The climate risk assessment we have undertaken, as described above, has informed detailed risk management
recommendations that we will assess over the year and look to implement to further improve our management of
climate risks. These recommendations outline key actions that will allow us to prudently manage climate risks material
to LondonMetric.
For overall risk management see page 70
Describe how
processes for
identifying, assessing,
and managing
climate-related risks
are integrated into the
organisation’s overall
risk management
The inclusion of physical climate change and transition risk into our risk register reflects the integration of these risks into
our overall risk management strategy, as outlined in the Governance and Risk Management sections above. Over the
forthcoming year, we will be looking to integrate the outputs of the climate risk assessments into our risk management
framework.
For responsible business risks see page 78
Metrics & targets
Disclose the
metrics used by the
organisation to assess
climate-related risks
and opportunities in
line with its strategy
and risk management
process
We report in line with EPRA Best Practice Recommendations on Sustainability Reporting and issue our EPRA tables on
our website: www.londonmetric.com/sustainability. We inform our stakeholders about climate-related performance by
reporting on energy, carbon, water, EPC and BREEAM ratings as follows: Energy consumption - Absolute (MWh and %
change) and like-for-like (% change); Scope 1, 2 and 3 GHG emissions - Absolute (tCO
2
e and % change) and like-for-like
(tCO
2
e and % change); Water consumption - Absolute (m
3
) and like-for-like (m
3
); EPC - % A-C; BREEAM - % Very Good/
Excellent. Although not publicly reported, we additionally seek to maximise tenant energy (absolute MWh),
water (absolute m3) and waste (tonnes) data collection to assess climate-related risks and opportunities.
For EPC table see page 56
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope3
greenhouse gas
(GHG) emissions,
and the related risks
We disclose Scope 1, 2 and 3 greenhouse gas emissions on page 54. Emissions are compared against 20/21 to allow
forcomparison with the year prior and assess progress. GHG intensity metrics are reported as tCO
2
e/£m and tCO
2
e/sq ft.
We have calculated and reported our emissions in line with the GHG Protocol Corporate Accounting and Reporting
Standard and ISO 14064-1:2006.
For GHG emissions table see page 54
Describe the
targets used by
the organisation
to manage climate-
related risks
and opportunities
and performance
against targets
16 ESG related targets were set in the year and these can be found at www.londonmetric.com/sustainability/policies-
documentsreporting. Eight of these targets are directly related to the environment, including climate risk assessments, as
well as targets that contribute towards improving LondonMetric’s climate resilience. They comprise: 1) minimising energy
consumption on supplies that we as landlord are responsible for (Scope 1&2); 2) increasing renewable energy taris to
cover 100% of landlord controlled electricity consumption; 3) putting in place a carbon oset strategy 4) tracking and
upgrading environmental performance of assets including increasing the percentage of the portfolio with an EPC rating of
C or above, and better understanding the potential for our occupiers to become operationally Net Zero; 5) continuing to
explore renewable energy installations with occupiers; 6) increasing occupier engagement more widely, collecting more
of their energy data (Scope 3); 7) Demonstrating sustainability considerations on developments, including matters relating
to climate change adaptation, energy eciency and use of low carbon material; and 8) applying higher development
standards, including the targeting of a minimum BREEAM Very Good/Excellent certification on newly built assets.
For target reporting see page 51
Risk management continued
LondonMetric Property Plc
Annual Report and Accounts 2022
7070
The Board’s risk management responsibility
The Board has overall responsibility
for establishing and maintaining a risk
management framework which is critical to its
decision making process and key to the long
term success of the business. This framework
gives the Board confidence that risks inherent
in running the business are successfully being
identified and mitigated to the extent possible
to safeguard stakeholders’ interests and
achievement of the Company’s strategic goals.
The Board considers risk in all the decisions it
takes. A high-level dashboard is used at every
meeting to monitor material issues, identify
new and emerging risks and promote regular
discussion of risk at Board level. The Chief
Executive also provides an informative
market overview at each meeting covering
overarching or longer term themes and
evolving trends within the sector, the wider
economy and the risk environment that
provides context for responsive strategic
decision making. Detailed papers are provided
on matters reserved for the Board’s attention
that highlight areas of risk and also provide the
basis for discussion. Similar papers are circulated
on matters requiring a decision outside of the
Board’s regular forum. These papers usually
relate to specific investment decisions and
Non Executive Directors are provided with an
opportunity to discuss the proposals with the
Executive Directors or Senior Leadership Team
members prior to approval. Such decisions are
later ratified by the Board as a whole.
The Audit Committee’s oversight role
The Audit Committee assists the Board by
providing a key oversight and assurance role.
It does so by appraising the risk management
framework in detail and seeking comfort
that there is a robust system in place for the
identification, assessment and mitigation of
the principal risks faced by the Company.
The Committee annually reviews the
Company’s detailed risk register and system of
internal control, considers their eectiveness and
reports its findings to the Board. The Committee
also undertakes thematic deep dives into
significant or areas of increasing risk.
Risk management
A review of our risk
Eective risk management reduces the negative
impact of risk on the business and is critical to our
strategy of investing in real estate that provides
reliable, repetitive and growing income-led total
returns and long term outperformance.
Structure and responsibility
The Senior Leadership Team, identify,
implement and monitor
The Senior Leadership Team is responsible
forongoing risk identification and the design,
implementation and maintenance of the
system of internal controls in light of the risks
identified. The team comprises of individuals
with a breadth of skills and experience from
across the Company. Short reporting lines,
low sta numbers and an embedded risk
awareness culture within the organisation
facilitate the early identification of risks and
the development of appropriate mitigation
strategies based on an assessment of the
impact and likelihood of a risk occurring.
Our risk register
The risk register is reviewed and updated at
least annually by the Company Secretary
assisted by members of the Senior Leadership
Team and includes meetings with risk owners
as part of this process.
Within the risk register, specific risks are
identified and their probability rated by
management as having either a high,
medium or low impact. A greater weighting
is applied the higher the significance and
probability of a risk. These weightings are
then mathematically combined to produce
an overall gross risk rating which is colour
coded using a trac light system. Risk specific
safeguards are identified, detailed in the
register and rated as strong, medium or
weak. The stronger the safeguard, the
greater the weighting applied. The gross risk
rating and strength of the safeguards against
that risk are then combined to produce a
resultant overall net risk. Consideration is
given to the implementation of further action
to reduce risk where necessary. Finally, every
risk is allocated an owner and details of how
the safeguards are evidenced are noted.
Risk owners and timelines are included for
any action points arising out of the review
ofthe register.
Our risk management approach
Our risk management structure
is illustrated below.
The Board
– Overall responsibility for risk
management and internal controls.
– Assess and monitor the business’s going
concern and long term viability.
– Set strategic objectives and consider
risk as part of this process.
– Determine appropriate risk appetite levels.
– Set delegated authority limits for
senior management.
Audit Committee
– Key oversight and assurance function
on risk management, internal controls
and viability.
– Report to the Board on the
eectivenessofrisk management
processes and controls.
Senior Leadership Team
– Identify, assess and quantify risk.
– Implement and monitor risk
mitigation processes.
71
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1-87 88 -154 155 -208
How the eectiveness of the Company’s
risk management and internal control
systems have been reviewed and the
outcome of those reviews
The Board has performed a robust
assessment of the principal and emerging
risks facing the Group. During the year the
Audit Committee carried out the following
risk, internal control and thematic reviews on
behalf of the Board. Based on its review and
assessment, the Committee is satisfied that no
significant weaknesses have been identified
in the Group’s internal control structure and
that an eective risk management system is
in place. These findings have been reported
to and discussed with the Board.
Risks considered What was considered and the outcome
January 2022
ESG focused meeting
(attended by all Non
Executive Directors)
The Company’s ESG framework, the Board’s obligations and responsibilities, external benchmarking, net
zero carbon ambitions and legislation, initiatives being undertaken, targets, TCFD reporting and investor
feedback on ESG matters.
Members were satisfied ESG is a key focus for management and a vast amount of work is being
undertaken and progress made. Key action points arising out of the meeting were circulated to attendees.
March 2022
The Company’s detailed
risk register
Review of the updated register.
Members were satisfied that: all significant risks have been identified, each bears an appropriate risk
weighting, each has identifiable safeguards to mitigate its occurrence and potential impact and
an allocated risk owner. Details on assurance, changes in the year and action points are recorded.
More frequent health and safety reporting was requested at Board level.
Internal controls
evaluation report
Review of management’s assessment of the existence and eectiveness of key internal controls.
Based on their review and assessment, members were satisfied that no significant weaknesses have
been identified in the Group’s internal control structure and systems are eective. The Committee also
considered the work undertaken and reported on by the Company’s auditor.
Report on the Company’s
IT and cyber security system
How cyber risk is managed, initiatives undertaken in the year and those planned for the forthcoming year.
Members satisfied themselves that this risk continues to be actively but pragmatically monitored and
managed and sta training raises awareness of emerging issues and practices.
Credit analysis report Key information on the top 20 occupiers, new tenant due diligence undertaken and ongoing credit
analysis processes. Update on ‘watch list’ tenants.
Members were satisfied management have appropriate processes in place which aren’t heavily reliant on
historic data. They noted that whilst concerns around rent payment due to the pandemic have waned, the
current high inflationary environment will add new pressure on occupiers in the form of rising supply chain
costs and consumers reducing their spending in certain areas. They were satisfied management remain
vigilant to this risk particularly for potential and existing tenants who may be due material rent increases in
the coming years. It was agreed that a tenant who was 75% Russian owned and not currently subject to UK
sanctions at the time would be closely monitored. Subsequently, the Russian interest has been bought out
freeing the tenant from any type of international sanctions. No other tenants were a cause for concern.
How the Board determines appropriate
risk appetite levels
The Board establishes the extent to which
it is willing to accept some level of risk in
achieving its strategic goals whilst ensuring
stakeholder interests are protected. It has
a low risk appetite in respect of these
objectives but acknowledges that no system
can eliminate risk entirely.
Assessing risk appetite
Pages 74 to 85 contain details of the
Board’s risk appetite pertinent to each
principal risk. The Board’s aim is to maintain
a low risk appetite overall, whilst balancing
commercial considerations.
At each meeting, the Board carefully
considers and debates a wide range of
factors including, but not limited to market
overview, political and economic risks,
portfolio composition, capital markets,
stakeholder sentiment and the emergence
of new risks. Such factors frame the extent
to which the Board is willing to accept some
level of risk or flex its existing risk appetite when
delivering strategic priorities and the Board
sets its risk appetite accordingly. For example,
on the major refinancing undertaken during
the year the Board considered its exposure
to interest rate risk taking into account
factors such as the quantum and profile of
fixed debt raised, forecast investment and
drawn debt levels and the forward looking
interest rate curve. Discussions were also
held on development exposure, particularly
speculative development risk following the
completion and successful letting of Bedford
Link and the portfolio split between distribution
and long income assets.
LondonMetric Property Plc
Annual Report and Accounts 2022
7272
Changes in risk appetite
After due consideration there were no
material changes in risk appetite recorded
during the year.
Principal risks
Our principal risks and uncertainties are
identified and reported on in pages 74 to
85. They refer to those risks with the potential
to cause material harm to operations
and stakeholders and could aect the
Company’s ability to execute its strategic
priorities or exceed the Board’s risk appetite.
Identifying emerging risk
Senior Leadership Team members are
closely involved in day-to-day matters
and have a breadth of experience across
corporate and regulatory, property,
banking, finance and risk management
matters. Each member, within their field of
expertise, considers emerging risk with the
potential to adversely aect the business
and stakeholders. Such risks are evaluated
and monitored through Senior Leadership
Team meetings, with appropriate mitigation
measures implemented as required.
Significant emerging risks are raised and
discussed at Board level.
From a property perspective, deep occupier
relationships inform management and help
them to understand tenants’ needs and
contentment and gain insights into tenants’
businesses. These relationships are one of
the key tools used to help source potential
o market opportunities as well as the
identification of emerging risks and trends.
Risk management
A review of our risk
Management also have strong banking
relationships and more broadly, regularly
meet industry representatives, shareholders
and analysts. These relationships are also
used to identify emerging risks. In addition,
reports are commissioned and briefings
arranged on wide ranging pertinent topics
to understand changes within the real estate
sector and the wider economic outlook.
Changes in risk factors
Major event
This year the new principal risk category
of Major Event has been introduced. It is
intended to capture risks associated with
external factors outside the Company’s
control such as major political or economic
events and ‘black swan’ or unexpected
global, regional and major national events
or series of events such as a financial crisis,
pandemic, acts of terrorism or conflict.
The war in Ukraine falls within the above
category as an emerging risk. At present
it is too early to tell how long the war and
resulting uncertainty will last and whether
the conflict will spread. The impact on
the economy and tenants of higher and
longer inflation and power and supply
chain disruption are also currently unknown.
Our strong occupier relationships provide
market intelligence and will help us to better
understand the impact over time. The Board
believe that a portfolio firmly placed on the
right side of structural change, with more
companies holding greater inventories within
the UK, and granularity of income, provide
ahigh level of resilience to any shocks.
The Board will continue to monitor events
and are mindful of the increased risk of cyber
attacks seeking to target the UK economy
and companies in retaliation for sanctions
imposed on Russia.
The Board also remain vigilant to the risks
posed by Covid-19 variants but consider
this risk has reduced due to the Company’s
experience of operating over the last
two years and the ecacy of vaccines
and treatments.
Brexit risk has been removed from the
risk register.
Investment risk
In identifying investment opportunities we
assess potential returns and weigh them
against the risks involved. As significant
shareholders we focus on quality investments
that oer long term income, capital growth
and downside protection from strong
intrinsic value, priding ourselves on our
process, discipline and rationality as we
look to prioritise quality assets in the best
geographies at the right price. This rigorous
approach invariably tempers investment
activity. We are mindful that increased
investor demand and tightening yields
for our preferred sectors make further
investment dicult whilst tightening yields
on weaker assets encourage sales for
the right property reasons but where
redeployment of proceeds is dicult. We will
aim to continue to maintain a fine balance
and defer sales receipts where possible, to
allow time for reinvestment and reduce the
negative impact on earnings.
No significant change
Increased risk
Decreased risk
New
1
Corporate
risks
Strategy,
market, systems,
employees, wider
stakeholders,
regulatory, social
and environmental
responsibilities
2
Property
risks
Portfolio
composition
and management,
developments,
valuation and
occupiers
3
Financing
risk
Investors, joint
ventures, debtand
cash management
These
relate
tothe
entire
Group
These
focus
onour
core
business
These
focus
on how
business
operations
are funded
73
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
Moderate
Moderate
Low
Probability
Negative impact on Group
Post mitigation residual risk
Corporate risks
Property risks
Financing risks
3
6
4
8
9
7
5
10
11
1
Responsible
Business approach
Investment
Valuation
Development
Systems processes and financial management
Regulatory framework
Transactions and tenants
Capital and finance
Human resources
Strategy &
its execution
Responsible business and sustainability
Stakeholder focus on responsible business
practices continues to increase with
particular attention on climate change from
an environmental perspective. A failure to
keep pace could have a profound negative
impact on our reputation, earnings, asset
and share liquidity. More information can be
found on our responsible business objectives,
initiatives undertaken and progress against
targets in our Responsible Business and ESG
review on pages 49 to 69.
Capital and finance risk
Our significant refinancing activity over the
year which extended debt maturity and a
successful, oversubscribed £175 million equity
placing have reduced this principal risk.
Further information can be found in the
Financial review on pages 42 to 48.
Post mitigation residual risk
The chart below illustrates the probability
and post mitigation residual risk level of the
principal risks which have been identified.
They are categorised in a manner consistent
with the Board’s risk dashboard which it
considers at each meeting.
2
Major event
Read more on the future outlook
in the Chief Executive’s review on
Page 15
Read more on risk management
and internal control in the Audit
Committee report on
Page 124
LondonMetric Property Plc
Annual Report and Accounts 2022
7474
Principal risks
A review of our risk
1.
Strategy and
its execution
Risk Impact Mitigation
Commentary Appetite Change in the year
Strategic objectives
may be:
– Inappropriate
for the current
economic climate
ormarket cycle
– Not achieved due
to external factors or
poor implementation
– Suboptimal returns
for shareholders
– Missed opportunities
– Ineective
threat management
– Wrong balance of
skills and resources
forongoing success
Impact on strategy
– Strategy and objectives are regularly reviewed by the Board
and adapted to changing market conditions and trends
– Strong occupier relationships and experience within our
sectors shape portfolio decisions
– Research assists our strategic decision making
– We have a UK based, predominantly logistics portfolio
in a world leading ecommerce market
– We continuously review and monitor our portfolio
taking into consideration sector weightings, tenant and
geographical concentrations, perceived threats and
market changes, the balance of income to non income
producing assets and asset management opportunities
– Our three year forecast is regularly flexed and reported
to the Board
– The Senior Leadership Team comprises departmental
heads from all key business functions with diverse skills
and experience
– Our relatively flat organisational structure makes it
easier to identify market changes, emerging risks and
monitor operations
– High share ownership amongst the management team
aligns their interests with shareholders on major decisions
– We remain alert to potentially disruptive
technological advancement
– Investor demand for distribution continues unabated attracted
by the occupational demand supply imbalance which is
driving rental growth. During the year we invested £432 million in
predominantly urban logistics where supply is most constrained
and rental growth prospects strongest, increasing our sector
weighting to 44%. We also sold an older mega distribution
warehouse for £102 million replacing it with a newer, more
modern and better located one for £97 million and a 12 year
longer WAULT
– Investor demand for long income with defensive and rental
growth characteristics has also intensified. Long income
acquisitions let to high quality occupiers were £143 million
in the year
– Our dividend has increased and cover remains strong
at 1.09 times EPRA earnings per share
– Our property cost leakage at 1.2% continues to be low
within the sector as our assets are operationally light and
portfolio vacancy low
The Board continue to view the
Company’s strategic priorities as
fundamental to its business and
reputation. Its appetite for this risk
is low.
No significant change
We have continued to
focus investment and asset
management activity on
improving the quality of our
portfolio to provide reliable,
repetitive and growing income
whilst providing strong intrinsic
value and capital protection.
We anticipate no significant
change in this risk over the next
12 months.
2.
Major event
Risk Impact Mitigation Commentary Appetite Change in the year
A market downturn,
specific sector
turbulence or business
disruption resulting from:
– a political or
economic event
or series of events
– a ‘black swan’
unexpected global,
regional or major
national event or
series of events such
as a financial crisis,
pandemic, acts of
terrorism or conflict
– Revenue impairment
– Occupier demand
may decrease
– Asset liquidity and
valuemay reduce
– Debt markets may
be impacted
– Workforce resilience
maybe impacted
Impact on strategy
– We remain focused on what we can control within the
business. This includes maintaining a high WAULT and low
vacancy on a portfolio of well located, UK only assets in
structurally supported sectors and a broad tenant base
– Our strong occupier relationships provide market intelligence
and help us better understand our tenants’ businesses, their
covenants, needs, emerging trends and risks
– We limit development exposure
– We have flexible funding arrangements from a diverse pool
of lenders with significant covenant headroom and we
regularly review financing strategy
– We nurture relationships with new and existing debt
and equity providers
– We reforecast on a regular basis
– We test our business continuity plan and seek to ensure the
integrity of our IT systems and cyber security through third
party specialists and training
– We maintain adequate insurance cover
– 97.1% of our portfolio is weighted towards the structurally
supported sectors of distribution (74.6%) and long income
(22.5%) which are performing in line or significantly ahead
of expectations
– We are monitoring the uncertainty and impact resulting from
the war in the Ukraine on our economy and tenants’ businesses
and remain alert to a heightened risk of cyber attacks targeting
our utilities, transport, communications and financial systems in
retaliation for sanctions imposed on Russia
– We remain mindful of the risks posed by Covid-19 variants but
consider this risk has reduced due to our experience over the
last two years and the ecacy of vaccines and treatments
– Brexit risk has been removed from our risk register
The Board monitors the impact
of such events which are outside
of its control and flex operations
accordingly. Focus remains on
maintaining a robust, ‘all weather’
portfolio to withstand such shocks to
the maximum extent possible.
New
Recent events in Ukraine
have increased uncertainty
and this risk. We continue to
monitor the situation but have
not experienced a significant
negative impact to date.
We anticipate this risk will remain
high over the next 12 months.
Corporate risks
75
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
1.
Strategy and
its execution
Risk Impact Mitigation
Commentary Appetite Change in the year
Strategic objectives
may be:
– Inappropriate
for the current
economic climate
ormarket cycle
– Not achieved due
to external factors or
poor implementation
– Suboptimal returns
for shareholders
– Missed opportunities
– Ineective
threat management
– Wrong balance of
skills and resources
forongoing success
Impact on strategy
– Strategy and objectives are regularly reviewed by the Board
and adapted to changing market conditions and trends
– Strong occupier relationships and experience within our
sectors shape portfolio decisions
– Research assists our strategic decision making
– We have a UK based, predominantly logistics portfolio
in a world leading ecommerce market
– We continuously review and monitor our portfolio
taking into consideration sector weightings, tenant and
geographical concentrations, perceived threats and
market changes, the balance of income to non income
producing assets and asset management opportunities
– Our three year forecast is regularly flexed and reported
to the Board
– The Senior Leadership Team comprises departmental
heads from all key business functions with diverse skills
and experience
– Our relatively flat organisational structure makes it
easier to identify market changes, emerging risks and
monitor operations
– High share ownership amongst the management team
aligns their interests with shareholders on major decisions
– We remain alert to potentially disruptive
technological advancement
– Investor demand for distribution continues unabated attracted
by the occupational demand supply imbalance which is
driving rental growth. During the year we invested £432 million in
predominantly urban logistics where supply is most constrained
and rental growth prospects strongest, increasing our sector
weighting to 44%. We also sold an older mega distribution
warehouse for £102 million replacing it with a newer, more
modern and better located one for £97 million and a 12 year
longer WAULT
– Investor demand for long income with defensive and rental
growth characteristics has also intensified. Long income
acquisitions let to high quality occupiers were £143 million
in the year
– Our dividend has increased and cover remains strong
at 1.09 times EPRA earnings per share
– Our property cost leakage at 1.2% continues to be low
within the sector as our assets are operationally light and
portfolio vacancy low
The Board continue to view the
Company’s strategic priorities as
fundamental to its business and
reputation. Its appetite for this risk
is low.
No significant change
We have continued to
focus investment and asset
management activity on
improving the quality of our
portfolio to provide reliable,
repetitive and growing income
whilst providing strong intrinsic
value and capital protection.
We anticipate no significant
change in this risk over the next
12 months.
2.
Major event
Risk Impact Mitigation Commentary Appetite Change in the year
A market downturn,
specific sector
turbulence or business
disruption resulting from:
– a political or
economic event
or series of events
– a ‘black swan’
unexpected global,
regional or major
national event or
series of events such
as a financial crisis,
pandemic, acts of
terrorism or conflict
– Revenue impairment
– Occupier demand
may decrease
– Asset liquidity and
valuemay reduce
– Debt markets may
be impacted
– Workforce resilience
maybe impacted
Impact on strategy
– We remain focused on what we can control within the
business. This includes maintaining a high WAULT and low
vacancy on a portfolio of well located, UK only assets in
structurally supported sectors and a broad tenant base
– Our strong occupier relationships provide market intelligence
and help us better understand our tenants’ businesses, their
covenants, needs, emerging trends and risks
– We limit development exposure
– We have flexible funding arrangements from a diverse pool
of lenders with significant covenant headroom and we
regularly review financing strategy
– We nurture relationships with new and existing debt
and equity providers
– We reforecast on a regular basis
– We test our business continuity plan and seek to ensure the
integrity of our IT systems and cyber security through third
party specialists and training
– We maintain adequate insurance cover
– 97.1% of our portfolio is weighted towards the structurally
supported sectors of distribution (74.6%) and long income
(22.5%) which are performing in line or significantly ahead
of expectations
– We are monitoring the uncertainty and impact resulting from
the war in the Ukraine on our economy and tenants’ businesses
and remain alert to a heightened risk of cyber attacks targeting
our utilities, transport, communications and financial systems in
retaliation for sanctions imposed on Russia
– We remain mindful of the risks posed by Covid-19 variants but
consider this risk has reduced due to our experience over the
last two years and the ecacy of vaccines and treatments
– Brexit risk has been removed from our risk register
The Board monitors the impact
of such events which are outside
of its control and flex operations
accordingly. Focus remains on
maintaining a robust, ‘all weather’
portfolio to withstand such shocks to
the maximum extent possible.
New
Recent events in Ukraine
have increased uncertainty
and this risk. We continue to
monitor the situation but have
not experienced a significant
negative impact to date.
We anticipate this risk will remain
high over the next 12 months.
Read more in
Chief Executive’s review
page 15
Read more in
Chief Executive’s review
page 15
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
3
Enhance assetvalue
and cash flow
4
Improve quality
and sustainability
of our assets
No significant change
Increased risk
Decreased risk
New
Property review
page 28
Financial review
page 42
Property review
page 28
LondonMetric Property Plc
Annual Report and Accounts 2022
7676
Principal risks
A review of our risk
3.
Human
resources
Risk Impact Mitigation
Commentary Appetite Change in the year
There may be an
inability to attract,
motivate and retain high
calibre employees in the
small team.
The business may lack
the skill set to establish
and deliver strategy
and maintain a
competitive advantage.
Impact on strategy
– Our stang plan focuses on experience and expertise
necessary to deliver strategy
– Our organisational structure has clear responsibilities and
reporting lines
– Executive Directors and senior managers are incentivised
in a similar manner. Both have significant unvested share
awards in the Company which incentivise long term
performance and retention and provide stability in the
management structure
– Annual appraisals identify training requirements and
assess performance
– Specialist support is contracted as appropriate
– Sta satisfaction surveys are undertaken and sta turnover
levels are low
– There is a phased Non Executive Director refreshment plan
– Key man insurance is in place for the Chief Executive
– The Senior Leadership Team promotes talent development
below Board level
– The appointment of Alistair Elliott, former Senior Partner and
Group Chair of Knight Frank, brings significant property and
leadership experience to the Board and supports longer term
succession planning
– We are appointing a search agency to find suitable
replacements for long service Non Executive Directors
– The sta survey responses were again extremely positive with
respondents proud and happy to be working for LondonMetric
and highly confident in the decisions being made by
senior management
– Our designated workforce Non Executive Director hosted
a round table meeting with a cross section of employees
in the year to hear their views and concerns
– Sta turnover remains low at only 6% since the merger in 2013
– 60% of employees participated in the 2022 LTIP
The Board believes it is vitally
important that the Company has
the appropriate level of leadership,
expertise and experience to
deliver its objectives and adapt to
change. Its appetite for this risk is
therefore low.
No significant change
There has been no significant
change in perceived risk.
We anticipate no significant
change in this risk over the next
12 months.
4.
Systems,
processes and
financial
management
Risk Impact Mitigation
Commentary Appetite Change in the year
Controls for
safeguarding assets
and supporting strategy
may be weak.
– Compromised
asset security
– Suboptimal returns
for shareholders
– Decisions made on
inaccurate information
Impact on strategy
– The Company has a strong controls culture
– We have IT security systems in place with back up
supported and tested by external specialists
– Our business continuity plan is regularly updated
– Our property assets are safeguarded by
appropriate insurance
– We have safety and security arrangements in place
on our developments, multi-let and vacant properties
– Appropriate data capture procedures ensure the
accuracy of the property database and financial
reporting systems
– We maintain appropriate segregation of duties with
controls over financial systems
– Management receive timely financial information for
approval and decision making
– Cost control procedures ensure expenditure is valid,
properly authorised and monitored
– We continue to take an active but pragmatic approach
towards cyber security, monitoring and building on our
technical solutions alongside raising sta awareness of emerging
issues and practices
– During the year we upgraded and implemented additional
security measures and tested our resilience to cyber attacks
through penetration testing to ensure they continue to provide
a strong level of protection. Compulsory cyber awareness
training was also provided to all sta
The Board’s appetite for such
risk is low and management
continually strives to monitor
andimprove processes.
No significant change
There has been no significant
change in perceived risk.
Cyber security remains an ever
present risk.
We anticipate no significant
change in this risk over the next
12 months.
Corporate risks
77
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
3.
Human
resources
Risk Impact Mitigation
Commentary Appetite Change in the year
There may be an
inability to attract,
motivate and retain high
calibre employees in the
small team.
The business may lack
the skill set to establish
and deliver strategy
and maintain a
competitive advantage.
Impact on strategy
– Our stang plan focuses on experience and expertise
necessary to deliver strategy
– Our organisational structure has clear responsibilities and
reporting lines
– Executive Directors and senior managers are incentivised
in a similar manner. Both have significant unvested share
awards in the Company which incentivise long term
performance and retention and provide stability in the
management structure
– Annual appraisals identify training requirements and
assess performance
– Specialist support is contracted as appropriate
– Sta satisfaction surveys are undertaken and sta turnover
levels are low
– There is a phased Non Executive Director refreshment plan
– Key man insurance is in place for the Chief Executive
– The Senior Leadership Team promotes talent development
below Board level
– The appointment of Alistair Elliott, former Senior Partner and
Group Chair of Knight Frank, brings significant property and
leadership experience to the Board and supports longer term
succession planning
– We are appointing a search agency to find suitable
replacements for long service Non Executive Directors
– The sta survey responses were again extremely positive with
respondents proud and happy to be working for LondonMetric
and highly confident in the decisions being made by
senior management
– Our designated workforce Non Executive Director hosted
a round table meeting with a cross section of employees
in the year to hear their views and concerns
– Sta turnover remains low at only 6% since the merger in 2013
– 60% of employees participated in the 2022 LTIP
The Board believes it is vitally
important that the Company has
the appropriate level of leadership,
expertise and experience to
deliver its objectives and adapt to
change. Its appetite for this risk is
therefore low.
No significant change
There has been no significant
change in perceived risk.
We anticipate no significant
change in this risk over the next
12 months.
4.
Systems,
processes and
financial
management
Risk Impact Mitigation
Commentary Appetite Change in the year
Controls for
safeguarding assets
and supporting strategy
may be weak.
– Compromised
asset security
– Suboptimal returns
for shareholders
– Decisions made on
inaccurate information
Impact on strategy
– The Company has a strong controls culture
– We have IT security systems in place with back up
supported and tested by external specialists
– Our business continuity plan is regularly updated
– Our property assets are safeguarded by
appropriate insurance
– We have safety and security arrangements in place
on our developments, multi-let and vacant properties
– Appropriate data capture procedures ensure the
accuracy of the property database and financial
reporting systems
– We maintain appropriate segregation of duties with
controls over financial systems
– Management receive timely financial information for
approval and decision making
– Cost control procedures ensure expenditure is valid,
properly authorised and monitored
– We continue to take an active but pragmatic approach
towards cyber security, monitoring and building on our
technical solutions alongside raising sta awareness of emerging
issues and practices
– During the year we upgraded and implemented additional
security measures and tested our resilience to cyber attacks
through penetration testing to ensure they continue to provide
a strong level of protection. Compulsory cyber awareness
training was also provided to all sta
The Board’s appetite for such
risk is low and management
continually strives to monitor
andimprove processes.
No significant change
There has been no significant
change in perceived risk.
Cyber security remains an ever
present risk.
We anticipate no significant
change in this risk over the next
12 months.
Read more in
Audit Committee report
page 124
Read more in
Employee engagement
page 106
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
3
Enhance assetvalue
and cash flow
4
Improve quality
and sustainability
of our assets
No significant change
Increased risk
Decreased risk
New
Management team
page 94
Our people
pages 24, 60 and 100
Nomination Committee
report
pa g e 116
Remuneration Committee
report
page 132
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
LondonMetric Property Plc
Annual Report and Accounts 2022
7878
Principal risks
A review of our risk
5.
Responsible
business and
sustainability
Risk Impact Mitigation
Commentary Appetite Change in the year
Non-compliance
with Responsible
Business practices.
– Reputational damage
– Suboptimal returns
for shareholders
– Asset liquidity may
be impacted
– Reduced access to debt
and capital markets
– Poor relationships
with stakeholders
Impact on strategy
– We monitor changes in law, stakeholder sentiment and
best practice in relation to sustainability, environmental
matters and our societal impact supported by specialist
consultants, and we consider the impact of changes
on strategy
– We give proper consideration to the needs of our
occupiers and shareholders by maintaining a high degree
of engagement. We also consider our impact on the
environment and local communities
– Responsibility for specific obligations is allocated to Senior
Leadership Team members
– A Responsible Business Working Group meets at least three
times a year and reports to the Board
– Sta training is provided
– EPC rating benchmarks are set to comply with current
and future Minimum Energy Eciency Standards (‘MEES’)
that could impact the quality and desirability of our assets
leading to higher voids, reduced income and liquidity
– We consider environmental and climate change risk
relating to our assets and commission reports
– We work with occupiers to improve the resilience of our
assets and their business models to climate change and a
low carbon economy
– Sustainability targets are set, monitored and reported
– Contractors are required to conform to our responsible
development requirements
– We held meetings with c.250 investors and potential investors
over the year
– We continue to score well in ESG benchmarks
– 29% of our portfolio by area is rated BREEAM Very Good or
Excellent, an increase from 26% in 2021
– 85% of our portfolio has an EPC rating of A-C and we are
targeting a minimum C rating on all assets by 2027
– Our Net Zero Carbon framework published last May sets out
ourambitions to become a zero carbon business and we have
undertaken Net Zero Carbon studies on various assets along
with reviewing our approach to carbon osets
– Our new revolving credit facilities incorporate a green
framework with a £50 million green private placement tranche
also put in place
– We continue to score highly in stakeholder surveys with
8.5 out of 10.0 occupiers recommending us as a landlord
in our latest occupier survey
– Our Communities and Charity Committee has spent
£66,766 in the year
– ESG targets have been embedded into the wider sta
performance criteria
– We have undertaken a full TCFD analysis of the Company and
some of our assets to better understand how we can continue
to address our climate change risks and opportunities
The Board has a low tolerance
for non-compliance with risks
that adversely impact reputation,
stakeholder sentiment and
asset liquidity.
Increased risk
ESG significance continues
to increase for stakeholders,
particularly in relation to
climate change.
We anticipate this risk will
continue to increase over
the next 12 months.
6.
Regulatory
framework
Risk Impact Mitigation
Commentary Appetite Change in the year
Non-compliance
with legal or
regulatory obligations.
– Reputational damage
– Increased costs
– Reduced access to debt
and capital markets
– Fines, penalties, sanctions
Impact on strategy
– We monitor regulatory changes that impact our business
assisted by specialist support providers
– We consider the impact of legislative changes on strategy
– We have allocated responsibility for specific obligations to
individuals within the Senior Leadership Team
– Our health and safety handbook is regularly updated
and audits are carried out on developments to
monitor compliance
– Our procurement and supply chain policy sets standards
for areas such as labour, human rights, pollution risk
and community
– Sta training is provided on wide ranging issues
– External tax specialists provide advice and REIT compliance
is monitored
– No significant new regulatory changes have impacted the
business this year outside of TCFD where we have fully disclosed
against the TCFD recommendations after undertaking a TCFD
gap analysis exercise
– We continued to undertake health and safety site audits on
our developments assisted by external specialists. This year
this included our developments at Derby and Weymouth.
Feedback has been positive and no significant issues
were identified
The Board has no appetite where
non-compliance risks injury or
damage to its broad range of
stakeholders, assets and reputation.
No significant change
There has been no significant
change in perceived risk.
New regulations and evolving
best practice will continue to
impact the business.
We anticipate no significant
change in this risk over the next
12 months.
Corporate risks
79
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
5.
Responsible
business and
sustainability
Risk Impact Mitigation
Commentary Appetite Change in the year
Non-compliance
with Responsible
Business practices.
– Reputational damage
– Suboptimal returns
for shareholders
– Asset liquidity may
be impacted
– Reduced access to debt
and capital markets
– Poor relationships
with stakeholders
Impact on strategy
– We monitor changes in law, stakeholder sentiment and
best practice in relation to sustainability, environmental
matters and our societal impact supported by specialist
consultants, and we consider the impact of changes
on strategy
– We give proper consideration to the needs of our
occupiers and shareholders by maintaining a high degree
of engagement. We also consider our impact on the
environment and local communities
– Responsibility for specific obligations is allocated to Senior
Leadership Team members
– A Responsible Business Working Group meets at least three
times a year and reports to the Board
– Sta training is provided
– EPC rating benchmarks are set to comply with current
and future Minimum Energy Eciency Standards (‘MEES’)
that could impact the quality and desirability of our assets
leading to higher voids, reduced income and liquidity
– We consider environmental and climate change risk
relating to our assets and commission reports
– We work with occupiers to improve the resilience of our
assets and their business models to climate change and a
low carbon economy
– Sustainability targets are set, monitored and reported
– Contractors are required to conform to our responsible
development requirements
– We held meetings with c.250 investors and potential investors
over the year
– We continue to score well in ESG benchmarks
– 29% of our portfolio by area is rated BREEAM Very Good or
Excellent, an increase from 26% in 2021
– 85% of our portfolio has an EPC rating of A-C and we are
targeting a minimum C rating on all assets by 2027
– Our Net Zero Carbon framework published last May sets out
ourambitions to become a zero carbon business and we have
undertaken Net Zero Carbon studies on various assets along
with reviewing our approach to carbon osets
– Our new revolving credit facilities incorporate a green
framework with a £50 million green private placement tranche
also put in place
– We continue to score highly in stakeholder surveys with
8.5 out of 10.0 occupiers recommending us as a landlord
in our latest occupier survey
– Our Communities and Charity Committee has spent
£66,766 in the year
– ESG targets have been embedded into the wider sta
performance criteria
– We have undertaken a full TCFD analysis of the Company and
some of our assets to better understand how we can continue
to address our climate change risks and opportunities
The Board has a low tolerance
for non-compliance with risks
that adversely impact reputation,
stakeholder sentiment and
asset liquidity.
Increased risk
ESG significance continues
to increase for stakeholders,
particularly in relation to
climate change.
We anticipate this risk will
continue to increase over
the next 12 months.
6.
Regulatory
framework
Risk Impact Mitigation
Commentary Appetite Change in the year
Non-compliance
with legal or
regulatory obligations.
– Reputational damage
– Increased costs
– Reduced access to debt
and capital markets
– Fines, penalties, sanctions
Impact on strategy
– We monitor regulatory changes that impact our business
assisted by specialist support providers
– We consider the impact of legislative changes on strategy
– We have allocated responsibility for specific obligations to
individuals within the Senior Leadership Team
– Our health and safety handbook is regularly updated
and audits are carried out on developments to
monitor compliance
– Our procurement and supply chain policy sets standards
for areas such as labour, human rights, pollution risk
and community
– Sta training is provided on wide ranging issues
– External tax specialists provide advice and REIT compliance
is monitored
– No significant new regulatory changes have impacted the
business this year outside of TCFD where we have fully disclosed
against the TCFD recommendations after undertaking a TCFD
gap analysis exercise
– We continued to undertake health and safety site audits on
our developments assisted by external specialists. This year
this included our developments at Derby and Weymouth.
Feedback has been positive and no significant issues
were identified
The Board has no appetite where
non-compliance risks injury or
damage to its broad range of
stakeholders, assets and reputation.
No significant change
There has been no significant
change in perceived risk.
New regulations and evolving
best practice will continue to
impact the business.
We anticipate no significant
change in this risk over the next
12 months.
Read more in
Responsible Business
and ESG review
page 49
Read more in
Responsible Business
and ESG review
page 49
Responsible Business report
www.londonmetric.com
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
3
Enhance assetvalue
and cash flow
4
Improve quality
and sustainability
of our assets
No significant change
Increased risk
Decreased risk
New
Shareholder engagement
page 109
TCFD
page 66
Nomination Committee
report
pa g e 116
LondonMetric Property Plc
Annual Report and Accounts 2022
8080
Principal risks
A review of our risk
7.
Investment
risk
Risk Impact Mitigation
Commentary Appetite Change in the year
We may be unable to
source rationally priced
investment opportunities
Ability to implement
strategy and deploy
capital into value and
earnings accretive
investments is at risk.
Impact on strategy
– Management’s extensive experience and their strong
network of relationships provide insight into the property
market and opportunities
– We continue to build on our strong occupier, developer
and industry relationships and attract o market opportunities
through these
– Despite highly competitive market conditions, we acquired
£575 million of assets in the year at a NIY of 4.4%
– Post year end, we have invested a further £43 million in
urban logistics assets
– Whilst we are keen to seek further investment opportunities, we
are not obsessed with growing the portfolio for the sake of size.
Senior management’s high share ownership aligns their interests
with shareholders meaning we remain disciplined and rational
as we look to invest at a fair price for the long term and improve
the quality and resilience of our assets
The Board continues to focus
on having the right people and
funding in place to take advantage
of opportunities as they arise.
The Board’s aim is to minimise this risk
to the extent possible.
Increased risk
The past 12 months have seen
record investment volumes and
tighter yields in the distribution
sector with a further influx of
overseas money into the market.
We anticipate this risk will remain
high over the next 12 months.
8.
Development
risk
Risk Impact Mitigation
Commentary Appetite Change in the year
– Excessive capital
may be allocated
to activities with
development risk
– Developments
may fail to deliver
expected returns
due to inconsistent
timing with the
economic or market
cycle, adverse letting
conditions, increased
costs, planning
or construction
delays resulting
from contractor
failure or supply
chain interruption
– Poorer than
expected performance
– Reputational damage
Impact on strategy
– As an income focused REIT, development exposure as a
percentage of our total portfolio is limited, typically well
below 5%
– We only undertake short cycle and relatively
uncomplicated development on a pre-let basis or where
there is high occupier demand
– Development sites are acquired with planning consent
whenever possible
– Management have significant experience of
complex development
– We use standardised appraisals and cost budgets and
monitor expenditure against budget to highlight potential
overruns early
– External project managers are appointed
– Our procurement process includes tendering and the
use of highly regarded firms with proven track records
– We review and monitor contractor covenant strength
– Having completed our developments at Tyseley and Bedford
Link in the year, current development exposure is only 1.9%
of the portfolio and predominantly pre-let
– Inflation has increased significantly over the last 12 months whilst
supply chain disruption and labour shortages have persisted.
By partnering with a limited number of contractors, where
subcontractor supply chains are key, we mitigate supply risk to
the extent possible and stay close to our contractors’ operations
– Increased competition for good geographies has made it
increasingly dicult to access potential development sites, but
we have been more successful in identifying accretive forward
funding opportunities where development risk is mitigated
The Board takes on limited
speculative development, although
its overall tolerance for this risk is low.
No significant change
Our development exposure
remains limited meaning there
has been no significant change
in perceived risk during the year.
More generally, high inflation,
supply chain disruption and
labour shortages in the market
are expected to continue over
the next 12 months and may
impact future developments.
Property risks
81
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
7.
Investment
risk
Risk Impact Mitigation
Commentary Appetite Change in the year
We may be unable to
source rationally priced
investment opportunities
Ability to implement
strategy and deploy
capital into value and
earnings accretive
investments is at risk.
Impact on strategy
– Management’s extensive experience and their strong
network of relationships provide insight into the property
market and opportunities
– We continue to build on our strong occupier, developer
and industry relationships and attract o market opportunities
through these
– Despite highly competitive market conditions, we acquired
£575 million of assets in the year at a NIY of 4.4%
– Post year end, we have invested a further £43 million in
urban logistics assets
– Whilst we are keen to seek further investment opportunities, we
are not obsessed with growing the portfolio for the sake of size.
Senior management’s high share ownership aligns their interests
with shareholders meaning we remain disciplined and rational
as we look to invest at a fair price for the long term and improve
the quality and resilience of our assets
The Board continues to focus
on having the right people and
funding in place to take advantage
of opportunities as they arise.
The Board’s aim is to minimise this risk
to the extent possible.
Increased risk
The past 12 months have seen
record investment volumes and
tighter yields in the distribution
sector with a further influx of
overseas money into the market.
We anticipate this risk will remain
high over the next 12 months.
8.
Development
risk
Risk Impact Mitigation
Commentary Appetite Change in the year
– Excessive capital
may be allocated
to activities with
development risk
– Developments
may fail to deliver
expected returns
due to inconsistent
timing with the
economic or market
cycle, adverse letting
conditions, increased
costs, planning
or construction
delays resulting
from contractor
failure or supply
chain interruption
– Poorer than
expected performance
– Reputational damage
Impact on strategy
– As an income focused REIT, development exposure as a
percentage of our total portfolio is limited, typically well
below 5%
– We only undertake short cycle and relatively
uncomplicated development on a pre-let basis or where
there is high occupier demand
– Development sites are acquired with planning consent
whenever possible
– Management have significant experience of
complex development
– We use standardised appraisals and cost budgets and
monitor expenditure against budget to highlight potential
overruns early
– External project managers are appointed
– Our procurement process includes tendering and the
use of highly regarded firms with proven track records
– We review and monitor contractor covenant strength
– Having completed our developments at Tyseley and Bedford
Link in the year, current development exposure is only 1.9%
of the portfolio and predominantly pre-let
– Inflation has increased significantly over the last 12 months whilst
supply chain disruption and labour shortages have persisted.
By partnering with a limited number of contractors, where
subcontractor supply chains are key, we mitigate supply risk to
the extent possible and stay close to our contractors’ operations
– Increased competition for good geographies has made it
increasingly dicult to access potential development sites, but
we have been more successful in identifying accretive forward
funding opportunities where development risk is mitigated
The Board takes on limited
speculative development, although
its overall tolerance for this risk is low.
No significant change
Our development exposure
remains limited meaning there
has been no significant change
in perceived risk during the year.
More generally, high inflation,
supply chain disruption and
labour shortages in the market
are expected to continue over
the next 12 months and may
impact future developments.
Read more in
Developments
page 40
Read more in
Property review
page 28
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
3
Enhance assetvalue
and cash flow
4
Improve quality
and sustainability
of our assets
No significant change
Increased risk
Decreased risk
New
Lettings case study –
Bedford Link
page 37
Tyseley development
page 19
Pre-let development
in Huntingdon
page 41
LondonMetric Property Plc
Annual Report and Accounts 2022
8282
Principal risks
A review of our risk
9.
Valuation
risk
Risk Impact Mitigation
Commentary Appetite Change in the year
Investments may fall
in value.
Pressure on net asset value
and potentially loan to
value debt covenants.
Impact on strategy
– Our portfolio is predominantly in structurally supported
sectors with few non core assets remaining
– Our focus remains on sustainable income and lettings to
high quality tenants within a diversified portfolio of well
located assets. We aim to maintain a high portfolio WAULT
and low vacancy rate. These metrics provide resilience and
reduce the negative impact of a market downturn
– Trends and the property cycle are continually monitored
with investment and divestment decisions made
strategically in anticipation of changing conditions
– Portfolio performance is regularly reviewed and
benchmarked on an asset by asset basis
– The majority of our assets are single let and operationally
light with little or no cost leakage and defensive
capital expenditure
– We stay close to our tenants to understand their
occupational requirements to mitigate vacancy risk
– We monitor tenant covenants and trading performance
– We maintain a low loan to value, materially below
maximum loan covenant thresholds
– Portfolio resilience is demonstrated by the unprecedented
valuation increase of £632.2 million in the year, with distribution
the strongest contributor
– 47.1% of our portfolio is in the high growth regions of London and
the South East of England
– 60.9% of income has contractual uplifts. 46.6% of these are
index linked, however, with RPI or CPIH caps typically at 4% and
therefore below the current inflationary level
– Our portfolio metrics continue to be strong with a WAULT of 11.9
years and only 10.6% of rent expiring within three years
– Portfolio occupancy is 98.7%
– 166 occupier initiatives added £10.5 million to contracted rent
delivering like for like income growth of 5.4%
There is no certainty that
property values will be realised.
This is an inherent risk in the industry.
The Board aims to keep this risk to a
minimum through its asset selection
and active management initiatives.
Decreased risk
The portfolio remains strategically
aligned to structurally supported
sectors where investor demand is
high and the prospects for value
preservation and further growth
are significant.
We anticipate no significant
change in this risk over the next
12 months, however, we expect
more muted valuation increases
with rental growth, not yield
compression, the key driver.
10.
Transaction
and tenant risk
Risk Impact Mitigation
Commentary Appetite Change in the year
– Acquisitions and
asset management
initiatives may
be inconsistent
with strategy
– Due diligence may
be flawed
– Tenant failure risk
Pressure on net asset value,
earnings and potentially
debt covenants.
Impact on strategy
– Thorough due diligence is undertaken on all acquisitions
including legal and property, tenant covenant strength
and trading performance
– We screen all prospective tenants and undertake regular
reviews thereafter
– Portfolio tenant concentration is considered for all
acquisitions and leasing transactions
– We have a diversified tenant base and limited exposure
to occupiers in bespoke properties
– Asset management initiatives undergo cost benefit analysis
prior to implementation
– External advisors benchmark lease transactions and advise
on acquisition due diligence
– Our experienced asset management team work closely
with tenants to oer them real estate solutions that meet
their business objectives. This proactive management
approach helps to reduce vacancy risk
– We monitor rent collection closely to identify potential issues
– Rent collection has remained high at 99.5% for the year
– Through our strong tenant relationships we are monitoring the
impact on our top occupiers of high inflation and potential
supply chain disruption stemming from the continuing eects of
the pandemic and more recently the war in Ukraine
– We have no exposure to Russian owned tenants who may
become subject to UK sanctions as a result of the war in Ukraine
– The granularity of our income has increased reducing
dependency on our top 10 occupiers to 28.5% from 36%
a year ago. No single tenant accounts for more than 4.1%
of income, down from 8.2% last year
The Board has no appetite for risk
arising out of poor due diligence
processes on acquisitions, disposals
and lettings. A degree of tenant
covenant risk and lower unexpired
lease terms are accepted on
urban logistics assets where there
is high occupational demand,
redevelopment potential or
alternative site use.
No significant change
Portfolio resilience has been
demonstrated through our rent
collection statistics.
We anticipate no significant
change in this risk over the next
12 months but will continue to
monitor the eects of recent
events in Ukraine.
Property risks
83
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
9.
Valuation
risk
Risk Impact Mitigation
Commentary Appetite Change in the year
Investments may fall
in value.
Pressure on net asset value
and potentially loan to
value debt covenants.
