Derwent London plc
Report and Accounts 2024
Network W1
Derwent London plc
Strategic report
04
Our strategic framework
06
Our year in review
08
Investment case
10
Chairman’s statement
12
Chief Executive’s statement
15
Central London office market
18
Our portfolio
20
Regeneration projects
24
Strategic framework
& business model
28
Strategic objectives
33
Measuring our performance
38
Our stakeholders
40
Responsibility
42
Double materiality
44
Environmental
48 Social
54 Governance
60
Property review
74
Finance review
86
Going concern & viability
90
Managing risks
Governance
118 Introduction from the Chairman
120 Governance at a glance
122 Board of Directors
124 Executive management
126 Corporate governance statement
132 The Section 172(1) Statement
140 Nominations Committee report
144 Audit Committee report
156 Risk Committee report
166 Responsible Business
Committee report
174 Remuneration Committee report
200 Directors’ report
205 Statement of Directors’
responsibilities
Financial statements
208 Independent Auditors’ report
216 Consolidated income statement
217 Consolidated statement of
comprehensive income
218 Consolidated balance sheet
219 Consolidated statement of
changes in equity
220 Consolidated cash flow statement
221 Notes to the consolidated
financial statements
268 Company balance sheet
269 Company statement of changes
in equity
270 Notes to the Company
financial statements
Other information
277 Ten-year summary
278 EPRA summary
281 Principal properties
283 List of definitions
287 Shareholder information
288 Awards and recognition
Read more
derwentlondon.com
derwentlondon.com/responsibility
We delivered another strong leasing performance in
2024 with new leases signed 12% above ERV, and
activity well distributed across the portfolio.
After declining in H1, portfolio valuations recovered in
the second half and ended the year up 0.2%. Our rental
values grew 4.3% in 2024, the highest since 2016.
London is a leading global city, attracting a diverse
occupier base. As office specialists, the spaces
we deliver have strong appeal. Our well-stocked
regeneration pipeline and high quality central London
portfolio positions us well to benefit from the positive
rental growth outlook for 2025.
Paul Williams
Chief Executive
Report and Accounts 2024
01
Strategic report
Derwent London plc
02
STRATEGIC
REPORT
04
Our strategic framework
06
Our year in review
08
Investment case
10
Chairman’s statement
12
Chief Executive’s statement
15
Central London office market
18
Our portfolio
20
Regeneration projects
24
Strategic framework
& business model
28
Strategic objectives
33
Measuring our performance
38
Our stakeholders
40
Responsibility
42
Double materiality
44 Environmental
48 Social
54 Governance
60
Property review
74
Financial review
86
Going concern & viability
90
Managing risks
DL/28 in Old Street EC1
Having access to the lounges
adds incredible value for
our staff and organisation.
What’s impressive is the spec,
design and quality. It really
puts Derwent into a different
light and category than most
office providers.
Comic Relief
on the DL/ Lounges
Report and Accounts 2024
03
Strategic report
OUR STRATEGIC FRAMEWORK
We are driven by our
To create long-term value for our stakeholders
Dedicated
and adaptable
A passion
to improve
London’s office
spaces
Strong
customer
focus
Progressive
and pragmatic
‘Open door’
and inclusive
Collaborative
and supportive
Occupiers
Employees
Local
communities
and others
Shareholders
and debt
providers
Central
and local
government
Suppliers
Vision
Culture
We design and curate long-life,
low carbon, intelligent offices
that contribute to London’s
position as a leading global city,
while aiming to deliver above
average long-term returns for
all our stakeholders
We build long-term relationships
We lead by design
We act with integrity
We manage our balanced portfolio
Achieved by our
We craft inspiring and
distinctive space where
people thrive
Purpose
Values
See pages 26 and 27
See pages 38 and 39
Core income
On-site schemes
Potential schemes
Strategic
objectives
Core
activities
Governance
framework
Derwent London plc
04
White Collar Factory EC1
Report and Accounts 2024
Strategic report
05
OUR YEAR IN REVIEW
Demand for our high quality, well-located product remained strong through 2024,
enabling us to secure £18.9m of new lettings during the year. This includes 25 Baker
Street W1 where the offices are now fully let ahead of completion. Progress continued
on other regeneration projects, notably at 50 Baker Street W1 where we secured
resolution to grant planning consent and acquired the remaining 50% interest from
our JV partner. Property yields stabilised in H2 and ERV growth doubled in the year,
returning the portfolio to capital growth.
Operational highlights
£18.9m
Lettings,6.2% above December 2023 ERV
3.1%
EPRA vacancy rate (December 2023: 4.0%)R
60%
Major on-site projects pre-let
50 Baker St
Achieved planning & acquired remaining 50%
for £44.4m (before costs)
ESG highlights
137kWh/sqm
Energy intensity (2023: 149 kWh/sqm)R
12,357tCO2e
Operational carbon footprint (2023: 14,370 tCO2e)
69.2%
EPC rating A or B (by ERV) including projects
(2023: 68.4%) – market average < 30%
£451k
Community fund & sponsorship donations committed
Portfolio performance
0.2%
Capital return
(2023: -10.6%)
4.1%
Total property returnR
(2023: -7.3%)
5.73%
True equivalent yield
(2023: 5.55%)
4.3%
ERV growth
(2023: 2.1%)
Derwent London plc
06
Financial highlights
1
EPRA performance measure – see page 283
for definitions.
2 See note 38 on page 255 in the financial
statements for reconciliation to IFRS figures.
3 See note 40 on page 261 in the financial
statements for calculation.
R Links to remuneration – see pages 33 to 37.
Soho Place W1
3,149p
EPRA NTA per share1, 2 (2023: 3,129p)
£276.9m
Gross property & other income
(2023: £265.9m)
3.2%
Total returnR (2023: -11.7%)
106.5p
EPRA earnings per share1, 2 (2023: 102.0p)
£189.6m
Net rental income (2023: £186.2m)
80.5p
Dividend per share (2023: 79.5p)
3.9x
Interest cover ratio3 (2023: 4.1x)
29.9%
EPRA loan-to-value ratio1, 3 (2023: 27.9%)
Report and Accounts 2024
07
Strategic report
INVESTMENT CASE
Positioned for growth
Our portfolio and people together
deliver long-term performance
Market-leading
brand and
experienced
team
• A brand renowned for
design and innovation
• Established team with
a strong track record
of success
• Long-term strategy
with consistent property
outperformance against
our benchmark
See pages 26 and 27
Balanced
portfolio with
extensive
pipeline
• West End focused, where
demand is strong and
rents are rising
• Opportunity-rich
portfolio: 47% with
regeneration potential;
£116m of reversion
• 2m sq ft pipeline of major
regeneration projects
See pages 18 to 21
Strong occupier
demand driving
rental growth
• London is a global city,
attracting a broad range
of sectors
• Quality offices, which are
in short supply, play a
key role in attracting and
retaining talent
• Businesses prioritising an
‘office-centric’ workforce
See pages 15 to 17
Derwent London plc
08
Differentiated
design-led and
amenity-rich
approach
• Matching product to
requirements through
bespoke design
• Broad product range
from larger HQs to
smaller ‘Flex’ units
• Portfolio-wide approach
to amenity made possible
by village clusters
See pages 22 and 23
Responsible
value
creation
• Ensuring value creation for
all stakeholders
• Commitment to net zero
carbon by 2030
• Investing in self-generated
‘green’ electricity
See pages 40 to 53
Disciplined
approach
to capital
management
• Robust balance sheet
with modest leverage
• Financial headroom
provides firepower when
opportunities arise
• Focus on total return
and long-term growth
in dividend, well covered
by earnings
See page 32
Report and Accounts 2024
Strategic report
09
We have a proven track record, with
a disciplined approach to capital
recycling. We have consistently
outperformed the MSCI Central London
Office Index and in 2024 our total
property return was a strong 280bp
outperformance of the index.
The occupational market in London
remains positive. Demand is broadening
and activity is more evenly spread
across sub-markets than in recent years.
While businesses continue to prioritise
prime offices in well-connected, central
locations, there has been an increase in
demand for space at more accessible
price points. Our development pipeline
and portfolio are well-aligned with these
market trends. Our overall ERV was up
£10.9m to £320.5m. This includes the
substantial uplift in our mark-to-market
reversion to £18.3m, from £7.1m at
December 2023, driven by ERV growth.
Over the coming years we intend to
maintain the pace of investment into
our portfolio to ensure our buildings
remain strategically well-placed. Our 2m
sq ft regeneration pipeline will deliver
attractive returns and the scale of the
projects provides good optionality. In
addition, the volume of refurbishments
continues to rise, giving us the
opportunity to drive rents.
Our portfolio remains under continual
review. We will recycle assets to maximise
our return on capital and ensure we
retain sufficient financial headroom
to take advantage of investment
opportunities that are emerging.
Our focus is on offering innovative
workspaces that meet London’s diverse
demand. Like our portfolio, this ranges
from large, long-term HQ spaces to
smaller ‘Furnished + Flexible’ units. We
are dedicated to delivering best-in-class
offices under our distinctive brand and
our unique DL/Member offering plays a
key role in providing real additional value
to our occupiers.
EPRA earnings in 2024 of 106.5p per
share were up 4.4% and I am therefore
pleased to confirm a 0.5p increase in the
final dividend to 55.5p, resulting in a 1.3%
increase in the full year dividend to 80.5p
per share in line with our progressive and
well covered policy. It will be paid on
30 May 2025 to shareholders on the
register of members at 25 April. The 2024
interim and final dividends were covered
1.32 times by EPRA earnings.
CHAIRMAN’S STATEMENT
The Group has a clear and
differentiated business model,
established over 40 years, adding
value through regeneration and
delivering high quality, design-led
sustainable offices.
Mark Breuer Chairman
Highlights
• Market conditions increasingly
favourable
• Long-term track record of total
property return outperformance
against the central London office index
• A balanced portfolio between core
income properties and those with
regeneration potential
Derwent London plc
10
We dedicate considerable time and
resources to the ongoing development
of our people to prepare for succession
at all levels across the business and the
Nominations Committee continues to
plan for senior succession. We have a
strong pool of talent from which to draw.
During 2024, a number of changes
were made to the Board. Claudia Arney
stepped down after nine years as Non-
Executive Director. She was succeeded as
Chair of the Remuneration Committee
by Sanjeev Sharma.
The Board was pleased to welcome
Rob Wilkinson and Madeleine McDougall
as Non-Executive Directors in the year.
Dame Cilla Snowball will retire by no
later than the 2025 AGM after her
nine-year term and be succeeded by
Madeleine as Chair of the Responsible
Business Committee. The Board thanks
both Claudia and Cilla for their valuable
contribution to the business and wishes
them well for the future.
With our great team, strong portfolio
and more positive market outlook,
we are optimistic for the future.
Mark Breuer
Chairman
Brunel Building W2
Report and Accounts 2024
11
Strategic report
We are excited about the outlook for
London and the office sector despite the
volatile macroeconomic environment.
The importance of the office is widely
endorsed by companies across sectors,
as they place increasing emphasis on
ensuring their talent is primarily in the
workplace. High quality, well-located
space across a broadening variety of
price points is being prioritised, which
aligns well with our portfolio.
London’s occupational market was strong
in 2024, with take-up in line with longer
term levels and active demand rising
significantly in the year. At the same time,
the vacancy rate for high quality London
offices is very low and the medium-term
development pipeline is constrained. In
2024, we delivered another successful
leasing performance and portfolio ERV
growth more than doubled year on year
to 4.3%, the highest level since 2016. We
expect this positive activity to continue.
The investment market was subdued last
year. Sentiment improved in the first half,
with inflation and long-term interest rates
reducing, optimism leading up to the
General Election and UK GDP forecasts
being revised upwards. However, Q4
saw a reversal in sentiment as concerns
around growth and inflation re-emerged.
In spite of this, and in line with our
guidance, property yields stabilised,
following two years of substantial
outward movement. Investment activity
is expected to increase in 2025, with a rise
in the number of assets being brought to
the market and more investors looking to
invest in the sector.
Our strategic focus
We are specialists in the London market,
with clear insight into how businesses
see London from a global perspective.
The evolving market and occupier
mindset present both challenges and
opportunities. We are well-positioned
to capitalise on these shifts and are
proactively responding to them.
Our commercial decisions around capital
allocation and operational models will
impact returns over several of years.
As such, we focus on the short and
long-term implications of our actions. We
continue to review market opportunities
while remaining committed to capital
recycling (both buying and selling) at the
optimal price and timing, ensuring we
deliver good returns.
CHIEF EXECUTIVE’S STATEMENT
London is a leading global city which
continuously adapts and evolves.
Paul Williams Chief Executive
Highlights
• Strong total return outlook
• ERV growth across market as
occupier demand broadens
• Substantial increase in
reversionary potential
• Delivering 0.9m sq ft into
supply-constrained market
London’s enduring appeal
London is a leading global city which
continuously adapts and evolves. With
unrivalled international connectivity and
world-leading universities, it is Europe’s
tech and innovation hub attracting
more venture capital investment than
any other European city. Appealing
to talent across a variety of sectors, it
supports a highly skilled workforce. It is a
city with all the elements for a promising
and strong future: ongoing growth in
office-based jobs, GDP expected to
maintain its outperformance, and an
enduring competitive advantage which
appeals to a broad range of businesses.
Derwent London plc
12
We continuously review the portfolio
to ensure it is fit for the future and
over the last five years have made
disposals totalling £824m. Combined
with acquisitions of £484m and capex of
£848m, our portfolio has been reshaped
to fewer but higher quality buildings. We
have been disciplined and strategically
focused with our capital allocation.
With higher quality, greener buildings
today, this reshaping has helped deliver
a more resilient valuation performance
through the recent downturn. Our total
property return has outperformed the
MSCI benchmark by 170bp pa over the
last 10 years, and by 280bp in 2024.
Operationally, our approach is to reflect
the market and offer spaces that appeal
to a broad range of businesses, without
assuming ‘one size fits all’. Inspiring and
innovative architecture and design,
sustainability, and a holistic approach
to our overall product and offering
are integral to everything we do when
shaping our portfolio.
For larger buildings with bigger floor
plates, we deliver HQ space which
attracts more established businesses on
long leases. For units under 10,000 sq ft,
we will likely offer Furnished and Flexible
units to attract smaller occupiers who
are often willing to pay higher rents for
this more straightforward, short-term
solution. Our focus is on maintaining a
well-balanced mix across the portfolio.
This approach ensures a robust WAULT,
sustainable profit margins and helps
us manage our operational costs.
The unique Derwent London offering,
regardless of scale, is backed by a
personal approach, exceptional service,
and further enhanced by our DL/
Member benefits.
Portfolio activity
In 2024 we achieved further operational
success, signing £18.9m of new leases
and bringing the total rent agreed over
the past two years to £47.3m. Open
market lettings in 2024 averaged 12.3%
ahead of December 2023 ERV and
included the pre-letting of the remaining
office space at 25 Baker Street W1. With
a high rate of retention and reletting,
coupled with commencement of rolling
refurbishment work at several properties,
our EPRA vacancy rate reduced from
4.0% at December 2023 to 3.1%. Since
the year end, a further £1.2m has been
let and £2.2m is under offer.
Soho Place W1
Our leasing activity was well distributed
across the portfolio. Geographically,
activity was split between the West End
at 53% and City Borders at 43%, with
pre-letting accounting for 47%.
Lease length is an important KPI for us,
with a long WAULT supporting our risk
capacity for speculative development.
Including pre-lets, the average term
(to break) for new leases signed in the
year was 8.0 years, slightly ahead of the
portfolio’s 6.8 year ‘topped up’ WAULT.
We completed disposals totalling £89.1m
(after costs) in the year. At £76.6m,
Turnmill EC1 was the principal disposal,
reflecting a capital value of £1,100 psf
and a 4.9% initial yield. In addition,
the sale of the recently vacated 4 & 10
Pentonville Road N1 completed shortly
after year end for £25.7m.
Capital expenditure for the year totalled
£207m, one of the highest levels on record.
Alongside our two major on-site projects,
the number of rolling refurbishments
increased in the year, as we upgrade
environmental performance and drive
rents. We expect a higher volume of
refurbishment over the coming years.
Marylebone has been proven as a strong
West End office market. This further
justified our acquisition of our JV partner’s
50% stake at 50 Baker Street W1. This
c.240,000 sq ft development is expected
to start in H1 2026. The consideration of
£44.4m (before costs) reflects a valuation
of c.£370 psf on the consented area, an
attractive discount to recent market
evidence. With a forecast shortage of
supply when the development completes,
we expect this project to deliver an
attractive return.
Report and Accounts 2024
13
Strategic report
CHIEF EXECUTIVE’S STATEMENT continued
Property valuations and
financial performance
Underlying capital values, before
accounting adjustments, increased 0.2%
in 2024, supporting a 0.6% uplift in NTA
to 3,149p per share and a positive total
return (also known as total accounting
return) of 3.2%. This masks a notable
shift through the year, however, with
valuations up 1.9% in H2, more than
offsetting the 1.7% reduction in H1. The
portfolio equivalent yield was unchanged
through H2 at 5.73%, having increased
18bp in the first half. Reversion growth
and development profits were the main
drivers of the second half valuation
performance. Our 4.1% total property
return again outperformed the MSCI
benchmark of 1.3%.
Our higher quality buildings continued to
outperform. Properties valued at ≥£1,500
psf rose in value by 3.5%, while those
valued at ≤£1,000 psf declined 3.8%.
The value of our on-site developments
increased 15.1% reflecting completion
of the pre-letting campaign at 25 Baker
Street and further progress on delivery.
With a structural shortage of space
across the London office market, and
particularly in the West End, that meets
the evolving requirements of occupiers,
we are confident in the ongoing rental
prospects for our portfolio. The pace of
rental value growth in our portfolio more
than doubled in 2024 to 4.3% compared
to 2.1% in 2023. Rental reversion from
reviews and expiries increased substantially
from £7.1m at December 2023 to £18.3m
at the end of 2024 which will drive future
growth in our gross rental income and
marks the start of the new cycle.
Earnings are an important component
of our total return. In recent years, we
have delivered relatively strong EPRA
earnings despite many of our costs
rising more quickly than rental income.
We are now seeing a general reduction
in the rate of cost inflation. It is worth
noting that the lumpy nature of our
development projects causes short-term
movement in earnings as they complete
and capitalisation of interest stops.
Combined with a gradual increase in our
average interest rate as near-term debt
is refinanced, this may impact our EPRA
earnings in 2025. Trading profits from the
sales of the private residential units at
25 Baker Street W1, which are excluded
from the definition of EPRA earnings,
are expected to offset this.
Dynamic London office market
Central London take-up increased each
quarter in 2024 aligning with longer term
levels. A total of 11.3m sq ft was leased.
There is significant pent-up demand
across a wide variety of requirements,
with active demand up 30% over the
year to 12.8m sq ft. London’s office
vacancy rate in 2024 reduced from
8.6% to 7.5%, a decline of c.4m sq ft.
Occupier requirements are focused on
well-connected core locations where
existing supply is low and new supply is
constrained. As a result, businesses with
larger space needs are engaging earlier
to maximise the available options.
We believe the West End is well-
positioned for the medium and longer
term. Reasons include the broad
occupier base and its more restrictive
planning backdrop which limits the
amount of new space being delivered.
While we expect the City to benefit
from a near-term increase in demand,
it is likely to remain more cyclical than
the West End which has historically
demonstrated more sustained growth.
2.0m sq ft regeneration pipeline
Regeneration sits at the heart of our
business model and we have a long
and successful track record of creating
high quality space in the right locations.
Our pipeline extends to approximately
2.0m sq ft across eight major projects,
which includes:
• on-site projects totalling 437,000
sq ft (completion in 2025); the
combined development yield is
6.1%, which would rise to 6.3% if a
similar level of ERV outperformance
is achieved on the remaining
speculative space. Our new yield
on completion metric, of 6.9% for
these projects, replaces notional
finance costs with actual capitalised
interest and is more in line with the
methodology used by our peers;
• next phase of projects totalling
481,300 sq ft which are expected to
complete over the next three to four
years; and
• longer term projects of c.1.1m sq ft.
To maximise value on our longer term
projects such as Old Street Quarter EC1,
we will explore the appropriate balance
of uses, including residential and other
‘living’ sectors.
Additionally, we have an ambitious
programme of refurbishments.
Upgrading the physical space
and improving the environmental
performance (EPC rating) will deliver
attractive rental uplifts at these smaller
projects. Examples include 1-2 Stephen
Street W1, Middlesex House W1 and 1
Oliver’s Yard EC1.
Recognising our employees
In January 2025, we were delighted to
achieve the National Equality Standard
(NES) for the second consecutive
time, achieving a score in the top 5%
of accredited organisations in the UK.
Our continued work to raise the bar
has also been recognised in the latest
Britain’s Most Admired Companies
awards where we came second in the
real estate sector. Acknowledging the
hard work of our talented workforce,
there were 15 internal promotions in
2024, including two promotions to the
Executive Committee: Matt Cook, Head
of Digital Innovation & Technology, and
Julie Schutz, Head of Internal Audit.
Outlook and guidance
The market outlook for London office
rental values is positive with increases
forecast across all sub-markets. Our
valuation ERV growth rose to 4.3% in
2024, and our guidance for 2025 is in the
range of 3% to 6% across our portfolio.
Initially, this will further drive our rental
reversion, with uplifts in passing rent
captured over the following years as
rent reviews and new lettings occur.
We operate a total return business
model. Whilst we expect to see a gradual
increase in our average cost of debt
as we refinance over the next year or
so, ERV-led capital value growth and
development surpluses will be the main
drivers of our performance over the next
couple of years, with earnings expected
to respond thereafter.
Assuming yields remain stable, our total
return outlook is the strongest it has
been for several years, supported by
ongoing investment into the portfolio
in a robust occupier market.
Paul Williams
Chief Executive
Derwent London plc
14
CENTRAL LONDON OFFICE MARKET
Highlights
• Take-up of 11.3m sq ft in line with
long-term average; substantial
pent-up demand
• Looming supply shortfall
–
Vacancy rate down 4m sq ft, to
7.5%; Grade A vacancy much
lower at 1.3% in West End
–
Speculative development of
8.4m sq ft over next four years;
<9 months’ supply
• Investment market subdued in
2024; forecast to improve in 2025
Occupational market
Over the next five years, economic
growth in London is forecast to
outperform the UK by c.40bp annually.
This is expected to support an annual
increase of c.40,000 new office-
based jobs, in turn giving business the
confidence it needs to support ongoing
investment in London.
Occupier demand is strong with a rise
in the number of businesses upsizing.
Recent data from Cushman & Wakefield
showed that for the 10 largest London
office lettings in 2024, there was a
47% average increase in space taken
compared to the existing footprint.
This was corroborated by data from
CBRE which shows the number of
expansions continuing to rise.
Take-up in 2024 was positive and
active occupier demand is elevated
whilst vacancy continues to reduce
and the medium-term development
pipeline is constrained. Consequently,
larger businesses are launching new
requirements at an ever earlier stage.
White Collar Factory EC1
Report and Accounts 2024
15
Strategic report
London’s office cycle
Capital growth
Rental value growth
Index (1980=100)
0
50
100
150
200
250
300
350
400
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
Central London office yields
West End
City
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
Prime office yield (%)
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Available space by sub-market
West End
City
Docklands
Central London
Vacancy rate (%)
0
2
4
6
8
10
12
14
16
18
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Source: MSCI
Source: CBRE
Source: CBRE
Central London office stock
West End
39%
City
33%
Midtown
11%
Docklands
9%
Southbank
8%
Source: CBRE
Overall take-up rose 4% to 11.3m sq ft, in line with the 10-
year average. At 3.5m sq ft, West End take-up reduced 6% as
space under offer rose 11% to 0.9m sq ft. In the City, take-up
increased 3% to 5.8m sq ft, but under offers declined 20% to
0.9m sq ft. Across London, active demand rose 30% to 12.8m
sq ft, the highest level on record, although transactions are
generally taking longer to complete.
Vacancy across London reduced by 4m sq ft to 7.5%, or 1.9%
for Grade A. Within this, the West End remains well-placed
with a Grade A vacancy rate of 1.3% (5.0% overall) with the
City at 2.0% (or 9.5% overall). The cyclical increase in demand
from the banking and finance and business services sectors
has supported a 3m sq ft reduction in City availability to
8.0m sq ft.
Across London, 14.5m sq ft of committed developments are
forecast to complete by 2028, of which 6.1m sq ft is pre-let
or under offer (42%, rising to 51% for 2025 completions) and
8.4m sq ft remains speculative. Based on average take-up
over the last 10 years, this is equivalent to less than nine
months’ supply. 2025 is expected to see a spike in deliveries
(8.8m sq ft), but over the medium-term, the pace of
completions slows significantly.
Looking ahead, the outlook is promising. We are pleased to
observe positive activity throughout London, with rental growth
now anticipated across most sub-markets. The trend toward
quality continues, and competition for the highest quality
spaces is emerging, further bolstering strong rental growth. In
addition, we are witnessing increased demand for good quality
space at more accessible price points. Businesses across all
sectors in London are back in the office, and with corporate
mandates becoming more common, we are seeing a rise in
businesses seeking additional space to accommodate this shift.
CENTRAL LONDON OFFICE MARKET continued
Derwent London plc
16
Central London office take-up
West End
City
Docklands, Midtown & Southbank
0
2
4
6
8
10
12
14
16
18
20
Take-up (million sq ft)
Central London office investment transactions
Average
Investment transactions (£bn)
0
2
4
6
8
10
12
14
16
18
20
22
2000
2000
2002
2002
2004
2004
2006
2006
2008
2008
2010
2010
2012
2012
2014
2014
2016
2016
2018
2018
2020
2020
2022
2022
2024
2024
Central London development pipeline
Completed
Under construction let/under offer
Under construction available
Vacancy rate
Completed average
0
2
4
4
6
6
8
8
10
10
12
12
Floorspace (million sq ft)
Vacancy rate (%)
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
Source: CBRE
Source: CBRE
Source: CBRE
Investment market
The macroeconomic backdrop remained uncertain in 2024.
The positive sentiment which started to emerge in the middle
part of the year reversed in Q4, with long-term interest rates
rising to their highest level since the global financial crisis in
2008-09. Ongoing uncertainty meant that many investors
remained on the sidelines and potential vendors chose to
hold on to buildings until market conditions improve. This
resulted in the lowest transactional volume recorded across
central London in the last 25 years (£4.9bn vs a long-term
average of c.£11.4bn).
Q4 saw the return of a number of institutional investors to
the central London office market, following recent price
corrections, having not been active for several years. Well-
located assets of up to £150m, with Value-Add and Core-Plus
business plans, continue to attract good investor demand,
principally due to the favourable occupational market and
strong rental growth prospects. However, Knight Frank
now also reports around £5bn of capital for core assets, as
a consequence of the growing perception that pricing has
levelled out.
Demand remained focused on the sub-£100m market, with
an average lot size across central London of c.£33m (against
a long-term average of closer to £80m). There were only 11
deals in excess of £100m. The West End proved more resilient
against the challenging economic backdrop, recording £3.1bn
of transactions or four times that of the City at £0.8bn. This
can partly be attributed to its smaller average lot sizes and
lower reliance on debt, but also its broader investor appeal.
Current investment availability sits at around £4.1bn,
according to CBRE. With more pricing datapoints starting
to emerge and rising demand, it is hoped that the market
will see an increase in stock levels over the course of 2025.
However, with around £20bn of equity targeting London,
CBRE estimates an imbalance between demand and supply.
Prime yields were unchanged in both the West End and City
in 2024 at 4.0% and 5.75%, respectively.
Report and Accounts 2024
17
Strategic report
Marylebone
Paddington
Mayfair
Paddington
Marylebone
Valuation
£5.0bn
Floor area
5.4m sq ft
Tenants
402
Buildings
62
A well-located central London portfolio
Portfolio weighting across our 13 London villages (98%)
West End Central
Fitzrovia
34%
Marylebone
11%
Victoria
8%
Soho/Covent Garden
8%
Paddington
6%
Mayfair
2%
West End Borders & Other
Islington and Camden
5%
Brixton
1%
Contracted rental income1
£204.3m
2023: £206.5m
Weighted average unexpired
lease term (WAULT) – to break
5.9yrs
2023: 6.5 years
Estimated rental value2
£320.5m
2023: £309.6m
‘Topped-up’ WAULT
– to break
6.8yrs
2023: 7.4 years
EPRA net initial yield
4.3%
2023: 4.3%
True equivalent
yield
5.73%
2023: 5.55%
OUR PORTFOLIO
1
Net of ground rents.
2 After additional capex of £292m.
City Borders
Old Street
11%
Shoreditch & Whitechapel
6%
Clerkenwell
5%
Southbank
1%
Scotland
2%
Derwent London plc
18
Pimlico
Vauxhall
River Thames
River Thames
Tower
Gateway
DLR
Farringdon
Angel
Tottenham
Court Road
Whitechapel
Victoria
Euston
Barbican
Blackfriars
Bond Street
Elephant and Castle
Cannon Street
London
Bridge
Liverpool Street
King’s Cross
St. Pancras
Fenchurch Street
Waterloo
Soho /
Covent Garden
Holborn
Shoreditch
Old Street
Fitzrovia
The City
Victoria
Islington
Clerkenwell
Whitechapel
Southbank
Key
Villages
Properties
Conditional acquisition
Report and Accounts 2024
19
Strategic report
REGENERATION PROJECTS
We typically invest £150m to £200m
in the portfolio each year.
Major projects and refurbishments
are classified in the ‘With Potential’
or ‘Under Development’ sections of
our balanced portfolio. Our pipeline
comprises of two on-site schemes
(437,000 sq ft) and a further six
schemes (c.1.6m sq ft) for delivery over
the medium to long-term, as well as
other various rolling refurbishments.
Refurbishment projects usually fall
into one of two categories: rolling
or comprehensive.
We reposition properties with enhanced
amenity and general upgrades which
grow income and future-proof asset
value.
The timing, pace and extent of rolling
refurbishments depends on when we
get space back from occupiers.
Part of our activity relates to EPC
upgrade works to ensure compliance
with evolving environmental legislation.
On completion, properties move into
the ‘Core Income’ category where we
continue to create value through asset
management.
See page 26
25 Baker Street W1
Target completion H1 2025
Network W1
Target completion H2 2025
1-2 Stephen Street W1
Rolling from 2023
Middlesex House W1
Rolling from 2024
2025
2026
2027
25 Baker St
Network
Holden House
50 Baker St
Greencoat & Gordon House
Rolling refurbishments
Project timeline for major projects
On-site
Next phase
Longer term
298,000 sq ft
Uplift: 66%
£298m
Total capex
(plus £27m estimated overage)
£82+ psf
Estimated rental value
£63 psf
Previous/passing rent
139,000 sq ft
Uplift: 66%
£125m
Total capex
£80+ psf
Estimated rental value
£60 psf
Previous/passing rent
We add value
through a
combination of
development and
refurbishment
projects across
the portfolio.
On-site
Examples of rolling refurbishments
Derwent London plc
20
20 Farringdon Road EC1
Comprehensive refurbishment
Start date: 2027
Old Street Quarter EC1
Mixed-use campus redevelopment
Start date: 2028+
166,300 sq ft
£52 psf
Passing rent
750,000+ sq ft
Target / Uplift: 80%
400,000 sq ft
Existing
200,000+ sq ft
Target / Uplift: 200%
60,100 sq ft
Existing
230 Blackfriars Road SE1
Redevelopment
Start date: 2030+
133,500 sq ft
Uplift: 47% (from 90,600 sq ft)
Consented
c.240,000 sq ft
Uplift: 96% (from 122,300 sq ft)
Consented
(resolution to grant)
Holden House W1
Redevelopment behind façade
Start date: H2 2025
50 Baker Street W1
Redevelopment
Start date: H1 2026
107,800 sq ft
£54 psf
Passing rent
Greencoat & Gordon House SW1
Comprehensive refurbishment
Start date: H1 2026
£70+ psf
Scheme ERV
£80+psf
Scheme ERV
2028
2029
2030+
20 Farringdon Rd
Old Street Quarter
230 Blackfriars Rd
Next phase
Longer term
Report and Accounts 2024
21
Strategic report
Q1 2023
106,100 sq ft - 5th to 9th floors
Q3 2023
49,400 sq ft - 3rd & 4th floor
Q4 2024 CONFIDENTIAL
24,500 sq ft - 2nd floor
Q2 2024
17,100 sq ft - Part 1st floor
Q4 2024
7,200 sq ft - Pt 1st
Growth in ERV
Pre-let
Available ERV
H1 2022
FY 2024
0
5
10
15
20
25
£m
18.4
20.7
0.6
£21.3m
+16%
REGENERATION PROJECTS continued
Investing in Marylebone
25 Baker Street W1
Regeneration underway
• Originally a collection of 1960s leasehold buildings we held jointly with
The Portman Estate, Derwent acquired full ownership in late 2021 ahead
of commencing the development.
• The 298,000 sq ft mixed-use scheme, designed by Hopkins Architects,
includes 206,000 sq ft of Grade A offices, 41 private residential apartments
(c.50% pre-sold by value) and 17 retail units around a new landscaped
public courtyard.
• Designed with all-electric heating and cooling and Intelligent Building
technology, the office building is being delivered with high sustainability
credentials, targeting BREEAM Outstanding and NABERS UK 4.5* or higher.
• The offices are fully pre-let ahead of completion in mid-2025 to five diverse
tenants, demonstrating depth of demand, at rents well ahead of our
original appraisal.
Derwent London plc
22
Our investment strategy often focuses on village clusters, which enables us to positively
impact the local area. Marylebone, with its vibrant village atmosphere, excellent transport
links and abundance of green space, embodies many of the attributes sought by discerning
occupiers. This underpins our decision to invest significantly in this location and generate value.
50 Baker Street W1
The next phase
• Our ownership of this 1.0-acre island site currently comprises three
leasehold properties. We purchased the first 50% from Lazari in 2021 and
the balance was acquired in late 2024 after a period of joint ownership.
Additionally, there is a fourth property owned by the freeholder, The
Portman Estate.
• We obtained resolution to grant planning consent in August 2024 and,
with our established relationship with the freeholder, are making good
progress on agreeing a headlease regear over the entire site.
• The project is a c.240,000 sq ft high quality office-led scheme, expected
to commence in early 2026.
• Following our leasing success at nearby 25 Baker Street, and considering
the limited availability of best-in-class space in the West End, we
anticipate strong demand from high calibre occupiers for this location.
Before
After
Report and Accounts 2024
Strategic report
23
STRATEGIC FRAMEWORK & BUSINESS MODEL
Our portfolio and people together
deliver long-term performance
We combine our asset management and regeneration expertise with a relationship-
focused approach to add value to the Group’s 5.4m sq ft property portfolio and grow
income. Stakeholder, climate change and wider ESG impacts form key considerations
in the strategy we pursue for each individual property. This approach benefits the
communities in which we operate and the wider environment.
Core
activities
Asset management
Understanding our occupiers helps
us tailor buildings and leases to their
needs thereby reducing vacancy,
growing our income streams and
adding value
Refurbishment and development
Our focus on design, amenity and
innovation creates sustainable and
adaptable buildings, characterised by
generous volumes and good natural
light with high quality amenities
Investment activity
We recycle capital, acquiring properties
with future regeneration potential
to build a pipeline of projects and
disposing of those which no longer
meet our investment criteria and
forward return expectations
See page 26
Achieved by our
We are driven by our
Culture
Dedicated
and adaptable
A passion to improve
London’s office spaces
Strong customer
focus
Progressive
and pragmatic
‘Open door’
and inclusive
Collaborative
and supportive
We craft inspiring and
distinctive space where
people thrive
Purpose
Values
Vision
We design and curate long-
life, low carbon, intelligent
offices that contribute to
London’s position as a leading
global city, while aiming
to deliver above average
long-term returns for all
our stakeholders
We build long-term
relationships
We lead by design
We act with integrity
Derwent London plc
24
Governance
framework
Risk management
Risk management is integral
to the delivery of our strategy
Performance and
remuneration
Success against our objectives
is measured using our KPIs and
rewarded through our incentive
schemes
See page 27
Our
stakeholders
Occupiers
Employees
Local communities
and others
Suppliers
Central and local
government
Shareholders and
debt providers
See pages 38 and 39
Strategic
objectives
To optimise returns
and create value from
a balanced portfolio
To grow recurring
earnings and cash flow
To attract, retain
and develop talented
employees
To design, deliver and
operate our buildings
responsibly
To maintain strong
and flexible financing
See pages 28 to 32
Creating value for
Report and Accounts 2024
Strategic report
25
Co
re
a
cti
vit
ie
s
B
al
a
nc
e
d
po
rt
fo
li
o
STRATEGIC FRAMEWORK & BUSINESS MODEL continued
We plan for a portfolio balanced
between ‘Regeneration’ and ‘Core
income’ assets. At 31 December
2024, our portfolio was split
47% ‘With potential’ or ‘Under
development’ and 53% ‘Core
income’. The balance may fluctuate
depending on the market cycle.
1
Comprises 4.92m sq ft of existing buildings plus 0.44m sq ft of on-site developments.
2
Includes Future appraisal, Under appraisal and Consented categories.
How we add value
Sell lower returning assets;
capital recycled into higher
returning opportunities
Continue to add value through
satisfying occupier needs,
minimising voids, growing
income and further upgrades
Buy properties with modest capital
values and potential to upgrade
and/or add floor area; usually
income-producing
Secure planning consent; refurbish or redevelop,
adding floor area where possible; seek to de-risk
with pre-let(s) and fixed price contracts
Explore the best
plan for a building
whilst maintaining
income; agree
landlord breaks at
future dates which
provide flexibility over
vacant possession for
regeneration
In
ve
st
me
nt
: r
ec
yc
lin
g
As
se
t
ma
na
ge
me
nt
In
ve
st
m
en
t:
a
cq
uis
iti
on
Re
fu
rb
is
h
me
nt
&
de
ve
lo
p
me
nt
As
se
t
m
an
ag
em
en
t
Future appraisal
18%
Core income
53%
Under
appraisal
13%
Consented 4%
On-site
refurbishments
4%
Portfolio characteristics
Floor area: 2.83m sq ft
Rental income: £137.9m
WAULT: 6.8 years
Rent3: £68.49 psf
ERV: £70.95 psf
Core income
Floor area: 0.44m sq ft
Pre-let income: £20.7m
WAULT: 13.5 years
Rent3: £104.06 psf
ERV: £96.68 psf
On-site developments
Floor area: 0.19m sq ft
Rental income: £0.9m
WAULT: 0.5 years
Rent3: £0.00 psf
ERV: £78.51 psf
On-site refurbishments
Floor area: 1.90m sq ft
Rental income: £65.5m
WAULT: 4.0 years
Rent3: £48.00 psf
ERV: £54.98 psf
Potential schemes2
Core activities
‘Core income’
Buildings where most of the
repositioning activity has taken place,
but we use our asset management
skills to continue to grow income
and value.
‘With potential’ or
‘Under development’
Buildings either on site or with potential to
add further value through regeneration.
The proposed major development at
Old Street Quarter EC1 is excluded as
completion of the purchase is conditional
and not anticipated to occur before 2027.
47%
Under
development/
potential4
53%
Core income4
5.4m
sq ft1
£204.3m
rent
On-site
developments
8%
3 ‘Topped-up’ office rents only.
4
49% Core income / 51% Under development/potential including
Old Street Quarter.
Derwent London plc
26
Governance framework
Risk management
Balancing the appropriate level of risk and return is
an integral part of our business model. Risk levels are
monitored regularly and split into categories considering
the likely impact on strategy, operations, financial
position and stakeholders.
We take a long-term view on planning, risk mitigation
and financial discipline as our projects often span
many years.
Annual preparation of a five-year plan helps us identify
risks and opportunities. It enables us to maintain an
appropriate balance between income/dividend growth
and value adding through higher risk projects over the
near and medium-term. It also helps us monitor our
responsibilities to our various stakeholders.
Long-standing relationships with our supply chain form
an important source of value and help mitigate risk.
Principal risks / See pages 94 to 99
Emerging risks/ See pages 100 and 101
Performance & remuneration
Key Performance Indicators (KPIs) help us measure
performance and assess the effectiveness of our strategy.
The main performance measures we use to ascertain
overall business performance and determine the majority
of the variable elements of executive remuneration are:
• Total return (TR) – Combines the dividend paid in the
year with the movement in net asset value (using EPRA
NTA) to provide an overall return for the year on a per
share basis; this is measured against our peer group.
• Total property return (TPR) – The movement in our
property values plus the income they generate; this is
compared against an index of other relevant properties.
• Total shareholder return (TSR) – The movement in our
share price plus dividends; this is compared against
our benchmark, the FTSE 350 Real Estate Super
Sector Index.
We use these metrics to ensure strong alignment
between the interests of shareholders and our decision
makers. In addition, non-financial targets, which
measure our success in meeting ESG and climate change
responsibilities and the needs of other stakeholders,
comprise 25% of the potential annual bonus and 10%
of the potential LTIP.
Performance measurement / See pages 33 to 37
Remuneration Committee report / See pages 174 to 199
80 Goswell Road EC1
Report and Accounts 2024
27
Strategic report
STRATEGIC OBJECTIVES
1
To optimise returns and create
value from a balanced portfolio
We plan to optimise returns from a
portfolio which is balanced between
properties with potential to add further
value through regeneration, and those
which have already been repositioned but
where our asset management skills can
continue to grow value and income. This
split changes depending on where we are
in the property cycle and where individual
properties are in their life cycle. See page
26 for ‘Balanced portfolio’ split.
Maintaining a pipeline of current and
future projects is a key part of our
strategy as returns generated from
value-enhancing projects help us
outperform our benchmarks (principally
the MSCI Central London Office Index).
These projects often take several years
with profits derived from a combination
of planning uplift, the regearing of
headleases and physical refurbishment
or redevelopment.
47%
of assets ‘Under development/With
potential’ (by area) / see page 26
53%
of assets ‘Core income’ (by area)
2024 Priorities
Progress
Make further progress on 25 Baker
Street and Network, including
additional pre-lets and residential
pre-sales
Good progress made and both projects
on track to complete in 2025. At 25
Baker Street, office space is 100%
pre-let on long leases ahead of ERV,
first retail units are under offer and 15
residential units pre-sold at Dec 2024
Let the remaining space at
The Featherstone Building,
Soho Place and elsewhere
Soho Place is now fully let and The
Featherstone Building is 92% leased
Secure planning for 50 Baker Street
JV and progress plans for Old
Street Quarter
At 50 Baker Street, resolution to grant
planning consent was received in Aug
2024, and 100% ownership acquired
in Dec 2024. At Old Street Quarter,
further progress made on plans for a
mixed-use project
Dispose of properties that no
longer meet our investment
criteria
Total disposals of £89m completed in
2024 in line with book value, with a
further £26m in Jan 2025
Review emerging acquisition
opportunities
Explored several acquisition
opportunities across a range
of assets, including those with
regeneration potential
2024 Priorities and progress
2025 Priorities
• Complete projects at 25 Baker
Street and Network, including
securing pre-lets at Network, and
further residential sales and letting
of the retail units at 25 Baker Street
• Commence redevelopment at
Holden House W1
• Progress 50 Baker Street
development
• Continue to progress masterplans
for Old Street Quarter in advance
of planning application
• Progress disposal opportunities
• Review emerging acquisition
opportunities
Principal risks:
1 3 4 5 6 7 8
9 11
Emerging risks:
A B C
Performance measures:
1 2 3 4 7 8 10
KPIs / See page 33
See page 94
See page 100
Having a balanced portfolio enables us
to start schemes speculatively. However,
we often look to de-risk projects by
agreeing pre-lets during the construction
period. The momentum this provides
encourages us to consider the next
phase of our project pipeline, adding
further value where we see opportunities.
We seek to balance the inherent risk of
regeneration projects with ‘core income’
properties in the portfolio, where the
focus is on customer relationships to
maintain or grow income through active
asset management. This enables us to
achieve the appropriate balance of risk
and return for the business.
We regularly review the portfolio to identify capital recycling opportunities,
which involves disposing of assets where we believe most of the upside has
been captured or which no longer meet our investment criteria.
Derwent London plc
28
2 To grow recurring
earnings and cash flow
Property valuations reflect the
combination of contracted and expected
future cash flows with a market yield
which takes account of risk, growth
expectations, quality, environmental
considerations and other factors.
Establishing the right strategy for
a property can both add value and
increase cash flow, but these typically
occur at different stages of the property
cycle. Value creation usually occurs first
as expectations emerge that rent will
grow above its current passing level,
referred to as ‘reversion’, with an uplift
in cash flow captured later upon lease
events such as rent reviews, lease regears
and other forms of lease restructuring.
2.6%
increase in like-for-like
gross rental income in 2024
3.1%
EPRA vacancy rate
2024 Priorities
Progress
Continue to proactively manage
upcoming reviews, expiries/breaks
and vacancies to retain or increase
income
Carried out asset management
activities on 364,400 sq ft, increasing
rent by 1.2% to £14.5m. Our combined
retention and re-let rate was 85% and
average unexpired lease length is 5.9
years (2023: 6.5 years)
Work to reduce irrecoverable
property costs
Lower EPRA vacancy rate, reduced
utility prices and maintenance
contracts negotiated at sub-inflation
levels helped reduce property costs
Look to upgrade existing stock
where opportunities arise to
maximise income
Invested £53m on smaller upgrade
projects across the portfolio
Further promote DL/Lounges and
DL/Service and continue to build
on our member offering
New office tenants briefed on
DL/Member benefits, various
marketing campaigns conducted
to promote DL/Service and member
feedback collected through surveys
2024 Priorities and progress
Achieved
In progress
Not achieved
2025 Priorities
• Proactively manage upcoming
reviews, expiries/breaks and
vacancies to retain or increase
income
• Continue to upgrade portfolio
and drive rents
• Review opportunities to reduce
EPRA cost ratio
• Complete majority of apartment
sales at 25 Baker Street
Principal risks:
1 3 4 5 6 7 8
9 11
Emerging risks:
A B C D E
Performance measures:
1 2 3 4 7 9 10
KPIs / See page 33
See page 94
See page 100
Drawing on established relationships
with occupiers, and with a focus on local
communities and other stakeholders,
our asset managers capture reversion by:
• achieving appropriate rent review
outcomes by working closely with our
occupiers and consultants;
• extending leases or removing break
clauses through negotiations with our
occupiers;
• co-ordinating ‘block dates’ to gain
possession of buildings in preparation
for regeneration schemes;
• reviewing levels of ‘grey’ space, i.e.
floor area that is let but which is
not currently occupied or is being
marketed by an occupier; and
• optimising income by anticipating our
occupiers’ needs. Examples include
fixed or minimum rental uplifts and a
flexible approach to dilapidations and
alienation clauses.
We believe that by creating the right space and providing our occupiers
with the flexibility, adaptability, amenity and DL/Member benefits they are
increasingly looking for we can generate further rental growth in the future.
Report and Accounts 2024
29
Strategic report
STRATEGIC OBJECTIVES continued
3 To attract, retain and
develop talented employees
Our employees are instrumental to the
successful delivery of our strategy and
long-term business performance.
We are an inclusive and respectful
employer that welcomes diversity and
champion equality. Our high performing,
progressive and collaborative culture,
alongside a consultative and professional
leadership style, is focused on teamwork,
integrity and long-term relationships.
The Group’s reputation stems from
behaviours and values promoted by the
Board and Executive Committee. Our
employees are our brand ambassadors and
we invest considerable time and resources
in their development and growth. The
Group enjoys a high rate of staff retention
(85% in 2024). When we recruit externally,
we look for diverse, outstanding individuals
who can bring creativity, skills and
competencies to the business.
93%
Proud to work at Derwent London
91%
Overall employee satisfaction
2024 Priorities
Progress
Host four individuals through
the #10,000 Interns programme
Four interns completed the #10,000
Interns programme, which incorporated
a reverse mentoring programme with
senior Derwent employees
Inclusive management training
for line managers
Directors, Executive Committee and
line managers received inclusive
management training in Nov 2024
Progress work on Disability
Strategy and Action Plan
External consultant-led review of
portfolio accessibility completed;
building access information packs to
support visitors with different abilities
to be introduced in 2025; all projects to
be audited at each RIBA design stage
by accessibility consultant
Take appropriate action identified
by employee focus groups
following staff survey
Staff appraisal process refreshed and
training provided to line management
to support higher quality outcomes
2024 Priorities and progress
Our operational structure enables
complex transactions to be managed
effectively. Although we are organised by
discipline, we assemble specific project
teams from across the business to
increase creativity and innovation.
We undertake an annual anonymous
staff survey which provides an important
forum for staff feedback. This helps us
identify areas where we have made a
positive impact and areas for future
improvement.
2025 Priorities
• Maintain focus on future succession
planning and employee upskilling
• Consider appropriate action
identified following staff ‘pulse
survey’
• Prepare and launch biennial
employee survey
• Analyse feedback from NES
reassessment report and refocus
priorities
• Continue with health and wellbeing
initiatives
Principal risks:
6 7 8 9 10 11
Emerging risks:
B C
Performance measures:
1 2 3 4 7 8 10
KPIs / See page 33
See page 94
See page 100
We are focused on embedding our diversity and inclusion ambitions,
and upskilling our talent, throughout the business.
Derwent London plc
30
4 To design, deliver and operate
our buildings responsibly
Delivering well-designed, adaptable,
occupier-focused buildings with carefully
considered amenity is an integral part
of our business model. We believe these
buildings offer better long-term value
for customers through more efficient
occupation, reduce letting risk and void
levels, and command stronger rents,
yields and values.
Setting high standards for design and
environmental responsibility builds
flexibility, longevity and climate resilience
into our portfolio, both for new schemes
and the properties we manage.
To meet our target of becoming a net
zero carbon business by 2030, we must
deliver buildings that are increasingly
energy efficient, powered by renewable
energy and have very low embodied
carbon footprints. Likewise, we must
reduce the reliance of our managed
properties on natural gas, and further
lower their energy consumption and
associated operational carbon footprints.
69.2%
EPC rating A or B, including
projects (by ERV)
17%
Reduction in energy intensity
since 2019 baseline (kWh/sqm)
2024 Priorities
Progress
Collaborate with occupiers to
reduce energy usage
Engaged with 118 occupiers (73% of
ERV); energy consumption of managed
portfolio reduced 9% in 2024
Review and expand material Scope
3 inventory elements, including
those relating to occupier energy
which we do not procure
Additional upgrade works to our
environmental data ecosystem were
prioritised in 2024 over Scope 3
expansion. This work included further
automation of data collection and
analysis processes, as well as Intelligent
Building integration
Complete double materiality
assessment
Completed double materiality
assessment and its integration into the
Group’s strategy and risk processes –
see pages 42 and 43
2024 Priorities and progress
Achieved
In progress
Not achieved
Our Net Zero Carbon 2030 Pathway is
set out on pages 44 to 47, together with
our full TCFD (Task Force on Climate-
related Financial Disclosures) report on
pages 102 to 115. A phased programme of
works to upgrade EPC ratings to ensure
compliance with evolving Minimum
Energy Efficiency Standards (MEES)
legislation is underway.
We work with our stakeholder groups
to ensure we are meeting their
expectations and standards, as well as
acting responsibly (see pages 38 and
39). This includes engaging with the
local communities around our buildings,
through to using the best designers
and contractors to ensure our portfolio
meets the high standards we set.
2025 Priorities
• Maintain positive progress towards
energy intensity reduction targets
• Ensure our development pipeline
continues to meet our embodied
carbon targets
• Progress Lochfaulds solar park
including commencement of solar
panel installation
• Progress concrete decarbonisation
and circular economy initiatives
• Review and expand material Scope
3 inventory elements
• Launch of three-year funding
option under our community fund
Principal risks:
1 6 7 8 9 10
Emerging risks:
A C D E
Performance measures:
1 2 3 4 7 9 10
KPIs / See page 33
See page 94
See page 100
We aim to ensure our portfolio is fit for purpose over the long-term and
continues to generate the returns we expect.
Report and Accounts 2024
31
Strategic report
STRATEGIC OBJECTIVES continued
5 To maintain strong
and flexible financing
We finance our business using equity and
a moderate level of debt from a variety of
sources. We value long-term relationships
with our lenders, whilst also striving to be
progressive and innovative.
Our core principle is one of modest
financial leverage with generous interest
cover, to balance the relatively higher risk
associated with our regeneration activity.
Using a combination of unsecured flexible
revolving bank facilities and longer term
fixed rate debt, we can adjust the level
of drawn debt to meet our day-to-day
requirements.
We aim to maintain considerable
headroom under our facilities to enable
us to move quickly when acquisition
opportunities arise. This demonstrates
flexibility to fund cash flows without
delay but has a cost in terms of non-
utilisation fees. It also reassures our
management team and stakeholders
that the development pipeline is capable
of being financed and delivered without
overstretching the balance sheet.
2024 Priorities
Progress
Agree and execute strategy for
£83m 3.99% secured loan due
in 2024
£83m secured loan refinanced with
new £100m unsecured 3-year term
facility plus two 1-year extension
options signed with NatWest
Consider refinancing options for
£175m convertible bonds and £55m
private placement notes due to
mature over the next 24 months
New facilities agreed with Barclays
(Dec 2024) and HSBC (Feb 2025),
for a combined £230m, on an initial
term of 2 years with options to extend
Maintain substantial headroom on
financial covenants
Interest cover remains strong at 3.9
times; property income could fall by
62% before breaching the interest
cover covenant. High level of cash
and undrawn facilities maintained
(£487m at Dec 2024) and EPRA LTV
remains low at 29.9%
Continue to maintain close
relations with our existing lenders
Maintained regular dialogue with all
our lenders throughout the year and
hosted a number of property tours
2024 Priorities and progress
Our REIT status
Derwent London plc has been a Real
Estate Investment Trust (REIT) since
July 2007. The REIT regime (see page
285) provides a structure which closely
mirrors the tax position of an investor
holding property directly and removes
tax inequalities between different real
estate investors. REITs are principally
property investors with tax-exempt
property rental businesses, but remain
subject to corporation tax on non-
exempt income and gains. In addition,
we are required to deduct withholding
tax from certain shareholders on
property income distributions and,
in 2024, £9.8m was paid to HMRC.
Our financing model is based on the
following principles:
• modest financial leverage;
• strong focus on interest cover
to support our credit rating
(Fitch issuer default rating of
‘BBB+’ with a stable outlook);
• borrowing from a diverse group of
relationship lenders who understand
and support our business model;
• a focus on debt maturities, while
managing the cost of debt and
ensuring sufficient protection
against interest rate fluctuations;
• keeping structures and covenants
simple and understandable and
planning ahead;
• ensuring alignment of the Group’s
financing strategy with our overall
business goals; and
• maintaining a healthy level of
financial headroom.
This approach provides financial stability
and helps us when considering issues such
as going concern and viability statements.
2025 Priorities
• Repay convertible bonds due
June 2025
• Refinance main £450m bank facility
• Consider refinancing options for
LMS bonds 2026
• Maintain substantial headroom
on financial covenants
• Continue to maintain close
relations with existing lenders
Principal risks:
1 2 3 4 6 7 8
9 10 11
Emerging risks:
D E
Performance measures:
1 2 3 4 7 8 10
KPIs / See page 33
See page 94
See page 100
Achieved
In progress
Not achieved
We value long-term relationships with our lenders, valuing the stability
and mutual understanding that this creates over an approach that seeks
the very lowest funding cost.
Derwent London plc
32
MEASURING OUR PERFORMANCE
Measuring our
performance
We use a balance of financial and non-financial key performance indicators
(KPIs) to measure our performance and assess the effectiveness of our
strategy. They are also used to monitor the impact of the principal risks that
have been identified and a number are used to determine remuneration.
Key Performance Indicators
Financial
Non-Financial
Operational measures
• Total return
• Total property return
• Total shareholder return
• EPRA earnings per share
Gearing measures
• Gearing & available resources
• Interest cover ratio
Operational measures
• Reversionary percentage
• Development potential
• Tenant retention
• Void management
Responsibility measures
• BREEAM ratings
• Energy Performance Certificates
• Energy intensity
• Embodied carbon intensity
• Accident frequency rate
• Staff satisfaction
Audited
Assured
Remuneration
A
A
R
Key to strategic objectives
To optimise returns and create value from a balanced portfolio
To grow recurring earnings and cash flow
To attract, retain and develop talented employees
To design, deliver and operate our buildings responsibly
To maintain strong and flexible financing
1
2
3
4
5
Strategy / See page 27
Report and Accounts 2024
33
Strategic report
(16.6)%
10.3%
1.5%
(31.1)%
(14.1)%
27.2%
8.4%
(28.2)%
(8.9)%
2020
2021
2023
2022
2024
(5.4)%
98.0
108.5
102.0
106.5
106.6
2020
2021
2023
2024
2022
(8.0)%
(7.9)%
0.3%
6.3%
(2.4)%
5.9%
(3.4)%
(7.3)%
2020
2021
2024
2022
2023
2024
1.7%
2.1%
4.6%
4.7%
1.6%
5.1%
1.1%
(1.5)%
(1.5)%
(2.2)%
2020
2021
2022
2023
Derwent London
MSCI Central London Office Index
Derwent London
MSCI UK All Property Index
(1.8)%
5.8%
(14.1)%
(0.6)%
6.2%
(12.8)%
17.8%
(6.3)%
(11.7)%
3.2%
2020
2021
2024
2022
2023
Derwent London
Weighted average of major UK REIT companies
Derwent London
FTSE UK 350 Super Sector Real Estate Index
4.1%
1.3%
4. EPRA earnings per share (EPS)
EPRA EPS is the principal measure used to assess the Group’s
operating performance and a key determinant of the annual
dividend. A reconciliation to the IFRS profit can be found in
note 38 on page 255.
1. Total return (TR)
TR is used to assess the value we have delivered for investors.
Our aim is to exceed the average of other major UK real estate
companies (our ‘benchmark’).
2. Total property return (TPR)
TPR is used to assess progress against our property-focused
strategic objectives. Our aim is to exceed the MSCI Central London
Office Index on an annual basis and the MSCI UK All Property Index
on a three-year rolling basis.
Annual
3. Total shareholder return (TSR)
TSR is used to measure the Group’s success in providing above
average long-term returns to its shareholders. We compare our
performance against the FTSE 350 Real Estate Super Sector
Index, measured in accordance with industry best practice.
Our performance
The Group’s TR in 2024 was 3.2% compared to the benchmark
of c.6.2% based on current estimates. Our average
annual return over the past five years is -2.2%, a 1.5% pa
underperformance against the benchmark -0.7%, mainly
due to the office sector performing less well than other
property sectors.
Strategic objectives 1 2 3 4 5
A R
Our performance
The fall in the share price during the year, in comparison to
those of our peers mainly invested in other property sectors,
meant that the Group underperformed its benchmark index
in 2024.
Strategic objectives 1 2 3 4 5
R
Our performance
EPRA EPS increased 4.4% to 106.5p per share in 2024. This was
mainly due to an increase in gross rental income at recently
completed developments, and an increase in surrender premium
income received in the year.
Strategic objectives 1 2
A
Three-year rolling
Financial
MEASURING OUR PERFORMANCE continued
Our performance
Good progress on delivery and de-risking of on-site projects
resulted in a 2.8% outperformance of the MSCI Central London
Office Index during 2024. The Group’s three-year rolling average
TPR is -2.2% pa, a 0.7% underperformance against the MSCI
UK All Property Index. This was mainly due to the strength of the
industrial sector in previous years.
Strategic objectives 1 2
R
Derwent London plc
34
4.5x
4.6x
4.1x
3.9x
4.2x
2020
2021
2022
2024
2023
Minimum target = 200%
5. Gearing and available resources
The Group uses NAV gearing and EPRA LTV to monitor its capital
position. The levels of cash and undrawn facilities, and uncharged
properties remain under regular review to ensure sufficient
flexibility to take advantage of acquisition and development
opportunities.
2023
2024
EPRA LTV ratio
27.9%
29.9%
NAV gearing
38.7%
41.9%
Cash and undrawn facilities
£480m
£487m
Uncharged properties
£4,202m
£4,665m
7. Reversionary percentage
This is the percentage by which cash flow from rental income
would grow, assuming passing rent increases to the estimated
rental value (ERV) and that on-site schemes are completed
and fully let. This is used to monitor the Group’s future income
growth potential.
2020
2021
2022
2023
2024
%
54
65
49
50
57
6. Interest cover ratio (ICR)
We aim for interest payable to be covered by net rental income
at least two times. The basis of calculation, which is detailed in
note 40 on page 261, is in line with the covenant which forms
part of our unsecured bank debt.
8. Development potential
We monitor the proportion of our portfolio with refurbishment
or redevelopment potential to ensure it contains sufficient
opportunities for future value creation.
2020
2021
2022
2023
2024
%
43
48
43
44
47
Our performance
After net investment in our portfolio of £150.6m in 2024,
cash and undrawn facilities at year and increased to £487m.
A fall in property values between June 2022 and June 2024 led
to an increase in the NAV gearing and LTV ratios. However, with
the stabilisation in valuations in H2 2024, both ratios remain at
comfortable levels.
Strategic objectives 5
A
Our performance
ERV increased by £10.9m to £320.5m in 2024, due to 4.3%
rental value growth on standing and development properties,
partly offset by disposals in the year. The £116m potential
reversion at December 2024 is 57% of passing rent (£204m),
of which 54% is contracted.
Strategic objectives 1 2
Our performance
Net property income increased in the year but higher finance
costs resulted in ICR decreasing slightly in 2024. We retain
substantial headroom to the main ICR covenant of 1.45 times;
rental income would need to fall by 62% before it was breached.
Strategic objectives 5
A
Our performance
At the end of 2024, on-site developments and refurbishments
represented 12% of the portfolio with a further 35% identified
as potential schemes. Including the conditional acquisition of
Old Street Quarter EC1, the development potential increases
to 51%.
We continue to actively seek opportunities to ensure the
optimal balance between core income and development
potential.
Strategic objectives 1
R
Non-Financial
Report and Accounts 2024
35
Strategic report
9. Tenant retention
Maximising tenant retention, in the absence of regeneration
plans, reduces void periods and vacancy levels, contributing
to net rental income.
2020
2021
2022
2023
2024
Exposure (£m pa)1
12.5
19.7
13.2
21.5
17.9
Retention (%)
65
47
59
62
76
Re-let (%)
22
30
20
3
9
Total (%)
87
77
79
65
85
10. Void management
To optimise our rental income we plan to minimise the amount
of space immediately available for letting. Our aim is for this to
remain below 10% of the portfolio’s estimated rental value (ERV).