Impact on strategy
– Our portfolio is predominantly in structurally supported
sectors with few non core assets remaining
– Our focus remains on sustainable income and lettings to
high quality tenants within a diversified portfolio of well
located assets. We aim to maintain a high portfolio WAULT
and low vacancy rate. These metrics provide resilience and
reduce the negative impact of a market downturn
– Trends and the property cycle are continually monitored
with investment and divestment decisions made
strategically in anticipation of changing conditions
– Portfolio performance is regularly reviewed and
benchmarked on an asset by asset basis
– The majority of our assets are single let and operationally
light with little or no cost leakage and defensive
capital expenditure
– We stay close to our tenants to understand their
occupational requirements to mitigate vacancy risk
– We monitor tenant covenants and trading performance
– We maintain a low loan to value, materially below
maximum loan covenant thresholds
– Portfolio resilience is demonstrated by the unprecedented
valuation increase of £632.2 million in the year, with distribution
the strongest contributor
– 47.1% of our portfolio is in the high growth regions of London and
the South East of England
– 60.9% of income has contractual uplifts. 46.6% of these are
index linked, however, with RPI or CPIH caps typically at 4% and
therefore below the current inflationary level
– Our portfolio metrics continue to be strong with a WAULT of 11.9
years and only 10.6% of rent expiring within three years
– Portfolio occupancy is 98.7%
– 166 occupier initiatives added £10.5 million to contracted rent
delivering like for like income growth of 5.4%
There is no certainty that
property values will be realised.
This is an inherent risk in the industry.
The Board aims to keep this risk to a
minimum through its asset selection
and active management initiatives.
Decreased risk
The portfolio remains strategically
aligned to structurally supported
sectors where investor demand is
high and the prospects for value
preservation and further growth
are significant.
We anticipate no significant
change in this risk over the next
12 months, however, we expect
more muted valuation increases
with rental growth, not yield
compression, the key driver.
10.
Transaction
and tenant risk
Risk Impact Mitigation
Commentary Appetite Change in the year
– Acquisitions and
asset management
initiatives may
be inconsistent
with strategy
– Due diligence may
be flawed
– Tenant failure risk
Pressure on net asset value,
earnings and potentially
debt covenants.
Impact on strategy
– Thorough due diligence is undertaken on all acquisitions
including legal and property, tenant covenant strength
and trading performance
– We screen all prospective tenants and undertake regular
reviews thereafter
– Portfolio tenant concentration is considered for all
acquisitions and leasing transactions
– We have a diversified tenant base and limited exposure
to occupiers in bespoke properties
– Asset management initiatives undergo cost benefit analysis
prior to implementation
– External advisors benchmark lease transactions and advise
on acquisition due diligence
– Our experienced asset management team work closely
with tenants to oer them real estate solutions that meet
their business objectives. This proactive management
approach helps to reduce vacancy risk
– We monitor rent collection closely to identify potential issues
– Rent collection has remained high at 99.5% for the year
– Through our strong tenant relationships we are monitoring the
impact on our top occupiers of high inflation and potential
supply chain disruption stemming from the continuing eects of
the pandemic and more recently the war in Ukraine
– We have no exposure to Russian owned tenants who may
become subject to UK sanctions as a result of the war in Ukraine
– The granularity of our income has increased reducing
dependency on our top 10 occupiers to 28.5% from 36%
a year ago. No single tenant accounts for more than 4.1%
of income, down from 8.2% last year
The Board has no appetite for risk
arising out of poor due diligence
processes on acquisitions, disposals
and lettings. A degree of tenant
covenant risk and lower unexpired
lease terms are accepted on
urban logistics assets where there
is high occupational demand,
redevelopment potential or
alternative site use.
No significant change
Portfolio resilience has been
demonstrated through our rent
collection statistics.
We anticipate no significant
change in this risk over the next
12 months but will continue to
monitor the eects of recent
events in Ukraine.
Read more in
Chief Executive’s review
page 15
Read more in
Chief Executive’s review
page 15
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
3
Enhance assetvalue
and cash flow
4
Improve quality
and sustainability
of our assets
No significant change
Increased risk
Decreased risk
New
Property review
page 28
Property review
page 28
Financial review
page 42
LondonMetric Property Plc
Annual Report and Accounts 2022
8484
Principal risks
A review of our risk
11.
Capital and
finance risk
Risk Impact Mitigation
Commentary Appetite Change in the year
The Company has
insucient funds and
available credit.
Strategy implementation
isat risk.
Impact on strategy
– We maintain a disciplined investment approach with
competition for capital. Assets are considered for sale
when they have achieved target returns and strategic
asset plans
– Cash flow forecasts are closely monitored
– Relationships with a diversified range of lenders are nurtured
– The availability of debt and the terms on which it is
available is considered as part of the Company’s long
term strategy
– Loan facilities incorporate covenant headroom,
appropriate cure provisions and flexibility
– Headroom and non financial covenants are monitored
– A modest level of gearing is maintained
– The impact of disposals on secured loan facilities covering
multiple assets is considered as part of the decision
making process
– Interest rate derivatives are used to fix or cap exposure
to rising rates as deemed prudent following specialist
hedging advice
– We raised £175 million through an oversubscribed equity
placing in November deploying the proceeds in investment
opportunities in less than three months
– We completed three new debt facilities last spring totalling
£780 million comprising an oversubscribed £380 million private
debt placement and two revolving credit facilities totalling
£400 million. These facilities replaced short dated facilities
and enabled us toincrease our debt maturity
– In November we entered into a further £150 million
unsecured debt facility to increase short term headroom
and accelerate an investment pipeline
– We have substantial headroom under our loan covenants.
Loan to value is 28.8%. Interest cover on unsecured facilities
is5.2 times
The Board has no appetite for
imprudently low levels of available
headroom in its reserves or credit
lines. The Board has some appetite
for interest rate risk. Loans are not
fully hedged. This follows cost
benefit assessment and takes into
account that not all loans are fully
drawn all the time.
Decreased risk
Our significant refinancing
activity has extended
debt maturity.
There is significant upward
pressure on interest rates, but
with no immediate financing
requirement following activity
in the year, and drawn fixed
rate debt of £720 million we
anticipate no significant change
in this risk over the next 12 months.
Financing risks
85
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
11.
Capital and
finance risk
Risk Impact Mitigation
Commentary Appetite Change in the year
The Company has
insucient funds and
available credit.
Strategy implementation
isat risk.
Impact on strategy
– We maintain a disciplined investment approach with
competition for capital. Assets are considered for sale
when they have achieved target returns and strategic
asset plans
– Cash flow forecasts are closely monitored
– Relationships with a diversified range of lenders are nurtured
– The availability of debt and the terms on which it is
available is considered as part of the Company’s long
term strategy
– Loan facilities incorporate covenant headroom,
appropriate cure provisions and flexibility
– Headroom and non financial covenants are monitored
– A modest level of gearing is maintained
– The impact of disposals on secured loan facilities covering
multiple assets is considered as part of the decision
making process
– Interest rate derivatives are used to fix or cap exposure
to rising rates as deemed prudent following specialist
hedging advice
– We raised £175 million through an oversubscribed equity
placing in November deploying the proceeds in investment
opportunities in less than three months
– We completed three new debt facilities last spring totalling
£780 million comprising an oversubscribed £380 million private
debt placement and two revolving credit facilities totalling
£400 million. These facilities replaced short dated facilities
and enabled us toincrease our debt maturity
– In November we entered into a further £150 million
unsecured debt facility to increase short term headroom
and accelerate an investment pipeline
– We have substantial headroom under our loan covenants.
Loan to value is 28.8%. Interest cover on unsecured facilities
is5.2 times
The Board has no appetite for
imprudently low levels of available
headroom in its reserves or credit
lines. The Board has some appetite
for interest rate risk. Loans are not
fully hedged. This follows cost
benefit assessment and takes into
account that not all loans are fully
drawn all the time.
Decreased risk
Our significant refinancing
activity has extended
debt maturity.
There is significant upward
pressure on interest rates, but
with no immediate financing
requirement following activity
in the year, and drawn fixed
rate debt of £720 million we
anticipate no significant change
in this risk over the next 12 months.
Read more in
Financial review
page 42
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
3
Enhance assetvalue
and cash flow
4
Improve quality
and sustainability
of our assets
No significant change
Increased risk
Decreased risk
New
Viability Statement
page 87
LondonMetric Property Plc
Annual Report and Accounts 2022
86
In accordance with the 2018 UK Corporate
Governance Code, the Board has assessed
the prospects of the Group over the following
time horizons:
– Short term – a period of 12 months from
the date of this report as required by the
‘Going Concern’ provision; and
– Longer term – a period of three years
to 31 March 2025 as required by the
‘Viability Statement’ provision.
Short term assessment
The Directors’ going concern assessment
included consideration of the following:
– Principal risks and uncertainties facing
the Group as discussed in the Risk
management section of this report
on pages 70 to 85;
– The business strategy and outlook as
discussed throughout the Strategic report;
– The economic impact of global issues
such as the pandemic and war in
Ukraine, including the impact of higher
inflation, interest rates and supply
chain disruption;
– The economic consequences of
potential rental defaults, vacancy costs
and letting defaults;
– The Group’s short term cash flow forecast
which is reviewed regularly by the Senior
Leadership Team;
– Rent collection rates, which are
circulated weekly to the Executive
Directors and senior managers; and
– The financial position and liquidity
including available cash and undrawn
facilities, access to debt facilities
and headroom under financial
loan covenants.
As reported in the Financial review, the
Group’s financial position was strengthened
in the year by a £175 million equity raise
that was significantly oversubscribed and
was deployed quickly into investment
opportunities. The Group also entered into
new debt facilities of £930 million in the
year, and at 31 March 2022, had available
cash and undrawn facilities of £299 million
and significant headroom under financial
loan covenants.
At 31 March 2022, the Group’s gearing ratio
as defined within its unsecured facilities
and private placement loan notes, which
together account for 92% of debt drawn,
was 39% (maximum 125%) and interest cover
was 5.2 times (minimum 1.5 times).
Rent collection rates continue to be
exceptionally strong with 99.5% of rent
due inthe year collected.
Longer term assessment
The Board reviews and challenges the period
over which to assess viability on an annual
basis and have determined that the three
year period to 31 March 2025 remains an
appropriate period over which to assess the
Group’s viability, as in previous years, for the
following reasons:
– The Group’s financial business plan and
detailed budgets cover a rolling three
year period;
– It is a reasonable approximation of the
time it takes from obtaining planning
permission for a development project
to practical completion of the property.
– The average length of the Group’s
developments that completed in the
year at Bedford, Tyseley and Derby was
ten months;
– The weighted average debt maturity
at 31 March 2022 was 6.5 years; and
– Three years is considered to be the
optimum balance between long term
property investment and the diculty in
accurately forecasting ahead given the
cyclical nature of property investment.
Going concern and viability
A review of our risk
Based on the results of their assessment which is detailed
below, theDirectors have a reasonable expectation
that the Company will beable to continue in operation
andmeet its liabilities as they fall due over the threeyear
period to 31 March 2025.
Going Concern Statement
On the basis of this review, together
with available market information
and the Directors’ experience and
knowledge of the portfolio, they have
a reasonable expectation that the
Company and the Group can meet
its liabilities as they fall due and has
adequate resources to continue in
operational existence for at least
12 months from the date of signing
these financial statements.
Accordingly, they continue to adopt
the going concern basis in preparing
the financial statements for the year
to 31 March 2022.
87
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88 -154 155 -208
Assessment of viability
The Directors conducted this review taking
account of the Group’s business strategy,
principal risks, financial position and outlook
as discussed throughout the Strategic review.
The Group’s strategy is reviewed by the
Board at each meeting and in depth on
an annual basis, when one meeting is
dedicated entirely to strategy and the Board
receives a presentation from the Strategy
Director, as discussed on page 111.
The business plan is structured around the
Group’s strategy and consists of a rolling
three year profit forecast, which factors in
deals under oer, committed developments
and reinvestment plans. It considers
capital commitments, dividend cover, loan
covenants and REIT compliance metrics.
The Senior Leadership Team provides regular
strategic input to the financial forecasts
covering investment, divestment and
development plans and they consider
the impact to earnings and liquidity.
Forecasts are reviewed against actual
performance and reported quarterly to
the Board.
When assessing longer term prospects,
the Board is mindful of the following:
– Income certainty, with 61% of the
Group’s rental income benefiting from
contractual uplifts;
– Income diversity, with 28.5% of rent due
from our top ten occupiers, falling from
51% in 2019 and 36% last year;
– Strong support from equity investors
evidenced by the oversubscribed
£175 million equity raise in the year;
– Strong relationships with debt providers,
evidenced by the £930 million debt
facilities completed in the year;
– Substantial liquidity with undrawn debt
facilities and cash of £299 million at the
year end; and
– The Company’s proven track record of
executing transactions, making good
sector choices and growing income even
through periods of significant uncertainty
including the Covid-19 pandemic.
In addition, the business plan was stress
tested to ensure it remained resilient
to adverse movements in its principal
risks including:
– Changes to macro-economic conditions,
reducing rent and property values;
– Changes in the occupier market
including tenant failures impacting
occupancy levels and lettings;
– Changes in the availability of funds
and interest rates; and
– Changes in property market
conditions impacting investment
and development opportunities.
Our scenario testing considered the longer
term economic impact of global issues
such as the pandemic and war in Ukraine,
including the impact of higher inflation and
interest rates, and supply chain disruption.
Reverse stress testing was also undertaken,
which considered the amount by which
property values and rents would need to
fall before loan covenants were breached.
Property values would need to fall by
approximately 49% and rental income by
64% to breach the gearing and interest
cover covenants under the Group’s
unsecured and private placement debt
facilities, that together account for 92% of
the Group’s borrowing including its share of
joint ventures.
Throughout the scenario testing, the
Group had sucient reserves to continue
in operation and remain compliant with its
banking covenants.
This testing, combined with the Group’s
strong financial position, rent collection
evidence, and mitigation actions available
including deferring non committed capital
expenditure and selling assets, supports
the Group’s ability to weather unexpected
and adverse economic and property
market conditions over the longer term
viability period.
Although the Board’s review focused on
the three year viability assessment period,
it also considered the Company’s longer
term success as noted on page 110 of the
Governance report.
Viability Statement
Based on the results of their
assessment, the Directors have a
reasonable expectation that the
Company will be able to continue
in operation and meet its liabilities
as they fall due over the three year
viability period to 31 March 2025.
Statement of compliance
The Board has considered
the Company’s compliance
with the provisions of the UK
Corporate Governance Code
(the ‘Code’) published by the
Financial Reporting Council in
July 2018, publicly available at
www.frc.org.uk.
The Board considers that the
Company has complied with
the provisions set out in the
Code throughout the year
under review and to the date
of this report, except for
Provision 19 relating to the
tenure of the Chair, which is fully
explained in the Nomination
Committee report on page
117 and Provision 38 in relation
to pension contributions as
explained in the Remuneration
Committee report on page 133.
Pension contributions for the
current Executive Directors
will be aligned with the all
employee rate from June 2022.
Board leadership
and Company purpose
Provides an overview of activities in the
year and how the Board has considered
its S172 responsibilities.
Chair’s introduction 90
Board of Directors 92
Management team 94
Our purpose, values, strategy and culture 96
Our activities
98
Our stakeholders and the Board’s engagement 100
Section 172 Statement 104
Employee engagement 106
Shareholder engagement 109
Highlights of the year
Work on succession planning
including appointment of Alistair
Elliott as a Non Executive Director
Increased focus on ESG journey
Received feedback from designated
Workforce NED on sta survey results
and annual meeting
Engaged with c.250 equity investors
Dedicated meeting on strategy
p9 0 -111
Division of
responsibilities
Sets out the leadership framework
and roles of Board members.
p112 -115
Leadership framework 112
Leadership roles and responsibilities 113
Governance overview
This report sets out the
Company’s governance
policies and practices
and explains how the
Board discharges its duties,
applies the principles
and complies with the
provisions of the Code.
Annual Report and Accounts 2022
LondonMetric Property Plc
88
p150 -154
Audit, risk and
internal control
Sets out how we monitor the Integrity
of the financial statements and oversee
risk management and internal control.
Highlights of the year
Approved interim and full year results
Focus on ESG and dedicated meeting
Oversight of new reporting requirements
including TCFD and ESEF
Audit partner rotation
Considered cyber security, emerging
risks and tenant covenant analysis
Reviewed investor and occupier
survey results
Audit Committee report 124
Financial reporting and
significant matters 126
Risk management and
internal control 128
Regulatory compliance 130
Report of the Directors
Sets out our regulatory compliance
and provides details of the 2022
Annual General Meeting.
p124 -131
Composition,
succession and
evaluation
Sets out the practices in place which
ensure the Board and its Committees
have the appropriate balance of
skills to govern the business and
operate eectively.
p116 -123
Highlights of the year
Board succession planning and
the appointment of Alistair Elliott
Led the internal Board and Committee
performance evaluation
Commenced search for an external agency
toassist with further NED recruitment
Nomination Committee report 116
Board composition and succession planning 117
Board appointment and induction 119
Diversity and inclusion 120
Performance evaluation 121
p132-149
Highlights of the year
Set targets for the year ahead
Set executive pay and alignment
with wider workforce
Considered employee views
on executive pay
Approved the variable elements ofthe
annual bonus and LTIP
Approved the extension of the Chair’s
letter of appointment for 12 months
to 31 March 2023
Remuneration Committee report 132
Chair’s introduction 133
Directors’ remuneration at a glance 135
Implementation of policy next year 136
Directors’ Remuneration Policy 138
Annual Report on Remuneration 141
Remuneration
Sets out our Remuneration Policy on
executive pay and its alignment with
strategy and the wider workforce.
LondonMetric Property Plc
Annual Report and Accounts 2022
89
Financial statements
155 -20888-154
GovernanceStrategic report
1-87
Report of the Directors 150
Directors’ Responsibilities Statement 154
skills and the right personal qualities to
complement and enhance the existing skill
set of the Board.
This appointment supports our longer
term succession planning for the Board,
which includes myself as your Chair and
my colleague James Dean, both of us
having now served for 12 years as Board
members. Both James and I will continue as
Non Executive Directors in the short term to
help ensure an orderly transition. In addition
we will require a suitable replacement for
Rosalyn Wilton, our Audit Committee Chair,
whose tenure is approaching nine years.
We are appointing an external agency to
help with our search and will report on the
results of this in due course.
Culture, Stakeholders and S172
Our culture defines how we do things and
behave. This is explained in detail on page
96. Supporting this culture through the
challenges of remote working has been
extremely important, and we have been
briefed regularly by the Executive Directors
on sentiment within thebusiness and the
wellbeing of employees.
Critical to our longer term success is the
strength of our stakeholder relationships.
We are here not only to generate financial
returns for shareholders but also to act
responsibly and in the best interests of all of
our stakeholders, the communities in which
we operate and wider society. The 2018
Corporate Governance Code requires us
to demonstrate how we have discharged
our duty under S172 Companies Act 2006
and report our compliance formally in a
statement, which we have set out on
page 104.
Whilst the Board’s direct engagement
is with shareholders and employees,
we have oversight of the wider team’s
relationships with occupiers, suppliers and the
communities within which we operate. This is
set out on page 100 along with the impact of
this engagement on the decisions we make.
Our successful equity raise demonstrated
thesupport of our investors, which is testament
to the extensive shareholder engagement
undertaken by the Executive Directors and our
comprehensive investor relations programme,
which is described in detail on pages 109 to
111 and something we are proud of. This oer
was extended to retail shareholders following
previous feedback we had received.
The dedication and commitment of our
close-knit entrepreneurial team has helped
us to make the right decisions and play our
part in a responsible and considered way
for the benefit of our stakeholders. We have
prioritised the wellbeing of our employees
and other stakeholders whilst protecting the
interests of our shareholders, and have been
rewarded by a set of exceptional results and
strong support from our equity investors and
debt providers over the year.
Despite the operational challenges we
have faced, with restrictions aecting the
economy and with homeworking guidance
for a large part of the year, your Board has
continued to operate as normal, meeting
remotely and safely where necessary to
maintain close oversight of the business
andits operations.
The Executive Directors and Senior Leadership
Team has worked tirelessly to protect and
motivate sta, consider the needs of our
occupiers and execute our business strategy,
and I would like to congratulate them on
their achievements this year. Our £175 million
equity raise in November was significantly
oversubscribed, and we were quick to deploy
this into attractive investments which have
enhanced our portfolio and helped it grow.
Board changes and succession
Our work on succession planning has
continued this year and I am very pleased
to announce and welcome Alistair Elliott to
the Board post year end as a Non Executive
Director. As former Senior Partner and Group
Chair of Knight Frank, Alistair brings a nearly
unique mix of both property and leadership
The strong governance framework
that underpins the way we do business
was once again critical this year, as we
continued to navigate our way through
the challenges imposed by the Covid-19
pandemic and our return to normality.
Patrick
Vaughan
Chair
Chair’s introduction
LondonMetric Property Plc
Annual Report and Accounts 2022
90
Board leadership and Company purpose
Our strong banking relationships helped us
secure new debt facilities in the year totalling
£930 million. Our most recent credit facility
for £150 million was drawn immediately to
fund acquisitions.
The £380 million private placement, which
was also oversubscribed, included a
£50 million green tranche, and £400 million
revolving credit facilities incorporated a
green framework and preferential pricing,
asdiscussed in detail in the Financial review
on page 42.
Whilst we were unable to invite shareholders
to attend the AGM last year, we oered
them the opportunity to listen in and ask
questions. This year, we are returning to an
in person meeting that shareholders can
attend and details can be found in the
Notice of AGM on page 202.
Diversity and inclusion
We look to employ and retain a diverse
group of talented individuals with a wide
range of skills, expertise and beliefs, and
to operate in a working environment free
of discrimination. We recognise that a
diverse organisation brings a wide range
ofperspectives and avoids narrow thinking.
We continue to support initiatives including
Real Estate Balance, to promote gender
diversity in the real estate sector and
throughout the year under review, have
met the Hampton Alexander target of
33% female representation on the Board.
To the extent that we have the opportunity,
we are committed to improving diversity
in its widest sense at all levels throughout
the organisation.
Internal Board evaluation
This year our performance evaluation was
undertaken internally, and I am pleased to
report that the Board and its Committees
continue to operate eectively, in an open
and supportive environment with the right
balance of skills and knowledge to carry
out their duties. I would like to thank my
fellow Board members for their support and
expertise this past year and for the valuable
contribution they make.
The findings and recommendations of this
year’s review and progress against the
recommendations made last year are
summarised in the Nomination Committee
report on page 122.
Our ESG journey
A priority this year for the Board has been to
ensure that the ESG targets and ambitions
outlined in the Responsible Business and ESG
review have continued to be progressed,
communicated and embedded into the
Company’s day to day activities. To this end,
the Audit Committee held an additional
meeting in the year to focus solely on
ESG matters, to which all Board members
were invited to attend, and received a
presentation from the Head of Investor
Relations and Sustainability and Strategy
Director. We continue to see greater focus
from investors on ESG matters and have
undertaken an in depth training session for
sta to raise awareness and progress specific
initiatives and projects in hand.
Our statement on TCFD, which is mandatory
this year, is set out on page 66. We remain
committed to reducing carbon emissions
and understand the importance of
addressing climate change. We continue
to assist our occupiers by providing buildings
that can meet their net zero targets and seek
to reduce emissions from our developments.
Our progress on this journey is outlined on
pages 49 to 69 of the Responsible Business
and ESG review.
Looking ahead
Our work on succession planning will
continue and we remain mindful of the
benefits of diversity in all respects as we
search for suitably experienced and
independent Directors.
We continue to focus on the resilience of
our business to challenges in the economic
and political landscape both in the UK and
globally. Whilst Covid-19 may thankfully
be largely behind us, we continue to face
economic challenges with the highest
inflation rates seen for decades and
geopolitical tensions including the war
in Ukraine.
Our success depends on a small, close-knit
and committed team of individuals led by
a dynamic Chief Executive, who I would
like to personally thank for embracing and
adapting to the challenges we have faced
this past year and for delivering another very
impressive set of financial results. I believe
that our portfolio is stronger than ever,
and Iook forward to the opportunities that
lie ahead.
Patrick Vaughan
Chair
Read more in the Notice
of AGM on page 202
Read more on diversity and
inclusion in the Nomination
Committee report page 120
Read more in the Responsible
Business and ESG review on page 49
Read more in the Nomination
Committee report on page 122
Strategic report Governance Financial statements
91
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88-154 155 -208
Patrick Vaughan
Chair of the Board and
Nomination Committee
Appointed: 13 January 2010
Patrick has been involved in the UK property
market since 1970. He was a co-founder
and CEO of Arlington, of Pillar, and of
London & Stamford, leading all three of the
companies to successful listings on the FTSE
main market. Upon completion of London
& Stamford’s merger with Metric in January
2013, hewas appointed Chair, becoming
Non Executive Chair on 1 October 2014.
Patrick also served as an Executive Director
of British Land 2005 to 2006, following its
acquisition of Pillar.
Other appointments: None
Andrew Jones
Chief Executive
Appointed: 25 January 2013
Andrew was a co-founder and CEO of
Metric from its inception in March 2010
until its merger with London & Stamford
in January 2013. On completion of the
merger, Andrew became Chief Executive
of LondonMetric. Andrew was previously
Executive Director and Head of Retail at
British Land. Andrew joined British Land
in 2005 following the acquisition of Pillar
where he served on the main Board.
Other appointments: None
Martin McGann
Finance Director
Appointed: 13 January 2010
Martin joined London & Stamford as
Finance Director in September 2008 until
its merger with Metric in January 2013,
when he became Finance Director of
LondonMetric. Between 2005 and 2008,
Martin was a Director of Kandahar Real
Estate. From 2002 to 2005 Martin worked
for Pillar, latterly as Finance Director. Prior to
joining Pillar, Martin was Finance Director
of the Strategic Rail Authority. Martin is a
qualified Chartered Accountant, having
trained and qualified with Deloitte.
Other appointments: None
Robert Fowlds
Senior Independent Director and
Chair of Remuneration Committee
Appointed: 31 January 2019
Robert was appointed to the Board
in January 2019. He has over 35 years’
experience in real estate and is a
Chartered Surveyor. He was head of real
estate investment banking at J.P. Morgan
Cazenove until 2015 and, prior to joining
J.P. Morgan Cazenove in 2006, an equity
analyst at Merrill Lynch and Dresdner
Kleinwort Benson.
Other appointments: Member of the
Supervisory Board of Klepierre S.A.
Suzanne Avery
Independent Director
Appointed: 22 March 2018
Suzanne was appointed to the Board in
March 2018. She has 25 years’ experience
in corporate banking, holding various
Managing Director roles at RBS, including
Managing Director of Real Estate Finance
Group & Sustainability, where she was
responsible for REITs, Funds and London
based private property companies together
with the sustainability strategy.
Other appointments: Church Commissioner,
senior advisor to Centrus Advisors, Non
Executive Director of Richmond Housing
Partnership Limited, and Deputy Chair of
RealEstate Balance.
N
A N R
A N R
The Board provides leadership and direction to the business, establishes and fosters the culture, values
and ethics within the organisation and independently oversees management’s execution of strategy
with appropriate challenge and support, taking into account the interests of its stakeholders when
making decisions.
Left to right
Patrick Vaughan, Andrew Jones, James Dean, Rosalyn Wilton,
LondonMetric Property Plc
Annual Report and Accounts 2022
92
Board of Directors
Board leadership and company purpose
Katerina Patmore (Kitty)
Independent Director
Appointed: 28 January 2021
Kitty was appointed to the Board in January
2021, joining as part of the Company’s Audit
Committee. Kitty is Chief Financial Ocer
of Harworth Group plc and has 16 years of
finance, banking and real estate lending
experience drawn from roles at Harwood,
DRC Capital and Barclays Bank PLC. She
was also formerly a National Director of the
Investment Property Forum.
Other appointments: Chief Financial Ocer
of Harworth Group plc and Chair of IPF’s
Finance Group.
James Dean
Independent Director
Appointed: 29 July 2010
James was appointed to the Board in July
2010. He is a Chartered Surveyor and has
worked with Savills plc since 1973, serving
asa Director from 1988 to 1999.
Other appointments: Non Executive
Director of Capsicum Holdings Ltd and
Chair of London & Lincoln Properties Ltd
and Patrick Dean Ltd.
Andrew Livingston
Independent Director
Appointed: 31 May 2016
Andrew was appointed to the Board in May
2016. In April 2018, Andrew was appointed
Chief Executive of Howden Joinery Group Plc,
having been the Chief Executive of Screwfix
since 2013 and previously their Commercial and
Ecommerce Director from 2009 to 2013. Before
joining Screwfix, Andrew was Commercial
Director at Wyevale Garden Centres between
2006 and 2008 and then Chief Operating
Ocer between 2008 and 2009. Andrew has
worked previously at Marks & Spencer, CSC
Index and B&Q where he was Showroom
Commercial Director from 2000 to 2005.
Other appointments: Chief Executive
of Howden Joinery Group Plc and Director
of Vedoneire Limited.
Alistair Elliott
Independent Director
Appointed: 26 May 2022
Alistair was appointed to the Board on 26 May
2022. He retired recently as Senior Partner and
Chair of the Knight Frank Group Executive
Board, where he drove the group’s global
strategy. Alistair has also previously been Vice
Chair and Trustee of LandAid, a member of
the BPF Policy Committee and the real estate
representative of the Professional and Business
Services Council, Chairman of the Oce
Agents Society and Chair of the Property
Advisors Forum.
Other appointments: Member of the Prince’s
Council and Chairman of The Commercial
Property and Development Committee for
the Duchy of Cornwall. Non Executive Director
to the Board of Grosvenor Great Britain
and Ireland.
Rosalyn Wilton
Independent Director and
Chair of Audit Committee
Appointed: 25 March 2014
A
R
Rosalyn was appointed to the Board in
March 2014, becoming Chair of the Audit
Committee in March 2015. She has held
a number of non executive directorship
positions, including with AXA UK Limited
where she acted as Chair of the Risk
Committee, and Optos Plc, where she was
Chair of Remuneration. She has previously
served as Senior Advisor to 3i Investments
and Providence Equity Partners, Chair of
Ipreo Holdings LLC, and has previously
worked for Reuters Group where she was a
member of the Executive Committee. Until
March 2022, Rosalyn was Trustee and Vice
Chair of the Harris Federation and Chair of
Governors of Harris Academy Bromley.
Other appointments: Independent Trustee,
Deputy Chair and Chair of Finance of the
University of London.
Left to right
Suzanne Avery, Robert Fowlds, Andrew Livingston, Katerina Patmore, Martin McGann
Board
independence
+75%
Female
representation
+33%
Board meeting
attendance
100%
Strategic report Governance Financial statements
93
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88-154 155 -208
A
Committee membership
A
Audit Committee
N
Nomination Committee
R
Remuneration Committee
Committee Chair
Committee member
N R
The team comprises departmental heads
from all key business functions with a diverse
range of skills and experience and meets to
discuss the evolution of strategy, risk, financial
and operating targets and performance,
investment opportunities, allocation of
capital and employee matters.
It provides feedback and makes
recommendations to the Board and is
responsible for identifying and assessing
risk and implementing and monitoring
mitigation processes.
Following the departure of Nick Minto in
October 2021, we redistributed work without
the need for a direct replacement, which
meant that female representation of the
Senior Leadership Team increased to 25%
excluding Executive Directors.
The team meet to discuss the key
operational and financial aspects integral
to the management of the business, and
through periods of enforced home working
inthe year, this continued remotely.
Regular meetings facilitate talent
development below Board level and
help promote an integrated and inclusive
culture throughout the organisation, as key
messages and decisions are fed down from
departmental heads to the wider workforce.
There are informal meetings at other times
and due to the size of the organisation, the
Executive Directors and Senior Leadership
Team are involved in all significant business
discussions and decisions.
The Senior Leadership Team is supported
by three sub-committees, each focusing
on dierent areas of the business: the
Investment, Asset Management and Finance
Committees, which meet regularly.
Valentine Beresford
Investment Director
Joined: 25 January 2013
Skills and experience: Valentine was
co-founder and Investment Director of
Metric from its inception in March 2010
until its merger with London & Stamford
in January 2013. Prior to setting up Metric,
Valentine was on the Executive Committee
of British Land and was responsible for all
their European retail developments and
investments. Valentine joined British Land
in July 2005, following the acquisition of
Pillar, where he also served on the Board
asInvestment Director.
The Senior Leadership Team operates under the
direction and leadership of the Chief Executive
to deliver the approved strategic objectives and
manage the day to day running of the business.
Mark Stirling
Asset Director
Joined: 25 January 2013
Skills and experience: Mark was co-founder
and Asset Management Director of Metric
from its inception in March 2010 until its
merger with London & Stamford in January
2013. Prior to the setting up of Metric,
Mark was on the Executive Committee
of British Land and as Asset Management
Director was responsible for the planning,
development and asset management of the
retail portfolio. Mark joined British Land in July
2005 following the acquisition of Pillar where
he was Managing Director of Pillar Retail
Parks Limited from 2002 until 2005.
Andrew Jones
Chief Executive
Martin McGann
Finance Director
Read Andrew’s full biography
on page 92
Read Martin’s full biography
on page 92
LondonMetric Property Plc
Annual Report and Accounts 2022
94
Management team
Board leadership and Company purpose
Committee membership
A
Asset Management Committee
I
Investment Committee
F
Finance Committee
A
A
I F
I
F
Andrew Smith
Strategy Director
Joined: 6 May 2014
A I
Skills and experience: Andrew joined
LondonMetric in May 2014 from British
Land where he worked for nine years.
Previously Andrew worked for Pillar. At British
Land he was a senior member of the retail
team and Head of Investment Portfolio
Management. Since joining LondonMetric,
Andrew has been responsible for the
development of the Company’s strategy
as well as portfolio management.
Jackie Jessop
Head of Finance
Joined: 1 March 2006
F
Skills and experience: Jackie joined London
& Stamford as Financial Controller on its
inception in 2006 having worked previously
for Pillar as Financial Controller. She became
Head of Finance at LondonMetric in 2013.
Jackie is a qualified Chartered Accountant
and is responsible for all aspects of financial
management and reporting.
Will Evers
Head of Long Income
Joined: 17 May 2010
I
Skills and experience: Will joined Metric from
inception in 2010 having previously worked
at LaSalle Investment Management and
Bear Stearns. Will’s primary focus is to source
and execute investment opportunities
whilst having responsibility for the portfolio
management and performance of the long
income and retail portfolio.
Gareth Price
Head of Investor Relations and
Sustainability
Joined: 5 January 2015
F
Skills and experience: Gareth joined
LondonMetric in 2015 having previously
worked in corporate broking at Cantor
Fitzgerald and Oriel Securities. He supports
the Executive Directors at shareholder
roadshows and events and also heads our
Responsible Business and Sustainability team.
Ritesh Patel
Forecasting and Corporate Finance
Joined: 21 November 2011
F
Skills and experience: Ritesh is a Chartered
Accountant and joined London & Stamford
in 2011 having previously qualified with BDO
LLP. Ritesh is responsible for the corporate
forecasting model and also is an integral part
of the banking and corporate finance team.
Jadzia Duzniak
Company Secretary
Joined: 23 April 2007
F
Skills and experience: Jadzia joined London
& Stamford in 2007 prior to its IPO and
became Company Secretary on merger
with Metric in 2013. Jadzia is a qualified
Chartered Accountant and her role extends
to corporate finance, banking arrangements
and transactions.
Sta
wellbeing
Financial
forecasts
and results
Cash flow,
liquidity and
debt
Risk and
mitigation
Asset
management,
development
and valuation
Acquisitions
and disposals
Responsibilities of the Senior Leadership Team
Female
representation*
25%
* Excluding Executive
Directors
Strategic report Governance Financial statements
95
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88-154 155 -208
Our purpose, values,
strategy and culture
Our strategy
How we achieve
this through our
strategic priorities
Our purpose sets out to employees, occupiers
and other stakeholders what we do and why.
It underpins our strategic priorities and long
term direction set by the Board, and guides our
decisions regarding transactions and capital
allocation. We see the progression of our ESG
agenda as a fundamental component of our
strategy and long term success.
Our values articulate what we believe in and
set our responsible approach to business.
Our culture guides the way we work and the
way we interact with our stakeholders. This is
set out below with links to further reading.
What we do
and why
Our vision
Our purpose
Being a leading income-led focused UK REIT.
To own and manage desirable real estate that meets occupiers demands,
delivering reliable, repetitive and growing income-led returns and outperforms
over the long term.
Learn more on
page 1
What we
believe in and
why it matters
The way
we work
Our culture is a combination of
our approach, encompassing
our values and what we
believe in
Our values
– Resilient portfolio
– Occupancy
– WAULT
– TPR
– LFL income
growth
– EPC rating
– BREEAM rating
– Employee
and occupier
survey results
– Strong
shareholder
and financing
relationships
– Dividend
progression
– TSR
– TAR
Our culture
We are a small highly focused and motivated
team. Our real estate knowledge and the
relationships we build with occupiers set us
apart and make us a partner of choice.
We nurture open and collaborative
communications with all stakeholders
and believe in a ‘can do’ attitude and
will always aim to do the right thing.
Learn more on
page 97
What we are
proud of
– Portfolio positioning
for the future
to benefit from
macro trends
– Minimising risk
and owning
assets with
occupier appeal
– A covered
and progressive
dividend
– Outperforming
benchmarks
– Attracting and
retaining talent
– Motivating our
team to deliver
long term
outperformance
– Working with
a wide range
of stakeholders
to understand
needs
– Fit for purpose,
resilient portfolio
– Improving the
quality of assets
– Minimising
the environmental
impact of
our activities
Read more on
pages 2-3
Read more on
pages 4-5
Read more on
pages 6-7
Read more on
pages 8-9
Annual Report and Accounts 2022
LondonMetric Property Plc
96
Board leadership and Company purpose
Learn more on page 14
Own Manage GenerateCollaborate
How the Board monitors culture
We strive to operate in an open, honest and
respectful manner, listening and engaging
with stakeholders and acting with integrity to
deliver our strategic objectives. We believe
in a ‘can do’ attitude, doing the right thing
for the long term, through empowerment,
inclusion, openness and teamwork.
The Board believes that this culture drives
the right behaviours and is therefore key
to our long term success. It recognises the
importance of monitoring the alignment of
culture to our strategy and ultimately our
purpose in order to highlight and address
anyinstances of misalignment.
The Chair is responsible for setting the tone
from the top and fostering the culture and
values of the Board and wider organisation.
When hosting Board meetings, he facilitates a
collaborative atmosphere in which all Directors
are able to voice their opinions and contribute
to the debate and no one individual
dominates. The ability for Board members
tospeak freely in a supportive environment
iscrucial for eective decision-making.
This culture and thinking permeates
throughout the organisation through the
close interaction of the Executive Directors
and Senior Leadership Team in day to
day activities, who lead by example and
demonstrate the behaviour that underpin
our culture.
We firmly believe that our culture is a key
strength and has enabled us to perform
exceptionally well in these challenging times,
and we are proud of our high sta retention
rates and contented workforce.
If the Board is concerned that policy, practices
or behaviour are not in line with the Company
purpose, values or strategy it will seek
assurance from the Senior Leadership Team
that it has taken corrective action. There were
no concerns raised in this regard in the year.
Throughout the disruption caused by the
Covid-19 pandemic, sta have been
encouraged and supported by a dedicated
Senior Leadership Team, who have fostered
an inclusive working environment through
virtual team meetings to ensure that
employees stayed connected and informed.
This inclusive and cohesive culture was
reinforced by regular updates to all sta from
the Chief Executive on transactions and
operational matters including any proposed
changes toworking arrangements.
Andrew Livingston has continued his work
as designated workforce NED and this year
hosted an in person and o site meeting
for a small group of employees from across
the business functions, providing a forum for
sta to share their views, raise any concerns
and improve links between employees
and the Board. This was also attended by
the Remuneration Committee Chair who
welcomed questions and explained how
executive pay was determined.
Our size, being only 35 employees and
the regularity of Board interaction with
employees, facilitates the monitoring of
culture, which we do in a number of ways
as follows:
– Inclusion of culture and value-led
questions within employee surveys
– Regular reporting and feedback from
the Executive Directors and designated
workforce NED following sta surveys,
highlighting what we do well and where
improvements can be made
– Regular face to face engagement
with employees through the annual
designated workforce NED meeting,
attendance at Board and Committee
meetings and at Board site visits
– Involvement of sta in the induction
and training sessions for new Board
members which this year will follow the
appointment of Alistair Elliott as a new
Non Executive Director
– Feedback from other stakeholder
engagement programmes including
our annual occupier survey and bi-
annual investor survey, which helps the
Board to assess our interactions with
third parties
– Monitoring of sta turnover rates,
whistleblowing and health and
safety incidents
Sta wellbeing and engagement has
been a top priority. Going forward, we will
look to learn from the changes made to
our business operations as a result of the
Covid-19 pandemic, including the ability
to successfully work remotely, as a result of
improvements to the IT infrastructure and
widespread use ofvirtual meeting platforms.
Our fifth all employee survey was completed
by 94% of sta in February. The feedback
continued to be very positive, as discussed in
detail on page 61. Key themes arising were
the importance of flexible working and sta
training and development.
The responses were discussed by the
Strategy Director with Andrew Livingston as
designated workforce NED, who relayed
the results of the survey, along with non
attributable feedback from his annual sta
meeting, to the Board at their next meeting.
In response to the feedback received
from the sta survey and the
designated workforce NED’s meeting
of employees, the Board will focus
on the following key action points in
order to drive the right behaviour and
support the wellbeing of employees:
– Provide training and development
opportunities for sta, both
professionally and personally
– Retain a flexible arrangement
where it is good for the business
– Keep working arrangements
under review including hybrid/
flexible working patterns to best
accommodate team working and
collaboration alongside flexibility
Further details of employee
engagement and the work of the
designated workforce NED can be
found in this Governance report on
pages 106 to 108, the Strategic report
on page 24 and in the Responsible
Business and ESG review on
pages60to 61.
Staff
turnover
6%
since merger
in 2013
2022 staff
survey
100%
enjoy working at
London Metric
Strategic report Governance Financial statements
97
LondonMetric Property Plc
Annual Report and Accounts 2022
1-87 88-154 155 -208
People and operations
Finance and risk
Our strategic priorities
How the Board spent its time in 2022
Our activities
Board leadership and Company purpose
– Review of strategy at each meeting and
the need for any change as a result of
investor feedback, occupier sentiment
and market conditions including the
pandemic, post-lockdown recovery and
war in Ukraine
– Approved capital allocation for property
acquisitions and disposals in excess
of £10 million including the corporate
acquisition of the Savills UK Income
and Growth Fund comprising 15 assets
for £122 million, the acquisition of the
THG mega distribution warehouse
in Warrington for £97 million and the
disposal of our mega distribution
warehouse in Thrapston let toPrimark for
£102 million
– Approved forward funded development
commitment in Huntingdon for £53 million
and pre-let to AM Fresh, and the second
phase of our pre-let development
in Weymouth
– Approved the full year and half
year results, the Annual Report and
Viability Statement
– Scrutinised the interim and annual
property valuations
– Annual review of the internal
control framework, risk register and
mitigation strategies
– Approved £175 million equity placing
– Approved £930 million private placement
and unsecured credit facilities
– Approved appointment of Alistair Elliott
as a new Non Executive Director
– Reviewed succession planning for Non
Executive Directors and are appointing
an external agency to commence
a transparent and open search
for replacements
– Reviewed the results of the internal Board
and Committee performance evaluation
– Considered new TCFD disclosure
requirement and climate risk assessment
– Adopted the use of Sharepoint for Board
papers to improve security of information
– Continued to monitor culture by
considering the results of the fifth annual
sta survey
– Andrew Livingston continued proactive
engagement as designated workforce
Non Executive Director by hosting an
in person meeting for a small group
of employees. Also attended by the
Remuneration Committee Chair to
welcome questions and explain the
components and determination of
executive pay
– Regular all sta updates were provided
by the Chief Executive on transactions,
results and operations
– Considered workforce remuneration
policies and packages and alignment to
Executive Directors
– Greater involvement of the management
team below the Board in Committee
meetings, increasing interaction
with the Non Executive team and
progressing development
– Improved cyber security with the
implementation of additional measures
and tested resilience through penetration
testing and an all employee cyber
awareness workshop
Strategy and operations
Governance,
leadership & regulatory
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
3
Enhance assetvalue
and cash flow
4
Improve quality
and sustainability
of our assets
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
Governance,
leadership &
regulatory
Finance
and risk
Strategy and
operations
People and
operations
Other
stakeholders
The
Board
LondonMetric Property Plc
Annual Report and Accounts 2022
98
Other stakeholders
How the Board spent its time in 2022
Board attendance during theyear
1 Based on Board members as at 31 March 2022
2 Bracketed numbers indicate the number of meetings the member was eligible to attend
3 Tenure is measured from the date of appointment to the LondonMetric Board and as at 31 March 2022, rounded to the nearest whole year
4 Although having served for 12 years, the Board continues to value James’s in-depth property expertise and sound judgement and believes
he acts in an independent manner at all times
– Considered feedback from Executive
Directors following shareholder meetings,
roadshows and results presentations
– Executive Directors met with c.250
equity investors
– Held virtual and in person presentations
and calls with existing and new lenders
in connection with the new debt facilities
and equity placing
– Received a presentation from members
of the Senior Leadership Team on the
Company’s ESG framework, ambitions,
initiatives and pathway in response to
increased investor focus
– Considered feedback from investor and
occupier surveys
– Reviewed and approved S172 Statement
and Directors’ duty to stakeholders
In addition to the work of the Board noted
on pages 98 and 99, regular matters are
discussed at each meeting including:
– Property market trends focusing on
logistics and long income sectors, as well
as the economic and political backdrop
including the Covid-19 pandemic and
war in Ukraine
– Quarterly performance against budgets
and analyst consensus
– Rolling three year financial forecasts,
liquidity and banking covenants
– Risk dashboard and emerging risks
– Quarterly dividend, scrip and PID
and the continued application of the
dividend policy
Key focus in 2023
– Continue work on succession
planning and Non Executive
Director recruitment
– Continued focus on ESG journey
– Continue to develop talent below
the Board and increase interaction
with the Board
– Promote diversity at all levels
throughout the organisation
and be mindful of Parker
Review recommendation
– Audit tender for 2024 year end
– Remuneration Policy review for
approval at 2023 AGM
– Internal Board and Committee
performance evaluation
Strategic report Governance Financial statements
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LondonMetric Property Plc
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1-87 88-154 155 -208
Member
Date
appointed
Tenure
(years)
3
Independent Board
2
Chair
Patrick Vaughan 13/1/2010 12 n/a 6 (6)
Executive Directors
Andrew Jones 25/1/2013 9 No 6 (6)
Martin McGann 13/1/2010 12 No 6 (6)
Non Executive Directors
Suzanne Avery 22/3/2018 4 Yes 6 (6)
James Dean
4
29/7/2010 12 Yes 6 (6)
Robert Fowlds 31/1/2019 3 Yes 6 (6)
Andrew Livingston 31/5/2016 6 Yes 6 (6)
Kitty Patmore 28/1/2021 1 Yes 6 (6)
Rosalyn Wilton 25/3/2014 8 Yes 6 (6)
Percentage independent
1
75%
Why they are important to us
Delivery of strategy
Key to long term success
Responsibility towards
their wellbeing, safety
anddevelopment
What is important to them
Flexibility, wellbeing and safety
Progression and career development
Reward and recognition
Fairness and equality
Our people
A small talented, committed
and diverse team of individuals.
In order to generate long term sustainable returns,
we need to understand the views and take account
of what is important to our key stakeholders. We do
this through proactive engagement and by nurturing
the relationships we have built with them.
Board engagement and oversight
The Covid-19 pandemic caused understandable
concerns over safety when returning to the oce.
Direct feedback to the Board through the close
involvement of the Executive Directors and
information received from the Senior Leadership
Team, and the designated workforce NED
following his annual sta meeting.
Results of fifth employee survey were discussed
with the designated workforce NED who fed
back to the Board.
Attendance by sta below Board at meetings
and accompanying property tours facilitates
interaction and engagement.
Sta pay awards reviewed by the
Remuneration Committee.
Board’s response and impact on decisions
More stringent rules were applied to close
Covid contacts than the government
guidance to protect sta.
A careful return to the oce when restrictions
were lifted, with minimal external visitors and
most meetings held remotely over Microsoft
teams. Hybrid working enabled sta to
balance home needs and remain safe.
Results of employee survey and designated
NED sta meeting led to focus on flexibility of
working arrangements alongside the benefits
of team collaboration.
Clear communication and regular email
updates to all sta by the Chief Executive.
Significant sta participation in the 2022
LTIP approved.
Outcomes
6% sta turnover since
merger in 2013
100% of sta feel proud
to work for the Company
Employee survey
results page 61
60% employee
participation in 2022
LTIP page 140
Read more on Employee
engagements on
page 106
LondonMetric Property Plc
Annual Report and Accounts 2022
100
Our stakeholders and
theBoard’s engagement
Board leadership and Company purpose
We set out on pages 24 to 25 of the Strategic report how the executive team has engaged with our stakeholders,
setting out the methods used, the feedback gathered and any resulting actions. We set out below how the Board
considered the interests of stakeholders and the information it received through engagement when making decisions
in the year. When making decisions, the Board considered each of its duties under S172 as listed on page 104.
Our contractors and suppliers
The businesses we work with.
Why they are important to us
Being a small team we are
dependent on a diverse
group of key suppliers
including professional advisors
and contractors
What is important to them
Fair payment terms
and prompt settlement
Good, eective and
stable working relationship
Long term partnership
Board engagement and oversight
The Board or its Committees receive regular
presentations and reports from its advisors
including external auditors, valuers and
remuneration consultants, who also regularly
attend Committee meetings.
Continued to advocate the Prompt
Payment Code and promote responsible
development standards.
Board’s response and impact on decisions
Received a Corporate Governance
update from Deloitte. Presentations keep
the Board up to date on market trends and
regulatory requirements.
Received feedback from PwC on Executive
Director peer group pay comparatives to
assist with setting remuneration.
Considered Deloitte partner rotation and
appointment of new Engagement Partner.
Our occupiers
The customers we provide
real estate solutions to.
Why they are important to us
Drivers of income
and capital growth
Lie at the heart of
our business purpose
What is important to them
Fit for purpose real estate
Acceptable lease terms
Well designed and
sustainable buildings
Good tenant/landlord relationship
Board engagement and oversight
Proactive engagement by asset managers
identified tenants experiencing financial
diculty through the pandemic and sought
solutions at an early stage. Chief Executive
involved in all decisions.
Chief Executive receives weekly rent collection
reports and feeds back to the Board.
Results of the annual occupier survey presented
to Audit Committee.
Site visits provide an opportunity for the Board
to engage with customers.
Board’s response and impact on decisions
Chief Executive involvement facilitated quick
decision-making to grant concessions or
deferral solutions for tenants with compensating
asset management initiatives, protecting the
Group’s income.
Occupier survey results help guide longer
term planning.
We have worked with occupiers to add solar PV,
progressing NZC and mitigating energy costs.
Property visit to the Bedford development site
attended by Robert Fowlds and Suzanne Avery.
Outcomes
98.7% portfolio occupancy
8.5/10.0 landlord
recommendation score
Occupier survey results
page 59
99.5% of rent collected
in the year
Read more on
page 59
Outcomes
Average payment
term of 14 days
100% compliance with
Responsible Development
checklist by contractors
page 62
Read more on
page 62
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1-87 88-154 155 -208
Our investors
Shareholders, debt providers
and joint venture partners.
Why they are important to us
Continued investment
Continued financial support
Future capital requirements
What is important to them
Financial performance
and progression
Well covered dividend/interest
Clear strategy, execution
and reporting
ESG targets and progression
Board engagement and oversight
The pandemic led to understandable
investor uncertainty over rent collection and
dividend payments.
The Board received briefing papers and a
presentation from brokers on the proposed
equity placing and discussed the inclusion
of PrimaryBid to facilitate participation by
retail shareholders following feedback from
shareholders after previous equity raises.
Comprehensive investor relations programme
undertaken by the Executive Directors and
reported to the Board at all meetings, with
c.250 equity investor meetings in the year,
both virtually and in person. Investor tours
arranged where possible.
Virtual AGM in 2021 gave shareholders the
opportunity to submit questions.
The Board received an update from
the Finance Director on the new private
placement debt and unsecured credit
facilities and considered the capital
funding allocation.
Board’s response and impact on decisions
Significant shareholder contact throughout
the pandemic providing additional trading
and rent collection updates.
Successful and oversubscribed £175 million
equity placing in November 2021.
Approved PrimaryBid participation in equity
placing to increase retail shareholding,
which represented 2% of the shares issued.
Focus on ESG following feedback from
investor meetings with a dedicated meeting
of the Audit Committee, attended by all
Board members, todiscuss our ESG journey
and initiatives.
Approved a new £380 million private
placement which incorporated a £50 million
tranche subject to a green use of proceeds
framework, two revolving credit facilities
totalling £400 million which incorporated a
green framework and a £150 million short
term unsecured credit facility which was
drawn immediately as discussed
in detail in the Financial review on page 42.
Outcomes
£175 million equity raise
£930 million debt
facilities completed
6.9% dividend progression
PrimaryBid participation
in equity raise
Investor site visit to Brent
Cross, London as discussed
on page 63
Read more on
Shareholder engagement
on page 109
LondonMetric Property Plc
Annual Report and Accounts 2022
102
Board leadership and Company purpose
Our stakeholders and
theBoard’s engagement
Our communities
The local interests with which we work
including businesses, residents and authorities.
What is important to them
Environmental impact
Disruption to daily lives
andbusiness operations
Employment opportunities
Why they are important to us
Supporting the communities
within which we work underpins
our responsible approach to
doing business and delivering
our strategy
Board engagement and oversight
Particular focus on ESG this year resulted in
a separate meeting of the Audit Committee
that was dedicated to a presentation by
two members of the Senior Leadership Team
on the Company’s ESG journey, providing a
forum for discussion and debate and raised
awareness of ESG matters at Board level.
ESG working group which included the
Finance Director met several times during
the year.
The working group supports charitable
donations and organisations local to assets
alongside support for sta fundraising.
Relationships with planning authorities are
key for the delivery of our asset management
and development plans. Engagement
and updates on planning and community
consultations are reported at Board Meetings.
Investment acquisition summary briefing
papers contain ESG credentials including
EPC ratings and BREEAM certification.
Board’s response and impact on decisions
ESG actions following dedicated meeting
arising included:
– Tracking of indices used by investors
to assess ESG performance
– Embedding data capture obligations
into leases going forward where possible
– Considering whether ESG quantifiable
measures could be incorporated into
personal objectives
Completed final phases of development
at Bedford and Tyseley, certified BREEAM
Excellent in the year.
Approved the acquisition of a pre-let
development opportunity for £53.4 million
which will be certified BREEAM Very Good.
Formalised carbon oset strategy and
undertook a climate risk assessment in the
year to support TCFD disclosure.
New electric company car leasing scheme
for employees approved by the Board
and established, benefiting employees
and the environment.
Read more on engaging with stakeholders on pages 24 to 25 of the Strategic report and throughout the Responsible Business and ESG
review on pages 58 to 64. Further detail on engagement with employees and shareholders can be found on pages 106 to 111 of this
Governance report.
Outcomes
£66,766 charitable
donations
Portfolio EPC rating of A-C
increased to 85%
29% of portfolio certified
BREEAM Very Good
or Excellent
Read more on
page 64
Strategic report Governance Financial statements
103
LondonMetric Property Plc
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1-87 88-154 155 -208
Companies Act 2006
Section 172 Statement
We are supportive of the emphasis the
Code places on stakeholders and our duty
under Section 172 of the Companies Act
2006 to act in good faith, and in a way
that would be most likely to promote the
success of theCompany for the benefit of
itsmembersas a whole, having regard to:
– The likely consequences of decisions
inthe long term;
– The interests of employees;
– The Company’s relationships with
suppliers, customers and others;
– The impact of the Company’s operations
on the community and the environment;
– The Company’s reputation and
maintaining high standards of
businessconduct; and
– The need to act fairly as between
members of the Company.
Identifying the relevant issues
andstakeholders
Throughout this report we set out our key
stakeholders as our people, our occupiers,
our investors, our contractors and suppliers,
and our communities. Their importance to
our business strategy and long term success
is described on pages 100 to 103.
We believe that in order to generate
value and long term sustainable returns
we need to understand the views and
take account of what is important to our
key stakeholders, through building and
nurturing the relationships we have with
them. We do this through eective and
proactive engagement.
Methods used by the Board to perform
their S172 duties
Methods used by the Board to perform
theirS172 duties include the following:
– Oversight of the Company’s purpose,
values, strategy and alignment
with culture;
– Consideration of the Group’s principal
risks and mitigation strategies;
– Its annual review of strategy and
long-term sustainable success;
– Direct and indirect stakeholder
engagement; and
– ESG oversight and dedicated focus
thisyear by the Audit Committee.
Methods of engagement
Engagement with stakeholders is both at
Board level, principally with employees
and shareholders, and through dedicated
management teams who keep the Board
fully apprised of material issues through
regular reports and briefing papers.
Methods of engagement include one to one
meetings and roadshows, which throughout
the pandemic have continued uninterrupted
through the use of virtual platforms, regular
liaison, formal employee appraisals and
customer, investor and employee surveys.
On pages 24 to 25 of the Strategic report,
we outline the ways the executive team has
engaged with our stakeholder groups this
year regarding day to day operations, the
feedback received and the outcomes and
actions arising. On pages 100 to 103, we set
out the Board’s engagement and oversight
and the impact this has had on some of
thedecisions they have made.
Impact on decisions made in the year
We have continued to embed stakeholder
interests into our culture and business model,
and nurture the strong relationships we have
built with tenants and suppliers to provide
workable solutions. All significant Board
decisions proposed must demonstrate
that the impact to stakeholders has
beenduly considered.
Board and Committee minutes record
theconsideration of stakeholders in the
decision making process where relevant,
and an explanation of Directors’ duties
underS172 is provided on induction for
allnewly appointed Directors.
Some examples of how the Board has
considered and responded to stakeholder
needs this year are set out on pages
100 to 103 and key decisions made
aresummarised below:
1. £175 million equity placing for
investment opportunities approved
and the appointment of PrimaryBid
to facilitate participation by retail
shareholders, following feedback
received from investors following
previous equity raises.
2. £122 million corporate acquisition
oftheSavills UK Income and Growth
Fund, comprising 15 predominantly
logistics assets, creating long term
valueand growth for shareholders
inour preferred sectors.
3. THG mega distribution warehouse
acquisition in Warrington for £97 million
approved, replacing income lost
through sales with a newer, more
modern and well located asset.
4. Disposal of a mega distribution
warehouse in Thrapston let to
Primark for£102 million approved,
demonstrating our commitment
to recycle capital out of mature
assets toprovide funding for future
investmentsand developments and
deliver further value for shareholders.
5. £780 million debt refinancing
approvedwhich lengthened debt
maturity, increased hedging, diversified
our lending base and reduced future
refinancing risk, whilst incorporating
agreen framework.
6. Acquisition of a pre-let development
opportunity for £53.4 million approved,
which is expected to be certified
BREEAM Very Good.
7. Completed the final phases of our
developments at Bedford and Tyseley
in the year, both certified as BREEAM
Excellent. Environmental considerations
at Bedford included solar PV and EV
charging point installations, alongside
community considerations including
thecreation of permanent local jobs
and charity initiatives.
8. Continued to provide assistance to
customers most aected by Covid-19
disruption, including permitting monthly
payment plans, short term deferral
arrangements and rent concessions in
return for asset management initiatives.
9. New electric company car leasing
scheme for employees approved,
benefiting employees and
the environment.
10. Responsible development of 51,000 sq ft
at Weymouth incorporating a number
of ecological initiatives and biodiversity
enhancement works.
Conclusion
After due consideration, we believe
that the Board has taken into
account the views, interests and
impact on key stakeholders in its
decisions made during the year.
LondonMetric Property Plc
Annual Report and Accounts 2022
104
Board leadership and Company purpose
S172 consideration Disclosure
The likely consequence of decisions
in the long term
– Chief Executive’s review
– Promoting long term success
– Strategic priorities and long term strategy
– Focus on strategy
Learn more on page 15
Learn more on page 110
Learn more on page 14
Learn more on page 111
Interests of its employees – Our people
– Employee engagement
Learn more on page 60
Learn more on page 106
The Company’s relationships with suppliers,
customers and the environment
– Engaging with stakeholders
– Our stakeholders and the
Board’s engagement
– Social considerations
Learn more on page 24
Learn more on page 100
Learn more on page 58
Impact of the Company’s operations
on the community and the environment
– Environmental considerations
– Communities
– TCFD Recommendation and Alignment
Learn more on page 52
Learn more on page 64
Learn more on page 66
The Company’s reputation and maintaining
high standards of business conduct
– How the Board monitors culture
– GRESB & FTSE4Good
Learn more on page 97
Learn more on page 51
The need to act fairly between members
of the Company
– Shareholder engagement
Learn more on page 109
Learn more
about our £122m
Savills portfolio
acquisition
on page 35
Learn more about
our responsible
development in
Weymouth on
page 62
Learn more about
our development
in Huntingdon
pre-let to AM Fresh
on page 41
Learn more about
our development
at Bedford Link
on page 37
Further reading on our approach to S172 and stakeholder engagement can be found as follows:
Strategic report Governance Financial statements
105
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As a small team, there is significant
interaction and visibility between the Board
and employees. More formally, the Board
has engaged withemployees during the
year through thefollowing methods:
– Andrew Livingston continued in his role
as designated workforce Non Executive
Director as described in detail on page
108. This is one of the three specific
employee engagement methods
referred to in the Code.
– Remuneration Committee oversight
of workforce remuneration and
engagement by Chair with sta as
detailed on page 140.
– Through the annual sta survey as
described in detail on page 61.
– Through the induction of new Board
members, which this year will include
Alistair Elliott as reported in the
Nomination Committee report on
page119.
– Though joining property visits and investor
presentations that other sta members
are attending. Unfortunately, due to the
pandemic, only one property tour was
arranged during the year, where Suzanne
Avery and Robert Fowlds accompanied
sta to the development site in Bedford.
These visits are an opportunity for the
Board to meet sta and also occupiers
and to discuss property and other matters
in an informal setting.
– The Executive Directors encourage their
teams to present at and join Board and
Committee meetings. During the year,
the Committees heard from employees
including the Strategy Director, the
Head of Investor Relations and
Sustainability and the Head of Finance on
strategy, the ESG journey, cyber security
and the occupier survey. In addition, the
Investment and Asset Directors provided
valuable transactional updates at
Board meetings.
– Annual one to one sta appraisals
undertaken by the Executive Directors
and Senior Leadership Team members
provided an opportunity for sta to
freely discuss career opportunities and
progression, training and development
and wellbeing.
– Companywide presentation of half
yearand annual results to all sta.
– Regular email updates to all sta from
the Chief Executive.
We are a small team of just 35 talented and
dedicated individuals who work closely together
alongside the Executive Directors in day to
day activities. Our continual low sta turnover
rates are testament to an extremely loyal and
happy workforce.
LondonMetric Property Plc
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106
Board leadership and Company purpose
Employee engagement
How we
engage with our
employees
Dedicated
workforce
Non Executive
Director
Companywide
training
Annual
employee
surveys
Half year
and annual
results
presentations
Annual one
to one
appraisals
Open door
culture
Formal
whistleblowing
policy
Management
team
invitedtoBoard
& Committee
meetings
Pandemic support
and employee wellbeing
Whilst restrictions were in place due to the
Covid-19 pandemic, we remained fully
operational albeit remotely, assisted by
improvements to the IT infrastructure and
virtual meeting platforms.
We introduced a gradual return to the oce
as soon as restrictions were eased, initially on
a completely voluntary basis, prioritising the
safety and wellbeing of sta with enforced
lateral flow testing. Our two oces are now
fully open and sta have enjoyed returning
to a more social working environment
that facilitates better sharing of ideas and
supports our creative and collaborative
culture. We firmly believe that the sum of
the whole is greater than the sum of the
individual parts and the oce environment
is an incredible source of inspiration, where
we are better able to exchange ideas
and thrive. However, we acknowledge the
tremendous success and eectiveness of
home working and the benefits of flexible
working practices and will continue hybrid
arrangements for some roles and situations.
During our periods of remote working, virtual
meetings of the various leadership teams
increased in frequency, ensuring the whole
oce stayed connected and felt included,
reinforcing our cohesive working culture.
The Chief Executive continued to send
regular email updates to all sta throughout
the year, helping to keep everyone abreast
of business developments and transactions
and informed about proposed changes to
working arrangements.
Employee engagement survey
We undertook our fifth annual employee
satisfaction survey in February this year.
The feedback continued to be very positive
with all employees enjoying and feeling
proud to work for LondonMetric. Sta have
confidence in the decisions made by
the Senior Leadership Team and remain
highly supportive of the Group’s strategy.
This year there was more focus on working
arrangements and the benefits of flexibility.
As in previous years, the survey covered
three key areas:
– The Company
– The working environment
– The individual
All employees enjoyed working for the
Company and 93% have confidence in
thedecisions made by senior management.
This year the survey focused on flexible
working arrangements as opposed to
home working and 83% of sta agreed
that systems and processes were working
eectively. The oce continues to be
seen as a desirable place to work with the
oce environment, receiving 83% positive
feedback, although all respondents valued
flexible working.
The main areas identified for further
monitoring and improvement were flexible
working arrangements and sta training
and development.
Andrew Livingston, the designated workforce
Non Executive Director, reviewed the results
with the Strategy Director and, following his
annual meeting with sta, fed back to the
Board. The Board acknowledged that home
working can be productive and benefit the
business, but alsonoted the importance
of collaboration and the strength of
teamwork. As a result, it decided to retain
a flexible arrangement where it is good for
the business.
In addition, the Board agreed to further
promote training and learning over the
coming year.
Further details on employee wellbeing,
engagement and the annual sta survey
can be found on pages 60 to 61.
100%
enjoy and are proud to work
atLondonMetric
100%
value flexible working
94%
staff engagement in the survey
93%
have confidence in the decisions
made by senior management
90%
feel informed on business activity
relevant to their job
83%
of staff agreed that systems and
processes were working effectively
83%
positive feedback on
the office environment
2022 sta survey
Strategic report Governance Financial statements
107
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1-87 88-154 155 -208
Andrew Livingston
Appointed as designated workforce
Non Executive Director in 2019
As Chief Executive of Howden Joinery
Group Plc, Andrew has experience of
managing and motivating a large team
of employees and so was well placed for
the role. His work ensures that the Board
has access to the views of the workforce,
regardless of their role or position,
and provides meaningful information
that can be used by the Board when
considering the potential impact of key
decisions on employees.
Each year since his appointment,
Andrew has hosted an informal session
for a select group of employees which
last year was held virtually. This year,
he held an in person and o site
meeting with a cross section of eight
employees from across all disciplines
of the Company that he had not
included in previous years, to allow
more sta to share their views. This year,
the Remuneration Committee Chair
attended the meeting to welcome any
questions from sta on executive pay.
The meeting was an opportunity for
people to speak freely and openly
and ask about topics discussed in the
Boardroom and share their day to day
working experiences. Topics discussed
included the return to the oce and
preferred working arrangements,
the benefits of flexibility, training and
development opportunities, the
appraisal process and the benefits
of teamwork.
Non attributable feedback was relayed
to the Board at its next meeting.
As a result of this feedback and
subsequent discussion, alongside the
results of the annual sta survey which
Andrew also fed back, the Board will
focus on the following action points to
drive the right behaviour and support
thewellbeing of employees:
Provide training and development
opportunities for sta, both
professionally and personally
Retain a flexible working arrangement
where it is good for the business
Keep working arrangements
under review to best accommodate
team working and collaboration
alongside flexibility
How does the designated workforce
NED consult with the wider workforce?
Consults directly with members
of the Senior Leadership Team
Holds own meetings with small
diverse group of employees
Reviews results of sta surveys
Sta liaison at Board and
Committee meetings
Attends site visits alongside
sta members
The work of the designated
workforce Non Executive Director
Andrew Livingston was appointed as designated workforce
Non Executive Director by the Board in 2019.
LondonMetric Property Plc
Annual Report and Accounts 2022
108
Board leadership and Company purpose
Employee engagement
His role was set out by the Board
toincludethe following:
Attend all sta presentations and other
events to give sta the opportunity to
get to know and liaise with him
Monitor the results of employee
engagement surveys and any
actions arising
Feedback to the Board at meetings
any sta concerns and the results
ofsurveys and other liaison at
least annually
1
2
3
4
The Company’s principal representatives
continue to be the Chief Executive and
Finance Director who, along with the Head
of Investor Relations and Sustainability,
hold meetings throughout the year and
particularly following results announcements
to communicate the Company’s strategy
and performance.
The Senior Independent Director, Robert
Fowlds, also attended six investor meetings
following the year end and half year
results announcements.
We continue to enjoy strong analyst
coverage with 13 brokers, which is
unchanged on the prior year.
Investor meetings
The framework of investor relations is set
around the financial reporting calendar
and at other times outside of half yearly
results announcements in response to ad
hoc requests and investor conferences.
Despite the continued impact of the
pandemic and our limited ability to physically
meet investors in the year, we met with c.250
UK and overseas shareholders, analysts and
potential investors virtually or in person.
The Executive Directors presented our
annual results via a live video webcast and
Q&A sessions for analysts and returned to
an in person presentation following the
announcement of our half year results.
As part of these meetings, we consulted with
17 investors ahead of our equity placing and
attended six conferences. A breakdown
by type of investor seen is shown in the
chart opposite.
The Company continues to place great
importance on and engage with its private
wealth shareholders, which represented over
half of all shareholders met during the year.
Meetings and roadshows seek to keep
investors informed of the Company’s
performance and plans, answer questions
they may have and understand their views.
Specific topics discussed include the
development and implementation of strategy,
financial and operational performance,
property transactions, the strength of our
underlying occupiers and rent collection, our
debt structure and ESG considerations, which
continue to be at the top of investors’ priority lists.
Investor site visits
Tours provide an opportunity to see our assets,
understand strategy and meet other members
of sta. However once again this year, due to
restrictions imposed by the Covid-19 pandemic,
we did not arrange any shareholder property
visits. Post year end, an investor visit to one of
our recently acquired assets near Brent Cross
was attended by 15 investors alongside sta as
discussed on page 63.
Shareholder engagement
Understanding the views of investors
continues to be a top priority for the
Board and vital to the Company’s
strategic direction and success.
1 Private wealth 57%
2 Specialists 23%
3 Generalists 17%
4 Brokers 3%
Equity Investors met
by type of Investor
Strategic report Governance Financial statements
109
LondonMetric Property Plc
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1-87 88-154 155 -208
How we
engage with our
shareholders
Consultation
on equity
placing
Corporate
website
Investor
survey
Senior
Independent
Director
Annual
General
Meeting
Annual and
half year results
presentations
Property
tours
Investor
roadshows,
conferences
& meetings
Board leadership and Company purpose
Investor feedback
Investor feedback is provided by the Chief
Executive to the Board at scheduled meetings,
together with published analyst comments
and reporting on the largest shareholdings, top
movements and analysts’ estimates.
Feedback received continues to be very
supportive of the Company’s strategy,
performance, management and
future direction.
ESG is a particular focus attracting lots of
questions, most commonly on the EPC
rating of assets and the Company’s delivery
of environmental improvements across
the portfolio.
Last year, as part of its ongoing shareholder
engagement, the Company conducted its
second bi-annual ESG survey of investors and
shared its draft Net Zero Carbon framework
in advance of formalising it. The feedback
continued to be very supportive of our ESG
strategy and achievements.
Public communication
Shareholders are kept informed of the
Company’s progress through results
statements and other announcements
released through the London Stock
Exchange. Company announcements
are made available on the website
aording all shareholders full access to
material information.
The website also includes a comprehensive
investor relations section containing all RNS
announcements, share price information,
investor presentations and factsheets, half
year results and Annual Reports available
for downloading.
A live and on demand webcast of results
and a CEO interview is posted twice a year
on our website. Individual shareholders
can also raise questions directly with the
Company at any time through a facility
onthe website.
This year we are required to comply with the
European Single Electronic Format (ESEF)
regulations for filing our Annual Report and
tagging our primary statements.
Scrip dividend
We continue to oer a scrip dividend
alternative to shareholders, which enables
them to opt for shares rather than cash with
no dealing costs or stamp duty. There is a
resolution to renew the scheme for a further
three years in the Notice of AGM on
page 202.
Equity placing
In November 2021, we successfully raised
gross proceeds of £175 million through
an equity placing that was significantly
oversubscribed. A total of 67.3 million new
ordinary shares were issued at a price of
260.0p per share, representing a discount
of 3.0% to the previous day’s closing share
price. The net proceeds after issue costs of
£170.2 million were used to acquire income
producing assets. For the first time, we
undertook a retail oer through PrimaryBid
to allow private retail investors to participate
directly in the placing.
Annual General Meeting
Shareholders are encouraged to participate
in the Annual General Meeting (‘AGM’)
of the Company, which provides a forum
for communication with both private and
institutional shareholders alike.
The AGM held last year was convened
with the minimum quorum of shareholders
present and voting was exercised in
advance by proxy. Shareholders were able
to listen in by conference call facilities and
submit questions.
This year, our AGM will be held at the
Connaught Hotel, Carlos Place, Mayfair,
London, W1K 2AL, for shareholders to
attend in person. The whole Board will be
in attendance and available to answer
shareholder questions.
Details of the resolutions to be proposed and
voting details can be found in the Notice
of AGM on pages 202 to 207. Details of
the number of proxy votes for, against and
withheld for each resolution will be disclosed
in the AGM RNS announcement and on
our website.
The Senior Independent Director is available
for shareholders to contact if other channels
of communication with the Company are
not available or appropriate.
Promoting long term success
The Board is collectively responsible for
the long term success of the business,
having due regard to the views of its
stakeholders and the environment
within which it operates.
Real estate is an inherently long
term cyclical business and the
Board therefore takes a longer
term view when making decisions.
Some examples of this include:
– The Group’s financial budgets
cover a three year rolling period
and are updated monthly and
reported quarterly to the Board;
– One Board meeting each year
focuses on the Group’s longer
term strategy;
– The risk register and dashboard
includes consideration of both short
and longer term emerging risks;
– Alongside our strategic priorities
on page 14, we consider our
longer term strategy and focus
for the next year; and
– Significant corporate acquisitions
and property disposals in the year
which further the Company’s long-
term strategy and value creation.
Despite the challenges of the
pandemic over the last two years,
we have continued to deliver
strong financial results and portfolio
metrics. The portfolio has grown
by 39% and looking ahead, the
combination of additional income
from our development programme,
asset management initiatives
and acquisitions help to support
sustainable earnings and dividends.
Our strategy, activities and financial
results are set out in the Strategic
report on pages 1 to 87 and our
longer term focus is clearly disclosed
alongside each of our strategic
objectives on page 14.
Our long term sustainable growth
is evidenced by the Performance
highlights and Key performance
indicators on pages 10 and
26 respectively.
LondonMetric Property Plc
Annual Report and Accounts 2022
110
Shareholder engagement
Board leadership and Company purpose
The four key trends that impact
ourinvestment decisions
Technology and continued online growth
Urbanisation with population growth
and on demand lifestyles
Convenience factor, with pandemic
induced lifestyles
Sustainability and wellbeing
Where next?
Retain hybrid model of logistics and
long income to deliver income focused
total returns
Remain highly disciplined with an
obsession on owning the right assets
in the right sectors
Remain alert and agile, retaining
optionality to deliver market leading
shareholder returns
Strategic considerations
Sectors that benefit from
structural trends
Optimal portfolio composition
Income focus and future
growth opportunities
Where we are today
Our strategic calls over the last few years into
logistics and long income have played out
well and the pandemic has accelerated
those calls, delivering strong shareholder
returns and reflecting wider macro trends
Q1 Q2 Q3 Q4
Full year 2021 results
and virtual analysts
presentation
Annual General Meeting
ofshareholders
Half year results, in person
analysts presentation and
investor roadshow
Private Wealth updates for
regional and London investors
Investor full year roadshow Private Wealth conference £175 million equity placing Two London based
investor conferences
Quarterly dividend payment Quarterly dividend payment Quarterly dividend payment Quarterly dividend payment
Key shareholders events this year
Strategic report Governance Financial statements
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Andrew Smith
Strategy Director
Focus on strategy
Throughout the uncertainty and disruption to operations over the last year,
we have kept our strategy and direction under constant review and at
the forefront of our mind. Strategy was discussed at every Board meeting
in the year alongside a market update covering longer term themes,
evolving trends and a trading feedback from occupiers. In addition, one
Board meeting was dedicated to a presentation by the Strategy Director
and subsequent discussion and challenge by the Board. The focus was on
the following:
Investment Committee Asset Management Committee Finance Committee
Chair: Valentine Beresford
– Reviews investment and divestment opportunities
and allocation of capital
– Approves transactions of less than £10 million
and recommends higher value transactions
tothe Board
Chair: Mark Stirling
– Reviews value enhancing operational activities
and development opportunities
Chair: Martin McGann
– Reviews budgets and forecasts, achievement
oftargets, funding requirements and liquidity
Board Committees
The Board has three Committees of Non Executive Directors to which it has delegated a number of its responsibilities. The Committees ensure a strong governance framework
for decision making and each operates within defined terms of reference which are reviewed annually. The Chair of each Committee provides averbal update on the matters
discussed at each meeting to the Board.
Chair: Patrick Vaughan
The Board is collectively responsible for the long term
success of the business, having due regard to the
views of its stakeholders and the environment within
which it operates. In a year of continued uncertainty,
the Board has provided leadership and direction and
worked with management to provide oversight and
challenge to drive positive outcomes, whilst maintaining
eective governance.
The Board establishes and fosters the culture, values
and ethics of the organisation, and independently
oversees management’s execution of strategy
within an acceptable risk management and internal
control framework.
The work of the Board both complements and supports
the work of the Senior Leadership team. The Board
is made up of a group of talented individuals with
wide-ranging commercial experience from a range
of industries and sectors including property, finance,
banking, capital markets, risk management, sustainability
and retail. Through this diversity, experience and
deep understanding of the business, its culture and
its stakeholders, the Board delivers sustainable value
assetout in the Strategic report from page 1.
Chair: Rosalyn Wilton
The Audit Committee has oversight of the Group’s
financial reporting processes and monitors the
integrity of the financial statements.
– Oversees financial reporting process
– Scrutinises significant judgements made
by management
– Monitors eectiveness of risk management
systems, internal control and viability
– Evaluates the external audit process
– Oversees regulatory compliance
Chair: Robert Fowlds
The Remuneration Committee determines and
implements a fair reward structure to incentivise
Executive Directors to deliver the Group’s strategic
objectives whilst maintaining stability in the
management of its long term business.
– Determines and implements Remuneration Policy
– Sets remuneration packages and incentives for
Executive Directors and certain members of the
Senior Leadership Team
– Approves annual bonus and LTIP targets and outcomes
– Has oversight of workforce remuneration
arrangements and alignment
Chair: Patrick Vaughan
The Nomination Committee ensures that the Board
and its Committees have the right balance of skills,
knowledge and experience, having due regard to
succession planning and diversity.
– Recommends appointments
– Board composition and succession
– Considers skills and diversity
– Leads performance evaluation
Leadership framework
Operates under the direction and leadership of the
Chief Executive to deliver the approved strategic
objectives and manage the day to day running of
the business. It is supported by three sub-committees,
focusing on dierent areas of the business.
– Implementation of strategy
– Sets budgets and monitors operational
and financial performance
– Day to day management of the business
– Manage, appraise and develop sta
– Employee remuneration and wellbeing
– Manages allocation of capital
– Identifies and assesses business risks and implements
mitigation strategies
– Responsible Business and ESG workstreams
LondonMetric Property Plc
Annual Report and Accounts 2022
112
Board of Directors
Audit Committee Remuneration Committee Nomination Committee
Senior Leadership Team
Management Committees
Division of responsibilities
Read more on page 124 Read more on page 132 Read more on page 116
Read more on page 94
Read more on
Our activities page 98
Board biographies pages 92 – 93
Leadership roles & responsibilities page 113
Role Responsibilities
Chair
Patrick
Vaughan
– Leads the Board and ensures it operates eectively
– Sets Board culture, style and tone of discussions to promote
boardroom debate and openness
– Promotes Company purpose, values and ethics
– Builds relationships between Executive and Non Executive Directors
– Monitors progress against strategy and performance
of the Chief Executive
Chief Executive
Andrew Jones
– Manages dialogue and communication with shareholders
and key stakeholders and relays views to the Board
– Develops and recommends strategy to the Board and is
responsible for its implementation
– Day to day management of the business operations and
personnel assisted by the Senior Leadership Team
Finance Director
Martin McGann
– Supports the Chief Executive in developing and implementing
strategy and alignment to financial objectives
– Stewardship of financial resources, the ESG agenda and
risk management
Non Executive
Directors
Suzanne Avery
James Dean
Alistair Elliott
Robert Fowlds
Andrew Livingston
Kitty Patmore
Rosalyn Wilton
– Support and constructively challenge the Executive Directors
indetermining and implementing strategy
– Bring independent judgement and scrutiny to decisions
recommended by the Executive Directors and approve
decisions reserved for the Board as a whole
– Contribute a broad range of skills and experience
– Monitor delivery of agreed strategy within the risk and control
framework set by the Board
– Review the integrity of financial information and risk
management systems
Senior
Independent
Director
Robert Fowlds
– Acts as a sounding board for the Chair and trusted
intermediary for the other Directors
– Available as a communication channel for shareholders ifother
means are not appropriate
– Leads performance evaluation of Chair
Designated
Workforce NED
Andrew Livingston
– Liaison with employees and attendance at key employee
andbusiness events
– Monitors the results of sta surveys and reports to the Board
– Reviews messages received through the whistleblowing system
Company
Secretary
Jadzia Duzniak
– Advises the Board and is responsible to the Chair on corporate
governance matters
– Ensures good flow of information to the Board, its Committees
and senior management
– Promotes compliance with statutory and regulatory
requirements and Board procedures
– Provides guidance and support to Directors, individually
and collectively
The following table sets out the key roles and responsibilities of Board members.
The responsibilities of the Chair, Chief Executive, Senior Independent Director,
Board and Committees are set out in writing, approved annually and are available
on the Company’s website at www.londonmetric.com.
Division of responsibilities
The roles of Chair and Chief Executive are
separately held and their responsibilities
are defined in writing and approved by
the Board.
There is a clear division of responsibilities
between the Chair, who is responsible
for leading the Board and monitoring its
eectiveness and the Chief Executive, who is
responsible for the day to day management
of the Group and the implementation
and delivery of the Board’s agreed
strategic objectives.
The Chair is responsible for ensuring a
constructive working relationship between
Executive and Non Executive Directors and
for encouraging and fostering a culture of
boardroom challenge and debate.
He sets the Board agenda and maintains
regular contact with individual Directors
outside of formal Board meetings, which
ensures he is kept abreast of individual views,
any issues arising and fosters an open and
two way debate about Board, Committee
and individual members’ eectiveness.
During the year, the Chair hosted an osite
dinner for the Non Executive Directors without
the Executive Directors present to promote
collaboration, discussion and debate in an
informal setting.
Strategic report Governance Financial statements
113
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Leadership roles and responsibilities
Division of responsibilities
Board meetings
The Board has a regular schedule of
meetings, timed around the financial
calendar, together with further ad
hoc meetings as required to deal with
transactional, routine or administrative
matters. The Company Secretary maintains
a rolling agenda for the Board and its
Committees and, in consultation with the
Chair, she ensures agenda items cover the
schedule of matters reserved for the Board,
compliance with the Code and other
regulatory requirements.
All Directors are expected to attend
all meetings of the Board and of the
Committees on which they serve, and to
devote sucient time to the Company’s
aairs to enable them to fulfil their duties
as Directors.
On the rare occasion that a Director is
unable to attend a meeting, papers will
still be provided in advance and their
comments and apologies for absence
provided to the Board prior to the meeting.
The attendance record of Directors at Board
meetings during the year is reflected in the
table on page 99.
Selected members of the Senior Leadership
Team attend Board and Committee
meetings and present on topics of
relevance, fostering talent development
below the Board and bringing fresh ideas
and wider perspectives to discussions.
This also promotes the interaction of Non
Executive Directors with senior managers
throughout the organisation.
This year the Strategy Director, Head of
Investor Relations and Sustainability and
Head of Finance attended Committee
meetings to discuss relevant operational
topics including strategy, ESG, the occupier
survey and cyber security.
In addition, the Investment and Asset
Directors provided valuable transactional
updates at Board meetings.
Whilst strategy is considered at every Board
meeting encompassing topics such as
market conditions and outlook, investment
opportunities, capital allocation and
emerging risks, one meeting each year
focuses on strategy to ensure it remains
relevant and adapts to changing economic,
political and environmental conditions.
See Focus on strategy on page 111.
Minutes of all Board and Committee
meetings are circulated to Directors after
each meeting and are included in the next
Board or Committee pack. A detailed action
list is prepared by the Company Secretary,
followed up by management and reviewed
at the next meeting.
Non Executive Directors
The Non Executive Directors are a diverse
group with a wide range of business
experience encompassing property, finance,
banking, capital markets, risk management,
sustainability and retail.
They provide a valued role by independently
challenging and scrutinising aspects of
decisions made by the Executive Directors
and monitoring the delivery of the agreed
strategy, adding insight from their varied
commercial backgrounds. Many either
currently or have previously served on
other listed boards, bringing dierent views
and perspectives to Board operations
and debates.
Each of the Non Executive Directors, other
than the Chair, is considered by the Board
to be independent from management and
has no commercial or other connection
with the Company. Tenure is measured from
the date of election to the LondonMetric
Board as in previous periods and the
Board’s composition throughout the year
met the Code’s requirement that at least
half of its members, excluding the Chair,
are independent Non Executive Directors.
This balance ensures that no one individual
or small group of individuals dominates the
Board’s decision making.
The Senior Independent Director is Robert
Fowlds. He acts as a sounding board for
the Chair and an intermediary to the other
Directors and shareholders as required.
He is available to meet with shareholders at
their request to address concerns or, if other
communication channels fail, to resolve
queries raised. Although no such requests
were received from shareholders in the year,
Robert attended six investor calls or meetings
following the announcement of results and
the in person half year results presentation
to investors. Robert also held a meeting of
the Non Executive Directors, to appraise
the performance of the Chair as part of the
annual performance evaluation.
Non Executive Directors are encouraged to
communicate directly and openly with the
Executive Directors and Senior Leadership
Team between scheduled Board meetings
to explore and challenge large and complex
transactions and as part of each Director’s
contribution to the delivery of strategy.
Nomination
Committee
Audit
Committee
Remuneration
Committee
Patrick Vaughan √ Chair
Suzanne Avery √ √ √
Robert Fowlds √ √ √ Chair
Andrew Livingston √ √
Kitty Patmore √
Rosalyn Wilton √ Chair √
Total membership 4 4 4
LondonMetric Property Plc
Annual Report and Accounts 2022
114
Leadership roles and responsibilities
Division of responsibilities
This ad hoc communication is supplemented
by property visits wherever possible and
provides further opportunity to mix with other
members of sta.
Due to Covid restrictions this year, only
one property tour was arranged in April
2021. Robert Fowlds and Suzanne Avery
accompanied the Chief Executive,
Asset Director and two managers to our
development site in Bedford. This provided
insight into the strong relationship
management has with occupiers and any
issues they may be facing which helps
drive strategy.
Robert also provided reassurance to the
Board following the investor calls and
meetings he attended, that the feedback
provided by the Executive Directors was
reflective of these meetings and noted the
support of the shareholders.
Information flow
The Chair, supported by the Company
Secretary, ensures that the Directors receive
clear and timely information on all relevant
matters to enable them to discharge their
responsibilities. Comprehensive reports and
briefing papers are circulated one week
prior to Board and Committee meetings to
give the Directors sucient time to consider
their content prior to the meeting and to
promote an informed boardroom discussion
and debate and to facilitate robust and
informed decision making. The Board papers
contain market, property, financial, risk
and governance updates as well as other
specific papers relating to agenda items.
Specific briefing papers were provided to
the Board and its Committees on strategy,
the equity placing, debt refinancing,
the ESG agenda, cyber security and
tenant covenants.
The Board receives other ad hoc papers of
a transactional nature at other times for their
review and approval which are ratified at
the next Board meeting.
How we make decisions
To retain control of key decisions and
to ensure there is a clear division of
responsibilities between the running of the
Board and the running of the business,
certain matters are reserved for the Board’s
attention and approval. These include the
approval of strategy, budgets, financial
reports, capital allocation and dividend
policy. In addition, decision making
for acquisitions, disposals and capital
expenditure is delegated according
to value.
Chief Executive
£2.5m+
Senior Leadership Team
£30k+
Department manager
£30k
Board
£10m+Over
Over
Over
Under
The delegated authority limits throughout
the business are as follows:
Strategic report Governance Financial statements
115
LondonMetric Property Plc
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1-87 88-154 155 -208
Patrick
Vaughan
Nomination
Committee
Chair
Our focus this year has been the
composition of the Board and its
performance, and I am pleased
to welcome Alistair Elliott as
a Non Executive Director.
Membership and attendance
The number of Committee members and their attendance during
theyear wasas follows:
Member
Date
appointed
Tenure
(years)
1
Meetings
attended
2
Patrick Vaughan (Chair) 1/11/2012 9 3 (3)
Andrew Livingston 19/9/2018 4 3 (3)
Suzanne Avery 31/1/2019 3 3 (3)
Robert Fowlds 28/1/2021 1 3 (3)
1 Tenure is measured from date of appointment to the Committee
andasat31 March 2022, rounded to the nearest whole year
2 Bracketed numbers indicate the number of meetings the member
waseligibleto attend
What the Committee did in 2022
– Considered Board succession and recommended
theappointment of Alistair Elliott as a Non
Executive Director
– Led the internal Board and Committee
performance evaluation
– Commenced the search for an external agency
toassist with further NED recruitment
– Reviewed its Terms of Reference which are
availableonour website
Key responsibilities
Board composition, succession
andappointment
– Review and evaluate the size, structure
and composition of the Board and its
Committees, including the diversity
and balance ofskills, knowledge
and experience
– Consider succession planning for Directors
– Lead the process for new Board and
Committee appointments andBoard
and Committee membership changes
See pages
117 – 119
Diversity
– Promote the Company’s policy on
diversity at Board level andthroughout
the organisation
See pages
120 – 121
Performance evaluation
– Lead the Board and Committee
performance evaluation exercise
See pages
121 – 123
Re-election of Directors
– Assess the time commitment required
from Non Executive Directors and
consider their annual re-election
See page
123
LondonMetric Property Plc
Annual Report and Accounts 2022
116
Nomination Committee report
Composition, succession and evaluation
Dear Shareholder,
As Chair of the Nomination Committee,
I am pleased to present our report for the
year to 31 March 2022.
Long term succession planning at both
Board and executive level remains a top
priority for the Committee. Our work this
year has focused on Non Executive Director
succession planning and Board tenure,
which led to the appointment of Alistair
Elliott as a new Non Executive Director of
theBoard, as announced today.
The Committee also led its annual evaluation
of Board and Committee performance,
which this year was undertaken internally
asdescribed on pages 121 to 123.
The findings concluded that the Board and
its Committees continued to operate to a
high standard and work very well together
and furthermore, no significant matters were
raised. I would like to thank my fellow Board
members for their honest and valuable input
to this exercise.
Looking forward, our focus will be on Non
Executive Director recruitment, as James
Dean and I have now served for 12 years
on your Board and Ros Wilton approaches
the ninth anniversary of her appointment.
The search process is underway and we will
continue to promote diversity in its widest
sense, not limited to gender, as we search
for suitably experienced replacements.
Role of the Committee
Our role is to ensure the Board and its
Committees continue to be well equipped
with the right balance of skills, experience
and knowledge to independently carry out
their duties and provide strong and eective
leadership to drive the future success of
the Company.
We lead the succession planning process
and ensure that it is properly planned
and managed to maintain stability in the
leadership team and mitigate against
business disruption.
Board composition, succession
and talent development
The Committee discusses Board and
Committee composition, size and structure
at each meeting and monitors the tenure
of Directors to ensure it adequately plans
in advance of retirement and facilitates
anorderly succession.
The table on page 116 provides an overview
of the composition of the Board’s three
Committees as at 31 March 2022.
Information on the Board’s diversity is
on page 118 and biographies are on
pages92to 93.
Our work on succession planning has
continued this year and I am very pleased
to announce and welcome Alistair Elliott to
the Board post year end as a Non Executive
Director. As former Senior Partner and Group
Chair of Knight Frank, Alistair brings a nearly
unique mix of both property and leadership
skills and the right personal qualities to
complement and enhance the existing
skillset of the Board.
This appointment supports our longer term
succession planning for the Board, which
includes myself as your Chair, and my
colleague James Dean, both of us having
now served for 12 years as Board members.
Both James and I will continue asNon
Executive Directors in the short term to
helpensure an orderly transition.
In addition we will require a suitable
replacement for Rosalyn Wilton, our
Audit Committee Chair, whose tenure
isapproaching nine years.
We are appointing an external agency
tohelp with our search and will report on
theresults of this in due course.
We are mindful of Provision 10 of the
Corporate Governance Code relating
to tenure and independence as James
Dean has served on the Board for over ten
years. However, the Committee and Board
continues to believe that James acts in an
independent manner at all times and adds
great value to the Board with his in-depth
property expertise and sound judgement.
We also acknowledge that as I have served
as Chair for 12 years, the length of my
tenure does not comply with Provision 19
of the Code, as set out in the Statement
ofCompliance on page 88.
The Nomination Committee and Board felt
that the disruption and uncertainty caused
by the Covid-19 pandemic meant that it
was more important than ever to maintain
stability in the leadership team, and therefore
in the best interests of the Company and
shareholders for me to continue in oce.
Accordingly, my Contract for Services has
been extended to 31 March 2023 and
my fellow Directors have advised me that
they do not believe my independence,
objectivity and judgement is compromised
by the length of my service.
As we emerge from the pandemic and
learn to live with Covid-19 in our everyday
lives, the search for my successor has
resumed. The priority will be to appoint
the right candidate with the necessary
expertise, character and personal attributes
to complement and lead the team. I will
remain in oce as long as necessary in
order to facilitate an orderly and planned
succession with minimal business disruption.
From a governance perspective, at
31 March 2022, 75% of the Board excluding
the Chair comprises independent Non
Executive Directors in accordance with
the Code.
117
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1-87 88-154 155 -208
1
2
1
2
3
Executive succession planning
The Committee is responsible for Board
succession, including for the Executive
Directors. The review process includes
considering talent development within
theorganisation to create a pipeline to the
Board, as we recognise the need to nurture
our own talent pool and give opportunities
to those high performing middle managers
to enable them to develop and grow into
more senior roles.
Below the Board, succession planning is
delegated to the Senior Leadership Team
which includes the Executive Directors, to
ensure we retain and recruit suitable future
leaders to serve as the next generation
ofDirectors and support the Company’s
longer term plans.
Although there are no immediate vacancies
and execution of the Company’s strategy
is not dependent on any one individual, we
recognise the need to develop our internal
talent and to have contingency plans for
unforeseen absences.
Sta appraisals are undertaken on an
annual basis and provide a forum to discuss
targets, progress and future prospects.
Regular contact with Board members
is encouraged, both in and outside of
meetings, through presentations, property
tours and at other times to discuss specific
issues. Training needs and requests can be
raised and discussed through the annual
appraisal process or at other times with line
managers. The Company has supported one
female member of sta through the RICS
professional qualification and has agreed
support for another through her Masters in
Real Estate Management, promoting the
Real Estate Balance initiative of developing
afemale talent pipeline.
The Group’s talent pipeline has been
strengthened this year through a number
of external appointments and internal
promotions including:
– The recruitment of one male and one
female qualified chartered surveyor
tosupport the investment team;
– The internal promotion of a female
trainee surveyor following qualification
tosupport the investment team; and
– The recruitment of an investment analyst
and qualified accountant as positions
became vacant.
Board composition
Board skills (%)
**
Board Tenure
Board gender diversity
1 Chair 1 11%
2 Independent Non
Executive Directors
6 67%
3 Executive Directors 2 22%
Total 9 100%
1 Property 7 78%
2 Finance & banking 5 56%
3 Risk management 2 22%
4 Sustainability 2 22%
5 Retail 1 11%
1 0-3 years 1 11%
2 3-6 years 3 33%
3 6-9 years 2 22%
4 10+ years 3 33%
Total 9 100%
1 Male 6 67%
2 Female 3 33%
Total 9 100%
A balanced Board*
* Based on Board composition as at 31 March 2022
** Some Directors are represented in more than one category in terms of their experience
33%
22%
33%
11%
1
2
3
4
1
2
3
4
5
78%
56%
22%
22%
11%
LondonMetric Property Plc
Annual Report and Accounts 2022
118
Nomination Committee report
Composition, succession and evaluation
Appointment process
Board appointment
We are responsible for identifying and
recommending candidates to fill Board
vacancies and lead the selection
process, ensuring it is formal, rigorous
and transparent.
The usual selection process for new
appointments to the Board is set out
intheflow chart opposite.
We only work with search agencies that
adopt the Voluntary Code of Conduct
for Executive Search firms on gender
and ethnic diversity and best practice.
Search agencies are challenged to
produce a long list of high quality
candidates from a broad range of
potential sources of talent.
On appointment, the Company arranges
a tailored induction programme to help
new Directors develop an understanding
ofthe business including its strategy,
portfolio, governance framework,
stakeholders, finances, risks and controls.
Alistair was introduced to the Chair as
having extensive and relevant experience
as Senior Partner and Chair at Knight
Frank. The Chair raised this with his fellow
Board members and following meetings
with the Executive Directors and Senior
Independent Director it was agreed
thathe would join the Board.
Board Induction
Key induction events planned for Alistair
include the following:
– One to one meetings with the
Finance Director, Company Secretary
and other members of the Senior
Leadership Team to discuss:
• the investment portfolio, asset
selection, capital allocation
and strategy;
• financial forecasting and
reporting processes, banking
and hedging strategy, risks
and internal controls and
regulatory matters;
• shareholder engagement; and
• our ESG targets and journey so far.
– Provision of past Board and Committee
papers, minutes and finance reports
– Guidance and information on annual
Board timetables, governance
processes, S172 responsibilities and
regulatory procedures including
share dealing
– Meeting with external audit partner
– Property tours
Role requirements for a new Non Executive Director
The Board considered and discussed
the role specification and personal
attributes required of a new Non
Executive Director to replace Rosalyn
Wilton. The role requires the ability to
foster open and inclusive discussion
and provide constructive challenge,
as well as contributing to the
formulation of strategy and upholding
best practice corporate governance.
The skills required include but are not
limited to operating at a senior level,
most likely to be a member of an
Executive Committee past or present,
and ideally in a listed environment.
The Board’s diversity is a crucial
consideration in this appointment.
Committee discussion of candidate
specification and required skill set
Prepare a comprehensive role brief
with input from search agencies
as required
Consider recommendations through
Board contacts and advisors and/or
search agency
Review a shortlist of potential
candidates for initial interviews
with Executive Directors, the
Senior Independent Director
andNomination Committee
Final proposal circulated with CV
for consideration
Committee recommends candidate
to the Board
Induction programme organised
by the Finance Director
Proposed election by shareholders at
the first AGM following appointment
Alistair Elliott
Non Executive Director
119
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Annual Report and Accounts 2022
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1-87 88-154 155 -208
Board appointment and induction
Board training
Oversight of the training needs of individual
Directors is the responsibility of the Chair.
However, Directors are also expected to
identify and develop their own individual
training needs, skills and knowledge and
ensure they are adequately informed
about the Group’s strategy, business and
responsibilities. They are encouraged to
attend relevant seminars and conferences
and receive technical update material
from advisors and are oered training
andguidance at the Company’s expense.
During the year, information updates were
provided through briefing papers prepared
by senior management and external advisors
on regulatory and accounting updates, the
Corporate Governance Code compliance,
ESG, cyber security and tenant covenants.