2020
2021
2022
2023
2024
Year end (%)
1.8
1.6
6.4
4.0
3.1
Average (%)
1.3
2.3
5.7
4.3
3.2
11. BREEAM ratings
BREEAM is an environmental impact assessment for non-domestic
buildings. Performance ratings are: Pass, Good, Very Good,
Excellent and Outstanding.
We target minimum BREEAM ratings of ‘Excellent’ for major
developments and ‘Very Good’ for major refurbishments.
Completion
Rating
25 Baker Street W1
H1 20251
Outstanding2,3
Network W1
H2 20251
Outstanding2
1
Targeted.
2
Certified at Design Stage.
3
Excluding the offices at 30 Gloucester Place which was rated BREEAM
‘Excellent’ at Design Stage.
12. Energy Performance Certificates (EPCs)
EPCs indicate the energy efficiency of a building. The ratings range
from ‘A’ (very efficient) to ‘G’ (inefficient).
We target a minimum EPC of ‘A’ for major developments and ‘B’
for major refurbishments.
Completion
Rating
25 Baker Street W1
H1 20251
A1,2
Network W1
H2 20251
A1
1
Targeted.
2
Excluding the offices at 30 Gloucester Place which has a target EPC of B.
1
Rental income subject to tenant breaks or expiries.
Our performance
Our retention and re-letting rate rose to 85% in 2024, partly
due to timing of breaks and expiries but also evidence of the
strong relationships we have with our tenants and the appeal
of our product.
Strategic objectives 2
R
Our performance
Our EPRA vacancy rate at year end was 3.1% and averaged
3.2% through 2024. The reduction compared to 2023 reflects
a combination of strong letting activity of vacant space and a
high retention and re-letting rate on lease breaks and expiries.
Strategic objectives 1 2
R
Our performance
Our two current on-site developments were rated BREEAM
‘Outstanding’3 at Design Stage.
Strategic objectives 4
Our performance
Our two on-site developments are targeting an EPC rating of A2.
Strategic objectives 4
Non-Financial continued
MEASURING OUR PERFORMANCE continued
Derwent London plc
36
140
160
180
120
100
80
60
40
20
0
2019 2020 2021
2022 2023 2024 2025 2026 2027 2028 2029 2030
166
90
137
13. Energy intensity
Energy intensity is measured as energy consumption over
the gross internal floor area (kWh/sqm) across our managed
portfolio. Our energy intensity target, which is aligned with our
corporate target of achieving net zero by 2030, is 90 kWh/sqm
in 2030, a reduction of 46% compared to our 2019 baseline.
Energy intensity
Target
Our performance
Energy intensity across our managed portfolio decreased by 8%
from 2023 to 137 kWh/sqm, a reduction of 17% compared to
the 2019 baseline. The decrease relates to a series of proactive
initiatives implemented by the Property Management team,
including shorter plant run-times, relaxed temperature set points
and continued occupier engagement.
Strategic objectives 4
A R
15. Accident Frequency Rate (AFR)
This is calculated by multiplying the number of significant RIDDOR
(Direct) injuries and incidents during the year by 1,000,000 and
dividing by the total work exposure hours. This KPI, which was
introduced in 2024, was previously based on total development
RIDDORs injuries only.
2020
2021
2022
2023
2024
RIDDOR (Direct)
AFR
n/a
n/a
n/a
n/a
1.35
Developments
2.72
1.26
3.60
4.38
1.75
Our performance
In 2024, the RIDDOR (Direct) AFR was 1.35 with 4 RIDDORs
(Direct) reported. As a full year of data was not available for 2023,
there is no prior year comparative.
Strategic objectives 4
A R
14. Embodied carbon intensity
Embodied carbon intensity is measured as the carbon emissions
generated in the construction of new developments (upfront
carbon, modules A1-A5) divided by the new gross floor area,
measured in kgCO2e/sqm. Our embodied carbon intensity
targets are aligned with our net zero by 2030 pathway.
Completion
kgCO2e/sqm
25 Baker Street W1
H1 20251
c.600
Network W1
H2 20251
c.530
1
Targeted.
Our performance
We have worked closely with our designers and contractors
to reduce the embodied carbon footprint of our on-site
developments, 25 Baker Street W1 and Network W1. Both
projects are anticipated to have an embodied carbon intensity
of 600 kgCO2e/sqm or less, in line with our corporate targets.
Strategic objectives 4
R
16. Staff satisfaction
We assess employee satisfaction through an annual staff
survey, and target a satisfaction rate above 80%.
2020
2021
2022
2023
2024
%
96.3
90.5
88.4
87.5
91.2
Our performance
The measure of staff satisfaction increased to 91.2%, the
highest it has been since 2020. This strong level is testament to
our collaborative and supportive culture and the pride our staff
feel in working at Derwent London.
Strategic objectives 3
R
Report and Accounts 2024
37
Strategic report
Occupiers
Employees
Suppliers
Central
and local
government
Shareholders
and debt
providers
OUR STAKEHOLDERS
We recognise that we have
a responsibility to all our
stakeholders
Why we engage
Our long-term success depends on
our ability to understand and respond
to evolving occupier requirements
• To gather invaluable feedback on
changing occupier trends, both
businesses and individuals
To benefit from the skills and knowledge
of our talent base
• Having an experienced, diverse,
inclusive and engaged workforce
underpins our success
To gather feedback on the needs of
the communities, neighbourhoods and
charitable organisations
• Helps ensure our buildings play a
positive role in their communities
• Provides support to local businesses,
residents and the wider public
To facilitate access to long-term and
cost effective finance and strategic input
• Our relationship with shareholders
and debt providers plays an important
role in informing our strategy and
monitoring our governance
To better understand public policy and
regulatory frameworks, and influence
policy outcomes
• Constructive engagement with
central and local government
• We seek to impact policy positively
We seek to partner with like-minded
businesses who engage and promote
ethical supply chain practices
• To positively influence our supply
chain and deliver value responsibly
Local
communities
and others
Delivering
value to our
stakeholders
Derwent London plc
38
Through effective engagement, we build strong and sustainable relationships
with our stakeholders to deepen our understanding of their aims and priorities.
How we engage
Value created in 2024
• We maintain ongoing dialogue through our Asset and
Property Management teams
• Provide high quality benefits such as our DL/Lounges
• Best practice and data sharing on sustainability
• Promotion of DL/Member benefits, including lounges at
DL/28 and DL/78, driving tenant retention and attraction
• Energy consumption reduced by 9% in 2024; ongoing
operationalisation of Intelligent Building Programme
• Annual employee survey
• Staff training provided on a wide range of issues, including
professional, as well as personal health and wellbeing
• Regular CEO-led town hall meetings
• Four employee representatives on Responsible Business
Committee
• 2023 employee survey results reviewed and appropriate
action plans prepared and implemented
• Continued focus on Disability and Accessibility
• Inclusive leadership training for management
• Two employees completed their two-year apprenticeship
and have taken on new roles as Building Operations Support
• Employee volunteering
• Work experience opportunities
• Building open-days
• Community funds and sponsorship donations
• Hosted four individuals on the #10,000 Interns programme
• Sponsorship and Donations Committee continued focus on
homelessness
• £451k community fund and sponsorship donations
committed in 2024
• New Social Value Strategic Framework embedded into all
community initiatives
• Open and transparent approach with shareholders
and debt providers. Host a variety of events including
roadshows, presentations, property tours and a
combination of one-to-one and larger group meetings
• All material news is published via Regulatory News Services
(RNS)
• Regular dialogue with all our lenders maintained and
hosted a number of property tours
• Maintained strong interest cover at 3.9 times
• High level of cash and undrawn facilities
(£487m at Dec 2024)
• Early engagement in relation to refinancing
• We engage across a variety of levels including local
planners, community groups and HMRC
• Involvement in various bodies, such as Westminster
Property Association and New West End Company
• Represented the real estate sector at the Sustainable
Markets Initiative Buildings Taskforce
• Worked with the WPA on response to new Westminster
planning policy
• Formed new concrete supply chain group to explore ways
to accelerate decarbonisation of concrete
• Operation of our Supply Chain Responsibility Standard
which includes our approach to net zero carbon
• Adherence to strict Modern Slavery standards
• Prompt payment and fair treatment of suppliers
• Supplier onboarding procedures
• Publication of our latest Modern Slavery Statement,
following an independent gap analysis by Unseen UK
• Prompt payment of suppliers: 20 days (average)
• Engaged further with suppliers on their ongoing
compliance with our Supply Chain Responsibility Standard
Below we outline why and how we engage with our stakeholders and the value we create. Our Section 172(1)
Statement for the year ended 31 December 2024, on page 132, demonstrates how these responsibilities influenced
some of the decisions taken by the Board in 2024.
Report and Accounts 2024
39
Strategic report
RESPONSIBILITY
RESPONSIBILITY
Environmental
1 Designing & delivering buildings
responsibly
2 Managing our assets responsibly
Social
3 Creating value in the community
4 Engaging & developing
our employees
5 Ensuring the highest standards
of health and safety
6 Protecting human rights
Governance
7 Setting the highest standards
of corporate governance
Our Responsibility
Policy and Strategy
set out what
operating responsibly
means to us
Derwent London is committed to high standards of integrity,
transparency and safety, whilst ensuring our buildings are designed,
delivered and operated responsibly to manage our carbon footprint
and ensure climate resilience.
Our seven Environmental,
Social & Governance priorities
See page 44
See page 48
See page 54
Derwent London plc
40
Well-designed, thoughtfully delivered
real estate can positively impact the
environment.
Our energy reduction targets are
aligned with a 1.5°C climate scenario.
• Energy intensity down 17% since 2019 on our journey to net zero carbon
• Collaborating with stakeholders, including occupiers and supply chain
• Developing solar park in Scotland as part of electricity self-generation
initiative
• Purchasing renewable energy on REGO/RGGO-backed tariffs
• Stretching embodied carbon targets for regeneration projects
• £650m of green finance facilities; £437.0m has been drawn for green capex
• High quality carbon credits used to offset residual
• Fully costed £90m EPC upgrade programme to maintain compliance
• Partnering with like-minded organisations to amplify impact
As a long-term investor, the success
of our buildings and our collaborative
approach has a positive social impact.
• Supporting local communities through community funds and donations
• Social value creation measured through new Social Value Strategic
Framework
• Local authority engagement and monitoring of post-completion social
impact
Our employees are key to our
successful performance and will
provide the next generation of
leadership talent.
High employee retention ensures
continuity.
• Ongoing vocational and compliance training & mentoring
• Internship opportunities for people from diverse backgrounds
• Proactive mental and physical wellbeing programme
• Regularly measuring and addressing employee satisfaction levels
We seek to minimise risks and
promote a safe working environment
collaborating with our supply chain
and industry peers, supported by our
Responsible Business Committee.
• Collaborating with peers on benchmarking and best practice
• Empowering employees and contractors to speak up
Acting in a fair and responsible
manner is a core element of our
business which runs through all levels,
starting with the Board.
• Accountability throughout our organisation
• Proactively adopting new and emerging legislation
• Remuneration clearly linked to sustainability outcomes
• Respect for human rights across our supply chain
• Obtaining third party assurance on our actions and outcomes
• Providing staff with access to an independently operated whistleblowing
system
Why
How
Report and Accounts 2024
Strategic report
41
RESPONSIBILITY – DOUBLE MATERIALITY
Introduction
Materiality assessments provide a
framework for prioritising issues and
ensuring our Responsibility Strategy and
management action are appropriately
focused and targeted. Our previous
materiality approach was based on the
traditional single perspective format,
which combines financial risk impact
with wider market intelligence.
In 2024 we revisited our approach,
aligned to ongoing evolution in
legislation, and undertook a double
materiality assessment, with support
from a third party consultant.
As well as confirming the key material
topics from our single materiality
assessment, a number of additional
topics were identified by a range of
stakeholders. This has given us greater
insight into our material topics and will
support us in prioritising future actions
more clearly.
Approach
A double materiality assessment, which
is both an ‘outside-in’ and ‘inside-out’
review, uses two perspectives.
• The financial impacts of ESG issues on
a business e.g. the impact of climate
change on a company’s balance sheet
or income statement.
• The impact of the business on the
environment and society from its
day-to-day activities e.g. the impact
of a company’s activities which
contribute to climate change.
Like in a traditional materiality assessment,
the topics which are identified are rated
and ranked according to their significance.
However, a double materiality assessment
then integrates them from both the
‘outside-in’ and ‘inside-out’ perspectives.
This can result in particular topics having
different levels of significance depending
upon the points of view of different
stakeholders. Consequently, a broader
output is achieved.
Outcome
The assessment results brought forward
a wide range of topics. This included
the four identified as part of our initial
preparatory works and four resulting from
stakeholder engagement which exceeded
the materiality threshold, taking the
number of material topics to 17.
Double materiality assessment
We recognise the role of materiality assessment in determining the
relative importance of key ESG issues to ourselves and our stakeholders.
We present the results on the following
page as a ‘Butterly Matrix’ with the
material topics listed in combined score
rank order. All of the issues were already
known and captured through our various
strategies and management procedures.
The scores for each materiality
perspective are derived from our
stakeholder engagement. This simplifies
the dual perspective outcome and
clearly shows the significant issues and
which perspective, or how much of each
perspective, is driving the significance.
Our double materiality assessment is
aligned with our process for identifying
and assessing the principal risks we
report in the Managing Risks section
(see pages 90 to 101).
We intend to monitor materiality
scores every second year to ensure
changes are captured on a timely
basis, and aligned to the timing of
updates to the independent climate
risk assessment and scenario analysis
which forms part of our TCFD disclosure
(see pages 102 to 115).
Our double materiality process
Step #1
Defined the relevant issues
(Preparatory)
A detailed review of the Group’s
business model, internal
documentation, external regulatory
landscape and peers was performed to
identify and define the relevant issues.
As well as the nine material topics
from our previous single materiality
assessment, an additional four were
identified at this stage. A workshop
with senior leadership provided
clear definitions for each topic and
confirmed scoring methodologies.
Step #2
Engaged with stakeholders
(Research)
A wide range of internal and external
stakeholders, aligned with our six key
stakeholder groups (see pages 38 to
39) were asked to respond to a ranking
questionnaire to provide a base of
quantitative evidence. This was followed
up with a series of interviews again
comprising a range of individuals across
all stakeholder groups.
Step #3
Analysed & defined results
(Outcomes)
The quantitative and qualitative
data was analysed to identify any
additional material topics (where
either the Financial or Impact score
was Medium or higher) raised by
stakeholders as well as to provide a
‘score’ from which our ‘materiality
matrix’ was developed. The outputs
were reviewed and validated by
senior management, including
the Chief Executive and Chief
Financial Officer.
Derwent London plc
42
Butterfly materiality matrix
Sustainable building design & construction
Local economic growth & placemaking
Operational GHG emissions & energy efficiency
Occupier wellbeing
Talent attraction, retention & development
Ethical & responsible business conduct
Responsible & local procurement
Climate change adaptation & resilience
Social value impact
Cyber security
Human rights & fair pay across the value chain
Diversity, equity & inclusion
Biodiversity & urban greening
Health, safety & wellbeing
Operational water use & management
Operational waste management & circular economy
Leasing transaction satisfaction
Financial
Material topics
Impact
Low
Medium
High
Very high
Very high
High
Medium
Low
The table below provides further detail of where our material issues can be located within our risk management and other reporting.
Most material topics – high or very high scores for either financial or impact materiality.
Most material topics
Page
Sustainable building design & construction
Principal risk, ‘Our resilience to climate change’
98
Emerging risk, ‘Nature of office occupation’
100
TCFD transition risk, ‘Planning requirements’
108
Local economic growth & placemaking
Our Communities
48
Operational GHG emissions & energy efficiency
Principal risk, ‘Our resilience to climate change’
98
Emerging risk, ‘Climate-related risks’
100
Our pathway to net zero
44 to 47
Occupier wellbeing
Principal risk, ‘Health and safety’
98
Emerging risk, ‘Nature of office occupation’
100
Health and safety
52 and 53
Talent attraction, retention & development
Responsible Business Committee report
166 to 173
Our people
50 and 51
Ethical & responsible business conduct
Principal risk, ‘Non-compliance with law and regulations’
99
Responsible Business Committee report
166 to 173
Responsible & local procurement
Responsible Business Committee report
166 to 173
Climate change adaptation & resilience
Principal risk, ‘Our resilience to climate change’
98
Task Force on Climate-related Financial Disclosures (TCFD)
102 to 115
Social value impact
Our Communities
48
Social Value Strategic Framework
48
Cyber security
Principal risk, ‘Cyber attack on our IT systems’
97
Principal risk, ‘Cyber attack on our buildings’
97
Emerging risk, ‘Technological change’
100
Risk Committee report
158 and 162
Human rights & fair pay across the value chain
Principal risk, ‘Non-compliance with law and regulations’
99
Responsible Business Committee report
166 to 173
Biodiversity & urban greening
https://www.derwentlondon.com/responsibility/publications
1
These risks are monitored via the Group’s Risk Register which is not disclosed in the annual Report & Accounts. Refer to pages 90 to 101 for the Group’s Principal
and Emerging risks.
Report and Accounts 2024
43
Strategic report
RESPONSIBILITY – ENVIRONMENTAL
Our journey to net zero
Reducing operational energy
and carbon emissions
Procuring and investing
in renewable energy
Our commitment
We are committed to operating our investment portfolio
on a net zero carbon basis by 2030. This involves driving
down our energy consumption significantly, upgrading
and retrofitting our properties to improve efficiency
and remove gas use where feasible, as well as closely
collaborating with our occupiers.
Actions and outcomes
Upgraded data environment
Following the extensive upgrade work to our data
environment in 2023, our new in-house database
was fully rolled out in 2024. This has delivered greater
efficiency and lower risk through increased automation
within the data collection and analysis phases. The new
system has also facilitated enhanced data usage across
the business. Combined with ongoing operationalisation
of our Intelligent Buildings initiative, our Building
Operations Managers have improved access to data on a
timely basis, allowing earlier detection and remediation
of excess consumption, as well as supporting greater
data sharing with occupiers.
Operational efficiency
Several trials have been run across our own office,
including shorter plant run-times and reduced
temperature set points, in line with new BCO guidance.
The data from these trials have enhanced our ongoing
programme of occupier engagement, which we
have refined to focus on buildings with the highest
consumption. Recognising that we should not use a
one-size-fits-all approach, we adapt our engagement to
maximise the impact.
Progress on removing gas
In 2024, we continued to remove gas from our buildings
as part of our portfolio decarbonisation efforts, including
at 1-2 Stephen Street W1 where air source heat pumps
were installed. The knowledge we gain from this will be
used to support further decarbonisation initiatives.
Where gas cannot be removed from a building, where
appropriate we are retrofitting specialist equipment to
boilers to enhance efficiency.
Our commitment
The Group is committed to ensuring that the energy
we procure – electricity and gas – is from renewable
sources. This means contracting electricity on renewable
tariffs backed by ‘Renewable Energy Guarantees of
Origin’ (REGO) certificates and gas contracts backed by
‘Renewable Gas Guarantees of Origin’ (RGGO) certificates.
Actions and outcomes
Energy on renewable tariffs in 2024
• Electricity (REGO-backed): 99% (2023: 99%)
• Gas (RGGO-backed): 100% (2023: 99%)
• As at 31 December 2024, 100% of our electricity and
gas contracts were on renewable tariffs backed by
REGOs/RGGOs
All electricity is procured from within the UK and is
from solar, wind or hydro projects which are less than
15 years old.
Self-generation in Scotland and London
At our Lochfaulds site in Scotland, planning consent
was secured in 2023 for a c.100-acre, 18.4 MW solar park
which we forecast will provide c.40% of the electricity
used across our London managed portfolio (compared
to a 2019 baseline). Delivery commenced in 2024 with
site preparation and infrastructure works underway. We
aim to procure the panels in a responsible manner and
tender responses have been received from solar panel
manufacturers. Completion is anticipated in 2026.
Where feasible, we install solar photovoltaic (PV) panels
on our buildings. In 2024, six buildings had PV arrays. In
addition, we have a small PV array at our Easter Cadder
site in Scotland which will provide all the power required
for our new Scottish office.
We will continue to review the strategic options available
to self-generate the remaining electricity needs across
the London managed portfolio.
Derwent London plc
44
Climate change is a material issue for society, our sector and our business. Having a robust
transition plan, which incorporates the right environmental and climate change measures,
enables us to operate responsibly across our portfolio and within the community.
Reducing the embodied carbon
of development projects
Offsetting residual carbon
emissions we cannot eliminate
Our commitment
Under our net zero pathway, new developments and major
refurbishments will be net zero carbon on completion. In
2024, we updated our reporting methodology to more
closely match the timing of emissions and offsetting.
Forecast project emissions are now recognised on a
phased basis over the construction period, with emissions
offset over the same profile.
Defining embodied carbon and setting
stretching targets
Whole life cycle carbon assessments are performed
on our projects to inform design decisions and report
on the ‘Cradle to Completed Development’ (A1-A5)
aspects. Refer to our Whole Life Carbon Assessment Brief
at www.derwentlondon.com/news/publications/
responsibility-policies.
We work collaboratively with our development supply
chain to assess and reduce a scheme’s embodied carbon
footprint. At each stage of design, we hold detailed
workshops with our design teams and ensure early
engagement on procurement of low carbon materials.
The wider industry needs to adapt and work together
for us to fully achieve our aims and we are active in this
endeavour – see page 46 for details.
Our phased targets for commercial office new build
developments align with the Greater London Authority
(GLA) and LETI targets (RICS v1):
• From 2025: ≤600 kgCO2e/sqm
• From 2030: ≤500 kgCO2e/sqm
Our two on-site projects are being delivered to align with
our 2025 target:
• 25 Baker Street W1: c.600 kgCO2e/sqm
• Network W1: c.530 kgCO2e/sqm
Our next phase of projects at Holden House W1 and 50
Baker Street W1 are also expected to be delivered in line
with these targets.
Actions and outcomes
Early in 2024 we launched an updated version of our
Responsible Development Brief. This places an enhanced
focus on climate resilience, reducing ‘whole life’ carbon
emissions and energy consumption, and promotes
circularity, biodiversity and social value.
Our commitment
The Group’s business model of office regeneration and
operation will, by its nature, result in the emission of
embodied and operational carbon across Scopes 1, 2
and 3. For this reason, whilst we have set ambitious
targets to reduce our carbon footprint as far as possible,
we have committed to offset any residual carbon that
we are unable to either manage out or eliminate.
Actions and outcomes
We have a phased pipeline of regeneration schemes
over the coming years. Occupational market dynamics
are expected to remain favourable and as such we
expect to commence work on the next phase of our
pipeline over the coming year. Beyond this, we have a
longer-term pipeline which is expected to commence
from 2027 onwards.
Forward purchase of carbon offsets
This project visibility allows us to forecast our embodied
carbon emissions and plan accordingly. In 2024, we
forward-purchased, on a phased basis, a portfolio of
carbon offset credits equivalent to c.114,000 tCO2e for
a total consideration of £3.9m or an average of £34/
tCO2e. This follows our procurement of c.81,600 credits
in 2020 for £1.0m which have been used to offset the
embodied carbon at a series of completed schemes.
Working with our offset partner, Climate Impact
Partners, we carried out significant due diligence to
ensure the environmental projects meet our quality
standards and have been validated under a robust,
credible scheme e.g. the Verified Carbon Standard (VCS)
or the American Carbon Registry (ACR). We acknowledge
this is a changing landscape and refer to latest guidance
from the UKGBC (Carbon Offsetting & Pricing Guidance).
Further tree planting on Scottish land
The Group submitted two planning applications in 2024
for tree planting covering a total of c.30ha on our Scottish
land. Subject to receipt of planning consent, planting is
expected to commence in H2 2025. We have identified in
excess of 200ha of additional land as potentially suitable
for planting, subject to further appraisals.
Report and Accounts 2024
45
Strategic report
RESPONSIBILITY – ENVIRONMENTAL continued
Water and waste
Water consumption rose 7% in
2024 compared to 2023. The
majority of the increase relates to
higher occupation levels at Soho
Place W1 and The Featherstone
Building EC1 following completion
of works part-way through 2023.
The managed portfolio
waste recycling rate reduced
marginally to 69% in 2024 from
71% in 2023. We maintained
an active programme of
engagement, particularly
targeting new occupiers.
2024 highlights
• Energy intensity reduced by 8%
to 137 kWh/sqm
• Engaged with 76% of occupiers
by ERV
• Upgraded data control environment
and launched new database
• Formation of industry-wide AC-DG
• Set SBTi-verified long-term
target aligned to 1.5°C scenario
(90% reduction in Scope 1, 2 & 3
by 2040 from 2022 baseline)
• Completed double materiality
assessment
Circular economy
Our intention is to accelerate our shift towards the
circular economy where greater value is extracted from
materials through innovative re-use. Our efforts in 2024
were focused on both our regeneration activity and our
day-to-day asset management.
A cross-business working group was established to facilitate
an audit of our forthcoming projects to identify materials
and parts that can be reused either on site, within the
portfolio, or through a new third party partner.
Examples of circular economy in action in our portfolio
• Refurbishment and re-use of raised access flooring:
Network W1, 1-2 Stephen Street W1, Holden House W1,
50 Baker Street W1
• Steel re-use: 1-2 Stephen Street, Greencoat & Gordon
House SE1
• Use of low carbon cement replacements (e.g. industrial
waste products) in concrete: 25 Baker Street W1, Network,
50 Baker Street
• Retention and re-use of MEP components and recycling
of light fittings and other components: 1-2 Stephen Street,
Greencoat & Gordon House
• Re-use of glass: Holden House, 50 Baker Street
Accelerating Concrete-Decarbonisation
Group (AC-DG)
The sub and super-structure elements of a development
represent c.55% of the embodied carbon footprint, of
which the primary contributor is the cement within the
concrete. A lower cement content can lead to substantial
carbon reductions.
In addition to exploring new and innovative structural
solutions, we are also investigating the viability of emerging
cement replacements. We recognise that to make this a
reality, we need to work collaboratively with our peer and
the wider supply chain from the concrete suppliers to the
structural engineers and main contractors.
In 2024, we created the first cross-industry supply chain-
wide working group called the ‘Accelerating Concrete-
Decarbonisation Group’. The aim is to facilitate collaboration
and information sharing, and to accelerate delivery of lower
carbon alternatives to market, while acknowledging the
significant work which has already taken place.
The AC-DG gives each stakeholder group within the
supply chain an opportunity to present their perspective
on the challenges, barriers and opportunities, in a series
of workshops. Three have already been held in 2024 with
more planned for 2025. The next phase of workshops will
look to identify appropriate concretes for piloting to better
understand the commercialisation potential.
A focus on embodied carbon
The circular economy is about rethinking
how we make, use and treat materials, such
that the material’s life is extended, re-used
or re-purposed.
Our regeneration activity means embodied carbon (Scope 3, Category 2) makes
a significant contribution to our annual carbon footprint. Decarbonising our
regeneration activity is therefore a key priority. In 2024, we made significant
progress in two key areas:
2025 priorities
• Progress the work of AC-DG to address key
barriers for bringing low carbon concrete to
the market
• Implement circular economy partnership
• Continue occupier engagement to further
reduce energy consumption
• Gain additional visibility over occupier
energy we do not procure (Scope 3,
Category 13 emissions)
• Extend data capture within Scope 3,
Category 1 (Purchased goods and services)
• Further progress initiatives to remove gas
from portfolio
Derwent London plc
46
‘Operational’ carbon footprint – Scopes 1, 2 & 3
Our performance in 2024
Energy intensity
0
20
40
60
80
100
120
140
160
180
kWh/sqm
• Managed portfolio energy intensity (EUI) reduced
to 137 kWh/sqm, 8% lower than 2023 (149 kWh/sqm)
• 2024 EUI 17% below 2019 baseline (166 kWh/sqm)
• Good progress towards 2030 target of 90kWh/sqm
• Ongoing collaboration between Property Management,
Asset Management and Sustainability teams
• Refreshed occupier engagement strategy to launch in
H1 2025
2020
139
2021
140
2022
142
2023
149
2024
137
-17%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0
10
20
30
40
50
60
70
80
90
100
tCO2e
London commercial portfolio by ERV (%)
EPC ratings
• Operational carbon footprint 14% lower at 12,357 tCO2e
compared to 2023 (14,370 tCO2e)
• Carbon conversion factors largely unchanged in 2024
• Scope 1 down 37% due to 34% lower emissions from
fuel usage and a 74% reduction in fugitive emissions
• Scope 2 (location-based) down 3% and Scope 3
(excluding embodied carbon) down 4%
• EPC ‘A’ and ‘B’ (including on-site projects) increased to
69.2%, significantly ahead of the wider London market
which is estimated at sub-30%
• Acquiring full control of 50 Baker Street W1 ahead of
redevelopment caused a slight reduction in EPC ‘C’-rated
units to 17.7%
• EPC upgrade works are factored into all refurbishment
projects to ensure ongoing compliance with evolving
legislation
Scope 1
Scope 2
Scope 3
EPC A/B
EPC C
2022
65.3
20.4
2023
68.4
19.1
2024
69.2
17.7
2023
4,364
2,795
7,211
14,370
Energy usage – electricity and gas
0
10
20
30
40
50
60
70
kWh (millions)
49.7
2021
49.2
2020
50.4
2022
• Energy consumption of 51.8m kWh down 9% versus 2023
• Gas usage down 21% to 13.0m kWh
• Gas removed at one building and specialist boiler
efficiency software installed at six buildings; shorter plant
run times and relaxed temperature set points
• Electricity down 3% to 38.8m kWh
• Ongoing occupier engagement with greater data sharing;
partly offset by higher occupancy at The Featherstone
Building EC1 and The White Chapel Building E1
Gas
Electricity
2023
56.7
2024
51.8
2019
64.6
2019
166
2022
3,062
2,388
5,864
11,314
2024
2,736
2,705
12,357
6,916
Report and Accounts 2024
47
Strategic report
RESPONSIBILITY – SOCIAL
Our social contribution
We recognise that our buildings should have a positive
impact on the communities in which they operate, and
strive to create value where possible for our stakeholders.
Our approach to social value
Our commitment to delivering social
value has been a core part of our
business for many years. This work
takes a variety of forms to maximise
the positive impact we have on local
communities. Financial support
through our Sponsorship and Donations
Committee and community funds is an
important part of our strategy to deliver
social value. We place equal value on
being part of each community to ensure
we remain alert to their concerns and
aspirations and can have a meaningful
impact. Employee volunteering, work
experience opportunities and building
open-days have all contributed to
establishing and maintaining effective
connections with these communities.
Progress against our Social
Value Strategic Framework
In December 2023, we published our
Social Value Strategic Framework,
outlining three key themes through
which we will make a meaningful and
positive difference to the communities
in which we operate. In 2024 we made
good progress against each theme:
• Theme 1 ‘Part of the
neighbourhood’: Timber from our
worksites was identified as suitable
for repurposing. We partnered with
‘Yes Make’ to repurpose the timber
for several playground projects
in London.
• Theme 2 ‘Great places to work’:
White Collar Factory EC1 hosted its
first charity abseiling event in aid
of UCLH Charity which encouraged
occupier connection and participation
from across the portfolio.
• Theme 3 ‘A thriving local
economy’: Our supply chain
has actively taken steps to offer
employment opportunities and
participated in career sessions,
including women in construction
events, green skills induction and
work experience sessions.
As part of our 40-year anniversary
celebrations, we held our Space for
Change competition, offering three
organisations complimentary DL/
Membership for one year, including
access to our lounges.
Small businesses, community
initiatives and charities were invited
to apply, with the winners selected
based on their vision, values,
business objectives, brand identity
and growth potential:
• Foundation for Change, a charity
which provides courses for those
with a history of addiction,
exploring psychology, feminism
and social inequality;
• Disruptor London, who is seeking
to revolutionise the haircare
market through tackling
overconsumption and plastic
waste with responsible solutions;
and
• Materials Assemble, a leading
destination for materials
sourcing, bespoke manufacturing
and consultancy services, tailored
to the design and architecture
industries.
Further information on the winning
businesses and their journeys can
be found on our LinkedIn profile.
Space for
Change
£4.2m
Sponsorship and Donations
Committee funding over 10 years
£1.2m
Community funds provided
since inception
2024 highlights
• Embedded new Social Value
Strategic Framework
• Community fund provided
£112,000 of funding across
16 projects
• Sponsorship and Donations
Committee approved £339,000;
specific focus in 2024 on
homelessness
• Funded Islington schools
participation in the Green
Schools Project programme
2025 priorities
• £450,000 (up from £360,000)
committed to our community
funds for 2025-2027
• Launch multi-year funding
approach
• Utilise DL/Lounges for the
charities and community groups
we support
• Continue to prioritise homelessness
as a key focus of the Sponsorship
and Donations Committee
Disruptor London
Derwent London plc
48
Continued to support our community funds
We operate two community funds: Fitzrovia and West End
(founded in 2013) and the Tech Belt (founded in 2016). The key
priority of these funds is to support and create value in the
community by providing funding for a variety of grassroots
projects with a focus on community events, environmental
improvements, health and wellbeing activities, music and
culture, and ongoing help for marginalised groups. The funds
also act as a springboard for further engagement with local
neighbourhoods, leading to corporate volunteering, school
engagement and work experience opportunities. In addition,
they enable us to anticipate further funding needs.
Following the launch in 2013, combined funding of over £1.2m
has been provided to date across 180 different projects
including:
• renewal of play equipment at a children’s natural playground;
• running interactive music sessions at a care home; and
• funding lunch clubs for older people.
In 2025 we intend to introduce a multi-year funding approach
so applicants will only need to apply once for the full three-year
funding. This will provide charities with greater visibility and
certainty, facilitating forward planning.
Teenage Cancer Trust (TCT)
Our longest-standing charity partner is Teenage Cancer Trust
(TCT). In over 20 years of continued support we have raised
£1.8m in donations. Our regular ‘Big Lunch’ event, which
started in 2002, is central to our fundraising efforts. The last
one held in 2022 raised £245,000 and the next will be in 2025.
Chickenshed
Our partnership with the inclusive theatre group,
Chickenshed, began in 2007. They welcome people from all
social and economic backgrounds, cultures and abilities to
create theatre productions. Throughout our partnership, we
have raised over £200,000 for this special social enterprise.
Soup Kitchen London is incredibly proud of our
relationship with Derwent London, which began
in 2016 through the Fitzrovia and West End
Community Fund. The ongoing monthly volunteer
support from employees, which started in 2018,
has been an absolute lifeline, helping us provide
for the 200-plus people we serve each morning.
Alexander Brown
Soup Kitchen London – Community fund recipient
The Soup Kitchen launches Home Kitchen
restaurant
In 2024 the founders of The Soup Kitchen paired with a
Michelin-star chef to open Home Kitchen restaurant in
Primrose Hill – a world-first fine dining establishment run
by, and for the benefit of, the homeless community. We
contributed towards a recruit’s salary in 2024 and 2025
as part of our ongoing prioritisation of homelessness.
Other activities
In 2024, our Sponsorship and Donations Committee approved
£339,000 of charitable donations to good causes. Some of the
ways these funds were used to create value in the community
during the year included:
Supporting UCLH Charity
We donated £30,000 to acquire essential equipment for breast
cancer treatment. In addition, we helped raise £50,000 through
a sponsored abseil, at our White Collar Factory building.
Prioritising homelessness
We donated c.£60,000 towards homelessness in 2024, of which
£20,000 went to the first year of our new three-year funding
agreement with Providence Row, a charity fighting poverty and
homelessness. This donation will support their Welcome Area
and Resource Hub, providing warm, safe spaces for their clients
as well as a place to eat. They also provide access to specialist
health services and support for substance misuse, employment
programmes and outreach psychotherapy.
Empowering young people for employment
£10,000 was donated towards Resurgo’s ‘Spear Programme’, a
six-week coaching course focused on preparing young people
for employment or further education. Participants also receive
support for a further 12 months as they gain confidence and
move into work or education.
Celebrating some of our
enduring partnerships
Report and Accounts 2024
49
Strategic report
RESPONSIBILITY – SOCIAL continued
Our people
We strive to attract a diverse workforce while continuously developing and upskilling
our existing talent. Our employees are essential to our success and will help shape the
next generation of leadership talent.
91%
Overall employee satisfaction
91%
Would recommend Derwent
London as a good place to work
Attracting and optimising talent
Our employees are instrumental to the
long-term success of the business. We
aim to create a culture which enables
our diverse workforce to thrive, have a
voice and be their authentic selves.
We enjoyed high employee retention
at 85% for 2024 (excluding contractors
and retirees) and a long average tenure
with 44% of our workforce having five
or more years of service and 23% having
10+ years. We seek to balance continuity
with fresh ideas, experience and skills,
and in 2024 we recruited 36 people
externally.
Ongoing development, career progression
and succession planning is important to
us, and we actively promote continuous
personal development and upskilling
opportunities. To facilitate this, we
invest in our employees by offering
comprehensive learning and development
opportunities at all levels. These include
core skills and technical workshops,
management skills training, as well as
one-to-one and team coaching.
2024 highlights
• Hosted four individuals through
the #10,000 Interns programme
• National Equality Standard (NES)
re-accreditation, top 5%
• Conducted inclusive leadership
training for senior management
• Continued focus on Disability
and Accessibility
• Held focus groups to review 2023
employee survey results and
prepared appropriate action plan
• Achieved the Silver Award
for Britain’s Most Admired
Companies in the real estate
category
2025 priorities
• Maintain focus on future
succession planning and
employee upskilling
• Take appropriate action
identified following staff
‘pulse survey’
• Prepare and launch biennial
employee survey
• Analyse feedback from NES
reassessment and refocus
priorities
• Repeat Business Disability Forum
self-assessment to identify
progress areas
Members of the D&I Working Group with Simon Manterfield (NES lead assessor)
In 2024, there were 15 internal
promotions (ten women and five men),
including two new Executive Committee
appointments.
Investing in existing talent is not enough.
For the real estate industry to appeal
to a broader cross-section of society,
creating opportunities for people from
different backgrounds is also important.
To facilitate this, in 2024:
• two employees completed their
two-year apprenticeship and have
taken on new roles as Building
Operations Support;
• we hosted 13 work experience
candidates;
• we ran a careers event at White
Collar Factory EC1 for a local
Islington school;
• we provided mock interview practice
and career advice for students at a
secondary school in Paddington; and
• we hosted four individuals through the
six-week #10,000 Interns programme.
Derwent London plc
50
In 2024, we achieved the National Equality Standard for the second time, with a
score in the top 5% of accredited organisations in the UK. We were particularly
praised for our ability to attract diverse talent, the breadth of our mental health
and wellbeing offerings and our approach to community and social impact work.
Since our initial accreditation in 2021, we have continued to raise the bar across
our talent processes, diversity and inclusion initiatives, and behavioural-based
competencies.
Employee engagement
Employee engagement and
communication are important; our
workforce should feel valued and
empowered to contribute and speak
up. Of our employees, 76% are based at
our head office which enables effective,
regular face-to-face interaction. This is
further supported by our ‘open-door’
policy. Together with a range of formal
and informal communication channels,
including our regular town hall meetings,
we have a highly engaged workforce.
We use anonymous annual employee
surveys to obtain staff feedback
and measure satisfaction levels. This
consists of a short ‘pulse survey’
and a comprehensive independent
survey in alternating years. In 2024,
our Responsible Business Committee
conducted a series of focus groups to
dive deeper into the areas identified
in the 2023 survey. Resulting actions,
reviewed by the Executive Committee,
included greater focus on cross-team
collaboration, training for middle
management and the redesign of our
performance appraisal process.
We achieved an 85% response rate to
our 2024 pulse survey, demonstrating
strong engagement. The results indicate
a high satisfaction rate of 91%.
Health and wellbeing
We know that people are most
productive when they are physically and
mentally thriving and socially connected.
In addition to a suite of generous
employee benefits, we have trained
mental health first aiders, an employee
assistance programme and occupational
health support. We encourage proactive
self-care and run a series of ‘lunch and
learn’ sessions. Topics in 2024 focused
on neurodiversity, imposter syndrome
and raising awareness of disabilities and
long-term health conditions. We also
introduced paid Carer’s Leave and a
stand-alone Sexual Harassment Policy
to reinforce our zero-tolerance stance.
Our intranet provides additional resources
across a range of topics.
To continue building healthy, nurturing
and supportive relationships, and foster
a genuine community spirit, our social
committee arranges regular inclusive
events. Numerous volunteering
opportunities are also open to everyone.
Diversity and inclusion (D&I)
Over the last 12 months we worked
hard to continually build on our
inclusive culture that attracts talented
individuals and promotes, encourages
and celebrates the diverse voices of all
our employees. In our 2024 pulse survey,
90% of employees agreed that Derwent
London is an inclusive place to work
(2023: 80%).
Our D&I Working Group has been
operational for several years and we are
proud of our journey to date. A key focus
area for 2024 was Inclusive Leadership
Training for our senior management
team. This aimed to educate and develop
the skills and practices needed to ensure
a supportive work environment where
all employees feel valued and respected.
Inclusive working sessions will be rolled
out to all employees in 2025.
As part of our objective to increase
awareness around religious festivals and
cultural celebrations, we amended our
Annual Leave Policy to offer employees
the option of swapping a number of bank
holidays for religious holidays or festivals.
A focus on disability
Since joining the Business Disability
Forum (BDF) in 2023, we have focused
on accessibility for our employees
and occupiers. Our Health, Safety &
Accessibility Working Group (together
with the D&I Working Group) has
partnered with a leading disability and
diversity consultancy to review a number
of our buildings. Existing barriers were
assessed and identified, taking the
requirements of all recognised disabilities
into consideration. Building Accessibility
Guides are being developed by Property
Management which will be available
to people accessing our buildings. The
guides will be rolled out over the coming
months in large print, Braille and digital.
We are dedicated to raising awareness
and education within our organisation
around long-term conditions and
disabilities. A number of employees
shared their lived experience in our D&I
newsletters, helping colleagues better
understand their challenges and how to
support them.
National Equality Standard
re-accreditation
Derwent’s decision to engage with NES for a second
time is a testament to its commitment to D&I and
its organisational appetite to grow and learn from
industry-leading practice.
Simon Manterfield
National Equality Standard,
Lead Assessor, EY
Report and Accounts 2024
51
Strategic report
RESPONSIBILITY – SOCIAL continued
Health & safety
The health, safety and wellbeing of our people, occupiers, residents, service partners,
contractors and the public is a high priority for us. This is achieved through robust and
effective risk management.
Our approach to health,
safety and wellbeing
Our approach is centred around people,
assets and developments. Our Health
& Safety (H&S) team is integral in
proactively developing our approach
across our London and Scotland
portfolios, at all levels.
• Our aim is to provide healthy, safe
and secure environments for our
people, customers and contractors
to work, live, visit and relax.
• Our people are instrumental to the
success of our business, which is why
we invest in and train them to ensure
healthy and safe work environments.
• Our integrated approach ensures
that health, safety and wellbeing
is considered at every stage of a
building’s life cycle.
We achieve this by:
• designing suitable health, safety
and wellbeing systems which are
proactively managed;
• establishing and maintaining formal
policies and procedures which comply
with latest legislation;
• ensuring work is assigned to
competent individuals, monitored
and audited;
• carrying out rigorous and
ongoing training on relevant legal
responsibilities and best practice;
• regularly reviewing our performance
at Board, Executive and Committee
levels; and
• ensuring we learn when accidents,
incidents or near misses occur and
make appropriate changes to prevent
reoccurrence.
Providing a safe work
environment for our people
We focus on both physical and mental
wellbeing to enable our employees to
thrive and enjoy a safe place to work.
This is achieved by ensuring our teams
are well informed and trained on H&S
requirements, standards and best
practice. Collaboration across Derwent
teams is intrinsic in engaging and
developing levels of understanding and
competence in the varying H&S risk
aspects, including marketing, events,
operations and construction.
During 2024, there were 198 person
days of H&S training covering a range
of topics. As well as formal training
courses and qualifications, we also
provided topical health and wellbeing
webinars, toolbox talk safety sessions
and site-specific H&S inductions for all
new employees.
A H&S training matrix is used to identify
training requirements by role. At the start
of 2024, a comprehensive review of the
matrix and programme was undertaken
to gain feedback and engagement in
developing appropriate competencies.
Our employee-led Health, Safety and
Accessibility Working Group meets every
two months. Key discussion points are
fed into the Group H&S Committee
alongside key outcomes from the Property
Management H&S Sub-Committee.
Making our assets safe to occupy
Ensuring our occupiers, visitors and those
who live and work in and around our
buildings remain safe and healthy is our
responsibility. This requires health and
safety risk consideration in designing,
constructing, maintaining and operating
our buildings. We utilise a combination of
early intervention techniques, adoption
of published health and safety standards,
as well as our own best practices and
collaboration across the business.
Our in-house H&S team supports our
Property Management team. Dedicated
H&S Managers engage and advise
building management teams, monitor
and audit performance, and ensure our
buildings are operated safely.
2024 highlights
• Achieved Royal Society for
Prevention of Accidents (RoSPA)
Gold Award for the second
consecutive year
• Rolled out Building Safety Act
plans across in-scope properties
and developments
• Launched Continuous
Improvement Group (CIG) for
our architects, principal designers
and project managers
• Implemented ‘Client audit and
early design H&S risk review’ for
major development schemes
• Full review of CDM Duty Holder
roles in line with fire and building
safety legislation updates
• Property Management H&S
Committee established
2025 priorities
• Launch H&S audit programme
for managed portfolio service
partners
• Further develop H&S processes
for safe acquisition of new
properties and development
• Extend Directors’ H&S Leadership
programme across Executive
Committee
• Review and update contractor
management controls and safe
systems of work for construction
projects
• On completion, safely mobilise
and launch 25 Baker Street W1
and Network W1 projects
Derwent London plc
52
Health and safety data
Our key H&S statistics for 2024 have been subject to independent limited assurance by Deloitte LLP in accordance with
the ISAE 3000 (Revised) Standard. Refer to the Health and Safety Basis of Reporting in the 2024 Responsibility Report.
Employee
Managed Portfolio
Construction Projects
Totals
2024
2023
2024
2023
2024
2023
2024
2023
Indicators
Person hours worked(A)
259,822*
266,513
981,639*
920,142
1,716,207
913,843
2,957,668
2,100,498
Minor injuries(A)
2
0
23
27
18
10
43
37
Near miss(A)
1
1
29
20
40
37
70
58
Lost time injuries(A)
1
3
2
3
4
4
7
10
Lost time days
2
13
5
10
10
5
17
28
RIDDORs (TOTAL)(A)
0
1
3
3
3
4
6
8
RIDDORs (Direct)** (A)
0
n/a
2
n/a
2
n/a
4
n/a
Dangerous occurrences(A)
0
0
0
0
0
0
0
0
Fatalities(A)
0
0
0
0
0
0
0
0
Improvement notices(A)
0
0
0
0
0
0
0
0
Prohibition notices(A)
0
0
0
0
0
0
0
0
Rates
Injury rate(A)
7.70
0
23.43
29.34
10.49
10.94
14.54
17.61
Lost day rate(A)
7.70
48.78
5.09
10.87
5.83
5.47
5.75
13.81
Severity rate(A)
0.67
3.25
0.18
0.30
0.40
0.28
0.30
0.51
RIDDOR AFR(A)
0.00
3.75
3.06
3.26
1.75
4.38
2.03
3.81
RIDDOR AFR (Direct)(A)
0.00
n/a
2.04
n/a
1.17
n/a
1.35
n/a
For the metrics denoted as (A) above, Deloitte LLP provides third party limited assurance in accordance with ISAE 3000 (Revised). For ‘Employees,’ Deloitte does
not assure lost time injuries, injury rate, lost day rate, or severity rate. In addition, Deloitte does not assure the ‘Totals’ column displayed in the table above.
* Denotes that person hours worked for ‘Employees’ includes ‘Derwent Lounges,’ but does not include Building Manager’s and ‘Caledonian Properties’
employees’ working hours, which are subtracted from submitted internal ‘Employees’ data and added to ‘Managed Portfolio’ data.
** Direct RIDDORs reported (new indicator) are separated from TOTAL RIDDORs reported. Refer to Health and Safety Basis of Reporting in the 2024
Responsibility Report for further details.
We use the RiskWise platform to monitor and report on asset H&S risk and
compliance across the managed portfolio. Formal annual ‘Property Health
Check’ inspections and Fire and Water Risk Assessments are undertaken; in
2024 we maintained 98% compliance.
High health and safety standards on construction sites
We maintain strong relationships with our principal and main contractors,
endeavouring to lead by example as an informed and responsible construction
client. In 2024, we worked with 25 principal contractors on our development
and managed property portfolios.
Each year we seek to enhance the overall environment of our construction
activities, through increased collaboration, client-input, consistent H&S standards,
and a continued focus on key risks within the construction industry. H&S
monitoring of our construction sites (through internal and external assessment),
provides assurance of performance, and opportunities to learn and improve.
Our two on-site major projects accounted for the three construction-related
RIDDORs reported to us in 2024 (2023: four), while the number of hours worked
nearly doubled to 1.7m. As a result, our RIDDOR accident frequency rate (AFR)
reduced significantly to 1.75 (2023: 4.38).
The H&S and Development teams work closely on all projects with a H&S
Manager assigned to each project from design phase. This has enhanced the
early identification of design elements with potential H&S risk implications,
facilitating early stage risk elimination or mitigation.
Members of the Health & Safety,
Property, Asset and Building teams
Report and Accounts 2024
53
Strategic report
RESPONSIBILITY – GOVERNANCE
Responsibility governance
Acting in a transparent and responsible
manner is a core element of our business
and underpins our key governance practices.
A responsible business
The oversight of ESG matters is critical. It not only allows
the Board to appreciate the overall impact of its decisions on
key stakeholders and the environment, but also ensures the
Board is kept aware of any significant changes in the market.
This includes the identification of emerging trends and risks,
which in turn can be factored into its strategy discussions.
We conduct business with integrity and work with stakeholders
who share our values and ethical principles.
ESG is overseen principally by the Board, Responsible Business
Committee and Sustainability Committee.
Governance framework / See page 129
Our Chief Executive, Paul Williams, is the designated Director
with overall accountability for ESG matters. However, the
responsibility for overseeing it is delegated to Nigel George
(Executive Director). Paul Williams oversees the review
and performance of our responsibility work as Chair of the
Sustainability Committee and as a member of the Responsible
Business Committee.
Overall responsibility for ESG matters
The Board
Responsibility for oversight of the Group’s ESG initiatives
Executive Directors with assistance from the Executive Committee
Ensures ESG skills,
knowledge and
experience is a
consideration
when assessing
the Board’s
composition and the
identification of any
skills gaps
Responsible for
implementing the
Board’s ESG strategy
Responsible for monitoring
health and safety
management and
performance
Responsible for the Group’s
charitable activities and
donations
Aims to encourage
teamwork and collaboration
between departments
through social activities
Nominations
Committee
Sustainability
Committee
Health and Safety
Committee
Sponsorship and
Donations Committee
Social
Committee
Monitors assurance
and internal
financial control
arrangements.
Ensures ESG-
related expenditure
is appropriately
reflected in our
financial statements
Audit
Committee
Identifies and
evaluates key ESG
risks (principal
and emerging),
ensuring they
are appropriately
managed
Risk
Committee
Monitors the
Group’s corporate
responsibility,
sustainability
and stakeholder
engagement
activities
Responsible Business
Committee
Ensures ESG
factors are included
in executive
remuneration (annual
bonus and long-term
incentive plans)
Remuneration
Committee
2024 highlights
• Publication of climate-related financial disclosures
consistent with the TCFD Recommendations as required
by the Listing Rule 6.6.6 (8)
• Published our latest Modern Slavery Statement, with key
recommendations implemented from the independent
gap analysis conducted by Unseen UK (see page 171)
• Continued mandatory compliance training for all
employees (including the Board)
• Hosted a ‘meet the Board’ event for employees from
across the workforce
• Implemented new environmental database with
enhanced control environment
Derwent London plc
54
Derwent London continued to be a
signatory of the Chartered Institute of
Credit Management (CICM) Prompt
Payment Code up until its cessation on
3 December 2024. Responsible payment
practices remain an area of important
focus for the Group as we are committed
to being clear, fair and collaborative with
our suppliers. We are currently in the
process of applying for a Fair Payment
Code Award, with the aim of achieving
silver or higher, which has replaced the
Prompt Payment Code (CICM).
Climate change governance
The governance of climate change
risk and opportunities is ultimately the
responsibility of the Board. However,
responsibility is delegated to the
Executive Committee and day-to-day
management to the Sustainability team.
The Board monitors the Group’s progress
against our net zero carbon targets,
specifically managed portfolio energy
intensity and embodied carbon intensity
on major projects. In addition, specific
climate-related performance indicators
are assured by Deloitte LLP and these can
be found in their assurance statement
which is available within the latest
Responsibility Report.
Responsibility Report /
www.derwentlondon.com/
responsibility/publications
Our strategy and targets for energy
consumption and carbon emissions
are approved and monitored by the
Board. The Board, Responsible Business
Committee and Executive Committee
receive formal updates and presentations
on performance against targets.
Additional governance
disclosures
The Section 172(1) Statement /
See page 132
Compliance training /
See page 165
Going concern and viability /
See pages 86 to 89
Anonymous reporting of concerns/
See page 128
Green finance governance
Our Green Finance Framework allows
us to clearly link our financing to the
environmental benefits our activities
generate. The Audit Committee receives
annual updates on our green finance
initiatives including in respect to our
reporting disclosures.
Our Green Finance Framework received
a Second Party Opinion (SPO) from DNV
that it is aligned with the Loan Market
Association’s Extended Green Loan
Principles 2021 and the International
Capital Market Association’s Green Bond
Principles 2021. The SPO is available on
our website www.derwentlondon.com.
This year, we changed our green finance
assurance provider from Deloitte LLP
to PwC. PwC have provided reasonable
assurance over selected green finance
KPI disclosures, and their assurance
statement is available within the latest
Responsibility Report.
Our Green Finance Framework /
See page 84
£878m
Cumulative Eligible Green Project
(EGP) capex at 31 December 2024
across five eligible projects
Protecting human rights
The protection of human rights and
fundamental freedoms is one of our
key ESG priorities which we manage
from an internal (within our business)
and external perspective (with our
supply chain and our relationships
with contractors). Internally, the Board
monitors our culture to ensure we
maintain our values and high standards
of transparency and integrity. Our HR
team ensures that we have the right
systems and processes in place to
strengthen and sustain our culture.
The Board’s role in managing
the Group’s culture / See page 130
Externally, we are active in ensuring our
ESG standards are clearly communicated
to our supply chain, principally via our
Supply Chain Responsibility Standard. To
ensure the human rights of our supply
chain are respected, we are clear on our
zero-tolerance position with regards to
slavery and human trafficking as set out
in our Modern Slavery Statement.
Based on our ongoing risk assessment,
we continue to believe the residual risk
of any slavery or human trafficking in
respect of our employees is very low.
Further information on our efforts to
prevent modern slavery occurring in our
supply chain is on page 171.
Modern Slavery Statement /
www.derwentlondon.com/investors/
governance/modern-slavery-act
Supply chain governance
It is important to us that our suppliers and
construction partners operate responsibly
and share our ESG business principles.
Our supply chain governance procedures
ensure our suppliers are aware of the
standards we expect from them and
the business practices which we will not
tolerate. All suppliers with whom we
spend more than £20,000 per annum
are required to provide evidence of how
they are complying with our Supply
Chain Responsibility Standard.
Supply Chain Responsibility Standard /
See page 171
Report and Accounts 2024
55
Strategic report
RESPONSIBILITY – GOVERNANCE continued
Tax governance
We take our obligations as a taxpayer
seriously and focus on ensuring that,
across the wide range of taxes that we
deal with, we have the governance and
risk management processes in place
to allow us to meet all our continuing
tax obligations. The Board has overall
responsibility for our tax strategy, risk
assessment and tax compliance.
We have recently recruited an
experienced Head of Tax to whom the
Board has delegated responsibility for
the management of the Group’s tax
affairs and for leading the relationship
with HMRC.
Our Statement of Tax Principles, which
is approved by the Board, is available
on our website: www.derwentlondon.
com/investors/governance/tax-
principles
We have an open and transparent
relationship with HMRC and seek to
anticipate any tax risks at an early stage,
including clarifying areas of uncertainty
as they become evident.
We keep HMRC informed of how our
business is structured and respond to
all questions and requests promptly.
The Head of Tax regularly engages with
HMRC to support consultations or to
seek legislative clarification in areas that
could potentially impact our business.
Non-financial reporting
As we have fewer than 500 employees, the non-financial and sustainability information statement (NFSIS) requirements contained
in the Companies Act 2006 do not apply to us. However, due to our commitment to promoting transparency in our reporting and
business practices, we have elected to provide further information in the table below.
Reporting frameworks and ESG data
Category
Our key policies and standards
Additional Information
Environmental
matters
• Responsibility Policy
• Net Zero Carbon Pathway
• Science-based carbon targets
• Task Force on Climate-related
Financial Disclosures (TCFD)
• Streamlined Energy and Carbon
Reporting (SECR) disclosure
Responsibility Report
www.derwentlondon.com/responsibility/publications
Our pathway to net zero carbon
Pages 44 and 45
Climate change governance
Pages 55 and 111
Risk management
Pages 161 and 90 to 101
Executive Directors’ LTIP 2024
Page 195
UN SDGs
Page 57
TCFD
Pages 102 to 115
SECR
Pages 58 and 59
Social and
employee aspects
• Volunteer Policy
• Equal Opportunities and
Diversity Policy
• Professional development
and training
• Shared parental leave
• Smart Working Policy
Community Fund
Pages 48 and 49
Our people
Pages 50 and 51
Executive Directors’ annual bonus
Pages 192 and 193
Diversity and inclusion
Pages 172 and 173
Employees on a committee
Page 170
The Section 172(1) Statement
Page 132
Respect for
human rights
• Individual Rights Policy
• Health and Safety Policy Statement
• Supply Chain Responsibility Standard
• Modern Slavery Statement & Policy
• Code of Conduct and Business Ethics
Health and safety
Pages 52 and 53
Human rights
Page 55
Modern slavery
Page 171
Supply Chain Responsibility Standard
Page 171
Anti-corruption
and bribery issues
• Anti-bribery Policy
• ‘Speak up’ Policy
• Expenses Policy
• Money Laundering and Terrorist
Financing Policy
• Preventing Facilitation of Tax
Evasion Policy
• Prevention of Fraud Policy
Audit Committee report
Pages 144 to 155
Risk Committee report
Pages 156 to 165
Anti-bribery and corruption
Page 165
Our principal risks
Pages 94 to 99
Our emerging risks
Pages 100 and 101
Compliance training
Page 165
Derwent London plc
56
UN SDG disclosures
The United Nations Sustainable Development Goals (SDGs) are an international framework developed to support global change
and sustainable growth.
We have reviewed the suite of 17 goals and have selected those which align most closely to our ESG priorities. We believe that we
have a role in supporting the UK in responding to this standard and helping positively effect change. Set out in the table below is
a summary of our progress against the selected goals.
Our ESG priority
UN Goal
Target
Indicator
Our progress
Creating value in
the community
and for our wider
stakeholders
4.4
4.4.1
Our community fund enables us to invest in and support groups which work
with and upskill young people from socially and economically challenged
backgrounds. We work with Soapbox Islington, a charity providing young
people with opportunities to build specialist and higher-level digital skills. They
are developing an accredited online Mentoring, Coaching & Employability
programme. Participants will develop specific STEAM-related skills, knowledge
and understanding of networks supporting them in follow-on education,
employment and training opportunities.
4.a
4.a.1
Our Sponsorship and Donations Committee funded the participation of a
group of young people in Resurgo’s Spear programme to help them realise
their potential regardless of the barriers to employment they face. Coaching is
provided on the mindset and skills needed to get into, and then thrive, at work.
Protecting human
rights, Engaging
and developing
our employees
5.1
5.1.1
Beyond our legislative requirements we are active in ensuring meaningful
gender equality across the business. In late-2021 we achieved National Equality
Standard (NES) certification and were delighted to achieve re-accreditation
in late-2024, scoring in the top 5% of assessed organisations. Our Diversity
& Inclusion Committee continues to ensure progress is being made and best
practice is implemented. Our training and development initiatives are available
company-wide. We have adopted a smart working policy and offer enhanced
parental leave. Feedback from our employee surveys helps us identify potential
gender and ethnicity differentials.
5.5
5.5.2
Our gender balance ratio is 49%:51% male/female, with women comprising
36% of our senior management team. In 2024, there were 15 internal
promotions, 67% of which were women.
Designing and
delivering buildings
responsibly,
Managing our
assets responsibly
7.2
7.2.1
We aim to purchase renewable energy across our managed portfolio. As at
the end of 2024, all electricity contracts were on renewable tariffs backed by
REGOs and gas contracts were RGGO-backed. As part of our net zero carbon
programme, construction has started on our 100-acre 18.4 MW solar park on
our Scottish land, which is due to complete in 2026.
7.3
7.3.1
We have developed building specific energy intensity reduction targets,
designed to help us measure and improve the energy efficiency of our
managed properties, supporting progress towards net zero carbon.
Creating value in
the community
and for our wider
stakeholders
11.7
11.7.1
We actively promote the inclusion of public spaces in and around our buildings
and ensure they are fully accessible. In addition, we are signatories of the
Westminster City Charter, the aim of which is to support Westminster City
Council in its ambition to become a zero-carbon borough by 2040.
Managing our
assets responsibly
12.5
12.5.1
We have a portfolio-wide minimum recycling target of 75% and a no waste to
landfill policy. In addition, we have developed a new circular economy strategy
for both our managed properties and regeneration projects, which we will
launch in H1 2025.
12.6
12.6.1
We integrate comprehensive sustainability information into our company and
public reporting cycles.
Designing and
delivering buildings
responsibly,
Managing our
assets responsibly
13.2
13.2.2
Our science-based carbon targets are aligned to a 1.5°C scenario, verified by
the Science Based Targets Initiative (SBTi). In addition, we have set embodied
carbon and energy intensity reduction targets for our developments and
managed properties respectively. We are committed to reducing our carbon
emissions and ensuring our portfolio is climate resilient. In 2024, we updated
our Responsible Development Brief which outlines our holistic approach to
responsible design.
Report and Accounts 2024
57
Strategic report
RESPONSIBILITY – GOVERNANCE continued
Streamlined Energy and Carbon Reporting
(SECR) disclosure
Data notes
Boundary
(consolidation approach)
We use the ‘operational control’ approach. This incorporates properties where the Group has management
control and influence over the operations, referred to as the ‘managed’ portfolio. This is located in central
London (UK) and comprises 35 properties in total. Landlord emissions from our retail park in Glasgow are
also included.