Diversity and inclusion
The Board recognises the importance of
diversity and the benefits it brings to the
organisation in terms of skills and experience,
diering perspectives, fresh ideas and
constructive challenge to established
behaviours, which ultimately leads to
betterdecision making.
The Board strives to operate in a working
environment of equal opportunity and
promotes a culture of mutual respect
andinclusion throughout the organisation.
It acknowledges that performance is, to
a large extent, determined by the quality
of recruitment, and the development,
commitment and retention of employees.
However, it realises that the diversity
of recruitment will be subject to the
availabilityof suitable candidates and
vacancies within the organisation.
The Board sets the tone on diversity and
gives full consideration to achieving a
diverse working environment by applying
the principles of the Company’s Diversity
and Inclusion Policy when considering
newappointments. This Policy was
updatedin April 2021 and is publicly
available on our website.
We promote diversity throughout
the workforce and the elimination of
discrimination. Current and potential
employees are oered the same
opportunities, including pay, benefits, training
and promotion, regardless of background,
gender, age, religion, disability, nationality,
ethnicity, sexual orientation or marital status.
Board Gender
1 Male 6 67%
2 Female 3 33%
Total 9 100%
1 Male 18 51%
2 Female 17 49%
Total 35 100%
Gender balance &
Hampton Alexander
Group Diversity
Senior leadership team
Senior leadership team and direct reports
1 Male 6 75%
2 Female 2 25%
Total 8 100%
1 Male 16 70%
2 Female 7 30%
Total 23 100%
Age (years)
Length of service (years)
1 20-30 4 12%
2 31-40 7 20%
3 41-50 12 34%
4 51-60 12 34%
Total 35 100%
1 0-5 13 37%
2 6-10 14 40%
3 11-15 7 20%
4 16+ 1 3%
Total 35 100%
1
2
1
2
1
2
1
2
1
3
4
2
1
3
4
2
LondonMetric Property Plc
Annual Report and Accounts 2022
120
Nomination Committee report
Composition, succession and evaluation
Year 1
Independent
externally
facilitated
review
Year 2
Internal review
to monitor progress
and any new
issues raised
Year 3
Internal review
to focus on
progress against
years 1 and 2
We actively engage with recruiters to
promote a diverse candidate selection and
will ensure that any executive search agency
we engage has signed up to the Voluntary
Code of Conduct for Executive Search Firms,
which addresses gender and ethnic diversity.
We expect our search consultants to ensure,
where possible, a gender-balanced and
ethnic-balanced list of potential candidates,
in line with our intention to improve diversity
across the business.
The Board acknowledges the challenges
faced by the real estate sector in improving
gender diversity and continues to support
the Real Estate Balance group, whose
objective is to improve gender diversity by
promoting and supporting the development
of a female talent pipeline. The Board also
recognises that diversity is not limited to just
gender and supports the Parker Review
recommendation that FTSE 250 boards
should have at least one director from an
ethnic minority background by 2024.
However, it does not believe quotas are
appropriate given the size of the Company
and has chosen not to set formal targets.
Ultimately, all appointments to the Board
and throughout the Company are based
on merit and suitability for the role, as an
appointment on any other basis would not
be in the best interests of shareholders or the
Company. We are proud of our low level
of sta turnover which, at 6% on average
over the past nine years, signifies a loyal
andcontent workforce but recognise that
this also constrains the pace of change.
The charts on page 120 reflect the gender
diversity of the Board, Senior Leadership
Team and across the Company.
There has been an ongoing commitment
tostrengthen female representation at
Boardlevel, and we are pleased that we
have met the Hampton Alexander target
of 33% female representation on FTSE 350
Boards throughout the year.
Our Senior Leadership Team manages
theday to day running of the business and
comprises departmental heads from all
key business functions with a diverse range
of skillsand experience. The departure of
Nick Minto in October 2021 provided an
opportunity to redistribute work without
the need to recruit a direct replacement,
which meant that female representation
ofthe Senior Leadership Team below
Boardincreased to 25%.
We will continue to work towards
compliance with the Hampton Alexander
targets but acknowledge that gender
balance is likely to remain a challenge,
as increasing its size is not considered an
eective solution and there are no known
natural succession changes anticipated at
the present time. In the wider organisation,
49% of all employees are female and
the culture of the organisation promotes
inclusion and equal opportunity. The latest
sta survey results which included questions
on inclusion and wellbeing, as discussed
on page 61, reinforces this culture with all
employees feeling proud and happy to
workat LondonMetric.
Our ambition is to increase gender diversity
throughout the Senior Leadership Team and
wider organisation when suitable vacancies
arise and appropriate candidates can
be found.
Further information on the Company’s
commitment to promoting diversity and
inclusion is included in the Responsible
Business and ESG review on page 60 and
inthe Employee engagement section of
thisreport on pages 106 to 108.
Board performance evaluation
A key requirement of good governance is
to ensure that the Board operates eectively.
The annual evaluation enables us to monitor
and improve the eectiveness of the Board
and its Committees.
Last year, the Committee appointed
Independent Audit Limited to undertake
the annual performance evaluation.
Progress against targets set last year is
setout on page 123. This year, an internal
questionnaire based evaluation was led
by this Committee. The findings were
collated and summarised by the Company
Secretary and tabled for discussion by the
Committee in February. The key findings
and recommendations are summarised
onpage 122.
Overall the results were extremely positive
with no significant areas of concern.
The Board welcomed the recommendations
for continued development to its practices
and procedures. Progress will be reported
atfuture meetings.
121
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1-87 88-154 155 -208
The key findings and recommendations
from the 2022 performance evaluation
review are listed below.
Key findings
– The Board has a clear, dynamic
strategy and set of objectives which is
supported by all Directors and agreed
with management, and spends a high
proportion of its time reviewing and
assessing strategy at meetings
– The business has performed extremely
well in the challenging Covid-19
environment and measures adopted
by the Board and management have
been appropriately focused on what
matters most, such as rent collection
andsta welfare
– Shareholder relationships are a key
focus for the Executive Directors and
strong investor sentiment towards
the Company is positive and highly
supportive of strategy as reflected by
strong share price performance
– The Board is risk aware and responds
wellto problems and crises as
evidenced during the pandemic.
NEDs receive comprehensive updates
and early warning signals from
management of problems ahead
which may adversely aect the
business, and Directors are confident
that risks are taken into account in
decision making processes
– The Board is cohesive with a
complimentary range of expertise,
skills and personalities. It combines
management support together
withappropriate challenge
– Board discussions are open and
transparent and attendance of senior
management at meetings is helpful
and welcome
– The Board is well balanced and
considered to have a good breadth
and depth of experience to allow it to
eectively discharge its responsibilities
and to face current and future
challenges. As a serving finance
director, Kitty Patmore is seen as
astrong addition to the Board
– Management are considered to
be exceptionally well connected,
respected and trusted and well
positioned to get early warning signs
and see opportunities in the market.
They are accessible and responsive
intheir dealings with the Board
– Committees have the right balance of
skills and all have been enhanced with
the appointments of Kitty Patmore
and Robert Fowlds and are very
well supported by external advisors,
the Executive Directors and wider
management team
– The Chair continues to provide
guidance to the management
team and leadership of the Board.
He brings sharp focus to big issues,
listens, provides broader context
andmanages time
– Non Executive Director only dinners or
lunches are welcomed to exchange
views, consider issues or concerns
without the Executive Directors present
and are beneficial for developing
NED relationships
Recommendations
– Encourage the inclusion of wider
management team members in
strategy and other discussions
– At least one annual strategy focused
discussion is a good discipline to
facilitate a deeper review which may
not be practical at every meeting
– More in-depth investor feedback
would be welcomed periodically
aswell as more frequent circulation
ofanalysts’ notes
– Climate risk reporting is an area to
watch given the pace of change
andever increasing focus
– The schedule of matters reserved
for the Board should be expanded
to include specific references to the
Board’s ESG responsibilities. The Board
should keep under review how best
toensure focus on ESG
– In person attendance at meetings
is encouraged following easing of
Covid-19 restrictions to generate
increased energy, collaborative
spiritand exchange of ideas
– Directors should update the Board
in respect of bilateral challenges
and debates held outside of
Board meetings
– The Board should consider whether
the £10 million Board approval
limit is still appropriate given the
Company’s growth since that limit
wasfirst introduced
– The Remuneration Committee Chair
may benefit from holding individual
discussions with Senior Leadership
Team members to hear their views
and aspirations directly both pre and
post award, in line with the previous
Chair’s practice
– The Nomination Committee should
have regard to the Parker Review
recommendation for one ethnic
minority Board member from 2024
– Continue to provide greater visibility
and focus on succession planning for
the Chair
Progress against the key points arising
from last year’s review is reflected in the
table on page 123.
In addition, as Chair, I conducted one
to one meetings with each of the Non
Executive Directors to provide feedback
and discuss their contribution and any
future expectations.
2022 Performance evaluation
The process covered the
following areas:
– Objectives, strategy and remit
– Performance
– Relationships with shareholders
– Risk management
– Board function and Directors
– Board constitution and succession
– Board Committees
– Chair
LondonMetric Property Plc
Annual Report and Accounts 2022
122
Nomination Committee report
Composition, succession and evaluation
Recommendation in 2021 Progress in 2022
Ensure the process for sourcing new Non Executive Directors
continues to promote fresh perspectives and diversity of thought
and ethnicity
Appointment of Alistair Elliott brings fresh views and perspectives.
Commenced the search for an external agency to assist with
further Non Executive Director recruitment
Increase opportunities for high potential managers to participate
in Boardroom discussions and regularly interact with Non
Executive Directors
Board and Committee meetings regularly attended by
Investment and Asset Directors, Strategy Director, Head of Investor
Relations and Sustainability, Head of Finance and other finance
team members
Ensure Board debates continue to be focused and current,
including topics such as ESG and employee engagement
andundertake more ‘deep dives’ on relevant themes
One meeting in the year dedicated to strategy and increasing
focus of Audit Committee on ESG
Consider a new innovative approach to the annual discussion
on strategy, refreshing the format and location to stimulate
debate on the future of the business
Not possible given the restrictions imposed by the pandemic
this year
Keep the tenure of the Chair under review and put in place
a plan to ensure a smooth succession when the time is right
As we emerge from the pandemic, the search for a successor to
the Chair has resumed, alongside other Non Executive Directors
Time commitment
In making recommendations to the Board
on Non Executive Director appointments,
the Nomination Committee considers the
expected time commitment of the proposed
appointee and other commitments they
already have. Alistair Elliott has two other
material engagements, with Grosvenor
Great Britain and Ireland and The Duchy of
Cornwall, which were considered by the
Nomination Committee and cleared before
recommending his appointment.
Before taking on any additional external
commitments, Directors must seek the
prior agreement of the Board to ensure
possible conflicts of interest are identified
and to confirm they will continue to have
sucient time available to devote to the
business of the Company and fulfil their
duties. Executive Directors are required to
devote almost all their working time to their
executive role at LondonMetric although
certain external appointments are permitted.
Independent advice
All Directors and Committees have access
at all times to the advice and services of
the Company Secretary, who is responsible
for ensuring that Board procedures are
followed and that governance regulations
are complied with and high standards
maintained. The Directors may, in the
furtherance of their duties, take independent
professional advice at the expense of the
Company. None of the Directors sought
such advice in the year. The Chairs of the
Audit and Remuneration Committees
communicate regularly and independently
with relevant sta and external advisors
including the Company’s external auditor,
Deloitte LLP, and remuneration advisors, PwC.
Conflicts of interest
Directors are required and have a duty to
notify the Company of any potential conflicts
of interest they may have. Any conflicts are
recorded and reviewed at each Board
meeting. There have been no conflicts of
interest noted this year.
Election and re-election of Directors
Following the Board evaluation and
appraisal process, the Committee
concluded that each of the Directors
seeking election and re-election continues to
make an eective and valuable contribution
to the Board and has the necessary skills,
knowledge, experience and time to enable
them to discharge their duties properly in the
coming year. The Committee considers the
time commitment required of the Directors
and other external appointments they have.
All Directors will oer themselves for election
and re-election at the forthcoming AGM on
13 July 2022 and I encourage shareholders
to support us and vote in favour of
these resolutions.
Patrick Vaughan
Chair of the Nomination Committee
26 May 2022
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Rosalyn
Wilton
Audit
Committee
Chair
The Committee continues
to play a key assurance role
by overseeing the integrity
and accuracy of financial
reporting and by ensuring
there is a sound system of
internal control and risk
management in place.
Membership and attendance
The number of Committee members and their attendance during
theyear wasas follows:
Member
Date
appointed
Tenure
(years)
1
Meetings
attended
2
Rosalyn Wilton (Chair) 25/3/2014 8 6 (6)
Suzanne Avery 22/3/2018 4 6 (6)
Robert Fowlds 31/3/2019 3 6 (6)
Kitty Patmore 28/1/2021 1 6 (6)
1 Tenure is measured from date of appointment to the Committee
andasat31 March 2022, rounded to the nearest whole year
2 Bracketed numbers indicate the number of meetings the member
waseligibleto attend
What the Committee did in 2022
– Considered the need for a separate ESG Committee
– Dedicated one meeting to ESG matters and
received an update on the Company’s ambitions
and performance
– Received a technical update from Deloitte on
corporate governance including the BEIS consultation
and reforms
– Oversight of new reporting requirements including
TCFD and ESEF
– Considered the rotation of the audit partner
fornext year
– Considered cyber security, emerging risks and
tenantcovenant analysis
– Reviewed investor and occupier survey results
Key responsibilities
Financial reporting
– Monitor the integrity of the financial
reporting process
– Scrutinise the full and half year
financial statements
– Consider and challenge the key
financial judgements
See pages
126 – 127
Risk management and internal control
– Oversee the internal control processes
and risk management framework
– Ensure risks are carefully identified,
assessed and mitigated
– Assess the need for an internal
audit function
See pages
128 – 129
External auditor
– Review the performance, independence
and eectiveness of the external auditor
and audit process
See pages
129 – 130
Regulatory compliance
– Review the Viability Statement and going
concern basis of preparation
– Consider whether the Annual Report is
‘fair, balanced and understandable’
– Monitor compliance with applicable
lawsand regulations
See pages
130 – 131
LondonMetric Property Plc
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124
Audit Committee report
Audit, risk and internal control
Dear Shareholder,
As Chair of the Committee, I am pleased
to present our report which describes the
key areas of focus and work we have
undertaken this year. The Committee
consisted throughout the year of four
members who attended all meetings
eitherin person or remotely.
We continue to play a key assurance role
for the Board, which is to independently
oversee and challenge the integrity of
the financial reporting processes which
support the accuracy of the financial results.
We have discussed with management and
the external auditors the key transactions
in the year as set out in the Strategic report
and have challenged the significant
judgements as reported on page 127.
Alongside this, one of our top priorities each
year is to review the risk management
framework and internal control procedures,
to ensure they remain relevant, robust and
are implemented eectively. I am pleased
to report that following our comprehensive
review of principal and emerging risks, which
included the impact of the war in Ukraine,
cyber security processes given the increase
in remote and hybrid working and climate
change, no significant weaknesses were
identified. Further details of this review can
be found on pages 70 to 85.
Of particular focus this year, was the
Company’s ESG ambitions including its Net
Zero Carbon pathway as reported last year,
and its TCFD obligations. Two members of
the Senior Leadership Team presented to the
Committee at a separate meeting outside
ofthe usual schedule. All other Non Executive
Directors were invited and attended.
The presentation covered the Company’s
ESG framework, the Board’s responsibilities,
external benchmarking, net zero ambitions,
specific initiatives and targets, TCFD reporting
and feedback on ESG matters. A list of
action points was compiled to follow up
on TCFD workflows, investor performance
indices and carbon osetting.
The Committee was satisfied that ESG is a key
focus for management and is embedded
into operations. The Committee also agreed
to hold a dedicated ESG update meeting
on an annual basis and to incorporate ESG
responsibilities into its terms of reference,
rather than establishing a separate ESG
Committee given the size of the Board.
In addition to recurring business, the
Committee also received briefing papers
and considered cyber security, tax strategy,
corporate governance, the occupier
survey results and portfolio credit analysis,
which noted the pressures on occupiers of
the current high inflationary environment
and considered whether the current UK
economic sanctions on Russia applied
toanyof the Company’s tenants, as
discussed on page 71.
Each year we also consider the
independence and eectiveness of the
external auditors to ensure they provide
the appropriate level of challenge and
expertise. Following our review, we have
recommended the reappointment of
Deloitte LLP (‘Deloitte’) at the AGM in July.
Deloitte have been in oce for nine years
now and we will be re-tendering ahead of
the 2024 year end. In addition, the current
Audit Partner will have served for five years
after the conclusion of this year’s audit and
in line with best practice recommendations
will be stepping down and handing over to
Rachel Argyle next year. On behalf of the
Committee and Board, I would like to thank
Georgina for her support and expertise over
the last five years.
During the year, the Company received a
letter from the FRC following their review of
the 2021 Annual Report. The objective of the
review was not to verify that the information
in the Annual Report was correct but rather
to consider compliance with reporting
requirements. I am pleased to report that
no queries or questions were raised, and no
response was required. The minor disclosure
recommendations that were noted have
been taken into consideration in the
preparation of this year’s Annual Report.
Membership
The Committee comprised throughout the
year of four independent Non Executive
Directors, with considerable commercial
knowledge and diverse industry experience
including property, finance, banking, capital
markets, risk management and sustainability.
The Board is satisfied that all current
members bring recent and relevant financial
experience to the Committee as required
by the Code and considers that the
Committee as a whole has the appropriate
commercial and industry specific knowledge
and competence to enable it to discharge
its duties, through the positions members
currently or have previously held.
Biographies of the Committee members
which set out the relevant skills, knowledge
and sector experience they bring can be
found on pages 92 to 93.
Meetings
The Committee met six times during the
year and follows an annual programme
which is agreed at the start of the year.
Meetings were aligned to the Company’s
financial reporting timetable, with the
May and November meetings scheduled
to precede the approval and issue of
the full and half year financial reports.
Separate meetings were held with the
Company’s property valuers to challenge
the valuation process and review their
independence. At the March meeting,
theCommittee reviewed risk management
and internal control processes and
considered the year end audit plan.
As usual, the Group’s external auditor,
independent property valuers, Finance
Director and Head of Finance attended
meetings by invitation, as well as other
employees who presented on specialist
topics such as ESG, cyber security and the
occupier survey results. This interaction is
extremely valuable as it focuses discussion
on topical issues and allows the Committee
to meet the pool of emerging talent below
Board. This year, the Head of Investor
Relations and Sustainability and the Strategy
Director presented an update on ESG and
the Head of Finance discussed significant
accounting matters and cyber security.
Time is allocated for the Committee to meet
the external auditor and property valuers
independently of management. As Chair
of the Committee, I report to the Board
any matters considered and conclusions
reached after each meeting.
In addition to formal Committee meetings,
I have regular contact and meetings with
the Finance Director, to understand and
keep abreast of key matters in advance
of meetings, facilitating informed and
constructive debate and challenge. With the
easing of restrictions, we have returned to
face-to face meetings, but recognise the
benefits of remote attendance and will
continue with hybrid meetings where we
feelit necessary and beneficial.
125
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Committee eectiveness
During the year, the Board led by the
Nomination Committee carried out an
internally facilitated evaluation of its
performance and that of its Committees as
reported on pages 121 to 123. The review
concluded that the Committee continued to
operate eectively and to a high standard,
was very well supported by the Finance
Director, his team and the external auditors
and provided the appropriate level of
independent challenge and scrutiny.
Our work in 2022
Throughout the year, the Committee acted
in accordance with its terms of reference,
which were last reviewed and updated
in March 2022 and can be found at
www.londonmetric.com.
The work undertaken this year is set out
in the table below and has included the
consideration, review and approval of
eachof the items noted.
Financial reporting
One of our principal responsibilities is
to monitor the integrity of the financial
information published in the interim
and annual statements and the
overall tone, messaging and clarity
ofreporting. In conducting its review,
theCommittee considers:
– The extent to which suitable
accountingpolicies and practices
havebeen adopted, consistently
appliedand disclosed;
– Significant matters by virtue of their
size, complexity, level of judgement
and potential impact on the
financialstatements; and
– Compliance with relevant
accountingstandards and other
regulatory reporting requirements
including the Code.
The significant matters considered by the
Committee, discussed with the external
auditor and addressed during the year
areset out on page 127 and are consistent
with previous years. Further details can be
found in note 1 to the financial statements
on pages 168 to 169.
Management confirmed that they were
notaware of any material misstatements
and the auditor confirmed they had not
found any material misstatements in the
course of their work, as reported in their
independent report on page 156.
In addition to the significant matters
discussed opposite, the Committee
considered a number of other judgements
made by management, none of which
werematerial in the context of the
Group’sresults or net assets.
Role Responsibilities
Financial
reporting
– Interim and full year results announcements and the
Annual Report
– Accounting treatment of significant transactions and
areas of judgement including property valuations and
corporate acquisitions
– The valuation process, the half yearly valuations and the
independence of the Group’s valuers
– Processes undertaken to ensure that the financial statements
arefair, balanced and understandable
Risk
management
and internal
control
– The Group’s risk register, principal and emerging risks including
cyber security and the war in Ukraine
– The adequacy and eectiveness of the Group’s internal controls
– The appropriateness of the going concern assumption
– The Viability Statement and longer term forecast
– The need for an internal audit function
External audit – Scope of the external audit plan
– The independence and objectivity of the external auditor
– Performance of the external auditor and eectiveness
of the audit process
– Auditor’s fee
– Reappointment of Deloitte LLP as external auditor
– Rotation of Audit Partner and consideration and approval
ofincoming Audit Partner
– Non audit services and ratio of fees
Regulatory
compliance
– Committee’s composition, performance, terms of reference
and constitution
– S172 Statement, occupier survey and other legislative
requirements including
TCFD and ESEF
– ESG matters including Net Zero Carbon ambition
– Tax strategy
LondonMetric Property Plc
Annual Report and Accounts 2022
126
Audit Committee report
Audit, risk and internal control
Property valuations
Significant transactions
Reporting issue
The property valuation is a critical part
of the Group’s reported performance.
It continues to be the most significant matter
for consideration, being a key determinant
of the Group’s profitability, net asset value,
total property return and avariable element
of remuneration.
Property valuations are inherently subjective
as they are based on assumptions and
judgements made by external valuers and
are underpinned by transactional market
evidence, which may not prove to be
accurate. In a disrupted and uncertain
market, this empirical data may be less
relevant and valuations may become more
subjective. Property valuations are a key
area of focus for the external auditor.
It remains a principal recurring risk for the
Group as reported in the Risk management
section on pages 70 to 85.
The Group and its share of joint ventures has
property assets of £3.6 billion as reflected
in the Financial review and as detailed in
Supplementary note ix on page 197.
The Committee’s role
All investment properties, including those
held in joint ventures, are externally valued
each half year by independent property
valuers, CBRE Limited and Savills (UK) Limited.
The Committee met twice during the year
with the property valuers, as part of the
interim and year end reporting process, to
scrutinise and challenge the integrity of the
valuation process, methodologies and results.
The key judgements applied and any issues
raised with management were considered
to ensure that the valuers remained
independent and objective throughout
the process and had not been subjected
to undue influence from management.
Supporting market evidence was provided
to enable the Committee to benchmark
assets and conclude that the assumptions
applied were appropriate.
The Committee reviewed key assumptions
including future rental growth, market yield,
capital expenditure, letting timeframes, void
costs and incentive packages and were
content with those applied.
Any valuations requiring a greater level
of judgement were debated, including
property under development and valuation
movements that were not broadly in line
with benchmarks.
The Committee challenged assumptions
and discussed the impact on values of
changes to the key assumptions.
As part of their audit work, Deloitte use their
own in-house property valuation expert
to assess and independently challenge
the valuation approach, assumptions and
judgements. They meet separately with
the valuers and report their findings and
conclusions to the Committee.
Conclusion
The Committee confirmed to the
Board that it was satisfied that the
external property valuation included
within the financial statements had
been carried out appropriately,
independently and in accordance
with industry valuation standards.
Reporting Issue
The Group transacted on £783 million of
property acquisitions and sales in the year,
as discussed in detail in the Property review
on pages 29 to 41. Certain transactions are
large and/or complex in nature and require
management to make judgements when
considering the appropriate accounting
treatment including how and when a
transaction should be recognised.
There is an inherent risk that an inappropriate
approach for a significant transaction could
lead to a material misstatement in the
Group’s financial statements.
This year the Group acquired £227 million
of assets through corporate transactions.
Other complexities considered included
forward funded developments and
deferredcompletion arrangements.
The Committee’s role
The Committee, in conjunction with the
external auditor, received and challenged
management’s accounting proposals
in relation to the corporate acquisition
and other significant transactions to the
extent that there were unusual terms
andconditions or judgement.
This year the Group acquired the Savills
UKIncome & Growth Fund for £122 million,
which comprised 15 propertyassets.
In addition, itacquired assets totalling
£105 million through two further
corporate acquisitions.
Minimal assets were acquired other than
the property portfolio, and there were
no employees or drawn debt balances.
Therefore, all transactions were
considered to beproperty acquisitions
and disposals of less complexity and not
business combinations in accordance
with IFRS 3.
Conclusion
The Committee concurred
withthe approach adopted by
management ineach case.
127
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Risk management and internal control
Risk management remains a top priority
for the Board and one it takes seriously.
The Board is ultimately responsible for
identifying the principal and emerging risks
which may aect its strategic objectives and
for monitoring the risk management controls
in place. It recognises that risk is inherent in
running the business and understands that
eective risk management is key to long
term sustainable success and growth.
The Board has delegated responsibility
for reviewing the eectiveness of the risk
management framework and internal
control environment to the Audit Committee.
Each year the Committee carries out an
in-depth review of the risk register and reports
its findings to the Board. The risk register was
last updated and presented to the Audit
Committee in March 2022.
There is a culture of risk awareness
embedded into the decision making process
and robust processes are in place to support
the identification and management of risk.
The Board considers risk at a strategic level
each meeting via a high level dashboard,
which ensures that new and emerging risks
are identified early on with appropriate
action taken to remove or reduce their
likelihood and impact.
The Chief Executive also provides an
informative market overview at each
meeting covering longer term themes and
evolving trends that provide context for
responsive strategic decision-making.
The Senior Leadership Team is responsible for
ongoing risk identification and the design,
implementation and maintenance of the
system of internal controls in light of the risks
identified. The team comprises individuals
with a breadth of skills and experience
from across the Company. Short reporting
lines, low sta numbers and an embedded
risk awareness culture facilitate the early
identification of risks and the development
ofappropriate mitigation strategies.
A new principal risk category of Major Event
has been added this year, to capture risks
associated with external factors such as the
pandemic, acts of terrorism or conflict.
The Covid-19 pandemic presented
challenges to the business and its
stakeholders, including the security of remote
working, oce safety, the financial stability
of tenants and the availability of contractual
supplies for development projects. The Board
remain vigilant to the risks posed by Covid-19
variants but consider this risk has reduced
due to the Company’s experience of
operating over the last two years and the
ecacy of vaccines and treatments.
The war in Ukraine has been identified as
a new emerging risk in the Major Event
category, although at present it is too
early to tell how long the war and resulting
uncertainty will last and whether the conflict
will spread. The impact on the economy
and tenants of higher and longer inflation
and power and supply chain disruption are
also currently unknown. Our strong occupier
relationships provide market intelligence and
will help us to better understand the impact
over time.
The Board believe that a portfolio firmly
placed on the right side of structural change,
with more companies holding greater
inventories within the UK, and granularity of
income, provide a high level of resilience
to any shocks. These risks are discussed
indetail in the Risk management section
onpages70to 85.
The risk management framework and
ongoing processes in place to identify,
evaluate and manage the principal risks
and uncertainties facing the Group are
described in the Risk management section
on pages70to 85.
As well as its review of the risk register, the
Committee received a cyber security
update paper from the Finance Director,
which highlighted the increased risk of
cyber threats linked to extensive periods
of remote and hybrid working and listed
the improvements made in the year.
These included the implementation of
improved threat detection and prevention
software, cyber awareness training for all
sta, penetration testing on existing systems
and the implementation of an electronic
approval system for purchase invoices.
Further details can be found in the Risk
management section on page 70.
Risk register
As in previous years, the risk register
identifies the following for each
corporate, property and financial
riskfacing the business:
– Significance and probability
ofeach risk;
– Controls and safeguards in
place tomanage and minimise
each risk;
– Movements in the Group’s
exposure tothe risk since the
lastreview; and
– Allocated owner of the risk and
management of safeguards.
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128
Audit Committee report
Audit, risk and internal control
Based on its review and assessment,
the Audit Committee is satisfied that no
significant weaknesses in the Group’s internal
control structure were identified during the
year and an eective risk management
system is in place and has reported these
findings to the Board.
Internal audit
The Group does not have a dedicated
internal audit function and the Committee
reviews the requirement for one each year.
Due to the size of the organisation, relatively
simple structure of the Group and close
involvement of the Senior Leadership Team
in day to day operations, the Committee
did not feel an internal audit function was
either appropriate or necessary. However,
from time to time and when considered
necessary, external advisors are engaged
to carry out reviews to supplement existing
arrangements and provide further assurance.
This has included testing of IT systems and
security including penetration and social
engineering testing. The Committee agreed
that external assurance would be sought for
any complex, specialist or high risk issue.
External audit
The Committee has continued to have
a constructive working relationship with
the external auditor and its lead partner
Georgina Robb, who was first appointed for
the 2018 year end. Current UK regulations
require rotation of the lead audit partner
every five years, a formal tender of the
auditor every ten years and a change of
auditor every 20 years. Therefore, Georgina
will be stepping down following the
conclusion of this year’s audit and Rachel
Argyle has been appointed as her successor.
Deloitte has been the external auditor for the
past nine years since 2013 and therefore we
will undertake a formal tender process for the
audit ahead of the 2024 year end.
The Company has complied with the
provisions of the Competition and Markets
Authority Order 2014 in relation to audit
tendering and the provision of non audit
services for the year under review.
Oversight
As in previous years, Deloitte presented their
audit plan to the Committee. This highlighted
the key audit risk areas consistent with
previous years as property valuations and
accounting for significant transactions.
The level of audit materiality was also
discussed and agreed. Their detailed audit
findings were presented ahead of the interim
and full year results. The Committee probed
and challenged the work undertaken and
the key assumptions made in reaching
their conclusions, with particular focus on
the audit risk areas identified. As part of
their work, the Committee allocate time
to meet privately with the auditor without
management present.
Eectiveness
The Committee assesses the eectiveness
of the external audit process by its review
ofthe following:
– Audit plan and deliverables;
– Independence and objectivity; and
– Fees and reappointment.
In making its assessment, the Committee
considers the expertise and consistency
of the audit partner and team as well
as the quality and timeliness of the audit
deliverables. It reviewed the extent to
which the audit plan was met, the level of
independent challenge and scrutiny applied
to the audit and the depth of understanding
of key matters and accounting judgements.
It also considered the interaction with and
views of management, which included
feedback received following the audit
clearance meeting held between
management and the audit team.
Internal control framework
The Committee also reviews
the eectiveness of the Group’s
internal controls including all
material financial, operational
and compliance controls, and
received an updated internal control
evaluation report from the Finance
Director in March 2022.
The key elements of the Group’s
internal control framework are
as follows:
– A defined schedule of matters
reserved for the Board’s attention;
– A documented appraisal
and approval process for all
significant capital expenditure
and development;
– A comprehensive and robust
system of financial budgeting,
forecasting and reporting;
– Weekly cash flow forecasting
that is reviewed by the Senior
Leadership Team;
– An integrated financial and
property management system;
– A simple and transparent
organisational structure
with clearly defined roles,
responsibilities and limits of
authority that facilitates eective
and ecient decision making;
– Most sta work closely with Senior
Leadership Team members,
who are involved in all day to
day operations and decision
making, facilitating supervision
and monitoring;
– Disciplined meetings of the
management committees
below Board;
– The maintenance of a risk register
and risk dashboard highlighting
movements in principal and
emerging risks and mitigation
strategies; and
– A formal whistleblowing policy
and annual performance reviews
to enable sta to voice concerns.
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Section 172 duties
The Board of Directors, both individually
and collectively, is aware of its duty
under Section 172 Companies Act to
act in the way it considers, in good
faith, would be most likely to promote
the success of the Company for the
benefit of its members as a whole,
having regard to:
– The likely consequences of
decisions in the long term;
– The interests of its employees;
– The Company’s relationships with
suppliers, customers and others;
– The impact of the Company’s
operations on the community
and environment;
– The Company’s reputation and
maintaining high standards of
business conduct; and
– The need to act fairly as between
members of the Company.
The Board’s consideration of
stakeholders is set out on pages 100
to 103 and the Section 172 statement
is on page 104.
The Committee continues to focus on
the long term success of the business
and its stakeholders through its work
on the following key areas:
– Assessing whether the Annual
Report is fair, balanced and
understandable to provide
shareholders and other
stakeholders with clear
information on the Company and
its long term outlook. Our review
isset out on page 131;
– Reviewing the appropriateness
of the going concern assumption
and assessing the Company’s
viability and longer term
prospects. Our work is set out on
page 86 and the Board’s Viability
Statement is on page 87; and
– Ensuring the Company’s risk
management framework is
suciently robust to safeguard
its future for the benefit of
its stakeholders.
The three year average ratio of non audit
fees (primarily the cost of the interim review)
to audit fees continues to be low at 17%,
supporting the Committee’s conclusion
thatDeloitte remains independent.
Having undertaken its review, in the opinion
of the Audit Committee, this year’s audit
wasappropriately planned, executed and
ofa consistently high quality.
Deloitte continue to provide the appropriate
level of professional challenge and remain
objective and independent and as such the
Committee has recommended to the Board
that Deloitte be appointed for another year.
A resolution to this eect will be proposed
atthe AGM in July.
Independence
The Committee recognises the importance
of auditor objectivity and independence
and understands that this could be
compromised by the provision of non audit
services. The Company’s policy on non audit
services stipulates that they are assessed on a
case by case basis by the Executive Directors
who observe the following guidelines:
– Pre approval of fees by the Executive
Directors up to a limit of £100,000 or
referral to the Audit Committee for
reviewand approval;
– Proposed arrangements to maintain
auditor independence;
– Confirmation from the auditor that
theyare acting independently; and
– Certain services are prohibited from
being undertaken by the external
auditorincluding bookkeeping,
preparing financial statements, design
and implementation of financial
information systems, valuation,
remuneration and legal services.
All taxation services and remuneration
advice is provided separately by PwC.
Corporate due diligence work and the audit
of certain subsidiary companies is undertaken
predominantly by BDO LLP. Deloitte has
confirmed to the Audit Committee that they
remain independent and have maintained
internal safeguards to ensure the objectivity
of the engagement partner and audit sta is
not impaired. They have also confirmed that
they have internal procedures in place to
identify any aspects of non audit work which
could compromise their role as auditor and
to ensure the objectivity of their audit report.
The table above sets out the fees payable
toDeloitte for each of the past three years.
Going concern and viability
Although the statements on going concern
and viability are a matter for the whole
Board, the Audit Committee reviewed the
appropriateness of preparing the financial
statements on a going concern basis and
the analysis prepared to support the Board’s
longer term Viability Statement required by
the Code.
Its assessment included a review of the
principal risks and risk appetite, the chosen
period of assessment, headroom under
loan covenants, liquidity, investment
commitments and the level of stress testing of
financial forecasts undertaken. It considered
the current economic challenges of higher
inflation and interest rates and supply chain
disruption on our occupiers, and the impact
to the Group of rental defaults, vacancy
costs and letting voids.
Following its review, the Committee was
satisfied that the going concern basis of
preparation remained appropriate and
recommended the Viability Statement
be approved by the Board. The Board’s
confirmation on going concern and its
Viability Statement is set out on pages
86and 87.
Audit and non audit fees
Year to 31 March
2022
£000
2021
£000
2020
£000
Audit fees 225 201 184
Review of interim results 38 35 30
Other non audit fees – – –
Total 263 236 214
Ratio of non audit fees (including interim
review) to audit fees 17% 17% 16%
* Audit fees paid to the external auditor in respect of joint ventures totalled £13,500 at share (2021: £12,100 at share)
Regulatory compliance
LondonMetric Property Plc
Annual Report and Accounts 2022
130
Audit Committee report
Audit, risk and internal control
Fair, balanced and understandable
At the request of the Board, the Audit
Committee considered whether this
Annual Report was a fair, balanced and
understandable assessment of the Group’s
position and prospects. In reaching its
decision, the Committee considered
the process in place and adopted by
management in preparing the Annual
Report, which included the following:
– The establishment of a team of
experienced senior managers, drawn
from finance, investor relations and
property with clear responsibilities for
the preparation and review of relevant
sections of the report;
– Regular team liaison during the
drafting stages to ensure consistency
of tone and message, balanced
content and appropriate linking of the
various sections;
– A technical briefing update given by
the external auditor covering corporate
governance and accounting regulations
attended by relevant sta and the Audit
Committee in January 2022;
– Early input from Executive Directors to the
overall message and tone of the report;
– Close involvement of the Executive
Directors throughout with extensive
review of drafting;
– A verification exercise undertaken by the
finance team to ensure factual accuracy
and consistency throughout the report;
and
– Review by the Audit Committee
before being presented to the Board
for approval.
Climate related disclosures
The Committee considered the new
requirement this year for disclosure,
on a comply or explain basis, on the
recommendations of the Task Force on
Climate-related Financial Disclosure (‘TCFD’).
During the year the Company undertook a
comprehensive climate risk assessment with
its external advisors as reported on page 52,
The Committee received an update from
management on the assessment undertaken
and the new TCFD disclosure which can be
found in the Responsible Business and ESG
review on pages 66 to 69.
ESEF reporting
The Committee also considered the new
requirement to prepare the Company’s
consolidated financial statements in digital
form under the European Single Electronic
Format regulatory standard (‘ESEF’).
The Committee reviewed management’s
process for completing the ESEF submission,
including the appointment of a qualified
provider for the preparation of the ESEF
report and is satisfied with the procedures
in place.
Whistleblowing procedures,
anti-corruption and anti-bribery
As a company, we seek to operate in
an honest and professional manner, with
integrity and respect for others. We do
not tolerate inappropriate behaviour or
malpractice of any kind. Employees are
encouraged to speak out if they witness
any wrongdoings and are provided with a
compliance procedures manual on joining
which sets out our whistleblowing policy and
anti-corruption procedures. Responsibility for
reviewing and monitoring whistleblowing
rests with the Board and the Committee
will report to the Board any incidents that
are brought to its attention. During the year
under review, there were no whistleblowing
incidents to report to the Board.
As reported throughout this Annual Report,
it has been another very successful and
busy year for the Company. I would like to
extend my thanks to my fellow Committee
members, wider management team and
Deloitte for their continued support and
valued contribution. This year, our AGM will
be held at the Connaught Hotel in Mayfair
for shareholders to attend and I will be
in attendance and available to answer
any questions.
Rosalyn Wilton
Chair of the Audit Committee
26 May 2022
131
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1-87 88-154 155 -208
In carrying out its review, the
Committee had considered
the following:
Fair
– Does it include relevant
transactions and balances?
– Does it include the required
regulatory disclosures?
– Does it provide shareholders
information to assess the Group’s
position and performance,
business model and strategy?
– Is it honest, reporting success
and opportunities alongside
challenges to the business?
Balanced
– Is it consistent throughout with
sucient linkage?
– Is there an appropriate mix
of statutory and alternative
performance measures?
– Are alternative performance
measures explained
and reconciled to the
financial statements?
Understandable
– Is it written in straightforward
language and without
unnecessary repetition?
– Does it use diagrams, charts, tables
and case studies to break up
lengthy narrative?
– Is there a clear contents
page to aid navigation and
sucient signposting?
The Committee concluded that the
Annual Report was fair, balanced and
understandable, allowing the Board to
make its statement on page 154.
Remuneration Committee report
Robert
Fowlds
Remuneration
Committee
Chair
The overriding objective of our
remuneration framework is to
operate a fair and transparent
Remuneration Policy which
motivates and retains individuals
of the highest calibre and rewards
exceptional performance for
the delivery of the Group’s
strategic goals.
Membership and attendance
The number of Committee members and their attendance during
theyear wasas follows:
Member
Date
appointed
Tenure
(years)
1
Meetings
attended
2
Robert Fowlds (Chair) 31/1/2019 3 4 (4)
Rosalyn Wilton 14/7/2016 6 4 (4)
Suzanne Avery 19/9/2018 4 4 (4)
Andrew Livingston 28/1/2021 1 4 (4)
1 Tenure is measured from date of appointment to the Committee and as at
31 March 2022, rounded to the nearest whole year
2 Bracketed numbers indicate the number of meetings the member was eligible
to attend
What the Committee did in 2022
– Set targets for the year
– Considered the wider workforce pay when setting
Executive Directors’ and the Senior Leadership
Team’s remuneration
– Considered employees views on Executive pay through
attendance by Chair at Workforce Non Executive
Director’s annual sta meeting
– Approved the variable elements of the annual bonus
and LTIP performance against targets set
– Approved the extension of the Board Chair’s letter
ofappointment for 12 months to 31 March 2023
Key responsibilities
Remuneration Policy
– Set and review the Remuneration Policy
for Directors and ensure it is aligned to the
Company’s purpose and values and the
delivery of its strategy
– Set the remuneration of the Executive
Directors and certain members of the
Senior Leadership Team and oversee
workforce remuneration arrangements
See pages
138 – 140
Remuneration packages and payouts
– Determine and review individual
remuneration packages
– Approve salaries, bonuses and
LTIP awards
See pages
141 – 149
Variable incentives
– Determine and review the Long Term
Incentive Plan (‘LTIP’) and Annual Bonus
Plan arrangements
– Approve targets and outcomes
See pages
141 – 149
LondonMetric Property Plc
Annual Report and Accounts 2022
132
Remuneration
I am very pleased to present the
Remuneration Committee’s report on
Directors’ remuneration for the year to
31 March 2022. Our Remuneration Policy was
approved for three years at the 2020 AGM
by over 95% of votes in favour. The Policy is
designed to be simple and transparent and
one which aligns executive pay with the
Company’s strategic goals, wider workforce
pay arrangements and shareholder interests
and one which rewards exceptional overall
and individual performance. A summary
of the Policy is provided on pages 138 to
140 and the full Policy can be found on our
website at www.londonmetric.com.
There have been no changes to the
Committee’s membership or primary role this
year, which is to determine and recommend
a fair reward structure that incentivises the
Executive Directors to deliver the Group’s
strategy whilst maintaining stability in the
management of its long term business.
Our Annual Report on Remuneration on
page 141 contains details of payments
during the financial year and how we intend
to implement the Remuneration Policy
for the next financial year. This part of the
report is subject to an advisory vote at the
forthcoming AGM.
Remuneration aligned
to purpose and strategy
Our remuneration framework is strongly
aligned with the Company’s purpose,
strategy and performance as well as the
interests of our shareholders as reflected in
the chart on page135.
Delivery of these strategic objectives is
measured using key performance metrics
that are embedded within the variable
elements of remuneration, being EPRA
Earnings per Share (‘EPS’), Total Property
Return (‘TPR’), Total Accounting Return
(‘TAR’) and Total Shareholder Return (‘TSR’).
Performance during the year
The Company has delivered another
very strong set of results this year despite
the continued economic and political
challenges and uncertainty posed by
Covid-19 and more recently the war in
Ukraine. It has delivered growth in earnings
of 9.2% and a progressive and well covered
dividend to shareholders of 9.25p, a 6.9%
increase on last year.
IFRS reported profit of £734.5 million, almost
trebled over the year, and was predicated
on a £632.2 million valuation gain. EPRA net
tangible assets per share has increased
37.2% to 261.1p and total property return
at 28.2% significantly outperformed the IPD
All Property index of 19.6%. The Company’s
£3.6 billion portfolio is well positioned with
97.1% of assets in the structurally supported
distribution and long income sectors.
Shareholder support for the Company’s
investment strategy was evidenced
by the successful and over-subscribed
£175 million equity raise in November 2021
and the strength of banking relationships
were instrumental in securing new private
placement and unsecured credit facilities
totalling £930 million in the year.
Given this exceptional performance and
the continued progressive returns enjoyed
by its shareholders both in terms of dividend
yield and share price performance, the
Committee considers it entirely appropriate
to reward the Executive Directors with the
variable elements of this year’s annual bonus
and LTIP in line with the formulaic outcomes
as detailed below.
Salary increases
This year, the Committee approved an 8.4%
increase for Executive Director salaries in
line with the average increase for the wider
workforce. In assessing the appropriateness
of this increase, the Committee also
noted that:
– While the Company has grown
significantly in size and complexity since its
inception, the Committee demonstrated
considerable restraint around fixed levels
of remuneration, such that in every year
since 2014 the Executive Directors have
received increases either equal to or
below that of the average employee
increase; and
– Corporate and individual performance
has been exceptional as demonstrated
by the bonus and LTIP outcomes and
the shareholder experience (33.7% TSR
this year).
The increases will apply from 1 June 2022.
Pension alignment
As reported last year, the Executive Directors’
pension contributions will be reduced from
the existing level of 12.5% of salary to 10%
of salary on 1 June 2022 to align with the
rate available to the wider workforce in
accordance with our Remuneration Policy.
Annual bonus
As set out in last year’s Remuneration Committee
report, the targets for the annual bonus for
the year to 31 March 2022 were based on
growth in EPRA EPS (35% weighting), growth
in TPR (35% weighting) and performance
against personal objectives (30% weighting).
The maximum opportunity was 165% of salary
for the Chief Executive and 140% of salary for
the Finance Director.
Notwithstanding the challenging operating
environment, the EPS growth measure
was achieved in full as EPRA EPS of 10.04p
significantly exceeded the maximum target
of 9.68p. To put this into context, the Company
started the year with substantial non-core
property sales completed or agreed, such
that the 9.68p target was eectively a 9%
increase in the underlying earnings in a very
competitive property investment market.
Management delivered significant accretive
acquisitions outperforming the target.
In line with best practice, TPR has been
measured on a multi-year basis (over one
and three years) to reflect performance
against the All Property Index and the
index for the Group’s portfolio of assets.
The Committee is satisfied that this approach
measures and rewards the longer-term
investing principles inherent in the real estate
sector. On this basis, the TPR element paid
out 72% of maximum.
Chair’s introduction
This report is structured as follows:
– Chair’s introduction page 133
– Directors’ Remuneration at a
glance page 135
– Implementation of Policy next
year page 136
– Directors’ Remuneration Policy
page 138
– Annual Report on Remuneration
page 141
133
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Remuneration
The Committee also assessed that
performance against personal objectives
would pay out in full this year reflecting the
strong strategic, financial and ESG progress
made as set out on pages 143 to 144.
Overall, the Committee has calculated
annual bonuses for the Chief Executive
and Finance Director to be at 90% of their
respective maximum levels. The Directors
have decided to opt out of the annual
bonus deferral provision in accordance
with the Remuneration Policy, as they have
exceeded the minimum shareholding
requirement of 700% of salary.
LTIP vesting
Vesting of the LTIP awards granted to
Executive Directors in 2019 is dependent on
Company performance over the three years
to 31 March 2022. Performance is measured
by reference to TAR and TSR relative to the
FTSE 350 Real Estate Super Sector excluding
agencies and operators (37.5% weighting
each) and EPRA EPS growth (25% weighting).
The Committee assessed relative TAR and
TSR performance over the three year period
with both being in the top quartile of the
measurement index leading to full vesting for
these elements.
The EPRA EPS growth targets are set with
reference to RPI measured on a spot to spot
basis over the three financial years ending
31st March 2022. Given the unforeseen
and exceptional increase in RPI in recent
months driven by external geopolitical and
macroeconomic factors, the Committee
determined to cap the RPI rate at which
the EPS growth targets were to be assessed.
In determining an RPI cap of 7% per annum
the Committee took into account the
following factors:
– Inflation rates when the targets were set;
– Inflation rates over the three
financial years;
– The lease structures of our customers,
many of which contain an annual
increase cap significantly below
current RPI;
– The other 15 recipients of the LTIP
award; and
– EPS performance over the three
financial years.
Based on this approach and an actual
EPRA EPS outturn for FY2022 of 10.04p
per share, vesting for this element is 83%.
The Committee considered the calculation
methodology fair and reasonable for the
Executive Directors and also for the 15 LTIP
participants in the wider workforce and
generated an outcome aligned with the
Company’s strong corporate performance
and the shareholder experience.
Overall, 95.8% of the 2019 LTIP will vest in June
2022, subject to continued service, using
the formulaic approach outlined above.
The awards are subject to a two-year post-
vesting holding period.
LTIP awards
The Group’s LTIP arrangements seek to align
executive pay with the delivery of long
term growth in shareholder value. This year
719,877share awards were granted to
the Executive Directors and 982,483 LTIP
awards vested.
The Directors disposed of 463,157 shares
to settle tax liabilities and retained the
remaining 519,326 shares which increased
their holding in the Company to a total of
8.1 million shares as reflected in the table
onpage 147.
Looking forward
The Committee will continue to monitor
emerging trends and best practice in
corporate governance ahead of its
third policy review in 2023, to ensure the
remuneration arrangements continue to
incentivise and motivate management.
Finally, I would like to thank my colleagues on
the Remuneration Committee for their high
quality input and support over the last year.
Robert Fowlds
Chair of the Remuneration Committee
26 May 2022
Chair’s introduction
Remuneration
Committee assessment
The Committee is satisfied that the
amount payable under the variable
incentive plans is a fair reflection
of the underlying performance of
the business. As such, no discretion
was exercised by the Committee in
relation to the formulaic outcomes.
In making this assessment, the
Committee took account of the
following factors:
– The Company achieved a strong
set of financial results, allowing
the Board to propose an increase
to the dividend for the year to
31 March 2022 of 6.9%
– The financial results were also
reflected in strong share price
growth which led to TSR growth
of 33.7% over the year and 59.5%
TSR growth over the three years to
31 March 2022
– Continued realignment of the
portfolio towards urban logistics
and long income: urban logistics
is now 44% of the portfolio and
logistics and long income is now
97% of the portfolio
– Continued improvement in the
quality of the portfolio through an
increased WAULT to 11.9 years and
occupancy maintained at 99%
– The equity raise during the year
was five times oversubscribed
– Improvement in EPC ratings, with
85% assets rated A to C (2021: 74%)
– All employees received an annual
bonus and the Committee
is delighted that 60% of our
employees will benefit from the
2022 LTIP award
– Finally, the Company has not
taken advantage of any UK
government support schemes
orloans during the pandemic.
The Committee is satisfied that the
remuneration policy operated
as intended in the year to
31 March 2022.
LondonMetric Property Plc
Annual Report and Accounts 2022
134
Remuneration
Directors’ remuneration at a glance
Earnings for the financial year
Remuneration for ExecutiveDirectors
Salary
£000
Benefits
£000
Pension
£000
Bonus
£000
LTIP
£000
Total
2022
2
£000
Total
2021
£000
Illustrative change in value
of shares owned and
outstanding
share awards
1
£000
Andrew Jones 565 26 73 847 1,524 3,035 2,998 655
Martin McGann 378 29 49 480 840 1,776 1,737 403
1 Based on an illustrative swing in share price of 10p. For reference, the highest closing share price during the year was 285.2p and the lowest closing price was 216.0p.
The number of shares and share awards was calculated based on the year end total
2 Full details of Directors’ remuneration for the year can be found in the table on page 142
3 2019 LTIP awards expected to vest in June 2022
Annual bonus plan – targets and outcomes
Performance measure
Payout target
Actual
%
awarded
Combining these outcomes with
the personal objectives gives the
following payouts: £000
% of
maximum
25% 50% 100%
EPRA EPS 9.52p 9.57p 9.68p 10.04p 100% Andrew Jones 847 90
TPR (3 year All Property) 6.4% 7.1% 7.7% 15.1% 100% Martin McGann 480 90
TPR (1 year All Property) 19.6% 21.6% 23.5% 28.2% 100%
TPR (3 year reweighted) 12.8% 14.1% 15.4% 15.1% 89%
TPR (1 year reweighted) 31.4% 34.5% 37.6% 28.2% –
2019 LTIPs vesting – targets and outcomes
Performance measure
Payout target
Actual
%
awarded
The estimated number of shares
vestingare as follows: Number25% 100%
TSR 19.8% 32.4% 59.5% 100% Andrew Jones 574,459
TAR -0.2% 25.4% 65.1% 100% Martin McGann 316,896
EPRA EPS 9.77p 10.12p 10.04p 83%
The level of LTIP vesting in 2022 demonstrates the successful performance of the Company over the longer three year performance period
with strong absolute earnings growth and a resulting comparative return performance in excess of the Company’s direct competitors.
LTIPs granted in the year
Basis of award
(% of salary)
Date
of grant
Share awards
number
Face
value
per share
Face value
of award
£000
Andrew Jones 200% 4 June 2021 484,839 234.7p 1,138
Martin McGann 145% 4 June 2021 235,038 234.7p 552
Shareholding of the Executive Directors
% of salary 0% 250% 500% 750% 1500%1000% 1250% 1750%
700%
2380%
797%
2299%
620%
700%
Andrew
Jones
Martin
McGann
Shareholding requirement
Beneficially owned shares
Unvested interests over shares
Shareholding requirement
Beneficially owned shares
Unvested interests over shares
2000%
2250%
2500%
135
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1-87 88-154 155 -208
Remuneration
Summary of Policy Implementation in the year to 31 March 2023
Base salary
An Executive Director’s basic salary is set on
appointment and reviewed annually with changes
normally taking eect from 1 June or when there is
achange in position or responsibility.
When determining an appropriate level of salary, the
Committee considers multiple factors including pay
increases to other employees, remuneration within
comparable property companies and the general
performance of the Company and individual.
The Committee has approved salary increases for the Executive Directors in line
with the workforce average increase of 8.4%.
Executive Director
Base salary from
1 June 2022
Base salary from
1 June 2021
Andrew Jones £616,569 £569,007
Martin McGann £412,273 £380,470
Pension
Currently, the maximum contribution is 12.5% of
salary which is payable as a monthly contribution to
the Executive Director’s individual personal pension
plan or taken as a cash equivalent. Salary sacrifice
arrangements can apply. This contribution reduces
to 10% from 1 June 2022.
The maximum pension contribution for newly
appointed Executive Directors is 10% of salary in line
with employees.
Executive Directors will receive the 12.5% of salary supplement in lieu of pension
until 31 May 2022. Thereafter, pension contributions will reduce in accordance
with the Remuneration Policy to 10%.
Benefits
The Committee recognises the need to maintain
suitable flexibility in the benefits provided to ensure
it is able to support the objective of attracting
and retaining personnel in order to deliver the
Group strategy.
In line with the Policy, each Executive Director receives:
– Car allowance
– Private medical insurance
– Life insurance
– Permanent health insurance
Annual bonus
Annual performance targets are set by the Committee
at the start of the financial year linked to the Group’s
long term strategy of growth in EPRA EPS and TPR.
At least half of the bonus will be linked to the key
property and financial metrics.
Non financial targets are set to measure individual
strategic performance and contribution to the
achievement of portfolio management initiatives and
other operational management objectives.
The payout for on target performance is 50% of the
maximum and the payout for threshold performance
is25% of the maximum.
Executive Directors who have met their minimum
shareholding requirement have the option to receive
the annual bonus paid in cash.
For those who are yet to meet the minimum shareholding
requirement, up to 100% of the annual bonus will be paid
in deferred shares vesting after three years.
The maximum bonus opportunity will remain at 165% of salary for the Chief
Executive and 140% of salary for the Finance Director. The performance
conditions and their weightings for the annual bonus are as follows:
Performance
measure Weighting Description of targets
Growth in
EPRA EPS
35% Growth in Company’s EPRA
EPS against a range of challenging targets
Growth in
total property
return (‘TPR’)
35% Growth in Company’s TPR against IPD All Property
Index and the index for the Group’s portfolio of
assets, on a multi-year basis; Full payout if growth
is 120% of the index; 50% payout if growth is 110%
of the index; 25% payout if growth matches the
index; Straight line interpolation between limits;
No payout if TPR is negative
Personal
objectives
30% Vary between individuals and include
portfolio management, financial and people
management, investor relations, Responsible
Business and regulatory compliance
The Committee believes that the EPRA EPS target and details of the personal
objectives for the coming year are commercially sensitive and accordingly
these are not disclosed. These will be reported and disclosed retrospectively
next year in order for shareholders to assess the basis for any payouts.
Implementation of policy next year
LondonMetric Property Plc
Annual Report and Accounts 2022
136
Remuneration
Summary of Policy Implementation in the year to 31 March 2023
Long Term Incentive Plan
Annual awards of up to 200% of salary for the
Chief Executive and 165% of salary for the other
Executive Directors.
Awards will normally vest at the end of a three year
period subject to:
– The Executive Director’s continued employment
at the date of vesting; and
– Satisfaction of the performance conditions.
Vested awards will be subject to a further two year
holding period during which Executive Directors
cannot dispose of shares other than for tax purposes.
The Committee may award dividend equivalents on
awards that vest.
Performance
measure Weighting
Threshold
(25% vesting)
Maximum
1
(100% vesting)
Total shareholder
return (TSR)
37.5% Equal to index Equal to upper quartile
ranked company
Total accounting
return (TAR)
37.5% Equal to index Equal to upper quartile
ranked company
EPRA EPS growth 25% CPIH plus 0%
over three years
CPIH plus 4.5% over
threeyears
1 Straight line interpolation between threshold and maximum
TSR and TAR are relative measures measured against the FTSE 350 Real Estate Sector
excluding agencies and operators (‘the Index’). Under the TSR element, there
will be no payout if TSR is negative. The Committee determined that the indices
would not be weighted. For the EPRA EPS growth targets, the out-performance
of inflation for full vesting has been increased to 4.5% to take account of the
dierential between RPI and CPIH. For new awards, RPI which is due to be phased
out, has been replaced by CPIH. Awards granted in 2022 to the Finance Director
will be based on 155% of salary to allow better alignment with senior managers
below the Board.
Shareholding requirement
Executive Directors are encouraged to build up andhold
a shareholding equivalent to a percentage of base
salary.
Executive Directors will be required to retain at least50%
of the post tax amount of vested shares from incentive
plans until this requirement is met andmaintained.
The post cessation shareholding requirement is 200%
ofsalary for two years post cessation of employment.
The shareholding requirement is:
– Chief Executive – 700% of salary
– Other Executive Directors and certain members of the Senior Leadership
Team – 700% of salary
– Newly appointed Executive Directors – 400% of salary
Malus and clawback
Malus may apply to any cash bonus up to the date
of payment and any deferred bonus or LTIP award
during their respective three year vesting periods.
Clawback may apply to any cash bonus for up to
two years following the payment of the bonus and
may apply to LTIP awards for up to two years following
vesting. Malus/clawback may result in the value of
awards being reduced to nil.
The circumstances in which malus and clawback could apply are:
– Material misstatement
– Calculation error in incentives
– Fraud or misconduct
– Reputational damage
– Corporate failure
Key elements and time period
Year ending March 2023 2024 2025 2026 2027
Base salary
Pension
Benefits
Annual bonus
– Cash
– Deferred shares
LTIP
Non Executive Directors’ fees
Performance period Vesting period Holding period
137
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1-87 88-154 155 -208
Directors’ Remuneration Policy
The Remuneration Policy for
the Group was approved
by shareholders at the
2020 AGM on 22 July 2020
for a period of three years.
This section is an extract
from the full Remuneration
Policy, which is available
on our website at
www.londonmetric.com.
Details of the core elements
of the Policy can be found
in the Implementation of
Policy next year section on
page 136.
Overview of our Policy
The Group’s Remuneration Policy is designed
to align executive pay and incentives with
the Company’s goals and encourage and
reward exceptional overall and individual
performance. As well as motivating,
remuneration plays a key role in retaining
highly regarded individuals and needs to
be competitive.
The principles which underpin the
Remuneration Policy ensure that Executive
Directors’ remuneration:
– Is aligned to the business strategy
and achievement of business goals;
– Is aligned with the interests of
shareholders by encouraging high
levels of share ownership;
– Attracts, motivates and retains high
calibre individuals;
– Is competitive in relation to other
comparable property companies;
– Is set in the context of pay and
employment conditions of other
employees; and
– Rewards superior performance through
the variable elements of remuneration
that are linked to performance.
Alignment of Policy with the 2018 Corporate Governance Code
Under the headings prescribed under provision 40 of the 2018 Code, the following table shows
the alignment between the Policy and Code.
Provision 40 element How the Remuneration Policy aligns
Clarity – remuneration
arrangements should be
transparent and promote
eective engagement
with shareholders and the
workforce.
Performance measures and targets under the LTIP are
disclosed before grant and performance targets for the
annual bonus are disclosed retrospectively.
Both the annual bonus and LTIP measures are based
oncore elements of the strategy and therefore there
is aclear link to all stakeholders between their delivery
andExecutive Director reward.
Simplicity – remuneration
structures should avoid
complexity and their rationale
and operation should be
easyto understand.
The Remuneration Policy is designed with simplicity in
mind and its operation aligns with that of the majority
ofthe FTSE 350 and is therefore easy to understand.
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.
The selection of performance measures and targets
ensures that incentives will only pay out where strategic
goals have been met. The mix of relative and absolute
performance measures help to balance the eect of
external market factors (whether positive or negative).
The Remuneration Policy contains strict minimum
shareholding requirements as well as a post cessation of
employment shareholding requirement which ensures
that the wealth of Executive Directors is linked to the
long term stability and growth of the share price which
discourages short term excessive risk taking which
couldnegatively impact on long term value.
The Policy contains sucient flexibility to adjust
paymentsthrough malus and clawback and an
overriding discretionon the part of the Committee to
depart from formulaic outcomes if it appears that the
criteria on which the award was based does not reflect
the underlying performance of the Company.
Predictability –the range of
possible values of rewards
to individual Directors and
any other limits or discretions
shouldbe identified and
explained at the time of
approving the Policy.
The Remuneration Policy sets out clearly the range
ofvalues, limits and discretions in respect of the
remuneration of management.
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 remuneration package is weighted in favour of
variable pay. This, combined with the Committee’s
approach to target setting including the use of relative
performance measures, means that total remuneration
will be reduced in the event of poor performance. Pay-
outs at maximum will only be available for delivery of
thestrategy and strong underlying performance.
Alignment to culture –
incentive schemes should
drive behaviour consistent
withCompany purpose,
valuesand strategy.
The overall structure of the Remuneration Policy including
the incentive schemes is consistent with the principles of
the Policy which encourage share ownership.
Furthermore, the elements of the Executive Director
remuneration package are cascaded further down
the organisation, as is the culture of share ownership.
LondonMetric Property Plc
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138
Remuneration
Illustration of application of Remuneration Policy
The charts below show the application of the Remuneration Policy and provide an indication of the potential remuneration for each element
of remuneration for each of the two current Executive Directors under various scenarios.
The elements of remuneration have been categorised into three components: (i) Fixed; (ii) Annual bonus (including deferred bonus); and (iii) LTIP.
The target scenarios assume 50% payout of the maximum opportunity under the annual bonus and 25% (being threshold vesting) of the LTIP.
In line with the changes to the regulations, we have also shown the maximum scenario with the impact of 50% share price appreciation over
three years. For comparison, we have also shown the actual single figure for the year to 31 March 2022.
Andrew Jones Martin McGann
Fixed
100%
664
46% 23% 19%
33%
21%
1,439
44% 36%
33% 27%
3,441
2,828
18%
3,035
Bonus LTIP Share price growth
ActualOn target MaximumMinimum
Fixed
100%
456
51% 27%
32% 27%
22%
30%
19%
891
41% 34%
2,003
1,665
17%
1,776
Bonus LTIP Share price growth
ActualOn target MaximumMinimum
Strategy link to Remuneration Policy
The Committee’s remuneration decisions are steered by the Group’s strategic direction and corporate objectives. It is important that the
incentive arrangements operated by the Company are directly linked to the achievement of the Company’s strategy and overall corporate
objectives. It is the Committee’s belief that the incentive elements of the Remuneration Policy align with these objectives.
The following table demonstrates how the Company’s key performance indicators (‘KPIs’) are aligned to its variable incentive arrangements
of the annual bonus and LTIP.
Key performance indicators
Link to remuneration
Annual bonus LTIP Link to strategy
Total shareholder return
37. 5 %
Total accounting return
37. 5 %
EPRA earnings per share
35% 25%
Total property return
35%
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Our strategic priorities
1
Align portfolio to
macrotrends
2
Focus on long-let
property with
rentalgrowth
3
Enhance asset value
and cash flow
4
Improve quality
and sustainability
of our assets
5
Partner of choice
mindset
6
Use the team’s
expertiseto make
informed decisions
7
Generate reliable,
repetitive and
growing income
8
Deliver strong cash
flows and attractive
total returns
Directors’ Remuneration Policy
Other directorships
Executive Directors are permitted to accept external, non executive appointments with the prior approval of the Board where such
appointments are not considered to have an adverse impact on their role within the Group. Fees earned may be retained by the Director.
None of the Executive Directors held external appointments during the year.
Employee considerations
Chief Executive Wider workforce
Salary increase
in 2022
+8.4%
Bonus movement
in 2022
-3.2%
Average salary
increase in 2022
+8.4%
Average bonus
movement in 2022
-0.9%
Of salary held in
Company shares
2380%
Pension contribution from
1 June 2022 in line with workforce
10%
Of employees received
a bonus in 2022
100%
Of employees participate
in the LTIP in 2022
60%
The Company applies the same principles to the remuneration of all employees as it applies to the Executive Directors, namely that:
– The remuneration is competitive in relation to other comparable
property companies;
– The incentive elements reward superior performance through the
variable elements of remuneration that are linked to the same
performance targets as for the Executive Directors that are aligned
to the business strategy; and
– The remuneration encourages employees
to become shareholders.
The Committee considers employee views carefully and Andrew
Livingston is the designated workforce Non Executive Director
responsible for gathering employee views, ensuring that key points
raised by employees are discussed at Committee and Board
meetings and feeding back to employees how their views have
been considered in the decision making process.
Andrew fed back results of the latest employee survey to the
Committee and Board in March, noting that all sta continued to be
very proud to be part of the LondonMetric team. Further details are
provided on pages 107 to 109.
In addition this year, the Remuneration Committee Chair attended the
annual meeting held by the designated workforce NED with a small
group of employees and welcomed questions on the principles and
components of executive pay. He explained how executive pay was
determined with reference to peer group comparison and alignment
to the wider workforce and outlined the importance of the pay
cascades in the organisation as reflected in the table opposite.
The table illustrates the cascade of pay structures throughout the
business for the Chief Executive, Finance Director and the Senior
Leadership Team for the year to 31 March 2022. The Committee
believes this demonstrates a fair and transparent progression of
remuneration throughout the Company which is in line with one of its
core pay principles that variable performance based pay increases
with seniority.
Element
of pay
Participation
Chief
Executive
Finance
Director
Senior
Leadership
Team
LTIP
200%
of salary
155%
of salary
39% to 155%
of salary
Annual
bonus
149%
of salary
126%
of salary
66% to 126%
of salary
Pension
12.5%
of salary
12.5%
of salary
10% to 12.5%
of salary
Non Executive Directors’ fees
The fees for Non Executive Directors and the Chair are broadly set
at a competitive level against the comparator group and increases
take account of any change in responsibility. The aggregate fee for
Non Executive Directors and the Chair will not exceed £1 million.
The base fee for Non Executive Directors has been increased by 5.0%
to £52,760 from 1 June 2022. The Chair’s new letter of appointment set
his fees for the period to 31 March 2023.
Chair £210,000
Base Non Executive Director fee £52,760
Senior Independent Director additional fee £5,000
Additional fee for Audit/
Remuneration Committee Chair £10,000
Additional fee for Audit/
Remuneration Committee membership £5,000
LondonMetric Property Plc
Annual Report and Accounts 2022
140
Remuneration
Annual Report on Remuneration
On the following pages we
set out the Annual Report
on Remuneration for the
year ending 31 March 2022
which provides details of
how the Remuneration
Policy was applied and
how we intend to apply
the Policy for the year
ahead to 31 March 2023.
The Annual Report on Remuneration including
the Chair’s introduction, Remuneration at a
Glance, and Implementation of the Policy
sections are subject to an advisory vote
at the forthcoming AGM on 13 July 2022
and complies with the 2018 UK Corporate
Governance Code, Listing Rules and The
Large and Medium Sized Companies
and Groups (Accounts and Reports)
(Amendment) Regulations 2013. The areas
of the report which are subject to audit have
been highlighted.
The role of the Remuneration Committee
The Committee determines Executive
Directors’ remuneration in accordance
with the approved Policy and its terms of
reference, which are reviewed annually by the
Board and are available on the Company’s
website at www.londonmetric.com.
The Board recognises that it is ultimately
accountable for executive remuneration
but has delegated this responsibility to the
Committee. All Committee members are
Non Executive Directors of the Company,
which is an important prerequisite to ensure
Executive Directors’ pay is set by Board
members who have no personal financial
interest in the Company other than as
potential shareholders.
The Committee meets regularly without
theExecutive Directors being present and is
independently advised by PwC, a signatory
to the Remuneration Consultants’ Code
of Conduct and which has no connection
with the Group other than in the provision
of advice on executive and employee
remuneration matters, corporate due
diligence and taxation advice. PwC were
appointed in 2017 by the Remuneration
Committee following a competitive tender
process. Total fees paid to PwC in respect
of remuneration advice to the Committee
were £81,500 calculated on both hourly and
fixed fee bases. The Committee is satisfied
that the advice provided by PwC is objective
and independent.
No Executive Director is involved in the
determination of his own remuneration
and fees for Non Executive Directors are
determined by the Board as a whole.
The Company Secretary acts as secretary
to the Committee and the Chief Executive
and Finance Director attend meetings by
invitation but are not present when their
own pay is being discussed. The Chair of
the Committee reports to the Board on
proceedings and outcomes following
each Committee meeting.
Meetings and activities
The Committee met on four occasions during the year. The main activities of the
Committee during the year and to the date of this report were as follows:
Annual
bonusandLTIP
Set challenging EPS targets for the 2021 LTIP awards granted
and annual bonus for the year to 31 March 2022
Approved Executive Directors’ share awards under the LTIP
following the announcement of the Company’s results for the
year ended 31 March 2021
Assessed the performance of Executive Directors against targets
set at the beginning of the year and determined annual bonuses
forthe year to 31 March 2022
Salary Reviewed and approved annual salary increases eective
from 1 June 2022
Governance Reviewed and approved the Remuneration Committee Report
External evaluation of its own performance and review of its
terms ofreference
Reviewed and approved the CEO pay ratio
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Remuneration
LondonMetric Property Plc
Annual Report and Accounts 2022
142
Single total figure of remuneration for each Director (audited)
Director
Salary and fees Benefits
1
Pension
2
Total Fixed Annual bonus
3
LTIP
4
Total Variable Total
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
£000
2022
£000
2021
£000
Executive
Andrew Jones 565 519 26 26 73 82 664 627 847 876 1,524 1,495 2,371 2,371 3,035 2,998
Martin McGann 378 347 29 29 49 55 456 431 480 497 840 809 1,320 1,306 1,776 1,737
Non Executive
Patrick Vaughan 216 206 – – – – 216 206 – – – – – – 216 206
Suzanne Avery 60 57 – – – – 60 57 – – – – – – 60 57
James Dean 50 51 – – – – 50 51 – – – – – – 50 51
Robert Fowlds 75 68 – – – – 75 68 – – – – – – 75 68
Andrew Livingston 55 52 – – – – 55 52 – – – – – – 55 52
Kitty Patmore 55 10 – – – – 55 10 – – – – – – 55 10
Rosalyn Wilton 70 66 – – – – 70 66 – – – – – – 70 66
1 Taxable benefits include the provision of a car allowance for Executive Directors and private medical insurance
2 Pension contribution is 12.5% of salary (excluding any salary sacrifice) and may be taken partly or entirely in cash
3 Annual bonus payable in respect of the financial year ending 31 March 2022 paid fully in cash as minimum shareholding requirements met
4 2019 LTIP awards expected to vest in June 2022 for the performance period to 31 March 2022. The value of the award has been calculated by multiplying the estimated
number of shares that will vest, including the dividend equivalent, by the average share price for the three months to 31 March 2022. No discretion was applied in
determining the estimated vesting of the award as a result of changes in share price or other factors. The change in share price growth between grant and 31 March 2022
accounts for £351,000 for Andrew Jones and £193,000 for Martin McGann as reflected in the table on page 146. The estimated figures disclosed in the previous Annual
Report for 2021 vesting have been restated to reflect final vesting figures and the share price on the date of vesting. The estimated share price used was 222.0p and the
actual share price on vesting was 234.5p. The differences in value were £94,000 for Andrew Jones and £50,000 for Martin McGann
The Committee believes it is important to take a holistic view of the Executive Directors’ total wealth when considering the single figure of remuneration.
The Executive Directors have very large shareholdings in the Company and are exposed to relatively small changes in the share price significantly
aecting their overall wealth. In the Committee’s opinion, the impact of share price movements on the total wealth of the Director is more important
than the single figure. The significant shareholding encourages Directors to take a long term view of the sustainable performance of the Company,
which is critical in a cyclical business. The Directors’ significant exposure to share price movements is a key facet of the Company’s Remuneration Policy.
Annual bonus outcome for the year ended 31 March 2022
The annual bonus performance targets set for the year to 31 March 2022 and the assessment of actual performance achieved is set out in the
table below. Bonus awards are based 70% on the Company’s financial performance and 30% on the individual’s contribution in the year.
The financial performance element measures growth in EPRA EPS and TPR relative to the IPD benchmark for the Group’s portfolio of assets.
In determining the base EPRA EPS target, the Committee looks to maintain consistency with longer term incentive targets but is mindful of
shorter term strategic priorities and changing market conditions. In line with best practice, TPR has been measured on a multi-year basis (over
one and three years). The 2022 annual bonus outcome is set out in the table below. No discretion has been exercised as the payout is in line
with underlying corporate performance.
Financial
objectives
Individual
objectives
Bonus % of
maximum
Bonus % of
salary
Total bonus
£000
Andrew Jones 60% 30% 90% 149% 847
Martin McGann 60% 30% 90% 126% 480
Group financial targets
Performance measure Weighting Basis of calculation
Range
Maximum
(100%)
Actual
performance
%
awarded(0%) (25%) (50%)
EPRA EPS 35% Growth in EPRA EPS against
achallenging target
<9.52p 9.52p 9.57p 9.68p 10.04p 100%
Total property return
(‘TPR’)
35% Growth in TPR against IPD
benchmark
Positive
growth
TPR matches
index
TPR is 1.1 times
index
TPR is 1.2 times
index
See below 72%
3 year All Property 6.4% 7.1% 7.7% 15.1% 100%
1 year All Property 19.6% 21.6% 23.5% 28.2% 100%
3 year reweighted 12.8% 14.1% 15.4% 15.1% 89%
1 year reweighted 31.4% 34.5% 37.6% 28.2% –
Annual Report on Remuneration
Remuneration
143
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1-87 88-154 155 -208
Individual non financial targets
Executive Directors’ non financial targets accounted for 30% of the maximum bonus award. Personal objectives were aligned to the delivery
of the Group’s key strategic objectives. The Committee felt that the Executive Directors had achieved their individual personal objectives and
approved full payouts for both, taking into account the overall strong corporate performance and shareholder experience.
The table below outlines the key personal objectives set and the Committee’s assessment of performance for each of the Executive Directors
for the annual bonus awarded in the year to 31 March 2022.
Objective Assessments
Andrew Jones
Portfolio & financial
Portfolio focus to maximise both EPS
andNAV growth
– Increase in EPRA EPS from 9.52p to 10.04p, providing cover for an increase in the dividend
for the year
– Increase in EPRA NTA per share from 190.3p to 261.1p largely due to revaluation gain
of £632 million
Recycling capital with sell down
ofnoncore assets
– Investment in preferred urban logistics sector increased from 38.5% to 43.9% in the year
– Reduced exposure to non core oces and residential assets, from 1.7% to 0.8%
Focus on income quality to deliver
opportunities for sustainable and
progressive earnings
– Growth in EPRA earnings per share in the year of 5.5%, supporting a continuation
in dividend progression
– Increase of 15% in contracted rent to £143.3 million
To provide oversight to the delivery of
development schemes during the year
– Completion of 0.5 million sq ft of development during the year producing £4.5 million
of annual rent with a further 0.9 million sq ft under construction
Reinforce the position of the Company
as leading investor/partner of choice
in logistics
– Reinforcement of growth characteristics of urban logistics continues to be well received
in the market and by stakeholders
ESG
Position the Company as an employer
of choice and continue to generate
positive employee feedback, very
low sta turnover and an inclusive
corporate culture
– Fifth sta survey undertaken in February with very positive results
– 100% of sta enjoy and are proud to work for the Company
– Very low sta turnover rate of 6%
Continue to realign the team in line with
our evolving portfolio strategy
– Continuing focus on the right team with the right skills. Additional investment support
recruited this year
Lengthen and strengthen relationships with
key stakeholders: institutional shareholders,
private client wealth managers (‘PCM’),
occupiers and analysts
– c.250 investors met in the year, good investor feedback and strong share
price performance
– Continuing focus on private wealth managers and funds which account for c.25%
of the register
– Strong portfolio metrics and results from the latest occupier survey demonstrate
contentment, with occupancy of 98.7% and a landlord recommendation score
of 8.5/10.0
Optimise our EPRA/GRESB
sustainability rankings
– GRESB Green Star, EPRA sustainability Gold Award
– GRESB score of 65%
Demonstrate sustainable improvement in
buildings across the portfolio, as measured
by EPC ratings, BREEAM and renewable
energy installations
– BREEAM Very Good or Excellent assets represent 29% of portfolio once current
developments complete
– EPC A-C rated assets increased from 74% to 85% in the year
– 0.9 MW of solar installed on portfolio with further opportunities identified
Objective Assessments
Martin McGann
Portfolio & financial
Optimising the funding structure to
support the real estate strategy
– New £380 million private placement with a £50 million green tranche
– Three new unsecured credit facilities completed in the year for £550 million, £400 million
subject to a green framework and preferential pricing
– Existing short dated facilities repaid and maturity extended via long dated
private placement
– £175 million equity placing in November 2021, significantly oversubscribed
Focus on income quality to deliver growth
in our sustainable earnings
– Growth in EPRA EPS in the year of 5.5%, supporting a continuation in dividend progression
– Increase of 15% in contracted rent to £143.3 million
Delivery of development schemes
on schedule and on budget, and
within agreed timescales and in line
with BREEAM
– Completion of 0.5 million sq ft of development during the year producing £4.5 million
ofannual rent with a further 0.9 million sq ft under construction
Maintain appropriate LTV, cost of finance
and debt maturity metrics
– Continued low average cost of debt of 2.6% (2021: 2.5%)
– Lower LTV of 28.8% (2021: 32.3%)
– Increased hedging post refinancing from 45% to 71%
ESG
Deliver Responsible Business agenda to
increasing satisfaction of stakeholders,
including investors, tenants, suppliers, our
sta and the local communities within
which we operate
– Net Zero Carbon ambition progressed
– Occupier survey undertaken with high level of satisfaction
– Continue to monitor ESG objectives across Company
– Investor feedback demonstrated we are meeting their ESG expectations on
performance and disclosure
– Charitable donation fund maintained and distributed
Position the Company as an employer
of choice and continue to generate
positive employee feedback, very
low sta turnover and an inclusive
corporate culture
– Fifth sta survey undertaken in February with very positive results
– 100% of sta enjoy and are proud to work for the Company
– Very low sta turnover rate of 6%
Optimise our EPRA/GRESB
sustainability rankings
– GRESB Green Star, EPRA sustainability Gold Award
– GRESB score of 65%
Demonstrate sustainable improvement in
buildings across the portfolio, as measured
by EPC ratings, BREEAM and renewable
energy installations
– BREEAM Very Good or Excellent assets represent 29% of portfolio once current
developments complete
– EPC A-C rated assets increased from 74% to 85% in the year
– 0.9 MW of solar installed on portfolio with further opportunities identified
Deferred Bonus Plan
The Remuneration Policy allows the Directors to opt out of bonus deferral if the minimum shareholding requirement is met. At the date of this
report, both Executive Director’s shareholding materially exceeds the minimum requirement.
Annual Report on Remuneration
LondonMetric Property Plc
Annual Report and Accounts 2022
144
Remuneration
Long Term Incentive Plan
Awards granted in the year to 31 March 2022 as nil cost options are summarised in the table below.
Basis of award
(% of salary)
Date of
grant
Share awards
number
Face value
per share
Face value
of award
£000
Andrew Jones 200% 4 June 2021 484,839 234.7p 1,138
Martin McGann 145% 4 June 2021 235,038 234.7p 552
The face value is based on a weighted average price per share, being the average share price over the five business days
immediately preceding the date of the award. Awards will vest after three years subject to continued service and the achievement
ofperformance conditions.
Performance condition Vesting level
Total Shareholder Return (‘TSR’) measured against FTSE 350 RealEstate
Super Sector excluding agencies and operators (37.5%ofAward)
TSR less than index over 3 years 0%
TSR equals index over 3 years
1
25%
TSR between index and upper quartile ranked company intheindex
1
Pro rata on a straight line basis between 25% and 100%
TSR equal to or better than the upper quartile ranked company
inthe index
1
100%
Total Accounting Return (‘TAR’) measured against FTSE 350
RealEstate Super Sector excluding agencies and operators
(37.5%ofAward)
TAR less than index over 3 years 0%
TAR equals index over 3 years 25%
TAR between index and upper quartile ranked company in the index Pro rata on a straight line basis between 25% and 100%
TAR equal to or better than the upper quartile ranked company
inthe index 100%
EPRA EPS growth against a base target plus RPI (25% of award)
Less than base plus RPI plus 0% over 3 years 0%
Base plus RPI plus 0% over 3 years 25%
Base plus RPI plus between 0% and 4% over 3 years Pro rata on a straight line basis between 25% and 100%
Base plus RPI plus 4% over 3 years 100%
1 TSR must be positive over three years
The adjusted EPRA EPS base target for the three year performance periods commencing 1 April 2019, 1 April 2020 and 1 April 2021 has been
set at 8.77p, 9.26p and 9.52p respectively. The Group’s three year financial forecast was taken into account when setting these targets along
with consideration of strategic goals and priorities, proposed investment and development plans, gearing levels and previous years’ results.
Targets are considered challenging yet achievable in order to adequately incentivise management and are in line with the Company’s
strategic aim of delivering long term growth for shareholders.
Awards expected to vest in the year to 31 March 2022 in relation to the three year performance period commencing 1 April 2019
aresummarised on page 146. No discretion has been exercised as the payout is in line with underlying corporate performance.
145
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1-87 88-154 155 -208
Range
Performance
measure Weighting Basis of calculation (0%) (25%) (100%)
Actual
performance
%
awarded
Total shareholder
return (‘TSR’)
37.5% Growth in TSR against FTSE 350
RealEstate Index
<19.8% 19.8% 32.4% 59.5% 100%
Total accounting
return (‘TAR’)
37.5% Growth in TAR against FTSE 350
RealEstate Index
<-0.2% -0.2% 25.4% 65.1% 100%
EPRA EPS 25% Growth in EPRA EPS against
achallenging base target
1
<9.77p 9.77p 10.12p 10.04p 83%
1 RPI was capped at 7% for the current year in the calculation of the EPS targets as set out in the Chair’s statement on page 134
Director
Maximum
number of
shares
LTIP
% of
maximum
Estimated
number of
shares
Face value
at grant
£000
Share price
appreciation
£000
Total estimated
face value of
award
1
£000
Andrew Jones 599,644 95.8% 574,459 1,173 351 1,524
Martin McGann 330,789 95.8% 316,896 647 193 840
1 The face value is based on the average share price for the three months to 31 March 2022 of 265.2p
Outstanding LTIP awards held by the Executive Directors are set out in the table below.
Number of shares under award
1
Director
Date of
grant
Face value
on grant
At 1 April
2021
Granted
in year
Notional
dividend shares
Vested
in year
Lapsed
in year
At 31 March
2022
Performance
period
Andrew Jones 15.6.2018 189.5p 631,098 – 6,294 (637,392) – – 1.4.2018 to
31.3.2021
5.6.2019 204.2p 579,164 – 20,480 – – 599,644 1.4.2019 to
31.3.2022
17.6.2020 212.0p 529,653 – 18,729 – – 548,382 1.4.2020 to
31.3.2023
4.6.2021 234.7p – 484,839 12,187 – – 497,026 1.4.2021 to
31.3.2024
Martin McGann 15.6.2018 189.5p 341,681 – 3,410 (345,091) – – 1.4.2018 to
31.3.2021
5.6.2019 204.2p 319,491 – 11,298 – – 330,789 1.4.2019 to
31.3.2022
17.6.2020 212.0p 274,471 – 9,706 – – 284,177 1.4.2020 to
31.3.2023
4.6.2021 234.7p – 235,038 5,908 – – 240,946 1.4.2021 to
31.3.2024
1 Awards granted as nil cost options
Directors’ shareholdings and share interests (audited)
The beneficial interests in the ordinary shares of the Company held by the Directors and their families who were in oce during the year and at the
date of this report are set out in the table on page 147.
There were no movements in Directors’ shareholdings between 31 March 2022 and the date of this report.
The shareholding guidelines recommend Executive Directors build up a shareholding in the Company at least equal to seven times salary.
All Executive Directors complied with this requirement at 31 March 2022 and as at the date of this report. No Director had any interest or contract
with the Company or any subsidiary undertaking during the year.
Annual Report on Remuneration
LondonMetric Property Plc
Annual Report and Accounts 2022
146
Remuneration
The Executive Directors have entered into individual personal loan arrangements with Coutts & Co and granted pledges over ordinary shares
in the Company as security in connection with the loans. The loans were used to repay debt secured against various residential investment
properties held personally. The number of shares pledged by each of the Directors is reflected in the table below.
Overall
beneficial
Interest 31
March 2022
Ordinary shares
of 10p each
Overall
beneficial
Interest 31
March 2021
Ordinary shares
of 10p each
LTIP shares
subject to
performance
conditions
Deferred
bonus
shares
Total
interests as at
31 March 2022
Share
ownership as
% of salary
1
Shareholding
guideline
met
Number of
shares
pledged as at
31 March 2022
Executive Directors
Andrew Jones 4,909,823 4,572,907 1,645,052 – 6,554,875 2380% Yes 3,446,072
Martin McGann 3,171,897 2,989,487 855,912 – 4,027,809 2299% Yes 2,341,585
Non Executive Directors
Patrick Vaughan 10,277,000 11,693,000
Suzanne Avery 22,750 22,750
James Dean 20,000 20,000
Robert Fowlds 104,000 104,000
Andrew Livingston 106,830 106,830
Kitty Patmore 5,000 –
Rosalyn Wilton 100,000 100,000
1 Based on the Company’s share price at 31 March 2022 of 275.8p and the beneficial interests of the Directors
Performance graph
The first graph below shows the Group’s total shareholder return (‘TSR’) for the period from 1 October 2010, when the Company listed on the
main market of the London Stock Exchange, to 31 March 2022, compared to the FTSE All Share REIT Index, the FTSE 350 Real Estate Index and
the FTSE 350 Real Estate Super Sector Index. These have been chosen by the Committee as in previous years as they are considered the most
appropriate and relevant benchmarks against which to assess the performance of the Company.
The starting point required by the remuneration regulations was close to the bottom of the property cycle where a number of property
companies launched rights issues while the Company did not. The Company’s share price had not fallen as much as the average share price
of the FTSE Real Estate sector prior to this starting point, thereby setting a higher initial base price for this graph.
Total shareholder return measures share price growth with dividends deemed to be reinvested on the ex-dividend date.
The Company’s total shareholder return over the period since merger in 2013 has outperformed all indices as shown in the second
graph below.
147
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88-154 155 -208
Apr
2020
Apr
2021
Apr
2022
LondonMetric Property Plc
FTSE All Share REIT Index
FTSE 350 Real Estate Index
FTSE 350 Real Estate Super Sector Index
Apr
2019
Apr
2018
Apr
2017
Apr
2014
Apr
2015
Apr
2016
Apr
2013
340
290
240
150
120
90
400
Oct
2018
LondonMetric Property Plc
FTSE All Share REIT Index
FTSE 350 Real Estate Index
FTSE 350 Real Estate Super Sector Index
Oct
2012
Oct
2014
Oct
2016
375
425
325
275
225
175
125
75
Oct
2010
Oct
2020
Apr
2022
Chief Executive’s remuneration table
The table below details the remuneration of the Chief Executive for the period from the Company’s listing on the main market of the London
Stock Exchange on 1 October 2010 to 31 March 2022.
Year to 31 March
Total
remuneration
£000
Annual bonus
(as a % of the
maximum
payout)
LTIP vesting
(as a % of the
maximum
opportunity)
2022 3,035 90 100
2021 2,998 97 100
2020 2,925 97.5 88
2019 2,703 90 84
2018 2,392 79 94
2017 2,506 89 100
2016 2,792 77 100
2015 1,167 78 –
2014 1,296 100 –
2013 (Andrew Jones)
1
166 100 –
2013 (Patrick Vaughan)
1
583 100 –
2012 664 100 –
2011
2
323 100 –
1 Andrew Jones became Chief Executive and Patrick Vaughan became Chair on 25 January 2013 following the merger of the Company with Metric Property Investments plc
2 For the six months from the Company’s listing on 1 October 2010 to 31 March 2011
Annual percentage change in remuneration of Directors and employees
The percentage change in Director remuneration from the previous year compared to the average percentage change in remuneration for
all other employees is as follows:
2022 % change 2021 % change
Salary
and fees
Taxable
benefits
Annual
bonus
Salary
and fees
Taxable
benefits
Annual
bonus
Andrew Jones 8.4% 2% -3.2% 4.2% -3% -0.2%
Martin McGann 8.4% 3% -3.2% 4.2% 14% 2.4%
Patrick Vaughan – n/a n/a – n/a n/a
Suzanne Avery 5.0% n/a n/a
1.5% n/a n/a
James Dean 5.0% n/a n/a
1.5% n/a n/a
Robert Fowlds 5.0% n/a n/a
1.5% n/a n/a
Andrew Livingston 5.0% n/a n/a
1.5% n/a n/a
Kitty Patmore 5.0% n/a n/a
1.5% n/a n/a
Rosalyn Wilton 5.0% n/a n/a 1.5% n/a n/a
Other employees (excluding Directors) 8.4% 3% -0.9% 4.2% -5% 10.0%
CEO pay ratio
Whilst the Company has fewer than 250 employees and therefore is not required to disclose a ratio, the Committee felt that it was appropriate
to disclose the CEO to all-employee pay ratio, recognising that the Company’s investors expect to see such disclosure.
Pay ratio
Year
25th
percentile
50th
percentile
75th
percentile
2022 43:1 22:1 8:1
2021 34:1 13:1 7:1
2020 42:1 16:1 8:1
LondonMetric Property Plc
Annual Report and Accounts 2022
148
Annual Report on Remuneration
Remuneration
The Company chose to adopt the Option A methodology when calculating the ratio as it deemed it the most appropriate approach and
had sucient data to be able to carry out this method. This method was used to calculate all figures in the table above. The Chief Executive’s
single figure of remuneration used for the calculation ratio is as detailed on page 148. The same methodology was used to calculate all-
employee pay for the purposes of the ratios, which were calculated based on amounts receivable up to the end of the relevant financial year
for all employees excluding the CEO and the Non Executive Directors.
As we continue to disclose the ratio in future years, we anticipate that there are likely to be changes in the ratio as the CEO’s total
remuneration has a greater portion of pay delivered as variable remuneration, which is consistent with the Company’s remuneration principles.
In summary, we anticipate volatility in this ratio, and we believe that this is caused by the following:
– Our CEO pay is made up of a higher proportion of incentive pay than that of our employees, in line with the expectations of our
shareholders. This introduces a higher degree of variability in his pay each year which aects the ratio;
– The value of long term incentives which measure performance over three years is disclosed in pay in the year it vests, which increases
the CEO pay in that year, again impacting the ratio for the year;
– Long term incentives are provided in shares, and therefore an increase in share price over the three years magnifies the impact of a long
term incentive award vesting in a year;
– We recognise that the ratio is driven by the dierent structure of the pay of our CEO versus that of our employees, as well as the make-up of our
workforce. This ratio varies between businesses even in the same sector. What is important from our perspective is that this ratio is influenced
only by the dierences in structure and not by divergence in fixed pay between the CEO and the wider workforce. The table showing the year
on year change of CEO remuneration and average employee remuneration demonstrates that divergence is not occurring; and
– Where the structure of remuneration is similar, as for the Senior Leadership Team and the CEO, the ratio is much more stable over time.
Payments to past Directors and for loss of oce
Valentine Beresford and Mark Stirling stepped down from the Board on 11 July 2019 but remained employees of the Company and thus in
accordance with the Policy and relevant share plan rules are entitled to vesting of existing share awards in line with their original schedules.
The 2018 LTIP awards made to Valentine Beresford and Mark Stirling when they were Directors vested during the year on 15 June 2021 in line
with the outcomes for the current Executive Directors with no discretion applied. Upon vesting, Messrs Beresford and Stirling each received
363,393 shares. There have been no payments for loss of oce in the year.
Relative importance of spend on pay
The table below shows the expenditure and percentage change in spend on employee remuneration compared to other key financial indicators.
2022
£m
2021
£m
%
change
Employee costs
1
11.5 10.8 6.5%
Dividends
2
81.7 75.6 8.1%
1 Figures taken from note 4 Administrative costs on page 173 and are stated before any amounts capitalised and exclude share scheme costs
2 Figures taken from note 7 Dividends on page 175
Statement of voting at AGM
At the AGM on 13 July 2021, the Annual Report on Remuneration was approved with votes from shareholders representing 76% of the issued
share capital of the Company. The Directors’ Remuneration Policy was approved at the AGM on 22 July 2020 with votes from shareholders
representing 77% of the issued share capital at the time. The details of these outcomes are below.
2021 Annual Report
onRemuneration
2020 Directors’
RemunerationPolicy
Votes cast % Votes cast %
For 628,851,592 91.67 636,778,186 95.40
Against 57,161,087 8.33 30,689,708 4.60
Withheld 6,527,664 32,932,457
Total 692,540,343 700,400,351
On the basis of the strong support for our remuneration policy and its implementation at the 2020 and 2021 AGMs, the Committee deemed
that it was not necessary to engage with shareholders on executive pay during the year to 31 March 2022.
Statement of implementation of Remuneration Policy for the year ending 31 March 2022
The table on pages 136 to 137 illustrates how we intend to implement our Policy over the next financial year and gives details of remuneration
payments and targets. The Committee does not expect to deviate from the Remuneration Policy in the year to 31 March 2022.
I am always available to shareholders to discuss the Remuneration Policy and can be contacted through the Company Secretary.
I look forward to the support of shareholders at this year’s AGM.
Robert Fowlds
Chair of the Remuneration Committee
26 May 2022
149
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Strategic report Governance Financial statements
1-87 88-154 155 -208
Annual General Meeting
I am pleased to be able to report that, this year, our Annual General
Meeting will revert to the pre-pandemic format of an in-person
meeting for shareholders. The AGM will be held on 13 July 2022 at
11 am at The Connaught, Carlos Place, Mayfair, London, W1K 2AL.
Whilst there are not expected to be any government restrictions
on public gatherings at the time of the AGM, shareholders are
asked to exercise good judgement and not to attend the AGM
in person if they have recently tested positive for COVID-19, are
exhibiting any symptoms of COVID-19 and/or are living with someone
who has recently tested positive for COVID-19. Instead, such
shareholders are encouraged to submit a proxy vote in advance
of the AGM. Any changes to the arrangements for the AGM will be
communicated to shareholders before the meeting via our website.
The Notice of AGM on pages 202 to 207 sets out the proposed
resolutions and voting details.
The Board considers that the resolutions promote the success
ofthe Company and are in the best interests of its shareholders.
The Directors unanimously recommend that you vote in favour
of the resolutions as they intend to do in respect of their own
beneficial holdings, which amount in aggregate to 18,717,300
shares representing approximately 1.9% of the existing issued
ordinary share capital of the Company as at 25 May 2022.
Martin
McGann
Finance
Director
I am pleased to present the
Report of the Directors together
with the audited financial
statements for the year ended
31 March 2022.
Information Relevant section Page
Review of business and future developments Strategic report
Page 1
Section 172 Statement Governance – Section 172 Statement
Page 104
Principal risks Strategic report – Risk management
Page 70
Greenhouse gas emissions Strategic report – Responsible Business and ESG review
Page 49
Internal financial control Governance – Audit Committee report
Page 124
Diversity and inclusion Governance – Nomination Committee report
Pa g e 116
Viability Statement Strategic report – Risk management
Page 70
Financial instruments Financial statements – note 14
Page 184
Directors’ details Governance – biographies
Page 92
Financial risk management policies Financial statements – note 14
Page 183
Directors’ interests Governance – Remuneration Committee report
Page 132
Interest capitalised Financial statements – note 5
Page 174
Long term incentive schemes Governance – Remuneration Committee report
Page 132
Related party transactions Financial statements – note 19
Page 187
Stakeholder engagement Strategic report – Responsible Business and ESG review
Page 49
Governance – Shareholder engagement
Page 109
Post balance sheet events Financial statements – note 20
Page 187
All other subsections of LR 9.8.4R are not applicable
Additional information which is incorporated into this report by reference, including information required in accordance with the Companies
Act 2006 and Listing Rule 9.8.4R can be found on the following pages:
LondonMetric Property Plc
Annual Report and Accounts 2022
150
Report of the Directors
Report of the Directors
Corporate governance arrangements
We have applied the principles of good
governance contained in the UK Corporate
Governance Code 2018 (the ‘Code’)
throughout the year under review. We were
unable to comply with provision 19 of
the Code and we will only become fully
compliant with provision 38 on 1 June 2022.
Our explanations for the departures are
contained in the compliance statement on
page 88 and in the Nomination Committee
report on page 116. Further details on how
we have applied the Code can be found in
the Governance section on pages 88 to 154
and should be read as part of this report.
Company status and branches
LondonMetric Property Plc is a Real Estate
Investment Trust (‘REIT’) and the holding
company of the Group, which has no
branches. It is listed on the London Stock
Exchange with a premium listing.
Principal activities and business review
The principal activity of the Group
continues to be property investment and
development, both directly and through
joint venture arrangements.
The purpose of the Annual Report is to
provide information to the members of
the Company which is a fair, balanced
and understandable assessment of the
Group’s performance, business model and
strategy. A detailed review of the Group’s
business and performance during the
year, its principal risks and uncertainties, its
business model, strategy and its approach
to Responsible Business and ESG is contained
in the Strategic report on pages 1 to 87 and
should be read as part of this report.
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 risk and uncertainty
because they relate to future events and
circumstances which can cause results
and developments to dier 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
The Group reported a profit for the year
attributable to equity shareholders of
£734.5 million (2021: £257.3 million). The first
two quarterly dividends for 2022 totalling 4.4p
per share were paid in the year as Property
Income Distributions (‘PIDs’).
The third quarterly dividend of 2.2p was
paid following the year end on 12 April 2022
as a PID. The Directors have approved a
fourth quarterly dividend of 2.65p per share
payable on 13 July 2022 to shareholders
on the register at the close of business on
10 June 2022, of which 1.15p will be paid
asa PID.
The total dividend charge for the year to
31 March 2022 was 9.25p per share, an
increase of 6.9% over the previous year.
Of this, 7.75p was payable as a PID as
required by REIT legislation, after deduction
of withholding tax at the basic rate of
income tax. The balance of 1.5p was
payable as an ordinary dividend which
isnotsubject to withholding tax.
Investment properties
A valuation of the Group’s investment
properties at 31 March 2022 was undertaken
by CBRE Limited and Savills (UK) Limited
on the basis of fair value which amounted
to £3,593.9 million (2021: £2,583.6 million
including the Group’s share of joint venture
property as reflected in the Financial review
on page 42 and note 2 to the financial
statements on page 172.
Share capital
As at 31 March 2022, there were 978,607,507
ordinary shares of 10p in issue, each carrying
one vote and all fully paid.