Alignment with financial
reporting
The only variation to our financial reporting approach is that energy data and GHG emissions are excluded
for buildings where the Group does not have control or influence. These are either single-let properties
(also referred to as FRI) or areas for which we do not have management control (e.g. we do not procure
utilities). We show our estimate of these emissions as a footnote to our SECR table. The rental income of
these properties is included in the consolidated financial statements.
Reporting method
GHG emissions reporting is in line with the Greenhouse Gas (GHG) Protocol Corporate Accounting and
Reporting Standard. Further details on our data calculation methodology can be found in the data
section of our annual Responsibility Report.
Prior year restatements
No restatements have been made to 2023 data.
Emissions factor source
(location-based)
UK Government emissions factors are used to convert energy usage into location-based carbon
equivalents. These can be found at www.gov.uk/government/collections/government-conversion-
factors-for-company-reporting.
Market-based emissions
The Scope 2 market-based factor is based on the provenance of energy supplies. In 2024, 99% of
electricity was purchased on REGO-backed tariffs.
Embodied carbon
In 2024, we updated our reporting methodology for embodied carbon emissions (Scope 3, Category 2)
from major projects (including refurbishments). We now report annually on a phased basis. Total
estimated emissions from the RIBA Stage 4 report are spread equally over the construction period.
Post practical completion, the as-built embodied carbon assessment will be reported, and any accruals
will be captured in the final reporting year. The reported carbon tonnage is offset in the year of
reporting. For our two major on-site projects, 25 Baker Street and Network, and Strathkelvin Retail Park,
which are due to complete in 2025, the embodied carbon will be spread and reported over the remaining
construction period (2024 and 2025). Prior year data has not been restated.
Independent assurance
Selected 2024 metrics were subject to independent limited assurance by Deloitte LLP in accordance
with ISAE 3000 (Revised) and ISAE 3410 Standards. Their unqualified assurance opinion and our
Environmental Basis of Reporting can be found in the 2024 Responsibility Report.
In line with SECR regulations, the
adjacent table shows the carbon
emissions (tCO2e) across Scopes 1, 2 and
3 together with appropriate intensity
ratios (kgCO2e/sqm) from our managed
portfolio. We also show the global energy
consumption (kWh) used to calculate
our emissions. New in 2024, we show
estimated consumption and emissions
from our unmanaged buildings.
www.derwentlondon.com/
responsibility/publications
In 2024, we updated our methodology
for reporting embodied carbon emissions
(included within Scope 3, Category 2)
from major projects to more closely align
the timing of emissions and offsetting. Full
details are provided in Data notes below.
Prior year data has not been restated.
Energy efficiency actions
The Group undertook a number of energy
efficiency actions in 2024. These included:
• trials run across our own office,
including shorter plant run-times and
relaxed temperature set points, the
results of which were used to support
our ongoing programme of occupier
engagement;
• out of hours assessments to identify
actions for application across the
portfolio, including external light
assessments with findings reported
to occupiers;
• air source heat pumps installed at
1-2 Stephen Street W1 as part of our
work to decarbonise the portfolio and
will use this model as a blueprint for
future decarbonisation works;
• retrofitting specialist equipment to
boilers at six buildings to enhance
efficiency;
• completing and submitting our Phase
3 ESOS assessment and our annual
reporting action plan template; and
• upgrades to building management
systems (BMS) at several buildings
to facilitate better control.
As the result of the actions and
interventions noted above, year on
year energy consumption reduced by
9% and energy intensity by 8% in 2024.
Compared to our 2019 baseline, energy
intensity has reduced by 17%.
See page 47
Derwent London plc
58
GHG emissions
tCO2e
% change
Location/
Market-based
2024
2023
2024 vs 2023
Scope 1
Combustion of fuel1
Location
2,378
3,007
(21)
Fugitive emissions2
Location
358
1,357
(74)
Total Scope 1 emissions
Location
2,736(A)
4,364
(37)
Scope 2
Purchased electricity, heat, steam and cooling for own use3
Location
2,705(A)
2,795
(3)
Purchased electricity, heat, steam and cooling for own use3
Market
19(A)
29
(34)
Total Scope 1 & 2 emissions
Location
5,441
7,159
(24)
Total Scope 1 & 2 emissions intensity (kgCO2e/sqm)
Location
13.6
18.2
(25)
Proportion UK-based
100%
100%
–
Scope 3 emissions4
Category
1. Purchased goods and services (includes water)
30
36
(17)
2. Capital goods5
19,136(A)
799
2,295
3. Fuel and energy-related activities
1,283
1,411
(9)
5. Waste generated in operations
52
79
(34)
6. Business travel
117
58
102
7. Employee commuting
110
110
0
13. Downstream leased assets6
5,324
5,517
(3)
Total Scope 3
26,052(A)
8,010
225
Total Scope 1, 2 & 3 emissions
Location
31,493
15,169
108
Total Scope 1, 2 & 3 (excluding embodied carbon) emissions
12,357
14,370
(14)
1
Managed portfolio gas use and fuel use in Derwent London owned vehicles.
2
Managed portfolio refrigerant loss from air conditioning and chilling systems.
3
Managed portfolio electricity use for common parts and shared services (landlord-controlled areas); no heat, steam or cooling was/is purchased.
4
Categories 4, 8, 9, 10, 11, 12, 14 & 15 are currently identified as non-material to scope of business or not relevant.
5
Refer to Data notes on page 58 for changes to embodied carbon emissions recognition methodology; 2023 data has not been restated.
6
Emissions from tenant electricity consumption for the managed portfolio only. Where the Group does not exercise ‘operational control’, consumption and
emissions are not reported within our managed portfolio disclosure (within Scope 3, Category 13). This relates to the FRI portfolio and those elements of the
managed portfolio (principally residential and retail units) where occupiers procure their own utilities. For completeness, based on estimated energy consumption
of c.38.6m kWh (2023: c.43.7m kWh), our best estimate of the carbon emissions for the FRI portfolio and those elements of the managed portfolio in 2024 is
c.7,700 tCO2e (2023: c.8,700 tCO2e).
Metrics denoted with an (A) have been subject to independent limited assurance by Deloitte LLP in accordance with ISAE 3000
(Revised) and ISAE 3410 Standards – see Environmental Basis of Reporting in our latest Responsibility Report.
Global energy use
kWh
% change
2024
2023
2024 vs 2023
Gas (combusted on a whole building basis)
12,981,252(A)
16,424,375
(21)
Electricity (consumption from landlord-controlled areas)
13,150,182(A)
13,596,037
(3)
Electricity (consumption from tenant-controlled areas)
25,713,301(A)
26,642,461
(3)
Total energy (consumption from landlord areas for electricity and gas)
26,131,434(A)
30,020,412
(13)
Total building energy (consumption from landlord and tenant-controlled
areas and gas)
51,844,735(A)
56,662,872
(9)
Derwent London vehicles (fuel combustion)
16,278
11,245
45
For more analysis of our GHG emissions, energy consumption and renewable energy generation, use and procurement, visit the
data section of our latest Responsibility Report.
Report and Accounts 2024
59
Strategic report
Our buildings
are our brand
PROPERTY REVIEW
Holden House W1
60
Derwent London plc
The Group’s investment portfolio was
valued at £5.0bn as at 31 December 2024
compared to £4.9bn at the end of 2023.
Supported by our on-site developments
and growth in reversion, the underlying
portfolio valuation increased 1.9% in
H2, with capital value growth, before
accounting adjustments, of 0.2%
overall in the year. This recovery follows
a 10.6% decline in 2023. There was a
deficit for the year of £1.8m which,
after accounting adjustments of £2.0m,
produced an overall increase of £0.2m.
Take-up in London was 4% higher
compared to 2023 and returned to
longer term levels. In particular, demand
remains strongest for modern, well-
located, high quality space with good
amenities. Including further pre-lets at
our 25 Baker Street W1 development, we
had another strong year for lettings, with
open-market leases signed on average
12.3% above December 2023 ERV.
Valuation
Highlights
• ERV growth of 4.3%
• Equivalent yield 5.73%, up 18bp
in H1 and stable in H2
• Underlying capital values up
0.2% in 2024 – quality continues
to outperform
• Valuation recovery in H2 (+1.9%)
on ERV growth and development
profits
Nigel George Executive Director
The balance of the portfolio, our Scottish
holdings, was up 11.6% driven by positive
asset management and leasing activity
at Strathkelvin Retail Park.
Further progress was made at our
two on-site West End developments,
25 Baker Street W1 and Network W1.
Valued at £597.2m, they represent 12%
of the portfolio (December 2023: 8%).
After adjusting for capital expenditure,
the valuation uplift was 15.1%. The main
drivers of this strong performance were
construction progress, completion of the
office pre-letting campaign at 25 Baker
Street at rents 16.5% above appraisal ERV,
and the release of development surpluses.
25 Baker Street is due to complete in H1
2025 with Network to follow later in the
year. On a combined basis, a further
£100m of capital expenditure is required.
Excluding these two projects, the portfolio
valuation decreased by 1.5% on an
underlying basis.
This fed through to our EPRA rental
values which were up 4.3% over the year,
an improvement on the 2.1% increase in
2023 and the strongest annual growth
figure since 2016.
Our portfolio EPRA true equivalent yield
was stable in H2 at 5.73%, having risen
18bp in H1. The EPRA initial yield was
unchanged year on year at 4.3% and
after allowing for the expiry of rent-free
periods and contractual uplifts, rises to
5.2% on a ‘topped-up’ basis (December
2023: 5.2%).
The valuation of our central London
properties, which represent 98% of the
portfolio, was flat with growth in the
West End of 1.2% offsetting the City
Borders where values were down 3.4%.
The latter was impacted by weaker
rental value growth and a slower
leasing market.
Report and Accounts 2024
61
Strategic report
Portfolio income potential
Contractual rent
Contractual rental uplifts
(including pre-lets)
Available to occupy
Under refurbishment/development
Rent reviews and lease renewals
Reversion %
0
100
25
200
50
300
75
400
100
Rental income (£m)
Reversion (%)
2020
2021
2022
2023
2024
Valuation yields
Derwent London true equivalent yield
UK 10-year Gilt
%
0
2
4
6
8
10
12
2024
2022
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
True equivalent yield
%
4.0
4.5
5.0
5.5
6.0
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
6
25
3
1
3
0
42
25
42
18
0
(4)
BBB yield
(4) (6) (3)
(3)
(9)
(15)(4)
(17)
Our portfolio valuation increase of 0.2% outperformed the
MSCI Quarterly Index for Central London Offices which was
down 2.6%. This was mainly due to the strong valuation uplifts
at our on-site developments. The wider UK All Property Index
increased by 0.4%.
Our portfolio falls into two main categories: core income and
future opportunities. The core income element comprises
buildings which have generally been upgraded into modern,
amenity-rich space. These properties typically have a higher
capital value per square foot and, as illustrated below,
remained more resilient. The future opportunities segment of
the portfolio are mostly our lower value properties which offer
refurbishment or redevelopment, often with the ability to add
additional floor area.
Valuation movement by capital value banding
Capital value banding
£psf
Weighting by value
%
Capital value change
%
≥£1,500
22
3.5
£1,000 – £1,499
21
(1.5)
<£1,000
45
(3.8)
Sub-total
88
(1.5)
On-site developments
12
15.1
Portfolio
100
0.2
Following two years of valuation declines, valuation yields
stabilised during H2 driving a total property return of 4.1%
in 2024. This compares to the MSCI Quarterly Index of 1.3%
for Central London Offices and 5.5% for UK All Property.
Further details on the progress of our projects are in the
‘Development and refurbishments’ section below.
Portfolio reversion
Our contracted annualised cash rent roll as at 31 December
2024 was £204.3m, a decrease of 1.1% over the last 12 months,
which is principally due to the disposal of Turnmill EC1. With
a portfolio ERV of £320.5m, there is £116.2m of potential
reversion, an increase of 12.7% compared to the £103.1m
at December 2023. The main components within this are:
• Contracted uplifts: £42.3m which is contracted through
a combination of rent-free expiries and fixed uplifts, the
majority of which is already straight-lined in the income
statement under IFRS accounting standards; our IFRS
accounting rent roll at 31 December 2024 was £210.7m.
• On-site developments: £34.4m from two on-site
developments at the current ERV, of which £20.7m
or 60% is pre-let, up from £15.6m or 47% a year ago.
• Smaller projects: £12.8m of refurbishment projects
(2023: £7.5m). These spaces will generally be upgraded
during 2025.
• EPRA vacancy: £8.4m of ‘available to let’ space. Since year
end, £3.4m of this space has been let or is under offer.
• Reviews and expiries: £18.3m is from future reviews
and expiries less future fixed uplifts. This has increased
substantially from the £7.1m at December 2023, principally
reflecting the acceleration in rental value growth seen
during the year.
PROPERTY REVIEW continued
Valuation continued
Derwent London plc
62
Rental value growth
Derwent London H1 growth
Derwent London H2 growth
MSCI Central London Offices annual growth
%
(10)
(5)
0
5
10
15
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total property return
Derwent London
MSCI Central London Offices1
MSCI UK All Property1
(12)
(9)
(6)
(3)
0
3
6
9
12
15
18
%
2020
2021
2022
2023
2024
1
Quarterly Index.
0.3
(2.4)(2.3)
(3.4)
4.1
1.3
5.5
16.5
5.9
6.3
(8.0)(9.1)
(7.3)(7.9)
(1.0)
Members of the Investor Relations and Investment teams
Report and Accounts 2024
63
Strategic report
Portfolio statistics – valuation
Valuation
£m
Weighting
%
Valuation1
performance
%
Let
floor area2
‘000 sq ft
Vacant
available
floor area
‘000 sq ft
Vacant
refurbishment
floor area
‘000 sq ft
Vacant
project
floor area
‘000 sq ft
Total
floor area
‘000 sq ft
West End
Central
3,473.1
69
1.8
2,749
38
78
175
3,040
Borders
301.7
6
(5.5)
354
22
53
0
429
3,774.8
75
1.2
3,103
60
131
175
3,469
City
Borders
1,173.4
23
(3.4)
1,334
165
63
0
1,562
Central London
4,948.2
98
0.0
4,437
225
194
175
5,031
Provincial
92.9
2
11.6
308
17
0
0
325
Total portfolio
2024
5,041.1
100
0.2
4,745
242
194
175
5,356
2023
4,878.5
100
(10.6)
4,753
284
121
236
5,394
1
Underlying – properties held throughout the year.
2 Includes pre-lets.
Rental income profile
Rental
uplift
£m
Rental
per annum
£m
Annualised contracted rental income, net of ground rents
204.3
Contractual rental increases across the portfolio
42.3
Contractual rental from pre-lets on developments1
20.7
Letting 242,000 sq ft available floor area
8.4
Completion and letting 194,000 sq ft of refurbishments
12.8
Completion and letting 175,000 sq ft of developments
13.7
Anticipated rent review and lease renewal reversions
18.3
Portfolio reversion
116.2
Potential portfolio rental value
320.5
1
204,300 sq ft of pre-lets in addition to 57,900 sq ft pre-sold, at 25 Baker Street W1.
Portfolio statistics – rental income
Net contracted
rental income
per annum
£m
Average rental
income
£ per sq ft
Vacant space
rental value
per annum
£m
Lease reversion
per annum1
£m
Portfolio estimated
rental value
per annum
£m
Average
unexpired lease
length2
Years
West End
Central
116.0
42.86
22.9
67.1
206.0
7.2
Borders
18.2
51.70
3.7
0.4
22.3
5.6
134.2
43.87
26.6
67.5
228.3
7.0
City
Borders
65.5
49.83
8.0
13.2
86.7
3.8
Central London
199.7
45.66
34.6
80.7
315.0
5.9
Provincial
4.6
14.82
0.3
0.6
5.5
1.8
Total portfolio
2024
204.3
43.65
34.9
81.3
320.5
5.93
2023
206.5
44.42
35.8
67.3
309.6
6.5
1
Contracted uplifts, rent reviews/lease renewal reversion and pre-lets.
2 Lease length weighted by rental income at year end and assuming tenants break at first opportunity.
3 6.8 years after adjusting for ‘topped-up’ rents and pre-lets.
Valuation continued
PROPERTY REVIEW continued
Derwent London plc
64
Central London office rent
‘Topped-up’ income
£0-£30 per sq ft
5%
£30-£40 per sq ft
8%
£40-£50 per sq ft
12%
£50-£60 per sq ft
22%
£60-£70 per sq ft
16%
£70-£80 per sq ft
18%
£80+ per sq ft
19%
Ten largest tenants
% of rental
income1
Expedia
7.7%
Public sector
7.4%
Burberry
6.7%
G-Research
4.7%
Boston Consulting Group
3.4%
Fora
3.1%
Arup
2.6%
VCCP
2.2%
Paymentsense
2.1%
Apollo
1.9%
Tenant diversity
% of rental
income1
Business services
19
Media
15
Fintech
10
Retail head office
9
Retail & hospitality
9
Online leisure
8
Public sector
7
Financial
7
Technology
6
Flexible office providers
5
Other
5
1
Based upon contracted net rental income of £204.3m.
Henry Wood House W1
Report and Accounts 2024
65
Strategic report
PROPERTY REVIEW continued
Sustainability
Embodied carbon – reducing
and offsetting our emissions
As part of our Net Zero Carbon Pathway,
we have set stretching targets to reduce
the embodied carbon footprint of
our regeneration activity. New builds
completing from 2025 are targeting
an embodied carbon intensity of
≤600 kgCO2e/sqm, which reduces
to ≤500 kgCO2e/sqm from 2030. We
have committed to offset the residual
embodied carbon using verified carbon
removal offset schemes.
In 2024, we revised our embodied carbon
recognition policy for major projects
to spread emissions over the duration
of the construction phase, with offsets
similarly phased to more closely align
with the timing of emissions. Previously,
a project’s emissions were recognised
(and offset) in the year of completion.
We estimate annual embodied carbon
emissions of c.15,000 tCO2e over the
coming years. As part of our strategic
planning, in the year we forward-
purchased verified credits, on a phased
basis, equivalent to c.114,000 tCO2e for
a total amount of £3.9m or c.£34/tCO2e.
Significant progress was made towards
decarbonising our regeneration activity
in 2024. First, we formalised our circular
economy approach, establishing a
cross-business working group to identify
materials and parts for re-use on site or
elsewhere either across the managed
portfolio or, working with a new third
party partner, elsewhere.
Examples of circular economy in
action across our portfolio include
the refurbishment and re-use of
raised access flooring, re-use of steel
(where appropriate), use of cement
replacements in concrete, retention and
re-use or recycling of MEP components,
and re-use of glass.
Additionally, we created a developer-
led cross-industry working group with
the objective of accelerating delivery
of lower carbon concrete products to
market, by facilitating collaboration and
information sharing across the concrete
supply chain from manufacturers to
structural engineers, main contractors
and clients. Very positive feedback has
been received following the ‘Accelerating
Concrete-Decarbonisation Group’
workshops held to date.
69% of our portfolio now rated
EPC A or B
In 2021, we outlined a c.£100m phased
programme of works to ensure
compliance with evolving EPC legislation
(Minimum Energy Efficiency Standards,
MEES), of which £86m is remaining. As
at December 2024, 69% of the portfolio
was rated A or B (including projects at
25 Baker Street W1 and Network W1)
in line with expected 2030 legislation,
which compares to the wider London
office market at sub-30%. A further
c.18% are rated C, taking our compliance
with expected 2027 legislation (EPC
C or above) to 87%. The remainder of
the portfolio is rated D or E, in line with
current MEES requirements.
Highlights
• Energy intensity reduced by 8%
to 137 kWh/sqm
• Forward purchase of c.114,000
carbon offsets for £34/tonne
• Good progress on delivery of
Scottish solar park
• 69% of portfolio has EPC ‘A’ or ‘B’
Reduction in energy intensity
and operational carbon emissions
Energy consumption in 2024 reduced
by 9% across the London managed
portfolio to 51.8m kWh (2023: 56.7m
kWh). Consequently, energy intensity
was 8% lower at 137 kWh/sqm (2023: 149
kWh/sqm), supporting ongoing progress
towards our 2030 target of 90 kWh/sqm.
Our operational carbon footprint
reduced 14% in the year to 12,357 tCO2e
(2023: 14,370 tCO2e).
This successful reduction was achieved
through continued collaboration
between our Property Management
and Sustainability teams, an ongoing
programme of occupier engagement
as well as completion of several building
upgrade initiatives. These included
installation of the first phase of air source
heat pumps at 1-2 Stephen Street W1,
part of our portfolio decarbonisation
strategy, and retrofitting specialist
equipment to boilers at six buildings
enhancing efficiency.
Self-generating electricity –
making progress with solar
park delivery
Following receipt of planning consent in
2023 for a c.100-acre 18.4MW solar park
on our land in Scotland, delivery is now
underway. On completion, the electricity
generated is expected to be in excess of
40% of our London managed portfolio’s
usage, on an annualised basis.
Members of the Sustainability team
Derwent London plc
66
Leasing and
asset management
Lettings
In 2024, we maintained positive
momentum in our letting activity as
occupiers continued to prioritise quality
buildings in well-connected London
locations for an office-centric workforce.
In total, £18.9m of new leases were
signed covering 324,700 sq ft. Demand
was more balanced when compared to
the prior year, reflective of a broader
recovery across the market.
• Location: At 43%, the City Borders
represented a greater proportion of
overall lettings against 2023. This was
primarily driven by £3.3m of lettings
at The White Chapel Building E1 where
occupancy increased from 60% to
77% in the year and 87% including
space under offer. Open market leases
in the West End and City Borders
averaged 12.1% and 7.6% ahead of
December 2023 ERV, respectively
(excluding pre-lets and short-term
development-linked deals).
• Pre-lets: At 25 Baker Street W1, the
office element is now fully pre-let
ahead of completion in H1 2025,
with 2024 pre-lets of £5.3m signed
at a 27.2% premium to the appraisal
ERV. Overall, non pre-lets accounted
for 53% of total lettings compared
to 43% in 2023, demonstrating the
enduring demand for our high quality
buildings in the right locations.
• ‘Furnished + Flexible’: £4.5m of
‘Furnished + Flexible’ transactions
were agreed, with open market deals
averaging 12.5% above December 2023
ERV. This represents a 33% increase
in letting volumes for these smaller,
fully-fitted units compared to 2023. We
operate c.190,000 sq ft of ‘Furnished
+ Flexible’ units, with c.100,000 sq
ft under review and expected to
be delivered in the coming years in
accordance with occupier demand.
Since the start of 2025, we have agreed a
further £1.2m of new leases and there is
£2.2m under offer. The latter includes the
conditional agreement for lease on the
pavilion and lower ground floors at The
White Chapel Building E1.
Emily Prideaux Executive Director
Highlights
• £18.9m of new leases in 2024;
6.2% above December 2023 ERV
–
12.3% above ERV excluding
short-term development
lettings
–
Includes £5.3m of pre-lets at
25 Baker Street W1 offices,
now 100% pre-let
–
Further £1.2m has completed
in H1 2025 to date, with £2.2m
currently under offer
• EPRA vacancy rate down 90bp
through 2024 to 3.1%
Report and Accounts 2024
67
Strategic report
PROPERTY REVIEW continued
Leasing and asset management continued
Leasing in 2024
Let
Performance against
Dec 2023 ERV (%)
Area
‘000 sq ft
Income
£m pa
WAULT1
yrs
Open market
Overall2
H1 2024
138.9
8.8
7.3
10.3
7.8
H2 2024
185.8
10.1
8.6
14.4
4.8
2024
324.7
18.9
8.0
12.3
6.2
Of which: F+F3
67.9
4.5
2.6
12.5
0.9
1
Weighted average unexpired lease term (to break).
2 Includes short-term lettings at properties earmarked for redevelopment.
3 ‘Furnished + Flexible’.
Leasing by type in 2024
Type
Area
‘000 sq ft
Income
£m pa
Performance vs
Dec 2023 ERV
%
Pre-let
154.7
8.8
14.8
Non pre-let – open market
126.3
8.6
9.9
Principal lettings in 2024
Property
Tenant
Area
sq ft
Rent
£ psf
Total
annual rent
£m
Lease
term
Years
Lease
break
Year
Rent-free
equivalent
Months
H1 2024
25 Baker Street W1
Cushman & Wakefield
17,100
107.50
1.8
15
–
34
The White Chapel Building E1
Pay UK
27,000
52.50
1.4
10
5
22, plus 5
if no break
The White Chapel Building E1
PLP Architecture
22,300
50.00
1.1
10
–
24
The White Chapel Building E1
Breast Cancer Now
14,700
51.00
0.8
10
5
20, plus 10
if no break
The Featherstone Building EC1
incident.io1
6,900
86.70
0.6
2
–
1
Tea Building E1
Buttermilk1
7,300
66.50
0.5
4
3
2, plus 2
if no break
One Oxford Street W1
Starbucks
4,200
98.10
0.4
15
10
12
230 Blackfriars Road SE1
Hello! Magazine1
7,300
52.50
0.4
5.5
–
14
H2 2024
1-2 Stephen Street W1
Envy
19,200
61.00
1.2
15
10
24, plus 12
if no break
20 Farringdon Road EC1
Lumon Pay1
18,100
45.00
0.8
2.25
–
7.5
25 Baker Street W1
Sculptor Capital
7,200
107.50
0.8
10
5
12, plus 12
if no break
The Featherstone Building EC1
Wiz Cloud1
5,800
89.50
0.5
3
2
–
One Oxford Street W1
Kiko Milano
2,900
168.50
0.5
10
6
12
One Oxford Street W1
Aldo
2,700
169.70
0.5
10
6
14
Tea Building E1
Cleo AI
6,900
65.00
0.5
1
–
–
Strathkelvin Retail Park, Scotland
Home Bargains
35,100
13.00
0.5
15
–
12
230 Blackfriars Road SE1
Instant Offices
7,300
44.00
0.3
5.3
3
14
Strathkelvin Retail Park, Scotland
Aldi
21,600
15.00
0.3
20
–
9
3-5 Rathbone Place W1
Saltus Partners1
3,900
88.00
0.3
5
3
1.5
Table excludes a confidential pre-let at 25 Baker Street W1.
1
Space leased on a ‘Furnished + Flexible’ basis.
Derwent London plc
68
Asset management
As demand for Grade A space continues to outpace supply,
we are engaged with a number of occupiers already planning
for lease breaks/expiries over the coming years. Relocation
costs are an important consideration for businesses assessing
occupational strategies in the current environment and we
work collaboratively with tenants to help them make informed
decisions around their office requirements.
At the start of 2024, 10% of passing rent was subject to break or
expiry in the year. After adjusting for disposals and space taken
back for larger schemes, 85% of income exposed to breaks and
expiries was retained or re-let by year end. This is in line with our
10-year average of 84%.
Overall, asset management activity in 2024 totalled £14.5m.
Rent reviews were settled on average 10.9% ahead of the
previous rent, reflecting the acceleration in rental growth.
Excluding development-linked deals, rent reviews, lease regears
and renewals were agreed 4.1% above previous income and
4.5% ahead of December 2023 ERV.
The key transactions were:
• 25 Savile Row W1: three rent reviews (18,700 sq ft) settled
on average 16.8% ahead of the previous rent, and 14.4%
above the December 2023 ERV.
• 1-2 Stephen Street W1: as part of a wider asset management
transaction, we relocated Envy Post Production from Holden
House W1 ahead of its redevelopment to 1-2 Stephen Street
(19,200 sq ft) at a rent of £1.2m pa (£61 psf), 13.5% above
the December 2023 ERV. This letting was for a 15-year term
with a break at year 10.
• Strathkelvin Retail Park, Scotland: as part of our upgrade
plans to future-proof the retail park and improve the public
realm, several leasing deals (including to Aldi and Home
Bargains) were agreed and two rent reviews were completed,
with the latter on average 13.2% ahead of the previous rent.
In addition to a focus on capturing reversionary value through
rent reviews and lease renewals, our Asset Management team
plays an important role in aligning lease profiles to facilitate
commencement of regeneration projects. In 2024, there were
25 development-linked deals at buildings which form the next
phase of our pipeline, commencing from 2025 onwards.
Asset management in 2024
Number
Area ‘000
sq ft
Previous rent
£m pa
New rent1
£m pa
Uplift
%
New rent vs
Dec 2023 ERV
%
All activity
Rent reviews
12
70.9
4.5
5.0
10.9
8.2
Lease renewals
48
212.3
5.3
5.1
-4.3
-3.1
Lease regears
13
81.2
4.5
4.4
-2.1
-2.0
Total
73
364.4
14.3
14.5
1.2
0.9
Activity excluding 50 Baker Street development facilitation activity
Lease renewals
25
185.2
4.2
4.2
-0.1
3.6
Lease regears
11
71.7
4.0
4.0
0.9
1.2
1
Headline rent, shown prior to lease incentives.
Members of the Asset, Leasing and Marketing teams
Report and Accounts 2024
69
Strategic report
Lease expiry and break analysis
Retained
Re-let
Vacant
Average retained/re-let (84%)
0
10
20
30
40
50
60
70
80
90
100
%
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
45
44
11
63
26
11
57
35
8
76
14
10
83
7
10
65
22
13
47
30
23
59
20
21
62
3
35
76
9
15
Average unexpired lease length
West End
City Borders
Central London
0
2
4
6
8
10
12
Years
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Ten-year vacancy trend
CBRE West End offices (by floorspace)
CBRE central London offices (by floorspace)
Derwent London (by rental value)
Vacancy rate (%)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
0
1
2
3
4
5
6
7
8
9
10
PROPERTY REVIEW continued
Senior members of the Building Management team
Leasing and asset management continued
The weighted average unexpired lease term (WAULT) to break
across the portfolio is 5.9 years, split 7.0 years in the West
End and 3.8 years in the City Borders. Our ‘topped-up’ WAULT
(adjusted for pre-lets and rent-free periods) is 6.8 years.
Vacancy
The EPRA vacancy rate decreased by 90bp through 2024 to 3.1%
(December 2023: 4.0%) with an ERV of £8.4m. There is a further
£9.7m of rent classified as project space.
Rent and service charge collection
Rent and service charge collection rates remain high at 99% for
the December 2024 quarter.
Property management
In 2024, in addition to operational management and customer
service, a particular focus of the Property Management team
has been on driving sustainability and net zero carbon initiatives.
Activities included a programme of enhanced metering to
improve data collection, continuous review of building services
to ensure optimisation, and investment in new technologies to
support reductions in energy consumption. At 1-2 Stephen Street
W1, the team is leading the M&E life cycle replacement project
and the installation of air source heat pumps which forms part
of our journey to net zero. A programme of decarbonisation
projects across the portfolio has been developed to continue
this work into 2025 and onwards. Coupled with our Intelligent
Buildings platform, we achieved a significant decrease in energy
consumption across the portfolio in 2024.
As well as further contract negotiations, the team continued
to focus on costs in the face of rising wages and inflation to
minimise building service charges. Use of new technologies, such
as drones and robotics, has assisted in reducing overall labour
costs and is a continuing area of focus for 2025.
Derwent London plc
70
Investment and regeneration
The Group’s capital allocation decisions
in 2024 were centred on its development
and refurbishment pipeline with £207m
of capital expenditure incurred in the
year. Including on-site schemes, our
regeneration pipeline extends to c.2.0m
sq ft across eight major projects which
will be delivered over the coming decade.
We remain committed to owning a
portfolio balanced between core income
properties and those that offer future
regeneration potential.
Highlights
Developments
• £207m of project expenditure
• Two major projects on site –
25 Baker Street W1 (298,000 sq ft)
and Network W1 (139,000 sq ft)
–
60% pre-let/sold
–
25 Baker Street offices 100%
pre-let, 16.5% ahead of
appraisal ERV
–
Combined 6.1% yield on cost
and 15% development profit
• Medium and longer term pipeline
totals c.1.6m sq ft
–
Additional programme of
smaller refurbishments
Acquisitions and disposals
• Acquisition of remaining 50%
stake in 50 Baker Street W1 for
£44.4m (£370 psf) before costs
• Total disposals £89.1m; major
sale was Turnmill EC1
(Q2: £76.6m; 4.9% yield)
In 2024, the London office investment
market remained slow following a
challenging few years. Nonetheless,
we remain disciplined in our capital
recycling strategy and anticipate selling
more of our buildings over the coming
years as the market recovers and more
attractive acquisition opportunities
emerge. Our approach to capital
recycling has helped us maintain a
robust balance sheet throughout market
volatility, ensuring we are well-positioned
as investment opportunities arise.
Paul Williams Chief Executive
Nigel George Executive Director
At 31 December 2024, the portfolio
was split 53% ‘core income’ and 47%
‘future opportunity’. This excludes Old
Street Quarter EC1 where our conditional
acquisition is expected to complete
from 2027 and which offers significant
potential to create a mixed-use campus.
We expect to maintain annual capital
expenditure in the range of £150m to
£200m, with a rising contribution from
rolling refurbishments.
Report and Accounts 2024
71
Strategic report
PROPERTY REVIEW continued
Developments and refurbishments
Major on-site projects – 437,000 sq ft
(60% pre-let/sold)
We continue to make good progress at both
our on-site West End development projects,
25 Baker Street W1 and Network W1, which
together total 437,000 sq ft. We currently
expect a combined 15% development
profit and 6.1% yield on cost (6.9% yield on
completion), which could rise to 6.3% if a
similar ERV beat is achieved on the remaining
speculative space.
• 25 Baker Street W1 (298,000 sq ft) – our
office-led scheme in Marylebone is expected
to complete later in H1 2025. It features
218,000 sq ft of best-in-class offices, 28,000
sq ft of new destination retail surrounding
a central landscaped courtyard (which
is being delivered for the freeholder, The
Portman Estate) and 52,000 sq ft of
residential, of which 45,000 sq ft is private.
Reflecting the strength of occupier demand
in the area, the offices are now 100% pre-let
at an average headline rent of £104 psf,
a 16.5% premium over the appraisal ERV.
Additionally, the sale of the residential
units is progressing well, with contracts
exchanged on 16 of the 41 private units for
£83.0m. This reflects an average capital
value of £3,750 psf, substantially ahead of
the appraisal value.
• Network W1 (139,000 sq ft) – an office-led
scheme in Fitzrovia, targeted for completion
in H2 2025, comprising 134,000 sq ft of
adaptable offices and 5,000 sq ft of retail.
The façade is nearing completion and the
project remains on programme. We have
adopted a number of circular economy
measures including the reconditioning and
re-use of raised access flooring, among
others, helping reduce the embodied carbon
intensity to c.530 kgCO2e/sqm. We are
engaged with several potential occupiers
across a range of sectors and with a variety
of requirements and are confident in the
quality of the space we are delivering
against the backdrop of a constrained
development pipeline in the West End,
especially in Fitzrovia.
Major on-site development pipeline
Project
Total
25 Baker Street
W1
Network
W1
Completion
H1 2025
H2 2025
Office (sq ft)
352,000
218,000
134,000
Residential (sq ft)
52,000
52,000
–
Retail (sq ft)
33,000
28,000
5,000
Total area (sq ft)
437,000
298,000
139,000
Est. future capex1 (£m)
100
50
50
Total cost2 (£m)
742
493
249
ERV (c.£ psf)
n/a
100
95
ERV (£m pa)
34.4
21.33
13.1
Pre-let/sold area (sq ft)
262,200
262,2004
–
Pre-let income (£m pa, net)
20.7
20.7
–
Embodied carbon intensity
(kgCO2e/sqm)5
c.600
c.530
Target BREEAM rating
Outstanding6
Outstanding
Target NABERS rating
4 Star or above6
4 Star or above
Green Finance
Elected6
Elected
1
As at 31 December 2024.
2 Comprising book value at commencement, capex, fees and notional interest on land, voids
and other costs. 25 Baker Street W1 includes a profit share to freeholder, The Portman Estate.
3 Long leasehold, net of 2.5% ground rent.
4 Includes five office pre-lets, 15 private residential units at year end (plus one further sale in
early 2025), the pre-sold affordable housing plus the courtyard retail and Gloucester Place
offices pre-sold to The Portman Estate.
5 Embodied carbon intensity estimate as at mid-stage 5.
6 On main commercial building.
Topping-out event for Network W1
Major on-site projects
437,000 sq ft
Expected profit
15%
Annual pre-let income (net)
£20.7m
Derwent London plc
72
Net property investment
Acquisitions
Disposals
Capital expenditure
£m
(400)
(300)
(200)
(100)
0
100
200
300
400
500
2020
2021
2022
2023
2024
Future regeneration projects
Six schemes totalling c.1.6m sq ft
In addition to our on-site projects, our medium to longer term
pipeline extends to c.1.6m sq ft across six design-led, amenity
rich projects.
Medium-term pipeline – all in the West End
• Holden House W1 (133,500 sq ft) – due to commence in
H2 2025: we are progressing our plans for this ‘behind the
façade’ project with a higher office weighting and improved
sustainability credentials.
• 50 Baker Street W1 (c.240,000 sq ft) – expected to
commence in H1 2026: in Q4 2024 we acquired Lazari
Investments 50% stake in the joint venture to take full
control of the project. This leasehold property is located
on The Portman Estate and headlease regear negotiations
are making positive progress. Resolution to grant planning
consent was secured in H2 2024.
• Greencoat & Gordon House SW1 (107,800 sq ft) – expected
to commence in H1 2026: originally a Victorian warehouse,
we will comprehensively refurbish the space celebrating its
heritage architecture, for delivery into a supply constrained
market in 2028.
Long-term pipeline
• 20 Farringdon Road EC1 (166,300 sq ft) – due to
commence in H1 2027: a number of refurbishment options
are being appraised following early-stage design surveys.
The project is expected to commence in 2027.
• Old Street Quarter EC1 (c.750,000 sq ft) – expected
to commence from 2028: our £239m acquisition of this
2.5-acre island site is expected to complete from 2027,
conditional on delivery by the vendor of the new eye hospital
at St Pancras and subsequent vacant possession of the
existing site. Our studies suggest there is potential for a
significant mixed-use campus development, potentially
incorporating both office and ‘living’ components.
• 230 Blackfriars Road SE1 (c.200,000 sq ft) – expected to
commence from 2030: our early appraisals show capacity
for a substantial development of this 1970s building, more
than three times the existing floor area.
Principal disposals in 2024
Property
Date
Area
sq ft
Total after costs
£m
Net yield
%
Net rental income
£m pa
Acquisitions
50 Baker Street W1 (50% share)
Q4
61,000
47.01
4.2
2.0
Disposals
Turnmill EC1
Q2
70,300
76.6
4.9
4.0
4 & 10 Pentonville Road N1
Q42
54,800
25.7
–
–
1
£44.4m before costs.
2 Exchange of contracts only; completed in January 2025.
Rolling refurbishments
Rolling refurbishments comprise a greater proportion of our
pipeline as we upgrade our portfolio to meet the evolving
needs of an increasingly selective occupier base. These projects
will provide the enhanced amenity occupiers are prioritising
and ensure compliance with evolving government EPC
requirements, as well as delivering attractive rental uplifts.
Our project pipeline includes 1-2 Stephen Street W1, Middlesex
House W1 and 1 Oliver’s Yard EC1.
Acquisitions and disposals
Shortly before the end of the year, the Group acquired the
remaining 50% holding in 50 Baker Street W1 from its JV
partner, Lazari Investments. The consideration, before costs,
was £44.4m or £370 psf.
Disposal activity in 2024 totalled £89.1m after costs with
a further £25.7m transacting just after year end. The two
principal transactions were:
• Turnmill EC1 for £76.6m, a capital value of £1,100 psf; and
• 4 & 10 Pentonville Road N1 for £25.7m, a capital value of
£470 psf, to an owner-occupier. Contracts were exchanged
in Q4 but the disposal completed shortly after year end.
Report and Accounts 2024
73
Strategic report
FINANCE REVIEW
Introduction
Property investment yields moved out
substantially in 2022 and 2023 but
firmed in H1 2024 and hardly moved
from that point to the end of the year.
This was supported by the strongest
growth we have seen in our rental values
since 2016. Overall cost inflation has also
moderated in most respects.
As a result, our outlook for total returns
over the next few years from our well-
designed and amenity-rich office space
in many of London’s best locations is
more positive than for some time.
In recent months, concerns over global
politics, UK economic growth and the
government’s funding deficit have
grown, raising uncertainty levels and
elevating yields for government bonds.
This is notable particularly at the longer
end of the curve though pressure has
eased in the last few weeks. It remains
to be seen whether gilt pricing reads
through to more widespread yield
adjustments. Long-term debt costs have
been affected too and rose in Q4 2024
and into early 2025, just as UK base
rates continue to fall. We will examine
our response to this in the ‘debt and
financing’ section later on.
We continue to invest in our people,
the green agenda, Intelligent Buildings,
amenity and governance, as well as
the core asset management and
development business. Over the past
few years, the cost of our platform has
grown more quickly than our rental
income; cost control and efficiency are
therefore continuing areas of focus for
us into 2025.
Presentation of financial results
The consolidated financial statements have been prepared
in accordance with UK adopted International Financial
Reporting Standards (IFRS). In common with usual and
best practice in our sector, alternative performance
measures have also been provided to supplement IFRS
based on the recommendations of the European Public
Real Estate Association (EPRA). EPRA Best Practice
Recommendations (BPR) have been adopted widely
throughout this report and are used within the business
when considering our operational performance as well
as matters such as dividend policy and elements of our
Directors’ and senior staff remuneration.
Full reconciliations between IFRS and EPRA figures are
provided in note 38 and the EPRA definitions are set out
on pages 283 and 284.
The Derwent London plc company financial statements
have been presented this year in accordance with FRS 101
with a transition date of 1 January 2023. The comparative
figures were previously prepared in accordance with IFRS.
No material adjustments were necessary to previously
reported figures as a result of adopting FRS 101 except for
certain disclosure exemptions.
Damian Wisniewski Chief Financial Officer
It was good to see Derwent
London return to a positive total
return in 2024 after two years of
valuation declines.
Derwent London plc
74
Over the last year, we believe we have again successfully
balanced value creation with relatively resilient recurring
earnings and dividend growth. Our high quality product remains
in demand and Derwent London’s leverage is comfortable.
Looking into 2025 and beyond, while near-term refinancing
will bring higher interest costs, we see attractive total returns
and will continue to recycle capital as we gradually renew or
refurbish our office portfolio. We may also consider other use
classes where we believe this provides stronger returns.
Net asset values and total return for the year
Our property values increased in H2 2024 to reverse the first
half decline of 1.7%. This helped bring Derwent London’s IFRS
net asset value to £3,540m at the year end, a 0.9% increase
over the year, from £3,509m at 31 December 2023. EPRA net
tangible asset (NTA) value per share increased accordingly to
3,149p from 3,129p at 31 December 2023 and we delivered a
positive total return (ie EPRA NTA growth plus dividends per
share) of 3.2%. In 2023, the total return was -11.7% and, in
2022, -6.3%.
Total net assets
£3,539.8m
Dec 2023: £3,508.8m
Property portfolio at fair value
£5,041.1m
Dec 2023: £4,844.7m
IFRS profit/(loss)
before tax
£116.0m
Dec 2023: (£475.9m)
EPRA LTV ratio
29.9%
Dec 2023: 27.9%
EPRA NTA per share
3,149p
Dec 2023: 3,129p
NAV gearing
41.9%
Dec 2023: 38.7%
EPRA earnings per
share (EPS)
106.5p
Dec 2023: 102.0p
Gross property and other income
£276.9m
Dec 2023: £265.9m
EPRA NDV per share
3,261p
Dec 2023: 3,243p
Interim and final
dividend per share
80.5p
Dec 2023: 79.5p
Net interest cover ratio
3.9x
Dec 2023: 4.1x
Net debt/EBITDA
9.3x
Dec 2023: 8.8x
Net rental income
£189.6m
Dec 2023: £186.2m
2024
p
2023
p
Opening EPRA NTA
3,129
3,632
Revaluation movement
(8)
(516)
Profit on disposals
2
1
EPRA earnings
106
102
Ordinary dividends paid
(80)
(79)
Share of joint venture revaluation
movement/impairment
–
(8)
Other
–
(3)
Closing EPRA NTA
3,149
3,129
EPRA Net Disposal Value (NDV), which takes account of the
£137m positive fair value impact of fixed rate debt and bonds
over their book values, also increased, rising to 3,261p per share
against 3,243p per share as at 31 December 2023.
Report and Accounts 2024
75
Strategic report
FINANCE REVIEW continued
Property acquisitions in 2024 totalled £47.0m including costs,
related to the acquisition of Lazari Investments Ltd’s 50%
interest in the 50 Baker Street W1 project in October 2024.
This terminated our joint venture arrangement with them and
the remaining 50% share already owned by us was therefore
transferred at fair value of £44.4m from investments to
wholly owned investment property. At 31 December 2023, the
carrying value of our joint venture investments was £35.8m,
the revaluation surplus in 2024 up to the transfer date being
due mainly to approval for a new larger scheme in August
2024. The uplift in fair value on planning was largely offset by
an increase of £7.6m, including costs of £0.3m, in the deferred
consideration due to the vendor for the original acquisition.
This amount was conditional on planning and regearing of
the headlease and so had previously been disclosed as a
contingent liability. We expect to pay the £7.3m deferred
consideration in H1 2025.
Capital expenditure invested across the wholly owned portfolio
in 2024 totalled £182.2m (2023: £152.3m) plus capitalised
interest and staff costs of £12.9m (2023: £6.3m). Interest
capitalised increased to £10.7m in 2024 (2023: £6.3m) as we
are nearing completion of the major developments at 25 Baker
Street W1 and Network W1; as a result, the cumulative costs
upon which interest is capitalised have increased significantly
compared to 2023.
The carrying value of property disposals made in 2024
increased to £82.9m from £64.0m in 2023 but remained lower
than usual. Principal disposals during the year were Turnmill
EC1 in June and Asta House W1 in July. In addition, 4 & 10
Pentonville Road N1 exchanged in late 2024 and was therefore
shown at the year end within ‘assets held for sale’ at £25.7m;
the sale completed in January 2025.
Owner-occupied property comprises our head office at
25 Savile Row W1. It is included within ‘property, plant
and equipment’ at £49.0m (2023: £46.1m) together with
£3.0m (2023: £3.8m) of leasehold improvements, furniture,
equipment and artwork.
Trading property at the year end increased significantly to
£115.7m from £60.0m in 2023. This relates mainly to the 41
residential apartments which are being built for sale at 100
George Street W1, part of our large 25 Baker Street scheme.
We have made further good sales progress through 2024 and
have now exchanged contracts on 16 units totalling £83.0m
with completion due later in the year. We anticipate that the
apartment completion dates will be spread between 2025 and
2026, with a smaller proportion in 2026. Note that trading
property disposals are not included within the definition of
EPRA earnings per share but will bolster IFRS earnings.
The accrued income through incentive periods at 31 December
2024 rose slightly to £195.6m (2023: £194.1m), the non-current
portion being £173.6m (2023: £173.9m) and the current
amount being £22.0m (2023: £20.2m).
Other balance sheet items
As noted last year, we are due to deliver certain retail elements
at the 25 Baker Street project on completion to the freeholder
at a pre-agreed price. This is classified as ‘trading stock’ rather
than property as we no longer hold any interest in the related
real estate. Amounts incurred to 31 December 2024 were
£17.5m (2023: £8.9m).
Non-current receivables included the £173.6m of rent
recognised in advance of cash receipts (2023: £173.9m)
referred to earlier.
Property portfolio at fair value
The fair value of the wholly owned property portfolio, which is externally valued by Knight Frank, increased to £5.0bn at
31 December 2024 from £4.8bn a year earlier. For accounting purposes, we make adjustments from fair value to carrying value,
the main ones being to recognise the rent-free incentives through earnings on a straight-line basis, spreading letting costs over
the life of each lease and grossing up headlease liabilities. After these adjustments, the total property fair value split across the
various balance sheet categories was as follows:
Dec 24
£m
Dec 23
£m
Investment property
4,670.1
4,551.4
Non-current assets held for sale
25.7
–
Owner-occupied property
49.0
46.1
Trading property
115.7
60.0
Property carrying value
4,860.5
4,657.5
Accrued income (non-current)
173.6
173.9
Accrued income (current)
22.0
20.2
Unamortised direct letting costs (non-current)
14.4
14.5
Unamortised direct letting costs (current)
2.8
2.4
Grossing up of headlease liabilities
(33.1)
(33.6)
Revaluation of trading property
0.6
9.8
Other
0.3
–
Fair value of property portfolio
5,041.1
4,844.7
Fair value of properties held in joint venture (50%)
–
33.8
Derwent London plc
76
EPRA earnings
0
50
100
150
200
250
£m
Gross rental
income
Premiums &
other income
Property
expenditure
Admin
expenses
Net
finance costs
Waivers &
impairments
Tax
charge
JVs/other
EPRA
earnings
214.8
7.9
(41.1)
(24.8)
(39.6)
(0.4)
(0.1)
2.8
119.5
EPRA net tangible assets per share
2,500
2,750
3,000
3,250
3,500
Pence
31 Dec 2023
EPRA
earnings
Profit on
disposal
Dividends
paid
Revaluation
deficit
Revaluation
deficit in JVs
Other
31 Dec 2024
(80)
(8)
0
0
3,129
106
2
3,149
+0.6%
The remaining non-current receivables were £14.4m (2023:
£14.5m) of initial direct letting fees and £13.0m (2023: £12.6m)
of design and planning fees relating to the Old Street Quarter
EC1 scheme. We are due to acquire this substantial Old Street
site no earlier than 2027 once the vendor provides vacant
possession. At that point, these costs will be allocated and
included within investment property at fair value. We are
working through various masterplanning options, the outcome
of which will influence the determination of fair value at the
point of acquisition.
Trade and other current receivables increased to £57.8m at
31 December 2024 (2023: £42.7m), mainly due to higher
prepayments across a number of categories, some of which
will reverse relatively quickly in 2025. Prepayments also include
£1.8m of carbon credits, £1.7m of which were acquired in 2024,
plus £2.5m of costs incurred so far at the Lochfaulds solar farm
site. Other receivables also include £22.0m (2023: £20.2m) of
rental income accrued through incentive periods under IFRS 16
and classified as a current asset and other amounts included
£2.8m of deferred initial direct letting fees.
Property and other income
Gross property and other income increased to £276.9m in
the year ended 31 December 2024 from £265.9m in 2023.
Gross rental income rose by 0.9% to £214.8m from £212.8m
and surrender premiums increased to £2.7m from £0.1m in
2023 due mainly to the early surrender of leases at 4 & 10
Pentonville Road in advance of the disposal of the building.
The rental movements in 2024 were relatively balanced, £11.5m
of additional rent coming from lettings and regears in 2023
and 2024 while rents fell by £7.6m as a result of space being
vacated or taken back for refurbishments. Acquisitions and
disposals also reduced rental income by a net £1.9m.
Net rental income also increased, rising to £189.6m in 2024
from £186.2m in 2023. Irrecoverable service charge costs were
£6.6m, the same in 2024 as in 2023 and, though other property
costs have increased slightly from £17.4m in 2023 to £18.2m
in 2024, impairments fell back from £2.6m to 0.4m over the
same periods. Adding back surrender premiums, dilapidation
receipts, other property income and management fees, net
property and other income rose by 4.1% to £198.3m from
£190.5m in the prior year.
The trading property sale proceeds of £3.7m (2023: £nil) came
mainly from Welby House SW1. As noted earlier, we have now
exchanged contracts on 16 apartments totalling £83.0m
(including car parking and storage) at 100 George Street W1,
part of the 25 Baker Street W1 project. As the sales complete
from mid-2025 onwards, proceeds and the related profits
from this trading activity will be recognised in the IFRS income
statement as property trading activity. Note that these results
will not be included in EPRA earnings as trading property
income is excluded from the definition of EPRA earnings.
Irrecoverable service charges reduced in H1 2024 ending the
year at £6.6m, the same as in 2023. Capped service charges
increased in H2 2024 due mainly to EPC upgrade works at 1-2
Stephen Street W1.
Movement in gross rental income
0
50
100
150
200
250
£m
31 Dec 2023
Lettings & asset
management –
current year
Lettings & asset
management –
prior year
Breaks, expiries
& voids
Acquisitions &
disposals
31 Dec 2024
212.8
5.2
6.3
214.8
(7.6)
(1.9)
Report and Accounts 2024
77
Strategic report
FINANCE REVIEW continued
A more detailed breakdown of service charge costs is set out below:
H1 2024
£m
H2 2024
£m
2024
£m
H1 2023
£m
H2 2023
£m
2023
£m
Service charges
Voids
1.5
1.6
3.1
2.1
1.8
3.9
Inclusive service charge
0.5
0.7
1.2
0.3
0.2
0.5
Capped service charge
0.5
1.0
1.5
1.0
0.1
1.1
Balancing service charge & other
0.3
0.5
0.8
1.1
0.0
1.1
2.8
3.8
6.6
4.5
2.1
6.6
Other irrecoverable property expenditure also increased to £18.2m in 2024 from £17.4m in 2023. The increase was due to running
costs at our occupier lounges and other enhanced customer services where costs increased by £1.5m from 2023. This followed the
opening of DL/28 in late 2023 and other improved catering facilities across the portfolio in early 2024. Note that the associated
income from letting rooms and selling food and drinks also increased to £0.9m in 2024 (2023: £0.3m), split between rent and
other income.
A full breakdown of other property costs is as follows:
H1 2024
£m
H2 2024
£m
2024
£m
H1 2023
£m
H2 2023
£m
2023
£m
Property costs
Legal and letting costs
2.1
2.0
4.1
2.2
2.4
4.6
Rates
2.0
1.7
3.7
1.1
1.7
2.8
Ground rent
1.0
0.5
1.5
1.2
1.1
2.3
Marketing costs
0.4
0.3
0.7
1.0
0.7
1.7
Lounges & customer service costs
1.2
1.7
2.9
0.3
1.1
1.4
Repairs
0.6
0.4
1.0
0.7
0.4
1.1
Other
2.0
2.3
4.3
2.1
1.4
3.5
9.3
8.9
18.2
8.6
8.8
17.4
Taken together, the irrecoverable service charge and property
costs were £24.8m in 2024, equivalent to 11.5% of gross
rental income.
Rent collection has been very strong in 2024 and our
impairment reviews saw some previous amounts reversed
while certain new provisions were made, mainly for the smaller
retail and hospitality tenants. The overall impairment booked
in 2024 was low at £0.2m for receivables. A further £0.2m of
the carrying value of prepaid costs at Old Street Quarter EC1
was impaired, following a detailed review in accordance with
IAS 36.
Administrative expenses and EPRA cost ratios
Administrative expenses increased by 5.1% in 2024 to £41.1m
from £39.1m in 2023. Base salaries for staff increased by
an average of 6% in 2024 and by 3% for Directors. Total
headcount also increased by two. In addition, with a strong
outperformance against our property return benchmarks
in 2024, we have increased the bonus provision by £2.2m
compared to the prior year. £2.5m of internal staff costs were
capitalised for the first time in 2024 in accordance with IAS 16.
Our EPRA cost ratios have declined very slightly in the year
but remain an area of focus. Including direct vacancy costs,
the cost ratio fell from 27.3% in 2023 to 27.0% and, excluding
direct vacancy costs, the ratio was 21.7% (2023: 22.3%).
Other income statement items
There was a small deficit of £2.7m on the wholly owned
investment portfolio’s revaluation in 2024 but this was offset
by a revaluation surplus on the Group’s owner-occupied
property at 25 Savile Row W1 of £2.9m. After deferred tax of
£0.6m, the net £2.3m passes through ‘other comprehensive
income’ in the statement of changes in equity. The overall
movement is a significant turnaround from the £581.5m deficit
recognised in the income statement in 2023 and the £87.2m
deficit in H1 2024. The final revaluation movement in the year
was our 50% share of the 50 Baker Street joint venture. This
showed a surplus of £7.3m (2023: deficit of £9.2m) offset by
£7.6m of additional deferred consideration, inclusive of costs.
This arose in relation to the original 50% interest and was
conditional on planning. All these figures are stated after
accounting adjustments.
The profit on disposal totalling £1.9m (2023: £1.2m) comprised
£2.1m on the £87.5m gross proceeds from the sales of Turnmill
EC1 and Asta House W1 offset by a £0.2m loss on the disposal
of artwork.
Finance income fell to £0.3m from £0.9m in 2023. Net finance
costs also fell slightly to £39.9m from £40.4m in 2023. As noted
earlier, the decrease was due mainly to higher capitalised
interest of £11.2m in 2024, £10.7m on the wholly owned
property portfolio and £0.5m on current asset prepayments
and stock. Capitalised income in 2023 totalled £6.5m when
the projects under construction had lower cumulative
development costs.
Derwent London plc
78
Maturity profile of debt facilities
0
100
200
300
400
500
600
700
800
£m
Fixed rate bonds and loans
Headroom
Drawn bank loans
Facility signed in Feb 2025
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
175
312.5
395.5
87
30
118
475
127
The Group’s interest rate swaps saw a fair value loss on derivative
financial instruments of £2.3m in 2024 (2023: £2.1m loss).
Up to the point of transfer into the wholly owned property
portfolio, our joint venture with Lazari Investments Ltd at
50 Baker Street W1 showed an overall profit of £1.5m.
IFRS profit before tax and EPRA earnings per share
The IFRS profit before tax, which includes fair value movements
such as the property revaluation passing through the income
statement, was £116.0m against a loss before tax of £475.9m in
2023. IFRS diluted earnings per share were 102.9p (2023: -424.3p).
EPRA earnings per share, which adjust for the fair value
movements and certain other items, were 106.5p per share
(2023: 102.0p). The main reason for the improvement was the
increase in net property and other income. A table showing a
reconciliation of the IFRS results to EPRA earnings per share is
included in note 26.
Like-for-like rental income
Like-for-like (LFL) gross rental income was up 2.6% over the
year, LFL net rental income was up 4.3% and LFL net property
income, which takes account of dilapidations and other
property income, was up 5.9%.
Internal controls, assurance and the regulatory
environment
Internal controls and business processes have remained areas
of focus. We have made good progress in developing digital
workflows for a number of key financial and non-financial
processes and have appointed an implementation partner to
work with us on the detailed design of our new finance system.
With newer and more advanced technology now available,
this should help us streamline business processes and improve
efficiency, all of which will have a positive impact on the
financial control environment. We anticipate that this project
will complete in late 2026.
We continue to obtain independent and external assurance
in higher risk areas from a range of providers. Consistent with
last year, in addition to the annual external audit, the principal
ones are assurance over selected sustainability, health and
safety and green finance disclosures, service charge audits, a
twice-yearly external valuation and internal audits covering a
range of key business risks. We also obtained Cyber Essentials
Plus certification in 2024, which included independent
verification of our cyber security procedures.
We remain on-track to achieve compliance with the internal
controls related elements of the revised UK Corporate
Governance Code for our financial year commencing 1 January
2026. This will require the Board to include a declaration in the
annual report explaining how it has monitored and reviewed
the effectiveness of the internal control framework, and its
conclusion as to the effectiveness of material controls.
Taxation
The tax charge for the year ended 31 December 2024 was
£0.1m (2023: £nil). This arose from deferred tax movements
which resulted in a net deferred tax charge of £0.1m.
As in previous years, the majority of our income was exempt
from corporation tax as it is derived from a qualifying property
rental business under the UK REIT regime but £9.8m of
withholding tax was paid to HMRC relating to property income
distributions (PIDs) (2023: £9.7m).
Derwent London’s principles of good governance extend to
a responsible approach to tax. Derwent London has a low
tolerance of tax risk and continues to retain its low risk status
which HMRC granted in the Business Risk Review in July 2023.
Our statement of tax principles is available on our website
www.derwentlondon.com/investors/governance/tax-
principles and is approved by the Board in line with the Group’s
long-term values, culture and strategy.
Borrowings, net debt and cash flow
Having acquired control of 50 Baker Street and with continued
capital investment across our high quality portfolio combined
with relatively low property disposals, Group borrowings increased
to £1.46bn at 31 December 2024 from £1.34bn a year earlier.
The increase came from drawings under bank facilities but
available cash and undrawn facilities have increased to £487m
at the December 2024 year end from £480m a year earlier.
During the year, the £175m convertible bonds due in June 2025
were reclassified as current liabilities, the other main current
liability being the £20m loan from Native Land in connection
with the residential at 25 Baker Street.
Taking account of leasehold liabilities, derivative financial
instruments and unrestricted cash, net debt also rose to £1.48bn
at 31 December 2024 compared with £1.36bn a year earlier.
123.5
77
115
Report and Accounts 2024
79
Strategic report
FINANCE REVIEW continued
Debt facilities and reconciliation to borrowings and net debt at 31 December 2024
Drawn
£m
Undrawn
£m
Total
£m
Maturity
Convertible bonds
175.0
–
175.0
2025
Secured bonds
175.0
–
175.0
2026
Green bonds
350.0
–
350.0
2031
Private placement notes
455.0
–
455.0
2026 – 2034
Other loans
20.0
–
20.0
n/a
Non-bank debt
1,175.0
–
1,175.0
Club revolving credit
87.0
363.0
450.0
2026
Bilateral term loan/revolving credit
82.5
32.5
115.0
2026
Bilateral term loan
100.0
–
100.0
2027
Bilateral revolving credit
23.5
76.5
100.0
2027
Committed bank facilities
293.0
472.0
765.0
Debt facilities
1,468.0
472.0
1,940.0
Acquired fair value of secured bonds less amortisation
3.4
Unamortised discount on green bonds
(1.3)
Equity adjustment to convertible bonds less amortisation
(0.6)
Unamortised issue and arrangement costs
(6.0)
Borrowings
1,463.5
Leasehold liabilities
34.6
Cash and cash equivalents
(15.4)
Net debt
1,482.7
This took the Group’s EPRA loan-to-value ratio to 29.9% from
27.9% in December 2023 and 29.0% in June 2024. It continues
to be one of the lower ratios in the sector. Interest cover
remained strong at 3.9 times but has fallen from 4.1 times
in 2023 due to higher borrowings and a rise in our average
interest rate. Our debt covenant is 1.45 times. Net debt to
EBITDA also increased a little to 9.3 times from 8.8 times a
year earlier and we anticipate that this will move back to
9.0 or below during 2025.
A further £52.8m (2023: £24.7m) of cash was invested during
2024 in our apartments for sale at 100 George Street W1
(held as trading properties) and the related retail being
passed to the freeholder (trading stock). As a result and in
accordance with IAS 7, cash generated from operations fell
to £102.6m in 2024 from £135.3m in 2023. The cash outflows
into trading stock and properties will cease in mid-2025 to be
replaced by inflows from trading property and stock disposals.
Adjusting for this, the cash generated from other continuing
operations was much closer to prior years, at £155.4m in 2024
and £160.0m in 2023.