The Company issued 67,307,693 new
ordinary shares in connection with an equity
placing in November 2021 that raised gross
proceeds of £175 million at an issue price
of 260.0p per share. The price reflected a
3.0% discount to the previous day’s share
price and a discount of 1.8% to the intra-day
price of 264.8p at the time the placing price
was agreed. 65,957,693 shares were issued
pursuant to the placing and 1,350,000 were
issued pursuant to a retail oer.
At the AGM in 2021, the Company was
granted authority to allot shares up to
a maximum amount of £30,325,397,
representing approximately 33.3% of the
Company’s issued ordinary share capital
and to allot shares up to a maximum
nominal value of £4,548,810, (representing
approximately 5% of the Company’s
issued share capital) without having to first
oer those shares to existing shareholders
(the ‘General Authority’). The Company
was also granted authority to allot further
shares up to a maximum nominal value of
£4,548,810, (representing approximately
5% of the Company’s issued share capital)
without having to first oer those shares
to existing shareholders, where such
authority is used in connection with the
financing (or refinancing, if the authority
is to be used within six months after the
original transaction) of an acquisition or
specified capital investment (the ‘Additional
Authority’). The Company used the full
Additional Authority granted to it to issue the
shares in connection with the placing, with
the remaining placing shares issued under
the General Authority.
The shares issued in connection with the
placing represented a 7.4% increase to the
issued share capital of the Company prior
to the placing and, combined with the
previous placing eected in May 2020, a
14.7% increase to the issued share capital
of the Company using non pre-emptive
allotment authorities in the three year period
preceding the placing.
In accordance with the Pre-Emption Group’s
Statement of Principles, this equates to a
2.4% increase to the issued share capital of
the Company prior to the placing (using the
General Authority) and a 5.11% increase to
the issued share capital of the Company
in the three year period preceding the
placing (using the General Authority and
the equivalent authority granted at the
AGM in 2019) and is therefore below the
level stipulated by the Pre-Emption Group.
151
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Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88-154 155 -208
In addition, the Company issued 1,656,774
ordinary shares under the terms of its Scrip
Dividend Scheme. Since the year end the
Company issued a further 1,536,819 ordinary
shares in relation to the third quarterly
dividend scrip alternative.
There is only one class of share in issue and
there are no restrictions on the size of a
holding or on the transfer of shares. None of
the shares carry any special rights of control
over the Company. There were no persons
with significant direct or indirect holdings
in the Company other than those listed as
substantial shareholders opposite.
The rules governing appointments,
replacement and powers of Directors are
contained in the Company’s Articles of
Association, the Companies Act 2006 and
the UK Corporate Governance Code.
These include powers to authorise the issue
and buy back of shares by the Company.
The Company’s Articles can be amended
by Special Resolution in accordance with
Companies Act 2006.
Purchase of own shares
The Company was granted authority at the
Annual General Meeting in 2021 to purchase
its own shares up to an aggregate nominal
value of 10% of the issued nominal capital.
That authority expires at this year’s AGM and
a resolution will be proposed for its renewal.
No ordinary shares were purchased under
this authority during the year.
Shares held in the Employee Benefit Trust
As at 31 March 2022, the Trustees of the
LondonMetric Long Term Incentive Plan
held 2,662,621 shares in the Company in
trust to satisfy awards under the Company’s
Long Term Incentive and Deferred Bonus
Plans. The Trustees have waived their right
to receive dividends on shares held in
the Company.
Substantial shareholders
The Directors have been notified that the
following shareholders have a disclosable
interest of 3% or more in the ordinary shares
of the Company at the date of this report:
Shareholder
Number of
shares %
BlackRock Inc 94,943,609 9.67
Norges Bank 60,981,764 6.22
The Vanguard
Group Inc 48,633,255 4.96
Rathbones 46,526,033 4.75
State Street
Global Advisors 33,465,474 3.41
Troy Asset
Management 30,707,861 3.13
APG Asset
Management 29,649,952 3.03
Directors
The present membership of the Board and
biographical details of Directors are set out
on pages 92 and 93.
The interests of the Directors and their families
in the shares of the Company are set out
in the Remuneration Committee report on
page 147.
In accordance with the UK Corporate
Governance Code and in line with
previous years, all of the Directors will oer
themselves for election and re-election by
the shareholders at the forthcoming AGM
on13 July 2022.
The powers of Directors are described in their
Terms of Reference, which are available
on request.
Directors’ and Ocers’ liability insurance
The Company has arranged Directors’ and
Ocers’ liability insurance cover in respect
of legal action against its Directors, which
is reviewed and renewed annually and
remains in force at the date of this report.
Stakeholders
The Group’s long term sustainable success
is dependent on its relationships with
key stakeholders.
In the Governance report on pages 100 to
103, we outline the ways in which we have
engaged with our key stakeholders, any
issues raised and how they have influenced
the Board’s decision making.
Employees
At 31 March 2022 the Group had 35
employees including the Executive Directors.
The Company promotes employee
involvement and consultation and
invests time in ensuring sta are informed
of the Group’s transactions, activities
and performance through internal
email communication of corporate
announcements and periodic updates by
the Chief Executive. In addition, the Group’s
interim and annual results are presented to
all sta by the Executive Directors.
The Board recognises the importance of
attracting, developing and retaining the
right people.
The Company operates a non discriminatory
employment policy which provides
equal opportunities for all employees
irrespective of gender, race, colour, disability,
sexual orientation, religious beliefs and
marital status.
A significant number of employees are
eligible to participate in the annual bonus
and LTIP arrangements, helping to develop
an interest in the Group’s performance
and align rewards with Directors’
incentive arrangements.
LondonMetric Property Plc
Annual Report and Accounts 2022
152
Report of the Directors
Report of the Directors
The Company provides retirement benefits
for its employees and Executive Directors.
Andrew Livingston is the designated
workforce Non Executive Director and
acts as a liaison between the Board
and employees and a channel through
which sta can share their views and
raise concerns. His work during the year is
discussed in detail in the Governance section
of this report on page 108.
Further details of how we engage with
employees can be found in the Governance
report on pages 106 to 107, the Strategic
report on page 24 and the Responsible
Business and ESG review on pages 60 to 61.
The environment
Details of our approach to Responsible
Business and its aims and activities can
be found on the Company’s website
www.londonmetric.com, where a full
version of the Responsible Business report
can be downloaded. An overview of our
Responsible Business activity can be found
on pages 49 to 69 of this report.
The Group recognises the importance
of minimising the adverse impact of its
operations on the environment and the
management of energy consumption
andwaste recycling.
The Group strives to maximise opportunities
to improve the resilience of assets to climate
change and the impact of transitioning to
a low carbon economy, as set out in the
Responsible Business and ESG review.
Greenhouse gas reporting
In accordance with Schedule 7 of the
Large and Medium-Sized Companies and
Groups (Accounts and Reports) Regulations
2008, information regarding the Company’s
greenhouse gas emissions can be found on
page 54.
Suppliers
The Group aims to settle supplier accounts
in accordance with their individual terms
of business.
The number of creditor days outstanding
forthe Group at 31 March 2022 was 14 days
(2021: 12 days).
Charitable and political contributions
In response to the Covid-19 pandemic
last year, we provided assistance to our
occupiers and significantly increased our
funding for local community charities located
close to our assets and developments.
This year we set a budget of £100,000 for
charitable funding as set out on page 64
ofthe Responsible Business and ESG review,
and have made donations of £66,766
(2021: £114,365). No political donations were
made during the year (2021: £nil).
Provisions on change of control
Under the Group’s credit facilities, the
lending banks may require repayment of
the outstanding amounts on any change
of control.
The Group’s Long Term Incentive Plan and
Deferred Share Bonus Plan contain provisions
relating to the vesting of awards in the event
of a change of control of the Company.
There are no agreements between the
Company and its Directors or employees
providing for compensation for loss of oce
or employment that occurs specifically
because of a takeover bid, except for
the provisions within the Company’s share
schemes as noted above.
Disclosure of information to auditor
So far as the Directors who held oce at the
date of approval of this Directors’ report 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.
Auditor
Deloitte LLP is willing to be reappointed
as the external auditor to the Company
and Group. Their reappointment has been
considered by the Audit Committee and
recommended to the Board. A resolution will
be proposed at the AGM on 13 July 2022.
By order of the Board
Martin McGann
Finance Director
26 May 2022
153
LondonMetric Property Plc
Annual Report and Accounts 2022
Strategic report Governance Financial statements
1-87 88-154 155 -208
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 accordance with UK-adopted
international accounting standards in
conformity with the requirements of
the Companies Act 2006. The financial
statements also comply with International
Financial Reporting Standards (‘IFRSs’)
as issued by the IASB. The Directors have
elected to prepare the Company financial
statements in accordance with Financial
Reporting Standard 101 (‘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 aairs of
the Company and of the profit or loss of the
Company for that period.
In preparing the 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 FRS 101
‘Reduced Disclosure Framework’ has
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 insucient 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 sucient to show and explain the
Company’s transactions and disclose with
reasonable accuracy at any time the
financial position of the Company and to
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 UK
governing the preparation and dissemination
of financial statements may dier 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
– 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
performance, business model
and strategy
By order of the Board
Martin McGann
Finance Director
26 May 2022
Andrew Jones
Chief Executive
26 May 2022
Report of the Directors
Directors’ Responsibilities Statement
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Financial
statements
Independent Auditor’s report 156
Group financial statements 164
Notes forming part of the Group financialstatements 168
Company financial statements 188
Notes forming part of the Company financialstatements 190
Supplementary information 194
Glossary 200
Notice of Annual General Meeting 202
Financial calendar 208
Shareholder information 208
The Group financial statements
that follow in thissection have been
prepared in accordance withIFRS.
The Company financial statements
have been prepared in accordance
withFRS 101.
The Independent Auditor’s report
that supports the financial statements
is reflected on page 156.
Martin McGann
Finance Director
Strategic report Governance Financial statements
1-87 88-154 155-208
155
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To the members of LondonMetric Property Plc
Independent Auditor’s report
Report on the audit of thefinancialstatements
1. Opinion
In our opinion:
– the financial statements of LondonMetric Property Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true and fair view
of the state of the Group’s and of the Parent Company’s aairs as at 31 March 2022 and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting
standards and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB);
– 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 and Company balance sheets;
– the Group and Company statements of changes in equity;
– the Group cash flow statement; and
– the related notes 1 to 20 and i to xi for Company only.
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 and IFRSs as issued by the IASB. 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. 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 sucient and appropriate to provide a basis for our opinion.
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3. Summary of our audit approach
Key audit matters The key audit matter that we identified in the current year was:
– Valuation of investment and development property
Within this report, key audit matters are identified as follows:
<>
Similar level of risk
Materiality The materiality that we used for the Group financial statements was £51.3 million which was
determined on the basis of 2% of shareholder’s equity at 31 March 2022. For testing balances
that impacted EPRA earnings we used a lower materiality of £4.7 million, which was based on
5% of EPRA earnings for the year end 31 March 2022.
Scoping The Group is subject to a full scope audit on 100% of net assets, revenue and profit before tax.
Significant changes in our approach No changes to our approach for the current year.
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:
– Assessing the Group’s 2022 and 2023 cash flow forecasts based on actual cash flow performance in 2021 and the 2022 financial year;
– Agreeing the level of committed, undrawn facilities of £245m to signed facility agreements;
– Recalculating the headroom within the forecasts based on the cash flow forecasts and the undrawn committed facilities;
– Recalculating covenant ratios on the year end position to evaluate compliance;
– Assessing the stress test scenarios, the reverse stress test run by the Directors including the linkage of these scenarios to the Group’s
principal risks disclosed on page 70 to 85 of the Annual Report & Accounts and impact on covenants; and
– Assessing the mitigating actions that could be taken by the Directors to maximise liquidity headroom including a reduction in capital
expenditure and a reduction in discretionary spend.
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.
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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 eect on: the overall audit strategy, the allocation of resources in the audit; and
directing the eorts 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 investment and development property
<>
Key audit matter
description
The Group owns a portfolio of largely distribution property assets, which is valued at £3,495 million (2021:
£2,505 million) as at 31 March 2022. The valuation of the portfolio is a significant judgement area and is
underpinned by a number of assumptions including capitalisation yields, lease incentives, future lease
income and with reference to development properties, costs to complete, Red Book guidance .
The Group uses professionally qualified external valuers to fair value the Group’s portfolio at six-monthly
intervals. The valuers are engaged by the Directors and performed their work in accordance with the
Royal Institution of Chartered Surveyors (‘RICS’) Valuation – Professional Standards.
The valuation exercise also relies on the integrity of the underlying lease and financial information
provided to the valuers by management. Therefore, due to this and the high level of judgement in the
assumptions, we have determined that there is a potential fraud risk in the balance.
Refer to page 127 (Audit Committee report), page 168 (accounting policy) and note 9 on page 178
(financial disclosures).
How the scope of our audit
responded to the key
audit matter
We performed the following procedures:
– Obtained an understanding and tested the relevant controls over the valuation process, including
management’s review of the information provided to valuers;
– Assessed management’s process for reviewing and assessing the work of the external valuer and
development appraisals;
– Assessed the competence, capabilities and objectivity of the external valuer and read their terms of
engagement with the Group to determine whether there were any matters that might have aected
their objectivity or may have imposed scope limitations on their work;
– Obtained the external valuation reports and, with the involvement of our internal real estate specialist,
assessed and challenged the valuation process, performance of the portfolio and significant
assumptions and critical judgement areas, including lease incentives, future lease income and yields;
– Considered the changes made to key valuation input assumptions at a macro-level in light of the
political situation in Ukraine and ongoing eects of the Covid-19 pandemic on the properties held by
the Group and benchmarked these against changes being made in the wider market and against
relevant market evidence including specific property sales and other external data;
– Assessed the valuation methodology used and considered any departures from the Red Book
guidance as well as tested the integrity of the model which is used by the external valuer;
– Met with the external valuers of the portfolio to discuss the results of their work and, for a sample
of properties of audit interest, we further challenged the yield assumptions and valuation by
benchmarking it to the market, including where relevant the impact of Covid-19 on the sector and
asset and the valuation adjustments reflected as a result;
– Performed audit procedures to assess the integrity of a sample of the information provided to the
external valuer by agreeing that information to underlying lease agreements; and
– Tested a sample of the costs to complete in relation to the development properties via challenging
the assumptions by benchmarking against the market or agreeing to supporting documentation
such as construction contracts.
Key observations We considered the assumptions applied in arriving at the fair value of the Group’s property portfolio
to be appropriate.
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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 £51.3 million (2021: £32.2 million)
We consider EPRA Earnings as a critical performance
measure for the Group and we applied a lower threshold
of £4.6 million (2021: £4.2 million) for testing of all balances
and classes of transaction which impact that measure,
primarily transactions recorded in the income statement
other than fair value movements on investment property,
development property and derivatives and impairment
of goodwill.
£33.3 million (2021: £27.6 million)
Basis for determining
materiality
Materiality for the Group is based on 2% (2021: 2%) of
shareholders’ equity at 31 March 2022. For EPRA Earnings
the basis used is 5% of EPRA earnings (2021: 5% EPRA
earnings) of that measure.
Materiality for the Company is based on 2%
of net assets (2021: 2% of net assets).
Rationale for the
benchmark applied
As an investment property company, the focus of
management is to generate long-term capital value
from the investment property portfolio and, therefore,
we consider equity to be the most appropriate basis
for materiality.
As an investment property company, the
focus of management is to generate long-
term capital value from the investment
property portfolio and, therefore, we consider
equity to be the most appropriate basis
for materiality.
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Shareholders’ equity
Group materiality
Parent materiality
£33m
Group materiality
£51m
Audit Committee
reporting threshold
£2.6m
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:
a. Our past experience of the audit, which has indicated
a low number of corrected and uncorrected
misstatements identified in prior periods; and
b. Our risk assessment, including our assessment
of the Group’s overall control environment.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit dierences in excess of £2.6 million
(2021: £1.6 million), as well as dierences 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.
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.
Our full scope audit is performed on 100% (2021: 100%) of the Group’s net assets, revenue and profit before tax.
The audit work in response to the risks of material misstatement was performed directly by the Group engagement team. Our audit also
included testing of the consolidation process.
The Company is located in London, UK and audited directly by the Group audit team.
7.2. Our consideration of the control environment
We have obtained an understanding of the relevant controls such as those relating to the financial reporting cycle, revenue cycle and those
in relation to our key audit matter.
We have decided not to rely on controls as the Group does not perform significant automated processing of large volumes of data and the
control environment is predominantly manual in nature.
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LondonMetric Property Plc
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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’s remuneration
policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
– results of our enquiries of management 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 involving relevant internal specialists, including tax, and industry
specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
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 following areas: Valuation of investment and development property. In common with
all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
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We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws
and regulations that had a direct eect 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 eect 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 valuation of investment and development property 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 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 eect 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; 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 Annual Report on Remuneration 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.
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 86;
– 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 86;
– the Directors’ statement on fair, balanced and understandable set out on page 154;
– the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 70;
– the section of the Annual Report that describes the review of eectiveness of risk management and internal control systems set out on
page 70; and
– the section describing the work of the Audit Committee set out on page 124.
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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 Annual Report on Remuneration 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 on 19 September 2013 by the Board of LondonMetric
Property Plc to audit the financial statements for the year ending 31 March 2014 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is 9 years, covering the years ending 31 March
2014 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).
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.
Georgina Robb, FCA
(Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
26 May 2022
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For the year ended 31 March
Group income statement
Note
2022
£m
2021
£m
Revenue 3 13 3 . 2 12 2 . 2
Cost of sales (1. 5) (1. 6)
Net income 131. 7 12 0 . 6
Administrative costs 4 (16 . 0) (15 . 8)
Profit on revaluation of investment properties 9 615 . 2 1 6 9. 9
Profit on sale of investment properties 8.0 0.8
Share of profits of joint ventures 10 23.3 6 .9
Operating profit 7 62.2 282.4
Finance income 0.5 0.6
Finance costs 5 (2 4 . 4) (2 4 .9)
Profit before tax 738 .3 2 5 8 .1
Taxation 6 (0 .1) (0 .1)
Profit for the year and total comprehensive income 738 . 2 258.0
Attributable to:
Equity shareholders 734 .5 2 5 7. 3
Non-controlling interest 19 3 .7 0.7
Earnings per share
Basic 8 78. 8p 28.6p
Diluted 8 78. 4p 28.5p
All amounts relate to continuing activities.
The notes on pages 168 to 187 form part of these financial statements.
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As at 31 March
Group balance sheet
Note
2022
£m
2021
£m
Non current assets
Investment properties 9 3,49 4.6 2,5 04.6
Investment in equity accounted joint ventures 10 72.6 5 9. 2
Other investments and tangible assets 1. 3 0.3
3,5 68.5 2 , 5 6 4 .1
Current assets
Assets held for sale 21. 2 –
Trading properties 1.1 1.1
Trade and other receivables 11 1 3 .1 9. 8
Cash and cash equivalents 12 51. 3 5 1. 4
86.7 62 .3
Total assets 3,655. 2 2,626.4
Current liabilities
Trade and other payables 13 5 9. 4 46.0
Non current liabilities
Borrowings 14 1 ,02 1 .4 8 3 7. 5
Lease liabilities 15 4.6 5.2
1 ,026.0 8 42.7
Total liabilities 1, 0 8 5 . 4 888.7
Net assets 2,56 9 .8 1 , 7 3 7. 7
Equity
Called up share capital 16 9 7. 9 91. 0
Share premium 17 38 6.8 2 1 9. 3
Capital redemption reserve 17 9. 6 9. 6
Other reserve 17 4 9 1.1 4 8 7. 7
Retained earnings 17 1 ,5 7 4.3 923.7
Equity shareholders’ funds 2,559 .7 1, 7 31. 3
Non-controlling interest 1 0 .1 6.4
Total equity 2,56 9 .8 1 , 7 3 7. 7
IFRS net asset value per share 8 262 .3p 191. 3p
The financial statements were approved and authorised for issue by the Board of Directors on 26 May 2022 and were signed on its behalf by:
Martin McGann
Finance Director
Registered in England and Wales, No 7124797
The notes on pages 168 to 187 form part of these financial statements.
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Group statement of changes in equity
Note
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Other
reserve
£m
Retained
earnings
£m
Equity
shareholders’
funds
£m
Non-
controlling
interest
£m
Total
equity
£m
At 1 April 2021 9 1. 0 2 19. 3 9. 6 4 8 7. 7 92 3.7 1, 7 31 . 3 6.4 1 , 7 3 7. 7
Profit for the year and total
comprehensive income – – – – 734 .5 734 .5 3 .7 73 8. 2
Equity placing 6.7 16 3 . 5 – – – 17 0 . 2 – 17 0 . 2
Purchase of shares held in Employee
Benefit Trust – – – (1. 5) – (1. 5) – (1. 5)
Vesting of shares held in Employee
Benefit Trust – – – 4 .9 (5 . 7) (0 . 8) – (0 . 8)
Share based awards – – – – 3. 5 3. 5 – 3.5
Dividends 7 0. 2 4.0 – – (81. 7) (7 7. 5) – (7 7. 5 )
At 31 March 2022 9 7. 9 3 86.8 9. 6 4 91 .1 1 ,57 4.3 2,55 9 .7 1 0 .1 2,56 9 .8
Note
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Other
reserve
£m
Retained
earnings
£m
Equity
shareholders’
funds
£m
Non-
controlling
interest
£m
Total
equity
£m
At 1 April 2020 84.2 1 06.3 9. 6 48 8.4 74 3 . 3 1, 4 31. 8 7. 1 1, 4 3 8 . 9
Profit for the year and total
comprehensive income – – – – 2 5 7. 3 2 5 7. 3 0.7 258.0
Equity placing 6.6 110 . 0 – – – 11 6 . 6 – 11 6 . 6
Purchase of shares held in Employee
Benefit Trust – – – (5. 5) – (5 . 5) – (5. 5)
Vesting of shares held in Employee
Benefit Trust – – – 4.8 (5 . 1) (0.3) – (0.3)
Share based awards – – – – 3. 8 3. 8 – 3.8
Distribution to non-controlling interest – – – – – – (1. 4) (1. 4)
Dividends 7 0. 2 3.0 – – (75 . 6) (72 .4) – (72 .4)
At 31 March 2021 91. 0 21 9. 3 9. 6 4 8 7. 7 923.7 1, 7 31. 3 6.4 1, 7 3 7. 7
The notes on pages 168 to 187 form part of these financial statements.
For the year ended 31 March
167
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LondonMetric Property Plc
Annual Report and Accounts 2022
Group cash flow statement
Note
2022
£m
2021
£m
Cash flows from operating activities
Profit before tax 73 8. 3 2 5 8 .1
Adjustments for non cash items:
Profit on revaluation of investment properties (61 5 . 2) (16 9. 9)
Profit on sale of investment properties (8 . 0) (0.8)
Share of post tax profit of joint ventures (2 3 . 3) (6 .9)
Movement in lease incentives (8 .9) (11 . 3)
Share based payment 3.5 3.8
Net finance costs 2 3 .9 24 .3
Cash flows from operations before changes in working capital 11 0 . 3 9 7. 3
Change in trade and other receivables (2 . 6) (1. 9)
Change in trade and other payables 11 . 5 4.5
Cash flows from operations 119 . 2 9 9. 9
Tax received/(paid) 0.3 (0 .3)
Cash flows from operating activities 11 9. 5 9 9. 6
Investing activities
Purchase of investment properties (5 0 0 . 6) (2 2 9. 0)
Capital expenditure on investment properties (51. 0) (2 5. 6)
Purchase of investments (1 .1) –
Lease incentives paid (4 . 2) (2 .1)
Sale of investment properties 17 9. 8 20 8.4
Investments in joint ventures – (4. 7)
Distributions from joint ventures 9.9 6.5
Interest received – 0 .1
Net cash used in investing activities (3 6 7. 2) (46.4)
Financing activities
Dividends paid (7 7. 5) (72. 4)
Distribution to non-controlling interest – (1. 4)
Proceeds from issue of ordinary shares 17 0 . 2 116 . 6
Purchase of shares held in Employee Benefit Trust (1. 5) (5 . 5)
Vesting of shares held in Employee Benefit Trust (0 .8) (0 .3)
New borrowings and amounts drawn down 18 1, 0 5 9. 0 316 . 0
Repayment of loan facilities 18 (8 71. 0) (4 0 9. 0)
Financial arrangement fees and break costs (6 . 6) ( 7. 5)
Interest paid (2 4 . 2) (2 0 . 1)
Net cash from/ (used in) financing activities 2 4 7. 6 (8 3. 6)
Net decrease in cash and cash equivalents 18 (0 . 1) (3 0 .4)
Opening cash and cash equivalents 51. 4 81. 8
Closing cash and cash equivalents 51. 3 5 1. 4
The notes on pages 168 to 187 form part of these financial statements.
For the year ended 31 March
168
LondonMetric Property Plc
Annual Report and Accounts 2022
Notes forming part of the Group
financial statements
1 Significant accounting policies
a) General information
LondonMetric Property Plc is a company incorporated in the
UnitedKited Kingdom under the Companies Act. The address of the
registered oce is given on page 208. The principal activities of
theCompany and its subsidiaries (‘the Group’) and the nature
ofthe Group’s operations are set out in the Strategic report on
pages 1 to 87.
b) Statement of compliance
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards
in conformity with the requirements of the Companies Act 2006.
The financial statements also comply with International Financial
Reporting Standards (‘IFRS’) as issued by the IASB.
c) Going concern
The Board has continued to pay particular attention to the
appropriateness of the going concern basis in preparing these
financial statements and its detailed assessment is on page 86.
The assessment considers the principal risks and uncertainties
facing the Group’s activities, future development
andperformance, as discussed in detail on pages 70 to 85 of the
Strategic report.
A key consideration is the Group’s financial position, cash flows
and liquidity, including its continued access to debt facilities and
its headroom under financial loan covenants, which is discussed
in detail in the Financial review on page 42.
d) Basis of preparation
The financial statements are prepared on a going concern basis,
as explained above.
The functional and presentational currency of the Group issterling.
The financial statements are prepared on thehistorical cost basis
except that investment and development properties and derivative
financial instrumentsare stated at fair value.
The accounting policies have been applied consistently inall
material respects except for the adoption of new and revised
standards as noted below.
i) Significant accounting estimates and judgements
The preparation of financial statements in conformity with
IFRSrequires management to make judgements, estimates and
assumptions that aect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may dier from these estimates.
Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision aects only that period.
If the revision aects both current and future periods, the change
isrecognised over those periods.
The accounting policies subject to significant judgements and
estimates are considered by the Audit Committee on page 124
andare as follows:
Significant areas of estimation uncertainty
Property valuations
The valuation of the property portfolio is a critical part of
theGroup’s performance. The Group carries the property
portfolioat fair value in the balance sheet and engages
professionally qualified external valuers to undertake
sixmonthly valuations.
The determination of the fair value of each property requires,
totheextent applicable, the use of estimates andassumptions
inrelation to factors such as estimated rental value and current
market rental yields. In addition, to the extent possible, the valuers
make reference to market evidence of transaction prices for
similar properties.
The fair value of a development property is determined
byusingthe ‘residual method’, which deducts all estimated
costs necessary to complete the development, together with
anallowance for development risk, profit and purchasers’ costs,
from the fair valuation of the completed property.
Note 9(c) to the financial statements includes further information
onthe valuation techniques, sensitivities and inputs used to
determine the fairvalue of the property portfolio.
Significant transactions
Some property transactions are large or complex and require
management to make judgements when considering the
appropriate accounting treatment.
These include acquisitions of property through corporate vehicles,
which could represent either asset acquisitions or business
combinations under IFRS 3.
Other complexities include conditionality inherent in transactions,
and other unusual terms and conditions. There is a risk that an
inappropriate approach could lead to a misstatement inthe
financial statements.
For the year ended 31 March 2022
169
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Annual Report and Accounts 2022
1 Significant accounting policies (continued)
Management applied judgement to three corporate acquisitions
made during the year to 31 March 2022 and determined that they
were all asset acquisitions rather than business combinations, as
minimal assets were acquired other than the property portfolio,
there were no employees or drawn debt balances.
ii) Adoption of new and revised standards
Standards and interpretations eective in the current period
During the year, the following new and revised Standards and
interpretations have been adopted and have not had a material
impact on the amounts reported in these financial statements.
Name Description
IFRS 16 Covid-related rent concessions
IFRS 7, IFRS 9, IAS 39, IFRS 4
and IFRS 16 (amendments)
Interest Rate Benchmark Reform –
phase 2
iii) Standards and interpretations in issue not yet adopted
The IASB and the International Financial Reporting Interpretations
Committee have issued the following standards and
interpretations, as at the date of this report, that are mandatory
for later accounting periods and which have not been adopted
early. They are not expected to have a material impact on the
financial statements.
Name Description
IFRS 17 Insurance contracts
Initial application of IFRS 17 and IFRS
9 – Comparative Information
IFRS 16 Covid-related rent concessions
beyond 30 June 2021
IFRS 3 References to the conceptual
framework
IAS 16 Property, plant and equipment –
proceeds before intended use
IAS 37 Onerous contracts
IAS 1 (amendments) Classification of Liabilities as Current
orNon Current – Deferral of Eective
Date
Disclosure of Accounting Policies
IAS 8 Definition of accounting estimates
IAS 12 Deferred tax related to assets
and liabilities arising from a single
transaction
IFRS 4 Extension of the Temporary
Exemption from Applying IFRS 9
Annual improvements to
IFRSs: 2018 -2020 cycle
Amendments to IFRS 1, IFRS 9, IFRS 16,
and IAS 41
e) Basis of consolidation
i) Subsidiaries
The consolidated financial statements include the accountsof
the Company and its subsidiaries. Subsidiaries are those entities
controlled by the Group. Control is assumed when the Group:
– Has the power over the investee
– Is exposed, or has rights, to variable returns from itsinvolvement
with the investee
– Has the ability to use its power to aect its returns
In the consolidated balance sheet, the acquiree’s identifiable
assets, liabilities and contingent liabilities are initially recognised
attheir fair value at the acquisition date.
The results of subsidiaries are included in the consolidated
financialstatements from the date that control commences
untilthe date that control ceases.
Where properties are acquired through corporate acquisitions and
there are no significant assets or liabilities other than property, the
acquisition is treated as an asset acquisition.
Where a business acquisition reflects an integrated set of activities
and assets capable of being conducted and managed for the
purpose of providing goods or services to customers, theacquisition
accounting method is used.
Under the acquisition accounting method, the identifiable assets,
liabilities and contingent liabilities acquired are measured at
fair value at the acquisition date. The consideration transferred
is measured at fair value and includes the fair value of any
contingent consideration.
ii) Joint ventures
Joint ventures are those entities over whose activities the Group
hasjoint control.
Joint ventures are accounted for under theequitymethod, whereby
the consolidated balance sheet incorporates the Group’s share of the
net assets of its joint ventures and the consolidated income statement
incorporates the Group’s share of joint venture profits after tax.
The Group’s joint ventures adopt the accounting policies of the
Group for inclusion in the Group financial statements.
Joint venture management fees are recognised as income in the
accounting period in which the service is rendered.
iii) Non-controlling interest
The Group’s non-controlling interest (‘NCI’) represents an 18%
shareholding in LMP Retail Warehouse JV Holdings Limited, which
owns a portfolio of DFS assets.
The Group consolidates the results and net assets of its subsidiary
in these financial statements and reflects the non-controlling
interests’ share within equity in the consolidated balance sheet and
allocates to the non-controlling interest their share of profit or loss for
the period within the consolidated income statement.
170
LondonMetric Property Plc
Annual Report and Accounts 2022
1 Significant accounting policies (continued)
iv) Alternative performance measures
Our portfolio is a combination of properties that are wholly
owned by the Group and part owned through joint venture
arrangements or where a third party holds a non-controlling
interest. Management reviews the performance of the Group’s
proportionate share of assets and returns, and considers the
presentation of information on this basis helpful to stakeholders
asitaggregates the results of all the Group’s property interests
which under IFRS are required to be presented across a number
ofline items in the financial statements. These measures are
alternative performance measures as they are not defined under
IFRS. Further information on alternative performance measures is
included with our performance highlights on page 10 and in the
Financial review on page 43.
v) Business combinations
The acquisition of subsidiaries is accounted for using the acquisition
method. The cost of the acquisition is measured at the aggregate
of the fair values of assets and liabilities acquired and equity
instruments issued by the Group in exchange for control of
the acquiree. Acquisition costs are recognised in the income
statementas incurred.
Any excess of the purchase price of business combinations
overthe fair value of the assets, liabilities and contingent liabilities
acquired is recognised as goodwill. This is recognised as an asset
and is reviewed for impairment at least annually. Any impairment
isrecognised immediately in the income statement.
f) Property portfolio
i) Investment properties
Investment properties are properties owned or leased by
theGroup which are held for long term rental income and for
capital appreciation. Investment property includes property that
is being constructed, developed or redeveloped for future use as
an investment property. Investment property is initially recognised
at cost, including related transaction costs. It is subsequently
carried at each published balance sheet date at fair value on
an open market basis as determined by professionally qualified
independent external valuers. Changes in fair value are included
inthe income statement.
Where a property held for investment isappropriated to
development property, it istransferred at fair value. A property
ceases to be treated asa development propertyon practical
completion. In accordance with IAS 40 Investment Properties,
nodepreciation isprovided in respect of investment properties.
Investment property is recognised as an asset when:
– It is probable that the future economic benefits that are
associated with the investment property will flow tothe Group
– The cost of the investment property can be measured reliably
All costs directly associated with the purchase and construction
of a development property are capitalised. Capital expenditure
that is directly attributable to the redevelopment or refurbishment
of investment property, upto the point of it being completed for
itsintended use, isincluded in the carrying value of the property.
ii) Assets held for sale
An asset is classified as held for sale if its carrying amount is expected
to be recovered through a sale transaction rather than through
continuing use. This condition is regarded asmet only when the
sale is highly probable, the asset is available for sale in itspresent
condition and management are committed to the sale and expect
it to complete within one year from the date of classification.
Assets classified as held for sale are measured at the lower of
carrying amount and the fair value less costs to sell.
iii) Tenant leases
Leases – the Group as a lessor
Rent receivable is recognised in the income statement on a straight
line basis over the term of the lease. In the event that a lease
incentive is granted to a lessee, such incentives are recognised as
an asset, 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 or to the first break option if earlier. When the Group is an
intermediate lessor, it accounts for the head lease and the sub-lease
as two separate contracts.
Leases – the Group as lessee
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 a small number
of leasehold properties and an occupational lease for its head
oce. Both right of use assets are classified as investment property
and added to the carrying value of the leasehold investment
property. The right of use asset in respect of its occupational lease
issubsequently depreciated over the length of the lease.
iv) Net rental income
Rental income from investment property leased out under an
operating lease is recognised in the profit or loss on a straight
linebasis over the lease term.
Contingent rents, such as turnover rents, rent reviews and
indexation, are recorded as income in the periods in which
theyareearned. The uplift from rent reviews is recognised when
such reviewshave been agreed with tenants.
Surrender premiums receivable are recognised on completion
ofthe surrender.
Where a rent free period is included in a lease, the rental income
foregone is allocated evenly over the period from the date of
leasecommencement to the earlier of the first break option or
thelease termination date.
Lease incentives and costs associated with entering into tenant
leases areamortised over the period fromthe date oflease
commencement to the earlier of the first break option orthe
lease termination date.
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
171
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LondonMetric Property Plc
Annual Report and Accounts 2022
1 Significant accounting policies (continued)
Property operating expenses are expensed as incurred and
anyproperty operating expenditure not recovered from tenants
through service charges is charged to the income statement.
v) Profit and loss on sale of investment properties
Profits and losses on sales of investment properties are recognised at
the date of legal completion rather than exchange of contracts and
calculated byreference to the carrying value at the previous year
end valuation date, adjusted for subsequent capital expenditure.
g) Financial assets and financial liabilities
Financial assets and financial liabilities are recognised in thebalance
sheet when the Group becomes a party to thecontractual terms of
the instrument.
Financial instruments under IFRS 9
i) Trade receivables
Trade receivables are initially recognised at their transaction price
and subsequently measured at amortised costasthe Group’s
business model is to collect the contractual cash flows due from
tenants. An impairment provision is created based on lifetime
expected credit losses, which reflect the Group’shistorical credit loss
experience and an assessment of current and forecast economic
conditions at the reporting date.
ii) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held
at call with banks and other short term highly liquid investments
with original maturities of three months or less, measured at
amortised cost.
iii) Trade and other payables
Trade payables and other payables are initially measured at fair
value, net of transaction costs and subsequently measured at
amortised cost using the eective interest method.
iv) Borrowings
Borrowings are recognised initially at fair value less attributable
transaction costs. Subsequently, borrowings are measured at
amortised cost with any dierence between the proceeds and
redemption value being recognised in the income statement over
the term of the borrowing using the eective interest method.
v) Derivative financial instruments
The Group uses derivative financial instruments to hedge its exposure
to interest rate risks. Derivative financial instruments are recognised
initially at fair value, which equates to cost andsubsequently
remeasured at fair value, with changes infairvalue being included
inthe income statement.
The Group does not apply hedge accounting under IFRS 9.
h) Finance costs and income
Net finance costs include interest payable on borrowings,
netofinterest capitalised and finance costs amortised.
Interest is capitalised if it is directly attributable to the acquisition,
construction or redevelopment of development properties from
the start of the development work until practical completion of
theproperty. Capitalised interest is calculated with reference
to theactual interest rate payable on specific borrowings for
the purposes of development or,for that part of the borrowings
financed out of general funds, with reference to the Group’s
weighted average costof borrowings.
Finance income includes interest receivable on funds invested
at the eective rate and notional interest receivable on forward
funded developments at the contractual rate.
Finance costs and income are presented in the cash flow statement
within financing and investing activities, respectively.
i) Tax
Tax is included in profit or loss except to the extent that it relates
toitems recognised directly in equity, in which case the related
taxis recognised in equity.
Current tax is the expected tax payable on the taxable income forthe
year, using tax rates enacted or substantively enacted at the balance
sheet date, together with any adjustment in respect ofprevious years.
Deferred tax is provided using the balance sheet liability method,
providing for temporary dierences between the carrying amounts
of assets and liabilities for financial reporting purposes and their tax
bases. The amount of deferred tax provided is based on the expected
manner or realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available
against whichthe asset can be utilised.
As the Group is a UK REIT there is no provision for deferred tax
arisingon the revaluation of properties or other temporary
dierences. The Group must comply with the UK REIT regulation
tobenefit fromthe favourable tax regime.
j) Share based payments
The fair value of equity-settled share based payments to
employeesis determined at the date of grant and is expensed
onastraight line basis over the vesting period based on the
Group’sestimate of shares that will eventually vest.
k) Shares held in Trust
The cost of the Company’s shares held by the Employee
BenefitTrust is deducted from equity in the Group balance sheet.
Any shares held by the Trust are not included in the calculation
ofearnings or net tangible assets per share.
l) Dividends
Dividends on equity shares are recognised when they become
legally payable. In the case of interim dividends, this is when
paid. In the case of final dividends, this is when approved by
theshareholders at the Annual General Meeting.
172
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Annual Report and Accounts 2022
2 Segmental information
As at 31 March 2022 2021
Property value
100%
owned
£m
Share
of JV
£m
NCI
£m
Total
£m
100%
owned
£m
Share
of JV
£m
NCI
£m
Total
£m
Distribution 2,642.0 – – 2,642.0 1,777.3 – – 1,777.3
Long income 703.8 96.6 (15.1) 785.3 5 47. 6 93.2 (11. 4 ) 629.4
Retail parks 70.6 – – 70.6 73.9 – – 73.9
Oce 27.3 – – 27.3 41.1 – – 41.1
Residential 0.9 – – 0.9 0.9 1.2 – 2.1
Development 67.8 – – 67. 8 59. 8 – – 59.8
3,512.4 96.6 (15.1) 3,593.9 2,500.6 94.4 (11.4) 2,583.6
Head lease and right of use assets 4.5 5.1
3,598.4 2,588.7
1 Includes trading property of £1.1 million and assets held for sale of £21.2 million
For the year to 31 March 2022 2021
Gross rental income
100%
owned
£m
Share
of JV
£m
NCI
£m
Total
£m
100%
owned
£m
Share
of JV
£m
NCI
£m
Total
£m
Distribution 88.7 – – 88.7 78.1 – (0.1) 78.0
Long income 35.9 4.5 (1.3) 39.1 34.7 5.3 (1.4) 38.6
Retail parks 4.4 – – 4.4 4.7 – – 4.7
Oce 2.3 – – 2.3 3.5 – – 3.5
Residential 0.1 – – 0.1 0.1 – – 0.1
Development 0.1 – – 0.1 0.2 – – 0.2
131.5 4.5 (1.3) 134.7 121.3 5.3 (1.5) 125.1
For the year to 31 March 2022 2021
Net rental income
100%
owned
£m
Share
of JV
£m
NCI
£m
Total
£m
100%
owned
£m
Share
of JV
£m
NCI
£m
Total
£m
Distribution 87.5 – – 87.5 7 7. 2 – (0.1) 7 7.1
Long income 35.8 4.4 (1.3) 38.9 34.5 5.2 (1.4) 38.3
Retail parks 4.5 – – 4.5 4.3 – – 4.3
Oce 2.0 – – 2.0 3.4 – – 3.4
Residential 0.1 – – 0.1 0.1 (0.1) – –
Development 0.1 – – 0.1 0.2 – – 0.2
130.0 4.4 (1.3) 133.1 119. 7 5.1 (1.5) 123.3
An operating segment is a distinguishable component of the Group that engages in business activities, earns revenue and incurs
expenses, whose results are reviewed by the Group’s Chief Operating Decision Makers (‘CODMs’) and for which discrete financial
information is available.
Gross rental income represents the Group’s revenues from its tenants and net rental income is the principal profit measure used to
determine the performance of each sector. Total assets and liabilities are not monitored by segment. However, property assets are
reviewed on an ongoing basis. The Group operates entirely in the United Kingdom andno geographical split is provided in information
reported to the Board.
Included within the distribution operating segment are the sub-categories of urban logistics, regional distribution and mega distribution
as reported on page 33 and throughout the Strategic report, however the sub-category results are not separately reviewed by the
CODMs as they are not considered separate operating segments. Instead the CODMs review the distribution sector as a whole as its own
operating segment.
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
173
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1-87 88-154 155-208
LondonMetric Property Plc
Annual Report and Accounts 2022
3 Revenue
For the year to 31 March
2022
£m
2021
£m
Gross rental income 131.5 121.3
Property management fee income 1.3 0.9
Other income 0.4 –
Revenue 133.2 122.2
For the year to 31 March
2022
£m
2021
£m
Gross rental income 131.5 121.3
Cost of sales – property operating expenses (1.5) (1.6)
Net rental income 130.0 119. 7
No individual tenant contributed more than 10% of gross rental income in the current or previous year. The contracted rental income of the
Group’s top ten occupiers is shown in Supplementary note xvii on page 199.
4 Administrative costs
a) Total administrative costs
For the year to 31 March
2022
£m
2021
£m
Sta costs 12.5 12.4
Auditor’s remuneration 0.3 0.2
Depreciation 0.6 0.7
Other administrative costs 2.6 2.5
16.0 15.8
b) Sta costs
For the year to 31 March
2022
£m
2021
£m
Employee costs, including those of Directors, comprise the following:
Wages and salaries 10.5 9.8
Less sta costs capitalised in respect of development projects (2.5) (2.2)
8.0 7.6
Social security costs 0.8 0.8
Pension costs 0.2 0.2
Share based payment 3.5 3.8
12.5 12.4
The long term share incentive plan (‘LTIP’) that was created in 2013 allows Executive Directors and eligible employees to receive an
award of shares, held in trust, dependent on performance conditions based on the earnings per share, total shareholder return and total
accounting return of the Group over a three year vesting period. The Group expenses the estimated number of shares likely to vest over
the three year period based on the market price atthe date of grant. In the current year the charge was £3.5 million (2021: £3.8 million).
The cost of acquiring the shares expected to vest under theLTIP of£1.5 million has been charged to reserves this year (2021: £5.5 million).
Directors’ emoluments are reflected in the table below. Directors received a salary supplement in lieu of pension contributions for the
current and previous year. Details of the Directors’ remuneration awards under the LTIP are given in the Remuneration Committee report
on pages 132 to 149.
For the year to 31 March
2022
£m
2021
£m
Remuneration for management services 2.9 2.8
Entitlement to pension scheme contributions 0.1 0.1
3.0 2.9
174
LondonMetric Property Plc
Annual Report and Accounts 2022
4 Administrative costs (continued)
The emoluments and benefits of the key management personnel oftheCompany, which comprise the Directors and certain members of
the Senior Leadership Team, are set out in aggregate in the table below.
For the year to 31 March
2022
£m
2021
£m
Short term employee benefits 9.0 8.7
Share based payments 1.8 2.5
10.8 11. 2
No disclosures have been made in accordance with IFRS 2 for share based payments to employees other than those intheRemuneration
Committee report on pages 132 to 149 on the basis of materiality.
c) Sta numbers
The average number of employees including Executive Directors during the year was:
2022
Number
2021
Number
Property and administration 32 32
d) Auditor’s remuneration
For the year to 31 March
2022
£000
2021
£000
Audit services:
Audit of the Group and Company financial statements, pursuant to legislation 225 201
Other fees:
Audit related assurance services 38 35
Total fees for audit and other services 263 236
In addition to the above audit fees, £27,000 (2021: £24,200) was due to the Group’s auditor in respect of its joint venture operations. BDO LLP
is responsible for the audit of other subsidiary entities at a cost to the Group of £38,000 (2021: £36,500).
5 Finance costs
For the year to 31 March
2022
£m
2021
£m
Interest payable on bank loans and related derivatives 23.1 19.4
Unwinding of discount on fixed rate debt acquired (0.2) (0.2)
Debt and hedging early close out costs – 7.5
Amortisation of loan issue costs 1.2 1.8
Interest on lease liabilities 0.1 0.1
Commitment fees and other finance costs 1.6 2.1
Total borrowing costs 25.8 30.7
Less amounts capitalised on developments (1.4) (1.1)
Net borrowing costs 24.4 29.6
Fair value gain on derivative financial instruments – (4.7)
Total finance costs 24.4 24.9
Net finance costs deducted from EPRA earnings as disclosed in Supplementary note ii include interest receivable of £0.5 million
(2021: £0.6 million) as reflected in the income statement and exclude the fair value gain on derivative financial instruments of £4.7 million
and early close out costs of £7.5 million in the comparative period.
6 Taxation
For the year to 31 March
2022
£m
2021
£m
Current tax
UK tax charge on profit 0.1 0.1
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
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6 Taxation (continued)
The tax assessed for the year varies from the standard rate of corporation tax in the UK. The dierences are explained below:
For the year to 31 March
2022
£m
2021
£m
Profit before tax 738.3 258.1
Tax charge at the standard rate of corporation tax in the UK of 19% (2021: 19%) 140.3 49. 0
Eects of:
Tax eect of income not subject to tax (135.8) (47. 6)
Share of post tax profits of joint ventures (4.4) (1.3)
UK tax charge on profit 0.1 0.1
The current tax charge relates to tax arising on income attributable to the Group’s non-controlling interest. As the Group is a UK REIT there is
no provision for deferred tax arising on the revaluation of properties or other temporary dierences.
7 Dividends
For the year to 31 March
2022
£m
2021
£m
Ordinary dividends paid
2020 Third quarterly interim dividend: 2.0p per share – 16.7
2020 Fourth quarterly interim dividend: 2.3p per share – 20.8
2021 First quarterly interim dividend: 2.1p per share – 19.0
2021 Second quarterly interim dividend: 2.1p per share – 19.1
2021 Third quarterly interim dividend: 2.1p per share 19.0 –
2021 Fourth quarterly interim dividend: 2.35p per share 21.3 –
2022 First quarterly interim dividend: 2.2p per share 20.0 –
2022 Second quarterly interim dividend: 2.2p per share 21.4 –
81.7 75.6
Quarterly dividend payable
2022 Third quarterly interim dividend: 2.2p per share 21.5
2022 Fourth quarterly interim dividend: 2.65p per share 25.9
The Company paid its third quarterly interim dividend in respect of the financial year to 31 March 2022 of 2.2p per share, wholly as a
Property Income Distribution (‘PID’), on 12 April 2022 to ordinary shareholders onthe register at the close of business on11 March 2022.
The fourth quarterly interim dividend for 2022 of 2.65p per share, of which 1.15p is payable as a PID, will be payable on 13 July2022
toshareholders on the register at the close of business on 10 June 2022. A scrip dividend alternative will be oered to shareholders as
itwasforthefirst three quarterly dividend payments.
Neither dividend has been included as a liability in these accounts. Both dividends will be recognised as an appropriation ofretained
earnings inthe year to 31 March 2023.
During the year the Company issued 1.7 million ordinary shares under the terms of the Scrip Dividend Scheme, which reduced the cash
dividend payment by £4.2 million to£77.5 million.
8 Earnings and net assets per share
Adjusted earnings and net assets per share are calculated in accordance with the Best Practice Recommendations (‘BPR’)
oftheEuropean Public RealEstate Association (‘EPRA’). The EPRA earnings measure highlights the underlying performance of the property
rental business.
The basic earnings per share calculation uses the weighted average number of ordinary shares during the year and excludes the average
number of shares held by the Employee Benefit Trust for the year. The basic net asset per share calculation uses the number of shares
in issue at the year end and excludes the actual number of shares held by the Employee Benefit Trust at the year end. The fully diluted
calculations assume that new shares are issued in connection with the expected vesting of the Group’s long term incentive plan.
Further EPRA performance measures are reflected in the Supplementary notes on pages 194 to 199.