Debt and financing
Lending conditions improved again through 2024 and there
was funding readily available in all our core markets, whether
bond issuance, convertible bonds, private placements or
bank facilities. Pricing for long-term debt has, however, been
unpredictable and we therefore opted to put in place three
facilities with our core UK relationship lending banks, all of
whom have provided very strong support, while we wait for
longer term debt pricing to moderate.
At the start of 2024, three or four cuts in UK base rate were
widely predicted over the year ahead but, as a result of more
persistent inflation, rates fell less quickly than expected.
As a reminder, having started rising from a low of 0.1% in
late 2021, the base rate peaked at 5.25% in August 2023.
The first 25bp base rate cut finally came in August 2024 with
a second following in November to take the year end rate
to 4.75%. Another widely expected 25bp cut was announced
in February 2025.
Uncertainty over the longer term rates outlook has
been fuelled by stickier inflation, geopolitical events and
widespread elections, including the General Election in the
UK in July 2024. This has seen economic confidence vary over
recent months. When combined with a shift in government
borrowing targets, gilt yields rose significantly over Q4 2024
and into January 2025, before moderating a little in the last
few weeks. These effects were particularly notable at the
longer end of the curve, the 30-year gilt peaking at just over
5.4% in January.
At the same time, credit spreads in the bond market came
down significantly in the second half of 2024. For us, it is the
all-in debt cost that dictates our actions. The implied yields
on our own 2031 unsecured bonds ranged from just under
5.0% to 5.6% through 2024 and ended the year at 5.4%.
The spread on those bonds also varied significantly, from a
high of 169bp in January 2024 to a low of 106bp at the year
end. In January 2025, those spreads fell again and have been
hovering just below 100bp in 2025 to date.
Derwent London plc
80
The Featherstone Building EC1
Report and Accounts 2024
81
Strategic report
FINANCE REVIEW continued
The 12-year secured loan of £83m at 3.99% from Mass
Mutual/Barings matured in October 2024 and was repaid in
full. As a result, the security was released and increased our
unencumbered assets by £240m. We opted to refinance in June
2024 with a new £100m three-year unsecured facility from
NatWest and wait for the cost of long-term fixed rate debt to
moderate. On top of the three-year term, this new bank facility
has two one-year extension options and we applied the £75m
1.36% interest rate swaps to this loan with the remaining £25m
at floating rates. This brought the current blended cost for this
loan to c.3.5% at year end.
As long-term rates moved upwards in the last quarter of the
year, our response was to arrange a new £115m two-year
unsecured loan facility (£82.5m term and £32.5m revolving)
with Barclays which was signed in December 2024. It has two
one-year extension options and flexible arrangement fees.
This was followed by a £115m two-year unsecured loan facility
(also with an £82.5m term and £32.5m revolving portion) from
HSBC in February 2025. This loan also has flexible up-front fees
plus a year’s extension option.
The margins on all three bank facilities are competitive
and, importantly, are based off floating SONIA rates, which
continue to fall, rather than the gilt. There has been a notable
increase in the gap between swap and gilt rates over recent
months; for example, at year end, the 10-year gilt was 55bp
higher than the equivalent swap and the 20-year gilt was 82bp
higher than its equivalent swap rate. At the right time, we
remain keen to lock into more long-term fixed rate debt.
Members of the Finance team
Derwent London plc
82
Looking forward, we have two sets of bonds due to mature
over the next 14 months as well as £55m of US private
placement notes. First, the £175m convertible bonds fall due in
June 2025 but, with the share price at a substantial discount
to net asset value, it is unlikely that we will put in place further
convertible debt for now. We like convertibles as a product in
a mixed debt portfolio but they need to offer both attractive
pricing and reasonable levels of dilution should they convert.
The current bonds pay cash interest at 1.5% pa but it is the
IFRS rate of 2.3% which passes through the income statement
and impacts our earnings.
The second set of bonds maturing are the £175m secured LMS
bonds in March 2026. These were arranged by London Merchant
Securities in 2001 and pay a fixed coupon of 6.5%, a level above
current market. Should both sets of bonds be refinanced at, say
5.25%, this would add c.£3m pa to our current annual interest
charges. Note also that our £75m of interest rate swaps at
1.36% expire in April 2025.
As a result of the higher proportion of floating rate borrowings
after repayment of the £83m 3.99% fixed rate loan in October,
the weighted average interest rate of Group borrowings on a
cash basis increased to 3.42%. It was 3.17% in December 2023
and 3.15% in June 2024. The IFRS interest rate, which makes
adjustments in relation to the convertible and unsecured 2031
green bonds, increased similarly to 3.53% at year end (2023:
3.29%). At 31 December 2024, 80% (2023: 94%) of our debt
was at fixed rates, 5% (2023: 4%) was hedged by £75m of
swaps maturing in April 2025, and the balance of 15% (2023:
2%) was at floating rates. The weighted average maturity of our
borrowings was 4.0 years at 31 December 2024 (2023: 5.0 years).
Derwent London remains in a strong financial position,
evidenced by Fitch confirming an unchanged credit rating in
May 2024 at BBB+ for the main issuer default rating and A- for
our senior unsecured debt rating, both with a stable outlook.
Debt: key stats
Dec 2024
Dec 2023
Hedging profile (%)
Fixed
80
94
Swaps
5
4
85
98
Percentage of debt that is unsecured (%)
88
81
Percentage of non-bank debt (%)
80
92
Weighted average interest rate – cash basis (%)
3.42
3.17
Weighted average interest rate – IFRS basis (%)
3.53
3.29
Weighted average maturity of facilities (years)
3.4
4.5
Weighted average maturity of borrowings (years)
4.0
5.0
Undrawn facilities and unrestricted cash (£m)
487
480
Uncharged properties (£m)
4,665
4,202
Dividend
Our dividend policy has been consistent for many years and
aims for progressive increases but to maintain a payout
well covered by EPRA earnings. Our obligations to other
stakeholders are also taken into account and in addition we
consider any other IFRS realised gains and losses which do
not form part of EPRA earnings. The Board is recommending
another 0.5p per share increase in the final dividend to 55.5p.
It will be paid in May 2025 with 45.5p as a PID and the balance
of 10.0p as a conventional dividend. The Company’s ISIN
reference is GB0002652740.
This will take the total dividend for the year to 80.5p, a 1.3%
increase over 2023. Dividends paid and declared in relation
to 2024 earnings were 1.3 times covered by EPRA earnings.
Report and Accounts 2024
83
Strategic report
FINANCE REVIEW continued
Reporting under the Green Finance Framework
Derwent London’s Green Finance Framework (the Framework) has been prepared in
line with the Loan Market Association (LMA) Green Loan Principles and International
Capital Market Association (ICMA) Green Bond Principles guidance document, has
been externally reviewed and a second party opinion (SPO) obtained. The latest
Framework and SPO are available on our website at www.derwentlondon.com.
The projects eligible for funds from the GFTs are as follows:
Green
project
80 Charlotte Street
W1
Soho Place
W1
The Featherstone
Building EC1
25 Baker Street
W1
Network
W1
Expected
completion
date
Completed in 2020
Completed in 2022
Completed in 2022
2025
2025
Category
for eligibility
Green building,
criterion 1 of section
3.1 of the Framework
(excludes Asta
House and Charlotte
Apartments)
Green building,
criterion 1 of section
3.1 of the Framework
Green building,
criterion 1 of section
3.1 of the Framework
Green building, criterion 1
and 2 of section 3.1 of the
Framework (excludes retail
and refurbished residential)
Green building,
criterion 1 of section
3.1 of the Framework
Impact
reporting
indicator
Building certification
achieved (system
& rating)
Building certification
achieved (system
& rating)
Building certification
achieved (system
& rating)
Building certification
achieved (system & rating)
Building certification
achieved (system
& rating)
Green
credentials1
Achieved:
• BREEAM Excellent
• EPC B
• LEED Gold
Achieved:
• BREEAM
Outstanding
• EPC B
• LEED Gold
Achieved:
• BREEAM
Outstanding
• EPC A
• LEED Platinum
25 Baker Street offices2
Achieved:
• BREEAM Outstanding
(design stage)
Expected:
• BREEAM Outstanding
(post-construction),
on target
• EPC A, on target
• LEED Gold, on target
30 Gloucester Place2 offices
Achieved:
• BREEAM Excellent
(design stage)
Expected:
• BREEAM Excellent (post-
construction), on target
• EPC B, on target
Private residential
Expected:
• Home Quality Mark
4 Stars, on target
Achieved:
• BREEAM
Outstanding
(design stage)
Expected:
• BREEAM
Outstanding (post-
construction), on
target
• LEED Gold, on target
• EPC A, on target
1
Green EGP credentials disclosed in accordance with the Framework and the Green Finance Basis of Reporting, available on our website and within the
Responsibility Report.
2 The development includes 206,000 sq ft of offices at 25 Baker Street and 12,000 sq ft of offices at 30 Gloucester Place.
Out of our total debt facilities of £1.9bn, £650m satisfy our
definition of Green Financing Transactions (GFTs). The GFTs
comprise the £350m Green Bond issuance in 2021 and a £300m
‘green’ tranche included within our main corporate £450m
revolving credit facility which was arranged in 2019. Together
these are used to fund qualifying green expenditure.
In 2024, we appointed Pricewaterhouse Coopers LLP to replace
the previous assurance provider and provide an independent
reasonable assurance opinion on our green finance metrics.
In accordance with the reporting requirements set out in the
Framework, we are disclosing the Eligible Green Projects (EGPs)
that have benefitted from our GFTs, and the allocation of
drawn funds to each project.
Derwent London plc
84
Green borrowings and qualifying expenditure
£m
Green
facilities
Qualifying
expenditure
Drawn green
facilities
0
100
200
300
400
500
600
800
900
700
437
213
350
300
Green RCF
Available green headroom
Green bond
Drawn green facilities
Green expenditure
878
Qualifying ‘green’ expenditure
The qualifying expenditure as at 31 December 2024 for each project is set out in the table below. This includes an element of ‘look
back’ capital expenditure on projects in which expenditure had been incurred prior to management’s approval of the project as an
EGP. This also includes capital expenditure on projects which had already been incurred as at October 2019, when the Group’s first
GFT was executed.
Costs which form part of the initial project appraisal or which are associated with delivering the project through to practical
completion are included within the eligible green expenditure of the project. Costs incurred following completion are generally
excluded unless specifically elected as green projects.
80 Charlotte Street, 1 Soho Place and The Featherstone Building are all completed projects and are fully operational. 25 Baker
Street and Network, which commenced on site in 2021 and 2022 respectively, are both due to reach practical completion in 2025.
Cumulative spend on each EGP as at the reporting date
Subsequent spend
EGP
Look back spend
£m
Q4 2019 – FY 2023
£m
2024 Spend
£m
Cumulative Spend
£m
80 Charlotte Street W1
185.6
52.5
0.1
238.2
1 Soho Place W1
57.5
165.9
1.2
224.6
The Featherstone Building EC1
29.1
68.4
0.8
98.3
25 Baker Street W1
26.5
132.1
87.1
245.7
Network W1
23.8
12.7
34.7
71.2
322.5
431.6
123.9
878.0
The total qualifying expenditure incurred in 2024 was
£123.9m and the cumulative qualifying expenditure on the
EGPs at 31 December 2024 was £878.0m.
Drawn borrowings from GFTs as at 31 December 2024 were
£437.0m, which comprised the £350m Green Bonds and £87m
drawn under the green tranche of the RCF. Therefore, there was
£213m undrawn under the £300m green tranche of the RCF, all
of which is available to fund future cash flow requirements of
the Group.
A requirement under the Framework and the facility agreement
is for there to be an excess of qualifying spend on EGPs over
the amount of drawn borrowings from all GFTs.
More information can be found
in the Responsibility Report 2024
Report and Accounts 2024
85
Strategic report
Short-term
Under provision 30 of the Code, the Board is required to
report whether it considers it appropriate to adopt the
going concern basis of accounting in the preparation of our
financial statements. The assessment focused primarily on the
short-term and at least the next 12 months to March 2026.
The Directors’ assessment included consideration of:
• the Group’s current financial position;
• the latest rolling forecast for the next two years, in
particular the cash flows, borrowings and undrawn facilities;
• the timing of repayment of existing financing facilities;
• current and potential sources of replacement financing;
• lease expiry profile; and
• any material uncertainties or assumptions.
The Group is in a strong financial position. As at 31 December
2024, the Group has:
• £487m of undrawn facilities and cash (2023: £466m);
• an EPRA loan-to-value ratio of 29.9%;
• an overall cost of debt with a weighted average interest rate
of 3.53%;
• 85% of our borrowings either fixed or hedged;
• significant headroom on our financial covenants; and
• strong interest cover of 3.86x.
The Group has sufficient access to finance in the short-term
and medium-term. At 31 December 2024, our average maturity
of borrowings is 4.0 years and average maturity of facilities
is 3.4 years. The £175m unsecured convertible bond, which
matures in June 2025, is a current liability and therefore the
Group is in a net current liabilities position. However, the Group
has significant liquidity to fund its ongoing operations and,
as noted above, has access to £487m of available undrawn
facilities and cash as at year end. In addition, a new £115m
unsecured term/revolving bank facility was signed in February
2025. Further information is on pages 81 and 82.
Material uncertainties or assumptions
The Directors did not identify any material uncertainties to the
Company’s ability to continue to operate as a going concern
over the period of its assessment. The key sources of estimated
uncertainty in the next 12 months are considered to be:
Income decline
Although not likely to impact the Group in the short-term, the
current economic situation could lead to some of our occupiers
facing a more challenging financial environment. It should be
noted that rent for offices typically represents a relatively small
percentage of business overheads. Leasing transactions can take
longer to finalise as occupiers tend to adopt a ‘wait-and-see’
approach leading to a greater risk of aborted transactions.
The impairment review of outstanding trade receivable
balances and amounts due under the spreading of lease
incentives has been carried out for our largest tenants and
others where we believe the risk is greatest. It has resulted in a
net charge to the income statement of £0.4m in the year and
no change to our overall impairment provision.
Fall in property values
During 2024, property values fell slightly in H1 before recovering
in H2. There remains a risk that property values could fall again
in 2025. The Board is monitoring the risk that the latest rise in
gilt yields could have a secondary impact on asset pricing.
The impact of yield changes on the Group’s financial covenants
and performance are monitored and are subject to sensitivity
analysis and testing against severe yet plausible ‘downside’
scenarios to ensure that adequate headroom is preserved. The
Group’s loan-to-value ratio reduces the likelihood that falls in
property values have a significant operational impact on our
business. Property values would need to fall by a further 50%
before our funding covenants would be breached.
Related information is on the following pages:
Significant financial judgements / See page 146
Property review / See pages 60 to 73
GOING CONCERN & VIABILITY
Our resilience
In accordance with the UK Corporate Governance Code 2018 (the Code), the Directors and senior management team
assessed the prospects of the Company and potential threats to its resilience:
• in the short-term (over the next 12 months as required by the ‘Going concern’ provision); and
• in the medium-term (a five-year period to 31 December 2029) as required by the ‘Viability statement’ provision.
This statement also contains references to the longer term threats to the Company’s resilience (beyond the five-year period).
Derwent London plc
86
Group’s risk register
The Schedule of Principal Risks contains the risks which are
currently impacting the Group or could impact it over the next
12 months. These risks are routinely subject to a comprehensive
review by the Executive Committee, Risk Committee and the
Board. Consideration is given to the risk likelihood, impact and
velocity (speed at which the risk could impact on the Group).
The Board agreed that, given the level of headroom, none of
the changes in risk likelihood or probability during the year had
a significant impact on the Group’s short-term viability.
Going concern statement
After making appropriate enquiries, the Directors have
a reasonable expectation that the Group and Company
have adequate resources to continue in operational
existence until at least March 2026. Therefore, the Board
continues to adopt the going concern basis in preparing
the financial statements.
Medium-term
The Directors challenge the time period over which to assess
the Company’s medium-term viability on an annual basis. The
Directors determined that the five-year period to 31 December
2029 remains an appropriate period based on the following:
• For a major scheme, five years is a reasonable
approximation of the time taken from obtaining planning
permission for a typical development to letting the property.
• Most leases contain a five-year rent review pattern or
break options. Therefore, five years allows for the forecasts
to include the reversion arising from those reviews while also
assessing the potential impact of income lost from breaks
exercised. Our weighted average unexpired lease term is
6.8 years (‘topped-up’ including rent-frees and pre-lets).
• The average maturity of borrowings is 4.0 years as at
31 December 2024.
As part of its assessment, the Board considered the Group’s
emerging risks (page 100), including how these are being
addressed. Emerging risks could involve a high degree of
uncertainty and are therefore factored into the Board’s
medium-term viability assessment and the long-term
sustainability of the Group. The methodology used to identify,
assess and monitor emerging risks is described in the risk
management framework on page 164. The Directors concluded
that none of the individual emerging risks would in isolation or
collectively compromise the Group’s viability over the five-year
period to 31 December 2029.
The Board’s medium-term assessment focused on our strategy,
finance and operations.
Viability of our strategy
The Board formally reviews its strategy on an ongoing basis
to ensure it remains capable of sustainable value creation
and is responding appropriately to changing macroeconomic
conditions, work practices and stakeholder expectations.
When assessing the viability of the Group’s strategy, the
Board’s key qualifications and assumptions were:
• a continued focus on the central London office market;
• a strategy of recycling capital by selling buildings when we
have maximised their potential, or they no longer meet our
investment criteria, and purchasing buildings where there is
an opportunity to replenish our development pipeline or add
value via asset management or refurbishment;
• maturing debt facilities could be refinanced, albeit generally
at a higher cost than the prevailing rate;
• a property portfolio which remains approximately the same
size, at 5.36m sq ft (2023: 5.39m sq ft); and
• a progressive dividend policy, whilst targeting dividend cover
in or above the range of 125% to 150%.
The London office market has generally been cyclical in recent
decades, with strong growth followed by economic downturns,
sometimes precipitated by rising interest rates. The impact of
these cycles is dependent on the quality and location of the
Group’s portfolio. Occupier demand in London is good for the
right product in the right location.
The Board agreed that we have a proven business model
which has allowed us to remain flexible and resilient during
previous property cycles and periods of significant uncertainty.
Additionally, we have the ability to flex our business plan to
react to unforeseen circumstances by either selling a property
to generate additional cash flow or commencing, stopping or
scaling back projects to manage our capital expenditure.
The Board agreed that no material change was required to
its strategy, which continued to generate sustainable returns.
Sensitivity and scenario testing
A detailed five-year strategic review was conducted which
considered the Group’s cash flows, dividend cover, REIT
compliance and other key financial ratios over the period.
These metrics were subjected to sensitivity analysis to assess
the Group’s ability to deliver its strategic objectives.
The Directors stress tested our strategy against various
scenarios to determine whether they were likely to have a
significant impact on the Group’s solvency and liquidity in
the short and medium-term. In addition, a reverse stress test
scenario was modelled to determine the circumstances under
which we would breach our covenants.
Report and Accounts 2024
87
Strategic report
Viability of our strategy continued
The scenarios are amended each year, as required, to reflect
the key areas of concern identified by the Board. The six
scenarios assessed were:
• a ‘base case’ scenario which was management’s best
estimate of market and business changes;
• a downside scenario which considers the impact of a fall in
property values of c.10% due to outwards yield shift;
• an upside scenario which includes a combination of stronger
ERV growth, yield compression and improved letting
assumptions; and
• four scenarios of varying levels of acquisitions and disposals.
In all scenarios, our net interest cover remained above 3.0
times and our EPRA loan-to-value ratio below 30%, both of
which are comfortably within our financial covenants. The
modelling indicated that under all scenarios the Group would
still be able to execute its strategic plan over the next five years
without breaching any covenants or experiencing any liquidity
concerns.
Development returns
The Directors considered the viability and risks associated with
the construction industry. It was noted that ‘Tier 1’ contractors
in central London are becoming increasingly risk adverse to
engaging on complex projects on fixed price contracts. There
is also an increased risk of insolvencies in the construction
industry as a result of rising inflation and construction costs,
which under fixed price contracts are a particular risk for the
contractor and subcontractors. Rising construction costs are
also a factor affecting development appraisals and the viability
of refurbishments. In addition, other consultants and advisers
are at some risk of insolvency.
Mixed-use projects with residential over 18 metres now fall into
a category of High-Risk Buildings as defined under the Building
Safety Act 2022 which may impact construction programmes
by four to six months.
The Board was satisfied that the business was:
• Adequately appraising investments, including through: (a)
the benchmarking of development costs; and (b) following
a procurement process that is properly designed (to
minimise uncertainty around costs) and that includes the
use of highly regarded quantity surveyors.
• Engaging with the Building Safety Regulator to mitigate
time required for Building Control approval.
• Using known ‘Tier 1’ contractors with whom we have
established working relationships and regularly work with
tried and tested subcontractors.
• Contractors are paid promptly and are encouraged to pay
subcontractors promptly. Payments to contractors are in
place to incentivise the achievement of project timescales,
with damages agreed in the event of delay/cost overruns.
• Regular on-site supervision by a dedicated Project Manager
who monitors contractor performance and identifies
problems at an early stage, thereby enabling remedial
action to be taken as soon as possible.
Viability of our finances
Derwent London would become unviable if we were unable to
meet our financial covenants. If this occurred, we would need to
repay our debt borrowings, and this would likely require the sale
of assets to meet these liabilities. As at 31 December 2024, we
have significant headroom over our covenants, as shown below:
Covenant
31 Dec 2024
Loan to value (specific assets)
≤ 60%1
47%
Ratio of unencumbered
assets to unsecured net debt
≥ 1.6 times
3.6 times
Group NAV gearing
≤ 145%
41.9%
Consolidated interest cover
> 145%
386%
1
6.5% secured bonds.
Our covenant headroom was subject to sensitivity analysis
and scenario testing as part of the Group’s strategy review.
Even in the most extreme ‘downside’ scenario we modelled,
the covenant ratios are covered and there is sufficient cash
and unutilised facilities available. For the Group to breach the
NAV gearing limit, the value of our portfolio would have to fall
in excess of £2,517m (or by a further 50%) in addition to the
16.5% decline already seen in the past three years.
This is significantly higher than we have seen in recent market
down cycles, the worst of which was following the global
financial crisis where the value of our underlying portfolio fell
34% but still outperformed the MSCI Central London Office
Index which fell 43%. Moreover, we have the ability to move
properties between the facilities to optimise headroom under
covenants.
To assess the Group’s liquidity and financial resilience, during
the year the Directors also reviewed:
• a detailed five-year strategic review which included
assessment of the Group’s cash flows, dividend cover, REIT
compliance and other key financial ratios. These metrics
were subjected to sensitivity analysis to assess the Group’s
ability to deliver its strategic objectives under varying
market conditions;
• the risks which could impact on the Group’s liquidity and
solvency over the next 12 months, five years and the longer
term; and
• the Group’s emerging risks.
The Board’s assessment highlighted that, despite the
macroeconomic environment deteriorating during 2024, the
Group benefitted from:
• reasonable income visibility for the life of our leases which
on 2024 lettings averaged 8.0 years (topped-up rent and
including pre-lets). In addition, the Group has a known
level of tenant lease expiries and breaks which is actively
managed by our Asset Management team; and
• a high quality customer base, with none of our occupiers
being responsible for more than 8% of total rental income
and relatively low exposure to the retail and restaurant
sector.
GOING CONCERN & VIABILITY continued
Derwent London plc
88
Refinancing risk
The availability of financing for good quality covenants has
generally improved through 2024 but the cost of long-term
debt has continued to be volatile. We have remained close
to our existing lenders and put in place £215m of new bank
facilities in 2024. We continue to review market conditions
for long-term fixed rate debt and engage with new possible
debt providers.
Viability of our operations
The Board received an update from the Chairs of the Audit and
Risk Committees on the work performed during 2024 in respect
to risk monitoring and reviewing the effectiveness of internal
controls (see page 93).
There has been a heightened risk of cyber attacks amid
escalating geopolitical tensions. To date, Derwent London
has not experienced a significant increase in attempted cyber
attacks. Ongoing staff vigilance is critical to the prevention of
cyber attacks.
The Digital Innovation & Technology (DIT) team are proactive
in providing regular guidance and refresher training to all
employees on cyber security matters.
We have a robust approach to cyber security which is routinely
subject to independent testing (see pages 162 and 163). Our
Intelligent Building Programme is a medium to long-term
initiative which will assist with meeting our net zero carbon
ambitions, strengthen our portfolio’s cyber security and help
realise cost savings for our occupiers.
Based on the Board’s assessments, none of the operational
principal or emerging risks currently facing the Group were
likely to have a material impact on the Group’s operations
or cause it to become unviable in the short to medium-term.
Related information is on the following pages:
Business continuity and disaster recovery / See page 163
Investing in our employees / See page 186
Mandatory compliance training / See page 165
Viability statement
Based on the Board’s assessments, 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 five-year period to 31 December 2029.
Long-term
The Board considered a number of longer term factors
(which could impact the Company and its business model in
the next five to 10 years) and how these were being addressed.
These factors included the impact of climate change and
technology advancement.
Related information is on the following pages:
Business model & strategy / See pages 24 to 32
Regeneration projects / See pages 20 to 23
Our portfolio / See pages 18 and 19
Climate change
During the year, Willis Towers Watson performed an updated
independent climate risk assessment and scenario analysis.
The scope of the assessment included our entire London-
based investment portfolio (including our head office) and
our Scottish portfolio. Of the risks identified, none were likely
to have a substantial impact on the viability of our business,
although our cost profile could increase.
Task Force on Climate-related Financial Disclosures /
See pages 102 to 115
Technology advancements
Adoption of technology is an emerging risk for the Group.
Technology in our sector is advancing at a rapid pace.
The Executive Committee has monitored the phased roll-out
of Intelligent Building infrastructure during the year. The
Derwent London Intelligent Building Programme seeks to enable
our buildings (where appropriate) to be digitally monitored
and operated more efficiently, driving down equipment faults
(and consequential maintenance) and delivering energy
and operational carbon savings. During the year, the Risk
Committee received a detailed overview of the Group’s current
cyber posture and how future technological trends could impact
on the Group’s future performance (see pages 101 and 157).
Digital strategy risks/ See page 163
Geopolitical instability
Geopolitical issues such as the ongoing war in the Ukraine
and the widening of the Middle East conflict remain a concern.
Despite the uncertainty, our supply chain has been relatively
unaffected due to our approach of early pre-ordering and
storage. Early supply chain engagement in project designs helps
with the identification of potential risks and alternative solutions.
Report and Accounts 2024
89
Strategic report
MANAGING RISKS
Our risk profile
With our strong balance sheet, we are well-positioned with the right
product and pipeline to capture London’s diverse demand, despite the
uncertain economic outlook.
As a predominantly London-based Group, we are particularly sensitive to factors which impact central London’s growth and demand
for office space. We are also impacted by the wider macroeconomic environment. Some of the external and property-related risks
which have impacted on the Group during 2024 are shown below. These risks are factored into the Board’s strategy discussions
and help to inform the scenarios chosen by the Board to stress test the viability of our business (see page 87).
Economic
growth
See page 15
Inflation
See page 74
Interest
rates
See page 16
Geopolitical
instability
See page 89
Climate
change
See page 102
Regulatory
and legal
See page 99
External
Planning
requirements
See page 91
Property
values
See page 61
Health
and safety
See page 52
Contractor
insolvency
See page 157
Vacancy
rates
See page 16
Energy
consumption
See page 44
Property-related
The Featherstone Building EC1
Derwent London plc
90
An overview of the risks and uncertainties
which have impacted on the Group’s risk profile
Sentiment at the start of 2024 was positive. Inflation was falling,
UK GDP forecasts were being revised upwards and long-term
interest rates were reducing. However, concerns around inflation
and growth re-emerged towards the end of the year and the
longer term interest rate curve moved upwards. It is not clear
how long the current higher interest rate environment will persist
and therefore what impact it may have on property yields.
However, the favourable demand/supply imbalance supports
a more positive ERV performance. Like many businesses, we
are monitoring the potential impact heightened geopolitical
tensions could have on global supply chains, commodity price
inflation, market uncertainty and deglobalisation.
Property portfolio
During 2024, property values fell slightly in H1 before recovering
in H2. If property values start to recover and yields remain flat,
this risk may no longer be considered ‘principal’ during 2025
and may be removed. Investment activity was subdued in
2024 with investor sentiment impacted by limited liquidity and
availability. Smaller lot sizes, especially in the West End, proved
more resilient, recording more transactions in comparison to
the City.
Planning requirements
Planning policies in London continue to be challenging as some
local authorities promote a ‘refurbishment-first’ approach
instead of new build. As a result, there is a risk that fewer new
developments will be constructed in the future. Managing
planning risk is achieved by a sound understanding of policy,
coupled with a collaborative approach with the local authority
and community. We benefit from a strong track record of
delivering quality and economic/social value.
Health and safety (H&S)
Whilst we operate and develop within environments that
contain higher risk activities, Derwent London strives to
continuously improve our H&S mitigations and controls. In
recognition of our high safety standards, for the second year
in a row, we achieved the Royal Society for Prevention of
Accidents (RoSPA) Gold Award. Further information on H&S
at Derwent London is available on pages 52 and 53.
Supply chain insolvency
The trend of rising insolvencies has continued over the past
year with the most notable insolvency being ISG in September
2024. Although Derwent London was not materially impacted,
we are vigilant in monitoring our contractors and supply chain.
In addition to main contractors and subcontractors, we also
monitor key consultants who perform statutory duties on our
projects. Further information is on page 157.
Refinancing
The availability of financing for good quality covenants has
generally improved through 2024 but the cost of long-term
debt has continued to be volatile. Lenders continue to favour
existing relationship borrowers. During 2024, new facilities have
been established with NatWest and Barclays. A further facility
was put in place with HSBC in February 2025. We continue to
review market conditions for long-term fixed rate debt and
engage with new possible debt providers. Further information
is on pages 81 and 82.
Principal risks
During 2024, the Board and Risk Committee identified
opportunities to consolidate and simplify the Group’s
principal risks and uncertainties. As a result, the number
of standalone principal risks identified by the Group has
reduced from 15 to 11.
The principal risks and uncertainties facing the Group in
2025 (as at 26 February 2025) are:
• Failure to implement the Group’s strategy
• Refinancing risk
• Income decline
• Fall in property values
• Reduced development returns
• Cyber attack on our IT systems
• Cyber attack on our buildings
• Our resilience to climate change
• Health and safety
• Non-compliance with law and regulations
• Change management systems
Our principal risks / See pages 94 to 99
Emerging risks
The emerging risks identified by the Board are:
• Nature of office occupation
• Technological change
• Climate-related risks
• Geopolitical instability
• Shortage of electrical power
Our emerging risks / See pages 100 and 101
Climate change
We identify and monitor climate change risks and
opportunities as part of our wider risk management
procedures. Our climate risk assessments have identified
the transition and physical risks and opportunities
applicable to our business:
• Enhanced emissions reporting requirements
• Change in customer demand
• Emissions offsets
• Planning approval changes
• Cost of raw materials
• Employee attitude to climate change and sustainability
• Cost of low carbon emission technologies
• Heat stress
• Flooding
• Drought
• Fire
• Windstorm
• Subsidence
Task Force on Climate-related Financial Disclosures /
See pages 102 to 115
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91
Strategic report
MANAGING RISKS continued
Managing risks
At Derwent London, the management of risk is treated as a critical and core
aspect of our business activities.
Risk management
The Board has ultimate responsibility for the Group’s approach
to risk management. On a regular basis, the Board reviews the
Group’s risk registers and conducts robust assessments of the
Group’s principal and emerging risks (see page 161).
During the year, with help from external advisers, we reassessed
the sustainability issues that are material to both our business
and our stakeholders via a double materiality assessment. Our
materiality assessment has been aligned with our process for
identifying and assessing our principal risks. Further information
on our material ESG issues is on pages 42 and 43.
Changes to our principal and emerging risks
Change management systems (new principal risk)
The Group is implementing a number of applications/systems
that need to be carefully managed to ensure they deliver
the anticipated benefits and mitigate any risks arising from
the implementation/transition process. As a result, change
management systems has been identified as a principal risk
by the Board for 2025.
Risk rating
As part of the Directors’ assessment process, we estimate the likelihood of the risk occurring and the potential quantitative
and qualitative impacts. Risks are rated in accordance with the Board’s Risk Appetite Statement. A simplified version of our
risk rating criteria is provided below.
Impact
Insignificant
Minor
Moderate
Major
Significant
Likelihood
Rare
Unlikely
Possible
Likely
Certain
Very low risk
Low risk
Medium risk
High risk
Very high risk
The risk ratings for our principal risks are detailed below:
Principal risks
Inherent risk
(without controls)
Residual risk
(with controls)
Our risk
tolerance
Failure to implement the Group’s strategy
Medium
Low
Low
Refinancing risk
Medium
Medium
Medium
Income decline
Medium
Low
Medium
Fall in property values
High
Medium
Medium
Reduced development returns
Medium
Low
Medium
Cyber attack on our IT systems
Very high
Medium
Low
Cyber attack on our buildings
Very high
Medium
Low
Our resilience to climate change
Medium
Low
Low
Health and safety
Very high
Medium
Zero
Non-compliance with law and regulations
Medium
Low
Zero
Change management systems
High
Low
Medium
Risk consolidation
During 2024, the Board and Risk Committee identified
opportunities to consolidate and simplify the Group’s principal
risks and uncertainties. As a result, the number of standalone
principal risks identified by the Group has reduced from 15 to 11:
• The risk of occupiers defaulting (or occupier failure) has
been combined with the risk of income decline.
• Reduced development returns captures all components
of development risk including ‘on-site’ issues, contractor
default, adherence to programme etc.
• Significant business interruption and reputational damage
have been removed as standalone principal risks as they are
adequately covered by other principal risks.
Derwent London plc
92
Effectiveness review
To ensure focused oversight, the Board operates a separate
Risk Committee (see pages 156 to 165). The Risk Committee
reviews the effectiveness of the Group’s risk management
policies and practices. This effectiveness review is conducted
through speaking with senior management directly, third party
assurance reviews, reports from internal and external audits,
and independent testing of our key controls.
The Audit Committee reviews the adequacy and effectiveness
of the Group’s system of internal financial controls which are
described briefly in the table on page 151. The Audit Committee
remains satisfied that the review of internal financial controls
did not reveal any significant weaknesses or failures, and they
continue to operate effectively.
Following the Audit Committee’s and Risk Committee’s reviews,
the Chairs of each Committee confirmed to the Board that
they were satisfied that the Group’s internal control framework
(financial and non-financial) and risk management procedures:
• operated effectively throughout the period; and
• are in accordance with the guidance contained within the
FRC’s Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting.
Risk appetite
Risk is inherent in running any business. At Derwent London we
aim to deliver on our strategic objectives for the benefit of our
shareholders and other stakeholders, whilst operating within
the risk tolerance levels set by our Board.
The Group’s risk appetite is set by the Board and is the level of
risk we are willing to accept to achieve our strategic objectives.
Our overall risk appetite is low with varying levels of risk
tolerance. This, alongside our culture, informs how our staff
respond to risk. Due to our open and collaborative working
style, any potential problem, risk or issue is identified quickly so
appropriate action can be taken.
The use of inherent and residual ‘risk ratings’ within our
Schedule of Principal Risks makes it easier for the Board to
identify which risks are not aligned with its tolerance on a
residual (after controls) basis:
• When assessing our health and safety risks, we consider all
of our core activities, including the work of our contractors
on site at our developments. Due to the nature of these
activities, health and safety is classified as a ‘medium
risk’ at residual level, which requires further contractor-
led controls to be implemented and the adoption of best
practice standards. As the Board is committed to promoting
the highest health and safety standards, its tolerance for
health and safety risks is set at zero. Further information on
health and safety is on pages 52 and 53.
• Similarly, the Board’s tolerance for cyber threats is low.
The Board recognises that due to the evolving nature of
the threat, it is difficult to reduce the residual risk from
medium to low. To provide the Board with comfort that our
Digital Innovation & Technology (DIT) team are adopting
a continuous improvement strategy towards our cyber
security posture, we commission regular independent
reviews and assessments (see pages 162 and 163).
Risk Appetite Statement
Summary of risk tolerance
Operational
Health and safety
Zero
IT continuity (including cyber attacks)
Low
Staff retention
Medium
Climate change resilience
Low
Other operational risks
Medium
Financial*
REIT status
Low
Credit rating
Low
Decrease in asset value (>£100m)
Medium
Profits (>£5m)
Medium
Cost overruns (>5%)
Medium
Interest cover (<20%)
Medium
Reputational
Brand value
Low
Regulatory
Statutory
Zero
Governance
Low
*
Financial amounts are measures of deviation from Group annual budget.
Key
Zero
The Board has a zero-tolerance approach and is
committed to promoting full health & safety and
statutory compliance
Low
The Board is risk averse and is reluctant to take risks
Medium
The Board is willing to take measured risks if they are
identified, assessed and controlled
High
The Board is willing to take significant risks
Additional risk disclosures
Page
Double materiality assessment
42 and 43
Health and safety
52 and 53
Risk management structure
160
Risk documentation and monitoring
161
Digital security and strategy risks
162 and 163
Risk management framework
164
Report and Accounts 2024
93
Strategic report
Strategic
The Group’s business model and/or strategy does not create the anticipated shareholder value or fails to meet investors’ and other
stakeholders’ expectations.
Risk
Status
Our actions
1
Failure to implement the Group’s strategy
The Group’s success depends on implementing
its strategy and responding appropriately to
internal and external factors including changing
work practices, occupational demand, economic
and property cycles.
Given the political and economic
uncertainties, there has been a
slowdown in the investment market
although the letting market remains
relatively strong. Occupier demand in
London is good for the right product
in the right location, and the flight to
quality continues.
Key performance indicators:
• Total property return
• Interest cover ratio (ICR)
• Gearing & available resources
In addition, we also consider inflation,
interest rates and yield changes.
• The Board maintains a formal schedule of matters
which are reserved solely for its approval. These
matters include decisions relating to the Group’s
strategy, capital structure, financing, any major
property acquisition or disposal, the risk appetite
of the Group and the authorisation of capital
expenditure above the delegated authority limits.
• Frequent strategic and financial reviews. An annual
strategic review and budget is prepared for Board
approval alongside two-year rolling forecasts which
are prepared during the year.
• The Credit Committee assesses and monitors the
financial strength of potential and existing occupiers.
The Group’s diverse and high quality occupier base
provides reasonable resilience against occupier
default.
• Maintain income from properties until development
commences and have an ongoing strategy to
extend income through lease renewals and regears.
Developments are de-risked through pre-lets.
• Maintain sufficient headroom for all the key financial
ratios and covenants, with a particular focus on
interest cover.
• Develop properties in central locations where there is
good potential for future demand, such as near the
Elizabeth Line.
Executive responsibility: Paul Williams
Risk tolerance: Low
Strategic objectives: 1 2 4 5
Stakeholders: Could potentially impact on all
our stakeholders
Trend:
The London office market has generally been
cyclical in recent decades, with strong growth
followed by economic downturns, sometimes
precipitated by rising interest rates. The impact
of these cycles is dependent on the quality
and location of the Group’s portfolio. Should
the Group fail to respond and adapt to such
cycles or execute the projects that underpin
its strategy, it may have a negative impact
on the Group’s expected growth and financial
performance.
Our principal risks
MANAGING RISKS continued
Our principal risks are not an exhaustive list of all risks facing the Group but
are a snapshot of the Company’s main risk profile as at 26 February 2025.
Time horizons
The Board seeks to assess and identify the risks facing the Group in the short, medium and long-term.
Imminent
< 1 year
Short-term
< 5 years
Medium-term
5 to 15 years
Long-term
15+ years
Principal risks
Emerging risks
Climate-related risks
See pages 94 to 99
See pages 100 and 101
See pages 102 to 115
The Schedule of Principal Risks
The Board classifies the Group’s most material risks as its principal risks. Materiality is assessed based on the potential impact
and its probability of occurring within the next 12 months. The key controls we have identified on pages 94 to 99 were in operation
during the year under review and up to the date the 2024 Report & Accounts were approved.
The Derwent London brand is well-regarded and respected within our industry and we are recognised for innovation and developing
design-led buildings. The protection of our brand and reputation is important to the future success of the Group. Our strong culture,
low overall risk tolerance and established procedures and policies mitigate against the risk of internal wrongdoing.
Derwent London plc
94
Financial
The main financial risk is that the Group becomes unable to meet its financial obligations. The probability of this occurring is low
due to our significant covenant headroom, modest leverage and strong credit metrics. Financial risks can arise from movements
in the financial markets in which we operate and inefficient management of capital resources.
Risk
Status
Our actions
2
Refinancing risks
The risk that the Group is unable to raise finance
in a cost-effective manner that optimises the
capital structure of the Group.
The availability of financing for good
quality covenants has generally
improved through 2024 but the cost
of long-term debt has continued to
be volatile. We have remained close
to our existing lenders and put in
place £215m of new bank facilities in
2024. We continue to review market
conditions for long-term fixed rate
debt and engage with new possible
debt providers.
Key performance indicators:
• Gearing & available resources
• Interest cover ratio (ICR)
• EPRA earnings per share
• Net debt/EBITDA
• Early and frequent engagement with existing and
potential lenders to maintain long-term relationships.
• Preparation of five-year cash flow and annual budgets
enable the Group to raise finance in advance of
requirements.
• The Group’s financial position is reviewed at Executive
Committee and Board meetings with an update on
leverage metrics and capital markets from the CFO.
• Annual review with credit rating agency with whom
we maintain a dialogue.
• Regular updates with our advisers to understand debt
market trends. This includes looking at new forms of
debt, considering whether security should be offered
and the appropriate term.
• Recycling of capital is a key assumption in our annual
budget and is updated in each rolling forecast.
Executive responsibility: Damian Wisniewski
Risk tolerance: Medium
Strategic objectives: 5
Stakeholders: Shareholders and debt providers
Trend:
Gradual rise in overall interest costs incurred as
debt refinanced over the next few years, with
a consequent impact on earnings and interest
cover.
Risk
Status
Our actions
3
Income decline
The risk that the Group’s income declines due to
external factors which are outside of its control,
such as:
• macroeconomic factors;
• recession;
• demand for office space;
• the ‘grey’ market in office space (i.e.
occupier controlled vacant space); and
• occupier default or failure.
Although not likely to impact on the
Group in the short-term, the current
economic situation could lead to
some of our occupiers facing a more
challenging financial environment.
Occupiers may also be impacted by
the rise in business rates, National
Insurance Contributions and the
National Minimum (and Living) Wage.
It should be noted that rent for offices
typically represents a relatively small
percentage of business overheads.
Leasing transactions can take longer
to finalise as occupiers tend to adopt
a ‘wait-and-see’ approach leading to
a greater risk of aborted transactions.
Key performance indicators:
• Tenant retention
• Void management
In addition, we consider the following:
• The amount of ‘grey space’
• Lease expiries/breaks
• Our Lease Incentive Debtor (LID)
balance
• Level of rent deposits
• The Credit Committee, chaired by the CEO or CFO,
conducts detailed reviews of all prospective occupiers
and monitors the financial strength of our existing
occupiers.
• The Group maintains a diverse range of occupiers.
We focus on letting our buildings to large and
established businesses (headquarter spaces)
where the risk of default is lower, rather than SMEs.
• A ‘tenants on watch’ register is maintained and
regularly reviewed by the Executive Directors and
the Board.
• Ongoing dialogue is maintained with occupiers to
understand their concerns, requirements and future
plans.
• Active in-house rent collection, with regular reports
to the Executive Directors on day 1, 7, 14 and 21 of each
rent collection cycle.
• The Group’s loan-to-value ratio and high interest cover
ratio reduces the likelihood that a fall in rental income
has a significant impact on our business continuity.
• Regular review of the lease expiry profile.
• Rent deposits are held where considered appropriate.
Executive responsibility: Paul Williams
Risk tolerance: Medium
Strategic objectives: 1 2 5
Stakeholders: Occupiers, shareholders and debt
providers
Trend:
Adverse macroeconomic conditions lead to a
general property market contraction, a decline
in rental values and Group income, which could
impact on property valuation yields. In the event
of occupier default, we could incur impairments
and write-offs of trade receivables and/or
IFRS 16 lease incentive receivable balances
(which arise from the accounting requirement
to spread any rent-free incentives given to an
occupier over the respective lease term), in
addition to a loss of rental income.
Strategic objectives
To optimise returns
and create value
from a balanced
portfolio
To attract, retain
and develop talented
employees
To maintain
strong and
flexible financing
Increased
Decreased
Unchanged
To grow recurring
earnings and
cash flow
To design, deliver and
operate our buildings
responsibly
1
2
3
4
5
Trend
Report and Accounts 2024
95
Strategic report
MANAGING RISKS continued
Financial continued
Risk
Status
Our actions
4
Fall in property values
The potential adverse impact of the economic
and political environment on property yields has
heightened the risk of a fall in property values.
During 2024, property values fell
slightly in H1 before recovering in H2.
There remains a risk that property
values could fall again in 2025. The
Board is monitoring the risk that the
latest rise in gilt yields could have a
secondary impact on asset pricing.
Key performance indicators:
• Total property return
• Void management
• Reversionary percentage
• The Group’s mainly unsecured financing makes
management of our financial covenants more
straightforward.
• The Group’s loan-to-value ratio and high interest cover
ratio reduces the likelihood that falls in property values
have a significant impact on our business continuity.
• The impact of valuation yield changes on the Group’s
financial covenants and performance is monitored
regularly and subjected to sensitivity analysis to ensure
that adequate headroom is preserved.
• The impact of valuation yield changes is considered
when potential projects are appraised.
• The Group produced a budget, five-year strategic
review and three rolling forecasts during the year
which contain detailed sensitivity analyses, including
the effect of changes to valuation yields.
Executive responsibility: Nigel George
Risk tolerance: Medium
Strategic objectives: 1 2 5
Stakeholders: Occupiers, shareholders and debt
providers
Trend:
A fall in property values will have an impact on
the Group’s net asset value and gearing levels.
Operational
The Group suffers either a financial loss or adverse consequences due to processes being inadequate or not operating correctly,
human factors or other external events.
Risk
Status
Our actions
5
Reduced development returns
Returns from the Group’s developments may
be adversely impacted due to:
• increased construction costs and
interest rates;
• labour and material shortages;
• movement in valuation yields;
• contractor or subcontractor default;
• delays on delivery due to poor contractor
performance;
• unexpected ‘on-site’ issues; and
• adverse letting conditions.
‘Tier 1’ contractors in central London
are becoming increasingly risk adverse
to engaging on complex projects on
fixed price contracts. There is also an
increased risk of insolvencies in the
construction industry as a result of
rising inflation and construction costs,
which under fixed price contracts are
a particular risk for the contractor and
subcontractors. Other consultants and
advisers are at some risk of insolvency.
Planning authorities have an increasing
preference for refurbishment ahead
of redevelopment. The Board is
monitoring the potential impact of
a tighter planning environment on
our strategy and future development
returns. Mixed-use projects with
residential over 18 metres now fall into
a category of High-Risk Buildings as
defined under the Building Safety Act
2022 which may impact construction
programmes by four to six months.
Key performance indicators:
• Total return
• Total property return
• Development potential
In addition, we consider the following:
• Construction cost inflation
• Project profitability status
• Average payment days to our
supplier
• Project delays
• Accident Frequency Rate (AFR)
• Contingency tracker
• We use known ‘Tier 1’ contractors with whom we have
established working relationships and regularly work
with tried and tested subcontractors.
• Prior to construction beginning on site, we conduct
thorough site investigations and surveys to reduce the
risk of unidentified issues, including investigating the
building’s history and adjacent buildings/sites.
• Engagement with the Building Safety Regulator to
mitigate time required for Building Control approval.
• Adequately appraise investments, including through:
(a) the benchmarking of development costs; and
(b) following a procurement process that is properly
designed (to minimise uncertainty around costs)
and that includes the use of highly regarded quantity
surveyors.
• Contractors are paid promptly and are encouraged to
pay subcontractors promptly. Payments to contractors
are in place to incentivise the achievement of project
timescales, with damages agreed in the event of
delay/cost overruns.
• Regular on-site supervision by a dedicated Project
Manager who monitors contractor performance and
identifies problems at an early stage, thereby enabling
remedial action to be taken.
• Post-completion reviews are carried out for all major
developments to ensure that improvements to the
Group’s procedures are identified, implemented and
lessons learned.
Executive responsibility: Paul Williams
Risk tolerance: Medium
Strategic objectives: 1 2
Stakeholders: Suppliers and occupiers
Trend:
Any significant delay in completing development
projects may result in financial penalties or
a reduction in the Group’s targeted financial
returns and a deferral of rental income.
Derwent London plc
96
Risk
Status
Our actions
6
Cyber attack on our IT systems
The Group may be subject to a cyber attack that
results in it being unable to use its information
systems and/or losing data.
There has been a heightened risk
of cyber attacks amid escalating
geopolitical tensions. To date,
Derwent London has not experienced
a significant increase in attempted
cyber attacks. Ongoing staff vigilance
is critical to the prevention of cyber
attacks. The Digital Innovation &
Technology (DIT) team is proactive
in providing regular guidance and
refresher training to all employees
on cyber security matters.
Key performance indicators:
• Could indirectly impact on a
number of our KPIs. In addition, we
consider any security issues raised
and the results of independent
assurance reviews
• Our IT systems are protected by anti-virus software,
24/7/365 threat hunting, security incident detection
and response, security anomaly detection and firewalls
that are frequently updated.
• The Group’s Business Continuity Plan and cyber
security incident response procedures are regularly
reviewed and tested.
• Security measures are regularly reviewed by the DIT
team.
• Independent internal and external penetration/
vulnerability tests and audits are regularly conducted
to assess the effectiveness of the Group’s security.
• Multi-Factor Authentication is in place for access to
our systems.
• The Group’s data is regularly backed up and securely
replicated off site.
• Frequent staff awareness and training programmes.
Executive responsibility: All Executive Directors
Risk tolerance: Low
Strategic objectives: 1 2 3 4 5
Stakeholders: Could potentially impact on all
our stakeholders
Trend:
Such an attack could severely restrict the ability
of the Group to operate, lead to an increase
in costs and/or require a significant diversion
of management time, in addition to potential
reputational damage.
Risk
Status
Our actions
7
Cyber attack on our buildings
The Group is exposed to cyber attacks on its
properties which may result in data breaches
or significant disruption to IT-enabled occupier
services.
There has been a heightened risk
of cyber attacks amid escalating
geopolitical tensions. To date,
Derwent London has not experienced
a significant increase in attempted
cyber attacks. As part of the
Intelligent Building Programme,
the DIT team has worked alongside
our portfolio IT Partner to conduct
network and IT asset inventories and
cyber security assessments.
Key performance indicators:
• Could indirectly impact on a
number of our KPIs. In addition, we
consider any security issues raised
and the results of independent
assurance reviews
• Our IT systems are protected by anti-virus software,
24/7/365 threat hunting, security incident detection
and response, security anomaly detection, a
vulnerability management, security penetration
testing and firewalls that are frequently updated.
• Frequent staff awareness and training programmes.
Building Managers are included in any cyber security
awareness training and phishing simulations.
• The Group’s cyber security incident response
procedures are regularly reviewed and tested.
• Physical segregation between the building’s core IT
infrastructure and occupiers’ corporate IT networks.
• Physical segregation of IT infrastructure between
buildings across the portfolio.
• Sophos Rapid Response team provides unlimited
support to our Cyber Incident Response team in the
event of a cyber attack.
Executive responsibility: All Executive Directors
Risk tolerance: Low
Strategic objectives: 1 2 3 4 5
Stakeholders: Could potentially impact on all
our stakeholders
Trend:
A major cyber attack against the Group or its
properties could negatively impact the Group’s
business, reputation and operating results.
Strategic objectives
To optimise returns
and create value
from a balanced
portfolio
To attract, retain
and develop talented
employees
To maintain
strong and
flexible financing
Increased
Decreased
Unchanged
To grow recurring
earnings and
cash flow
To design, deliver and
operate our buildings
responsibly
1
2
3
4
5
Trend
Report and Accounts 2024
97
Strategic report
MANAGING RISKS continued
Operational continued
Risk
Status
Our actions
8
Our resilience to climate change
The Group fails to respond appropriately, and
sufficiently, to climate-related risks or fails to
benefit from the potential opportunities.
Sustainability-related disclosure
requirements are increasing. During
the past 12 months, numerous
publications have been released
which could require additional
disclosures on our net zero carbon
plans, for example the ISSB (IFRS)
Sustainability Disclosure Standards.
We are sponsoring the UK Net Zero
Carbon (UKNZC) Building Standard
which launched in September 2024 for
pilot testing.
Key performance indicators:
• Total shareholder return
• BREEAM ratings
• Energy Performance Certificates
(EPCs)
• Energy intensity
• Embodied carbon intensity
• Our SBTi targets are aligned to a challenging 1.5°C
climate scenario in line with our net zero carbon
ambition.
• We are progressing the construction of a 18.4 MW
solar park at Lochfaulds (Scotland), with delivery
anticipated in 2026.
• The Board and Executive Directors receive regular
updates and presentations on environmental and
sustainability performance and management matters,
as well as progress against our pathway to becoming
net zero carbon by 2030.
• Undertake periodic multi-scenario climate risk
assessments (physical and transition risks) to identify
risks and agree mitigation plans.
• Production of an annual Responsibility Report with
key data and performance points which are internally
reviewed and subject to external assurance.
Executive responsibility: Nigel George
Risk tolerance: Low
Strategic objectives: 1 2 3 4 5
Stakeholders: Could potentially impact on all
our stakeholders
Trend:
This could lead to reputational damage, loss of
income and/or property values. In addition, there
is a risk that the cost of construction materials
and providing energy, water and other services
to occupiers will rise.
Risk
Status
Our actions
9
Health and safety (H&S)
A major incident occurs at a managed property
or development scheme which leads to
significant injuries, harm or fatal consequences.
Construction activities can have a
high inherent risk for injury, harm,
or loss, particularly in respect of our
managed portfolio with occupiers in
situ, demolition and early construction
phases. In addition, serious accidents
involving falls from height, pedestrian-
vehicle collision, and slips and trips
are still frequent within the Property
Management and Maintenance
sectors. Derwent London continues to
ensure high levels of H&S compliance
across all of our activities, including
our agriculture operations in Scotland.
Key performance indicators:
• RIDDOR Accident Frequency Rate
(AFR)
In addition, we monitor:
• the completion of Safe Start
meetings before construction
commences on site;
• feedback gathered from employee
and occupier surveys; and
• monthly Construction (Design
and Management)(CDM) site
inspections, and H&S training data.
• Relevant and effective health, safety and fire
management policies and procedures.
• The Group has a competent and qualified (CMIOSH)
H&S team, whose performance is monitored
and reviewed by the CEO, and the H&S and Risk
Committees.
• The H&S competence of our main contractors and
service partners is verified by the H&S team prior to
their appointment.
• Our main contractors must submit suitable
Construction Phase Plans, Site Management and
Logistics Plans and Fire Management Plans, before
works commence.
• The H&S team, with the support of external
appointments and audits, ensures our CDM client
duties are executed and monitored on a monthly
basis.
• The Board, Risk Committee and Executive Directors
receive frequent updates and presentations on
key H&S matters, including ‘Significant Incidents’,
legislation updates, and H&S performance trends
across the development and managed portfolio.
Executive responsibility: Paul Williams
Risk tolerance: Zero
Strategic objectives: 1 2 3 4 5
Stakeholders: Could potentially impact on all
our stakeholders
Trend:
A major health and safety incident could cause
loss of life, life-changing injuries, significant
business interruption, Company or Director fines
or imprisonment, reputational damage, and/or
loss of our licences to operate.
Derwent London plc
98
Risk
Status
Our actions
10
Non-compliance with law and regulations
The Group breaches any of the legislation that
forms the regulatory framework within which the
Group operates.
The Group has been actively
monitoring the proposed regulatory
changes which could impact on our
business, including the reform of the
UK Prospectus and Listing regime,
and the UK Economic Crime and
Corporate Transparency Act 2023.
Following the publication of the UK
Corporate Governance Code 2024,
the Board will ensure the Group is fully
compliant with the revised provisions
by the applicable dates, particularly in
respect of internal controls.
Key performance indicators:
• Total shareholder return
• Accident Frequency Rate (AFR)
• A significant diversion of time
could affect a wider range of KPIs
In addition, we consider compliance
training completion rates, compliance
with legislation through software
systems and feedback received from
employee and occupier surveys.
• The Board and Risk Committee receive regular reports
prepared by the Group’s legal advisers identifying
upcoming legislative/regulatory changes. External
advice is taken on any new legislation, if required.
• Managing our properties to ensure they are compliant
with the Minimum Energy Efficiency Standards (MEES)
for Energy Performance Certificates (EPCs).
• A Group whistleblowing system (‘Speak-up’) for staff
is maintained to report wrongdoing anonymously.
• Ongoing staff training and awareness programmes.
• Group policies and procedures dealing with all key
legislation are available on the Group’s intranet.
• Quarterly review of our anti-bribery and corruption
procedures by the Risk Committee.
Executive responsibility: All Executive Directors
Risk tolerance: Zero
Strategic objectives: 3 4 5
Stakeholders: Could potentially impact on all
our stakeholders
Trend:
The Group’s cost base could increase and
management time could be diverted. This could
lead to damage to our reputation and/or loss of
our licence to operate.
Risk
Status
Our actions
11
Change management systems
Projects fail to be implemented or do not deliver
the anticipated benefits due to:
• lack of clear scope and strategy;
• underestimation of investment;
• lack of project management and governance;
• inadequate support from management;
• inadequate communication to stakeholders;
and
• neglecting the impact on stakeholders and
importance of change management.
The Group is implementing a number
of applications/systems that need to
be carefully managed to ensure they
deliver the anticipated benefits and
mitigate any risks arising from the
implementation/transition process.
Key performance indicators:
• A significant diversion of time
could affect a wider range of KPIs
In addition, we monitor key project
milestones and budget contingency
trackers.
• Project scope and objectives are clearly defined,
documented, approved and communicated to all
stakeholders.
• Before project approval, the costs of implementation
is budgeted, alongside the preparation of a detailed
resource plan, to ensure adequate contingency in case
of unforeseen delays.
• Budget contingency is monitored throughout the
project and reported to the Executive Committee and
Board/Committees, as required.
• For each project there is project management resource
assigned, who are required to follow good governance
and internal project management processes.
• We provide clear and consistent communication
about key projects to the whole business, throughout
the project, with support and leadership from the
executive team.
Executive responsibility: Damian Wisniewski
Risk tolerance: Medium
Strategic objectives: 1 2 3 5
Stakeholders: Employees and occupiers
Trend: NEW
Project failure could lead to increased costs,
diversion of management time or errors in
financial accounting and reporting. Depending
on the project, it could adversely impact
upon our wider stakeholders (such as delayed
payments or inaccurate financial reporting etc.)
and reputation.
Strategic objectives
To optimise returns
and create value
from a balanced
portfolio
To attract, retain
and develop talented
employees
To maintain
strong and
flexible financing
Increased
Decreased
Unchanged
To grow recurring
earnings and
cash flow
To design, deliver and
operate our buildings
responsibly
1
2
3
4
5
Trend
Report and Accounts 2024
99
Strategic report
MANAGING RISKS continued
Our emerging risks
Emerging risks are conditions, situations or trends that could significantly impact the Group’s financial strength, competitive
position or reputation within the next five years. Emerging risks are therefore factored into the Board’s viability assessment and
strategic planning process. Emerging risks could involve a high degree of uncertainty. The methodology used to identify, assess
and monitor emerging risks is described in the risk management framework on page 164.
Time horizon1
Risk
0-5
years
5-10
years
15+
years
Impact
Our actions
A: Nature of office
occupation
Strategic objectives:
1 2 4
The Group needs to ensure it is thinking
ahead, so that our product remains
attractive to businesses, thereby retaining
its competitive edge. Buildings that are
unable to meet these objectives may suffer
in value unless they can be redeveloped or
repurposed.
Close engagement with our occupiers and
the wider market ensures we are aware of
changing trends and respond appropriately.
We believe our approach of delivering space
with creative design, enhanced amenity,
Intelligent Building infrastructure, and
employee wellbeing at its core will exceed
these evolving requirements.
B: Technological
change
Strategic objectives:
1 2 3
A failure to adopt technology could lead
to the Group becoming less efficient
than its competitors, leading to a loss
of competitive advantage. Buildings are
becoming increasingly ‘intelligent’ and
occupiers may begin to choose such
buildings over those without the same
technological amenities. If the Group
fails to respond to occupier demands for
technology, the Group’s office spaces could
become less desirable, leading to potential
vacancies and loss of rental income.
We have a digital strategy which is being
implemented by our dedicated, cross-
functional and highly collaborative Digital
Innovation & Technology team. We critically
analyse new technology to ensure that
maximum value can be derived from any
new system or service that we choose to
add into our overall digital and technological
framework. In particular, analysing the
capability of the new system or service to
support our Net Zero Carbon Pathway.
C: Climate-related
risks
Strategic objectives:
1 2 3 4
The six climate-related emerging risks
which are considered to have the
greatest impact on Derwent London
are: enhanced emissions reporting
requirements, emissions offsets, planning
approval changes, windstorm, flooding
and subsidence. To avoid duplication,
our climate-related emerging risks are
contained on page 104.
Through our ongoing refurbishment
programme, we continually improve
the energy efficiency of our buildings. In
addition to purchasing renewable energy
and green tariff supplies, wherever possible,
we are researching opportunities to
increase our own supply base of renewable
energy. Embodied carbon reduction and
energy intensity reduction are included
within the Executive Directors’ long-term
incentive plan awards (PSP).
D: Geopolitical
instability
Strategic objectives:
2 4 5
Continued geopolitical tensions could
cause prolonged global supply chain
disruption, commodity price inflation,
market uncertainty and deglobalisation.
There is also a risk of increased cyber
attacks and social unrest.
Despite the uncertainty, our supply chain
has been relatively unaffected due to our
approach of early pre-ordering and storage.
Early supply chain engagement in project
designs helps with the identification of
potential risks and alternative solutions.
E: Shortage of
electrical power
Strategic objectives:
2 4 5
Shortage of electrical power is a risk for
London, particularly in West London.
Shortage of electrical power could lead
to power cuts and cost pressures. UKPN
consider power cuts as being possible but
unlikely and will be driven by a combined
impact of very cold weather and a
reduction in power generated from wind
farms due to lack of wind.
UKPN are the provider in central London,
covering all Derwent London properties,
and have put in place robust plans to meet
future load requirements. Early engagement
for schemes with UKPN is the key to risk
mitigation for the provision of power.