176
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8 Earnings and net assets per share (continued)
a) EPRA earnings
EPRA earnings for the Group and its share of joint ventures are detailed as follows:
For the year to 31 March
100%
owned
£m
JV
£m
NCI
£m
2022
£m
100%
owned
£m
JV
£m
NCI
£m
2021
£m
Gross rental income 131.5 4.5 (1.3) 134.7 121.3 5.3 (1.5) 125.1
Property costs (1.5) (0.1) – (1.6) (1.6) (0.2) – (1.8)
Net rental income 130.0 4.4 (1.3) 133.1 119. 7 5.1 (1.5) 123.3
Management fees 1.3 (0.5) – 0.8 0.9 (0.4) – 0.5
Other income 0.4 – – 0.4 – – – –
Administrative costs (16.0) (0.1) – (16.1) (15.8) – – (15.8)
Net finance costs
1
(23.9) (1.0) 0.2 (24.7) (21.5) (1.2) 0.2 (22.5)
Tax (0.1) – 0.1 – (0.1) – 0.2 0.1
EPRA earnings 91.7 2.8 (1.0) 93.5 83.2 3.5 (1.1) 85.6
1 Group net finance costs reflect total finance costs of £24.4 million (note 5) less finance income of£0.5 million
The reconciliation of EPRA earnings to IFRS reported profit can be summarised as follows:
For the year to 31 March
100%
owned
£m
JV
£m
NCI
£m
2022
£m
100%
owned
£m
JV
£m
NCI
£m
2021
£m
EPRA earnings 91.7 2.8 (1.0) 93.5 83.2 3.5 (1.1) 85.6
Revaluation of property 615.2 19.7 (2.7) 632.2 169.9 3.4 0.4 173.7
Fair value of derivatives – 0.7 – 0.7 4.7 0.1 – 4.8
Profit/(loss) on disposal 8.0 0.2 – 8.2 0.8 (0.1) – 0.7
Debt/hedging costs – (0.1) – (0.1) ( 7. 5) – – ( 7. 5 )
IFRS reported profit 714.9 23.3 (3.7) 734.5 251.1 6.9 (0.7) 2 5 7. 3
b) Earnings per ordinary share attributable to equity shareholders
For the year to 31 March
2022
£m
2021
£m
Basic and diluted earnings 734.5 2 5 7. 3
EPRA adjustments above (641.0) (171.7)
EPRA earnings 93.5 85.6
For the year to 31 March
2022
Number of
shares
(millions)
2021
Number of
shares
(millions)
Ordinary share capital 934.2 901.9
Shares held in the Employee Benefit Trust (2.7) (2.8)
Weighted average number of ordinary shares – basic 931.5 899.1
Employee share schemes 4.8 4.8
Weighted average number of ordinary shares – fully diluted 936.3 903.9
Earnings per share
Basic 78.84p 28.61p
Diluted 78.44p 28.46p
EPRA earnings per share
Basic 10.04p 9. 52p
Diluted 9.99p 9. 47p
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
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8 Earnings and net assets per share (continued)
c) Net assets per share attributable to equity shareholders
In October 2019, EPRA published new best practice recommendations for financial disclosures by public real estate companies. The best
practice recommendations introduced three new measures of net asset value: EPRA net tangible assets (‘NTA’), EPRA net reinstatement value
(‘NRV’) and EPRA net disposal value (‘NDV’).
EPRA NTA is considered to be the most relevant measure for the Group and replaces EPRA NAV as the primary measure of net asset value.
All three measures are calculated on a diluted basis, which assumes that new shares are issued in connection with the expected vesting of
the Group’s long term incentive plan. A reconciliation between the three new EPRA NAV metrics to IFRS NAV and the previously reported
EPRA NAV in the comparative period is shown in the tables below.
As at 31 March 2022
EPRA net
tangible assets
£m
EPRA net
disposal value
£m
EPRA net
reinstatement
value
£m
Equity shareholders’ funds 2,559.7 2,559.7 2,559.7
Fair value of joint ventures’ derivatives (0.1) – (0.1)
Mark to market of fixed rate debt – 11.3 –
Purchasers’ costs – – 202.0
EPRA net asset value 2,559.6 2,571.0 2,761.6
1 Estimated from the portfolio’s external valuation which is stated net of purchasers’ costs of 6.8%
As at 31 March 2021
EPRA net
tangible assets
£m
EPRA net
disposal value
£m
EPRA net
reinstatement
value
£m
Equity shareholders’ funds 1,731.3 1,731.3 1,731.3
Fair value of group derivatives – – –
Fair value of joint ventures’ derivatives 0.6 0.6 0.6
EPRA net asset value (as previously reported) 1,731.9 1,731.9 1,731.9
Fair value of derivatives – (0.6) –
Mark to market of fixed rate debt – (4.9) –
Purchasers’ costs – – 176.0
EPRA net asset value (new measures) 1,731.9 1,726.4 1, 9 0 7.9
As at 31 March
2022
Number of
shares
(millions)
2021
Number of
shares
(millions)
Ordinary share capital 978.6 909.6
Shares held in Employee Benefit Trust (2.7) (4.4)
Number of ordinary shares – basic 975.9 905.2
Employee share schemes 4.5 4.7
Number of ordinary shares – fully diluted 980.4 90 9.9
IFRS net asset value per share 262.3p 191.3p
EPRA net tangible assets per share 261.1p 190.3p
EPRA net disposal value per share 262.2p 18 9. 7p
EPRA net reinstatement value per share 281.7p 20 9. 7p
178
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9 Investment properties
a) Investment properties
As at 31 March
Completed
£m
Under
development
£m
2022
Total
£m
Completed
£m
Under
development
£m
2021
Total
£m
Opening balance 2,440.8 58.7 2,499.5 2,212.0 55.9 2, 2 6 7. 9
Acquisitions 457. 5 43.5 501.0 212.4 16.8 2 29.2
Capital expenditure 10.4 44.6 55.0 4.9 21.1 26.0
Disposals (162.4) (3.4) (165.8) (200.8) – (200.8)
Property transfers 73.1 (94.3) (21.2) 55.5 (55.5) –
Revaluation movement 598.4 16.8 615.2 149.7 20.2 169.9
Movement in tenant incentives andrentfree uplifts 5.6 0.8 6.4 7.1 0.2 7. 3
Property portfolio 3,423.4 66.7 3,490.1 2,440.8 58.7 2,499.5
Head lease and right of use assets 4.5 – 4.5 5.1 – 5.1
3,427.9 66.7 3,494.6 2,445.9 58.7 2,504.6
1 Properties totalling £21.2 million have been separately disclosed as assets held for sale as reflected in note 9b
Investment properties are held at fair value as at 31 March 2022 based on external valuations performed by professionally qualified valuers
CBRE Limited (‘CBRE’) and Savills (UK) Limited (‘Savills’). The valuations have been prepared in accordance with the RICS Valuation –
Global Standards 2022 on the basis of fair value as set out in note 1. There has been no change in the valuation technique in the year.
The total fees earned by CBRE and Savills from the Company represent less than 5% of their total UK revenues. CBRE and Savills have
continuously been the signatory ofvaluations for the Company since October 2007 and September 2010 respectively. However, this year
Savills have increased their portfolio coverage and Cushman & Wakefield have stepped down.
Long term leasehold values included within investment properties amount to £169.7 million (2021: £148.7 million). All other properties are
freehold. The historical cost of all of the Group’s investment properties at 31 March 2022 was £2,358.4 million (2021: £1,948.2 million).
Included within the investment property valuation is £85.8 million (2021: £79.4 million) in respect of unamortised lease incentives and rent free
periods. The movement in the year reflects lease incentives paid of £4.2 million (2021: £2.1 million) and rent free and amortisation movements
of £8.9 million (2021: £11.3 million), oset by incentives written o on disposal of £6.7 million (2021: £6.1 million).
Capital commitments have been entered into amounting to £127.4 million (2021: £93.3million) which have not been providedfor in the
financial statements. Internal sta costs of the development team of £2.5 million (2021: £2.2 million) have been capitalised, being directly
attributable to the development projects in progress.
Forward funded development costs of £13.2 million (2021: £15.5 million) have been classified within investment property as acquisitions.
At 31 March 2022, investment properties included £4.5 million for the head lease right of use assets in accordance with IFRS 16
(2021: £5.1 million).
b) Assets held for sale
The valuation of property held for sale at 31 March 2022 was £21.2 million (2021: £22.4 million), representing long income assets which are
expected to complete within the next six months. The prior year comparatives have not been separately disclosed on the face of the
balance sheet and have been classified within investment properties.
c) Valuation technique and quantitative information
Asset type
Fair value
2022
£m
Valuation
technique
ERV Net initial yield Reversionary yield
Weighted
average
(£ per sq ft)
Range
(£ per sq ft)
Weighted
average
%
Range
%
Weighted
average
%
Range
%
Distribution 2,642.0 Yield capitalisation 8.24 4.10 -28.80 3.3 2.0-6.0 4.0 3.0-6.8
Long income 703.8 Yield capitalisation 15.00 3.00-173.70 4.5 2. 7-11. 5 4.4 2.5-22.0
Retail parks 70.6 Yield capitalisation 13.34 5.00-18.80 4.8 4.0-13.3 4.6 4.3-8.1
Oce 27.3 Yield capitalisation 16.92 10.00-43.00 6.4 4.4-8.8 6.8 6. 0 -9. 3
Development 66.7 Residual 14.07 7. 75 - 42 . 0 9 3.6 3.1-5.8 4.3 3.5-5.8
Residential 0.9 Comparison n/a n/a n/a n/a n/a n/a
1 As reflected in note 2 and including assets held for sale of £21.2 million but excluding trading properties classified as development of £1.1 million
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
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LondonMetric Property Plc
Annual Report and Accounts 2022
9 Investment properties (continued)
Asset type
Fair value
2021
£m
Valuation
technique
ERV Net initial yield Reversionary yield
Weighted
average
(£ per sq ft)
Range
(£ per sq ft)
Weighted
average
%
Range
%
Weighted
average
%
Range
%
Distribution 1,777.3 Yield capitalisation 7. 0 6 4.0 0 -21.40 4.1 1. 4 -7.1 4.5 2.4-7.4
Long income 547.6 Yield capitalisation 14.00 3.00-155.70 4.9 3 . 4 -11. 8 4.7 2.4-13.4
Retail parks 73.9 Yield capitalisation 14.03 6.00-18.70 7. 5 6.2-12.4 6.7 6.0 -9.4
Oce 41.1 Yield capitalisation 17. 3 8 11.50-33.90 6.0 5. 0 -7. 4 6.5 5.6 -9.3
Development 58.7 Residual 10.21 8.35-25.00 4.2 3.9-5.7 3.9 3.7-5.7
Residential 0.9 Comparison n/a n/a n/a n/a n/a n/a
All of the Group’s properties are categorised as Level 3 in the fair value hierarchy as defined by IFRS 13 fair value measurement. There have
been no transfers of properties between Levels 1, 2 and 3 during the year ended 31 March 2022. The fair value at 31 March 2022 represents
the highest and best use.
i) Technique
The valuation techniques described below are consistent with IFRS 13 and use significant ‘unobservable’ inputs such as Expected Rental
Value (‘ERV’) and yield. There have been no changes in valuation techniques since the prior year.
Yield capitalisation – for commercial investment properties, market rental values are capitalised with a market capitalisation rate.
The resulting valuations are cross-checked against the net initial yields and the fair market values per square foot derived from recent
market transactions.
Residual – for certain investment properties under development, the fair value of the property is calculated by estimating thefair value
ofthe completed property using the yield capitalisation technique less estimated costs to completion and arisk premium.
Comparison – for residential properties the fair value is calculated by using data from recent market transactions.
ii) Sensitivity
A 5% increase or decrease in ERV would increase or decrease the fair value of the Group’s investment properties by £107.2 million or
£105.7 million respectively.
An increase or decrease of 25 bps to the equivalent yield would decrease or increase the fair value of the Group’sinvestment properties
by £236.0 million or £191.5 million respectively.
There are interrelationships between the unobservable inputs as they are determined by market conditions; an increase inmore than
oneinput could magnify or mitigate the impact on the valuation.
iii) Process
The valuation reports produced by CBRE and Savills are based on:
– Information provided by the Group, such as current rents, lease terms, capital expenditure and comparable sales information, which
isderived from the Group’s financial and property management systems and is subject to the Group’soverall control environment
– Assumptions applied by the valuers such as ERVs and yields which are based on market observation and their professional judgement
10 Investment in joint ventures
At 31 March 2022, the following principal property interests, being jointly controlled entities, have been equity accounted forin these
financial statements:
Country of incorporation
or registration
1
Property sectors Group share
Metric Income Plus Partnership England Long income 50.0%
LSP London Residential Investments Limited Guernsey Residential 40.0%
1 The registered address for entities incorporated in England is One Curzon Street, London, W1J 5HB. The registered address for entities incorporated in Guernsey
isRegencyCourt, Glategny Esplanade, St Peter Port, Guernsey, GY1 3AP
The principal activity of joint venture interests is property investment in the UK in the sectors noted in the table above, whichcomplements
the Group’s operations and contributes to the achievement of its strategy.
LSP London Residential Investments Limited disposed of its remaining four residential flats at Moore House in October 2021 for £2.4 million
(Group share: £1.0 million).
180
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Annual Report and Accounts 2022
10 Investment in joint ventures (continued)
The Metric Income Plus Partnership (‘MIPP’), in which the Company has a 50% interest, sold six properties in the year for £37.3 million
(Groupshare: £18.6 million). Post period end, it has exchanged to sell a property in Ashford let to Lidl for £18.0 million (Group share:
£9.0 million).
At 31 March 2022, the investment properties were externally valued by Royal Institution of Chartered Surveyors (‘RICS’) registered
valuers, CBRE. There was no property held for sale by joint ventures at 31 March 2022 (2021: £21.1 million andGroup share £10.6 million).
The movement in the carrying value of joint venture interests in the year is summarised as follows:
As at 31 March
2022
£m
2021
£m
Opening balance 59.2 54.1
Additions at cost – 4.7
Share of profit in the year 23.3 6.9
Distributions received (9.9) (6.5)
72.6 59.2
The Group’s share of the profit after tax and net assets of its joint ventures is as follows:
Summarised income statement
Metric
Income Plus
Partnership
£m
LSP
London
Residential
Investments
£m
Total
2022
£m
Group
share
2022
£m
Gross rental income 8.9 – 8.9 4.5
Property costs (0.2) – (0.2) (0.1)
Net rental income 8.7 – 8.7 4.4
Administrative costs (0.1) – (0.1) (0.1)
Management fees (1.0) – (1.0) (0.5)
Revaluation 39.7 (0.5) 39.2 19.7
Net finance cost (2 .1) – (2.1) (1.1)
Derivative movement 1.3 – 1.3 0.7
Profit/(loss) on disposal 0.5 (0.1) 0.4 0.2
Profit/(loss) after tax 47. 0 (0.6) 46.4 23.3
Group share of profit/(loss) after tax 23.5 (0.2) 23.3
EPRA adjustments:
Revaluation (39.7) 0.5 (39.2) (19.7)
Debt and hedging early close out costs 0.2 – 0.2 0.1
Derivative movement (1.3) – (1.3) (0.7)
(Profit)/loss on disposal (0.5) 0.1 (0.4) (0.2)
EPRA earnings 5.7 – 5.7 2.8
Group share of EPRA earnings 2.8 – 2.8
Summarised balance sheet
Investment properties 193.3 – 193.3 96.6
Other current assets 0.3 – 0.3 0.2
Cash 7.0 0.3 7.3 3.6
Current liabilities (2.9) (0.1) (3.0) (1.5)
Bank debt (53.1) – (53.1) (26.5)
Unamortised finance costs 0.2 – 0.2 0.1
Derivative financial instruments 0.2 – 0.2 0.1
Net assets 145.0 0.2 145.2 72.6
Group share of net assets 72.5 0.1 72.6
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
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Annual Report and Accounts 2022
10 Investment in joint ventures (continued)
Summarised income statement
Metric
Income Plus
Partnership
£m
LSP
London
Residential
Investments
£m
Total
2021
£m
Group
share
2021
£m
Gross rental income 10.7 – 10.7 5.3
Property costs (0.3) (0.1) (0.4) (0.2)
Net rental income 10.4 (0.1) 10.3 5.1
Administrative costs (0.1) – (0.1) –
Management fees (0.8) (0.1) (0.9) (0.4)
Revaluation 8.0 (1.5) 6.5 3.4
Net finance cost (2.5) – (2.5) (1.2)
Derivative movement 0.3 – 0.3 0.1
Loss on disposal – (0.2) (0.2) (0.1)
Profit/(loss) after tax 15.3 (1.9) 13.4 6.9
Group share of profit/(loss) after tax 7. 7 (0.8) 6.9
EPRA adjustments:
Revaluation (8.0) 1.5 (6.5) (3.4)
Debt and hedging early close out costs 0.1 – 0.1 –
Derivative movement (0.3) – (0.3) (0.1)
Loss on disposal – 0.2 0.2 0.1
EPRA earnings 7.1 (0.2) 6.9 3.5
Group share of EPRA earnings 3.6 (0.1) 3.5
Summarised balance sheet
Investment properties 186.5 2.9 18 9. 4 94.4
Other current assets 0.8 – 0.8 0.4
Cash 4.6 2.8 7. 4 3.4
Current liabilities (2.6) – (2.6) (1.2)
Bank debt (74.9) – (74.9) (37. 5 )
Unamortised finance costs 0.5 – 0.5 0.3
Derivative financial instruments (1.1) – (1.1) (0.6)
Net assets 113 . 8 5.7 119. 5 59.2
Group share of net assets 56.9 2.3 59.2
11 Trade and other receivables
As at 31 March
2022
£m
2021
£m
Trade receivables 5.7 4.8
Prepayments and accrued income 6.2 3.5
Other receivables 1.2 1.5
13.1 9. 8
All amounts fall due for payment in less than one year. Trade receivables comprise rental income which is due on contractualpayment days
with no credit period. At 31 March 2022, trade receivables of £125,800 were overdue and considered at risk (2021:£159,200). Based on the IFRS
9 expected credit loss model, an impairment provision of £1.1 million (2021: £0.8 million) has also been made against trade receivables.
12 Cash and cash equivalents
Cash and cash equivalents include £7.4 million (2021: £10.7 million) retained in rent and restricted accounts which are not readily available
to the Group for day to day commercial purposes.
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13 Trade and other payables
As at 31 March
2022
£m
2021
£m
Trade payables 12.2 4.6
Amounts payable on property acquisitions and disposals 1.0 1.3
Rent received in advance 24.6 22.6
Accrued interest 1.0 1.3
Other payables 7.1 5.3
Other accruals and deferred income 13.5 10.9
59.4 46.0
The Group has financial risk management policies in place to ensure that all payables are settled within the required credit timeframe.
14 Borrowings and financial instruments
a) Non current financial liabilities
As at 31 March
2022
£m
2021
£m
Secured bank loans 62.2 192.5
Unsecured bank loans 965.0 6 47. 0
1,027. 2 8 39. 5
Unamortised finance costs (5.8) (2.0)
1,021.4 8 37. 5
Certain bank loans at 31 March 2022 are secured by fixed charges over Group investment properties with a carrying value of£284.7 million
(2021: £584.9 million).
As at 31 March 2022
Floating rate
£m
Fixed rate
£m
Total debt
£m
Weighted
average
maturity
(years)
Secured bank loans:
Scottish Widows fixed rate debt – 62.2 62.2 9.7
Unsecured bank loans:
Revolving credit facility (syndicate) 100.0 – 100.0 2.1
Wells Fargo revolving credit facility 55.0 – 55.0 4.1
Barclays credit facility 150.0 – 150.0 1.3
Private Placement 2016 (syndicate) – 130.0 130.0 2.7
Private Placement 2018 (syndicate) – 150.0 150.0 8.8
Private Placement 2021(syndicate) – 380.0 380.0 10.2
305.0 722.2 1,0 27. 2 6.6
As at 31 March 2021
Floating rate
1
£m
Fixed rate
£m
Total debt
£m
Weighted
average
maturity
(years)
Secured bank loans:
Helaba term loan 130.0 – 130.0 3.3
Scottish Widows fixed rate debt – 62.5 62.5 10.7
Unsecured bank loans:
Revolving credit facility (syndicate) 258.0 – 258.0 1.0
HSBC revolving credit facility 59.0 – 59.0 2.0
Wells Fargo revolving credit facility 50.0 – 50.0 4.3
Private Placement 2016 (syndicate) – 130.0 130.0 3.7
Private Placement 2018 (syndicate)
– 150.0 150.0 9. 8
49 7. 0 342.5 8 39. 5 4.3
1 interest rate caps of £19.6 million were used to hedge the Group’s exposure to interest rate risk
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
183
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LondonMetric Property Plc
Annual Report and Accounts 2022
14 Borrowings and financial instruments (continued)
As part of the new £380 million private debt placement, we agreed a £50 million green tranche to fund qualifying expenditure on buildings
which have high sustainability standards. Post year end, expenditure has been allocated to this green tranche. The two new revolving credit
facilities also incorporate a green framework and preferential pricing for compliance with ESG targets linked to EPC ratings, renewable
installations and developments meeting a minimum BREEAM Very Good standard. Margin savings will be added to funds allocated for
charitable giving. Post year end, we have recently agreed the first one year extension for these two revolving credit facilities.
b) Financial risk management
Financial risk factors
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse eects on the Group’s financial performance. The Group’s financial risk management objectives are tominimise the eect of risks
it is exposed to through its operations and the use of debt financing.
The principal financial risks to the Group and the policies it has in place to manage these risks are summarised below:
i) Credit risk
Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual obligations.
The Group’s principal financial assets are cash balances and deposits and trade and other receivables. The Group’s credit risk is primarily
attributable to its cash deposits and trade receivables.
The Group mitigates financial loss from tenant defaults by dealing with only creditworthy tenants. Trade receivables are presented at
amortised cost less loss allowance for expected credit losses. The loss allowance balance is low relative to the scale of the balance sheet
and therefore the credit riskof trade receivables is considered to be low. Cash is held in a diverse mix of institutions with investment grade
credit ratings. The credit ratings of the banks are monitored and changes are made where necessary to manage risk.
The credit risk on liquid funds and derivative financial instruments is limited due to the Group’s policy of monitoring counterparty exposures
with a maximum exposure equal to the carrying amount of these instruments. The Group has nosignificant concentration of credit risk,
with exposure spread over a large number of counterparties.
ii) Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments onits debt
instruments. It is the risk that the Group will encounter diculty in meeting its financial obligations as they fall due.
The Group actively maintains a mixture of long term and short term committed facilities that are designed to ensure that the Group has
sucient available funds for operations. The Group’s funding sources are diversified across a range of banks and institutions. Weekly cash
flow forecasts are prepared for the Senior Leadership Team to ensure sucient resources of cash and undrawn debt facilities are in place
to meet liabilities as they fall due.
The Group had cash reserves of £51.3 million (2021: £51.4 million) and available and undrawn bank loan facilities at 31 March 2022 of
£245.0million (2021: £170.5 million).
The following table shows the contractual maturity profile of the Group’s bank loans, interest payments on bank loans and derivative
financial instruments on an undiscounted cash flow basis and assuming settlement on the earliest repayment date. Other financial
liabilities as disclosed in note 14c(i) include trade payables and accrued interest and are repayable within one year. The contractual
maturity profile of lease liabilities disclosed in the balance sheet is reflected in note 15.
As at 31 March 2022
Less than
one year
£m
One to
two years
£m
Two to
five years
£m
More than
five years
£m
Total
£m
Bank loans 76.4 189.5 249.8 693.4 1,209.1
As at 31 March 2021
Less than
one year
£m
One to
two years
£m
Two to
five years
£m
More than
five years
£m
Total
£m
Bank loans 20.3 332.5 317. 4 2 74 . 3 944.5
iii) Market risk – interest rate risk
The Group is exposed to interest rate risk from the use of debt financing at a variable rate. It is the risk that future cash flows ofa financial
instrument will fluctuate because of changes in interest rates. It is Group policy that a reasonable portion of external borrowings are at a
fixed interest rate in order to manage this risk.
The Group uses interest rate derivatives and fixed rates to manage its interest rate exposure and hedge future interest rate risk for the term
of the bank loan. Although the Board accepts that this policy neither protects the Group entirely from the risk of paying rates in excess of
current market rates nor eliminates fully the cash flow risk associated with interest payments, it considers thatit achieves an appropriate
balance of exposure to these risks.
During the year, in preparation for the cessation of LIBOR, the benchmark rate of the existing joint venture floating rate loan was transitioned
onto a SONIA basis. All new credit facilities entered into during the year reference SONIA rates and the Group’s debt arrangements have no
remaining exposure to LIBOR.
184
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Annual Report and Accounts 2022
14 Borrowings and financial instruments (continued)
At 31 March 2022, 71% of the Group’s (including share of joint ventures) debt drawn was hedged, mainly through fixed coupon debt
arrangements. The average interest rate payable by the Group (including share of joint ventures) on all bank borrowings at 31 March 2022
including the cost of amortising finance arrangement fees, was 2.6% (2021: 2.5%). A 1% increase or decrease in interest rates during the
year would have decreased or increased the Group’s annual profit before tax by £2.6 million or £0.4 million respectively.
iv) Capital risk management
The Group’s objectives when maintaining capital are to safeguard the entity’s ability to continue as a going concern so thatit can provide
returns to shareholders and as such it seeks to maintain an appropriate mix of debt and equity. The capital structure of the Group consists
of debt, which includes long term borrowings and undrawn debt facilities, and equity comprising issued capital, reserves and retained
earnings. The Group balances its overall capital structure through the payment of dividends, new share issues as well as the issue of new
debt or the redemption of existing debt.
The Group seeks to maintain an ecient capital structure with a balance of debt and equity as shown in the table below.
As at 31 March
2022
£m
2021
£m
Net debt 975.7 792.6
Shareholders’ equity 2,559.7 1,731.3
3,535.4 2,523.9
c) Financial instruments
i) Categories of financial instruments
Measured at amortisedcost Measured at fair value
As at 31 March
2022
£m
2021
£m
2022
£m
2021
£m
Current assets
Cash and cash equivalents (note 12) 51.3 51.4 – –
Trade receivables (note 11) 5.7 4.8 – –
Other receivables (note 11) 1.2 1.5 – –
58.2 5 7. 7 – –
Non current liabilities
Derivative financial instruments (see 14c (iii)) – – – –
Borrowings (note 14a) 1,021.4 8 37. 5 – –
Lease liabilities (note 15) 4.6 5.2 – –
Current liabilities
Trade payables (note 13) 12.2 4.6 – –
Accrued interest (note 13) 1.0 1.3 – –
1,039.2 848.6 – –
ii) Fair values
To the extent financial assets and liabilities are not carried at fair value in the consolidated balance sheet, the Directors areofthe opinion
that book value approximates to fair value at 31 March 2022.
iii) Derivative financial instruments
Details of the fair value of the Group’s derivative financial instruments that were in place at 31 March 2022 are provided below:
As at 31 March Average rate Notional amount Fair value
Interest rate caps – expiry
2022
%
2021
%
2022
£m
2021
£m
2022
£m
2021
£m
Less than one year – 2.0 – 19.6 – –
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
185
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LondonMetric Property Plc
Annual Report and Accounts 2022
14 Borrowings and financial instruments (continued)
All derivative financial instruments are non current interest rate derivatives, and are carried at fair value following a valuationat the period
end by Chatham Financial. In accordance with accounting standards, fairvalue is estimated by calculating the present value of future cash
flows, using appropriate market discount rates. For allderivative financial instruments this equates to a Level 2 fair value measurement as
defined by IFRS 13 Fair Value Measurement.
The valuation therefore does not reflect the cost or gain to the Group of cancelling its interest rate protection at the balance sheet date,
which is generally a marginally higher cost (or smaller gain) than amarket valuation.
15 Leases
The Group’s minimum lease rentals receivable under non cancellable leases, excluding joint ventures, are as follows:
As at 31 March
2022
£m
2021
£m
Less than one year 135.0 114. 2
Between one and five years 485.2 416.8
Between six and ten years 465.6 392.6
Between 11 and 15 years 334.7 265.8
Between 16 and 20 years 192.8 129. 4
Over 20 years 68.6 25.3
1,681.9 1,344.1
In accordance with IFRS 16, the Group has recognised a right of use asset for its head oce lease and other head lease obligations.
The Group’s minimum lease payments are due as follows:
As at 31 March
Undiscounted
minimum lease
payments
£m
Interest
£m
Present value of
minimum lease
payments
2022
£m
Present value of
minimum lease
payments
2021
£m
Less than one year 0.7 (0.1) 0.6 0.6
Between one and two years 0.3 (0.1) 0.2 0.6
Between two and five years 0.3 (0.2) 0.1 0.3
Over five years 7. 2 (3.5) 3.7 3.7
8.5 (3.9) 4.6 5.2
16 Share capital
As at 31 March
Issued, called up and fully paid
2022
Number
2022
£m
2021
Number
2021
£m
Ordinary shares of 10p each 978,607,507 97.9 909,643,040 91.0
The movement in the share capital and share premium of the Company during the current and previous year is summarised below.
Share capital issued, called up and fully paid
Ordinary shares
Number
Ordinary shares
£m
Share premium
£m
At 1 April 2020 841,498,022 84.2 106.3
Issued under equity placing 66,666,666 6.6 110. 0
Issued under scrip share scheme 1,478,352 0.2 3.0
At 31 March 2021 909,643,040 91.0 219. 3
Issued under equity placing 67, 3 07,6 9 3 6.7 163.5
Issued under scrip share scheme 1,656,774 0.2 4.0
At 31 March 2022 978,607,507 97.9 386.8
186
LondonMetric Property Plc
Annual Report and Accounts 2022
16 Share capital (continued)
On 22 November 2021, the Company issued 67,307,693 new ordinary shares in connection with an equity placing that raised gross
proceeds of £175 million at an issue price of 260.0p per share. In addition, the Company issued 1,656,774 ordinary shares under the terms
of its Scrip Dividend Scheme during the year. Post year end in April, the Company issued a further 1,536,819 ordinary shares under the terms
of its Scrip Dividend Scheme.
The movement in the shares held by the Employee Benefit Trust in the year is summarised in the table below.
Shares held by the Employee Benefit Trust
Ordinary shares
Number
Ordinary shares
£m
At 31 March 2021 4,390,195 0.4
Shares issued under employee share schemes (2,339,267) (0.2)
Shares acquired by the Employee Benefit Trust 611, 693 0.1
At 31 March 2022 2,662,621 0.3
In June 2021, the Company granted options over 1,822,860 ordinary shares under its Long Term Incentive Plan. In addition, 2,339,267 ordinary
shares in the Company that were granted to certain Directors and employees under the Company’s Long Term Incentive Plan in 2018
vested. The average share price on vesting was 234.5p.
As at 31 March 2022, the Company’s Employee Benefit Trust held 2,662,621 shares in the Company to satisfy awards under the Company’s
Long Term Incentive Plan.
17 Reserves
The Group statement of changes in equity is shown on page 166. The nature and purpose of each reserve within equity is described below:
Share capital The nominal value of shares issued.
Share premium The premium paid for new ordinary shares issued above the nominal value.
Capital redemption reserve Amounts transferred from share capital on redemption of issued ordinary shares.
Other reserve A reserve relating to the application of merger relief in the acquisition of LondonMetric Management
Limited, Metric Property Investments Plc and A&J Mucklow Group Plc by the Company and the cost of shares
held in trust to provide for the Company’s future obligations under share award schemes. A breakdown of
other reserves is provided for the Group below and for the Company on page 193.
Retained earnings The cumulative profits and losses after the payment of dividends.
As at 31 March
Merger
reserve
£m
Employee
Benefit Trust
shares
£m
2022
Total other
reserves
£m
Merger
reserve
£m
Employee
Benefit Trust
shares
£m
2021
Total other
reserves
£m
Opening balance 497. 4 (9.7) 487.7 4 9 7. 4 (9.0) 488.4
Employee share schemes:
Purchase of shares – (1.5) (1.5) – (5.5) (5.5)
Vesting of shares – 4.9 4.9 – 4.8 4.8
Closing balance 497. 4 (6.3) 491.1 49 7. 4 (9.7) 4 87.7
18 Analysis of movement in net debt
Non cash movements
1 April 2021
£m
Financing cash
flows
£m
Other cash
flows
£m
Impact of
issue and
arrangement
costs
£m
Early close
out costs
£m
Interest charge
and unwinding
of discount
£m
31 March 2022
£m
Bank loans and derivatives 839.5 188.0 – – – (0.3) 1,0 27. 2
Unamortised finance costs (2.0) (5.0) – 1.2 – – (5.8)
Other finance costs – (1.6) – 1.6 – – –
Interest payable and fees 1.3 (23.5) – – – 23.2 1.0
Lease liabilities 5.2 (0.7) – – – 0.1 4.6
Total liabilities from financing activities 844.0 157. 2 – 2.8 – 23.0 1, 0 27.0
Cash and cash equivalents (51.4) – 0.1 – – – (51.3)
Net debt 792.6 157. 2 0.1 2.8 – 23.0 975.7
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
187
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LondonMetric Property Plc
Annual Report and Accounts 2022
18 Analysis of movement in net debt (continued)
Non cash movements
As at
1 April 2020
£m
Financing cash
flows
£m
Other cash
flows
£m
Impact of
issue and
arrangement
costs
£m
Early close out
costs
£m
Interest charge
and unwinding
of discount
£m
31 March 2021
£m
Bank loans and derivatives
9 3 7. 4 (97. 9) – – – – 8 39.5
Unamortised finance costs (6.0) – – 1.4 2.6 – (2.0)
Interest payable and fees 1.9 (22.7) – 2.7 – 19.4 1.3
Lease liabilities 5.9 – – – – (0.7) 5.2
Total liabilities from financing
activities 939. 2 (120.6) – 4.1 2.6 18.7 844.0
Cash and cash equivalents (81.8) – 30.4 – – – (51.4)
Net debt 8 5 7. 4 (120.6) 30.4 4.1 2.6 18.7 792.6
19 Related party transactions
a) Joint ventures
Management fees and distributions receivable from the Group’s joint venture arrangements and non-controlling interest during the year
were as follows:
Management fees Distributions
For the year to 31 March Group interest
2022
£m
2021
£m
2022
£m
2021
£m
LSP London Residential Investments 40% – 0.1 2.0 2.8
LMP Retail Warehouse JV Holdings Limited 82% 0.1 – – 1.4
Metric Income Plus Partnership 50% 1.2 0.8 7.9 3.7
1.3 0.9 9.9 7. 9
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
b) Non-controlling interest
The Group’s non-controlling interest (‘NCI’) represents an 18% shareholding in LMP Retail Warehouse JV Holdings Limited, which owns a
portfolio of DFS assets. The Group’s interest in LMP Retail Warehouse JV Holdings Limited is 82%, requiring it to consolidate the results and
net assets of its subsidiary in these financial statements and reflect the non-controlling share as a deduction in the consolidated income
statement and consolidated balance sheet. As at the year end, the non-controlling interest share of profits and net assets was £3.7 million
and £10.1 million respectively, and no distributions were paid during the year.
20 Post balance sheet events
We exchanged to buy £72.4 million of assets in the year which will complete next year. We have also exchanged or completed further
acquisitions totalling £43.0 million since the year end. In addition, we exchanged in the year to sell assets totalling £21.2 million, of which
£15.0 million completed post year end, and we have also exchanged or completed a further £85.8 million of asset sales post year end.
188
LondonMetric Property Plc
Annual Report and Accounts 2022
Non current assets Note
2022
£m
2021
£m
Investment in subsidiaries and joint ventures iii 1,524.7 1,333.8
Investment properties iv 0.8 1.4
Amounts due from subsidiary undertakings 28.8 29.2
Other investments and tangible assets 1.2 0.2
1,555.5 1,364.6
Current assets
Trade and other receivables v 1,049.0 635.9
Cash at bank 35.4 34.8
1,084.4 670.7
Total assets 2,639.9 2,035.3
Current liabilities
Trade and other payables vi 11.7 9.9
Non current liabilities
Borrowings vii 960.0 645.8
Lease liabilities viii 0.8 1.5
960.8 6 47. 3
Total liabilities 972.5 6 5 7. 2
Net assets 1,667.4 1,378.1
Equity
Called up share capital 97.9 91.0
Share premium 386.8 219. 3
Capital redemption reserve 9.6 9.6
Other reserve 36.4 51.5
Retained earnings 1,136.7 1,006.7
Equity shareholders’ funds 1,667.4 1,378.1
The Company reported a profit for the financial year to 31 March 2022 of £195.4 million (2021: £122.5 million).
The financial statements were approved and authorised for issue by the Board of Directors on 26 May 2022 and were signed on its
behalf by:
Martin McGann
Finance Director
Registered in England and Wales, No 7124797
The notes on pages 190 to 193 form part of these financial statements.
Company balance sheet
As at 31 March
189
Strategic report Governance Financial statements
1-87 88-154 155-208
LondonMetric Property Plc
Annual Report and Accounts 2022
Company statement of changes in equity
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Other
reserve
£m
Retained
earnings
£m
Total
£m
At 1 April 2021 91.0 219.3 9.6 51.5 1,006.7 1,378.1
Profit for the year – – – – 195.4 195.4
Equity placing 6.7 163.5 – – – 170.2
Purchase of shares held in employee benefit trust – – – (1.5) – (1.5)
Vesting of shares held in employee benefit trust – – – 4.9 (5.7) (0.8)
Share based awards – – – – 3.5 3.5
Reserve transfer of impairment insubsidiary – – – (18.5) 18.5 –
Dividends 0.2 4.0 – – (81.7) (77.5)
At 31 March 2022 97.9 386.8 9.6 36.4 1,136.7 1, 667. 4
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Other
reserve
£m
Retained
earnings
£m
Total
£m
At 1 April 2020 84.2 106.3 9.6 176. 5 836.8 1,213.4
Profit for the year – – – – 122.5 122.5
Share issue on acquisition 6.6 110 . 0 – – – 116 . 6
Purchase of shares held in employee benefit trust – – – (5.5) – (5.5)
Vesting of shares held in employee benefit trust – – – 4.8 (5.1) (0.3)
Share based awards – – – – 3.8 3.8
Reserve transfer of impairment insubsidiary – – – (124.3) 124.3 –
Dividends 0.2 3.0 – – (75.6) (72.4)
At 31 March 2021 91.0 219.3 9.6 51.5 1,006.7 1,378.1
The notes on pages 190 to 193 form part of these financial statements.
For the year ended 31 March
190
LondonMetric Property Plc
Annual Report and Accounts 2022
i Accounting policies
Accounting convention
The separate financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared in
accordance with FRS 101 (Financial Reporting Standard 101) ‘Reduced Disclosure Framework’ as issued by the Financial Reporting Council.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard inrelation to
share based payments, financial instruments, capital management, presentation of a cash flow statement, fair value measurement,
impairment, standards in issue and not yet eective andcertain related party transactions. The key source of estimation uncertainty
relevant to the Company relates to the impairment of investment in subsidiaries. The determination of the recoverable amount of the
subsidiaries is underpinned by the valuation of the underlying properties owned by each subsidiary. In determining this recoverable
amount, the use of estimates and assumptions is required which are consistent with the key sources of estimation uncertainty disclosed
in note 1 and 9 for the Group. The accounting policies relevant to the Company are the same as those set out in the accounting policies
for the Group, except as noted below.
Subsidiary undertakings and joint ventures
Investments in subsidiary undertakings and joint ventures are stated at cost less any provision for impairment.
Amounts due from subsidiary undertakings
Amounts owed by subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand. Amounts due from
subsidiary undertakings included within current assets are expected to be repaid within one year and are measured for impairment using
the simplified approach under IFRS 9. Amounts due from subsidiary undertakings included within non current assets are repayable within
one to two years and are also measured for impairment using the simplified approach under IFRS 9.
ii Profit attributable to members of the parent undertaking
As permitted by Section 408 Companies Act 2006, the income statement of the Company is not presented as part of these financial
statements. The reported profit of the Company was £195.4 million (2021: £122.5 million).
Audit fees in relation to the Company only were £225,000 in the year (2021: £200,700).
iii Fixed asset investments
Subsidiary
Cost
£m
Subsidiary
impairment
£m
Joint venture
Cost
£m
Joint venture
impairment
£m
Total
undertakings
£m
At 1 April 2021 1,793.6 (462.1) 16.7 (14.4) 1,333.8
Additions 238.5 – – – 238.5
Disposals (30.9) 1.8 – – (29.1)
Impairment of investment – (16.3) – (2.2) (18.5)
At 31 March 2022 2,001.2 (476.6) 16.7 (16.6) 1,524.7
The carrying value of the Company’s investments was impaired by £18.5 million following an impairment review to assess therecoverable
amount based on the net assets of the subsidiary companies and joint venture investments. The resulting impairment loss was due to
property sales and dividend payments.
The recoverable amount of investments in subsidiary undertakings of £1,524.6 million and joint ventures of £0.1 million has been determined
based on their fair value less cost of disposal. The Directors believe that this approximates to their net assets due to the investment property
that they hold being valued using the valuation techniques and the key assumptions disclosed in note 9 Investment property to the Group
financial statements.
The Company is incorporated in England and is the ultimate holding company of the Group with the subsidiary undertakings and joint
venture investments detailed in the tables below.
Except where disclosed, the Group owns the entire share capital of each undertaking comprising of ordinary shares. All subsidiaries are
consolidated in the Group’s consolidated financial statements.
Audit exemption taken for subsidiaries
Certain UK subsidiaries are exempt from the requirement of the Companies Act 2006 relating to the audit of individual accounts by virtue
of Section 479A of that Act.
Subsidiaries for which Section 479A Companies Act 2006
exemption taken
Country of
incorporation or
registration
Companies House
registered number Nature of business
LSI (Investments) Limited England 03539331 Property investment
LondonMetric Saturn Limited England 08336260 Property investment
LondonMetric Saturn II Limited England 08565264 Property investment
Notes forming part of the Group
financial statements
For the year ended 31 March 2022
191
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LondonMetric Property Plc
Annual Report and Accounts 2022
Subsidiaries for which Section 479A Companies Act 2006
exemption taken
Country of
incorporation or
registration
Companies House
registered number Nature of business
LondonMetric Retail Distribution I Limited England 08524540 Property investment
LondonMetric Retail Distribution II Limited England 08644584 Property investment
LondonMetric Liverpool Limited England 09335885 Property investment
LondonMetric Swindon Limited England 08989820 Property investment
LondonMetric Distribution Limited England 09269541 Property investment
LondonMetric Retail Limited England 09062484 Property investment
LondonMetric Derby Limited England 08568072 Property investment
LondonMetric Crawley Limited England 10120420 Property investment
LondonMetric Leisure Limited England 113 5 76 8 6 Property investment
Metric Property Coventry Limited England 07347027 Property investment
Metric Property Kirkstall Limited
1
England 074 55 382 Property investment
LondonMetric Logistics Limited England 10882805 Property investment
LondonMetric Bognor Regis Limited England 09409081 Property investment
LondonMetric Urban Limited England 13249056 Property investment
LondonMetric Development Limited England 13481500 Property investment
MCL Omega PropCo Limited England 12133819 Property investment
A & J Mucklow (Properties) Limited
1
England 0 0758764 Property investment
A & J Mucklow (Halesowen) Limited
1
England 04848576 Property investment
LondonMetric Unitholder 2 Limited England 1374 3626 Unitholder
Metric Property Investments Limited England 071728 04 Intermediate holding company
Metric Property Finance 1 Limited England 07403434 Intermediate holding company
Metric LP Income Plus Limited
1
England 07780077 Intermediate holding company
A & J Mucklow Group Limited England 00717658 Intermediate holding company
A & J Mucklow (Nominees) Limited
1
England 01232337 Administrative company
A & J Mucklow & Co Limited
1
England 00384508 Property trading
Subsidiaries for which Section 479A Companies Act 2006
exemption not taken
Country of
Incorporation or
registration Nature of business
Penbrick Limited
1
England Property investment
A & J Mucklow (Investments) Limited
1
England Property investment
LondonMetric Milton Keynes Limited England Property investment
LondonMetric Droitwich Limited England Property investment
LMP Steel LP
1,2
England Property investment
Metric Income Plus Limited Partnership
1,6
England Property investment
LMP Steel GP LLP England Limited partner
Metric GP Income Plus Limited
1,6
England Intermediate holding company
Metric Income Plus Nominees Limited
1,6
England Administrative company
Barr’s Industrial Limited
1,2
England Dormant
Belfont Homes (Birmingham) Limited
1,2
England Dormant
A & J Mucklow (Birmingham) Limited
1,2
England Dormant
A and J Mucklow (Lands) Limited
1,2
England Dormant
A & J Mucklow (Estates) Limited
1,2
England Dormant
A & J Mucklow (Ettingshall Estate) Limited
1,2
England Dormant
A & J Mucklow (Lancashire) Limited
1,2
England Dormant
A & J Mucklow (Wollescote Estate) Limited
1,2
England Dormant
A & J Mucklow (Callowbrook Estate) Limited
1,2
England Dormant
Goresbrook Property Limited
2
England Dormant
Metric Property Finance 2 Limited
2
England Dormant
THG Omega Limited Guernsey Dormant
LondonMetric Management Limited Guernsey Management company
LMP Omega II Limited
2
Guernsey Property investment
L&S Highbury Limited
2
Guernsey Property investment
LMP Green Park Cinemas Limited
2
Guernsey Property investment
iii Fixed asset investments (continued)
192
LondonMetric Property Plc
Annual Report and Accounts 2022
Subsidiaries for which Section 479A Companies Act 2006
exemption not taken
Country of
Incorporation or
registration Nature of business
LMP Thrapston Limited
2
Guernsey Property investment
LMP Bell Farm Limited
2
Guernsey Property investment
LMP Dagenham Limited
2
Guernsey Property investment
LMP Retail Warehouse JV Holdings Limited
2,4
Guernsey Property investment
LSP RI Moore House Limited
5
Guernsey Property investment
LSP London Residential Investments Limited
5
Guernsey Intermediate holding company
LSP London Residential Holdings Limited
5
Guernsey Intermediate holding company
LMP Steel Property Unit Trust Jersey Intermediate holding entity
1 Undertakings held indirectly by the Company
2 Exempt from the requirement to file audited accounts
3 In the process of being liquidated
4 The Company owns 100% of the voting rights and 100% of the A ordinary shares representing 81.88% of the beneficial interest in the share capital
5 The Company owns ordinary shares representing 40% of the beneficial interest in the share capital
6 The Company owns a 50% beneficial interest
All of the undertakings listed above are tax resident in the UK with the exception of LSP RI Moore House Limited, LSP London Residential
Investments Limited and LSP London Residential Holdings Limited which are tax resident in Guernsey and LMP Steel Property Unit Trust which is
tax resident in Jersey.
The registered address for companies incorporated in England is One Curzon Street, London, W1J 5HB. The registered address for
companies incorporated in Guernsey is Regency Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 3AP. The registered address
for LMP Steel Property Unit Trust is 4th Floor, St Paul’s Gate, 22-24 New Street, St Helier, Jersey, JE1 4TR.
iv Investment property
At 31 March 2022, investment properties included £0.8 million (2021: £1.4 million) for the head lease right of use assets which have been
recognised following adoption of IFRS 16.
v Trade and other receivables
As at 31 March
2022
£m
2021
£m
Prepayments and accrued income 2.0 0.5
Amounts due from subsidiary undertakings 1,0 47.0 635.4
1,049.0 635.9
All amounts under receivables fall due for payment in less than one year. Based on the IFRS 9 Expected Credit Loss model, an impairment
review was undertaken and no provision was considered necessary in the current or previous year.
vi Trade and other payables
As at 31 March
2022
£m
2021
£m
Trade payables 1.1 0.1
Other accruals and deferred income 7. 8 7. 0
Other payables 2.8 2.8
11.7 9.9
Included within other accruals and deferred income is accrued interest payable of £0.6 million (2021: £0.4 million).
vii Borrowings and financial instruments
Non current financial liabilities
As at 31 March
2022
£m
2021
£m
Unsecured bank loans 965.0 6 47. 0
Unamortised finance costs (5.0) (1.2)
960.0 645.8
Notes forming part of the Group
financial statements
iii Fixed asset investments (continued)
For the year ended 31 March 2022
193
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Annual Report and Accounts 2022
vii Borrowings and financial instruments (continued)
The Company uses interest rate derivatives and fixed rates to manage its interest rate exposure and hedge future interest rate risk for the term
of the bank loan. At 31 March 2022, 68% of the Company’s debt drawn was hedged through fixed coupon debt arrangements.
The following table shows the contractual maturity profile of the Company’s financial liabilities assuming settlement on the earliest repayment date.
As at 31 March
Bank
loans
£m
Interest
payable
£m
2022
£m
2021
£m
Less than one year 48.7 0.6 49.3 0.1
One to five years 357.5 – 3 57.5 471.2
More than five years 553.8 – 553.8 174 .9
960.0 0.6 960.6 646.2
Derivative financial instruments
The Company is exposed to market risk through interest rate fluctuations. It is the Company’s policy that a reasonable portion of external
bank borrowings are at a fixed interest rate in order to manage this risk. At 31 March 2022, all of the Company’s hedging was through fixed
coupon debt arrangements.
The Company uses interest rate derivatives and fixed rates to manage its interest rate exposure and hedge future interest rate risk for the term of
thebank loan. Although the Board accepts that this policy neither protects the Company entirely from the risk ofpaying rates in excess ofcurrent
market rates nor eliminates fully the cash flow risk associated with interest payments, itconsiders that it achieves an appropriate balance of exposure
to these risks.
In accordance with accounting standards, fair value is estimated by calculating the present value of future cash flows, using appropriate
market discount rates. For all derivative financial instruments this equates to a Level 2 fair value measurement as defined by IFRS 13 Fair
Value Measurement. The valuation therefore does not reflect the cost or gain to the Company of cancelling its interest rate protection at
the balance sheet date, which is generally a marginally higher cost (or smaller gain) than a market valuation.
Further information on financial risk management policies and practices can be found in note 14 to the Group financial statements.
viii Leases
In accordance with IFRS 16, the Group has recognised a right of use asset for its head oce lease obligations. The Group’s minimum lease
payments are due as follows:
As at 31 March
Undiscounted
minimum lease
payments
£m
Interest
£m
Present value of
minimum lease
payments
2022
£m
Present value of
minimum lease
payments
2021
£m
Less than one year 0.6 – 0.6 0.6
Between one and five years 0.2 – 0.2 0.9
0.8 – 0.8 1.5
ix Related party transactions
Related party transactions for the Company are as noted for the Group in note 19 to the Group financial statements.
x Reserves
The Company statement of changes in equity is shown on page 189. The nature and purpose of each reserve within equity is described in
note 17 to the Group financial statements.