Derwent London engage with UKPN on a
regular basis at a monthly meeting and we
have a dedicated UKPN Account Manager.
1
Due to the uncertain nature of emerging risks and trends, the time horizon indicates the time period over which the Board currently perceive these risks could
begin to have a material impact on the Group.
Derwent London plc
100
Emerging risk
In the table below, we have explored two of the technology
trends which could impact on our business in the future and
the risks and opportunities that we have identified. Further
information on Artificial Intelligence (AI) is on page 163.
In November 2024, the Risk Committee received training on
emerging technological trends, in addition to the current
cyber landscape.
Although these trends are emerging, we are preparing
through frequent reviews of our security protocols and
systems to incorporate the latest advancements in
quantum-resistant technologies, staff training on the proper
use of systems and AI, regular audits/monitoring, and our
‘zero trust’ architecture. Further information on our digital
security and strategy is on pages 162 and 163.
Technological change
Artificial Intelligence (AI)
Quantum computing
The theory and development of computer systems able to
perform tasks normally requiring human intelligence, such
as visual perception, speech recognition, decision making
and translation between languages.
AI is already prevalent for automation and data analysis.
It is anticipated that it will be more widely adopted in the
short to medium-term.
Potential risks:
• Advanced phishing and deepfakes
• Data loss through misuse
Potential opportunities:
• Enhanced threat detection and automated response
• Human-AI collaboration
• Predictive insights
Quantum computing is an advanced field of computer
science that leverages the principles of quantum mechanics
to process information in fundamentally different ways
than classical computers. Quantum computing is estimated
to become more relevant in the next five to 20 years.
Potential risks:
• Existing cryptography methods will become obsolete
almost instantly
• Increased sophistication of cyber attacks
• Need for post-quantum cryptography which is resistant
to attack
Potential opportunities:
• Enhanced cryptography will be available
• Enhanced threat detection
Example of a quantum computer
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Strategic report
MANAGING RISKS continued
Task Force on Climate-related
Financial Disclosures (TCFD)
We are proactive in finding solutions to further reduce emissions and
develop renewable energy sources.
Our disclosures in this section are consistent with the TCFD’s
Recommendations and Recommended Disclosures. When
assessing the consistency of our disclosures, we have had
due regard for all relevant guidance including the TCFD’s
Guidance for All Sectors.
We have adapted our disclosure to reflect some of the
key aspects within the sustainability disclosure standards
IFRS S1 and S2 which were published by the International
Sustainability Standards Board in 2023.
We separately publish a Responsibility Report alongside our
annual Report & Accounts which provides more granular,
detailed climate-related data sets and performance metrics.
TCFD compliance statement
Governance
a) Describe the Board’s oversight of climate-related risks and opportunities
See pages 110 and 111
b) Describe management’s role in assessing and managing climate-related
risks and opportunities
See pages 106 to 111
Strategy
a) Describe the climate-related risks and opportunities the organisation
has identified over the short, medium and long-term
See pages 104 to 107
b) Describe the impact of climate-related risks and opportunities on the
organisation’s business strategy and financial planning
See pages 108 and 109
c) Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario
See pages 104 to 107
Risk management
a) Describe the organisation’s processes for identifying and assessing
climate-related risks
See pages 103 to 109
b) Describe the organisation’s processes for managing climate-related risks
See pages 98, 110 to 113
c) Describe how processes for identifying and managing climate-related
risks are integrated into the organisation’s overall risk management
See page 103
Metrics and
targets
a) Disclose the metrics used by the organisation to assess climate-related
risks and opportunities in line with its strategy and risk management
process
See pages 58, 59 and 113
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas
(GHG) emissions, and the related risks
See pages 58 and 59
c) Describe the targets used by the organisation to manage climate-
related risks and opportunities and performance against targets
See pages 47 and 113
This can be found at www.derwentlondon.com/
responsibility/publications. We structure our reporting
in this way to satisfy the requirements of our various
stakeholders.
TCFD directory
In line with the UK’s Financial Conduct Authority Listing
Rules, we have identified in the table below where our
responses to the TCFD’s 11 recommendations are located. We
retain sufficient evidence/records to support our compliance
statement (on page 102) and our data disclosures in our
annual Report & Accounts and Responsibility Reports.
Derwent London plc
102
Climate change is a major global challenge which will
impact how business operates in the future. The built
environment contributes approximately 40% (including
the residential sector) to the UK’s overall carbon footprint.
Consequently, we take a proactive approach in finding
solutions to further reduce emissions and develop renewable
energy sources (see pages 44 to 47).
As part of our commitment to being a net zero carbon
business by 2030, we are helping to lead the industry in
supporting the government’s net zero carbon ambitions and
improving the carbon footprint of the built environment.
We are also helping to develop best practice guidance for
our sector through engagement with industry partners and
organisations such as the Better Building Partnership and
the British Property Federation.
The built
environment
Climate change is a material issue for our business. We deem
an issue to be ‘material’ when it is assessed as being sufficiently
important to both our business and our stakeholders. Our
properties are subject to climate-related risks such as increasing
temperatures which could lead to greater physical stresses.
Our strategy involves the acquisition and repositioning of older
properties and ongoing investment in more modern properties.
We ensure a high degree of resilience in our new developments
and repositioning of older properties by setting high standards
for sustainability. When managing our core income portfolio,
we focus on energy and carbon reduction (as dictated by our
energy intensity reduction targets), ensuring our buildings
operate as efficiently as possible. Our strategy centres around
the concept of continual improvement to ensure a high degree
of both climate and financial resilience. Our environmental
priorities are on pages 44 to 47.
Climate risk assessment
We identify and monitor climate change risks and
opportunities as part of our wider risk management procedures
which are overseen by the Board and its principal committees
(see pages 110 to 111 and 144).
We structure our risk management framework, which is
disclosed on page 164, into four stages. Our climate risk
disclosures, shown on pages 102 to 115, are structured in
accordance with this four-stage approach.
Our approach
Examples include:
• Westminster City Council Sustainable City Charter:
We were early signatories to the Westminster City
Council (WCC) Sustainable City Charter, which provides
a framework for reducing carbon emissions from non-
domestic buildings across Westminster. John Davies, our
Head of Sustainability, is the Chairman of its Steering
Committee.
• Sustainable Markets Initiative (SMI) Buildings
Taskforce: Our CEO, Paul Williams, sits on the
Sustainable Markets Initiative (SMI) Buildings Taskforce
which is part of His Majesty King Charles III’s Terra Carta.
The aim of the initiative is to put nature, people and the
planet at the heart of global value creation.
Engagement
We seek to actively engage with our peers, occupiers
and other stakeholders to reduce energy use and carbon
emissions within the built environment. If you wish to discuss
our pathway to net zero carbon, our Sustainability team can
be contacted via email: sustainability@derwentlondon.com
Owing to their complex nature, the identification and
assessment of climate-related risks and opportunities are
undertaken with the support of third party expertise. In 2024,
Willis Towers Watson (WTW) performed an updated independent
climate risk assessment and scenario analysis. The scope of
the assessment included our entire London-based investment
portfolio (including our head office) and our Scottish portfolio.
During our climate risk assessments, short, medium and long-
term time horizons were considered (see page 94). We recognise
that climate-related issues, in particular physical risks, are often
(but not exclusively) linked to the medium to long-term and
that the properties within our investment portfolio have a long
lifespan of many decades.
The climate risk assessments sought to identify the transition
and physical risks and opportunities applicable to the Group.
As our business is based in and solely focused on the UK, the
risks/opportunities were not considered on an international
and/or segmental basis.
Through this process we identified and reviewed nearly 35
transition and physical risks and opportunities. On page 104
we have disclosed the most material risks and opportunities
in terms of impact, likelihood (transition risk) and exposure
(physical risk). Once the risks and opportunities had been
identified, three pre-defined climate scenarios were applied,
where appropriate, to test the resilience of our business, strategy
and financial planning.
Identification
See page 104
Assessment
See page 106
Monitoring
See page 110
Response
See page 112
Report and Accounts 2024
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Strategic report
MANAGING RISKS continued
Identification
Transition
Transition risks and opportunities are those which arise from the
transition to a low carbon economy. We identified and assessed
transition risks and opportunities, in terms of their impact
and likelihood, via a facilitated workshop with cross-functional
representation from across our business. As part of our risk
assessment, we considered how these risks changed under a
1.5°C aligned scenario (the ‘Low Carbon World’). Overall, our
transition risk exposure under the ‘Low Carbon World’ scenario
was assessed to be low to moderate in both the short-term
(2030) and the medium-term (2040) (see table below).
The impact and likelihood of each identified risk was
challenged in the context of the latest regulatory updates
and WTW’s/our experience with the real estate sector.
We also estimated the financial impact (whether to the
balance sheet or income statement) and assigned high
and low impact estimates to applicable cost components,
depending on the effectiveness of our planned mitigating
actions. Through the assessment process, we applied
mitigation measures already captured within the scope
of our Net Zero Carbon Pathway and those within our
existing business processes, to define our residual risk profiles.
Due to the strength of our mitigation strategies, the impact
of these risks reduced significantly on a residual basis.
Based on our assessment, the table below shows the most
material transition risks and opportunities applicable to
our business.
Material transition risks and opportunities identified:
‘Low Carbon World’ (~1.5°C)
Risks
Opportunities
Risk rating on a residual basis
0-5 years
5-15 years
0-5 years
5-15 years
Enhanced emissions reporting requirements
Moderate
Moderate
Change in customer demand
Moderate
Moderate
Emissions offsets
Low
Moderate
Planning approval changes
Moderate
Moderate
Cost of raw materials
Low
Low
Employee attitude to climate change and sustainability
Low
Low
Cost of low carbon emission technologies
Low
Low
Risk rating / See page 92
Material physical risks and opportunities identified:
Short-term
0-5 years
Medium-term
5-15 years
Long-term
15+ years
Present day
‘Low Carbon
World’
(~1.5°C)
‘Current
Policies’
(~2 to 3°C)
‘Hot House
World’
(>4°C)
‘Current
Policies’
(~2 to 3°C)
‘Hot House
World’
(>4°C)
Heat stress
Very low
Very low
Very low
Low
Low
Low
Flooding
Low
Low
Low
Moderate
Moderate
Moderate
Drought
Very low
Low
Low
Low
Low
Moderate
Fire
Very low
Low
Low
Low
Low
Low
Windstorm
Moderate
Moderate
Moderate
Moderate
Moderate
Moderate
Subsidence
Moderate
Moderate
High
High
High
High
Physical
Physical risks were identified and assessed through an asset-
by-asset exposure/susceptibility analysis using a range of
acute and chronic climate hazards (risks). The scenarios were
tested as at the present day, as well as for future projections
under three climate scenarios (see table below). This was
supplemented by a climate risk modelling analysis, undertaken
by WTW, for flood and windstorm, as well as more chronic
risks like heat, drought and subsidence. Physical assets were
considered exposed if they are located in an area where a
climate hazard may occur. The degree of exposure was defined
by the severity/intensity of that hazard, with each hazard
having its own intensity scale. If an exposure was deemed
to be moderate or above it could have a material impact.
It should be noted that the scores were based on a global
scale. For the UK, a modest increase in a chronic hazard, such
as heat-stress (heatwaves), from very low to low could have
wider implications on properties and infrastructure.
Our exposure to physical risks increases into the medium
and long-term and as global temperatures rise. Based on
our assessment, we consider windstorm and flooding to
be the most material physical risks to our business. While
subsidence is a material physical risk, there is no clear financial
quantification model available within the data sets used.
Derwent London plc
104
Climate risk and opportunity
As part of our Net Zero Carbon Pathway we advocate
a ‘reduction first, abatement last’ policy for carbon
management. This means we set, and look to achieve,
challenging carbon reduction targets for both operational
and embodied carbon. Only when we have reduced our
emissions does the residual carbon get offset, thereby
allowing us to move towards our net zero ambition.
Risk: Quality and cost
Over recent years the voluntary carbon market has grown
significantly in terms of the level of demand created by
organisations looking to move to a net zero position and
consequently requiring access to carbon credits in the form
of offsets. As a result, a wide variety of credits have emerged,
which are typically categorised depending on whether they
directly or indirectly abate carbon emissions. Those which
directly abate carbon emissions are often referred to as
carbon removal credits e.g. tree planting. Those which do
so indirectly are referred to as avoidance credits e.g. forest
protection. Pricing of removal credits is generally more
expensive than for avoidance credits, in part reflecting their
higher capital start up and ongoing maintenance costs.
Our preference when purchasing credits is to invest in
high quality removal credits, particularly those which are
nature-based (e.g. tree planting) and have co-benefits
such as biodiversity enhancement and local economy
support. In 2024, we forward-purchased credits to cover
forecast emissions from our development pipeline to 2030.
See page 45 for more detail.
Opportunity: Adoption and diversity
In addition to the voluntary carbon market, which we
use to access credits from international projects, we
are also looking to diversify our credit portfolio via UK-based
projects, particularly within our portfolio. In 2015, we
planted over 30 hectares of woodlands on our Scottish land
which has already generated 127 Woodland Carbon Code
verified carbon credits and are exploring opportunities
to increase this further. Our ambition is to maximise our
‘self-generated’ offsetting to complement our international
credits, increasing the transparency and robustness of our
offsets portfolio.
Residual emissions offsetting
Tree planting on our Scottish land
Report and Accounts 2024
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Strategic report
MANAGING RISKS continued
Assessment
Testing our resilience
The risks and opportunities we identified were applied
against at least two climate scenarios for transition risk
and three for physical risk to test the resilience of our
business, strategy and financial planning.
Our approach to creating scenarios followed the updated
guidelines produced by the TCFD within their Guidance on
Scenario Analysis for Non-Financial Companies. We set
out on page 115 the assumptions and risk data sources
that were used in our most recent climate scenarios.
When conducting the scenario analysis, we had due
regard to the following:
• Forecasting: scenarios are a way to imagine plausible
states of the world and plan for our resilience. They are
not intended as forecasts of the future.
• Balance: they should have aspects of quantification,
but not so much that it impairs strategic thinking.
• Challenge: they must ensure we challenge our own
thinking about our organisation and business model.
• Certainty: some drivers within the scenarios may be
relatively certain and predictable whilst others are
highly uncertain as to their development and impacts
over time.
• Breadth: the resilience of our strategy should be
investigated under multiple scenarios, including a 2°C
or lower scenario.
The tables on pages 108 and 109 illustrate how we have
incorporated these risks and opportunities into our
strategy and financial planning. Ultimately, we do not
envisage having to make changes to our overall strategic
approach when considering climate-related scenarios.
Risk rating / See page 92
Scenario 1
‘Low Carbon World’
~1.5°C
A low temperature rise scenario as the world transitions to
a low carbon economy
• Pricing of voluntary carbon offsets increases significantly.
• Increased stringency of building planning and design
requirements to meet net zero targets.
• Increased demand for lower emission technologies to enable
transition to a low carbon world.
• Increased cost of high carbon raw materials (e.g. steel, glass
and concrete), which is further impacted by a carbon tax.
• Increased demand for enhanced climate-related disclosures.
• Climate change and sustainability remain concerns for
employees.
Transition risks
Low to Moderate
Our overall risk exposure under the ‘Low Carbon World’ (1.5°C)
scenario is low to moderate in both the short-term (2030) and
the medium-term (2040). The most material transition risks
identified were EPC rating requirements, planning approvals
and rising emission offset prices.
Physical risk exposure
Very Low to Low
Our physical risk exposure was low under this scenario.
However, our Scottish land had greater exposure to windstorm
and river floods in comparison to our London portfolio.
Potential financial impacts
Moderate
In 2021, approximately £97m of capex was identified to achieve
an EPC rating of B across our London commercial portfolio.
This has since been revised to £86m to reflect the latest scope
(change in building regulations), inflation, disposals, the
acquisition of the remaining 50% interest in 50 Baker Street W1,
and the work carried out to date.
Based on the International Monetary Agency’s (IMA) projected
carbon offset prices of £80 per tonne by 2030, the average
cost to offset our residual development carbon annually would
be c.£49,000 using high quality removal offsets. We have
mitigated the near-term cost increases by forward-purchasing
high quality, nature-based removal credits for our regeneration
pipeline to 2030. However, we remain vigilant to pricing shifts
in the voluntary carbon market.
Potential impact on strategy
Low
Our strategy and financial planning already reflect more
stringent planning and design requirements, primarily via the
introduction of our Net Zero Carbon Pathway in July 2020.
We estimate that the cost impact of achieving our pathway
requirements is approximately 5% to 10% of our development
costs which is factored into our appraisals.
Over the long-term, we can reduce the cost impact of carbon
offsets on our financial returns by extending our carbon
removal projects (e.g. tree planting) on our Scottish land
which will help to reduce our reliance on the voluntary carbon
market. However, in this scenario we are unlikely to realise the
full value for some time, given such projects take time to yield
a significant number of credits.
Of the risks identified, none were
deemed likely to have an impact such
that the viability of our business would
be interrupted, although our cost
profile could increase.
Derwent London plc
106
Scenario 3
‘Hot House World’
4°C
Scenario 2
‘Current Policies’
~2 to 3°C
A high carbon scenario where the world fails to
transition, and temperatures rise
• No change in EPC rating requirements.
• Current policies promoting sustainability are removed.
• No carbon pricing exists.
• Exploitation of abundant fossil fuel resources.
• Little or no development in low carbon technology.
• Adoption of resource and energy intensive lifestyles.
Transition risks
n/a
Transition risks were not modelled under this scenario.
These risks only arise if the world actively attempts to
transition to a low carbon economy.
Physical risk exposure
Moderate to High
Our London portfolio could see a moderate risk of drought,
of between three to four months per year, a notable
increase over today’s climate. Under this scenario, there is
increased susceptibility of subsidence, with all the London
portfolio having ‘probable’ increases and instability issues
in line with the wider London area. There was no scientific
evidence to suggest that intensity or frequency of windstorm
would increase significantly. Consequently, the risk profile
has been deemed to be broadly similar to that in the
‘Current Policies’ scenario.
Potential financial impacts
Low
Within the next 10 years, modelling showed that there
was a 10% probability of windstorm damage to the
portfolio costing approximately £1.8m to £4.0m in the most
extreme years. Likewise, in the same extreme years flood
damage could cost £0.3m to £3.6m, rising to approximately
£2.1m to £6.1m by 2050, across both the London and
Scottish portfolios.
Potential impact on strategy
Low
Drought might create water stress issues and shortages
in the water supply for London. Our water management
strategy would need to be adapted for more optimal water
usage (reuse, collections etc.) which could lead to higher
maintenance and regeneration costs.
Although overall flood risk is not significant, projected
changes indicate that the frequency of flood events could
increase in the UK (and more for Scotland) and create
additional direct building and infrastructure damage and
more frequent interruptions. Flood risk assessment forms
part of our acquisition appraisal process.
Subsidence presents a risk to our London portfolio, although
the lack of data makes it difficult to ascertain the impact, if
any, on our business strategy.
The world follows the emissions trajectory based on
current policies/practices
• Offset prices increase but not by as much as under the
‘Low Carbon World’ scenario.
• There are no changes to existing planning and design
requirements for developments.
• No change in the demand for lower emissions
technologies.
• The increase in cost of low carbon materials is anticipated
to be lower than in the ‘Low Carbon World’ scenario.
• No discernible change in demand for enhanced
climate-related disclosures.
• No change in employees’ attitude to climate change
and sustainability.
Transition risks
Low to Moderate
Under this scenario, the risk impact and likelihood profiles for
transition risks were unchanged in comparison to the ‘Low
Carbon World’ scenario. This is because strategically we are
expecting to decarbonise in a shorter time frame compared
to the current policy approach.
Physical risk exposure
Low to Moderate
Within this climate scenario there was no scientific evidence
to suggest that intensity or frequency of windstorms would
increase significantly, therefore the risk profile has been
deemed to be broadly similar to that in the short-term.
However, subsidence starts to represent a material risk
in this scenario, albeit currently there is little or no data
available on its impact, either financially or structurally at
the asset level. All our London portfolio assets are either out
of risk zones or are protected by the Thames Barrier. Four
agricultural assets in our Scottish portfolio are currently
exposed to very high flooding risk. Flooding consequently
represents a moderate risk in this scenario.
Potential financial impacts
Low to Moderate
Generally, the transition risk cost impact is lower than in the
‘Low Carbon World’ scenario where demand for instruments
such as offsets is greater leading to supply constraints.
Physical risk cost impact is not discernible in this scenario.
Potential impact on strategy
Low
Sustainability has always been part of our strategy. This
puts us in a good position to take advantage of market
and occupier demand for more sustainable spaces, and
the associated higher rental premiums. There are also
operational cost savings that can be achieved from
reduced energy intensity of more efficient spaces.
Under this scenario, we would continue to retrofit and
improve our properties in line with our net zero strategy
and overall business model.
It is assumed the opportunities available on our Scottish
portfolio remain the same.
Report and Accounts 2024
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Strategic report
MANAGING RISKS continued
Assessment continued
Impact on our strategy and financial planning
The outputs from the risk and scenario assessments (see pages 104 to 107) have been embedded into our business to ensure all
of our core activities accurately reflect the required actions and investments. Our strategy remains unchanged as we continue to
develop design-led, amenity-rich, low carbon office space in line with market and customer demand.
Exposure
Material risk
0-5
years
5-10
years
15+
years
Impact on strategy
Impact on financial planning
Transition risks
Planning requirements
It is likely that the UK will
need to incrementally
increase the stringency of
building planning and design
requirements as part of
its efforts to meet its net
zero targets. This would
affect our development
pipeline, including increasing
development costs to ensure
all new buildings are net zero
carbon ready.
Our Responsible Development
Framework and Net Zero Carbon
Pathway aim to ensure that our
properties are more climate resilient,
built for a longer life, flexible to occupy
and operate, less reliant on mechanical
cooling and free from fossil fuel use
i.e., all electric heating and cooling.
Strategic objectives: 1 2 4
Business model: Refurbishment &
Development
The requirement to be net zero
aligned is already factored into our
development appraisal process and
ensures we have a robust level of cost
certainty and financial forecasting
ability. Access to good quality,
affordable finance is also important to
enable us to deliver our development
pipeline effectively and demonstrate
how we are addressing and effectively
managing climate risk. Further
information on our green finance
initiatives is on pages 84 and 85.
Emissions offsets
As more companies commit
to net zero, the demand for
high quality carbon removal
offsets is increasing, resulting
in higher prices. There is also
increasing reputational risk
associated with the use of
emission offsets if carbon
offsetting is chosen as the
only net zero measure,
instead of focusing on
reducing energy consumption
and emissions first.
We have put in place energy intensity
reduction targets for the properties in
our managed portfolio which look to
reduce intensity by c.4% year-on-year
between our 2019 baseline and 2030.
These are designed to ensure (alongside
our renewable energy procurement)
that we drive down operational carbon
as much as possible.
Our strategy has been to utilise our
Scottish land to generate our own
offsets, initially via tree planting
schemes.
Strategic objectives: 4
Business model: Asset Management &
Investment activities
To offset our development-based
residual embodied carbon we use
carbon removal offsets purchased
from the voluntary carbon market.
Our development appraisals include
a cost of carbon for these offsets,
currently set at £34 per tonne. This
is complemented by our stretching
embodied carbon targets which aim to
drive down the amount of embodied
carbon on scheme completion and
subsequently the need for and cost
of offsetting.
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108
Strategic objectives
To optimise returns
and create value from
a balanced portfolio
1
To attract, retain
and develop
talented employees
To maintain
strong and
flexible financing
To grow recurring
earnings and
cash flow
To design, deliver and
operate our buildings
responsibly
2
3
4
5
Exposure
Material risk
0-5
years
5-10
years
15+
years
Impact on strategy
Impact on financial planning
Physical risks
Windstorm
The risk arising from
windstorms is damage to our
buildings (which could include
façade and roof damage and
power outages), primarily
caused by flying debris.
Our buildings are in storm susceptible
regions, with our land in Scotland being
at highest risk. Overall, the impact of
windstorms on our portfolio does not
impact on our business strategy. We
have adequate building maintenance
and management measures in place.
Strategic objectives: 1 2 3 4 5
Business model: All of our core activities
As modelling showed a minor potential
financial loss of approximately £2-4m,
we currently do not believe that it
will impact on our financial planning.
Recommendations from the climate
assessments will be factored into our
property management strategy and
planned preventive maintenance
schedules.
Flooding
All of our London assets are
out of flood risk zones or
protected by the Thames
Barrier. In Scotland (c.2% of
our total portfolio), we have
locations, mainly used for
agricultural purposes, which
are currently exposed to very
high flooding risk.
The risks from flooding do not impact
our overall business strategy, albeit we
are likely to undertake a greater level
of due diligence during the acquisition
process given future purchase targets
could potentially be in flood zones.
Strategic objectives: 2 4
Business model: All of our core activities
To ensure we understand the flood
risk of potential new acquisitions, our
due diligence procedures will need
to be enhanced to account for a
greater level of flood mapping to avoid
introducing higher levels of risk and
loss exposure into the portfolio.
Further information on how we have addressed these risks can be found on the following pages:
Our pathway to net zero / See pages 44 and 45
Occupier engagement on climate change / See page 44
Report and Accounts 2024
109
Strategic report
MANAGING RISKS continued
Monitoring
Role of the Board
The Board has overall accountability for climate-related risks
and opportunities. It is responsible for ensuring that climate
change is adequately reflected in the Group’s strategy to
ensure our future resilience. Due to its importance, climate-
related matters are regularly discussed during the Board’s
strategy reviews and factored into the Board’s viability
assessment (see page 89).
Climate resilience has been classified as a principal risk for
the Group and is contained on our Schedule of Principal Risks
(see page 98). The Board reviews and approves the Group’s risk
registers on at least an annual basis and they are subject to
review by the Risk Committee at each of its meetings.
Climate-related topics are included on the agenda of each
meeting of the Responsible Business Committee and the
Sustainability Committee, including our progress to net zero
carbon. Climate-related risks and reporting are regular agenda
items for the Risk and Audit Committee meetings. The climate
risk governance framework is on page 111.
To embed a further level of oversight, we have linked climate-
related performance measures into our Remuneration Policy
for the Executive Directors (see page 179). These targets are
directly linked to our Net Zero Carbon Pathway.
Further information on the role of the Board and its
Committees in respect of climate change is available
on the following pages:
Audit Committee Report / See page 144
Remuneration Committee Report / See page 174
The Board does not have terms of reference. Instead a schedule
of matters reserved solely for its attention is maintained.
Within this schedule, climate change and other environmental
factors which could impact on the design or management
of our portfolio is reserved to the Board and its Committees,
principally the Responsible Business Committee and Audit
Committee. To formalise the role of each Committee in the
oversight of climate-related risks and opportunities, their terms
of reference were updated in 2024.
The Board’s assessment of its skills, experience and knowledge
is on page 137 and incorporates reference to environmental
matters, including climate change.
Role of management
As Chief Executive, Paul Williams has overall accountability to the Board for climate-related issues. Paul Williams has
delegated management oversight to Nigel George (Executive Director) and responsibility for implementation to John Davies
(Head of Sustainability) and Robert Duncan (Head of Investor Relations and Strategic Planning).
The table below illustrates their involvement in the Group’s climate risk framework. As a result, they have a comprehensive
oversight of all our climate-related work.
Paul Williams
Nigel George
John Davies
Robert Duncan
Board
Member
Member
By invitation
By invitation
Audit Committee
By invitation
Regular attendee
Regular attendee
Regular attendee
Risk Committee
Regular attendee
By invitation
Regular attendee
–
Remuneration Committee
By invitation
–
–
–
Nominations Committee
By invitation
–
–
–
Responsible Business Committee
Member
By invitation
Regular attendee
–
Executive Committee
Chairman
Member
Member
Member
Sustainability Committee
Chairman
Member
Member
Member
Sustainability Team
–
Oversight
Head of Department
–
Throughout the year, the Executive Committee reviews the
Group’s risk registers, which include sustainability/climate
change-related risks. These reviews consider the risk severity,
likelihood and the internal controls and/or mitigation
actions required to reduce our risk exposure, so that it is
aligned with or below our risk appetite. This approach allows
the effects of any mitigating procedures to be considered
properly, recognising that risk cannot be eliminated in every
circumstance.
The Sustainability Committee comprises of key department
leaders, many of whom have a responsibility for oversight
and implementation of climate-related issues within their
department. At each meeting, a ‘performance and data’
dashboard is produced for discussion and analysis.
Members from key departments were involved in the climate
risk assessment and climate scenarios conducted with Willis
Towers Watson, the outputs of which underpin our disclosure.
Derwent London plc
110
Climate risk governance framework
As climate risks and opportunities are likely to have an impact on various aspects of our business, all the Board’s Committees are
involved in the oversight of climate-related matters. As illustrated below, the business has a ‘top-down, bottom-up’ approach to
the oversight of climate-related aspects, from individual departments to the Board.
Responsible Business Committee
Monitors the management of our climate-related risks and opportunities and meets at least twice per year
to ensure that the Board adequately reflects climate-related issues in its decision making.
Ensures climate and
environmental skills,
knowledge and experience
are a consideration
when assessing the
Board’s composition and
identifying any skills gaps.
The Committee meets
as required.
Responsible for ensuring
our development schemes
embed the required
climate-related and net
zero carbon aspects
within their design and
delivery programmes.
Ensures climate-
related risks and
capital expenditure are
appropriately reflected in
our financial statements
and portfolio valuations.
The Committee typically
meets three times per year.
Responsible for ensuring
our properties are
operated efficiently
e.g. building energy
consumption is reducing
in line with our energy
targets.
Responsible for ensuring
EPCs are tracked and
monitored across the
investment portfolio.
Responsible for ensuring
climate-related issues
are adequately reflected
within our corporate
governance structure.
Board
Overall accountability for climate-related risks and opportunities
Oversight
Monitoring
Nominations
Committee
Development
Audit
Committee
Property Management
Ensures climate-related
aspects are appropriately
included in executive
remuneration. The
Committee typically
meets at least twice
per year.
Remuneration
Committee
Asset Management
Ensures climate-related
risks are appropriately
identified, monitored and
managed. The Committee
typically meets three
times per year.
Risk
Committee
Company Secretarial
Typically meets monthly and has overall responsibility
for oversight of climate-related risks and opportunities.
Typically meets quarterly and comprises key department
leaders; it is chaired by the CEO. The Committee is
responsible for monitoring our day-to-day climate-related
progress and performance.
Executive Committee
Sustainability Committee
Management
Sustainability team
Responsible for developing appropriate climate-related management measures for implementation across
the business and identifying climate risk and opportunities to inform the risk management process.
Report and Accounts 2024
111
Strategic report
MANAGING RISKS continued
Response
Capturing opportunities
As a responsible business, we understand, balance and manage
our environmental opportunities proactively; it is visible in our
culture and approach, and the design and management of
our buildings. Our management structure and style ensure
that we can respond to changes in regulation and occupier
demand. Likewise, this enables us to plan more effectively for
the long-term and ensure we are putting the right systems and
processes in place to maintain our position as London’s leading
office-focused REIT and capture the opportunities which arise.
Through our climate risk assessment, we identified the
opportunities that we could embrace. Of those identified,
changing occupier requirements and cost of debt
through green initiatives were considered most material.
We detail below some of the ways in which we are capturing
climate-related opportunities.
White Collar Factory & Old Street Yard EC1
Derwent London plc
112
Green Finance
Our Green Finance Framework was specifically developed to link our ‘green’ debt to our net zero carbon
ambitions and in particular our development and refurbishment activities. We have two specific debt
facilities which are linked to our framework; the £300m ‘green’ tranche of our main corporate £450m
revolving credit facility and a £350m Green Bond issued in 2021. These are being used to part-fund our
eligible projects. Further information on our Green Finance Framework is on pages 84 and 85.
Building
Upgrades
Refurbishing space to optimise rents as vacancies occur is an integral part of our business model. In
addition to physical upgrades, we also seek to improve a building’s environmental credentials. Where
appropriate, we are removing gas from properties and where this is not possible, we are retrofitting
specialist boiler equipment to enhance performance – see page 45 for further details. These works, which
also form part of our strategy to ensure compliance with evolving EPC legislation, are factored into all
refurbishment projects. Since the independent third party assessment in 2021, we have invested £13m of
capital expenditure on EPC upgrade works.
Operationalising
Data
The volume and quality of environmental data we collect from our buildings continues to rise. As well
as retrofitting sensors as part of our refurbishment activity, we have developed a bespoke in-house
environmental database which operates alongside our Intelligent Buildings programme. Our building
managers now have better access to near-real time data, facilitating lower energy consumption and
delivering savings in cost and operational carbon to our occupiers.
Self-Generation
The provenance of energy is under increasing scrutiny as businesses seek to optimise GHG emissions.
Aligned with this, we aim to procure 100% of the energy consumed across our portfolio on renewable
contracts. Our land in Scotland presents several opportunities for us to reduce our carbon impact,
including self-generation. Following receipt of resolution to grant planning consent in 2023, construction
of a 100-acre, 18.4 MW solar park is underway (total development cost c.£17m). On completion in 2026,
we expect it to generate in excess of 40% of the electricity needs of our London managed portfolio.
Reducing operational energy
and carbon emissions
Reducing embodied carbon of
development projects
• An annual reduction in energy intensity of our managed
portfolio to achieve 90 kWh/sqm by 2030
• Near-term: we commit to reduce absolute Scope 1 and
2 GHG emissions by 42% by 2030 (to 3,161 tCO2e) from
a 2022 baseline and to measure Scope 3 emissions
• Long-term: reduce absolute Scope 1, 2 and 3 GHG
emissions by 90% by 2040 from a 2022 baseline
• New build commercial office schemes completing
from 2025 to achieve: ≤600 kgCO2e/sqm
(upfront carbon, A1-A5)
• New build commercial office schemes completing
from 2030 to achieve: ≤500 kgCO2e/sqm
(upfront carbon, A1-A5)
Metrics and targets
The Group reports annually on its progress towards net zero by
2030. A brief outline of our progress in 2024 is set out on pages
44 to 47. To help our stakeholders understand our performance,
the data section within our annual Responsibility Report sets
out a broad range of climate and energy performance data
and metrics. This includes extensive carbon reporting and
historical performance data to allow for trend analysis. Our
Responsibility Report is available on our website.
We align our Responsibility Report disclosures to externally
recognised frameworks including the EPRA Best Practices
Recommendations for Sustainability Reporting (sBPR) and
the Sustainability Accounting Standards Board (SASB). We
participate in internationally recognised indices, namely CDP
and GRESB, and our performance against these can be found
on the inside back cover.
Since 2023, embodied carbon reduction and energy intensity
reduction performance metrics have been included within the
Executive Director and Executive Committee incentive plan
(the PSP). Further information is on page 182.
In 2020 we published our Net Zero Carbon Pathway which is
aligned to the Better Building Partnership (BBP) Climate Change
Commitment. This includes a series of ambitious climate-related
targets, which are shown on the right. We expect to publish an
updated Net Zero Carbon Pathway in 2025.
Energy and carbon reporting
We publish a full breakdown of our corporate carbon footprint
(inclusive of Scopes 1, 2 and 3) and energy usage in our
Streamlined Energy and Carbon Reporting (SECR) disclosure on
pages 58 and 59. Our Scope 1, 2 and 3 totals in 2024 have been
subject to independent limited assurance by Deloitte LLP in
accordance with ISAE 3000 (Revised) and ISAE 3410 Standards.
SECR disclosures / See page 59
Report and Accounts 2024
113
Strategic report
MANAGING RISKS continued
Response continued
EPC ratings
EPC ratings indicate the energy efficiency of a building. We are
following a phased programme of works to upgrade the EPC
ratings of our portfolio. We target a minimum EPC of ‘A’ for
major new build schemes and ‘B’ for major refurbishments
(see page 47 for our progress in 2024).
69.2%
of our portfolio (by ERV)
has an EPC rating of A or B
(including projects)
17.7%
of our portfolio (by ERV)
has an EPC rating of C
Percentage of portfolio (by ERV)
2024
2023
2022
Rated A
10%
10%
9%
Rated B
48%
47%
45%
Rated C
18%
19%
20%
Rated D
8%
8%
9%
Rated E
5%
5%
4%
Rated F
0%
0%
0%
Rated G
0%
0%
0%
Properties in development
11%
11%
12%
Exempt/under review/outstanding
0%
0%
1%
Renewable energy
The Group is committed to ensuring that all the energy
we procure, electricity and gas, is from renewable sources.
99%
of our electricity is
from renewable sources
100%
of our gas is from
renewable sources
Target: 100%
2024
2023
2022
Percentage of electricity from
renewable sources1
99%
99%
99%
On-site renewable energy
generation (kWh)
86,136
97,440
81,367
Percentage of gas from
renewable sources2
100%
99%
80%
1
Electricity purchased on renewable tariffs backed by REGOs.
2
Gas purchased on renewable tariffs backed by RGGOs.
Certification
BREEAM and LEED certifications recognise the sustainability
of our buildings, their construction and operation. We target
minimum BREEAM ratings of ‘Excellent’ for major developments
and ‘Very Good’ for major refurbishments (see page 36 for our
progress in 2024).
Percentage of portfolio
(by floor area – NIA)
2024
2023
2022
BREEAM certified
33%
35%
34%
LEED certified
22%
22%
13%
Our progress
As part of our commitment, we analyse our activities to ensure
we are reducing our carbon footprint across all our spheres of
influence. Our pathway focuses on four principal areas:
• Reducing operational energy and carbon emissions
through setting annual reduction targets and engaging
with our occupiers.
• Procuring and investing in renewable energy.
• Reducing the embodied carbon of our future pipeline.
• Offsetting residual carbon emissions we cannot eliminate.
Further information on these commitments and our progress
in 2024 is detailed on pages 44 to 47.
Future priorities
On page 46 we have outlined our environmental priorities
for 2025. In addition to these focus areas, we intend to action
the following:
• Governance: The Board will continue to build its
competency through training and monitoring of developing
best practice.
• Strategy: Monitor construction of our 18.4 MW solar park
in Scotland which commenced in 2024.
• Metrics and targets: In 2024, we undertook a double
materiality assessment which we disclose on pages 42 and
43. We will also start to report on our rebased SBTi-verified
targets (aligned to a 1.5°C scenario).
Derwent London plc
114
Climate scenarios – assumptions and risk data sources
2024 Willis Towers Watson risk assessment
Scenario Name
‘Low Carbon World’ (~1.5°C)
‘Current Policies’ (~2 to 3°C)
‘Hot House World’ (>4°C)
Temperature
Range
1.4°C (median, 2100, IEA NZE2050,
NGFS 2050)
~1.5°C (median, 2100, RCP2.6)
2.6°C (median, 2100, IEA STEPS)
~2.3°C (mean, 2100, RCP4.5)
~4.2°C
(mean, 2100, RCP8.5)
Sources
IEA – Energy Outlook 2021: NZE2050
NGFS 2050
IPCC, 2014: Synthesis Report: RCP2.6
Narratives for SSPs*: SSP1
IEA – Energy Outlook 2021: STEPS
IPCC, 2014: Synthesis Report: RCP4.5
Narratives for SSPs*: SSP2
IPCC, 2014: Synthesis
Report: RCP8.5
Narratives for SSPs*: SSP5
Primary risks
Transition risks (2025 and 2030)
Moderate transition (2025 and 2030)
and physical risks (current, 2030, 2050)
Physical risks
(current, 2030, 2050)
Underlying assumptions
Global net zero
achieved by:
2050 (IEA NZE2050)
Not achieved before 2100 (IEA STEPs)
Not achieved
Carbon price
Advanced economies: 2025, 2030,
2040, 2050
$75/tonne; $130/tonne; $205/tonne;
$250/tonne
(IEA NZE2050)
EU: 2030, 2040, 2050
$65/tonne; $75/tonne; $90/tonne
(IEA STEPs)
No carbon pricing
in existence. (SSP5)
Building sector
policies
Implementation of more stringent
building energy conservation
building codes for existing and new
buildings, including net zero emission
requirements by 2030 and 85% of all
buildings are zero carbon-ready in
2050. (IEA NZE2050)
In the UK, Low Carbon Heat Support
and Heat Networks Investment
Project; various retrofit incentive
schemes for improving buildings
efficiency as part of Plan for Jobs. It
does not however assume increasing
stringency of EPC requirements.
(IEA STEPs)
Assumes current policies
promoting sustainability
are removed. (SSP5)
Social
assumptions
Assumes low growth in material
consumption and increasing
consumer pressure on businesses
to drive sustainability. (SSP1)
The world follows a path in which
social, economic and technological
trends do not shift markedly from
historical patterns. Global and
national institutions work towards,
but make slow progress in achieving,
sustainable development goals. (SSP2)
The push for economic
and social development
is coupled with the
exploitation of abundant
fossil fuel resources and the
adoption of resource and
energy intensive lifestyles
around the world. (SSP5)
Technology
assumptions
Promotion of alternative fuels and
technologies such as hydrogen,
biogas, biomethane and carbon
capture utilisation and storage across
sectors. The share of renewables by
2030 in the global electricity supply
would increase to approximately 61%,
shifting economies from being fossil
fuel-dependent to renewable energy
driven. (IEA NZE2050)
Phase out of traditional coal-fired
power by 2024 in the UK and the
Ten Point Plan, with up to 40 GW
offshore wind capacity by 2030.
Electrification component of the Sixth
Carbon Budget and Industrial Energy
Transformation Fund provides grant
funding for energy efficiency projects.
(IEA STEPs)
Little to no development
in low carbon technology.
(SSP5)
Physical risk data sources
Willis Towers Watson’s Global Peril Diagnostic and Climate Diagnostic Tools, data from the MunichRe hazard databases,
and the Intergovernmental Panel on Climate Change (IPCC). For climate loss modelling, the catastrophe model of RMS
(Risk Management Solutions) was used.
Report and Accounts 2024
115
Strategic report
Derwent London plc
116
GOVERNANCE
118 Introduction from the Chairman
120 Governance at a glance
122 Board of Directors
124 Executive management
126 Corporate governance statement
132 The Section 172(1) Statement
140 Nominations Committee report
144 Audit Committee report
156 Risk Committee report
166 Responsible Business
Committee report
174 Remuneration Committee report
200 Directors’ report
205 Statement of Directors’
responsibilities
90 Whitfield Street W1
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Sponsorship & donations
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Report and Accounts 2024
117
Governance
Dear Shareholder,
On behalf of the Board, I am pleased to
introduce the 2024 Corporate governance
statement on pages 126 to 139.
The Board’s activities
During the year, the Board held its annual Strategy
Awayday with members of the senior management team
invited to present to the Board on the five-year plan and
portfolio strategy.
On 17 October the Board attended a site tour of the portfolio
led by members of the senior management team and, as
part of the Board’s continued focus on the Group’s talent
pipeline and succession plans, held a reception with a range
of employees to facilitate a ‘meet the Board’ event.
In accordance with our three-year cycle, I conducted an
internal evaluation of the Board, its principal committees
and individual Directors for the year ended 31 December 2024.
The review confirmed that the Board, its committees and
Directors continue to operate effectively. Further information
on the Board evaluation is on page 139.
2025 focus areas
• Ongoing review of the Group’s five-year plan and
portfolio strategy
• Ensure a smooth handover of responsibility to
Madeleine McDougall as the new Responsible Business
Committee Chair when Dame Cilla Snowball steps
down from the Board
• Continue to monitor the Group’s long-term succession
and talent development pipeline
• Engage in an externally facilitated Board performance
evaluation
Mark Breuer Chairman
INTRODUCTION FROM THE CHAIRMAN
2024
January
February
March
April
May
Audit Committee
Main Board
Nominations
Committee
Remuneration
Committee
Audit Committee
Nominations
Committee
Risk Committee
Annual General
Meeting
Main Board
Responsible Business
Committee
Full year results
announcement
Investor meetings
2023 Report &
Accounts and
Notice of AGM
Sale of Turnmill
EC1
Q1 Business update
Key
announcements
Board and
committee
meetings
The composition of our Board
remains strong, with an
effective balance of skills, and
our discussions are open to
constructive challenge.
Mark Breuer
Chairman
Derwent London plc
118
On 17 October, members of senior management presented
to the Board at DL/78 with a primary focus on the new
developments within the portfolio including Network W1,
Stephen Street W1 and Holden House W1. Following the
presentation, the Board received a site tour to see first-hand
the progress of developments.
The Board continues to recognise the importance of
employee engagement and strengthening the talent
pipeline to secure the future of the business. The Board,
therefore, hosted a ‘meet the Board’ event with employees
from across the workforce to facilitate discussions and
foster relationships.
As part of our Non-Executive Director induction
programme, Madeleine McDougall was invited to attend the
Board event and site tour in advance of her appointment on
1 November. Following Cilla Snowball’s retirement from the
Board, Madeleine will become the designated director for
gathering the views of the workforce.
s.172 factors (see page 132)
A B
Board engagement
June
July
August
September
October
November
December
Main Board
(Strategy
Awayday)
Audit
Committee
Main Board
Nominations
Committee
Remuneration
Committee
Risk Committee
Portfolio site
tour and ‘meet
the Board’ event
Audit
Committee
Main Board
Nominations
Committee
Remuneration
Committee
Risk Committee
Main Board
Remuneration
Committee
Responsible
Business
Committee
Interim results
Investor
meetings
Q3 Business
update
Acquisition of
50% stake in
Baker Street
W1 from Lazari
Investments
Board changes
At the 2024 AGM Claudia Arney stepped down from the Board
as she reached her ninth anniversary.
As Dame Cilla Snowball also approached her ninth anniversary,
the Board facilitated the recruitment of two Non-Executive
Directors to ensure the Board’s composition remained strong
with sufficient skills, experience and knowledge.
On behalf of the Board, I would like to thank Claudia Arney and
Cilla Snowball for their unwavering dedication and valuable
contributions over their nine-year terms. I am pleased to
welcome Robert Wilkinson and Madeleine McDougall, who
both bring a wealth of knowledge and experience to the Board.
Further information on the induction process is on page 142.
UK Corporate Governance Code 2024
Following the publication of the UK Corporate Governance
Code 2024 (the 2024 Code) on 22 January 2024, the Board
has been regularly updated on the Group’s compliance and
preparations. The main changes focus on ‘Audit, risk and
internal control’, with the Board required to make a declaration
of effectiveness applicable from 1 January 2026. The current
status of our compliance with the UK Corporate Governance
Code 2018 and preparations for the 2024 Code is outlined on
page 121.
Annual General Meeting (AGM)
The forthcoming AGM will be hosted at DL/78 on 16 May 2025.
Alongside my fellow Directors, I hope that you will be able to
join us. If you wish to discuss any aspect of our governance
arrangements, please contact me via our Company Secretary,
David Lawler.
Telephone: +44 (0)20 7659 3000 or
Email: company.secretary@derwentlondon.com
Mark Breuer
Chairman
26 February 2025
Holden House W1
Report and Accounts 2024
119
Governance
GOVERNANCE AT A GLANCE
Corporate governance is essential in ensuring our
business is run in the right way for the benefit of
our stakeholders.
2025 Governance focus areas
• To engage in an externally facilitated
Board performance evaluation in
accordance with our three-year cycle
• Review the Remuneration Policy and
engage with major shareholders
• Ensure a smooth and effective transition
of the new external Lead Audit Partner
• Continue to prepare for compliance with
the UK Corporate Governance Code 2024
(see page 121)
• Conduct a competitive tender in respect
of our ESG assurance provider
2024 Governance highlights
91%
Employee satisfaction
See page 50
60%
Board independence
(exc. the Chairman)
See page 136
4.1%
Total Return for the year
ended 31 December 2024
See page 34
51%
Female representation
in our workforce
See page 173
Board changes during 2024
It has been a busy year for the Board with the recruitment of two new
Non-Executive Directors. The Board were pleased to welcome Robert
Wilkinson on 1 June 2024 and Madeleine McDougall on 1 November 2024.
Details of the induction process are on page 142.
Madeleine McDougall will succeed Cilla Snowball as the Chair of the
Responsible Business Committee and as the designated director for gathering
the views of the workforce following Cilla’s retirement from the Board.
Robert Wilkinson Non-Executive Director
Madeleine McDougall Non-Executive Director
Governance statements
Going concern & viability /
See pages 86 to 89
Principal and emerging risks /
See pages 94 to 101
Governance framework /
See page 129
The Section 172(1) Statement /
See page 132
Key Board activities /See page 134
Board skills and experience /See page 137
Board biographies /See page 122 to 123
Board induction /See page 142
Derwent London plc
120
Key changes to principles & provisions
Our response
Status
(31 December 2024)
Board leadership and Company purpose
Principle C:
To focus on board decisions and the outcomes in
context of the company’s strategy and objectives.
Our disclosure on ‘Key activities of the Board’ (see page
134) outlines the key decisions made by the Board during
2024 with a link to the Group’s strategic objectives.
Compliant
Provision 2:
The board’s role to not only assess and monitor
company culture but to ensure the desired culture
is embedded.
Details of how the Group’s culture has been monitored
and embedded are on page 130.
Compliant
Composition, success and evaluation
Principle J:
To promote diversity, inclusion and equal
opportunity when appointing to the board.
The Nominations Committee report outlines the Board’s
recognition of the role of diversity when reviewing its
composition and making appointments to the Board
(see pages 140 to 143).
Compliant
Provision 23:
Companies may have further initiatives in place
alongside their diversity and inclusion policy.
Our progress in diversity is included on page 143.
Further information on our diversity and inclusion
initiatives is on pages 172 and 173.
Compliant
Audit, risk and internal control
Principle O:
The board to be responsible for maintaining the
effectiveness of risk management and the internal
control framework.
The risk management structure outlines the Board’s
responsibility for maintaining the effectiveness of risk
management and the internal control framework
(see page 160).
Compliant
Provision 29:
To describe how the board has monitored and
reviewed the effectiveness of the framework.
A declaration of effectiveness of the material
controls as at the balance sheet date.
To describe any material controls that have not
operated effectively as at the balance sheet date.
As part of the Internal Controls Project, we have
commenced the process to identify Derwent London’s
material controls in preparation for the declaration
of effectiveness as at 31 December 2026. Further
information on identifying our material controls is on
page 149.
In progress
Remuneration
Provision 37:
Director remuneration contracts/agreements should
include malus and clawback.
The provision of malus and clawback and the
circumstances in which it could be applied is detailed
in the Remuneration Committee report on page 184.
Compliant
Provision 38:
Describe malus and clawback including the provisions
that have been used in the last reporting period.
Compliant
UK Corporate Governance Code 2018 Compliance Statement (2018 Code)
The Board confirms that for the year ended 31 December 2024, we have complied with the provisions and have consistently
applied the principles of good corporate governance, contained in the 2018 Code.
Further information on the 2018 Code can be found on the Financial Reporting Council’s website: www.frc.org.uk
Preparing for the UK Corporate Governance Code 2024 (2024 Code)
The FRC published the 2024 Code on 22 January 2024 following a 16-week consultation held during 2023. The 2024 Code is
applicable to financial years beginning on or after 1 January 2025, apart from provision 29 which is applicable from 1 January 2026.
The 2024 Report & Accounts continues to comply in accordance with the UK Corporate Governance Code 2018. In advance of
1 January 2025, we continue to prepare and monitor our compliance with the 2024 Code as outlined in the table below.
Report and Accounts 2024
121
Governance
BOARD OF DIRECTORS
Mark Breuer
Chairman
Appointed to the Board: 2021
Mark worked in investment banking
for 30 years and, in 2017, retired from
a 20-year career at JP Morgan in
London, where he held the position of
Vice Chairman Global M&A and was
a member of the Global Strategic
Advisory Council. Mark is a Fellow of the
Institute of Chartered Accountants of
England and Wales, having qualified in
1987, and has a BA from Vassar College
in the US.
Other public appointments:
Chairman of DCC plc.
Committee:
Nominations (Chair),
Responsible Business.
Damian Wisniewski
Chief Financial Officer
Appointed to the Board: 2010
Damian is a chartered accountant
who has overall responsibility for
financial strategy, treasury, taxation
and financial reporting; as well as other
operational responsibilities including
Board responsibility for the Property
Management, Facilities Management
and Building Management teams.
Other public appointments:
Member of the governing body and
Chair of Audit Committee at the
Royal Academy of Music and Deputy
Chairman and Chair of the Finance and
Business Development Committee at
the ABRSM.
Nigel George
Executive Director
Appointed to the Board: 1998
Nigel is a chartered surveyor who joined
the Group in 1988. Nigel is responsible
for leading Derwent London’s
investment acquisitions, disposals and
analysis.
In addition, his responsibilities include
overseeing the Group’s Development
and Sustainability teams.
Other public appointments:
Co-opted member of the Royal Albert
Hall Fabric Committee.
Paul Williams
Chief Executive
Appointed to the Board: 1998
Paul is a chartered surveyor who joined
the Group in 1987. He was appointed
Chief Executive in 2019, and has overall
responsibility for Group strategy,
business development, sustainability,
health and safety, and day-to-day
operations.
Other public appointments:
Chair of Sadler’s Wells Foundation,
Chair of the New West End Company
(NWEC), Board member of the
Westminster Property Association and
member of the Real Estate Committee
of HM The King SMI.
Committee
Responsible Business.
Helen Gordon
Senior Independent Director
Appointed to the Board: 2018
Helen is a chartered surveyor and is
Chief Executive Officer of Grainger plc.
Previously, she was Global Head of Real
Estate Asset Management of Royal
Bank of Scotland plc and has held senior
property positions at Legal & General
Investment Management, Railtrack and
John Laing Developments.
Other public appointments:
CEO of Grainger plc, Board member
and Past President of the British
Property Federation and Vice Chair and
Board Member of EPRA, Non-Executive
Director of Business LDN.
Committee:
Risk (Chair), Nominations, Remuneration.
Emily Prideaux
Executive Director
Appointed to the Board: 2021
Emily has overall responsibility for
overseeing the leasing and asset
management departments. In addition,
Emily leads our DL/Member initiative,
driving excellent customer service and
relations; and leads our marketing and
digital strategies, whilst continuing to
ensure that our future developments
provide best-in-class workspace.
Other public appointments:
NLA Expert Panel Member and adviser
to the Prince’s Council serving on the
Commercial Property Development
Committee (CPDC) for the Duchy of
Cornwall.
Derwent London plc
122
Dame Cilla Snowball
Non-Executive Director
Appointed to the Board: 2015
Cilla is the former Group Chairman and
Group CEO at AMV BBDO, one of the
top advertising agencies in the UK.
Other public appointments:
Governor of the Wellcome Trust,
Non-Executive Director of Whitbread
PLC and Deputy Pro Chancellor of the
University of Birmingham.
Committee:
Responsible Business (Chair),
Audit, Nominations, Risk.
Robert Wilkinson
Non-Executive Director
Appointed to the Board: 2024
Robert has significant real estate
and financial services experience and
previously served as a Non-Executive
Director of Grainger plc. Robert joined
AEW in 2009, one of the largest real
estate asset managers in the world,
and prior to being appointed Chief
Executive Officer in 2014; served as
Chief Investment Officer for the firm
in Europe.
Other public appointments:
CEO of AEW Europe and Vice Chair
of INREV’s Management Board.
Committee:
Audit, Nominations.
Madeleine McDougall
Non-Executive Director
Appointed to the Board: 2024
Madeleine is the Head of the Corporate
Coverage Sector at Lloyds Banking
Group. Before this Madeleine was Head
of the Real Estate & Housing team for
six years and has been within the Lloyds
banking team since 2014. Prior to her
role at Lloyds Bank, she was the Head
of International Clients at Deutsche
Pfandbriefbank, covering Europe-wide
real estate financing.
Other public appointments:
Non-Executive Director of British
Property Federation.
Committee:
Nominations, Responsible Business, Risk.
Lucinda Bell
Non-Executive Director
Appointed to the Board: 2019
Lucinda is a chartered accountant
and from 2011 to 2018 was CFO of
The British Land Company plc (British
Land). Prior to that, she held a range
of finance and tax roles at British Land.
Other public appointments:
Non-Executive Director at Man Group Plc.
Committee:
Audit (Chair), Nominations,
Remuneration, Risk.
Sanjeev Sharma
Non-Executive Director
Appointed to the Board: 2021
Chief Property Portfolio Officer at
M&G Real Estate – a leading financial
solutions provider for global real estate
investors, which is part of M&G plc’s
£75bn Private Markets business.
Other public appointments:
Sanjeev is an independent member
of the Estates Strategy Committee
of King’s College University London.
Sanjeev is on the Patrons Committee
of Real Estate Balance and a Trustee
Director of the Prudential Staff
Charitable Trust.
Committee:
Remuneration (Chair), Audit,
Nominations, Risk.
Report and Accounts 2024
123
Governance
EXECUTIVE MANAGEMENT
David Lawler
Company Secretary
Joined Derwent London:
September 2017
Appointed to Executive Committee:
September 2017
Jay Joshi
Group Financial Controller
Joined Derwent London:
April 2012
Appointed to Executive Committee:
April 2021
Victoria Steventon
Head of Property Management
Joined Derwent London:
December 2019
Appointed to Executive Committee:
January 2022
Richard Baldwin
Director of Development
Joined Derwent London:
January 2011
Appointed to Executive Committee:
January 2011
John Davies
Head of Sustainability
Joined Derwent London:
January 2013
Appointed to Executive Committee:
January 2022
Philippa Abendanon
Head of Leasing
Joined Derwent London:
April 2013
Appointed to Executive Committee:
July 2022
Jennifer Whybrow
Head of Financial Planning
& Analysis
Joined Derwent London:
June 2007
Appointed to Executive Committee:
January 2018
Vasiliki Arvaniti
Head of Asset Management
Joined Derwent London:
September 2019
Appointed to Executive Committee:
January 2022
Robert Duncan
Head of Investor Relations
& Strategic Planning
Joined Derwent London:
September 2021
Appointed to Executive Committee:
January 2023
Derwent London plc
124
Matt Cook
Head of Digital Innovation &
Technology
Joined Derwent London:
November 2015
Appointed to Executive Committee:
January 2024
Julie Schutz
Head of Internal Audit
Joined Derwent London:
January 2023
Appointed to Executive Committee:
July 2024
Richard Dean
Director of Investment
Joined Derwent London:
January 2023
Appointed to Executive Committee:
July 2023
Katy Levine
Head of Human Resources
Joined Derwent London:
September 2008
Appointed to Executive Committee:
January 2023
Senior management
Joined Derwent London
Lesley Bufton
Head of Property Marketing
October 2003
Tim Hyman
Group Architect
September 2008
Benjamin Lesser
Head of Design & Innovation
May 2010
Jonathan Theobald
Head of Investment Analytics
December 2012
Matt Massey
Head of Project Management
March 2014
Davina Smith
Property Finance Lead
June 2015
Matt Peaty
Head of Health & Safety
November 2022
Paul Atkins
Head of Tax
December 2024
Report and Accounts 2024
125
Governance
CORPORATE GOVERNANCE STATEMENT
Governance
At Derwent London our approach to governance is rooted in
the concepts of fairness, transparency and accountability.
The Section 172(1) Statement
The Board of Directors confirm that during the year under
review, it has acted to promote the long-term success of the
Company for the benefit of shareholders, whilst having due
regard to the matters set out in section 172(1)(a) to (f) of the
Companies Act 2006.
The Board has direct engagement principally with our
employees and shareholders but is also kept fully informed
of the material issues of other stakeholders through the
Responsible Business Committee, Executive Directors, reports
from senior management and external advisers. We utilise
various engagement channels to receive informative feedback
from our key stakeholders which can be factored into our
principal decisions and activities.
Further information / See page 132
Public Interest Statement
We are aware of our wider obligations to be a responsible
business partner to our occupiers and to the communities
in which we operate. As our activities impact on multiple
stakeholder groups, our Board ensures that stakeholder
matters are central to its decision making alongside the
long-term financial success of our business.
We extend our obligations beyond the statutory requirements
to add value and build long-term mutually beneficial
relationships. Our obligations are incorporated into our
purpose, which strongly influences our values (see page 4).
We have detailed on pages 38 to 59 and 126 to 155 how we
have acted in the public interest during 2024.
Allows our
stakeholders
to inform our
decision making
Maintains a sound
system of risk
oversight and
management
Corporate governance
is essential to ensuring our
business is run in the right way
for the benefit of all
our stakeholders
Promotes the desired
culture and values
Ensures
accountability and
responsibility
Monitors key
performance
indicators
Facilitates
the sharing of
information
Derwent London plc
126
Running our business
in the right way
Effective leadership
Our Board is composed of diverse professionals who bring a
range of skills, perspectives and corporate experience to our
boardroom. The composition of the Board is subject to periodic
review by the Nominations Committee to ensure it remains
sufficiently balanced and diverse to effectively oversee and
determine the Group’s strategy.
Non-Executive Director recruitment was a focus area for 2024.
Robert Wilkinson and Madeleine McDougall were appointed
with effect from 1 June and 1 November 2024, respectively.
See page 142 for further information on the induction process.
To ensure sufficient time for discussion, the Board utilises
its five principal committees to effectively manage its time
(see page 129). At each Board meeting, the agenda ensures
sufficient time for the committee chairs to report on the
contents of discussions, any recommendations to the Board
which require approval, and the actions taken.
The Board, its principal committees and individual Directors
are subject to annual effectiveness evaluations to identify
areas for improvement or action (see page 139). The Chairman
discusses with each Director their training needs to ensure they
keep their knowledge and skills up to date.
Value creation and preservation
The role of the Board is to generate long-term value for
shareholders and other key stakeholders. The appropriateness
of our strategy is subject to detailed review at the Board’s
Strategy Awaydays which are held annually. Additionally, before
making a material decision, the Directors have due regard for
the wider context including the macroeconomic environment,
property cycle and the potential impact on our stakeholders
and wider society.
Some of the key aspects discussed by the Board during its
strategy discussions were:
• changes to the London office market and investment
market (see pages 15 to 17);
• nature of office occupation;
• climate change risk and opportunities;
• our development pipeline in respect to its replenishment
and future potential; and
• review of the five-year plan including the potential impact
of external risk factors on the business and our stakeholders,
including geopolitical tensions, inflation, interest rates and
technological changes.
The Board required no significant changes to the Group’s
strategy during 2024, which continues to assist in the
achievement of our purpose and is aligned with our values.
As a business, we continue to create value responsibly through
responsible initiatives, a conservative balance sheet and
resilient strategy (see pages 8 and 9).
Applying best practice principles
During the year ended 31 December 2024, we have applied
the principles and complied with the provisions of good
governance contained in the UK Corporate Governance Code
2018 (the Code). Our Compliance Statement for 2024 is on
page 121. Further details on how we have applied the Code
can be found in the Governance section on pages 126 to 139.
1
Board leadership and Company purpose
Page
A
Effective Board
127
B
Purpose, values and culture
130
C
Governance framework and arrangements
129
D
Stakeholder engagement
131
E
Workforce policies and practices
128
2
Division of responsibilities
Page
F
Board roles
138
G
Independence
136
H
External appointments
136
I
Key activities of the Board
134
3
Composition, succession and evaluation
Page
J
Appointments to the Board
142
K
Board skills, experience and knowledge
137
L
Annual Board evaluation
139
4
Audit, risk and internal control
Page
M
Financial reporting
145
Internal and external audit
150
N
Review of the 2024 Report & Accounts
145
O
Internal financial controls
151
Risk management
156
5
Remuneration
Page
P
Linking remuneration with our purpose,
values and strategy
179
Q
Summary of the Remuneration Policy
180
R
Pay for performance
192
Strategic targets
193
Report and Accounts 2024
127
Governance
CORPORATE GOVERNANCE STATEMENT continued
Ensures accountability
and responsibility
As a business, we seek to conduct ourselves with honesty and integrity and believe that it
is our duty to take appropriate measures to identify and remedy any malpractice within or
affecting the Company. Our employees embrace our high standards of conduct and are
encouraged to speak out if they witness any wrongdoing which falls short of those standards.
Code of Conduct for Directors
In October 2024, the Institute of Directors (IoD) launched
a voluntary Code of Conduct for Directors, which is
centred on six principles:
• Leading by example
• Integrity
• Transparency
• Accountability
• Fairness
• Responsible business
The Derwent London Board has confirmed that they have
complied with the IoD Code of Conduct and its principles
for director conduct during 2024. Further information on
the IoD Code of Conduct for Directors can be found here:
www.iod.com
Workforce policies and practices
The Executive Directors have been delegated responsibility for
ensuring that policies and behaviours set at Board level are
effectively communicated and implemented across the business.
Policies are published on the intranet and where relevant
included in the employee handbook. To ensure policies are
embedded in our business practices, we operate a mandatory
training programme which aims to reinforce key compliance
messages in areas such as anti-bribery, fraud, modern
slavery, etc. If the Board is concerned or dissatisfied with any
behaviours or actions, it seeks assurance that corrective action
is being taken. No such action was required during 2024.
Compliance training / See page 165
Anonymous reporting of concerns
All employees have access to our ‘Speak up’ system. Our
procedures are included within our employee handbook, on
our Group intranet and staff noticeboards. Our procedures
aim to support and reassure staff that they are able to raise
genuine concerns without fear of victimisation or unfair
treatment, even if they turn out to be mistaken. In 2024, our
‘Speak up’ Policy was updated to specifically reference modern
slavery and bullying/harassment as reportable concerns.
Following receipt of a message we have procedures in place
to ensure an independent and proportionate investigation.
The Board receives updates from the Company Secretary
on the operation of the ‘Speak up’ system. During the year
under review, we did not receive any messages via our system
(2023: no messages). Due to the ‘open door’ nature of our
business, concerns are often raised directly with management,
the CEO or the HR team.
Conflicts of interest
All employees (including the Board) are required to notify the
Company as soon as they become aware of a situation that
could give rise to a conflict or potential conflict of interest.
Prior to all major Board decisions, the Chairman requires the
Directors to confirm that they do not have a potential personal
conflict with the matter being discussed. If a conflict does
arise, the Director is excluded from discussions and voting,
unless the Board unanimously decides otherwise.
Independence / See page 136
Delegated authority limits
The Board maintains a formal schedule of matters which are
reserved solely for its approval. These matters include decisions
relating to the Group’s strategy, capital structure, financing,
any major property acquisition or disposal, the risk appetite of
the Group and the authorisation of capital expenditure above
the delegated authority limits. The delegated authority limits
are detailed below:
Board approval is required for:
Level of approval:
Major property
acquisition or disposal
Valued above £40m
Major capital
expenditure project
Projected costs above £20m
Material occupier
lease or contract
Rental income greater than 7.5%
of the Group’s total rental income
Although the Board is formally required to authorise capital
expenditure above this limit, the open nature of our business
means that the Board is aware of all active projects within
our portfolio.
If any Director has concerns about the running of the Group or
a proposed course of action, they are encouraged to express
those concerns which are then minuted. No such concerns
were raised during 2024.
All Directors have access to the services of the Company
Secretary, and any Director may instigate an agreed procedure
whereby independent professional advice may be sought at
the Company’s expense. No such advice was sought by any
Director during the year.
Governance framework / See page 129
Key activities of the Board / See pages 134 and 135
Derwent London plc
128
Governance framework
We pride ourselves on conducting our business in an open and transparent manner.
Our well-established culture ensures that our governance framework remains flexible, allowing for fast decision making, effective
oversight and clear accountability throughout the organisation.
The Board is primarily responsible for setting the Group’s strategy for delivering long-term value to our shareholders and
other stakeholders, providing effective challenge to management concerning the execution of the strategy and ensuring
the Group maintains an effective risk management and internal control system.
Ensures the Board
(and its committees)
have the correct
balance of skills,
knowledge and
experience, and that
adequate succession
plans are in place.
See page 140
Oversees the
Group’s financial
reporting, maintains
an appropriate
relationship with the
external Auditor and
monitors the Group’s
financial internal
controls.
See page 144
Reviews and monitors
the Group’s principal
and emerging risks,
and the effectiveness
of the Group’s risk
management systems
and non-financial
internal controls.
See page 156
Monitors the
Group’s corporate
responsibility,
sustainability
and stakeholder
engagement activities.
See page 166
Establishes the
Group’s Remuneration
Policy and ensures
there is a clear link
between performance
and remuneration.
See page 174
The Board delegates the execution of the Company’s strategy and the day-to-day management
of the business to the Executive Directors, assisted by other members of the Executive Committee.
The executives operate a number of supporting committees that provide oversight
on key business activities and risks, examples include:
Our strategy /
See page 24
Managing risks /
See page 90
The Section 172(1) Statement /
See page 132
Board activities /
See page 134
Chief Executive’s
statement / See page 12
Credit Committee
Measuring our
performance / See page 33
Health and Safety Committee
Property review /
See page 60
Sustainability Committee
Executive management
/ See page 124
Cost Committee
Our shareholders and other key stakeholders play an important role in monitoring and safeguarding the governance of our Group.
Further information on how we engage with our key stakeholders is on pages 38 to 39 and 131.
Engagement with shareholders and other stakeholders
The terms of reference for each Board Committee are available on the Group’s website at
www.derwentlondon.com
Executive Directors
Supporting committees
The Board delegates certain matters to its five principal committees
The Board
Nominations
Committee
Audit
Committee
Risk
Committee
Responsible
Business Committee
Remuneration
Committee
Report and Accounts 2024
129
Governance
Vision
Purpose
Values
Strategy
CORPORATE GOVERNANCE STATEMENT continued
Promotes the desired
culture and values
Our culture has developed from our values and is a key strength of our business.
The benefits of a strong culture are seen in our employees’ engagement scores,
retention rate and levels of productivity.
Monitoring culture and values
The Board monitors the culture and values of the Group via:
• Regularly meeting with management and inviting
employees to present at Board and committee meetings.
• Receiving feedback via the four employee representatives
that sit on our Responsible Business Committee.
• Assessing cultural indicators such as:
–
management’s attitude to risk;
–
health and safety data;
–
compliance with the Group’s policies and procedures; and
–
key performance indicators, including staff retention.
• Feedback from our wider stakeholders, including from
occupier ‘pulse surveys’.
• Promptness of payments to suppliers.
• Independent assurance can be sought via the internal audit
function and other advisers.
The feedback received from employee surveys provides valuable
insights into what is valued and seen as corporate norms.
The biennial employee survey includes a specific question
on how our employees would describe our culture.
If the Board is concerned or dissatisfied with any behaviours
or actions, it seeks assurance that corrective action is being
taken. No such action was required during 2024.
Embedding our culture and values
The Board reinforces our culture and values through its
decisions, strategy and conduct. Culture and value ‘fit’ is a
key consideration during our recruitment process, which is
reinforced during our induction programme, town halls run by
the CEO, and is monitored through performance appraisals.
As part of the performance appraisal process, all employees
are required to work towards achieving the following objectives:
• active involvement in fostering, promoting and supporting
an inclusive culture; and
• cross-team collaboration to deliver goals and build strong
trusting relationships.
These objectives reinforce the behaviours we wish to foster
within our workforce and link our culture to our reward
mechanisms.
Employees on the Responsible Business Committee /
See page 170
Responsible payment practices / See page 171
Culture
Dedicated
and adaptable
A passion
to improve
London’s
office spaces
Strong customer
focus
Progressive
and pragmatic
‘Open door’
and inclusive
Collaborative
and supportive
Derwent London plc
130
Stakeholder engagement
We recognise the importance of clear communication and
proactive engagement with all of our stakeholders. We utilise
various engagement channels to receive informative feedback
from our key stakeholders which can be factored into our
principal decisions and activities.
Our Chairman aims to routinely meet with institutional
investors and report their views to the Board. On an annual
basis, Mark Breuer writes to all our major shareholders inviting
them to meet with him to discuss any areas of concern
or provide feedback. For our private investors, there is an
opportunity to meet the entire Board (including the Non-
Executive Directors) at our Annual General Meeting (AGM).
25 Baker Street is due to achieve practical completion
during 2025. The development includes 218,000 sq ft of
office space as well as 28,000 sq ft of retail and 52,000
sq ft of residential. During the early preparatory stages of
the project, a stakeholder impact analysis was undertaken
to ensure the decisions made by the Board were well-
informed and considered the interests of key stakeholders.
Key benefits:
• The creation of a new place of interest
• Enhancing the public experience at street-level by
including a pedestrian step-free accessible passageway
and courtyard
• Assisting in improving local infrastructure, with
significant contribution made to the ‘Baker Street
two-way project’
• Endeavouring to use local procurement opportunities
and local labour to assist with employment levels
Key concerns:
• Noise levels, vibrations and dust
• General disruption to the local road network
• Management and impact of construction works on
neighbouring residents and businesses
• Implementation of biodiverse roofs/plantation of trees
• Minimisation of site waste
To mitigate these concerns, the following measures were
implemented:
Construction:
• Noise and dust monitoring equipment was positioned
around the site and within buildings to affirm that the
site operations remain within the limits stipulated by
Westminster City Council.
• A vibration and movement monitoring strategy was
implemented, and construction activities were actively
managed to minimise the impact of vibration.
• To control on-site waste a Site Waste Management
Plan was prepared, with all contractors required to
implement methods to reduce waste.
Community and environment:
• Construction logistics strategies were developed
by our contractors to minimise the impact on the
surrounding area by ensuring the site is self-sufficient
within its boundary.
• Maintained close engagement with local residents
through public exhibitions, consultations, regular
newsletters and resident meetings.
s.172 factors (see page 132)
C D E
25 Baker Street
Stakeholder impact analysis
Stakeholders
Material concerns
Occupiers
• Well-designed and sustainable
buildings
• Suitable lease terms
• Exclusive access to available
amenities
• Adaptable space to accommodate
new and collaborative ways of
working
Employees
• Overall health and wellbeing
• A diverse and inclusive working
environment
• Opportunities for training,
development and progression
• Adoption of smart working
principles
Local communities
and others
• Minimising local disruption
• Impact on the local economy
• Effective communication and
engagement
• Being a responsible neighbour
Suppliers
• Long-term partnerships
• Collaborative approach
• Open terms of business
• Fair payment practices
Central and local
government
• Openness and transparency
• Proactive engagement with local
authorities
• Support for local economic plans
and strategies
• Compliance with legislation
Shareholders and
debt providers
• Financial performance
• Environmental, social and
governance performance
• Openness and transparency
• Dividend
Report and Accounts 2024
131
Governance
CORPORATE GOVERNANCE STATEMENT continued
Allows our stakeholders
to inform our decision making
The Section 172(1) Statement
The Board of Directors confirm that during the year under review, it has acted to promote the long-term success of the
Company for the benefit of shareholders, whilst having due regard to the matters set out in section 172(1)(a) to (f) of the
Companies Act 2006.
Informed decision making
The Board’s procedures require a stakeholder
impact analysis to be completed for all
material decisions requiring its approval that
could impact on one or more of our stakeholder
groups. The stakeholder impact analysis assists
the Directors in performing their duties under
s.172 of the Companies Act 2006 and provides
the Board with assurance that the potential
impacts on our stakeholders are being carefully
considered by management when developing
plans for Board approval. The key activities and
principal decisions undertaken by the Board in
2024 are detailed on pages 134 and 135.
Principal methods used by the Board
in 2024
The main methods used by the Directors to
perform their duties include:
• strategy reviews which assess the long-term
sustainable success of the Group and our
impact on key stakeholders;
• the Responsible Business Committee
monitors the Group’s corporate
responsibility, sustainability and stakeholder
engagement activities and reports to the
Board on its activities (see pages 166 to 173);
• assessing the potential impact of significant
capital expenditure decisions on our
stakeholders;
• identifying the risks and potential
consequences of decisions in the short,
medium and long-term so that mitigation
plans can be put in place;
• direct and indirect stakeholder engagement
(see page 131);
• external assurance is received from
stakeholder surveys, brokers and advisers; and
• specific training for our Directors and
senior managers, in addition to the
mandatory compliance training programme
(see pages 137 and 165).
Issues, factors and stakeholders
Case studies have been included throughout the Governance section
(see pages 119, 131 and 133). Within each case study we have identified
the s.172 factors which were most relevant in the Board’s decision making.
Additionally, we have provided an explanation of how our stakeholders
impacted on the Board’s discussions during 2024 on the following pages:
Network W1 / See page 133
25 Baker Street / See page 131
s.172 factor
Relevant disclosures
Page
a) the likely consequences
of any decision in the
long-term
Company purpose
4
Central London office market
15
Our business model and strategy
24
b) the interests of the
Company’s employees
Our people
50
Diversity and inclusion
172
Non-financial reporting
56
Employee engagement
51
c) the need to foster the
Company’s business
relationships with suppliers,
customers and others
Social Value Strategic Framework
48
Responsible payment practices
171
Modern slavery
171
Supply Chain Responsibility Standard 171
d) the impact of the
Company’s operations on
the community and
the environment
Our journey to net zero
44
Double materiality assessment
42
Community Fund
49
Streamlined Energy and Carbon
58
Reporting (SECR) disclosure
Task Force on Climate-related
102
Financial Disclosures (TCFD)
e) the desirability of the
Company maintaining
a reputation for high
standards of business
conduct
‘Speak up’ procedures
128
Purpose, values and culture
130
Internal financial controls
151
Risk management
161
Anti-bribery and corruption
165
Awards and recognition
288
f) the need to act fairly
between members of
the Company
Annual General Meeting
202
Voting
202
Rights attached to shares
203
Derwent London plc
132
During the year, the Board continued to monitor the
development at Network W1. The Network W1 development
consists of 134,519 sq ft of commercial office space and
4,919 sq ft of retail space.
Engagement and collaboration with the communities
and local councils in the Boroughs in which we operate, is
imperative in fostering long-term sustainable relationships.
Throughout the development, the Board has carefully
considered the impact on key stakeholder groups. During the
planning application stage of the Network development, we
worked with Camden Council to understand how the public
realm in close proximity to Network could be improved for
the benefit of the local community and our occupiers.
Factors that were considered:
• Greening opportunities including incorporation of rain
gardens and planting street trees.
• Improving pedestrian access through widening of
pavements in the surrounding area.
• Improving quality and capacity of existing public open
space in the vicinity to the development.
As a result of this engagement, it was decided to widen the
footpaths around Network and utilise the benefits of plants
and trees to improve both the amenity space and wellbeing
of our stakeholders. To support this initiative Derwent
London agreed to provide a financial contribution within the
planning consent to support delivery by Camden Council.
The public realm improvements are due for delivery at the
end of 2025.
Network, W1
Other decisions that have considered our stakeholders:
Community management
As the Network development has progressed, our occupiers
have been engaged through a series of newsletters and
presentations from contractors. This approach is replicated
across developments within our portfolio, ensuring
stakeholders are at the forefront of the Group’s decisions
and positive long-term relationships with occupiers and
communities are upheld.
Delivering lower carbon solutions
The Development team has been working with contractors
on delivering lower carbon solutions on site. So far, this has
included electric arc furnace steel and lower carbon concrete
cement replacements, which contributes to reducing the
embodied carbon of the development and positively impacts
our ability to achieve net zero carbon.
Social Value Strategy
The ongoing engagement with Camden Council in prioritising
community engagement and local employment opportunities
has influenced the creation of our Social Value Strategic
Framework.
The creation of partnerships across our stakeholder groups
maximises the social value that our developments create.
Through a dedicated online portal, jobs and apprenticeships
at Network are communicated. As the scheme progresses
to its operational phase, local employment and training
opportunities will be made accessible to Camden residents.
s.172 factors
C D E
Report and Accounts 2024
133
Governance
Recycling of capital
Investment activity is one of our core
activities. This involves the recycling
of capital – acquiring properties with
future regeneration opportunities
and disposing of those which no
longer meet our investment criteria
and forward return expectations.
During the year, the Board:
• reviewed our portfolio pipeline for
future acquisition and disposal
opportunities;
• approved the sale of the freehold
interest in Turnmill EC1 for £77.35m
(before costs). The proceeds were
recycled into our two on-site
developments, 25 Baker Street W1
and Network W1; and
• approved the acquisition of the
remaining 50% stake in the
proposed 50 Baker Street W1
scheme from Lazari Investments,
our joint venture partner, for
£44.4m, following the pre-letting
success at our adjacent 25 Baker
Street W1 project.
Construction projects
Received regular updates on key
construction projects and received
resolution to grant planning at our
c.240,000 sq ft 50 Baker Street W1
development.
Leasing activity
Monitored letting activity throughout
the year, which remained strong at
6.2% above December 2023 ERV.
Strategic objectives
1 2 4
s.172 factors (see page 132)
A C D
Strategy Awayday
In addition to ongoing updates
from the Executive Directors on
the implementation of strategy
throughout the year, a Board
Strategy Awayday was held in June.
Financing strategy
A strategic objective for the Group
is the maintenance of strong and
flexible financing. The Board received
updates throughout the year on the
Group’s financing strategy, including:
• Our secured debt instruments:
The £83m Mass Mutual secured
loan was repaid in October 2024,
releasing c.£240m of security
and increasing our unsecured
borrowings to 88% of the total.
Our only remaining secured debt
instruments as at 31 December
2024 are the £175m LMS bonds
due in March 2026.
• Refinancing strategy:
During the year under review, a
new £100m unsecured term loan
from NatWest and a short-term
unsecured £100m term loan from
Barclays were negotiated.
• Future financing options:
The Board considered various
options, including a conventional
or convertible bond issuance or
private placement notes.
Dividends
Approved the 2024 interim and final
dividends.
Strategic objectives
1 4 5
s.172 factors
A F
Internal Control Project
The Internal Controls Project
continues to remain on track to
achieve compliance with the UK
Corporate Governance Code 2024
effective from 1 January 2026.
During the year the Audit
Committee discussed defining our
material controls and the required
assurance levels.
Assurance
Received assurance reports in
respect to green finance, and
environmental and health & safety
metrics.
Principal risks
Approved the consolidation and
simplification of the Group’s
principal risks. Agreed that change
management systems was a
principal risk for 2025 (see page 92).
Finance system project
Continued to monitor the finance
system project and approved the
utilisation of Oracle NetSuite as the
new finance system.
Supply chain insolvency
The trend of rising insolvencies
within the real estate industry
has continued over the past year.
Updates were received on the risk of
insolvencies and how we are seeking
to monitor the financial solvency of
contractors and consultants.
Strategic objectives
2 3 4
s.172 factors
E D
CORPORATE GOVERNANCE STATEMENT continued
Board activities
The Board met six times during the year (including the Annual General Meeting).
An overview of our Board’s key activities in 2024 is provided below.
Property portfolio
Strategy and
financing
Risk management and
internal control
Derwent London plc
134
Review of 2024
Report & Accounts
Reviewed the 2024 Report & Accounts
to ensure it is fair, balanced and
understandable.
Board evaluation
Our Chairman, Mark Breuer,
conducted the 2024 internal
Board evaluation of the Board, its
committees and individual Directors.
The Chairman confirmed that each
Director’s performance continues to
be highly effective and demonstrates
a high level of commitment to the
role (see page 139).
Reporting
• Reviewed the rolling forecasts
and approved the 2025 budget.
• Approved the full year and interim
results, in addition to the Q1 and
Q3 business updates.
• Reviewed and approved the
Group’s five-year plan and forecast.
• Reviewed quarterly project cost
reports.
• Approved the portfolio valuation
as at 30 June and 31 December
2024.
Net zero carbon
Received updates on the Group’s Net
Zero Carbon Pathway and the latest
climate risk assessment.
Strategic objectives
1 2 5
s.172 factors
E A
‘Meet the Board’ event
On 17 October, the Board received
a tour of the portfolio, including
buildings in the development
pipeline. Following which, a
reception to ‘meet the Board’ was
held at Savile Row with a range of
employees invited to attend from
across the workforce.
Employee ‘pulse survey’
Sought feedback from our employees
during Q4 2024, in order to assess
staff satisfaction.
National Equality Standard
Achieved the National Equality
Standard, following Board approval
to partake in the re-accreditation.
AGM
Hosted the 40th Annual General
Meeting (AGM) on 10 May 2024 at
DL/78. Paul Williams provided our
shareholders with a business update
presentation. During 2024, the Board
considered the structure of the AGM.
Tracing our ‘gone away’
shareholders
In Q4 2024, the Board initiated a
tracing exercise, led by the Company
Secretarial team, which sought
to trace the 171 shareholders with
whom our share registrar had lost
contact.
Stakeholder engagement
The Responsible Business Committee
continued to monitor and receive
regular updates on stakeholder
engagement.
Strategic objectives
3 4
s.172 factors
B C D E F
Corporate governance
Continued to monitor our progress
to comply with the UK Corporate
Governance Code 2024.
Succession planning
Approved the recruitment of Robert
Wilkinson and Madeleine McDougall
during the year. In line with the
change in Board composition, a
thorough review of the Board’s skill
matrix was conducted.
Modern slavery
Reviewed the results of an
independent gap analysis on
our modern slavery policies and
procedures and approved the 2024
Modern Slavery Statement.
Audit exemption
Approved the use of audit
exemptions under the Companies
Act for a number of subsidiary
accounts.
Economic Crime and
Corporate Transparency
Act 2023
The Board received updates on the
new regulations, our responsibilities
and how we are ensuring our
compliance. An in-depth review of
our fraud procedures against the
Home Office’s guidance will be
conducted during Q1 2025.
Board policies
The Board reviewed and approved
the ‘Schedule of Matters Reserved
for the Board’.
Strategic objectives
1 3
s.172 factors
C E F
Strategic objectives
To optimise returns
and create value from
a balanced portfolio
1
To attract, retain
and develop
talented employees
To maintain
strong and
flexible financing
To grow recurring
earnings and
cash flow
To design, deliver and
operate our buildings
responsibly
2
3
4
5
Corporate reporting
and performance
monitoring
Stakeholder
engagement
Governance
Report and Accounts 2024
135
Governance
Policies and practices
CORPORATE GOVERNANCE STATEMENT continued
Independence
The Non-Executive Directors play an important role in holding
to account the performance of executive management and
ensuring that no individual or group dominates the Board’s
decision making. It is therefore of paramount importance that
their independence is maintained.
The Board has identified in the table on page 137 which
Directors are considered to be independent. To safeguard their
independence, Non-Executive Directors are not permitted to
serve more than three three-year terms unless in exceptional
circumstances (see page 141).
The Board has reconfirmed that our Non-Executive Directors
remain independent from executive management and free
from any business or other relationships which could materially
interfere with the exercise of their judgement.
The Chairman held a number of meetings with the
Non-Executive Directors without executive management
being present. These meetings are useful to safeguard the
independence of our Non-Executive Directors by providing
them with time to discuss their views in a more private
environment.
Related party disclosures / See page 254
External commitments
The Board takes into account a Director’s other external
commitments when considering them for appointment, to
satisfy itself that the individual can discharge sufficient time to
the Derwent London Board and assess any potential conflicts of
interest. Our Directors are required to notify the Chairman of any
alterations to their external commitments that arise during their
tenure with an indication of the time commitment involved.
When assessing additional directorships, the Board considers
the number of public directorships held by the individual
already and their expected time commitment for those roles
(see biographies on pages 122 and 123).
Executive Directors may accept a non-executive role at another
company with the approval of the Board. Currently, none of
our Executive Directors are directors of other listed companies.
However, several of our Executive Directors are trustees of
charitable organisations or members of industry-related bodies.
All Directors have confirmed (as they are required to do
annually) that they have been able to allocate sufficient time
to discharge their responsibilities effectively (see page 137 for
Board meeting attendance).
The 2024 Board evaluation conducted by Mark Breuer,
Chairman, also considered whether each Director had sufficient
time to discharge their responsibilities effectively at Derwent
London (see page 139).
Other publicly listed appointments
The Board takes into account guidance published by institutional investors and proxy advisers as to the maximum number of
public appointments which can be managed efficiently. For the table below, we have used the methodology contained in the
ISS UK and Ireland Proxy Voting Guidelines in respect of ‘overboarding’ to calculate our Non-Executive Directors’ mandates in
respect of their publicly listed appointments. Any person who holds more than five mandates at listed companies would be
classified as ‘overboarded’. The Board confirms that none of our Directors are overcommitted and all Directors are capable of
discharging sufficient time to Derwent London.
Non-Executive Director
Board Chairman
Executive Director
Total
mandates1
Appointments
Mandates
Appointments
Mandates
Appointments
Mandates
Mark Breuer
—
Derwent London plc
DCC plc
4
—
—
4
Lucinda Bell
Derwent London plc
Man Group Plc
2
—
—
—
—
2
Helen Gordon
Derwent London plc
1
—
—
Grainger plc
3
4
Sanjeev Sharma Derwent London plc
1
—
—
—
—
1
Dame Cilla
Snowball
Derwent London plc
Whitbread PLC
2
—
—
—
—
2
Robert Wilkinson Derwent London plc
1
—
—
—
—
1
Madeleine
McDougall
Derwent London plc
1
—
—
—
—
1
1
Inclusive of their appointment at Derwent London plc. For the purposes of calculating the number of total mandates: a non-executive directorship
counts as one mandate, a non-executive chairmanship counts as two mandates, and a position as executive director (or a comparable role) is counted
as three mandates.
Derwent London plc
136
Training
With the ever-changing environment in which Derwent
London operates, it is important for our Executive and Non-
Executive Directors to remain aware of recent, and upcoming,
developments. We require all Directors to keep their knowledge
and skills up to date and include training discussions with the
Chairman in their annual performance reviews.
As required, we invite professional advisers to provide in-depth
updates. Updates and training are not solely reserved for
legislative developments but aim to cover a range of issues
including, but not limited to, market trends, the economic and
political environment, environmental, technological and social
considerations.
Our Company Secretary provides regular updates to the Board
and its committees on regulatory and corporate governance
matters. In addition, we invite our Directors to attend courses
hosted by the Deloitte Academy and PwC.
During 2024
• The Risk Committee reviewed a legal update on
upcoming legislative changes in November and were
presented with an overview of cyber security trends and
its changing landscape.
• The Remuneration Committee received an update
on remuneration market trends and the latest proxy
agency guidance.
• All Directors attended regular external briefing sessions
from the major accountancy firms.
• All employees (including Directors) participated in
compliance training courses on a range of topics
including anti-money laundering, modern slavery,
tax evasion and cyber fraud awareness.
The Executive Directors have been delegated responsibility for
ensuring that policies and behaviours set at Board level are
effectively communicated and implemented across the business.
Policies are published on the intranet and where relevant
included in the employee handbook. To ensure policies are
embedded in our business practices, we operate a mandatory
training programme which aims to reinforce key compliance
messages in areas such as anti-bribery, fraud, modern slavery,
conflict of interest, etc.
Compliance training / See page 165
Board members and attendance in 2024
Independent
Number of
meetings
Attendance¹
Chairman
Mark Breuer
Yes
6
100%
Executive Directors
Paul Williams
No
6
100%
Damian Wisniewski
No
6
100%
Nigel George
No
6
100%
Emily Prideaux
No
6
100%
Non-Executive Directors
Claudia Arney
(until 10 May)2
Yes
2
100%
Lucinda Bell
Yes
6
100%
Helen Gordon
Yes
6
100%
Cilla Snowball3
Yes
5
83%
Sanjeev Sharma
Yes
6
100%
Robert Wilkinson
(from 1 June)
Yes
4
100%
Madeleine McDougall
(from 1 November)
Yes
2
100%
1
Percentages based on the number of meetings that each Director is entitled
to attend for the 12 months ended 31 December 2024.
2
Claudia Arney stepped down from the Board on 10 May 2024.
3
Cilla Snowball was unable to attend the Board meeting in December.
Board skills and experience
The chart below provides an overview of the skills and
experience of our Directors as at 31 December 2024.
To be counted for each skill area, a Director is required
to have executive or senior management experience.
Executive Directors
Non-Executive Directors (including Chairman)
4
7 100%
82%
100%
55%
91%
73%
45%
82%
100%
82%
82%
27%
4
5
4
7
1
5
4
6
2
6
2
3
3
6
4
7
7
7
2
2
2
1
Executive/strategic leadership
Property, real estate or construction
Listed plc experience
Accountancy or audit
Corporate finance/treasury
Risk management
Health and safety
ESG (including climate change)
Investor relations and engagement
Governance, legal or compliance
Remuneration/HR
Technology, data or cyber security
The Board remains well-equipped with a diverse range of skills
and expertise to contribute to achieving the Group’s long-term
strategy. For the skill areas in which our Directors have less
experience at executive-level, we provide training and regular
updates either to the entire Board or to specific committees.
Board biographies / See pages 122 and 123
Report and Accounts 2024
137
Governance
CORPORATE GOVERNANCE STATEMENT continued
Division of responsibilities
Board roles
There is clear division between executive and non-executive responsibilities which ensure accountability and oversight. The roles of
the Chairman and Chief Executive are separately held and their responsibilities are well-defined, set out in writing and subject to
review by the Board.
1
Cilla Snowball was chosen for this position as she chairs the Responsible Business Committee which oversees stakeholder engagement. The Chairman ensures that
all Directors continue to remain engaged with our employees, and challenge and contribute to discussions on workforce engagement. Madeleine McDougall will
succeed Cilla Snowball as the designated director responsible for gathering the views of our workforce.
Chairman, Mark Breuer
• Responsible for the effective running of the Board and ensuring
it is appropriately balanced to deliver the Group’s strategic
objectives
• Promote a boardroom culture that is rooted in the principles of
good governance and enables transparency, debate and challenge
• Ensure that the Board as a whole plays a full and constructive part
in the development of strategy and that there is sufficient time for
boardroom discussion
• Effective engagement between the Board, its shareholders and
other key stakeholders
Senior Independent Director, Helen Gordon
• Provide a ‘sounding board’ for the Chairman in matters of
governance or the performance of the Board
• Available to shareholders if they have concerns which have not
been resolved through the normal channels of communication
• To at least annually lead a meeting of the Non-Executive Directors
without the Chairman present to appraise the performance of
the Chairman
• To act as an intermediary for Non-Executive Directors when
necessary and act as Chairman of the Board, if the Chairman
is conflicted
Designated director for gathering the views
of our workforce1, Dame Cilla Snowball
Cilla Snowball has been designated the director responsible
for gathering the views of our workforce. This is achieved by:
• attendance at key employee and business events, including
property launches;
• reviewing messages received through the ‘Speak up’ system
from the Group’s employees;
• monitoring the effectiveness of engagement programmes
established for employees; and
• monitoring the outcome of employee surveys and providing
input on their design.
Non-Executive Directors (NEDs)
• Provide constructive challenge to our executives, help to develop
proposals on strategy and monitor performance against our KPIs
• Ensure that no individual or group dominates the Board’s decision
making
• Promote the highest standards of integrity and corporate
governance throughout the Company and particularly at Board
level
• Determine appropriate levels of remuneration for the senior
executives
• Review the integrity of financial reporting and that financial
controls and systems of risk management are robust
Chief Executive, Paul Williams
• To provide clear and visible leadership
• Execute the Group’s strategy and commercial objectives together
with implementing the decisions of the Board and its committees
• To keep the Chairman and Board appraised of important and
strategic issues facing the Group
• To ensure that the Group’s business is conducted with the highest
standards of integrity, in keeping with our culture
• Manage the Group’s risk profile and ensure actions are compliant
with the Board’s risk appetite
• Investor relation activities, including effective and ongoing
communication with shareholders
Chief Financial Officer, Damian Wisniewski
• Support the CEO in developing and implementing strategy
• Provide financial leadership to the Group and align the Group’s
business and financial strategy
• Responsible for financial planning and analysis, treasury and
tax functions, and overseeing change management systems
• Responsible for presenting and reporting accurate and timely
historical financial information
• Manage the capital structure of the Group
• Investor relation activities, including communications with
shareholders, alongside the CEO
Other Executive Directors
• Support the CEO in developing and implementing strategy
• Oversee the day-to-day activities of the Group, including the
design and implementation of appropriate risk management
and internal control systems (financial and non-financial)
• Manage, motivate and develop staff
• Develop business plans in collaboration with the Board
• Ensure that the policies and practices set by the Board are
adopted at all levels of the Group
• Investor relation activities, including communications with
shareholders, alongside the CEO
Company Secretary, David Lawler
• Secretary to the Board and its committees
• Develop Board and committee agendas and collate and
distribute papers
• Ensure compliance with Board procedures
• Advise on regulatory compliance and corporate governance
• Facilitate induction programmes for Directors and assist with
their training and development, as required
• Responsible for communications with retail shareholders and
the organisation of the Annual General Meeting
• Available to support all Directors
Derwent London plc
138
Ensures the long-term sustainable
success of the Company
Annual Board evaluation
On an annual basis, an evaluation process is undertaken
which considers the effectiveness of the Board, its principal
committees and individual Directors. The review identifies
areas for improvement, informs training plans for our
Directors and identifies areas of knowledge, expertise
or diversity which should be considered in our succession
plans. The Board follows a formal three-year cycle that
was developed to enable reviews to be led from a fresh
perspective, each year.
Evaluation for the year ended 31 December 2023
The 2023 Board evaluation was internally facilitated by Helen
Gordon, Senior Independent Director, and was outlined in
the 2023 Report & Accounts on page 137. As a result of this
evaluation, the Board identified a number of areas which it
wished to focus upon during 2024:
Focus area
Actions during 2024
Interaction and
engagement between
the Board and wider
workforce
On 17 October the Board received a
presentation from members of the senior
management team on the key construction
projects. Additionally, the Board hosted
a ‘meet the Board’ event with employees
from across the workforce (see page 119).
Broader debate
on risk appetite
Our risk appetite was reviewed by the Risk
Committee during the year with details of
the current risk appetite on page 93.
Discussions around
the use of Artificial
Intelligence (AI)
The role of AI and the impact on our
customer base continues to be reviewed by
Paul Williams, CEO with a further update
scheduled to go to the Board in Q2 2025.
During the year the Company introduced
Microsoft Copilot to a focus group of
employees with the aim of streamlining
workflows.
Evaluation for the year ended 31 December 2024
The 2024 Board evaluation was internally facilitated by
Mark Breuer, our Chairman, who was informed by the
recommendations arising from the 2023 external Board
evaluation. The process covered the following areas:
• Strategy review and execution monitoring
• Balance of Board’s skills
• Succession planning
• Format of Board meetings
• Effective use of committees
Feedback from the 2024 Board evaluation
As a result of the evaluation, the Board confirmed that its
structure, balance of skills and operation continues to be
satisfactory and appropriate for the Group. Overall, the
feedback of the internal evaluation was positive from all
Board members, however, for continuous improvement
the Board identified a number of focus areas for 2025:
• To include a greater focus on the long-term strategy,
facilitated by both the Strategy Awayday and an additional
strategy pre-meeting.
• Continue to receive contributions from middle management
in Board meetings and at on-site visits.
• An additional Board meeting to be held in September in
order to balance the Board calendar.
Re-election of Directors
In accordance with the Code, all Directors (excluding Cilla
Snowball) will be putting themselves forward for re-election
at the 2025 AGM and both Robert Wilkinson and Madeleine
McDougall will be put forward for election following their
appointments to the Board during the year. Following the formal
performance evaluation (detailed above), and taking into
account the Directors’ skills and experience (set out on page
137), the Board believes that the re-election and election of all
Directors respectively is in the best interests of the Company.
Evaluation for the year ending 31 December 2025
In accordance with our three-year cycle, the performance
evaluation for the year ending 31 December 2025 will be
externally facilitated by an independent provider. The Board
has already commenced the process to appoint the board
evaluator, with each shortlisted firm required to provide
a written proposal and present to the Chairman, Senior
Independent Director and Company Secretary. Following
appointment, the provider will commence the evaluation
process in Q4 2025 with the outcome of the evaluation
reported in the 2025 Report & Accounts.
Year 3
Internal evaluation
facilitated by the
Chairman
Year 2
Internal evaluation
facilitated by the
Senior Independent
Director
Year 1
Externally facilitated
independent review
Report and Accounts 2024
139
Governance
Dear Shareholder,
I am pleased to present an overview of
the Committee’s work during 2024. The
Committee has principally focused on
succession planning and the recruitment
of Non-Executive Directors.
Non-Executive Director changes
At the 2024 AGM, Claudia Arney stepped down from the
Board as she reached her ninth anniversary. A smooth
transition was made to Sanjeev Sharma as the new Chair
of the Remuneration Committee. As Dame Cilla Snowball
approached her ninth anniversary, the Committee facilitated
the recruitment of two Non-Executive Directors to ensure the
Board continues to benefit from a wide range of expertise and
skills following Claudia and Cilla’s retirements. We were pleased
to welcome Robert Wilkinson (1 June 2024) and Madeleine
McDougall (1 November 2024). Both Robert and Madeleine
bring a wealth of knowledge and expertise to our Board.
On behalf of the Board, I would like to thank Claudia and Cilla
for their valuable contributions and dedication to their roles.
Non-Executive Director recruitment / See page 142
Executive development and succession planning
Derwent London’s talented and diverse employees are a key
asset and as such, the Committee met regularly to review
succession and talent development plans. On an annual basis
the Committee considers the Group’s succession pipeline to
ensure any changes are proactively planned and co-ordinated.
Succession planning / See page 142
Board composition and diversity
The Board continues to recognise the role of diversity in its
composition and for future recruitments. As part of the Group’s
ongoing commitment to diversity and inclusion during the
year, the reassessment of the National Equality Standard
accreditation was successfully completed. The Board continues
to remain compliant with the Listing Rules, FTSE 350 Women
Leaders Review and the 2024 Parker Review target. Last year
we published our ethnic diversity target for December 2027 in
accordance with the latest Parker Review recommendation. Our
target remains a work in progress as we aim for at least 15% of
our senior management team self-identifying as being of an
ethnically diverse background.
Board diversity / See pages 143 and 173
Further engagement
If you wish to discuss any aspect of the Committee’s activities,
I will be attending the forthcoming AGM on 16 May 2025 and
would welcome your questions. I am also available via our
Company Secretary, David Lawler.
Telephone: +44 (0)20 7659 3000 or
Email: company.secretary@derwentlondon.com
Mark Breuer
Chair of the Nominations Committee
26 February 2025
NOMINATIONS COMMITTEE REPORT
2025 focus areas
• Ensure a smooth handover of responsibility to Madeleine
McDougall as Chair of the Responsibility Business
Committee as Cilla Snowball steps down from the Board
• Further discuss the long-term succession of senior
executives
• Continue to monitor the talent development pipeline
Committee membership during 2024
Independent
Number of
meetings
Attendance1
Mark Breuer
Yes
4
100%
Lucinda Bell
Yes
4
100%
Helen Gordon
Yes
4
100%
Sanjeev Sharma
Yes
4
100%
Cilla Snowball
Yes
4
100%
Robert Wilkinson2
Yes
2
100%
Madeleine McDougall3
Yes
1
100%
1
Percentages are based on the number of meetings that each member
is entitled to attend for the 12 months ended 31 December 2024.
2
Robert Wilkinson joined the Board as a Non-Executive Director
effective from 1 June 2024.
3
Madeleine McDougall joined the Board as a Non-Executive Director
effective from 1 November 2024.
The first two meetings in 2024 focused on appointing Claudia Arney’s
successor, therefore it was deemed appropriate for Claudia not to attend.
Claudia Arney stepped down from the Board on 10 May 2024.
Mark Breuer Chair of the Nominations Committee
Derwent London plc
140
Committee composition and performance
Our Committee consists of six independent Non-Executive
Directors as well as our independent Chairman. At the
request of the Committee, members of the Executive
Committee, Executive Directors, members of the senior
management team and external advisers may be invited to
attend all or part of any meeting, as and when appropriate.
During the year under review, the Committee held four
meetings (2023: two meetings).
The 2024 evaluation of the Board, its committees and
individual Directors was internally facilitated by the Chairman,
Mark Breuer, in accordance with our three-year cycle of
evaluations (see page 139). The review confirmed that the
Committee continues to operate effectively, with no significant
matters raised. The Committee’s role and responsibilities are
set out in the terms of reference, which were last updated
in November 2023 and are on the Company’s website at:
www.derwentlondon.com/investors/governance/board-
committees
On a regular basis, the Committee considers the composition
of the Board and its committees in terms of its balance of
skills, experience, length of service, knowledge of the Group
and wider diversity considerations; alongside considering
whether each Non-Executive Director has sufficient time to
discharge their duties. This review also informs specifications
for new Board members. During the year, the Committee led
the search for two new Non-Executive Directors.
The composition review conducted in 2024, following the
appointment of Robert Wilkinson and Madeleine McDougall,
confirmed that the Board, and the membership of its five
principal committees, continues to be appropriate.
The Board’s diversity policy is on page 142. In respect of its
committees, the Board requires that each committee has
at least one female member and/or one member from an
ethnically diverse background.
Board and committee composition
The table below provides an overview of the composition of
the Board’s five principal committees as at 31 December 2024.
Audit
Risk
Remuneration
Nominations
Responsible
Business
Mark Breuer
Chair
Dame Cilla Snowball
Chair
Helen Gordon
Chair
Lucinda Bell
Chair
Madeleine McDougall1
Robert Wilkinson2
Sanjeev Sharma
Chair
Number of female
members:
2
4
2
4
2
Members from an
ethnically diverse
background:
1
1
1
1
0
Number of
independent NEDs:
4
5
3
7
3
Number of
Executive Directors:
—
—
—
—
1
Number of employee
representatives:
—
—
—
—
4
Total membership:
4
5
3
7
8
1
Madeleine McDougall joined the Board as a Non-Executive Director from
1 November 2024.
2
Robert Wilkinson joined the Board as a Non-Executive Director from
1 June 2024.
Non-Executive Directors’ tenure
The Committee monitors the Non-Executive Directors’ tenure and reviews potential departure dates assuming the relevant
Directors are not permitted to serve more than three three-year terms (nine years) from their appointment date, unless in
exceptional circumstances (see the chart below). During 2024 Cilla Snowball reached her ninth year on the Board. To ensure
an orderly transition of responsibility to Madeleine McDougall, Cilla’s tenure has been extended. During this period the Board
continues to consider Cilla as independent.
2015
2016
2017
2018
2019 2020 2021
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
2032 2033
Cilla Snowball
Helen Gordon
Lucinda Bell
Mark Breuer
Sanjeev Sharma
Robert Wilkinson
Madeleine McDougall
Succession planning / See page 142
Report and Accounts 2024
141
Governance
NOMINATIONS COMMITTEE REPORT continued
Succession planning
As Directors we have a duty to ensure the long-term success of the Company,
which includes ensuring that we have a steady supply of talent for executive
positions and established succession plans for Board changes.
Executive Director
The Committee considers the Group’s succession planning
on a regular basis to ensure that changes to the Board are
proactively planned and co-ordinated. During the year, the
Committee had a detailed discussion on the succession of
the Executive leadership team.
Executive Committee
The Group’s talent pipeline has been strengthened through a
number of internal promotions. During the year, Julie Schutz
(Head of Internal Audit) joined the Executive Committee.
As at 31 December 2024, the composition of the Executive
Committee consists of four Executive Directors, the Company
Secretary and 12 senior managers. The Executive Committee
is now 41.2% female, achieving the FTSE 350 Women Leaders
Review target of 40% (see page 143).
Senior management
The Executive Directors are responsible for the Group’s
succession plans below Board-level. The Committee receives
periodic updates on these succession plans and monitors
the development of the executive management team
below the Board, to ensure that there is a diverse supply of
senior executives and potential future Board members with
appropriate skills and experience.
Non-Executive Director recruitment
The Committee is responsible for leading the recruitment
process for new Non-Executive Directors and during the
year led the selection and appointment process for two new
Non-Executive Directors, as Claudia Arney stepped down
from the Board at the 2024 AGM and Dame Cilla Snowball
approached her ninth year on the Board.
The Committee appointed Egon Zehnder as an external search
consultancy during 2023 to commence the recruitment process
for two new Non-Executive Directors. The Board confirms that
the external search consultancy was appointed free from any
conflicts of interest.
The Board’s appointment policy requires that, where possible,
each time a Director is recruited at least one of the shortlisted
candidates is female and at least one of the candidates is from
an ethnically diverse background. Whilst we have identified
areas where we could further improve our diversity balance,
principally our ethnic diversity, we do not positively discriminate
during the recruitment process.
Board biographies / See pages 122 and 123
Non-Executive Director tenure /See page 141
Non-Executive Director induction
The Board was pleased to welcome Robert Wilkinson in
June 2024 and Madeleine McDougall in November 2024
as Non-Executive Directors.
Both Robert Wilkinson and Madeleine McDougall received a
comprehensive and tailored induction programme developed
by the Group’s Company Secretarial team and approved by
the Chair of the Committee.
The induction programme included visiting a number of the
Group’s properties, meetings with the Group’s audit partner
and corporate lawyer, together with meetings with the
Executive Directors, Executive Committee and members of
senior management. If considered appropriate, new Directors
are also provided with external training that addresses their
role and duties as a director of a quoted public company.
All new Directors are provided with access to our electronic
Board paper system which provides easy and immediate
access to key documents.
Q&A
Derwent London’s strong reputation for creating leading
edge offices in central London was a big attraction. In
a changing world, the Company’s focus on sustainable
long-term investment was also important to me.
Robert Wilkinson
Non-Executive Director
I am incredibly excited to be able to contribute ideas and
insights that align to the long-term goals whilst driving
responsible, ethical and transparent decision making.
Not to mention joining an organisation where a culture
of teamwork and co-operation are at the heart of their
strategy.
Madeleine McDougall
Non-Executive Director
What are you looking forward to contributing
within your role on the Derwent London Board?
What attracted you to becoming a
Non-Executive Director at Derwent London?
Derwent London plc
142
Women on
the Board
45.5%
Women on the
Executive Committee1
41.2%
Female Non-Executive
Directors2
66.7%
Female direct reports of
the Executive Committee3
41.7%
Female
Male
Our progress in diversity
The Listing Rules
The Listing Rules include specific diversity targets which require companies to report against on a ‘comply or explain’ basis.
Target
Status
At least 40% of the Board are women
45.5% of our Board are women
At least one of the senior Board positions is held by a woman
Helen Gordon is our Senior Independent Director
At least one member of the Board is from a minority ethnic background
Sanjeev Sharma joined the Board in October 2021
The Parker Review
The Parker Review continues to monitor and champion ethnic diversity on boards. In accordance with the Parker Review’s latest
recommendations, we have set a target of at least 15% of our senior management team self-identifying as being of an ethnically
diverse background by December 2027. The Board recognises that this is a challenging but realistic target.
December 2024 Target
Status
At least one director from an ethnically diverse background
Sanjeev Sharma joined the Board in October 2021
December 2027 Target
Status
At least 15% of our senior management team self-identifying
as being of an ethnically diverse background
11.5% of our senior management team
self-identify as being ethnically diverse
FTSE 350 Women Leaders Review
1
The combined diversity balance of the Executive Committee and its direct reports (excluding administrative and support staff) is 41.6% women.
2
Independent Non-Executive Directors, excluding the Chairman.
3
Direct reports to the Executive Committee, excluding administrative and support staff, is 41.7% women. Direct reports to the Executive Committee, including
administrative and support staff, is 50.0% women.
Target
40%
A diversified Board brings constructive challenge and fresh
perspectives to discussions. We consider diversity, in its widest
sense (and not limited to gender), during our Board and committee
composition reviews and the development of recruitment
specifications during recruitment.
We are pleased that Derwent London’s efforts to actively promote
the importance of diversity has ensured our Board and senior
management teams achieve the targets set by the FTSE 350 Women
Leaders Review, the Listing Rules and the Parker Review.
Our compliance
Our progress as at 31 December 2024.
Fully compliant
In progress
Targets
Status
Listing Rule
Parker Review 2024 target
Parker Review 2027 target
FTSE Women Leaders Review
Report and Accounts 2024
143
Governance
AUDIT COMMITTEE REPORT
Dear Shareholder,
I am pleased to provide you with an
overview of the Committee’s activities.
External audit
Following the comprehensive audit tender completed during
2023, PwC were reappointed as the Group’s external Auditor
and Allan McGrath will succeed Sandra Dowling as Lead Audit
Partner for the year ending 31 December 2025. To ensure Allan
has a full understanding of our business, he attended the
Committee meetings in both November 2024 and February
2025, met with members of senior management and visited
our portfolio. On behalf of the Committee, I extend our thanks
to Sandra for her constructive challenge and commitment as
Lead Audit Partner over her five-year tenure.
Climate change and ESG disclosures
Climate change reporting continues to be an important matter
for the Group. As ESG reporting continues to evolve, during
the year the Committee reviewed the future legislation
expected to come into effect and the implications on the
Group. Deloitte has been the Group’s ESG assurance provider
since 2018. In accordance with best practice the Committee
will conduct a tender for an ESG assurance provider during 2025.
UK Corporate Governance Code
On 22 January 2024, the FRC published the revised UK Corporate
Governance Code 2024 (the Code). A detailed review has
been conducted to understand the Group’s current position
and preparation to achieve full compliance (see page 121).
Additionally, our risks and controls have been reviewed with
the aim of identifying the Group’s material controls and the
current level of assurance associated with them. The Committee
recognises the importance of effective internal controls and
has been pleased with the work of Julie Schutz, Head of
Internal Audit.
New finance system project
The Committee continues to be responsible for monitoring the
effectiveness of the Group’s internal controls, alongside the Risk
Committee. As part of the ongoing review of the internal control
environment, the Committee is monitoring the selection and
implementation of a new finance system. The purpose of the
new system is to provide significant improvements in efficiency,
functionality and control. The Committee will continue to oversee
the project until its completion, which is expected in 2026.
Further engagement
I look forward to seeing you at the 2025 AGM. If you wish to
discuss any aspect of this report, please contact me via our
Company Secretary, David Lawler.
Telephone: +44 (0)20 7659 3000 or
Email: company.secretary@derwentlondon.com
Lucinda Bell
Chair of the Audit Committee
26 February 2025
2025 focus areas
• Ensure a smooth and effective transition to Allan
McGrath, as the new external Lead Audit Partner
• Conduct a competitive tender in respect of our ESG
assurance provider
• Continue to make progress on the effectiveness of
material controls declaration that the Board will be
required to make as at 31 December 2026
• Oversee the implementation of the new finance system
which is expected to be completed during 2026
Committee membership during 2024
Independent
Number of
meetings
Attendance1
Lucinda Bell
Yes
4
100%
Claudia Arney2
Yes
2
100%
Sanjeev Sharma
Yes
4
100%
Cilla Snowball
Yes
4
100%
Robert Wilkinson3
Yes
2
100%
1
Percentages are based on the number of meetings that each member
is entitled to attend for the 12 months ended 31 December 2024.
2
Claudia Arney stepped down from the Board at the 2024 AGM.
3
Robert Wilkinson was appointed as a member of the Audit Committee
on 1 June 2024.
Lucinda Bell Chair of the Audit Committee
Derwent London plc
144
Committee composition and performance
During the year under review, the Committee was composed
of independent Non-Executive Directors with a wide range of
experience, including real estate and finance (biographies are
available on pages 122 and 123). The Board considers that the
Committee (including its Chair, Lucinda Bell) is composed of
a sufficient number of financial experts, with an appropriate
level of recent and relevant financial experience, to discharge
its duties. At the request of the Committee Chair, meetings
are attended by the Board Chairman, the Head of Internal
Audit, external Auditor, and members of the Group’s senior
management team. In addition, Deloitte regularly attends
meetings when ESG assurance is discussed. To further facilitate
open dialogue, the Committee holds private sessions with
the internal and external Auditors without members of
management being present.
During 2024, the Committee held four scheduled meetings
(2023: four meetings), two of which included an update from
the Group’s external property valuers. In addition, the Risk
Committee held three meetings during 2024.
The 2024 evaluation of the Board, its committees and
individual Directors was internally facilitated by Mark Breuer,
Chairman, in accordance with our three-year cycle of
evaluations (see page 139). The review confirmed that the
Committee continues to operate effectively, with no significant
matters raised.
The Committee’s role and responsibilities are set out in the
terms of reference, which were last updated in November 2024.
The Audit Committee terms of reference are available on the
Company’s website at: www.derwentlondon.com/investors/
governance/board-committees
Financial reporting
One of the Committee’s principal responsibilities is to review
and report to the Board on the clarity and accuracy of the
Group’s financial statements, including the annual Report &
Accounts and interim statement. When conducting its reviews,
the Committee considers the following:
• the accounting policies and practices applied (see note 41
on pages 263 to 267) including in respect to any significant
transactions during the year;
• material accounting assumptions and estimates made by
management (see note 3 on page 222);
• significant judgements and key audit matters identified by
the external Auditor (see page 146 and pages 209 to 211);
• the effectiveness and application of internal financial
controls (see pages 150 and 151); and
• compliance with relevant accounting standards and other
regulatory financial reporting requirements including the UK
Corporate Governance Code and European Single Electronic
Format (ESEF) requirements.
On 5 November 2024 we were pleased to be awarded ‘Audit
Disclosure of the Year’ by the Chartered Governance Institute
for our disclosure in the 2023 Report & Accounts.
At the request of the Board, the Committee was asked
to review the Group’s Report & Accounts and to consider
whether, taken as a whole, it was fair, balanced and
understandable. In carrying out its review, the Committee
had regard to the following:
Fairness and balance
• Is the report open and honest?
• Are we reporting on our weaknesses, difficulties and
challenges alongside our successes and opportunities?
• Do we provide clear explanations of our KPIs and is
there strong linkage between our KPIs and our strategy?
• Do we show our progress over time and is there
consistency in our metrics and measurements?
Understandable
• Do we explain our business model, strategy and
accounting policies simply, using precise and clear
language?
• Do we break up lengthy narrative with quotes, tables,
case studies and graphics?
• Do we have a consistent tone across the Report &
Accounts?
• Are we clearly ‘signposting’ to where additional
information can be found?
Specific considerations for the 2024
Report & Accounts
• A 40th anniversary section which highlights key events
and showcases some of our buildings over the years.
• Confirmation of our compliance with the Audit
Committees and the External Audit: Minimum Standard.
• Our double materiality assessment and whether it
clearly identifies our key ESG issues.
• The preparation undertaken to prepare the business
for the UK Corporate Governance Code 2024 and
ensure our compliance, including in respect of the
effectiveness of our material controls.
• The outcome of the latest climate risk assessment
conducted by Willis Towers Watson.
The Committee paid particular attention to these changes
to ensure they did not adversely impact on the balance
and clarity of the Report & Accounts.
Following its review, the Committee confirmed to the
Board that the 2024 Report & Accounts is fair, balanced
and provides sufficient clarity for shareholders to
understand our business model, strategy, financial position
and performance.
Review of the 2024
Report & Accounts
Report and Accounts 2024
145
Governance
Significant financial judgements, key assumptions and estimates
Any key accounting issues or judgements made by management are monitored and discussed with the Committee throughout the
year. The table below provides information on the key issues discussed with the Committee in 2024 and the judgements adopted.
AUDIT COMMITTEE REPORT continued
Issue
Judgements or estimates
Outcome
Taxation and REIT compliance
Should the Group not comply
with UK REIT regulations, it
could incur tax penalties or
ultimately be expelled from the
REIT regime, which would have
a significant impact on the
financial statements.
As a REIT, the Group benefits from tax
advantages. Income and chargeable
gains on the qualifying property rental
business are exempt from corporation tax.
Income that does not qualify as property
income within the REIT rules is subject to
corporation tax in the normal way. There are
a number of tests that are applied annually,
and in relation to forecasts, to ensure the
Group remains well within the limits allowed
within those tests.
The Group has a qualified and experienced
Head of Tax who the Committee meets at
least annually. The Committee noted the
frequency with which compliance with the
tests and regulations was reported to the
Board and considered the substantial margin
by which the Group complied. Based on
this, and the level of headroom shown in
the latest Group forecasts, the Committee
agreed that sound application of judgement
has been made.
Valuation of the Group’s property portfolio
Due to its size, nature and the
direct impact upon the Group’s
net asset value, the Committee
reviews the assumptions and
estimates used in the valuation
carried out by the external
valuers.
The valuation adopts a range of
assumptions including future rental income,
investment yields, anticipated outgoings
and maintenance costs, future development
expenditure and appropriate discount rates.
The external valuers also make reference to
market evidence of transaction prices for
similar properties and take into account
the impact of climate change and related
environmental, social and governance (ESG)
considerations. Where reasonable and
measurable, the effects and consequences
of climate change are reflected in these
financial statements and valuations (see
note 16 on pages 233 to 237).
The valuation is performed twice yearly
by the external valuers and, due to its
significance, is also reviewed by the
external Auditor. The Committee reviewed
the underlying assumptions used in the
valuation, of the Group’s development
property portfolio in addition to the external
valuers’ objectivity and methodology. These
procedures enabled the Committee to be
satisfied with the assumptions and estimates
used in the valuation of the Group’s property
portfolio.
1 Stephen Street W1
Derwent London plc
146
Portfolio valuation
An important area of reporting risk relates to the valuation
of our portfolio. Knight Frank have been our principal valuers
since December 2022 and are responsible for valuing our
property portfolio for both our interim and year end results.
As at 31 December 2024, our portfolio was valued at £5.0bn
(2023: £4.9bn) and principally consists of 62 properties.
Further information on our valuation is on pages 61 to 65.
During the year, the Committee monitored the smooth
transition from Savills to Knight Frank as valuers of our Scottish
portfolio. The transition confirms the Group’s full compliance
with the Royal Institution of Chartered Surveyors (RICS) best
practice guidance published in 2023.
The valuation of our portfolio is a major component of EPRA
net tangible assets (NTA) and is a key determinant for our
investors when assessing our performance. Movements in the
valuation are a significant part of how we measure our progress
and a material determinant of the Group’s total return.
Due to its significance, the biannual valuation is overseen by
the Audit Committee and also subject to a detailed internal
review by our Investment team, which consists of experienced
and qualified professionals.
Key matters discussed during the meetings in 2024 included:
• the impact of the macroeconomy and valuation outlook
for our London portfolio;
• the cost of EPC improvements included in the valuation;
• the programme of our major on-site developments; and
• the transition to Knight Frank as valuers of the Scottish
portfolio.
RICS valuation – Global standards
Valuations are undertaken in accordance with the ‘RICS
Valuation – Global Standards’ (the Standards). Knight Frank
are responsible for monitoring any forthcoming regulation
changes, with the most recent changes published in December
2024 with an effective date of 31 January 2025. The Standards
now include a section on ESG, detailing the ESG considerations
that a valuer should consider and report. Other updates to the
Standards included greater clarification on valuation methods,
record keeping and financial reporting.
Effectiveness of the Group’s valuers
A review into the effectiveness of the external valuer is
performed after the year end and interim valuations, with
assistance from Nigel George, Executive Director. The
effectiveness reviews for 2024 were conducted in February and
August and considered the following:
• experience, qualification and objectivity of the valuation team;
• quality of presentation and data; and
• robustness of the valuation.
At both meetings it was concluded that the external valuer
performed to a high standard and the timetable for delivery
was achieved.
Property review / See pages 60 and 73
Central London office market / See pages 15 to 17
Regeneration projects / See pages 20 and 23
Our Scottish assets, representing c.2% of the Derwent
London portfolio, are concentrated on the northern edge
of Glasgow, consisting of:
• 5,500 acres of rural land including woodland and
grassland; and
• a 325,000 sq ft multi-let retail park with rental income
of c.£4.0m pa.
Our operations in Scotland are predominantly focused
on four main areas: agricultural operations, residential,
commercial and projects. Our projects include the c.100
acre Lochfauld Solar Park which is under construction
with installation of solar panels expected in H2 2025. Our
Scottish assets were valued at £92.9m at 31 December
2024 (11.6% uplift from 2023).
• Strathkelvin Retail Park: 22.6% uplift
• Agricultural land: (0.7%) decline since December 2023
Due to refurbishments and lettings, the Strathkelvin
Retail Park has increased in value by 22.6%. The slight
decrease in the value of our agricultural land arose from
capital expenditure relating to planning and building
maintenance.
Valuation of the
Scottish portfolio
Report and Accounts 2024
147
Governance
AUDIT COMMITTEE REPORT continued
Climate change and ESG disclosures
The Group is committed to be net zero carbon by 2030 and
has set Science Based Targets initiative (SBTi) verified targets
aligned to a 1.5°c climate scenario. The Committee’s role
is to gain assurance that the effects and consequences of
climate change are being adequately reflected in our financial
statements and valuations.
Climate disclosures and emissions reporting can be complex.
During 2024, the Committee reviewed the emerging legislation
expected to come into effect over the near to medium-term
and the implications for the Group.
Following training received in 2023, the Committee is prepared
to be compliant with the IFRS S1 & S2 legislation for accounting
periods on or after 1 January 2025. Additionally, the double
materiality assessment conducted in 2024 (see pages 42 and 43)
will form part of our reporting in accordance with IFRS S2.
The Committee will continue to monitor developing best
practice, and seek training/professional guidance when
required, to ensure it continues to effectively oversee our
reporting in this area.
ESG assurance
During the year, Stephen Craig, from Deloitte LLP, took over the
role of ESG assurance partner and presented the 2024 Audit
Plan to the Committee. Assurance from Deloitte LLP is received
on selected ESG metrics (see page 152 and 153).
In accordance with our governance policies and procedures
the Committee expects to conduct a tender for the role of
ESG assurance provider during 2025 due to Deloitte LLP having
been the Group’s ESG assurance provider since 2018.