As at 31 March
Merger
reserve
£m
Employee
Benefit Trust
shares
£m
Total other
reserves
2022
£m
Merger
reserve
£m
Employee
Benefit Trust
shares
£m
Total other
reserves
2021
£m
Opening balance 61.2 (9.7) 51.5 185.5 (9.0) 176.5
Employee share schemes:
Purchase of shares – (1.5) (1.5) – (5.5) (5.5)
Vesting of shares – 4.9 4.9 – 4.8 4.8
Impairment in subsidiary (18.5) – (18.5) (124.3) – (124.3)
Closing balance 42.7 (6.3) 36.4 61.2 (9.7) 51.5
xi Share capital and share premium
The movement in the share capital and share premium of the Company during the year is reflected in note 16 to the Group accounts on
page 185.
194
LondonMetric Property Plc
Annual Report and Accounts 2022
Supplementary information
(not audited)
i EPRA summary table
2022 2021
EPRA earnings per share 10.04p 9.52 p
EPRA net tangible assets per share 261.1p 190.3p
EPRA net disposal value per share 262.2p 189.7p
EPRA net reinstatement value per share 281.7p 20 9.7p
EPRA vacancy rate 1.3% 1.3%
EPRA cost ratio (including vacant property costs) 12.5% 13.6%
EPRA cost ratio (excluding vacant property costs) 11.8% 13.0%
EPRA net initial yield 3.4% 4.3%
EPRA ‘topped up’ net initial yield 3.7% 4.6%
The definition of these measures can be found in the Glossary on page 200.
ii EPRA proportionally consolidated income statement
For the year to 31 March
100%
owned
£m
JV
£m
NCI
£m
Total
2022
£m
100%
owned
£m
JV
£m
NCI
£m
Total
2021
£m
Gross rental income 131.5 4.5 (1.3) 134.7 121.3 5.3 (1.5) 125.1
Property costs (1.5) (0.1) – (1.6) (1.6) (0.2) – (1.8)
Net rental income 130.0 4.4 (1.3) 133.1 119. 7 5.1 (1.5) 123.3
Management fees 1.3 (0.5) – 0.8 0.9 (0.4) – 0.5
Other income 0.4 – – 0.4 – – – –
Administrative costs (16.0) (0.1) – (16.1) (15.8) – – (15.8)
Net finance costs (23.9) (1.0) 0.2 (24.7) (21.5) (1.2) 0.2 (22.5)
Tax (0.1) – 0.1 – (0.1) – 0.2 0.1
EPRA earnings 91.7 2.8 (1.0) 93.5 83.2 3.5 (1.1) 85.6
iii EPRA proportionally consolidated balance sheet
As at 31 March
100%
owned
£m
JV
£m
NCI
£m
Total
2022
£m
100%
owned
£m
JV
£m
NCI
£m
Total
2021
£m
Investment property 3,494.6 96.6 (15.1) 3,576.1 2,504.6 94.4 (11. 4 ) 2, 5 8 7. 6
Assets held for sale 21.2 – – 21.2 – – – –
Trading property 1.1 – – 1.1 1.1 – – 1.1
3,516.9 96.6 (15.1) 3,598.4 2,505.7 94.4 (11. 4) 2,588.7
Gross debt (1,027. 2) (26.5) – (1,053.7) (839. 5) (37. 5) – (877.0)
Cash 51.3 3.6 (0.6) 54.3 51.4 3.4 (0.2) 54.6
Other net liabilities (43.8) (1.2) 5.6 (39.4) (39.1) (0.5) 5.2 (34.4)
EPRA net tangible assets 2,497. 2 72.5 (10.1) 2,559.6 1,678.5 59.8 (6.4) 1,731.9
Derivatives – 0.1 – 0.1 – (0.6) – (0.6)
IFRS net assets 2 ,497.2 72.6 (10.1) 2,559.7 1,678.5 59.2 (6.4) 1,731.3
Loan to value 28.9% 24.3% – 28.8% 32.2% 32.8% – 32.3%
Cost of debt 2.6% 3.4% – 2.6% 2.5% 3.0% – 2.5%
Undrawn facilities 245.0 – – 245.0 170. 5 – – 170.5
195
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LondonMetric Property Plc
Annual Report and Accounts 2022
iv EPRA cost ratio
For the year to 31 March
2022
£m
2021
£m
Property operating expenses 1.5 1.6
Administrative costs 16.0 15.8
Share of joint venture property costs, administrative costs and management fees 0.7 0.6
Less:
Joint venture property management fee income (1.3) (0.9)
Ground rents (0.1) (0.1)
Total costs including vacant property costs (A) 16.8 17. 0
Group vacant property costs (0.9) (0.7)
Total costs excluding vacant property costs (B) 15.9 16.3
Gross rental income 131.5 121.3
Share of joint venture gross rental income 4.5 5.3
Share of non-controlling interest gross rental income (1.3) (1.5)
134.7 125.1
Less:
Ground rents (0.1) (0.1)
Total gross rental income (C) 134.6 125.0
Total EPRA cost ratio (including vacant property costs) (A)/(C) 12.5% 13.6%
Total EPRA cost ratio (excluding vacant property costs) (B)/(C) 11. 8% 13.0%
v EPRA net initial yield and ‘topped up’ net initial yield
As at 31 March
2022
£m
2021
£m
Investment property – wholly owned 3,511.3 2,49 9. 5
Investment property – share of joint ventures 96.6 94.4
Trading property 1.1 1.1
Less development properties (67.8) (59. 8)
Less residential properties (0.9) (2.1)
Less non-controlling interest (15.1) (11. 4)
Completed property portfolio 3,525.2 2,521.7
Allowance for:
Estimated purchasers’ costs 239.7 171.5
Estimated costs to complete 33.7 14.7
EPRA property portfolio valuation (A) 3,798.6 2 , 70 7. 9
Annualised passing rental income 129.4 112. 6
Share of joint ventures 4.5 6.2
Less development properties (3.3) (2.3)
Annualised net rents (B) 130.6 116 . 5
Contractual rental increase across the portfolio 11.5 7.7
‘Topped up’ net annualised rent (C) 142.1 124.2
EPRA net initial yield (B/A) 3.4% 4.3%
EPRA ‘topped up’ net initial yield (C/A) 3.7% 4.6%
196
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Annual Report and Accounts 2022
vi EPRA vacancy rate
As at 31 March
2022
£m
2021
£m
Annualised estimated rental value of vacant premises 2.1 1.7
Portfolio estimated rental value
1
157.1 12 7. 7
EPRA vacancy rate 1.3% 1.3%
1 Excludes residential and development properties
vii EPRA capital expenditure analysis
As at 31 March
100%
owned
5
£m
JV
£m
NCI
£m
Total
2022
£m
100%
owned
£m
JV
£m
NCI
£m
Total
2021
£m
Opening valuation 2,505.7 94.4 (11.4) 2,588.7 2,274.7 92.4 (14.9) 2,352.2
Acquisitions
1
457. 5 – – 4 57.5 212.4 – – 212.4
Developments
2
87.8 – – 87. 8 37. 0 – – 37. 0
Investment properties
– incremental
lettable space
3
4.5 – (0.7) 3.8 0.6 – (0.1) 0.5
– no incremental
lettable space
3
5.6 1.6 – 7.2 4.3 0.3 – 4.6
– tenant incentives 5.6 (0.5) (0.3) 4.8 7.1 0.1 (0.1) 7.1
Capitalised interest 1.4 – – 1.4 1.1 – – 1.1
Total EPRA capex 562.4 1.1 (1.0) 562.5 262.5 0.4 (0.2) 262.7
Disposals (165.8) (18.6) – (184.4) (200.8) (1.8) 3.3 (199. 3)
Revaluation 615.2 19.7 (2.7) 632.2 169.9 3.4 0.4 173.7
ROU asset (0.6) – – (0.6) (0.6) – – (0.6)
Closing valuation 3,516.9 96.6 (15.1) 3,598.4 2,505.7 94.4 (11. 4 ) 2,588.7
1 Group acquisitions in the year include completed investment properties as reflected in note 9 to the financial statements
2 Group developments include acquisitions, capital expenditure and lease incentive movements on properties under development as reflected in note 9
3 Group capital expenditure on completed properties, as reflected in note 9 to the financial statements after including capitalised interest noted in footnote 4 below
4 Capitalised interest on investment properties of £0.3 million (2021: nil) and development properties of £1.1 million (2021: £1.1 million)
5 Including trading property of £1.1 million and assets held for sale of £21.2 million
viii Total accounting return
For the year to 31 March
2022
pence
per share
2021
pence
per share
EPRA net tangible assets per share
– at end of year 261.1 190.3
– at start of year 190.3 170.3
Increase 70.8 20.0
Dividend paid 8.9 8.5
Total increase 79.7 28.5
Total accounting return 41.9% 16.7%
Supplementary information
(not audited)
197
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LondonMetric Property Plc
Annual Report and Accounts 2022
ix Portfolio split and valuation
As at 31 March
2022
£m
2022
%
2021
£m
2021
%
Mega distribution 425.2 11.8 351.9 13.6
Regional distribution 665.3 18.5 483.5 18.7
Urban logistics 1,551.5 43.2 941.9 36.5
Distribution 2,642.0 73.5 1,777.3 68.8
Long income 785.3 21.8 62 9.4 24.3
Retail parks 70.6 2.0 73.9 2.9
Oces 27.3 0.8 41.1 1.6
Investment portfolio 3,525.2 98.1 2,521.7 97. 6
Development
1
67.8 1.9 59. 8 2.3
Residential 0.9 – 2.1 0.1
Total portfolio 3,593.9 100.0 2,583.6 100.0
Head lease and right of use assets 4.5 5.1
3,598.4 2,588.7
1 Represents regional distribution £15.9 million (0.4%), urban logistics £25.8 million (0.7%), long income £23.2 million (0.7%), office and other land £2.9 million (0.1%) at 31 March
2022. Split of prior year comparatives was urban logistics £51.8 million (2.0%), long income £5.8 million (0.2%), office and other land £2.2 million (0.1%)
x Investment portfolio yields
2022 2021
As at 31 March
EPRA NIY
%
EPRA
topped up NIY
%
Equivalent
yield
%
EPRA NIY
%
EPRA
topped up NIY
%
Equivalent
yield
%
Distribution 3.0 3.4 4.1 3.8 4.1 4.7
Long income 4.6 4.7 5.1 5.2 5.4 5.7
Retail parks 4.5 4.9 4.8 7.1 7. 6 7.1
Oces 6.4 6.4 6.5 4.9 6.0 6.5
Investment portfolio 3.4 3.7 4.4 4.3 4.6 5.1
xi Investment portfolio – Key statistics
As at 31 March 2022
Area
’000 sq ft
WAULT
to expiry
years
WAULT
to first break
years
Occupancy
%
Average rent
£ per sq ft
Distribution 13,773 11.3 10.2 98.1 7. 0 0
Long income 2,771 14.1 12.9 99.9 15.90
Retail parks 258 7. 2 6.5 100.0 14.10
Oces 118 3.9 3.9 89.5 17.60
Investment portfolio 16,920 11.9 10.8 98.7 8.50
xii Total property returns
For the year to 31 March
All property
2022
%
All property
2021
%
Capital return 22.9 8.0
Income return 4.4 5.1
Total return 28.2 13.4
198
LondonMetric Property Plc
Annual Report and Accounts 2022
xiii Contracted rental income
As at 31 March
2022
£m
2021
£m
Distribution 95.6 7 7. 6
Long income 38.9 35.8
Retail parks 3.6 6.0
Oces 1.9 2.6
Investment portfolio 140.0 122.0
Development – distribution 2.4 1.7
Development – long income 0.9 0.6
Total portfolio 143.3 124.3
xiv Rent subject to expiry
As at 31 March 2022
Within 3 years
%
Within 5 years
%
Within 10 years
%
Within 15 years
%
Within 20 years
%
Over 20 years
%
Distribution 12.6 21.5 50.8 73.4 83.9 100.0
Oces 31.8 69.6 100.0 100.0 100.0 100.0
Long income 3.7 8.9 31.2 60.6 93.2 100.0
Retail parks 21.3 26.0 84.2 100.0 100.0 100.0
Total portfolio 10.6 18.8 46.8 70.9 87.1 100.0
xv Contracted rent subject to inflationary or fixed uplifts
As at 31 March
2022
£m
2022
%
2021
£m
2021
%
Distribution 60.0 61.2 46.2 58.2
Long income 27.0 67.7 22.9 63.1
Retail parks 0.3 9. 2 0.8 14.0
Oces – – 0.6 22.5
Total portfolio 87.3 60.9 70.5 56.8
xvi Top ten assets (by value)
As at 31 March 2022
Area
’000 sq ft
Contracted
rent
£m
Occupancy
%
WAULT
to expiry
years
WAULT
to first break
years
Primark, T2, Islip 1,062 5.8 100 18.5 18.5
Eddie Stobart, Dagenham 454 4.1 100 21.5 21.5
Argos, Bedford 658 4.1 100 12.0 12.0
THG, Warrington 686 4.1 100 22.7 22.7
Tesco, Croydon 191 1.9 100 6.1 6.1
Movianto, Bedford 356 2.8 100 24.7 24.7
Amazon, Warrington 357 2.4 100 9.7 9.7
Reynolds, Waltham Cross 115 1.6 100 22.1 22.1
Clipper, Ollerton 364 2.1 100 15.5 15.5
DHL, Reading 230 2.3 100 3.3 3.3
Supplementary information
(not audited)
199
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LondonMetric Property Plc
Annual Report and Accounts 2022
xvii Top ten occupiers
As at 31 March 2022
Contracted
rental income
£m
Contracted
rental income
%
Primark 5.8 4.1
Amazon 4.9 3.4
Argos 4.2 2.9
THG 4.1 2.9
Eddie Stobart 4.1 2.8
DFS 3.9 2.7
DHL 3.6 2.5
Currys 3.6 2.5
Odeon 3.5 2.4
Waitrose 3.3 2.3
Top ten 41.0 28.5
xviii Loan to value
2022
£m
2021
£m
Gross debt 1,053.7 877.0
less: Fair value adjustments (2.2) (2.5)
less: Cash balances (54.3) (54.6)
Net debt 997. 2 819.9
Acquisitions exchanged in the year 72.4 35.7
Disposals exchanged in the year (21.2) (15.2)
Adjusted net debt (A) 1,048.4 840.4
Total property portfolio 3,593.9 2,583.6
Acquisitions exchanged in the year 72.4 35.7
Disposals exchanged in the year (21.2) (15.2)
Adjusted property portfolio (B) 3,645.1 2,604.1
Loan to value (A)/(B) 28.8% 32.3%
200
LondonMetric Property Plc
Annual Report and Accounts 2022
Building Research Establishment
Environmental Assessment
Methodology(‘BREEAM’)
A set of assessment methods and tools
designed to help construction professionals
understand and mitigate the environmental
impacts of the developments they design
and build.
Capital Return
The valuation movement on the property
portfolio adjusted for capital expenditure
andexpressed as a percentage of the
capitalemployed over the period.
Chief Operating Decision Makers (‘CODMs’)
The Executive Directors, Senior Leadership
Team members and other senior managers.
Contracted Rent
The annualised rent excluding rent
free periods.
Cost of Debt
Weighted average interest rate payable.
Debt Maturity
Weighted average period to expiry
ofdebt drawn.
Distribution
The activity of delivering a product
forconsumption by the end user.
Energy Performance Certificate (‘EPC’)
Required certificate whenever a property
isbuilt, sold or rented. An EPC gives a
propertyan energy eciency rating from
A (most ecient) to G (least ecient) and
is validfor ten years. An EPC contains
information about a property’s energy
use and typical energy costs, and
recommendations about how toreduce
energyuse and save money.
EPRA Cost Ratio
Administrative and operating costs
(includingand excluding costs of direct
vacancy) as a percentage of gross
rental income.
EPRA Earnings per share (‘EPS’)
Underlying earnings from the Group’s
propertyrental business divided by the
average number of shares in issue over
the period.
EPRA NAV per share
Balance sheet net assets excluding fair value
of derivatives, divided by the number of shares
in issue at the balance sheet date.
EPRA Net Disposal Value per share
Represents the shareholders’ value under a
disposal scenario, where assets are sold and/
or liabilities are not held to maturity. Therefore,
this measure includes an adjustment to mark
to market the Group’s fixed rate debt.
EPRA Net Reinstatement Value per share
This reflects the value of net assets required
to rebuild the entity, assuming that entities
never sell assets. Assets and liabilities,
such as fair value movements on financial
derivatives that are not expected to crystallise
in normal circumstances, are excluded.
Investment property purchasers’ costs
are included.
EPRA Net Tangible Asset Value per share
This reflects the value of net assets on a long
term, ongoing basis assuming entities buy
and sell assets. Assets and liabilities, such as
fair value movements on financial derivatives
that are not expected to crystallise in normal
circumstances, are excluded.
EPRA Net Initial Yield
Annualised rental income based on cash
rentspassing at the balance sheet date,
less non recoverable property operating
expenses, expressed as a percentage
ofthemarket value of the property, after
inclusion of estimated purchaser’s costs.
EPRA Topped Up Net Initial Yield
EPRA net initial yield adjusted for expiration
ofrent free periods or other lease incentives
such as discounted rent periods and
stepped rents.
EPRA Vacancy
The Estimated Rental Value (‘ERV’) of
immediately available vacant space
as a percentage of the total ERV of the
investment portfolio.
Equivalent Yield
The weighted average income return
expressed as a percentage of the market
value of the property, after inclusion of
estimated purchaser’s costs.
Estimated Rental Value (‘ERV’)
The external valuers’ opinion of the
open market rent which, on the date of
valuation,could reasonably be expected
tobe obtained on a new letting or rent
reviewof a property.
European Public Real Estate
Association(‘EPRA’)
EPRA is the industry body for European
RealEstate Investment Trusts (‘REITs’).
European Single Electronic Format (‘ESEF’)
ESEF is the electronic reporting format
required from 1 January 2021 to facilitate
access, analysis and comparison of
annualfinancial reports.
Gross Rental Income
Rental income for the period from let
propertiesreported under IFRS, after
accounting for lease incentives and
rentfreeperiods. Gross rental income
will include, where relevant, turnover
based rent,surrender premiums
andcarparking income.
Group
LondonMetric Property Plc and
its subsidiaries.
IFRS
The International Financial Reporting
Standards issued by the International
Accounting Standards Board and
adoptedbythe European Union.
IFRS Net Assets
The Group’s equity shareholders’ funds at the
period end, which excludes the net assets
attributable to the non-controlling interest.
IFRS Net Assets per share
IFRS net assets divided by the number of
sharesin issue at the balance sheet date.
Income Return
Net rental income expressed as a
percentageof capital employed over
the period.
Investment Portfolio
The Group’s property portfolio excluding
development, land holdings and
residential properties.
Investment Property Databank (‘IPD’)
IPD is a wholly owned subsidiary
ofMSCIproducing an independent
benchmark of property returns and
theGroup’s portfolio returns.
Glossary
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Like for Like Income Growth
The movement in contracted rental
incomeonproperties owned through
theperiod under review, excluding
propertiesheldfordevelopment
and residential.
Loan to Value (‘LTV’)
Net debt expressed as a percentage
ofthetotal property portfolio value
attheperiod end, adjusted for
deferredcompletions on sales and
acquisitions that exchanged in the period.
Logistics
The organisation and implementation
ofoperations to manage the flow of
physicalitems from origin to the point
of consumption.
Net Debt
The Group’s bank loans net of cash
balancesat the period end.
Net Rental Income
Gross rental income receivable after
deduction for ground rents and other net
property outgoings including void costs
andnet service charge expenses.
Occupancy Rate
The ERV of the let units as a percentage
ofthetotal ERV of the Investment Portfolio.
Passing Rent
The gross rent payable by tenants under
operating leases, less any ground rent
payableunder head leases.
Property Income Distribution (‘PID’)
Dividends from profits of the Group’s
tax-exempt property rental business under
theREIT regulations. The PID dividend is
paid after deducting withholding tax
atthebasic rate.
Real Estate Investment Trust (‘REIT’)
A listed property company which qualifies
forand has elected into a tax regime which
is exempt from corporation tax on profits
fromproperty rental income and UK capital
gains on the sale of investment properties.
Task Force on Climate-Related Financial
Disclosures (‘TCFD’)
Created in 2015 to develop a framework
for consistent climate-related financial
risk disclosure.
Total Accounting Return (‘TAR’)
The movement in EPRA Net Tangible Assets
per share plusthedividend paid during the
period expressed as a percentage of the EPRA
net tangible assets pershare atthe beginning
of the period.
Total Property Return (‘TPR’)
Unlevered weighted capital and income
return of the property portfolio as calculated
by IPD.
Total Shareholder Return (‘TSR’)
The movement in the ordinary share price
asquoted on the London Stock Exchange
plusdividends per share assuming that
dividends are reinvested at the time
ofbeing paid.
Weighted Average Interest Rate
The total loan interest and derivative costs
perannum (including the amortisation
offinance costs) divided by the total
debtinissue at the period end.
Weighted Average Unexpired
LeaseTerm(‘WAULT’)
Average unexpired lease term across
the investment portfolio weighted by
contracted rent.
202
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Notice is hereby given that the Annual General Meeting of
themembers of LondonMetric Property Plc (Registered number
7124797) will be held at The Connaught, Carlos Place, Mayfair,
London, W1K 2AL on13July 2022 at 11.00 am.
Resolutions 1 to 16 (inclusive) will be proposed as ordinary
resolutions and resolutions 17 to 20 (inclusive) will be proposed
asspecial resolutions. Voting on all resolutions will be by way of poll.
1. That the Annual Report and Accounts forthe year ended
31March 2022 be received.
2. That the Annual Report on Remuneration in the form set
outinthe Annual Report and Accounts fortheyear ended
31March 2022 be approved.
3. That Deloitte LLP be reappointed as auditor of the Company,
tohold oce until the conclusion of the next general meeting
at which accounts are laid before the Company.
4. That the Directors be authorised to determine the remuneration
ofthe auditor.
5. That Patrick Vaughan be re-elected as a Director.
6. That Andrew Jones be re-elected as a Director.
7. That Martin McGann be re-elected as a Director.
8. That James Dean be re-elected as a Director.
9. That Rosalyn Wilton be re-elected as a Director.
10. That Andrew Livingston be re-elected as a Director.
11. That Suzanne Avery be re-elected as a Director.
12. That Robert Fowlds be re-elected as a Director.
13. That Katerina Patmore be re-elected as a Director.
14. That Alistair Elliott be elected as a Director
15. That the Directors be and they are hereby generally and
unconditionally authorised in accordance with Section 551
ofthe Companies Act 2006 (the ‘2006 Act’), in substitution
forallexisting authorities:
a. to exercise all the powers of the Company to allot shares
and to make oers or agreements to allot shares in the
Company or grant rights to subscribe for or to convert any
security into shares in the Company (together ‘Relevant
Securities’) up to an aggregate nominal amount of
£32,671,477 (such amount to be reduced by the nominal
amount of any equity securities (within the meaning of
Section 560 of the 2006 Act) allotted under paragraph 15b
below in excess of £32,671,478; and
b. to exercise all the powers of the Company to allot equity
securities (within the meaning of Section 560 of the 2006
Act) up to a maximum aggregate nominal amount of
£65,342,954 (such amount to be reduced by any Relevant
Securities allotted or granted under paragraph 15a above)
provided that this authority may only be used in connection
with a rights issue in favour of holders of ordinary shares
and other persons entitled to participate therein where the
equity securities respectively attributable to the interests of
all those persons at such record date as the Directors may
determine are proportionate (as nearly as may be) to the
respective numbers of equity securities held by them or are
otherwise allotted in accordance with the rights attaching
to such equitysecurities subject to such exclusions or other
arrangements as the Directors may consider necessary
or expedient to deal with fractional entitlements or legal
diculties under the laws of any territory or the requirements
ofa regulatory body orstock exchange or by virtue of
shares being represented by depositary receipts or any
other matter whatsoever,
provided that the authorities in paragraphs 15a and 15b shall
expire at the conclusion of the next Annual General Meeting
of the Company after the passing of this resolution (or, if earlier,
on the date which is 15 months after the date of this Annual
General Meeting), except that the Company may before such
expiry make an oer or agreement which would or might require
Relevant Securities or equity securities as the case may be to be
allotted (and treasury shares to be sold) after such expiry and
the Directors may allot Relevant Securities or equity securities
(and sell treasury shares) in pursuance of any such oer or
agreement as if the authority in question had not expired.
16. That, subject to the passing of resolution 15 and in accordance
with Article 145 of the Company’s Articles of Association (as
varied and amended from time to time), the Directors be and
are hereby authorised, for the period of three years from the
date of the passing of this resolution, to oer to any holder of
ordinary shares in the Company, the right to elect to receive
ordinary shares credited as fully paid, instead of cash in respect
of the whole (or part, to be determined by the Directors) of all
or any dividend on such terms as the Directors shall determine
(subject to the terms provided in the Articles of Association of
the Company) from time to time.
17. That, if resolution 15 is passed, the Directors be and are
empowered, in accordance with Sections 570 and 573 of the
2006 Act, to allot equity securities (as defined in Section 560(1)
of the 2006 Act) for cash pursuant to the authority conferred
by resolution 15 and/or by way of a sale oftreasury shares
as if Section 561(1) of the 2006 Act did not apply to any such
allotment or sale, provided that this power shall be limited to:
a. the allotment of equity securities and sale of treasury
shares for cash in connection with an oer of, or invitation
to apply for, equity securities made to (but in the case of
the authority conferred by paragraph 15b of resolution
15 above, by way of arights issue only):
(i) to ordinary shareholders in proportion (as nearly
as maybe practicable) to their existing holdings;
Notice of Annual General Meeting
This document is important and requires your immediate attention. If you are in any doubt as to the action you should take,
you should seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, or other
financial advisor authorised under the Financial Services and Markets Act 2000.
If you have sold or otherwise transferred all your ordinary shares, please send this document, together with the accompanying
documents, as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom
the sale or transfer was eected, for delivery to the purchaser or transferee.
203
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Annual Report and Accounts 2022
(ii) to holders of other equity securities as required by
therights of those securities or, if the Directors otherwise
consider necessary, as permitted by the rights of those
securities, and so that the Directors may impose any
limits or restrictions and make any arrangements which
they consider necessary or appropriate to deal with any
treasury shares, fractional entitlements, record dates,
legal, regulatory or practical problems in, or under
thelaws of, any territory or any other matter; and
b. the allotment of equity securities or sale of treasury shares
(otherwise than under paragraph 17a above) up to an
aggregate nominal amount of £4,900,720.
provided that this power shall expire at the conclusion
ofthenext Annual General Meeting of the Company
(or,if earlier, on the date which is 15 months after the
date of this Annual General Meeting) but prior to its
expiry the Company may make oers, and enter into
agreements, which would, or might, require equity
securities to be allotted (and treasury shares to be sold)
after the authority expires and the Directors may allot
equity securities (andselltreasury shares) under any such
oeroragreementasif the authority had not expired.
18. That, if resolution 15 is passed, the Directors be and are
empowered, in accordance with Sections 570 and 573 of the
2006 Act, in addition toanyauthority granted under resolution
17, to allot equity securities (as defined in Section 560(1) of
the 2006 Act) for cashpursuant to the authority conferred
by resolution 15 and/orbyway of a sale oftreasury shares
as if Section 561(1) ofthe2006 Act did not apply to any such
allotment or sale, suchpower to be:
a. limited to the allotment of equity securities or sale of
treasuryshares up to an aggregate nominal amount
of£4,900,720; and
b. used only for the purposes of financing (or refinancing,
iftheauthority is to be used within six months after the original
transaction) a transaction which the Directors determine
to be an acquisition or other capital investment of a kind
contemplated by the Statement of Principles onDisapplying
Pre-Emption Rights most recently publishedbythe Pre-
Emption Group prior to the date ofthis notice, provided that
this power shall expire at the end of thenext Annual General
Meeting of the Company (or, if earlier, onthe date which is
15 months after the date of this Annual General Meeting) but,
in each case, prior to its expiry the Company may make
oers, and enter into agreements which would, or might,
require equity securities to be allotted (and treasury shares
to be sold) after the authorityexpires and the Directors
may allot equitysecurities(and sell treasury shares) under
any suchoer oragreement as if theauthority in question
hadnot expired.
19. That the Company be and is hereby generally and
unconditionally authorised, in accordance with Section
701 ofthe 2006 Act, to make market purchases (within the
meaningof Section 693(4) of the 2006 Act) of ordinary shares
of10p each in the capital of the Company (‘ordinary shares’)
on such terms and in such manner asthe Directors may
fromtime to time determine provided that:
a. the maximum aggregate number of ordinary shares
authorised tobepurchased is 98,014,433;
b. the minimum price which may be paid for an ordinary
share is 10p being the nominal amount thereof
(exclusiveofexpenses payable by the Company);
c. the maximum price which may be paid for an ordinary
share (exclusive of expenses payable by the Company)
cannot be more than the higher of:
(i) 105% of the average market value of an ordinary
share as derived from the London Stock Exchange’s
Daily Ocial List for the five business days prior to the
day on whichthe ordinary share is contracted to be
purchased;and
(ii) the value of an ordinary share calculated on the basis
of the higher of: (A) the last independent trade of; or (B)
the highest current independent bid for, any number of
ordinary shares on the trading venue where the market
purchase by the Company will be carried out;
d. this authority shall expire at the conclusion of the next
Annual General Meeting of the Company (or, if earlier, on
the date which is 15 months after the date of this Annual
General Meeting) except that the Company may before
such expiry make a contract to purchase its own shares
which will or may be completed or executed wholly or
partly after such expiry.
20. That the Company is authorised to call any general meeting
of the Company other than the Annual General Meeting by
notice of at least 14 clear days during the period beginning
on the date of the passing of this resolution and ending on the
conclusion of the next Annual General of the Company.
By order of the Board
Jadzia Duzniak
Company Secretary
26 May 2022
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LondonMetric Property Plc
Annual Report and Accounts 2022
Notes to the Notice of the Annual General Meeting:
(i) Shareholders entitled to attend and vote at the meeting may
appoint one or more proxies (who need not be shareholders)
to attend, speak and vote on their behalf, provided that
eachproxy is appointed to exercise the rights attaching to
thedierentshares held by him or her.
(ii) Your proxy could be the Chair, another Director of the
Company or another person who has agreed to attend and
represent you. Your proxy will vote as you instruct and must
attend the meeting for your vote to be counted. Details of
howtoappoint the chair (or another person) as your proxy
are set out in the notes to the proxy form.
(iii) Any person to whom this Notice is sent who is a person
nominated under Section 146 of the 2006 Act to enjoy
information rights (a‘Nominated Person’) may, under an
agreement between him/her and the shareholder by whom
he/she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the Annual
General Meeting. If a Nominated Person has no such proxy
appointment right, or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to
the shareholder as to the exercise of voting rights.
The statement of rights of shareholders in relation to the
appointment of proxies in paragraph (i) above does not
apply toNominated Persons. The rights described in that
paragraph can only be exercised by shareholders of
the Company.
(iv) To have the right to attend and vote at the meeting you must
hold ordinary shares in the Company and your name must be
entered on the share register of the Company in accordance
with note (vi) below.
(v) You will not have received a hard copy proxy form for the
AnnualGeneral Meeting in the post. You can instead submit
your proxy vote electronically by accessing the shareholder
portal at www.signalshares.com, logging in and selecting
the ‘Vote Online Now’ link. You will require your username
and password in order to log in and vote. If you have
forgotten your username or password you can request a
reminder via the shareholder portal. If you have not previously
registered to use the portal you will require your investor
code (‘IVC’) which can be found on your share certificate
or dividend notification. Proxy votes should be submitted
as early as possible and in any event, no later than 11.00
am on 11 July 2022 (or, in the event of an adjournment, not
less than two business days before the stated time of the
adjourned meeting).
You may request a hard copy proxy form directly from the
Registrars, Link Group by emailing enquiries@linkgroup.co.uk
or by post at Link Group, Central Square, 29 Wellington Street,
Leeds, LS1 4DL. To be valid, any hard copy proxy form must
be received by post or (during normal business hours only)
by hand at the Company’s registrars, Link Group, Central
Square, 29 Wellington Street, Leeds, LS1 4DL by no later than
11.00 am on11 July 2022 (or, in the event of an adjournment,
not less than two business days before the stated time of the
adjourned meeting).
To be valid, Forms of Proxy (and the power of attorney or
other authority, if any, under which it is signed or a notarially
certified copy thereof) must be completed and signed and
received by Link Group at PXS1, Central Square, 29 Wellington
Street, Leeds, LS1 4DL as soon as possible but, in any event, so
as to arrive no later than 11.00 am on 11July 2022 (or, in the
event of an adjournment, not less than two business days
before the stated time of the adjourned meeting).
Where you have appointed a proxy using the hard copy
proxy form and would like to change the instructions using
another hard copy proxy form, please contact Link Group
at PXS1, Central Square, 29 Wellington Street, Leeds, LS1 4DL.
The deadline forreceipt of proxy appointments (see above)
also applies inrelation to amended instructions.
Any attempt to terminate or amend a proxy appointment
received after the relevant deadline will be disregarded.
Where two or more valid separate appointments of proxy
are received in respect of the same share in respect of the
same meeting, the one which is last sent shall betreated as
replacing and revoking the other or others.
If you need help with voting online, or require a paper proxy
form, please contact our Registrar, Link Group by email at:
enquiries@linkgroup.co.uk, or you may call Link on 0371 664
0391 if calling from the UK, or +44 (0) 371 664 0391 if calling
from outside of the UK. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside
the United Kingdom will be charged at the applicable
international rate; lines are open 9.00am to 5.30pm, Monday
to Friday excluding public holidays inEngland and Wales.
(vi) The time by which a person must be entered on the register
of members in order to have the right to attend or vote
at the meeting is close of business on 11 July 2022. If the
meeting is adjourned, the time by which a person must be
entered on the register of members in order to have the
right to attend or vote at the adjourned meeting is close of
business on the day that is two business days before the date
fixed for the adjourned meeting. Changes to entries on the
register of members after such times shall be disregarded
in determining the rights of any person toattend or vote at
the meeting.
(vii) CREST members who wish to appoint a proxy or proxies by
utilising the CREST electronic proxy appointment service
may doso by utilising the procedures described in the CREST
Manual. CREST Personal Members or other CREST sponsored
members, and those CREST members who have appointed a
voting service provider(s), should refer to their CREST sponsor
or voting service provider(s), who will be able to take the
appropriate action on their behalf.
(viii) In order for a proxy appointment or instruction made by
means of CREST to be valid, the appropriate CREST message
(a ‘CREST Proxy Instruction’) must be properly authenticated in
accordance with Euroclear UK & International’s specifications
and must contain the information required for such
instructions, as described in the CREST Manual. The message,
regardless of whether it constitutes the appointment of
a proxy or an amendment to the instruction given to a
previously appointed proxy, must, in order to be valid,
be transmitted so as to be received by the issuer’s agent
Notice of Annual General Meeting
205
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LondonMetric Property Plc
Annual Report and Accounts 2022
(IDnumber RA10) by 11.00 am on 11 July 2022 (or, in the event
of an adjournment, not less than two business days before the
stated time of the adjourned meeting).
For this purpose, thetime of receipt will be taken to be
the time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which the
issuer’s agent is able to retrieve the message by enquiry to
CREST in the manner prescribed by CREST.
(ix) The Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
(x) CREST members and, where applicable, their CREST sponsors
or voting service providers should note that Euroclear UK &
International does not make available special procedures
in CREST for any particular messages. Normal system timings
and limitations will therefore apply in relation to the input of
CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a CREST
personal member or sponsored member or has appointed
a voting service provider(s), to procure that his or her CREST
sponsor or voting service provider(s) take(s)) such action as
shall be necessary to ensure that a message is transmitted by
means of the CREST system by any particular time.
In this connection, CREST members and, where applicable,
their CREST sponsors or voting system providers are referred, in
particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings.
(xi) Any corporation which is a member can appoint one or
more corporate representatives who may exercise on its
behalf all of itspowers as a member provided that they do
not do so in relation to the same shares.
(xii) You may not use any electronic address provided either in this
Notice of Annual General Meeting or any related documents
(including the form of proxy) to communicate with the
Company forany purposes other than those expressly stated.
(xiii) As at 25 May 2022 (being the closest practical business
day beforethe publication of this Notice), the Company’s
issued share capital consisted of 980,144,326 ordinary shares
carryingone vote each.
(xiv) Members satisfying the thresholds in Section 527 of the 2006
Act can require the Company to publish a statement on its
website setting out any matter relating to:
a. the audit of the Company’s accounts (including the
Auditor’s report and the conduct of the audit) that are
tobelaid before the meeting; or
b. any circumstances connected with an auditor of the
Company ceasing to hold oce since the last Annual
General Meeting, that the members propose to raise
atthe meeting.
The Company cannot require the members requesting the
publication to pay its expenses. Any statement placed on the
website must also be sent to the Company’s auditor no later
than the time it makes its statement available on the website.
The business which may be dealt with at the meeting
includes any statement that the Company has been required
to publish on its website.
(xv) Any member attending the meeting has the right to ask
questions. The Company must cause to be answered any
such question relating to the business being dealt with at
themeeting but no such answer need be given if:
a. to do so would interfere unduly with the preparation
for the meeting or involve the disclosure of
confidential information;
b. the answer has already been given on a website
in theform of an answer to a question; or
c. it is undesirable in the interests of the Company
or the goodorder of the meeting that the question
be answered.
(xvi) A copy of this Notice, and other information required
by Section 311A of the 2006 Act, can be found at
www.londonmetric.com.
(xvii) The following documents are available for inspection at the
registered oce of the Company during normal business
hours on each weekday (public holidays excluded) from the
date of this Notice until the conclusion of the Annual General
Meeting and at the place of the Annual General Meeting for
15 minutes prior to and during the meeting:
a. copies of the Executive Directors’ service contracts with
theCompany; and
b. copies of letters of appointment of Non Executive
Directors; and
c. a copy of the Articles of Association of the Company.
Should a shareholder wish to inspect any of these documents
please submit a request to info@londonmetric.com.
(xviii) In the case of joint registered holders, the signature of one
holderon a proxy card will be accepted and the vote of
the senior holder who tenders a vote, whether in person or
by proxy, shall be accepted to the exclusion of the votes
of the other joint holders. For this purpose, seniority shall be
determined by the order in which names stand on the register
of members of the Company in respect of the relevant
joint holding.
(xix) Voting on all resolutions at the Annual General Meeting will
be by way of poll. The Company believes that this is the best
way ofrepresenting the view of as many shareholders as
possible inthe voting process.
(xx) This Notice (including these notes) reflects the intention of
the Board with respect to the AGM given the law in force,
and relevant guidance, as at the latest practicable date
before the publication of this Notice. Shareholders should
check our website to ensure they have the most up to date
information available regarding the AGM. The AGM will be
held in person and will be continually monitored given the
continuing uncertainty in respect to COVID-19. Whilst there
are not expected to be any government restrictions on public
gatherings at the time of the AGM, shareholders are asked
to exercise good judgement and not to attend the AGM
in person if they have recently tested positive for COVID-19,
are exhibiting any symptoms of COVID-19 and/or are living
with someone who has recently tested positive for COVID-19.
Instead, shareholders are encouraged to submit a proxy vote
in advance of the AGM.
206
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Annual Report and Accounts 2022
Explanatory notes:
The information below is an explanation of the business to be
considered at the Annual General Meeting.
Resolution 1 – To receive the Annual Report and Accounts
The Chair will present the Annual Report and Accounts for the year
ended 31 March 2022 to the meeting. Resolution 1 isto receive
the Report of the Directors, thefinancial statements and the
Independent Auditor’s report on the financial statementsand on
the auditable part of the Annual Report on Remuneration for the
financial year ended 31 March 2022.
Resolution 2 – Annual Report on Remuneration
Resolution 2 is an ordinary resolution to approve the Annual Report
on Remuneration relating to the implementation of the Company’s
existing Remuneration Policy, which was last approved at the 2020
Annual General Meeting. Section 439 of the 2006 Act requires
UK-incorporated listed companies to put their Annual Report
on Remuneration to an advisory shareholder vote. As the vote is
advisory it does not aect the actual remuneration paid to any
individual Director. The Annual Report on Remuneration is set out in
full in the Annual Report and Accounts.
Resolutions 3 and 4 – Reappointment of auditors
Resolution 3 relates to the reappointment of Deloitte LLP as the
Company’s auditor to hold oce until the next Annual General
Meeting of the Company and Resolution 4 authorises the Directors
to set their remuneration.
Resolutions 5 to 14 – Re-election and election of Directors
Resolutions 5 to 14 deal with re-election and election of the
Directors (as applicable). Biographies of each of the Directors
seeking re-election and election can be found on pages 92 and 93
of the Annual Report andAccounts. The Board has confirmed,
following aperformance review, that allDirectors standing
for re-election or election continue toperform eectively and
demonstrate commitment to their role.
Resolution 15 – Allotment of share capital
At the last Annual General Meeting of the Company the Directors
were given authority to allot ordinary shares in the capital of the
Company. This authority expires at the conclusion of the Annual
General Meeting (or, if earlier, on thedate which is 15 months after
the date of the Annual General Meeting).
Your Board considers it appropriate that a similar authority be
granted to allot ordinary shares in the capital of the Company
up to a maximum nominal amount of £32,671,477 (representing
approximately one third ofthe Company’s issued ordinary share
capital as at 25 May 2022) during the period up to the conclusion of
the next Annual General Meeting of theCompany. Such authority
is sought in paragraph 15a of Resolution 15.
In accordance with the guidelines issued by the Investment
Association, paragraph 15b of Resolution 15 will allow Directors to
allot, including the shares referred to in paragraph 15a of Resolution
15, shares in the Company in connection with a pre-emptive oer
by way of a rights issue to shareholders up to a maximum nominal
amount of £65,342,954, representing approximately two thirds of the
issued ordinary share capital ofthe Company as at 25 May 2022.
Your Board considers it appropriate to seek this additional
allotment authority at the Annual General Meeting in order to
take advantage of the flexibility it oers. However, the Board
has no present intention of exercising either authority (except in
relation to the Company’s scrip dividend scheme and its share
schemes). If they do exercise the authority, the Directors intend
to follow best practice as regards its use, as recommended by
theInvestment Association.
As at the date of this Notice the Company does not hold any
ordinary sharesin the capital of the Company in treasury.
Resolution 16 – Authority to oer scrip dividend
Under the Articles of Association of the Company, the Board
may, with the prior authority of an ordinary resolution of the
Company, oer holders of any particular class of shares who have
elected to receive them paid up ordinary shares instead of cash
in respect of all or part of a dividend or dividends specified by the
ordinary resolution.
Under a scrip dividend programme, shareholders who elect to do
so will be able to receive ordinary shares in the Company in lieu
of future cash dividends. In addition to the benefit to shareholders
of allowing them to increase their shareholdings without incurring
costs (such as stamp duty or dealing costs), a scrip dividend
programme will allow the Company to retain the proceeds which
would otherwise be paid out as dividends.
Authority was previously granted on 11 July 2019 and that
authority expires after three years. This resolution renews that
authority. A Scrip Circular setting out the terms and conditions and
instructions on how to participate is available on the Company’s
website. In line with investor protection guidelines the authority
contained in resolution 16 is sought for three years
Resolutions 17 and 18 – General and additional authority to
disapply pre-emption rights
At the last Annual General Meeting of the Company the Directors
were also given authority to allot equity securities for cash without
first being required to oer such shares to existing shareholders.
This authority expires at the conclusion of the Annual General
Meeting (or, if earlier, on the date which is15 months after the
date of last year’s Annual General Meeting).
The passing of Resolutions 17 and 18 would allow the Directors to
allot equitysecurities (or sell any shares which the Company may
purchase and hold in treasury) without first oering them to existing
holders in proportion totheir existing holdings.
The authority set out in Resolution 17 is limited to: (a) allotments or
sales inconnection with pre-emptive oers and oers to holders
of other equity securities if required by the rights of those shares;
or (b) otherwise than in connection with a pre-emptive oer, up
to an aggregate nominal amount of (i) £4,900,720 (representing
49,007,200 shares.). This aggregate nominal amount represents
5% of the issued ordinary share capital of the Company as at
25May 2022.
Notice of Annual General Meeting
207
Strategic report Governance Financial statements
1-87 88-154 155-208
LondonMetric Property Plc
Annual Report and Accounts 2022
Taking into account the template resolutions published by the UK
Pre-Emption Group in May 2016, the authority set out in Resolution
18 is limited to allotments or sales of up to an aggregate nominal
amount of (i) £4,900,720 (representing 49,007,200 shares) in addition
to the authority set out in Resolution 17 which are used only for
the purposes of financing (or refinancing, if the authority is to be
used within six months after the original transaction) a transaction
which theDirectors determine to be an acquisition or other capital
investment of a kind contemplated by the Statement of Principles
on dis-applying pre-emption rights most recently published by the
UK Pre-Emption Group prior to the date of this Notice.
This aggregate nominal amount represents approximately an
additional 5% of the issuedordinary share capital of theCompany
as at 25 May 2022.
The Directors also confirm their intention to follow the provisions
of the UKPre-Emption Group’s Statement of Principles regarding
cumulative usage of authorities within a rolling three year period
where the Principles provide that usage in excess of 7.5% of issued
ordinary share capital of theCompany (excluding treasury shares)
should not take place without priorconsultation with shareholders,
except in connection with an acquisition or specified capital
investment as referred to above.
Resolution 19 – Authority to purchase own shares
Resolution 19 gives the Company authority to buy back its own
ordinary shares in the market as permitted by the 2006 Act.
The authority limits the number of shares that could be purchased
to a maximum of 98,014,433 shares (representing approximately
10% of the Company’s issued ordinary share capital as at 25 May
2022 and sets minimum and maximumprices. This authority will
expire at the conclusion of the next Annual GeneralMeeting of
the Company.
The Directors have no present intention of exercising the authority
to purchase the Company’s ordinary shares but will keep the
matter under review, taking into account the financial resources
of the Company, the Company’s share price and future
funding opportunities. The authority willbe exercised only after
consideration by the Directors of the eect onnetasset value
and if the Directors believe that to do so would be in theinterests
of shareholders generally. Any purchases of ordinary shares
would be by means of market purchases through the London
Stock Exchange.
Listed companies purchasing their own shares are allowed to hold
them in treasury as an alternative to cancelling them. No dividends
are paid on shares whilst held in treasury and no voting rights
attach to treasury shares.
If Resolution 19 is passed at the Annual General Meeting, it is the
Company’s current intention to hold in treasury the majority of the
shares it may purchase pursuant to the authority granted to it.
However, in order to respond properly to the Company’s capital
requirements and prevailing market conditions, the Directors will
need to reassess at the time of any and each actual purchase
whether to hold the shares in treasury or cancel them, provided
itispermitted to do so. The Company may hold a maximum of up
to 10% ofits issued share capital in treasury in accordance with
guidelines issued bythe Investment Association.
As at 25 May 2022 (the latest practicable date before publication of
this Notice), there were share awards over 5,547,196 ordinary shares
in the capital of the Company representing approximately 0.57%
of the Company’s issued ordinary share capital. If the authority to
purchase the Company’s ordinary shares was exercised in full, these
awards would represent approximately 0.63% of the Company’s
issued ordinary share capital.
Resolution 20 – Notice period for general meetings
It is proposed in Resolution 20 that shareholders should approve the
continuedability of the Company to hold general meetings other
thantheAnnual General Meeting on 14 clear days’ notice.
This resolution is required under Section 307A of the 2006 Act.
Under thatsection, a traded company which wishes to be able
to call general meetings (other than an Annual General Meeting)
on 14 clear days’ notice must obtain shareholders’ approval.
Resolution 20 seeks such approval.
The resolution is valid up to the next Annual General Meeting of the
Companyand needs to be renewed annually. The Company will
also needto meet therequirements for voting by electronic means
under Section307A ofthe2006 Act before it can call a general
meeting on14days’notice.
The shorter notice period would not be used as a matter of routine
for general meetings, but only where the flexibility is merited by the
business of the meeting and is thought to be to the advantage of
shareholders asa whole.
208
LondonMetric Property Plc
Annual Report and Accounts 2022
Financial calendar
Shareholder information
Announcement of results 26 May 2022
Annual General Meeting 13 July 2022
REIT status and taxation
As a UK REIT, the Group is exempt
fromcorporation tax on rental
incomeand UKproperty gains.
Dividend payments to shareholders
are split between PropertyIncome
Distributions (‘PIDs’) and non PIDs.
For most shareholders, PIDs
willbepaidafter deducting
withholding tax at the basic rate.
However, certain categories of
shareholder are entitled to receive
PIDswithout withholding tax,
principally UK resident companies,
UK public bodies, UKpension funds
and managers of ISAs, PEPs and
ChildTrust Funds. There is a form
on theCompany’s website for
shareholders tocertify that they
qualifyto receive PIDs without
withholding tax.
Payment of dividends
Shareholders who would like
theirdividends paid direct toa
bankorbuilding society account
shouldnotify Link Group. Tax
vouchers will continue tobe
senttothe shareholder’s
registered address.
Advisors to the Company
Joint Financial Advisors and Brokers
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
JP Morgan Securities Limited
25 Bank Street
Canary Wharf
London E14 5JP
Auditor
Deloitte LLP
1 New Street Square
London EC4A 3HQ
Property Valuers
CBRE Limited
St Martin’s Court
10 Paternoster Row
London EC4M 7HP
Savills (UK)Limited
33 Margaret Street
London W1G 0JD
Tax & Remuneration Advisors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Solicitors to the Company
CMS Cameron McKenna
NabarroOlswang LLP
78 Cannon Place
Cannon Street
London EC4N 6AF
Registrar
Link Group
The Registry
Central square
29 Wellington Street
Leeds LS1 4DL
Secretary and Registered Address
Jadzia Duzniak
One Curzon Street
London W1J 5HB
www.londonmetric.com
Design and production
Radley Yeldar – www.ry.com
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Find us online
www.londonmetric.com
LondonMetric Property Plc
One Curzon Street
London W1J 5HB
United Kingdom
Telephone +44 (0) 20 7484 9000
Fax +44 (0) 20 7484 9001