Impact on the valuation
Following an independent third party assessment in 2021,
approximately £97m of capital expenditure was identified to
achieve 2030 EPC compliance across our London commercial
portfolio. This figure is reviewed annually and has been
revised to £86m to reflect the latest scope (change in
building regulations), inflation, disposals, the acquisition of
the remaining 50% interest in 50 Baker Street, and the work
carried out to date. Of this, Knight Frank made a specific
deduction of £41m in their December 2024 external valuation.
In addition, further amounts have been allowed for general
upgrades between assumed tenant vacancies.
Environmental / See pages 44 to 47
Net zero carbon / See pages 44 and 45
Task Force on Climate-related Financial Disclosures /
See pages 102 to 115
Double materiality assessment / See pages 42 and 43
Audit Committees and the External Audit:
Minimum Standard
The Committee confirms that for the year ended 31 December
2024, it has complied with the Audit Committees and the
External Audit: Minimum Standard (the Standard).
The Committee last conducted a competitive external audit
tender in 2023. The Committee disclosed the criteria used to
make its selection and the process followed on pages 150 and
151 of the 2023 Report & Accounts.
The Committee has outlined in the table below the activities it
has undertaken to meet the requirements of the Standard.
Reporting area
Our activities
Significant issues that the Committee
considered relating to the financial statements
See pages 145
and 146
Application of the entity’s accounting policies
See page 263
Shareholders request for certain matters to be
covered in an audit1
n/a
Assessment of the independence and
effectiveness of the external audit process
See page 154
External audit tender and appointment
See page 154
An explanation of how auditor independence
and objectivity has been safeguarded if
non-audit services are provided
See pages 154
and 155
Details of the findings of a regulatory inspection
of the quality of the company's audit
n/a
1
As at 31 December 2024, we have not received any requests from
shareholders that certain matters be covered in an audit.
Monitoring future regulatory developments
UK Corporate Governance Code 2024
The Committee engaged with the FRC’s consultation during
2023 and following the publication of the UK Corporate
Governance 2024 (the Code) on 22 January 2024, the
Committee conducted a detailed review of the changes.
Derwent London is already compliant with the vast majority
of new requirements, however, the key change is in relation to
provision 29 with the new declaration on the effectiveness of
material controls, which is effective from 1 January 2026.
The Board will be required to provide:
• a description of how the board has monitored and reviewed
the effectiveness of the risk management and internal
control framework;
• a declaration of effectiveness of the material controls as at
the balance sheet date; and
• a description of any material controls which have not
operated effectively as at the balance sheet date, the
action taken, or proposed, to improve them and any action
taken to address previously reported issues.
Further information on the status of our preparations for the
UK Corporate Governance Code 2024 is on page 121.
Derwent London plc
148
Our material controls categories
Effectiveness of material controls
Following the publication of the UK Corporate Governance Code 2024, preparations are well underway to ensure compliance
with the requirements of provision 29 for the year ending 31 December 2026. A timeline outlining the key milestones to achieving
compliance is outlined below.
Our approach
An initial proposal on material controls (financial and non-
financial) and assurance has been reviewed by the Risk and
Audit Committees and is subject to further enhancement in
preparation for a ‘dry run’ in H2 2025.
Existing governance structures mean that the Board and its
principal committees already report upon the effectiveness
of a range of controls in the annual Report & Accounts.
Efforts are therefore being focused on leveraging this strong
foundation and strengthening any gaps to ensure the Board
has the requisite level of confidence in making their annual
declaration on the effectiveness of material controls.
Identifying our material controls
Materiality for the purposes of complying with provision 29 of
the Code has been informed by looking at Derwent London’s
risk appetite, Schedule of Principal Risks, Board Assurance
Framework as well as detailed risk assessments and controls
documentation. It takes into consideration the size, nature
and complexity of our operations as well as the requirements
of various reporting regimes, laws and regulations that we are
obliged to comply with.
We have defined our material controls as those that are
most important in mitigating key risks that threaten the
long-term sustainability of the business, and where a failure
of their effective operation, or a resulting omission and/or
misstatement of information caused by the control failure is
likely to influence decisions made by users of the information.
They have been grouped into six categories as set out in the
diagram below.
Assurance
While the Code does not require independent or external
assurance to be obtained, for those material controls that
have the highest impact of the long-term sustainability of the
organisation and are most likely to influence decision makers,
independent/external assurance will be sought in line with
good practice.
To date, existing assurance activities have been mapped
against proposed material controls using the Board Assurance
Framework and knowledge of the assurance environment.
An assessment of the strength of current assurance activities
has been performed, and where gaps have been identified,
recommendations for additional assurance have been made
for consideration by the Board.
Key milestones to compliance
January
2024
August
2024
November
2024
H1
2025
H2
2025
H1 & H2
2026
H2
2026
December
2026
FRC published the UK Corporate Governance
Code 2024 and supporting guidance
Schedule of Principal Risks was rationalised
Draft material controls and assurance
proposal reviewed by the Risk and
Audit Committees
Revised material controls to be reviewed
and agreed in principle by the Audit and Risk
Committees and the Board
A ‘dry run’ of material controls assurance
pack to be reviewed by the Audit Committee
and adjustments made as required
Updates on assurance outcomes performed
throughout the year provided to the
Audit Committee
Material controls assurance pack to
be reviewed by the Audit Committee
Annual Report & Accounts for year ending
31 December 2026 to include the Board’s
declaration on the effectiveness of
material controls
Completed
In progress
To be completed
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Report and Accounts 2024
149
Governance
The Internal Audit Plan for 2024 was jointly approved by the
Risk and Audit Committees and was comprised of risk-based
reviews across a range of business areas. Both Committees
receive reports on internal audit activity and monitor the
status of internal audit recommendations.
2024 was the first year in which Derwent London saw
delivery of the Internal Audit Plan by the in-house Head of
Internal Audit. A range of assurance and advisory reviews
were delivered that have provided a meaningful contribution
to the effectiveness of the organisation’s governance, risk
management and internal control frameworks.
Audits performed during 2024 include:
• Sales & acquisitions
• DL/Lounges & DL/App
• Accounts payable
• VAT compliance
• External & internal cyber security tests
• Environmental KPI control design
Annual review of the internal audit function
A formal review of the effectiveness of the internal audit
function and the internal audit process was conducted at the
Audit Committee in February 2025, where it was concluded
that the process had been conducted effectively and that
the assurance received through internal audits had been
beneficial to the Committee and management. The depth of
business understanding from the in-house function has helped
ensure recommendations are commercial and proportionate,
solidifying the position of internal audit as both an assurance
provider and a trusted adviser within the business.
AUDIT COMMITTEE REPORT continued
Internal audit
New Global Internal Audit Standards and
Internal Audit Code of Practice
The International Internal Audit Standards Board (IIASB)
released the new Global Internal Audit Standards (the
Standards) in early 2024, with an effective date of January
2025. At the heart of the new Standards are five domains
and 15 guiding principles that enable effective internal
auditing, supported by a number of standards.
Following the update of the Global Internal Audit
Standards, a new Internal Audit Code of Practice (the
Code) was released by the Institute of Internal Auditors
(IIA) in September 2024 to align with the revised
Standards. The Code is also effective from January 2025.
It is principles-based and is intended to fortify the role of
internal audit in helping boards and management identify,
manage and mitigate risks in an ever-evolving landscape.
An assessment was conducted in November 2024 and
while compliance with the new Code is already at a
good level, several areas for ongoing improvement have
been agreed with the Audit Committee. These will be
implemented during 2025 and beyond to demonstrate a
commitment to continuous improvement and compliance
with both the Code and the new Standards.
Internal controls
Our internal control environment allows the Company to
safeguard its assets, prevent and detect material fraud
and errors, and ensure accuracy and completeness of its
accounting records which are used to produce reliable financial
information. During 2024, we have undertaken the following
key actions to further strengthen our internal controls:
• A new supplier portal has been developed and is live on the
internal Derwent Central platform which helps automate
the set-up process and strengthens due diligence performed
on suppliers prior to onboarding.
• The new payroll system is scheduled to go-live in early
2025 which will allow for automated workflows between
HR and Payroll.
• Cyber Essentials Plus certification has been obtained.
• A continuous learning approach to cyber awareness has
been maintained, with employees completing a number
of ‘bite-sized’ modules throughout the year. This helps
to raise threat awareness in real-time and enables
customised training.
• Implementation of recommendations raised in internal
audit reports and by other external assurance providers to
address control gaps and further strengthen the financial
and non-financial control environment.
Effectiveness review
The Committee receives detailed reports on the operation and
effectiveness of internal financial controls from members of
the senior management team and Internal Audit. In addition,
the outcome of the external audit at half year and year
end is considered in respect of ongoing enhancements to
internal controls.
On an annual basis, the Committee reviews the Group’s
Fraud Risk Management Framework (the Framework), of
which a fraud risk assessment is a key component. The
Framework helps management assess and improve upon its
fraud resilience measures across a range of key components,
while the risk assessment sets out the detailed controls which
safeguard the Company’s assets and help prevent and detect
fraud and errors. A heat map summarises residual risk scores
based on the fraud risk assessment, and those risks with
scores above tolerance levels have action plans in place
to help further mitigate residual risk.
As training and staff awareness forms part of the Group’s
internal control framework, the Risk Committee receives
updates on key policies and procedures in place and how
these are being communicated to, and complied with,
by our staff. Further information is on pages 128 and 165.
Following the Audit and Risk Committees’ reviews (see page
93), the Chairs of each Committee confirmed to the Board that
they are satisfied that the Group’s internal control framework
(financial and non-financial) and risk management procedures:
• operated effectively throughout the period; and
• are in accordance with the guidance contained within the
FRC’s Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting.
Derwent London plc
150
Internal financial controls
Our internal financial controls operate within the following control environment and context:
• Culture: We have a defined set of values and strategic objectives that are supported by our Code of Conduct and Business
Ethics which creates an environment that values integrity, openness, transparency and building long-term relationships.
Our culture promotes collaboration and encourages employees to challenge requests that do not follow standard procedures.
• Workforce: Our flat structure and modest headcount (relative to asset values) allows for the close supervision and monitoring
of activity by members of the Executive Committee.
• Group structure: A relatively simple Group legal structure with clear delegated authority limits and authorisation hierarchies.
• Income/costs: Rent, service charge, administrative costs (mainly salaries), interest and other finance costs are predictable.
Quarterly management accounts are prepared that analyse income and expenditure and compare them with the prior year
and budget, with unexpected variances investigated and explained.
• Capital costs: The largest costs incurred relate to capital expenditure. All capex on investment properties is approved and,
where material, is subject to external confirmation before being paid. These approved budgets are monitored internally.
Overview of internal financial controls:
Governance
framework
Our governance framework (see page 129) supports effective internal controls through an approved
Schedule of Matters Reserved for the Board and the Executive Directors, supported by defined
responsibilities, levels of delegated authority and supporting committees.
Risk identification
and monitoring
Management regularly review and assess key risks facing the Group, including scenarios which could
result in material financial and/or tax fraud or errors. Key risks are documented in risk registers, along
with a schedule of key controls and key risk indicators. The schedule of key controls provides evidence of
how the controls are being operated, their effectiveness and areas of potential weakness and further
improvement. Risk management activities are overseen by the Risk Committee (see pages 156 to 165).
Financial controls
Comprehensive systems of financial control are in place including an annual budgeting exercise with
three rolling forecasts, as well as a five-year strategic review. Breakeven and sensitivity analyses
are included in both the five-year review and the rolling forecasts, with quarterly variance analysis
performed between budget and actuals. A range of both preventative and detective controls, including
segregation of duties, reconciliations, approvals, management reviews and exception reporting helps
ensure accuracy and completeness of financial records.
Treasury and
tax controls
Treasury activities are controlled by the Chief Financial Officer and Group Financial Controller. All large
and/or complex transactions are discussed in advance with the Board and Executive Directors and are
executed in line with delegated authority levels and reviewed externally by our advisers. Taxation is a
complex area and is subject to frequent external review. Corporate tax returns are prepared internally
by the Tax Manager and are reviewed by senior members of the Tax team and externally by tax
advisers on a sample basis. Other higher risk areas like VAT, PAYE, SDLT and CIS are subject to thorough
examination and testing and external advisers are consulted where necessary. We maintain an open
relationship with HMRC which assessed our tax status in 2023 as ‘low risk’ in all categories. Further
information on tax governance is on page 56.
IT controls
IT general controls are a fundamental part of the financial control environment and apply to all
applications, databases and operating systems. They ensure appropriate access to, and integrity of
our data, which ultimately flows through to the financial statements. A robust system of backup is in
place to protect against the potential loss or corruption of data against the backdrop of ever-evolving
cyber threats.
Training and
staff awareness
Key policies and procedures are available to employees on our Group intranet. Employees are required
to confirm their understanding of our key internal policies upon joining, and periodically thereafter
as required for compliance purposes. Cyber risk training is delivered throughout the year to help
maintain high levels of staff awareness and core system training is delivered when new systems are
implemented, or ways of working are changed. The Group operates a ‘Speak up’ Policy which includes
access to an anonymous reporting hotline to raise any concerns of perceived or actual misconduct,
wrongdoing, or fraud (see page 128).
External/Independent
evaluation
A range of external and independent evaluation is in place to provide an additional layer of assurance
over the effective operation of key financial controls. The in-house internal audit function performed
various assurance reviews during 2024 which included testing of a range of key financial controls.
External advisers with specialist knowledge are periodically engaged to review particular financial
controls. The implementation of recommendations arising from these reviews are monitored by the
Risk and Audit Committees.
Report and Accounts 2024
151
Governance
AUDIT COMMITTEE REPORT continued
Assurance over external reporting
Our approach to assurance is influenced by our risk appetite,
our management approach and culture.
Our approach
It is crucial that the information we disclose is relevant,
informative and sufficiently transparent, so that our
stakeholders can assess our performance and have trust in the
integrity of our reporting. To keep our shareholders and the
wider market informed, we release results on a half yearly basis,
with a business update at the end of quarters one and three.
Our financial calendar for 2025 can be found on page 287.
Full year results announcement and annual
Report & Accounts
Our financial year is the 12 months to 31 December, and we
publish our full year results in late February. The disclosures
contained in this announcement form the foundation for our
annual Report & Accounts (principally the front end of the
Strategic report as well as the financial statements).
Our financial statements are subject to audit by our external
Auditor, PricewaterhouseCoopers LLP (PwC) and the entire
annual Report & Accounts is subject to a fair, balanced and
understandable review by both the Audit Committee and the
Derwent London Board (see page 145). In addition, any key
accounting issues or judgements made by management are
reviewed and agreed with the Audit Committee (page 146). The
main area of estimation uncertainty relates to the valuation
of our portfolio. Our property portfolio is valued by external
valuers for both our interim and year end results (see page 147).
Impairment review
While impairment testing of trade receivables and accrued
rental income recognised in advance of receipt is no longer
a key area of estimation for the Group, it remains subject to
extensive review by our internal team. As at 31 December 2024,
our lease incentive and trade debtors, including impairment,
amounted to £208.9m (2023: £204.5m) and an ECL provision
of £4.6m has been recorded (2023: £4.6m) for bad debts
(see pages 240 and 241).
Risks and uncertainties
Our principal and emerging risk registers are regularly reviewed
by the Executive Committee and Risk Committee, prior to
approval by the Board. As part of our review of principal risks,
the Risk Committee utilises a Board Assurance Framework
which identifies the key controls for each risk and the level of
assurance available.
Remuneration
Key disclosures in our Remuneration Committee report are
subject to independent audit by PwC. Our remuneration
disclosures are also reviewed by Deloitte LLP to ensure they are
aligned with best practice. In addition, Deloitte LLP independently
reviews the executive incentive outcomes under the
Performance Share Plan and annual bonus to provide assurance
to the Remuneration Committee that the outcomes have been
accurately calculated.
Going concern and viability
In order to assure our stakeholders that the Company remains
viable for the next 12 months and into the medium-term
(the next five years), we have provided detailed disclosures
on pages 86 to 89. The process and assumptions underlying
the short, medium and long-term assessments and scenarios,
which form the going concern and viability statements, are
subject to a detailed review by the Audit Committee and
Board. As part of their audit, PwC tested the integrity of the
underlying calculations within the going concern modelling,
assessed the appropriateness of the key assumptions and
agreed the underlying cash flow projections (see page 212).
Environmental, social and governance (ESG)
We understand the importance of clear and accurate reporting
of key ESG data to our stakeholders. During the year, we have
obtained independent limited assurance from Deloitte LLP in
accordance with ISAE 3000 (Revised) and ISAE 3410 Standards,
in respect of:
• selected energy and carbon reporting metrics
(energy data, Scope 1, 2 and 3 greenhouse gas emissions
data, and intensity ratios); and
• selected health and safety metrics (all RIDDORs, fatalities,
minor injuries, significant near misses and any enforcement
notices data).
In addition, PwC have provided reasonable assurance
over selected green finance KPI disclosures. The assurance
statements are published in our annual Responsibility Reports
which are available on our website.
We have voluntarily disclosed under the Task Force on
Climate-related Financial Disclosures (TCFD) since the 2018
Report & Accounts. As these disclosures are now mandatory,
our TCFD disclosures are subject to periodic third party review,
including in 2024.
Other annual report disclosures
The rest of our Strategic report and governance disclosures
are subject to detailed internal review and verification. Other
key audit matters which, in the external Auditor’s professional
judgement, were of most significance in the audit of the
financial statements and include the most significant assessed
risks of material misstatement were:
• valuation of investment properties;
• compliance with REIT guidelines; and
• valuation of investments in, and loans to, subsidiaries.
Information on PwC’s audit of these disclosures is provided on
pages 209 and 211.
Derwent London plc
152
Half year results announcement
In respect to the valuation, a similar process to year end is
adopted with our investment properties being independently
valued, which is then reviewed at valuation meetings by the
Audit Committee and approved by the Board.
Although not legally required, our external Auditor performs
a review on our half year results announcement. Whilst this
is not to the same level of assurance as a year end audit,
it does allow an independent review of our half year results
announcement and any issues are raised and discussed with
the Audit Committee.
Investor presentations
We prepare detailed investor presentations for year end
and half year results. A significant amount of information
contained in our investor presentations is extracted from
results announcements released via the London Stock
Exchange’s regulatory news service (RNS). Any additional
information is subject to detailed internal review.
Quarterly business updates
We provide a market update with portfolio information in
April/May and October/November. No financial numbers
are provided, nor do we revalue or provide any forecasts in
respect to the valuation of our portfolio. Due to the limited
information provided, no external assurance is provided or
deemed necessary. However, the announcements are subject
to significant internal review and verification.
Annual Responsibility Report and our progress to
net zero carbon
We publish an annual Responsibility Report which is structured
around our seven key ESG priorities (see page 40). Certain
environmental and health and safety metrics are subject to
independent limited assurance under the ISAE 3000 (Revised)
and ISAE 3410 Standards. This assurance captures the data
we disclose on utility usage, waste generation and energy
consumption.
In addition to TCFD (see pages 102 to 115), we report in
accordance with the EPRA Sustainability Best Practices
Recommendations and the Sustainability Accounting
Standards Board (SASB). Disclosures are prepared by the
Sustainability and Investor Relations teams. As well as being
subject to detailed internal reviews, the environmental and
health and safety metrics are reviewed by Deloitte LLP as part
of their external assurance work.
Other reports
There are a limited number of other financial reports provided
to external stakeholders. These relate mainly to RNS and press
release announcements of transactions. The announcements
are subject to internal verification checks to ensure values,
rental levels, areas and yields are fairly stated and, where
material, are signed off by the CEO and CFO. In relation to
acquisitions and disposals, figures are reconciled to cash
movements and completion statements. When reported,
rent collection figures are generated internally from daily cash
sheets and entered into our property management database.
Given the daily nature of this information, and the immateriality
of individual amounts, it is not considered practical to seek
external assurance in relation to this information.
Key reporting risk area
Current level of assurance
Current provider(s)
Further information
Financial statements
International Standards on Auditing (UK) and applicable law
PwC
Pages 216 to 276
Key EPRA financial
metrics1
International Standards on Auditing (UK) and applicable law
PwC
Page 278
Portfolio valuation
External valuation in accordance with RICS Valuation Global
Standards and the Red Book
Knight Frank
Pages 61 to 65
Key performance
indicators
Detailed internal review and external assurance on specific
KPIs from PwC and Deloitte LLP
PwC & Deloitte LLP
Pages 33 to 37
Environmental,
energy and carbon
ISAE 3000 (Revised) and ISAE 3410 Standards
‘limited assurance’
Deloitte LLP
Pages 58 and 59
Task Force on
Climate-related Financial
Disclosures (TCFD)
Detailed internal review and external review from PwC
PwC
Pages 102 to 115
Health and
safety statistics
ISAE 3000 (Revised) Standard ‘limited assurance’
Deloitte LLP
Page 53
Green Finance Framework
and disclosures
Our Green Finance Framework received a Second Party
Opinion (SPO) from DNV that it is aligned with the Loan
Market Association’s Extended Green Loan Principles 2021
and the International Capital Market Association’s Green
Bond Principles 2021. PwC have also provided reasonable
assurance over selected green finance KPI disclosures.
PwC & DNV
Pages 83 to 85
1
EPRA earnings and EPRA NAV metrics (EPRA NRV, EPRA NTA and EPRA NDV).
Report and Accounts 2024
153
Governance
AUDIT COMMITTEE REPORT continued
External audit
The Committee has primary responsibility for managing the relationship with the external
Auditor, including assessing their performance, effectiveness and independence annually
and recommending to the Board their reappointment or removal.
The Company has complied with the provisions of the
Competition and Markets Authority’s order for the financial
year under review in respect to audit tendering and the
provision of non-audit services. The Committee last
conducted a competitive external audit tender in 2023.
The Committee conducts an effectiveness review of the
external Auditor on an annual basis which aims to ensure a
robust audit is performed, auditor performance is optimised
and encourages candid feedback and communication between
the Auditor and the Committee. The aspects considered by the
Committee during its review are detailed in the diagram below.
Audit quality can be challenging to define and measure.
The Committee utilises Audit Quality Indicators (AQIs)
to assess PwC’s audit quality. The Committee finds the
use of AQIs an effective addition to its review processes.
The proposed AQIs for the 2024 year end were as follows:
• experience and continuity of the audit team;
• management and engagement team feedback;
• success in achieving the agreed timetable;
• number of audit misstatements, both adjusted and
unadjusted; and
• number of control findings.
After taking all of these matters into account, the Committee
concluded that PwC had performed their audit effectively,
efficiently and to a high quality.
An important aspect of managing the external Auditor
relationship is ensuring there are adequate safeguards to
protect auditor objectivity and independence. In assessing
this matter, the Committee considered the following:
• the Auditor’s independence letter which annually confirms
their independence and compliance with the Financial
Reporting Council’s (FRC) Ethical Standard;
• how the Auditor demonstrated professional scepticism and
challenged management’s assumptions, where necessary;
• the tenure of the external Auditor and the Lead Audit
Partner;
• the outcome of the FRC’s latest inspection of PwC’s audit
quality; and
• how the Auditor identified risks to audit quality and how
these were addressed, including the network level controls
the Auditor relied upon.
In assessing how the Auditor demonstrated professional
scepticism and challenged management’s assumptions, the
Committee considered the depth of discussions held with
the Auditor, particularly in respect to challenging the Group’s
approach to its significant judgements and estimates
(see page 146).
Qualification
and expertise
The qualification and
expertise of the Lead
Audit Partner and the
wider audit team
Judgements
and estimates
Quality of audit in respect
of key judgements and
estimates
Resources
The availability of
resources to perform
a comprehensive and
timely audit
Planning
Quality of planning and
ability to meet deadlines
Non-audit services
Adherence to the
Non-Audit Services Policy
Quality
Quality of the audit
plan, overall audit and
outcome report
Annual effectiveness review of the external Auditor
Derwent London plc
154
Audit and non-audit services in 2024
The audit fees incurred by PwC during the year totalled £673,975. In addition, PwC was remunerated £74,025 for the review of
the interim results, £40,000 for green finance assurance, and £71,000 for other non-assurance related services. The Committee
confirmed that it does not believe that the level or nature of the non-audit services provided during 2024 have impacted on PwC’s
actual or perceived independence as Auditor.
2024
2023
2022
Audit and non-audit fees
£’000
%
£’000
%
£’000
%
Audit of Derwent London plc and subsidiaries
674
78
620
90
657
90
Review of interim results
74
9
71
10
64
10
Other non-audit services
111
13
—
—
—
—
Total fees
859
100
691
100
721
100
Non-Audit Services Policy
Non-audit fees as a % of the average audit fee in the last three
consecutive financial years
28
12
11
Headroom relative to 70% limit
42
58
59
Audit exemption
For the year ended 31 December 2024, a number of the Group’s
wholly owned subsidiaries are entitled to exemption from audit,
under section 479A of the Companies Act 2006. We have
identified in the table on pages 274 to 276 which subsidiaries
intend to utilise the audit exemption.
Derwent London plc is the ultimate parent company of these
subsidiaries and has unanimously agreed to the adoption
of the exemptions and to the granting of a guarantee in
accordance with section 479C of the Companies Act 2006.
Non-audit services
The objective of maintaining the Non-Audit Services Policy
(the Policy) is to ensure the independence of the external
Auditor is not compromised and that the provision of such
services does not impair the external Auditor’s objectivity.
The Policy was last approved by the Audit Committee in
November 2023.
The Committee has provided pre-approval limits which allow
management to appoint the external Auditor to conduct
permissible non-audit services if they fall below an amount
it deems as trivial. The approval limits for non-audit services
are provided below and are subject to review:
Value
Approval required prior to engagement
Up to £25,000
Chief Financial Officer
£25,001 to £100,000
At least two members of the
Audit Committee (including the
Committee Chair)
£100,001 and above
Board of Directors
Summary of the Non-Audit Services Policy
Under the Policy, all services provided by the external Auditor
(other than the audit itself) are regarded as non-audit
services. Our Policy draws a distinction between permissible
services (which could be provided subject to conditions set
by the Committee) and prohibited services (which may not
be provided by the external Auditor except in exceptional
circumstances when the Auditor has been provided with
approval by the Financial Conduct Authority).
The type of non-audit services deemed to be permissible
includes a review of the half year results and assurance work
on non-financial data. In accordance with audit legislation,
the total fees for non-audit services provided by the external
Auditor to the Group shall be limited to no more than 70% of
the average of the statutory audit fee for the Company paid to
the Auditor in the last three consecutive financial years.
When reviewing requests for permitted non-audit services, the
Committee will assess:
• whether the provision of such services impairs the Auditor’s
independence or objectivity and any safeguards in place to
eliminate or reduce such threats;
• the nature of the non-audit services;
• whether the skills and experience make the Auditor the
most suitable supplier of the non-audit service;
• the fee to be incurred for non-audit services, both for
individual non-audit services and in aggregate, relative to
the Group audit fee; and
• the criteria which govern the compensation of the
individuals performing the audit.
In accordance with the FRC Ethical Standard, the Committee
would also assess whether it is probable that an objective,
reasonable and informed third party would conclude
independence is not compromised.
Report and Accounts 2024
155
Governance
RISK COMMITTEE REPORT
Dear Shareholder,
I am pleased to provide a report on
the activities and focus areas of the
Risk Committee.
The Group’s risk profile remained elevated during 2024,
as the sector continued to be impacted by the wider
macro environment. Further information can be found
in the ‘Managing risks’ section on pages 90 to 101.
Key activities of the Committee during 2024
A focus for the Committee this year was to gain a deeper
understanding of the emerging and market risks which could
impact on the Group in the future, and to ascertain how the
business was preparing and/or monitoring these risk areas. In
particular, the Committee received presentations on changing
occupation levels and tenant demand, in addition to how the
Group is managing building obsolescence. Our emerging risk
register is available on page 100.
The Committee has overseen a wide range of activities within
four key categories (see pages 158 and 159):
• Property and market
• Technology
• People and environment
• Compliance
The Committee invited members of the senior management
team to present on risks relevant to their departments. This
allowed the Committee to delve deeper into management’s
approach to risk and compliance with key policies.
Health and safety
Due to the importance of ensuring our people and contractors
are safe, at each Committee meeting, a detailed update is
provided on health and safety matters and identified key risks,
both in the managed portfolio and development pipeline.
During 2024, all Executive Directors conducted leadership
tours to reinforce the Board’s commitment to, and visibility of,
health and safety. Further information on health and safety is
available on pages 52 and 53.
The Committee received a presentation on the Scottish
portfolio risks including operational and project-specific
risks. The Committee noted that whilst the Scottish portfolio
represents only c.2% of our assets, the risks associated with the
large acreage and varied uses are principally focused on health
& safety, and reputation. The Committee discussed the key
controls being implemented and their effectiveness.
Supply chain insolvency
The trend of rising insolvencies has continued over the last year
with the most notable insolvency being ISG in September 2024.
Although ISG was not engaged on any Derwent London projects,
checks were carried out with our main contractors to determine
if they could be impacted by the ISG insolvency. It was pleasing
to note that none were affected. The Committee received
updates on the risk of insolvencies and how we are seeking to
monitor the financial solvency of contractors and consultants.
2025 focus areas
• Monitor emerging and market risks and how they might
impact on the Group in the short to medium-term
• Ensure health and safety risks are being effectively
managed across the Group
• Receive training on the Building Safety Act 2022
during 2025
• Review the Group’s response to the ongoing risk posed
by cyber attacks
• Ongoing monitoring of the Group’s principal and
emerging risks
Committee membership during 2024
Independent
Number of
meetings
Attendance1
Helen Gordon
Yes
3
100%
Lucinda Bell
Yes
3
100%
Sanjeev Sharma
Yes
3
100%
Cilla Snowball
Yes
3
100%
Madeleine McDougall2
Yes
1
100%
1
Percentages are based on the number of meetings that each member
is entitled to attend for the 12 months ended 31 December 2024.
2
Madeleine McDougall was appointed as a member of the Risk
Committee on 1 November 2024.
Helen Gordon Chair of the Risk Committee
Derwent London plc
156
Cyber security
Due to the ongoing and rising risk of cyber crime, the
Committee dedicated a significant portion of its November
meeting to receiving a detailed update on cyber security from
members of the Digital Innovation & Technology (DIT) team.
The Committee was advised of our cyber posture and how we
are seeking to mitigate risks.
In November, the Group achieved the government-backed
Cyber Essentials Plus accreditation which provides greater
assurance to stakeholders on the strength of our cyber posture.
Further information on cyber security is on pages 162 and 163.
Changes to our risk registers
Change management systems has been added as a principal
risk for 2025. Additionally, the Board and Risk Committee
identified opportunities to consolidate and simplify the Group’s
principal risks and uncertainties. As a result, the number of
standalone principal risks identified by the Group has reduced
from 15 to 11 (see page 92). Further information can be found
in the Managing risks section on pages 90 to 101.
Further engagement
The forthcoming AGM is on 16 May 2025 and I will be available
to answer any questions on the Committee’s activities that
you may have. If you wish to contact me, I am available via
our Company Secretary, David Lawler.
Telephone: +44 (0)20 7659 3000 or
Email: company.secretary@derwentlondon.com
Helen Gordon
Chair of the Risk Committee
26 February 2025
Committee composition and performance
The Committee’s membership for the year under review is
detailed in the table on page 156. In addition to the Committee
members, the Board Chairman, other Directors, senior
management and the internal and/or external Auditors, are
often invited to attend all or part of any meeting as and when
appropriate or necessary.
In 2024, the Risk Committee met three times (2023: four
meetings). The meetings in August and November included a
joint session with the Audit Committee to review the outcome
of internal audits (see page 150).
The 2024 evaluation of the Board, its committees and
individual Directors was internally facilitated, in accordance
with our three-year cycle of evaluations (see page 139).
The review confirmed that the Committee continues to
operate effectively, with no significant matters raised.
The Committee’s role and responsibilities are set out in
the terms of reference, which were last updated in August
2024, and are available on the Company’s website at:
www.derwentlondon.com/investors/governance/board-
committees
Our construction contracts place the risk of subcontractor
insolvency with the main contractor. Whilst subcontractor
insolvency remains a significant risk, we work with our
contractors and consultant teams to monitor it closely.
Causes of insolvency
• Poor financial management
• Inflation
• Economic downturns
• Over-reliance on a single client/project
• Inadequate risk assessment
• Low margin bidding
• Over investment
Consequences
• Project delays
• Increased costs
• Legal disputes
• Reputational damage
• Supply chain disruptions
Mitigation strategies
• Financial due diligence
• Parent company guarantees
or performance bonds
• Insurance
• Warranties
• Advance payments
• Contractual protections
• Monitoring and auditing
• Factory visits
Even with the above protections in place, we remain
vigilant to early indicators that may indicate strain within
the subcontractor supply chain. This includes maintaining
good relationships in the industry to raise awareness about
contractor finances, late financial returns, project team
members leaving, project programmes slipping, under-
resourced projects, increasing defects, subcontractors
not being paid on time and inflated applications. We
meet with our subcontractors to review performance and
carry out visits of factory facilities to assure the quality
of the outputs and that the necessary staffing levels
are maintained. During 2024, Derwent London was not
materially impacted by supply chain insolvencies.
s.172 factors (see page 132)
C E
Insolvencies within
the construction
industry
Report and Accounts 2024
157
Governance
RISK COMMITTEE REPORT continued
Key activities of the Committee
During 2024, the Committee has focused its attention on a variety of risks within
four key categories.
Property and market
Technology
Development risks
The Committee regularly reviewed the key risks affecting
our major on-site developments. In addition, the
Committee received updates on the wider factors which
could impact our developments, including construction
cost inflation, supply chain disruption, site security and
material/labour shortages (see page 96).
Planning risk
The Development team joined Committee meetings to
provide updates on the progress of planning applications
for all major projects.
Insolvency risk
The Committee received a presentation on the causes
of contractor and consultant insolvency and its
consequences. The Committee received assurances that
neither Derwent London nor its supply chain had been
impacted by the insolvency of ISG (see page 157).
Building Safety Act 2022
The Committee received an update on our
responsibilities and how we are ensuring our compliance.
It was agreed that in-depth training on the Building
Safety Act 2022 would be provided to the Committee
in 2025.
Building obsolescence
The Committee were advised of the steps being taken to
ensure longevity of assets and discussed obsolescence
risk from a physical, functional and locational viewpoint.
Fire safety
The Committee received an update on the frequency
and robustness of the Group’s fire risk assessments,
system testing and strategies.
Cyber security
Our cyber security controls have been strengthened
considerably in recent years in response to the increasing
threat this poses to businesses, and it remains an area
that the Committee keeps under continuous review
(see pages 162 and 163). In November 2024, the
Committee received a detailed presentation on cyber
security which covered:
• our cyber posture;
• our cyber strategy;
• future trends; and
• third party dependencies.
Crisis Management Team (CMT)
The Committee received updates on technical testing
that was completed in July to ensure key IT disaster
recovery failover mechanisms were operating effectively.
Phishing tests
The Committee received updates on the phishing tests
conducted by the Digital Innovation and Technology
(DIT) team throughout the year, which sought to test
the robustness of our training programme.
Security penetration tests
The Committee received summarised reports of the
independent security penetration tests that were carried
out in 2024.
Cyber Essentials Plus
In November, the Group achieved the government-
backed Cyber Essentials Plus accreditation which provides
greater assurance to stakeholders on the strength of our
cyber posture.
Strategic objectives
1 2 4
Strategic objectives
3 4
Principal risks (see page 94)
1 3 4 5
Principal risks
6 7 11
Derwent London plc
158
People and environment
Compliance
Strategic objectives
To optimise returns
and create value from
a balanced portfolio
1
To attract, retain
and develop
talented employees
To maintain
strong and flexible
financing
To grow recurring
earnings and
cash flow
To design, deliver and
operate our buildings
responsibly
2
3
4
5
Health and safety (H&S)
At each Committee meeting, a detailed update is
provided on health and safety matters and identified key
risks, both in the managed portfolio and development
pipeline. During 2024, all Executive Directors conducted
leadership tours to reinforce the Board’s commitment
and visibility to health and safety.
H&S system and reporting
The Committee reviewed the systems utilised to monitor
our health and safety compliance, reporting and
management.
Asbestos management
The Committee receives updates on asbestos
management at least annually. The Committee gained
assurance that the risk was being adequately managed.
Lift entrapment
The Committee reviewed the number of instances of lift
entrapment across the portfolio. The Committee gained
an understanding of why lift entrapments occur and how
we seek to rectify the issues. It was pleasing to note that
there had been no injuries or harm to individuals from the
lift entrapments.
Scotland solar panel procurement
The Committee reviewed the risks associated with the
procurement of solar panels for our 100-acre Solar Park
in Lochfaulds (see page 161).
Terrorism risk
The Committee received an update on the security
provision across the portfolio to ensure our assets and
occupiers are protected, with plans in place to respond
to terrorism risks should they occur.
Key risk indicators
The Committee has identified, and reviews at each
meeting, key risk indicators and whether they have
exceeded the agreed risk tolerances.
Legal updates
The Committee received assurances from the business
that we are preparing for any upcoming legal
developments.
Anti-bribery and corruption
At each meeting, the Committee reviews the Hospitality
& Gift Register which contains the returns prepared by
all employees (including Directors) on a quarterly basis.
Litigation risk
The Committee received updates on a series of ‘mock
trials’ undertaken with assistance from expert barristers,
which aimed to understand how Derwent London was
seeking to avoid regulatory action and how it would
respond to litigation risks.
Compliance training
The Risk Committee agreed the 2025 training
programme and monitored completion rates.
Engagement with the training continues to be high
with on average c.96% of employees completing
quarterly training (see page 165).
Internal audits
Alongside the Audit Committee, the Risk Committee
received updates on the work performed by internal
audit. Further information on the audits conducted
during 2024 is on page 150.
Strategic objectives
3 4
Strategic objectives
3 4
Principal risks
8 9 10
Principal risks
10
Report and Accounts 2024
159
Governance
RISK COMMITTEE REPORT continued
• Reviews the Board’s risk registers
and determines the nature
and extent of the principal and
emerging risks facing the Group
• Manages the internal audit process
jointly with the Audit Committee
• Works alongside the Board to set
risk tolerance levels
• Receives updates on key risk
areas and monitors the Group’s
risk indicators and non-financial
controls
• Ensures the design and implementation of appropriate
risk management and internal control systems that
identify the risks facing the Group and enable the
Board to make a robust assessment of the principal risks
• Maintains the Group’s risk registers
• Manages the Group’s risk management procedures
• Reviews the operation and effectiveness of key controls
• Provides guidance and advice to staff on risk
identification and mitigation plans
• Engages with the Executive Directors and senior
management to identify risks
• Allocates ‘risk managers’ and oversees their response
• Risk management is devolved to the appropriate level
most capable of identifying and managing the risk
• Overall responsibility for risk
management and internal control
• Sets strategic objectives and
risk tolerance
• Sets delegation of authority
limits for senior management
• Ensures that a healthy purposeful
culture has been embedded
throughout the organisation (with
input from the Executive Directors)
• Agrees the Group’s strategy to
managing climate change resilience,
approving and monitoring progress
against our Net Zero Carbon
Pathway (with input from the
Responsible Business Committee)
• Ensures the Board (and
its committees) have
the correct balance of
skills, knowledge and
experience
• Ensures that adequate
succession plans are
in place for the Board,
Executive Directors and
the wider talent pipeline
• Reviews the assurance
received for the
information published in
our financial statements
and key announcements
• Manages the external
audit process and
reviews internal audit
reports jointly with the
Risk Committee
• Monitors the internal
financial control
arrangements, and
satisfies itself that
they are functioning
effectively, and that
corrective action is being
taken where necessary
• Oversees the Group’s
policies in respect of
modern slavery, the
protection of human
rights, achieving our
Net Zero Carbon
Pathway, and employee
satisfaction and
wellbeing etc.
• Monitors the Group’s
corporate responsibility,
sustainability and
stakeholder engagement
activities
• Monitors the Group’s
diversity and inclusion
initiatives
• Ensures that
remuneration and
reward arrangements
promote long-term
sustainable performance
and retention of key
talent
• Monitors the incentive
framework to ensure
it does not encourage
Executive Directors to
operate outside the
Board’s risk tolerance
In addition to the Risk Committee, the Board’s other principal committees
manage risks relevant to their areas of responsibility.
Risk management structure
The Board
Risk Committee
Executive Directors, with assistance from the Executive Committee
Heads of Department
Nominations
Committee
Audit
Committee
Responsible Business
Committee
Remuneration
Committee
Derwent London plc
160
Risk management
At Derwent London, the management of risk is treated as a
critical and core aspect of our business activities. Although
the Board has ultimate responsibility for the Group’s risk
identification and management procedures, certain risk
management activities are delegated to the level that the
Board judge is most capable of overseeing and managing the
risks. In order to gain a comprehensive understanding of the
risks facing the business and the management thereof, the
Risk Committee invites senior managers and external advisers
to present at its meetings.
A robust assessment of the principal risks facing the Group
is regularly performed by the Directors, taking into account
the risks that could threaten our business model, future
performance, solvency or liquidity, as well as the Group’s
strategic objectives over the coming 12 months.
Our principal risks are documented in the Schedule of Principal
Risks (see pages 94 to 99) which includes a comprehensive
overview of the key (financial and non-financial) internal
controls in place to mitigate each risk and the potential
impact. The Directors also review an assurance framework
which evidences how each internal control is managed,
overseen and (where appropriate) independently assured.
Due to its importance, material changes to the Schedule of
Principal Risks can only be made with approval from the Risk
Committee or Board (changes made to our principal risks
during 2024 are on page 92). Further information on the
Group’s risk registers subject to review by the Risk Committee
are detailed in the table below.
Risk documentation and monitoring
Schedule of Principal Risks
See page 94
Contains the risks which are classified as the Group’s main risks which impact on the Group or
could impact the Group over the next 12 months. The Schedule of Principal Risks also includes
an assurance framework to evidence how each control is managed, overseen and independently
verified. During 2024, the Board and Risk Committee identified opportunities to consolidate and
simplify the Group’s principal risks and uncertainties. As at 31 December 2024, the Schedule of
Principal Risks contains 11 risks (2023: 15 risks).
Schedule of Emerging Risks
See page 100
Contains the internal and external emerging risks that could significantly impact the Group’s
financial strength, competitive position or reputation within the next five years. Emerging risks
could involve a high degree of uncertainty. As at 31 December 2024, the Schedule of Emerging Risks
contains five risks (2023: five risks).
Group Risk Register
Risks not deemed to be principal to the Group are documented within the Group’s Risk Register,
which is maintained by the Executive Directors, with assistance from the Executive Committee. The
Board reviews and approves the Group’s Risk Register on an annual basis and it is reviewed by the
Risk Committee at each of its meetings. As at 31 December 2024, the Group Risk Register contains
48 risks (2023: 47 risks).
Key risk indicators
The Risk Committee has identified risk areas which could indicate an increase in the Group’s risk
profile. These indicators are reviewed at each Risk Committee meeting and are compared against
the Board’s Risk Appetite Statement (see page 93). Any deviance or significant increase is subject
to challenge by the Risk Committee. The risk indicator contains 10 risk areas including cyber security,
cost inflation, project status, data protection, and health and safety incidents etc.
Functional/departmental
risk registers
Risk registers are maintained at a departmental/functional level to ensure detailed monitoring of
risks, where necessary. These registers are the responsibility of each department and are periodically
reviewed by the Risk Committee during risk-specific presentations. Examples of these registers are
the development risk registers for each building project and the ‘tenants on watch’ register.
There are global concerns over the possible use of forced
labour in the production of solar panels. At its meeting in
August 2024, the Committee sought to understand the
risks associated with the procurement of solar panels for
our 100-acre Solar Park in Lochfaulds. To aid in finding
an appropriate supplier, Derwent London appointed The
Greenspan Agency at the conception of the project. To aid
in its understanding, the Committee reviewed background
reports on the preferred supplier shortlist, a risk exposure
report and research information. It was agreed that to
avoid human rights abuses, all potential suppliers would be
required to confirm the origins of the materials used and
their manufacturing during the tender process.
s.172 factors (see page 132)
C D E
Procurement
of solar panels
Report and Accounts 2024
161
Governance
RISK COMMITTEE REPORT continued
Digital security risks
Cyber and information security
We adopt a layered defence approach to cyber security which
provides multiple levels of security controls to protect against
cyber attacks. This eliminates single points of failure and
provides multiple opportunities for threats to be identified,
contained and remediated before they can cause harm.
Our cyber security controls and procedures are subject to
regular independent reviews and tests, the results of which
are presented to the Risk Committee, which monitors the
implementation of any arising actions. The Committee reviews
a dashboard of key risk indicators at each meeting which
includes information security and cyber risk-related KPIs.
In H1 2024, multiple security penetration tests were conducted
by a UK-based CREST accredited security consultancy and
in November, our government-backed Cyber Essentials
accreditation was upgraded to Cyber Essentials Plus. This
provides greater assurance to stakeholders on our security
posture as it involves an independent technical audit of
our cyber controls and vulnerability tests performed by the
certification body, IASME.
During 2024, there was a 15% increase in the total number
of potential attacks when compared to 2023, none of which
resulted in a security incident. 99.98% of the attempts were
stopped before they reached the intended targets, with
the remaining attempts immediately being reported to our
Digital Innovation and Technology (DIT) team. This highlights
the robustness of our cyber security posture and awareness
campaigns.
As part of our compliance training programme in 2024, the
DIT team highlighted the dangers of video and audio ‘deep
fakes’ to perpetrate realistic cyber attacks by generating voice
clones of our Executive Directors. With the rise of sophisticated
technology available to threat actors and the enhanced
effectiveness of AI in executing attacks, it is critical that our
staff remain abreast of the latest threats.
Cyber attack on our buildings / See page 97
Cyber attack on our IT systems / See page 97
Members of the Digital Innovation & Technology team
Derwent London plc
162
Data protection
Derwent London is perceived as being relatively low risk from a
data protection perspective, as the amount of personal data
that we hold is limited. We have robust procedures in place to
safeguard the security and privacy of information entrusted
to us. As part of the Committee’s key risk indicator schedule,
we monitor the number of ‘near miss’ data breaches and how
these have been addressed. Our procedures ensure that we:
• maintain the confidentiality, integrity and availability of
data and safeguard the privacy of our customers and
employees, to ensure that the business retains their trust
and confidence;
• protect the Group’s intellectual property rights, financial
interests and competitive edge;
• maintain our reputation and brand value; and
• comply with applicable legal and regulatory requirements.
We operate a Data Protection Steering Committee which
meets on a quarterly basis and comprises of Data Protection
Champions from each department. Our DIT team routinely
conducts supplier information security due diligence
assessments as part of the onboarding process for all new
suppliers of digital services to help provide assurance on
the security posture of our suppliers and reduce the risk of
supply chain attacks. Data Protection Impact Assessments
(DPIAs) are also completed for any new projects or changes
to processes that involve data processing, to help identify and
mitigate any data privacy risks.
Digital strategy risks
As we increase the digitalisation of our business model through
our Intelligent Building Programme, our potential exposure to
digital risks will increase. A cyber attack on our buildings has
been identified as a principal risk for the Group, and our key
controls to mitigate these risks are detailed on page 97.
Intelligent Building Programme
In alignment with our strategy and purpose, the Derwent
London Intelligent Building Programme seeks to enable our
buildings to be monitored and operated more efficiently,
driving down equipment faults (and consequential
maintenance) and delivering energy and operational carbon
savings. During 2024, the Executive Committee continued
to monitor the phased roll-out of the Intelligent Building
Programme. The Committee will be kept updated on progress
and its success. The key indicators of success will be the cost
savings to our occupiers (due to early fault detection) and the
operational carbon savings for the Group and our occupiers.
Artificial Intelligence (AI)
Technological advancements are an emerging risk for
the Group. While the rapid pace of AI development offers
potentially large efficiency gains throughout our business,
it does introduce several risks. A group of users have been
trialling Microsoft Copilot over recent months to see how it
can assist their roles. It is expected that we will roll Microsoft
Copilot out to the wider business in 2025, along with training.
Our Acceptable Use Policy has been amended to reference AI
and make clear to our users that it should be used responsibly
and ethically and that users are accountable for reviewing any
output generated for correctness.
Technological change / See pages 100 and 101
Business continuity
In 2024, a Business Impact Analysis (BIA) was conducted to
determine and evaluate the potential effects of an interruption
to critical business operations.
During the analysis, we reviewed the Maximum Tolerable
Outage (MTO) time for all critical business processes, the
dependencies for each process in terms of people, technology
and supply chains, as well as the expected process recovery
times in the event of various major disruptive incident scenarios.
The output from the BIA will be used in 2025 to further develop
our Business Continuity Plan (BCP) and prioritise recovery plans.
In July 2024, annual technical testing was completed to ensure
key IT disaster recovery failover mechanisms were operational.
Our next biennial full interruption test, including a failover of
all IT systems and services to our backup data centre, will be
conducted in 2025.
Disaster recovery
Derwent London has formal procedures for use in the event
of an emergency that disrupts our normal business operations
that consist of:
• Business Continuity Plan (BCP): The BCP serves as
the centralised repository for the information, tasks and
procedures that would be necessary to facilitate Derwent
London’s decision making process and its timely response
to any disruption or prolonged interruption to our normal
activities. The aim of the BCP is to enable the recovery of
prioritised business operations as soon as practicable.
• Crisis Management Team (CMT): The CMT is composed of
key personnel deemed necessary to assist with the recovery
of business. The BCP empowers the CMT to make strategic
and effective decisions to support the recovery of business
until we are able to return to normal working.
• Off-site disaster recovery data centre: An off-site
disaster recovery data centre is available in the event of an
emergency, to provide continued access to IT services and
data to our staff.
• Testing and review: The strength of our business continuity
and disaster recovery plans are regularly tested and
continually refined to reduce the potential for failure.
Report and Accounts 2024
163
Governance
RISK COMMITTEE REPORT continued
Risk management framework
Our risk management procedures seek to ensure that all foreseeable
and emerging risks are identified, understood and managed.
Identification
• Top down approach to identify the principal risks
that could threaten the delivery of our strategy:
At the Board’s annual strategy reviews, scenarios for the
future are considered which assist with the identification
of principal and emerging risks and how they could
impact on our strategy. The continuous review of strategy
and our environment ensures that we do not become
complacent and that we respond in a timely manner to
any changes.
• Bottom up approach at a departmental and
functional level: Risks are principally identified by
the Executive Committee and members of senior
management, through analysis, independent reviews
and use of historical data and experience. Risk registers
are maintained at a departmental/functional level to
ensure detailed monitoring of risks, where necessary. Risks
contained on the departmental registers are fed into the
main Group Risk Register depending on the individual risk
probability and potential impact.
Assessment
Following the identification of a potential risk, the Executive
Committee seeks to:
• gain sufficient understanding of the risk to allow
an effective and efficient mitigation strategy to be
determined;
• allow the root cause of the risk to be identified;
• estimate the probability of the risk occurring and the
potential quantitative and qualitative impacts; and
• understand the Group’s current exposure to the risk and
the ‘target residual risk profile’ (in accordance with the
Board’s risk tolerance) which will be achieved following
the completion of mitigation plans.
Where necessary, external assistance is sought to assess
potential risks and advise on mitigation strategies. Emerging
risks are kept under review at each Risk Committee meeting
and are reassessed during the Board’s annual strategy
reviews.
Monitoring
As part of our risk management procedures, the Executive
Committee and Risk Committee routinely conduct
monitoring exercises to ensure that risk management
activities are being consistently applied across the Group,
that they remain sufficiently robust and identify any
weaknesses or enhancements which could be made to the
procedures. Monitoring activities include:
• the regular review and updating of the Schedule of
Principal Risks, Schedule of Emerging Risks and the
Group’s Risk Register;
• independent third party reviews of the risk management
process to provide further assurance of its effectiveness;
• alerting the Board to new emerging risks and changes to
existing risks;
• monitoring how the risk profile is changing for the
Group; and
• providing assurance that risks are being managed
effectively and where any assurance gaps exist,
identifiable action plans are being implemented.
Response
We implement controls and procedures in response to
identified risks with the aim of reducing our risk exposure, so
that it is aligned or below our risk tolerance. The successful
management of risk cannot be done in isolation without
understanding how risks relate and impact upon each other.
The mitigation plans in place for our principal risks are
described on pages 94 to 99. We use insurance to transfer
risks which we cannot fully mitigate.
Insurance
Our comprehensive insurance programme covers all of our
assets and insurable risks. We are advised by insurance
brokers, who provide a report to the Risk Committee on an
annual basis. We have a long-standing relationship with
our property insurers, who perform regular reviews of our
properties that aim to identify risk improvement areas. Due to
our proactive risk management processes, Derwent London
has a low claims record which makes us attractive to insurers.
Our risk management framework is summarised below.
Identification
Assessment
Monitoring
Response
Independent
assurance
Derwent London plc
164
Anti-bribery and corruption
We are committed to the highest standards of ethical conduct
and integrity in our business practices and adopt a zero-
tolerance approach to bribery and corruption. The Company
has assessed the nature and extent of its exposure to bribery
and corrupt practices and, overall, considers our residual
exposure to be low. To address the risk areas identified, and
other risks that may arise from time to time, the Company
has established procedures which are designed to prevent
bribery and corrupt practices from occurring. An overview
of our policies and procedures in this area is contained in the
table below.
The greatest potential risk area for Derwent London is
in respect of our long supply chains. Our zero-tolerance
approach is communicated to all of our suppliers, contractors
and business partners. Before we enter into a new business
relationship, our due diligence procedures determine if a
third party has previous convictions under the Bribery Act.
All contracts with suppliers or contractors prohibit the
payment of bribes, or engaging in any corrupt practice,
and we have the right to terminate agreements in the
event a bribe is paid or other corrupt practice undertaken.
Compliance training
The Group operates a compliance training programme which
is mandatory for all employees and members of the Board. The
Risk Committee oversees the programme, agrees the topics
to be covered and receives an update on completion rates.
The programme covers a range of risk and compliance topics
(including anti-bribery and corruption, diversity and inclusion,
data protection, fraud and modern slavery).
At the launch of each training topic, an introductory email
is sent to participants advising them why the training is
important and links to further information (including Company
policies and guidance notes). The topics covered over the past
two years are:
• anti-money laundering;
• prevention of tax evasion;
• modern slavery;
• competition law;
• conflicts of interest;
• anti-bribery and corruption; and
• cyber fraud awareness.
The Committee was pleased with the level of engagement
from employees with, on average, c.96% of all employees
completing each training module.
Policy and procedures to prevent bribery and corruption
Corporate hospitality
Hospitality must be reasonable in value, appropriate to the occasion and provided openly and
transparently. It must not compromise, nor appear to compromise, the Group nor the business
judgement of our staff.
Business gifts
Generally, gifts should not be accepted unless valued at less than £50, are not cash or a cash equivalent
(e.g. gift certificate), are appropriate to the circumstances and are not given with the intention of
compromising or influencing the party to whom it is being given.
Hospitality and
Gift Returns
All staff are required to complete quarterly Hospitality and Gift Returns which document all instances of
third party hospitality or gifts (given or received) over that three-month period if the value is in excess
of £50 for hospitality and £10 for gifts. The Hospitality and Gift Returns are subject to review by the Risk
Committee.
Political donations
The Company strictly prohibits any political donations being made on its behalf.
Charitable donations
Charitable donations are handled by the Sponsorships and Donations Committee. ‘Know your client’
procedures are applied to charitable organisations to ensure we are dealing with a valid body acting in
good faith and with charitable objectives.
Contractors and suppliers
Our greatest potential risk area is in respect of our long supply chains, as detailed above.
Supply Chain
Responsibility Standard
Contains the minimum standards we expect from major suppliers (further information is on page 171).
Payments and expenses
All payments made must be warranted, transparent and proper. All payments must be accurately
recorded through the normal accounting and financial procedures without any deception or disguise as
to the recipient’s identity or the purpose of the payment in question. No one approves their own expense
claim. All expense claims must be approved by a Director or senior manager.
Facilitation payments
Facilitation payments are bribes and are strictly prohibited.
Conflicts of interest
All conflicts of interest or potential conflicts of interest must be notified to the Company Secretary and
a register of such notifications is maintained. The Corporate governance statement on page 128 explains
our process for managing potential conflicts.
Training
We provide our employees with guidance notes and regular training on anti-bribery, corruption, fraud,
ethical standards and the prevention of the facilitation of tax evasion.
‘Speak up’ procedures
A confidential helpline is available for staff to report concerns anonymously (see page 128).
Report and Accounts 2024
165
Governance
RESPONSIBLE BUSINESS COMMITTEE REPORT
Dear Shareholder,
As the Chair of the Responsible Business
Committee, I am pleased to present our
report for 2024.
Engagement with our stakeholders
Stakeholder engagement is a core strategic priority at Derwent
London, and the Committee regularly reviews the activities
and impacts of the Company’s engagement with its employee,
occupier, supplier and community stakeholders.
The Derwent London Community Fund has been running since
2013 and to date has invested over £1.15m into 172 grassroot,
local community projects and initiatives across our portfolio.
We are extremely proud of the work that has been done and
that local funding has been consistently maintained (led by
Helen Joscelyne, Community & Social Value Manager) enabling
our neighbours and communities to thrive. The Committee also
reviewed the wider community engagement and consultations
held during Derwent London’s developments at Baker Street,
Network, Gloucester Place and in the Old Street Quarter.
Employee engagement is particularly strong at Derwent
London and we are proud to see consistently high levels of
employee pride and satisfaction in staff surveys. This year
the Committee’s employee members led important work to
improve performance reviews and cross-company collaboration
as well as preparing for the 2024 employee ‘pulse survey’ that
was carried out in December 2024. On 17 October, the Board
hosted a reception with a range of Derwent London employees
to foster relationships and facilitate wider discussions.
The Committee received updates on occupier engagement with
our sustainability initiatives, the Supply Chain Responsibility
Standard and Modern Slavery Policy, practices and procedures.
Diversity and inclusion
The Committee oversaw the process to renew Derwent
London’s National Equality Standard (NES) accreditation
and was delighted that the Company was emphatically
reaccredited and ranked in the top 5% of all companies
who have participated in the National Equality Standard
assessment. Special credit to Katy Levine (Head of HR) and
the D&I Working Group who led this important work and
many other inclusion initiatives over the year; including the
#10,000 Black & Able Intern programme, our health and
wellbeing strategy and the Health, Safety and Accessibility
Working Group. The Working Group continued to progress the
recommendations from the Business Disability Forum self-
assessment. All this work was effectively communicated and
actioned through town halls and D&I newsletters, ensuring high
awareness and engagement.
Net zero carbon
The Committee received regular oversight updates on the
progress to net zero carbon by 2030, focusing on dashboard
metrics, embodied carbon, occupier engagement and
operational initiatives. We discussed work on offsets and solar
panel procurement, the Accelerating Concrete Decarbonisation
Group and the circular economy initiative. We are grateful to
John Davies and the Sustainability team for leading this work.
2025 focus areas
• Ensure a smooth transition as Madeleine McDougall
succeeds Dame Cilla Snowball as Chair of the Responsible
Business Committee
• Review and action the recommendations arising from the
2024 employee ‘pulse survey’
• Continue to monitor the Group’s community, charitable
and sponsorship initiatives
• Continue to monitor and receive regular progress updates
on the Group’s Net Zero Carbon Pathway
Committee membership during 2024
Independent
Number of
meetings
Attendance1
Cilla Snowball2
Yes
1
50%
Mark Breuer
Yes
2
100%
Madeleine McDougall3
Yes
1
100%
Matt Massey
Employee
2
100%
Lucy Taylor
Employee
2
100%
Kirsty Williams
Employee
2
100%
Paul Williams
No
2
100%
1
Percentages are based on the number of meetings that each member is
entitled to attend for the 12 months ended 31 December 2024.
2
Cilla Snowball was unable to attend the meeting in December. Cilla was
fully involved in the preparation of the agenda and review of the papers.
In Cilla’s absence Mark Breuer acted as Committee Chair.
3
Madeleine McDougall was appointed as a member of the Responsible
Business Committee on 1 November 2024.
Dame Cilla Snowball Chair of the Responsible Business Committee
Derwent London plc
166
Employee members
The employee members bring great insight, momentum and
energy to the Committee and the Board is extremely grateful
for their contributions which have made such a positive
difference in so many areas and enable the Board to have
a wider and deeper understanding of the organisation. We
thank Matt Massey, Lucy Taylor and Kirsty Williams for their
excellent work over their terms which concluded in December
2024. Following an internal application and selection process,
we appointed Carys Grieve, Amy Hulbert, Bryan Vasquez and
William Waples to the Committee as employee members.
We wish them all much success in 2025 and beyond.
Further engagement
I would recommend that this report is read alongside the
Responsibility section on pages 40 to 59. If you wish to discuss
any aspect of the Committee’s activities I am available via our
Company Secretary, David Lawler.
After nine years on the Board, I will be stepping down on or
before the 2025 AGM as Chair of the Responsible Business
Committee and as the designated director for gathering the
views of the workforce. I am delighted to be handing over my
responsibilities to Madeleine McDougall, who I am sure will
continue to drive the ever-important responsible business
initiatives that are embedded in the culture at Derwent London.
Telephone: +44 (0)20 7659 3000 or
Email: company.secretary@derwentlondon.com
Dame Cilla Snowball
Chair of the Responsible Business Committee
26 February 2025
Committee composition and performance
During 2024, our Committee consisted of three independent
Non-Executive Directors, the Chief Executive and three
employee members. At the request of the Committee,
members of the Executive Committee, senior management
team, other Board members and external advisers were invited
to attend all or part of any meeting, as and when appropriate.
During the year under review, the Committee held two formal
meetings (in May and December) (2023: two meetings).
As Cilla Snowball will retire from the Board no later than at
the 2025 AGM, Madeleine McDougall will succeed Cilla as the
Group’s designated director for gathering the views of our
workforce (see page 138).
The 2024 evaluation of the Board, its committees and
individual Directors was internally facilitated by Mark Breuer,
Chairman, in accordance with our three-year cycle of
evaluations (see page 139). The review confirmed that the
Committee continues to operate very effectively.
The Committee’s role and responsibilities are set out in the
terms of reference, which were last updated in December
2023 and are available on the Company’s website at:
www.derwentlondon.com/investors/governance/board-
committees
Committee Chair succession
Madeleine McDougall joined the Derwent London Board
and was appointed a member of the Responsible Business
Committee on 1 November 2024.
Madeleine is the Head of Corporate Coverage Sector at Lloyds
Banking Group and prior to this was the Head of the Real
Estate & Housing team. Madeleine brings significant banking
and central London real estate expertise to the Board.
During 2025, Madeleine will succeed Dame Cilla Snowball
as Chair of the Responsible Business Committee and as the
designated director for gathering the views of our workforce.
Non-Executive Director recruitment / See page 142
Madeleine McDougall Non-Executive Director
Incoming Chair of Responsible Business Committee
Report and Accounts 2024
167
Governance
RESPONSIBLE BUSINESS COMMITTEE REPORT continued
Key activities of the Committee
During 2024, the Committee continued to monitor and have oversight of the responsible
business practices of the Group, prioritised employee wellbeing and engagement with
key stakeholders through several methods and activities.
Responsible business
Stakeholder engagement
Supply Chain Responsibility Standard
Following the independent gap analysis conducted in
2023, the Supply Chain Responsibility Standard was
revised and updated. The main changes related to:
• a new standalone section for ‘Information Security
and Data’ providing emphasis on its importance; and
• greater detail on diversity and inclusion to encourage
suppliers to improve practices within the sector
beyond compliance obligations.
Modern slavery
Reviewed the Group’s practices to prevent modern
slavery and implemented the key recommendations
from the independent gap analysis conducted by Unseen
UK, which included updating the ‘Speak up’ Policy and
condensing our procedures into a Modern Slavery Policy.
The new Modern Slavery Policy was published on the
Group’s intranet.
Circular economy
The Committee received a copy of the Circular Economy
initiative in advance of the Board meeting in H1 2025.
The circular economy is about rethinking how we make,
use and treat materials, such that the material’s life is
extended, reused or repurposed (see page 46).
Net zero carbon
Reviewed the Group’s progress to be net zero carbon
by 2030 and the latest Sustainability Data Dashboard.
Discussed the work undertaken on carbon offsets, solar
panel procurement and the Accelerating Concrete
Decarbonisation Group. The risks associated with the
procurement of solar panels was referred to the Risk
Committee (see page 161).
Local community engagement
Reviewed the wider community engagement and
consultations undertaken before, during and after
completion of our developments. Received regular
updates on our community initiatives and engagement.
Sponsorship and Donations Committee
The Sponsorship & Donations Committee committed
£339k for a variety of causes to be supported throughout
the year.
The Committee received an update in December of
all the charities supported during 2024, inclusive of
both the Community Fund and the Sponsorship and
Donations Committee.
The Committee noted that in the future there will be
an option for charities to apply for multi-year funding.
This is in response to charities looking for greater
certainty and stability.
Occupier engagement
The Committee received an update on occupiers who
have been engaged with during the year in respect to
our sustainability initiatives.
Employee engagement
The Board hosted a ‘meet the Board’ event with
employees from across the workforce to facilitate
discussions and foster relationships. The Committee
received an update on the latest ‘pulse survey’ and
staff satisfaction in 2024.
8 years
Our Supply Chain Responsibility Standard has been
an integral part of our responsible business practices
for eight years
£339k
Committed by the Sponsorship and Donations
Committee during 2024
Derwent London plc
168
Diversity and inclusion
Employees
National Equality Standard
Renewed our National Equality Standard accreditation
through an assessment conducted by EY, scoring in the
top 5% of accredited organisations in the UK.
EY spoke with over 60 employees, including leadership
discussions, 1-1 interviews and focus groups, and we
provided 55 pieces of supporting documentation. EY
presented the results to the Committee in December.
D&I Working Group
During the year the D&I Working Group membership
was refreshed and strengthened through a series of
new appointments.
The importance of D&I continued to be well-communicated
across the business through town halls, inductions, the
intranet and D&I newsletters.
#10,000 Black & Able Intern programme
Welcomed four interns for a period of six weeks with a
rotation across the business every two weeks.
Health, Safety and Accessibility
Working Group
The Committee received updates from the Health,
Safety and Accessibility Working Group which continues
to progress the recommendations arising from the
Business Disability Forum self-assessment, with a focus
on the built environment and accessibility. Actions
include improving the way in which we capture and
interpret data from our occupiers to identity patterns
and common issues and improve the user experience
in our buildings.
Employee members
To enable the voice of employees to be heard in the
boardroom, the Responsible Business Committee
composition includes employee members.
As the employee members reached the end of their
tenure, engagement was sought from the wider
workforce to appoint new members. Further information
is on page 170.
The Committee’s employee members continue to play
an active and critical role in the Committee’s activities
and facilitate engagement between the wider workforce
and the Board.
Health & Wellbeing Plan
Rolled out the 2024 Plan which covered an array of
topics, such as pensions, healthcare and neurodiversity.
The Committee were kept updated on the health and
wellbeing initiatives being offered to staff and the
feedback received.
Feedback from 2023 employee survey
The Committee reviewed the recommendations arising
from the results of the 2023 biennial employee survey.
The Committee’s employee members hosted a series
of focus groups to identify key focus areas, with the
feedback and recommendations presented to the
Committee.
Employee initiatives
Celebrated the careers and achievements of individual
employees through the ‘Monday Meets’ initiative and
introduced a series of ‘Jargon Busting’ interviews to
share knowledge on our environmental, social and
governance (ESG) areas.
Top 5%
Scored in the top 5% of accredited organisations in
the UK with the National Equality Standard
6 years
The voice of our employees has been brought into
the boardroom via our employee members for the
past six years
Report and Accounts 2024
169
Governance
RESPONSIBLE BUSINESS COMMITTEE REPORT continued
Employees on the Responsible
Business Committee
Having employee members on a Board-level committee enables
the diverse voice of our employees to be brought directly into
our boardroom, providing invaluable insight and feedback.
The Committee opened applications for new employee members
in Q4 2024 as Matt Massey, Lucy Taylor and Kirsty Williams
approached the end of their tenure. The Committee is thankful
for the level of commitment the employee members have all
shown to the Committee’s initiatives. The Committee was
pleased to receive a number of high quality applications from the
wider workforce, and following an in-depth process, welcomed
Byran Vasquez, Carys Grieve, Amy Hulbert and William Waples
as the new employee members from 1 January 2025.
Our employee members will continue to be fully engaged in all
aspects of the Committee’s activities, meeting regularly with
the Head of HR and D&I Working Group to review initiatives
and provide six-monthly updates to the Executive Committee
and wider workforce.
Bryan Vasquez
Data Analyst Lead
Carys Grieve
Senior Financial Accountant
Amy Hulbert
Assistant Company Secretary
William Waples
Senior Asset Manager
As an employee member, I was fortunate
to collaborate with various people from
across the business and saw first-hand the
value created when bringing the employee
voice into the boardroom.
Kirsty Williams
Associate, Property Management
Member of the Committee from January 2022
to December 2024
Derwent London plc
170
Supply Chain Responsibility Standard
The primary purpose of the Supply Chain Responsibility
Standard (the Standard) is to clearly set out our principles
and expectations in terms of the environmental, social, ethical
and governance issues which relate to our supply chains. The
Standard renews our commitment to ensuring our supply chain
remains as engaged as we are in setting the highest standards.
During 2024, a review was conducted to ensure the Standard
remains valid, with an updated version to be issued in 2025.
All new suppliers must acknowledge and adhere to our
standards. We conduct risk reviews every two years, focusing
on suppliers with an annual spend of over £20,000 and ask
these suppliers to complete a more detailed questionnaire on
key risk areas. All responses are reviewed to ensure compliance,
and we provide additional support to suppliers if needed. The
fundamental principles of the Standard are set out below:
Fundamental principles
Minimum standard
Governance
We will not tolerate any form of
fraud corruption, bribery or anti-
competitive behaviour/actions in
our supply chain
Information security
and data protection
Suppliers to have a comprehensive
set of IT governance policies and
procedures that are communicated
to all employees through periodic
training on data privacy and
protection
Employment and
labour practices
Suppliers to comply with the
relevant employee-based legislation
Modern slavery
Suppliers to comply with the
relevant legislation, specifically the
Modern Slavery Act 2015
Diversity and inclusion
Suppliers to comply with the
relevant employee-based legislation,
specifically the Equality Act 2010
Payment practices
To aim to pay our suppliers within
30 days or in accordance with
specified contract conditions
Health, safety
and wellbeing
Suppliers to annually review their
Health and Safety Policy Statement
and management systems
Environmental and
social
Suppliers to have robust
environmental management policies
and procedures in place appropriate
to nature and scale of business
Responsible payment practices
Derwent London continued to be a signatory of the Chartered
Institute of Credit Management (CICM) Prompt Payment Code
up until its cessation on 3 December 2024. During 2024 our
average payment term was 20 days. The Fair Payment Code
replaced the Prompt Payment Code in December 2024. We
remain committed to being clear, fair and collaborative with
our suppliers and are currently in the process of applying for a
Fair Payment Code Award of silver or higher.
Modern slavery
We understand that preventing modern slavery is vital
and we remain committed to eradicating any possibility
of modern slavery or human trafficking occurring with
respect to our operations. During the year we continued to
strengthen our policies and procedures by implementing the
key recommendations arising from the independent review
conducted in 2023 by the anti-slavery charity, Unseen UK.
Additionally, all employees (including the Board) completed
training on ‘Modern Slavery Transparency Statements’.
Key recommendations
Status
Condense our procedures
into a Modern Slavery Policy
Actioned and published
on our Group intranet
To update the Responsible
Business Committee terms
of reference to make specific
reference of having oversight
to modern slavery risk
The Responsible Business
Committee terms of
reference were updated
and are available to view
on our website
Our ‘Speak up’ Policy to
specifically reference modern
slavery as a reportable concern
Actioned and published
on our Group intranet
A summary of our key modern slavery practices is outlined
below. Our latest Modern Slavery Statement is available to
view on our website www.derwentlondon.com
Risk
The potential greatest risk exists in the supply
chains of our construction contractors as well
as the property management suppliers and
maintenance contractors used in our buildings.
Governance
The Modern Slavery Act 2015 requires companies
with an annual turnover of £36m to provide
a modern slavery statement. Where legally
required, our suppliers publish a modern slavery
statement. Regardless of this threshold we
encourage all suppliers to adhere to the Act.
Suppliers are expected to provide modern slavery
training to employees and ensure they have
provisions in place for full compliance.
Policies
We have a number of internal policies that
promote our culture and expected behaviours
in accordance with the Act’s objectives.
Engagement
We are clear on our zero-tolerance position
and all suppliers have access to Derwent
London’s latest Modern Slavery Statement.
We endeavour to obtain modern slavery
statements from all suppliers, where they
are bound by the Act. We expect our main
contractors to conduct due diligence within
their own supply chains to ensure that the
risk of modern slavery and human trafficking
occurring is adequately mitigated.
Effectiveness
All new starters are required to complete a
‘core skills’ programme which includes training
on modern slavery risks. Ongoing training
initiatives and our mandatory compliance
training programme ensures that employees
are kept up to date with the latest requirements.
Report and Accounts 2024
171
Governance
Diversity key performance indicators
RESPONSIBLE BUSINESS COMMITTEE REPORT continued
Diversity and inclusion
Having a diverse, highly talented and skilled group of people at
all levels within Derwent London is fundamental to our business
success. Diversity and inclusion brings new ideas and fresh
perspectives which fuel innovation and creativity.
The Board has established clear focus areas which aim to build
an inclusive culture that promotes, encourages and celebrates
the importance of diversity and inclusion at all stages, from
attracting diverse and talented individuals through to retention
and career opportunities.
Diversity and inclusion focus areas
Attracting diverse, highly skilled and talented
employees
• Tackle any unconscious bias
• All shortlists to have due regard for diversity
considerations (not limited to gender and ethnicity)
• Recruit from a wide pool of talent
(including parents returning to work)
Retaining the best talent
• Focus on supporting parents returning to work
• Promote the importance of health and wellbeing
initiatives
• Prioritise training and development and equal
opportunities for all, with support of career progression
• Ensure open two-way communication
Promoting diversity
• Gender balance within our internships and work
experience placements
• Aim to attract more women to the construction and
property industry
• Heads of Departments to lead by example
demonstrating inclusive leadership qualities
Key actions taken during 2024
• Redesigned and relaunched our performance
appraisal process following feedback from the 2023
employee survey with manager training and consistent
performance metrics and measurements.
• Worked with EY during the four-month National Equality
Standard reassessment, which included speaking to a
significant number of employees through a series of
focus groups.
• Hosted six individuals through the #10,000 Black & Able
Intern programme.
• Provided inclusive leadership training for senior managers.
• Introduced the option of enabling employees to ‘swap’ a
limited number of standard bank holidays for a religious
holiday/festival that holds personal significance.
Our people / See page 50
The Diversity & Inclusion Working Group
The Diversity & Inclusion Working Group (the D&I Working
Group) consists of 13 members and meets monthly to discuss
the progress being made towards the Group’s diversity and
inclusion vision, strategy and KPIs.
On an ad hoc basis and when deemed necessary, Executive
Directors and/or Heads of Departments and employees are
invited to join the Group’s meetings, which provides insights
into the diversity and inclusion initiatives being discussed. The
Committee received updates on the progress made by the D&I
Working Group at each meeting during 2024, which included:
• Business Disability Forum (BDF): Derwent London
became a member of the BDF from 1 March 2023.
During the year, the D&I Working Group continued to
focus on progressing the feedback from the Disability Smart
Audit self-assessment across the 10 competency areas.
• Wellbeing initiatives: During 2024, all employees
were invited to attend a range of programmes. Our
comprehensive approach involves supporting mental,
physical, social and financial wellbeing. These were
well-attended and included sessions on ‘Neurodiversity:
invisible conditions’, ‘The impact of changing seasons’,
and our benefit schemes. Additionally, there is a wealth
of information available via the intranet all year round.
• Communication: The importance of diversity and inclusion
has continued to be communicated via staff inductions,
town halls and the intranet. Two diversity and inclusion
newsletters were rolled out to employees with positive
engagement and feedback received. To further share in
the careers and achievements of individual employees, the
D&I Working Group continued to post ‘Monday Meets’ via
the Intranet and social media channels. 2024 also saw the
introduction of a ‘Jargon Busting’ series with the objective
of providing greater insight into our ESG areas.
In 2025, the D&I Working Group will continue to focus on the
Business Disability Forum Framework and action plan, as
well as actioning feedback from the recent National Equality
Standard re-accreditation. The wellbeing strategy will be
updated to reflect new requirements and inclusive working
training will be rolled out to all employees.
51%
of employees are
female as at
31 December 2024
36.1%
of new recruits during 2024
were from an ethnically
diverse background
42%
of the Executive Committee and
its direct reports are women
Derwent London plc
172
Length of service
Employees by age
Years
Number of
Employees
Under 3
85
3–4
27
5–9
43
10–14
19
15–19
12
20+
15
Total
201
Age
Number
20–29
26
30–39
75
40–49
53
50–59
24
60+
23
Total
201
The Group’s composition and diversity
The information below provides a breakdown of our diversity as at 31 December 2024. Further information on the Board’s
composition is shown on page 143. The variance between genders in response to employee surveys is taken into account by the
Remuneration Committee when determining the annual bonus payout for Executive Directors in relation to the staff satisfaction
metric (see page 193).
Gender diversity and ethnic origin1
Total employees2
Executive Committee
and its direct reports3
Board4
Senior positions
on the Board5
Number
%
Number
%
Number
%
Number
Gender
Men
98
49%
44
58%
6
55%
3
Women
103
51%
32
42%
5
45%
1
Other
–
–
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
–
–
201
76
11
4
Ethnicity
White British/White Other
143
71%
64
84%
10
90%
4
Mixed/Multiple Ethnic Groups
10
5%
3
4%
–
–
–
Asian/Asian British
26
13%
6
8%
1
10%
–
Black/African/Caribbean/Black British
15
7%
1
1%
–
–
–
Other Ethnic Group
5
3%
2
3%
–
–
–
Not specified/prefer not to say
2
1%
–
–
–
–
–
Total
201
76
11
4
1
The information disclosed, and the format of the table, is prescribed by Listing Rule 9.8.6R(10).
2
Total employees include the Board of Directors.
3
Includes the Executive Committee and its direct reports (excluding administrative and support staff).
4
The Board includes the Chairman, Executive Directors and Non-Executive Directors.
5
Senior positions on the Board include the CEO, CFO, Chairman and Senior Independent Director.
Report and Accounts 2024
173
Governance
Dear Shareholder,
As Chair of the Remuneration Committee
and on behalf of the Board, I am pleased
to present our report on Directors’
remuneration for 2024, my first since
becoming Chair in May 2024.
I would like to thank Claudia Arney for her time chairing the
Remuneration Committee and for her support as part of the
transition process.
The Annual report on remuneration, describing how the
Remuneration Policy has been applied for the year ended
31 December 2024 and how we intend to implement the Policy
for 2025, is provided on pages 178 to 199. Our Remuneration
Policy was approved by shareholders at the AGM held on
12 May 2023, and received 95% of votes cast in favour. We
have provided a summary of the Policy on pages 180 to 183.
A copy of the complete Remuneration Policy can be found
on our website at: www.derwentlondon.com/investors/
governance/board-committees
Linking Executive Directors’ remuneration
with our purpose, values and strategy
Our Remuneration Policy is designed to be simple and
transparent and to promote effective stewardship in the
context of the nature of the sector in which we operate.
Further details, including how remuneration aligns with our
purpose, values and strategy and how our KPIs are embedded
within the incentive framework, are set out on page 179.
The Committee strives to provide clarity on how pay and
performance is reported at Derwent London and how decisions
made by the Committee support our purpose and values and
strategic direction of the Group and take into account the
experience of key stakeholders. During the year, the Committee
considers that our Remuneration Policy has operated as
intended in terms of supporting the delivery of the strategy
and aligning outcomes with Company performance.
Performance outcomes in 2024
Based on performance against the financial and strategic
targets, the incentive outcomes for 2024 were as follows:
• Annual bonus outcome of 61.3% of the maximum
opportunity (equivalent to 92% of base salary) based on
the outcome of the relative total return and total property
return performance metrics and strategic objectives
(see pages 192 and 193).
• The Performance Share Plan (PSP) award granted in 2022
will lapse in full, based on the outcome of the relative
total shareholder return and relative total property return
performance metrics (see page 194).
REMUNERATION COMMITTEE REPORT
2025 focus areas
• Remuneration Policy review and consultation with
major shareholders
• Operation of the 2025 annual bonus and grant of 2025
Performance Share Plan (PSP) awards
• Continue to keep wider workforce remuneration
arrangements under review, taking these into account
when considering remuneration arrangements for
Executive Directors
Committee membership during 2024
Independent
Number of
meetings1
Attendance
Sanjeev Sharma
Yes
4
100%
Lucinda Bell
Yes
4
100%
Helen Gordon
Yes
4
100%
Claudia Arney2
Yes
1
100%
1
Percentages are based on the meetings that each member is entitled
to attend for the 12 months ended 31 December 2024.
2
Claudia Arney stepped down from the Board at the 2024 AGM.
Annual statement
Sanjeev Sharma Chair of the Remuneration Committee
Derwent London plc
174
The Committee considered the formulaic vesting outcomes
against broader perspectives including: underlying business
performance and affordability; the experience of shareholders;
and the experience of employees and other stakeholders.
The Group has continued to perform strongly relative to
central London office-based real estate peers (the Group’s
total property return performance was 4.1% compared to
the MSCI Quarterly Offices Index of 1.3%) in the face of a
subdued market and continued economic uncertainty, which is
testament to the execution of the strategy over multiple years,
the performance and commitment of our Executive leadership
team and the quality of the portfolio they have assembled.
The Directors recommend a final dividend of 55.50p per
ordinary share for the year ended 31 December 2024. When
taken together with the interim dividend of 25.00p per ordinary
share paid in October 2024, this results in a 1.3% increase in
total dividend for the year. The Committee also recognises
that shareholders have been impacted by the Group’s absolute
share price performance during the last couple of years.
A dedicated section is included within this report which
incorporates several disclosures to demonstrate the
Committee’s belief that remuneration arrangements for
Executive Directors are fair and appropriate in the context
of pay policies and practice across the wider workforce
(see pages 186 to 189). In particular, it is noted that all eligible
employees received a bonus for 2024.
No discretion was applied to adjust the formulaic outcome of
the annual bonus or PSP awards.
Implementation in 2025
Base salaries
The Committee awarded the Executive Directors a 3.5% salary
increase with effect from 1 January 2025. Therefore, Paul
Williams’ salary was increased to £732,000 and to £564,600
for the other Executive Directors. Base salary increases were
in line with the average inflationary increase for the wider
workforce of 3.5%. The average actual increase in base salaries
for all employees eligible for a pay rise (inclusive of promotions,
career progression and market salary alignments) effective
from 1 January 2025 was 5.9%.
Annual bonus and PSP
The annual bonus and PSP opportunities remain unchanged
for 2025. The Committee reviewed the annual bonus and
PSP performance measures during 2024 to ensure that they
continue to align with our strategy. After careful consideration,
and reflecting that the Remuneration Policy will be fully
reviewed in 2025 as part of the normal three-year cycle,
the Committee agreed to implement minor refinements
to performance measures for the 2025 annual bonus.
Details are provided below.
The Committee agreed to rebalance the weighting of the
2025 annual bonus measures as follows: relative total property
return (45%, vs 37.5% for 2024); relative total return (30%, vs
37.5% for 2024); strategic objectives (25%, no change vs 2024).
The relative total property return measure, which assesses
our performance against the MSCI Quarterly Central London
Offices Total Return Index, provides direct alignment with the
Group’s continued strategic focus on the central London office
market. The Committee therefore considers that a modest
increase to the weighting of the total property return measure
strikes a better balance in terms of incentivising and rewarding
Executive Directors for progressing our strategy and delivering
outperformance across the central London office market.
The Committee believes that the total return performance
measure should be retained (at a reduced weighting of
30%) as it means that Executive Directors also continue to
be incentivised to outperform the real estate market more
generally. Noting that the total return comparator group
includes companies operating across different asset classes
and UK regions (see page 193).
No changes have been made to the strategic objectives
(see page 182).
No changes are proposed to the PSP performance measures.
The 2025 award will continue to be based on total shareholder
return vs the FTSE 350 Super Sector Real Estate Index (50%),
total property return vs the MSCI Quarterly UK All Property
Index (40%), embodied carbon and energy intensity reduction
targets (10%).
As disclosed in the 2023 Report & Accounts, the Committee
intended to increase the weighting of the embodied carbon
and energy intensity reduction performance measures to
20% in the future. The Committee is mindful that the Group
is still embedding a robust approach to managing embodied
carbon and energy data and measuring performance against
the UKGBC-aligned targets set under our Net Zero Carbon
Pathway. In the current environment the Committee also
wants to ensure that sufficient focus is retained on delivering
total property return and total shareholder return performance.
Therefore, after careful reflection, the Committee considers it
appropriate to retain the weighting of the embodied carbon
and energy intensity reduction performance measures at 10%
within the 2025 PSP awards. The Committee will keep this
under review in the future.
Delivering on its net zero carbon commitments remains a
fundamental part of Derwent London’s long-term strategy. The
Committee strongly believes that, whilst it is appropriate for
a proportion of PSP awards to be subject to embodied carbon
and energy intensity performance measures, the Executive
Directors are fully committed to delivering our sustainability
strategy regardless of this link to the incentive framework.
Furthermore, the Board believes that strong sustainability
performance will ultimately enhance the Group’s total returns
and total property returns over the longer term, both of which
are performance measures within the incentive framework.
Report and Accounts 2024
175
Governance
Non-Executive Chairman and Non-Executive Director fees
The Non-Executive Chairman’s fee was increased by 3.5% to £289,800 with effect
from 1 January 2025. The Non-Executive Director base fee was increased by 3.5%
to £59,000 with effect from 1 January 2025. A similar increase was made to the
additional fees payable to the Non-Executive Directors (see page 183). Fee increases
were in line with the average inflationary increase for the wider workforce of 3.5%.
Remuneration Policy review
The current Remuneration Policy was approved by shareholders at the 2023 AGM.
We are therefore required to put a new Remuneration Policy for shareholder approval
at the 2026 AGM, which will govern annual bonus and long-term incentive awards
granted in 2026, 2027 and 2028. The Committee will therefore undertake a thorough
review of the current Remuneration Policy and incentive framework during the course
of 2025 and will consult with major shareholders on any proposed changes.
Further engagement
I look forward to receiving your support at our 2025 AGM, where I will be available to
respond to any questions shareholders may have on this report or in relation to any of
the Committee’s activities. In the meantime, if you would like to discuss any aspect
of our Remuneration Policy or incentive framework, please feel free to contact me
through the Company Secretary, David Lawler, as detailed below.
The Directors’ remuneration report has been approved by the Board of Directors and
signed on its behalf by:
Sanjeev Sharma
Chair of the Remuneration Committee
26 February 2025
REMUNERATION COMMITTEE REPORT continued
Annual statement continued
Remuneration
Policy review
Outline of proposed timetable.
Dates are provisional and subject to change.
Invitation
to engage
14 April 2025
Review Remuneration
Policy and incentive
framework
Q2 2025
Shareholder
consultation
Q3 2025
Approval of final
Remuneration Policy
Q4 2025
Publish Remuneration
Policy Report
April 2026
Shareholder
approval at AGM
May 2026
Invitation to engage
Ongoing dialogue with our shareholders is important to us and informs the
Board’s decision making. Any shareholder who wishes to provide input into
our Remuneration Policy review can contact me via our Company Secretary,
David Lawler.
Telephone: +44 (0)20 7659 3000 or
Email: company.secretary@derwentlondon.com
We request that all shareholders who wish to engage with the Committee during
the Remuneration Policy review contact the Company Secretary before the
2024 AGM, on 16 May 2025. This is to ensure your comments are included in the
Committee’s discussions prior to consultation.
Derwent London plc
176
Remuneration at a glance
Our Remuneration Policy is designed to be transparent and to promote
effective stewardship that is vital to the delivery of the Group’s purpose
and strategy.
Wider stakeholder
considerations
The Committee considers pay policies
and practices for employees, as well
as feedback from key stakeholders,
when making remuneration decisions
for Executive Directors.
Reward linked to performance
Performance-based remuneration achieved for the year ended 31 December as a
percentage of base salary. Further information on annual bonus and PSP outcome
in 2024 is available on pages 192 to 194.
Single figure of remuneration (£’000)
Paul Williams, CEO
Other Executive Directors (average)
+5.9%
average increase in base
salaries for all employees
eligible for a pay rise effective
from 1 January 2025
+1.3%
increase in the total dividend
(2023 to 2024)
95%
of votes cast in favour of our
Remuneration Policy at the
2023 AGM
Component
Key features3
Base salary and benefits
Attract and retain high calibre executives
Pension
In line with the contributions available for the majority
of the wider workforce (currently 15% of salary)
Annual bonus1
Maximum opportunity of 150% of salary
Any bonus earned in excess of 75% of salary is
deferred into shares over three years
LTIP1
Maximum opportunity of 200% of salary
Three-year performance period plus two-year
holding period
Shareholding guidelines2
200% of salary for all executives
Post-employment guidelines apply
1
Strong link between performance against strategy and KPIs and reward.
2
Supports long-term stewardship.
3
Takes into account risk management.
17:1
CEO pay ratio at 50th percentile
(median) for 2024 (see page 189)
2024
2023
814
319
846
651
2024
2023
620
658
241
502
Maximum opportunity (% of salary)
92%
150%
Annual bonus
200%
0%
PSP
Fixed pay
Pay for performance (and other items in the nature of remuneration)
Remuneration Policy summary
Total remuneration
Fixed pay
Base salary
Benefits
Pension
Variable pay
Annual bonus
Long-term incentive
Performance-based
Report and Accounts 2024
177
Governance
Annual report on remuneration
(unaudited unless otherwise indicated)
The Annual report on remuneration (pages 178 to 199) explains how we have implemented
our Remuneration Policy during 2024. The Remuneration Policy in place for the year was
approved by shareholders at the 2023 AGM and is available to download from our website
at: www.derwentlondon.com/investors/governance/board-committees
REMUNERATION COMMITTEE REPORT continued
Role of the Remuneration Committee
The role of the Committee is to determine and recommend
to the Board the Remuneration Policy for Executive Directors,
and set the remuneration for the Chairman, Executive
Directors and Executive Committee (including the Company
Secretary). In doing so, the Committee has due regard for the
remuneration arrangements available to the entire workforce
and ensures that our Remuneration Policy supports our
strategy, the achievement of our purpose, and is aligned with
our values. We detail the Group’s key remuneration principles,
which inform our remuneration structure, in the table below.
The Committee’s role and responsibilities are set out in the
terms of reference, which were last updated in March 2022
and are available on the Company’s website.
Structure of the annual report on remuneration
The Committee has structured this report to demonstrate that
the remuneration arrangements for Executive Directors are fair
and appropriate in the context of pay policies and practices
across the wider workforce, mitigating risk and rewarding
genuine outperformance. Key sections include:
• Aligning remuneration with our purpose, values and strategy
(page 179)
• Overview of our Remuneration Policy and its
implementation in 2025 (pages 180 to 183)
• Risk management (pages 184 and 185)
• Remuneration decisions in context (page 186)
• Executive Director remuneration in 2024 (page 190)
Our remuneration principles
The Committee ensures that the remuneration arrangements for Executive Directors are aligned with our key remuneration
principles which are detailed below, as well as taking into account the principles of clarity, simplicity, risk, predictability,
proportionality and alignment to culture set out in the UK Corporate Governance Code 2018.
Attract, retain and motivate
Support an effective pay for performance culture which enables the Company to attract,
retain and motivate Executive Directors who have the skills and experience necessary to
deliver the Group’s purpose.
Clarity and simplicity
Ensure that remuneration arrangements are simple and transparent to key stakeholders
and take account of pay policies for the wider workforce.
Alignment to strategy
and culture
Align remuneration with the Group’s objectives and long-term strategy and reflect our
culture through a balanced mix of short and long-term performance-related pay and
ensure that performance metrics remain effectively aligned with strategy.
Risk management
Promote long-term sustainable performance through sufficiently stretching performance
targets, whilst ensuring that the incentive framework does not encourage Executive
Directors to operate outside the Group’s risk appetite (see page 93). Further information
on risk management within our remuneration structures is on pages 184 and 185.
Stewardship
Promote long-term shareholdings by Executive Directors that support alignment with
long-term shareholder interests. Executive Directors are subject to within-employment
and post-employment shareholding guidelines. Once PSP awards have vested there is a
two-year holding period during which Executive Directors are not able to sell their shares
(net of tax) to support sustainable decision making.
Predictability
Details of the maximum potential values that may be earned through the remuneration
arrangements are set out in the summary of our Remuneration Policy on pages 180 to 183.
Proportionality and fairness
Total remuneration should fairly reflect the performance delivered by the Executive Directors
and the Group. The Committee takes into account underlying business performance and
the experience of shareholders, employees and other stakeholders when determining vesting
outcomes, ensuring that poor performance is not rewarded. The Committee considers the
approach to wider workforce pay and policies when determining the Remuneration Policy to
ensure that it is appropriate in this context.
Derwent London plc
178
Aligning remuneration with our purpose, values and strategy
Remuneration that aligns with our values
Our core values are reflected in our remuneration arrangements in the following ways:
Remuneration that supports our strategy and helps us to achieve our purpose
We seek to create above average long-term returns for our shareholders, retain and develop our talented workforce, design
‘long-life, low carbon’ space, and work towards achieving our net zero carbon ambitions.
Our Remuneration Policy has been designed to support our strategy by aligning our performance-based pay with our strategic
objectives and Net Zero Carbon Pathway. We have ESG-related metrics within both elements of variable remuneration for
Executive Directors (annual bonus and PSP).
Our ability to provide above average returns to our shareholders is a substantial element of our PSP (see page 194). Our total
shareholder return is ranked against the FTSE 350 Super Sector Real Estate Index and vesting of this element only occurs if we
reach or exceed median. Further information on the rationale for the Committee’s chosen strategic performance targets is on
page 184.
As delivering on our net zero carbon
commitments is a fundamental part of
Derwent London’s long-term strategy,
sustainability performance metrics
(embodied carbon reduction and energy
intensity reduction) are included within
the Executive Directors’ long-term
incentive plan awards (PSP).
All employees receive at least the
London Living Wage. Our generous
benefit package includes a 15% company
pension contribution. We continue to
invest significantly in our employees to
ensure that everyone thrives in their
roles, feels valued, supported and has
the opportunity of continuous growth
and development.
Risk management is factored into
the design of our remuneration
arrangements and the setting of
targets. We seek to ensure fairness and
transparency in our disclosures, and
voluntarily report on our CEO pay ratio
on page 189.
Environmental
Social
We seek to create long-term
collaborative relationships with our
occupiers and employees. The annual
bonus contains strategic targets for
tenant retention and staff satisfaction.
A staff satisfaction metric helps the
Committee, and the Board, monitor the
wellbeing of the wider workforce and
gauge our ability to retain key talent.
Our Remuneration Policy has
been designed to reflect our key
remuneration principles (page 178).
Incentive arrangements reward genuine
outperformance and progress against
our strategic objectives. The structure
of our Remuneration Policy is kept under
routine review.
Total remuneration fairly reflects the
performance delivered by the Executive
Directors and the Group. The Committee
takes into account underlying business
performance and the experience of
shareholders, employees and other
stakeholders when determining
vesting outcomes, ensuring that poor
performance is not rewarded.
We build long-term
relationships
We lead by design
We act with integrity
Governance
How our KPIs are embedded within the executive remuneration framework
Success against our strategic objectives is measured using a range of financial and non-financial key performance indicators
(KPIs), which are largely embedded within the executive remuneration framework as illustrated by the chart below.
KPIs
Financial
Non-financial
Total return
B
Reversionary percentage
Total property return1
P
B
Development potential
B
Total Shareholder Return (TSR)
P
Tenant retention
B
EPRA Earnings Per Share (EPS)
Void management
B
Gearing & available resources
BREEAM ratings
Interest cover ratio (ICR)
Energy Performance Certificates (EPCs)
Energy intensity
P
Embodied carbon intensity
P
Accident Frequency Rate (AFR)
B
Staff satisfaction
B
Annual Bonus
Performance Share Plan
B
P
1
Total Property Return (TPR) performance for the annual bonus is assessed
against the MSCI Quarterly Central London Offices Total Return Index (see page
193). TPR performance is assessed against the MSCI Quarterly UK All Property
Total Return Index under the Performance Share Plan (see page 194).
Report and Accounts 2024
179
Governance
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Summary of Remuneration Policy
We have provided a summary of the key elements of the Remuneration Policy for Executive Directors and Non-Executive Directors
approved by shareholders at the 2023 AGM on pages 180 to 183. In addition, we have set out how the Remuneration Policy will
be implemented in 2025. Our full Remuneration Policy can be found on our website at: www.derwentlondon.com/investors/
governance/board-committees.
We always seek to engage with shareholders when considering material changes to our remuneration policies or practices.
In 2022, the Remuneration Committee consulted on the Remuneration Policy with 20 of our largest shareholders, representing
approximately 64% of our issued share capital. The Committee was extremely pleased with the level of shareholder support at
recent AGMs in respect of its Remuneration Policy and the Annual report on remuneration.
Annual report on remuneration
(2024 AGM)
Remuneration Policy
(2023 AGM)
Votes cast in favour
95.5m
99.3%
91.6m
95.0%
Votes cast against
0.6m
0.7%
4.8m
5.0%
Votes withheld
0.0m
0.0%
0.0m
0.0%
Total votes cast
96.1m
100%
96.4m
100%
Executive Directors
Element
How operated
Maximum opportunity
Implementation for 2025
Base
salary
Normally reviewed annually.
Any increase is normally effective
from 1 January.
Factors taken into account in the
review include:
• the role, experience and
performance of the individual
and the Company;
• pay and conditions throughout
the business; and
• practice in companies with
similar business characteristics.
No maximum, but increases will
normally be consistent with the
policy applied to the workforce
generally (in percentage of
salary terms).
Increases above this level may be
awarded in certain circumstances
such as, but not limited to:
• where there is a change in
role or responsibility;
• an Executive Director’s
development or performance
in role (e.g.to align a new
hire’s salary with the market
over time); and
• where there is a significant
change in the size and/or
complexity of the Group.
With effect from 1 January 2025, Executive
Directors’ salaries were increased by 3.5%.
The average inflationary increase for the wider
workforce was 3.5%.
Executive Director
2025 salary
(£’000)
2024 salary
(£’000)
Paul Williams
732.0
707.2
Damian Wisniewski
564.6
545.5
Nigel George
564.6
545.5
Emily Prideaux
564.6
545.5
The average actual increase in base salaries
for all employees eligible for a pay rise
(inclusive of promotions, career progression
and market salary alignments) effective
from 1 January 2025 was 5.9%.
Benefits
Benefits include, but are not
limited to, private medical
insurance, car and fuel allowance
and life assurance.
Executive Directors may participate
in the Sharesave Plan and any
other all-employee plans on the
same basis as other employees up
to HMRC approved limits.
Set at a level which the
Committee considers to be
appropriate taking into account
relevant factors including but
not limited to the overall cost
to the Company in securing
the benefits, individual
circumstances, benefits provided
to the wider workforce and
market practice.
Benefits will continue to include a car
allowance or fully expensed car, fuel allowance,
private medical insurance and life assurance.
Pension
Executive Directors may receive
cash payments in lieu of
contributions where considered
appropriate (for example where
contributions would exceed either
the lifetime or annual contribution
limits).
The maximum Company
contribution or cash supplement
(or a mix of both) for Executive
Directors is aligned with the
contribution available to the
majority of the wider workforce
(currently 15% of salary).
Company pension contribution and/or cash
supplement for the Executive Directors
is aligned with the majority of the wider
workforce (currently at 15% of salary).
Derwent London plc
180
Element
How operated
Maximum opportunity
Implementation for 2025
Annual
bonus
At least 75% of the annual
bonus will be based on financial
measures with up to 25% based
on strategic objectives.
Bonuses up to 75% of salary are
paid as cash. Amounts in excess
of 75% are deferred into shares for
three years subject to continued
employment.
Dividend equivalents may accrue
on deferred shares. Such amounts
will normally be paid in shares.
Malus and clawback provisions
apply (see table on page 184).
The Committee has discretion
to adjust the payment outcome
if it is not deemed to reflect the
underlying financial or non-
financial performance of the
business, the performance of the
individual or the experience of
shareholders or other stakeholders
over the performance period.
Maximum opportunity of up to
150% of salary may be awarded
in respect of a financial year.
The maximum bonus potential for Executive
Directors is 150% of salary. Bonuses for 2025 are
subject to the following performance metrics:
• Total Return (weighting: 30%).
Performance measured against a
comparator group of real estate companies.
Targets and amounts vesting for threshold
and maximum performance are outlined on
page 193.
• Total Property Return (weighting: 45%).
Performance measured against the MSCI
Quarterly Central London Offices Total
Return Index. Targets and amounts vesting
for threshold and maximum performance
are outlined on page 193.
• Strategic targets (weighting: 25%). The
strategic targets, ranges and weightings are
outlined on page 182.
As detailed on page 175, compared to 2024, the
weighting of the Total Property Return metric
will be increased by 7.5%, with a commensurate
decrease in the Total Return weighting.
Long-term
incentives
Award of performance shares
which vest after three years
subject to performance measures
set by the Committee and
continued employment.
Awards will be subject to a two-
year post-vesting holding period.
Dividend equivalents may
accrue on performance shares.
Such amounts will normally be
paid in shares.
Malus and clawback provisions
apply (see table on page 184).
The Committee has discretion
to adjust the vesting outcome
if it is not deemed to reflect
appropriately the underlying
financial or non-financial
performance of the business, the
performance of the individual or
the experience of shareholders
or other stakeholders over the
performance period.
Maximum opportunity of up to
200% of salary may be awarded
in respect of a financial year.
The Committee reviewed the Group’s share
price performance prior to determining the
award levels for the 2025 PSP award. As the
share price on 20 February 2025 was not
materially different to the share price at
the time the 2024 PSP awards were granted
(£21.00), the Committee considered it
appropriate to award a maximum opportunity
of 200% of salary to Executive Directors.
PSP awards for 2025 are subject to the
following performance metrics:
• Total Shareholder Return (50%)
• Total Property Return (40%)
• Embodied carbon (5%)
• Energy intensity reduction (5%)
The targets for Total Shareholder Return and
Total Property Return remain the same as for
the 2024 PSP awards (see page 195).
The embodied carbon and energy intensity
reduction targets are based on the business’
UKGBC-aligned milestone targets to achieve
net zero by 2030 and are detailed on page 182.
Service contracts
Executive Directors’ service contracts do not have a fixed expiry date; however, they are terminable either by the Company
providing 12 months’ notice or by the executive providing six months’ notice.
Date of service contract
Paul Williams
22 November 2018
Damian Wisniewski
10 July 2019
Nigel George
10 July 2019
Emily Prideaux
26 February 2021
Executive Directors may accept a non-executive role at another company with the approval of the Board. The Executive Director is
entitled to retain any fees paid for these services.
Report and Accounts 2024
181
Governance
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Performance targets for 2025
Annual bonus strategic targets
The strategic targets for the 2025 annual bonus are the same as those used for the 2024 annual bonus (see page 193).
Performance measure
Link to strategic
objectives1
Target range2
Weighting %
of bonus
Void management
This is measured by the Group’s EPRA vacancy rate for the year calculated as the
average of each quarter end figure.
1 2
10% to 2%
5.0%
Tenant retention
This is measured by the percentage of tenants that remain in their space when their
lease expires or the space is re-let during the reporting period.
1 2
50% to 75%
5.0%
Staff satisfaction
Staff surveys are used to assess this measure. In assessing this target the
Committee will consider any variance in staff satisfaction scores between genders.
3
80% to 90%
4.0%
Accident rate
The Group’s RIDDOR Accident Frequency Rate (AFR) is calculated based on significant
(‘Direct’) RIDDOR injuries and incidents during the year3, multiplied by 1,000,000 and
divided by ‘total work exposure hours’. This target is also conditional on each Executive
Director completing, during 2025, an annual health and safety leadership tour.
4
4.0 to 1.0
4.0%
Portfolio development potential
This is measured by the percentage of the Group’s portfolio by area where a potential
development scheme has been identified, including committed acquisitions4.
1
35% to 50%
7.0%
25%
1
The references above show the link between our strategic objectives and our annual bonus targets (see pages 28 to 32).
2
Payout accrues on a broadly straight-line basis, between threshold and maximum performance.
3
The RIDDOR reportable injuries that we capture in our AFR are all HSE-reportable accidents or incidents which result in a fatality or ‘specified injuries’ (such as
fractures, serious burns etc). In addition, we will include all injuries caused to members of the public, where we may have contributed to the causation and where
they are taken directly to hospital, and injuries to our employees which result in them being unable to return to work for seven consecutive days. Our key health
and safety statistics are available on page 53.
4
The target range for portfolio development potential includes Old Street Quarter.
Long-term incentives
The targets for the Total Shareholder Return and Total Property Return performance metrics remain the same as for the 2024 PSP
awards (see page 195). Our embodied carbon and energy intensity targets are based on the business’ UKGBC-aligned milestone
targets to achieve net zero by 2030 and are as follows:
Measure
Weighting % of PSP
Threshold
Maximum4
Embodied carbon intensity1,3
(new build commercial office)
5%
600 kg CO2e/m2
500 kg CO2e/m2
Energy intensity2,3
(managed properties)
5%
Average energy intensity of 121
kWh/m2 across 2025, 2026 and 2027
Average energy intensity of 118
kWh/m2 across 2025, 2026 and 2027
1
Calculated based on an overall weighted average embodied carbon performance for all live projects during the performance period.
2
Energy intensity is assessed based on the energy consumption of the managed portfolio for the year (gas and electricity).
3
The purchasing of carbon offsets will not affect the outcome of the embodied carbon or energy intensity reduction performance measures.
4
Vesting accrues on a straight-line basis, between threshold (22.5% of maximum) and maximum performance.
Our embodied carbon and energy intensity performance will be independently assured by an external third party.
Strategic objectives
To optimise returns
and create value from
a balanced portfolio
1
To attract, retain
and develop
talented employees
To maintain
strong and
flexible financing
To grow recurring
earnings and
cash flow
To design, deliver and
operate our buildings
responsibly
2
3
4
5
Derwent London plc
182
Chairman and Non-Executive Directors
The summary table below sets out the remuneration package for the Chairman and Non-Executive Directors.
Operation
Implementation for 2025
Chairman
The remuneration of the Chairman is set by the
Remuneration Committee.
The Chairman receives an annual fee and may be
eligible to receive benefits including, but not limited to,
secretarial provision and travel costs. Non-significant
benefits may be provided if considered appropriate.
The Chairman does not receive pension or participate
in incentive arrangements.
With effect from 1 January 2025, Mark Breuer’s
inclusive Chairman fee was increased by
3.5% to £289,800, in line with the average
inflationary increases for the wider workforce.
Non-Executive
Directors
The remuneration for Non-Executive Directors is set by
the Executive Directors and Non-Executive Chairman.
Non-Executive Directors receive a base fee plus
additional fees for committee chairmanship, committee
membership and for the role of Senior Independent
Director. Additional fees may be paid to reflect additional
Board or committee responsibilities or time commitment
as appropriate.
Non-Executive Directors may be eligible to receive
benefits including, but not limited to, secretarial provision
and travel costs.
Non-Executive Directors do not receive pension
contributions or participate in incentive arrangements.
With effect from 1 January 2025, the fees
payable to the Non-Executive Directors were
increased by c.3.5%, in line with the average
inflationary increase for the wider workforce.
(£’000)
2025
2024
Base fee
59.0
57.0
Audit Committee Chair
12.9
12.5
Other Committee Chairs
10.3
10.0
Senior Independent Director
12.9
12.5
Committee membership
5.2
5.0
In addition to their chairmanship fee,
a Committee Chair also receives the
Committee membership fee.
Letters of appointment
The Chairman and Non-Executive Directors do not have service contracts but are appointed for initial three-year terms which
thereafter may be extended, subject to re-election, at each AGM. Details are set out in the table below. Further information on
Non-Executive Director tenure and recruitment is on pages 141 and 142 of the Nominations Committee report.
Date of latest appointment letter
Latest appointment letter expiry date
Mark Breuer
3 November 2023
1 February 2027
Dame Cilla Snowball1
15 August 2024
16 May 2025
Helen Gordon
3 November 2023
31 December 2026
Lucinda Bell
7 August 2024
31 December 2027
Sanjeev Sharma
7 August 2024
1 October 2027
Robert Wilkinson
31 May 2024
1 June 2027
Madeleine McDougall
15 October 2024
31 October 2027
1
Dame Cilla Snowball will step down as a Director no later than at the 2025 AGM. Further information on Non-Executive Director succession is on page 142.
Report and Accounts 2024
183
Governance
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Risk management
We are transparent about our pay practices which aim to incentivise our employees to achieve our strategy and generate
sustainable value for our stakeholders. Risk management is a key remuneration principle and has been incorporated into our
Remuneration Policy, principally through:
Sufficiently stretching
performance targets
which promote long-term
sustainable performance
Enables the Committee
to recover sums paid, or
cancel awards, in specific
circumstances
The Committee has the
means to apply discretion
and judgement to vesting
outcomes
Requirement to build up
and retain a shareholding in
Derwent London during and
post-employment
Stretching
performance targets
Malus and
clawback provisions
Discretion
Shareholding guidelines
Choice of performance measures
The performance measures used for the annual bonus and PSP awards reflect the short and long-term financial and strategic
priorities of the business, and are aligned with performance measures used by our real estate sector peers. A significant proportion
of annual bonus and PSP awards are subject to performance relative to the real estate sector. This helps support an incentive
framework whereby Executive Directors may be fairly and equitably rewarded for outperforming peers and protecting and
delivering shareholder value in a cyclical market. For relative performance measures, performance targets are set each year
relative to the real estate comparator group.
For strategic measures, targets are set taking into account the Group’s strategic plan. Maximum vesting will only occur for what
the Committee considers to be outstanding performance. Details of the performance measures for the 2025 annual bonus and
PSP awards are set out on page 182. When setting the targets to be achieved, the Committee aims to ensure that they are
sufficiently stretching so as to reward genuine outperformance without promoting inappropriate risk-taking outside of the Board’s
risk appetite (see page 93).
Malus and clawback
It is a condition of the grant of any awards that the Executive Directors agree to terms of the relevant Plan rules and, in particular,
the operation of malus and clawback provisions. A summary of our malus and clawback provisions is provided below.
Malus
Clawback
Annual bonus
To such time as payment is made.
Up to two years following payment.
Deferred bonus
To such time as the award vests.
No clawback provisions apply (as malus provisions
apply for three years from the date of award).
PSP awards
To such time as the award vests.
Up to two years following vesting.
The circumstances in which malus and clawback provisions could be applied:
1. Material misstatement of financial results.
2. An error in assessing performance conditions which has led to an overpayment.
3. Serious or gross misconduct.
4. Serious reputational damage.
5. Corporate failure.
A clawback period of two years following payment of an annual bonus and vesting of PSP awards is considered appropriate on the
basis that:
• it is reasonable to assume that a material misstatement of financial results relating to the performance period, an error in
assessing performance conditions, or an event, act or omission which occurred during the performance period resulting in
serious reputational damage, or corporate failure, would be discovered within a two-year period;
• it is considered a reasonable period to support the enforceability of clawback; and
• it is aligned with market practice across the FTSE 250.
The Company has not needed to use the malus and clawback provisions in the last five years (including the latest reporting period).
Discretion
The Committee has discretion to adjust the annual bonus or PSP award outcome if it is not deemed to reflect the underlying
financial or non-financial performance of the business, the performance of the individual or the experience of shareholders or
other stakeholders over the performance period.
Derwent London plc
184
Shareholding guidelines
Our Remuneration Policy promotes long-term shareholdings by Executive Directors through within-employment and post-employment
shareholding guidelines.
Within-employment
Executive Directors are expected to build up and retain a shareholding equal to 200% of salary. Until
the shareholding guideline is met, 50% of any deferred bonus awards or PSP awards vesting (net of
tax) normally must be retained. Once PSP awards have vested there is a two-year holding period during
which Executive Directors are not able to sell their shares to support sustainable decision making.
Post-employment1
Executive Directors who step down from the Board are normally expected to retain a holding in
‘guideline shares’2 equal to 200% of salary (or their actual shareholding at the point of stepping down
if lower) for the first 12 months following stepping down as an Executive Director; then, 100% of salary
(or their actual shareholding at the point of stepping down if lower) for the subsequent 12 months.
The Committee retains discretion to waive this guideline if it is not considered to be appropriate in the
specific circumstance.
1
The number of shares subject to the post-employment shareholding guideline is confirmed to the Executive Director on stepping down from the Board.
The Committee will monitor the former Executive Directors’ compliance with the guideline. Should the former Executive Director breach compliance,
the Committee may reduce any unvested share awards held by the former Executive Director.
2
‘Guideline shares’ do not include shares that the Executive Director has purchased or which have been acquired pursuant to deferred share awards or PSP awards
which vested before 1 January 2020. Unless the Committee determines otherwise, an Executive Director or former Executive Director shall be deemed to have
disposed of shares which are not ‘guideline shares’ before ‘guideline shares’.
As at 31 December 2024, all Executive Directors have exceeded the within-employment shareholding guideline, except Emily Prideaux
who was appointed an Executive Director from 1 March 2021. Emily Prideaux is working towards achieving the within-employment
shareholding guideline.
% of base salary
Executive Directors
Beneficially
held shares
2024 salary1
Target
Achieved
Value of beneficially
held shares2
Paul Williams
92,921
707,200
200%
288%
£2,034,970
Damian Wisniewski
69,095
545,500
200%
277%
£1,513,181
Nigel George
100,046
545,500
200%
402%
£2,191,007
Emily Prideaux
6,081
545,500
200%
24%
£133,174
1
The base salaries shown in the table above are as at 31 December 2024. Further information on fixed pay during 2024 is provided on page 191.
2
The value of the Executive Directors’ beneficially held shares has been calculated using the average closing share price during the year ended 31 December 2024
of £21.90.
All other employees granted PSP awards are expected to work towards holding shares in Derwent London plc equivalent to 50%
of base salary. The share ownership guidelines for all PSP recipients (including Executive Directors) require them to retain at least
half of any deferred bonus shares or performance shares which vest (net of tax) until the guideline is met. Only wholly owned
shares will count towards the guideline. There is no shareholding guideline for Non-Executive Directors. Due to the relatively
large shareholdings of our Executive Directors, a small change in our share price would have a material impact on their wealth.
For example, a 5% drop in our share price would result in a loss of value for our Chief Executive, Paul Williams, equivalent to
approximately 14% of his base salary.
Independent advice
The Committee has authority to obtain the advice of external independent remuneration consultants. Deloitte LLP has been
appointed as the Committee’s principal consultants since July 2018, following a competitive tender process. The Committee
has been fully briefed on Deloitte’s compliance with the voluntary code of conduct in respect of the provision of remuneration
consulting services. During the year under review, Deloitte provided independent assistance to the Committee in respect of,
among other things, the following matters:
• performance assessment against annual bonus and PSP targets;
• remuneration benchmarking of Executive Committee; and
• market practice and corporate governance updates.
The fees paid to Deloitte for their services to the Committee during the year, based on time and expenses, amounted to £120,720.
Separate teams at Deloitte LLP also provided sustainability and health and safety limited assurance under the ISAE 3000 (Revised)
standard, corporate tax consultancy and employment tax consultancy services to the Group. The Committee took this work into
account and, due to the nature and extent of the work performed, concluded that it did not impair Deloitte’s ability to advise the
Committee objectively and free from influence. It is the view of the Committee that the Deloitte engagement team which provides
remuneration advice to the Committee does not have connections with Derwent London or its Directors that may impair its
independence. The Committee therefore deems Deloitte capable of providing appropriate, objective and independent advice.
Report and Accounts 2024
185
Governance
Annual report on remuneration continued
Remuneration decisions in context
The Committee is kept informed of salary increases for the wider workforce, as well as any
significant changes in practice or policy, which is taken into consideration when making
remuneration decisions for Executive Directors.
REMUNERATION COMMITTEE REPORT continued
Engaging with our employees
We have an open, collaborative and inclusive management
structure and engage regularly with our employees on a
variety of issues. We do this through a range of one-way and
two-way channels including appraisals, employee surveys,
our intranet site, Company presentations, awaydays and our
wellbeing programme.
An engagement section is included within the explanatory
booklet of the wider employee incentive plan, ESOP, which
details our remuneration strategy and principles. This section
also provides further information on the differences between
the executive and wider employee incentive arrangements
(PSP and ESOP).
Our employees are provided with the means to engage
on a range of matters, including the Group’s approach
to executive remuneration, how executive remuneration
aligns with the Group’s pay policy and how the structure
of executive remuneration compares to wider workforce
remuneration. The Committee considers pay across the
Group, as well as any employee feedback, when making
decisions on executive remuneration.
Employee engagement / See pages 38 and 51
Relative importance of the Company’s
spend on pay
In order to give shareholders an understanding of how total
expenditure on remuneration (for all employees) compares
to certain core financial dispersals of the Company, the
table below demonstrates the relative importance of the
Company’s spend on employee pay for the period 2023
to 2024.
£m
2024
2023
% change
Staff costs1
29.7
28.8
3.1
Distributions to shareholders2
89.8
88.7
1.2
Net asset value attributable
to equity shareholders3
3,540
3,508
0.9
1
Staff costs includes salaries, employer pension contributions, national
insurance contributions, benefits and share-based payment expenses
relating to equity settled schemes (see note 12 on page 277).
2
Distribution to shareholders during the financial year. For 2024, this
includes the payment of the 2023 final and 2024 interim dividends.
3
Net asset value attributable to equity shareholders was chosen as it is a
key determinate of the Group’s total return and is used by management
to measure our progress. We base our total return calculation on EPRA net
tangible assets (NTA).
The Committee has introduced this dedicated section
(pages 186 to 189) which incorporates several disclosures
to demonstrate the Committee’s belief that remuneration
arrangements for Executive Directors are fair and
appropriate in the context of pay policies and practices
across the wider workforce.
Investing in our employees
We recognise that our employees are our brand ambassadors
and vital to the successful delivery of our strategy and
long-term business performance. We continue to invest
significantly in our employees to ensure that everyone thrives
in their roles, feels valued, supported and has the opportunity
of continuous growth and development.
We run a detailed induction programme, hold CEO-led
monthly town halls, provide a series of core skills workshops,
internal technical workshops, mandatory compliance
training and various management and leadership initiatives
(including 1:1 and team coaching). In addition, we support
and sponsor further professional qualifications and
encourage internal and external personal development
opportunities wherever possible. This is coupled with
six-monthly performance reviews and optional Personal
Development Plans, alongside regular dialogues with
line managers to discuss performance, identify training
requirements and understand individual career aspirations.
We have trained mental health first aiders, and we have
both an employee assistance programme and occupational
health support in place. We encourage proactive self-care
and run a series of ‘lunch and learn’ sessions.
Attracting and optimising talent / See page 50
Derwent London plc
186
Wider workforce
Executive Directors
Remuneration structure
We value and appreciate our employees and aim to provide market competitive remuneration and benefit packages in order
to continue to be seen as an employer of choice. The remuneration structure for our wider workforce is similar to that of our
Executive Directors1 and contains both fixed and performance-based elements (see below).
Base salary
Sharesave
Plan
Benefits2
Pension2
Life
assurance2
Annual
bonus
Long-term
incentives
Average inflationary increase for the wider workforce
of 3.5% from 1 January 2025. The average actual
increase in base salaries for all employees eligible for
a pay rise was 5.9%.
Receive an employer pension contribution equal to 15% of salary per annum with the option to make additional
voluntary contributions (AVCs)
All employees (including the
Executive Directors) receive:
• private medical insurance;
• dental care; and
• the option of joining a
non-contractual healthcare
cash plan which offers an
affordable way to help with
everyday healthcare costs.
We also operate a:
• Cycle to Work scheme;
• Electric Car Salary Sacrifice
Scheme which allows any
member of staff to lease
a new electric car in a tax
efficient way; and
• season ticket loan.
A car allowance is payable to
Executive Directors, members of
the Executive Committee, Heads
of Departments and other senior
managers. Other employees may
receive a car allowance depending
on the nature of their role.
Employees who opt to participate in the pension scheme also receive:
• a lump sum Death in Service insurance benefit of 4x their base annual salary; and
• an additional Death in Service pension benefit of one-third of base salary paid to their nominated
dependant(s).
Base salary increase of 3.5% from 1 January 2025.
1
A summary of our Remuneration Policy for Executive Directors is on pages 180 to 183. Further information on the remuneration received by Executive Directors
during 2024 is on page 190.
2
All benefits are subject to the terms and conditions of the insurance policy in force.
To encourage Group-wide share ownership, the Company operates an HMRC tax efficient Sharesave Plan which
is open to all eligible employees including the Executive Directors. The sixth grant under the Sharesave Plan was
made on 19 September 2024, with employees saving on average £142 per month.
• All employees are enrolled into an annual
discretionary bonus scheme
• Bonuses are paid via payroll in March
• Bonuses are based on individual and Group
performance
• 100% of our workforce below Board level
(not subject to probation) received an annual
bonus in 2024
• We operate a discretionary ESOP for employees
below the Board and Executive Committee
• ESOP grants options which are exercisable
after three years at a pre-agreed option price
• There is no performance conditions attached
to the awards except continued employment
• In 2024, we granted 380,200 options to eligible
employees (see note 13 on page 227)
• The Executive Directors’ discretionary bonus is
based on strategic (non-financial) and financial
performance targets
• Bonuses in excess of 75% of salary are subject
to deferral for three years
• Subject to malus and clawback provisions and
can be adjusted if payout does not align with
the wider stakeholder experience
• We operate the PSP for the Executive Directors
and Executive Committee
• PSP grants require the achievement of
stretching performance targets over
a three-year performance period
• PSP awards are subject to a two-year holding
period, shareholding guidelines, and malus and
clawback provisions
Report and Accounts 2024
187
Governance
Percentage change in remuneration
The table below shows the annual percentage change in the salary or fees, benefits and annual bonus, for each of the Directors
compared to that for an average employee, from 2020 to 2024. The Directors’ remuneration used to calculate the percentage
change is taken from the ‘single figure’ table on page 190.
Average
employee1,2
Executive Directors
Non-Executive Directors
Former
Directors
Williams
P.3
Wisniewski
D.
George
N.
Prideaux
E.4
Breuer
M.
Snowball
C.5
Gordon
H.
Bell
L.
Sharma
S.6
Wilkinson
R.7
McDougall
M.7
Arney
C.8
2023 to 2024
Salary/fees
+3.4
+4.0
+4.0
+4.0
+10.8
+12.0
+8.8
+10.5
+8.4
+13.7
n/a
n/a
n/a
Benefits9
+5.1
(2.2)
+1.7
+5.0
+8.1
–
–
–
–
–
–
–
–
Bonus
+29.3
+105.8
+105.8
+105.8
+119.2
–
–
–
–
–
–
–
–
2022 to 2023
Salary/fees
+2.6
+7.8
+4.0
+4.0
+9.4
0
+3.0
0
0
0
n/a
n/a
0
Benefits9
(1.5)
+7.1
+3.8
+3.6
+1.1
–
–
–
–
–
–
–
–
Bonus
(27.1)
(59.8)
(61.2)
(61.2)
(59.2)
–
–
–
–
–
–
–
–
2021 to 2022
Salary/fees
+1.4
+3.0
+3.0
+3.0
+9.8
0
+15.7
+10.7 +16.2
+13.5
n/a
n/a
+16.2
Benefits9
(9.9)
(7.0)
+1.0
+0.7
+20.0
–
–
–
–
–
–
–
–
Bonus
(24.5)
+177
+177
+177
+253
–
–
–
–
–
–
–
–
2020 to 2021
Salary/fees
+0.3
+2.0
+2.0
+2.0
n/a
n/a
0
+3.0
0
n/a
n/a
n/a
0
Benefits9
(3.7)
(0.2)
(0.2)
(0.0)
n/a
–
–
–
–
–
–
–
–
Bonus
+22.5
(52.5)
(52.5)
(52.5)
n/a
–
–
–
–
–
–
–
–
2019 to 2020
Salary/fees
+4.7
+10.5
+3.7
+3.7
n/a
n/a
0
0
+6.0
n/a
n/a
n/a
0
Benefits9
(6.2)
+0.1
(1.4)
(3.9)
n/a
–
–
–
–
–
–
–
–
Bonus
(21.0)
(24.4)
(29.0)
(29.0)
n/a
–
–
–
–
–
–
–
–
Average employee calculation
1
The movement in the average annual salary is calculated based on the mean employee pay for employees of Derwent London plc on a full-time equivalent basis.
The average employee salary increase includes employees who were not eligible for a salary increase (i.e. new joiners and leavers, depending on the date of joining
or leaving the Group) and takes into account that new joiners may be recruited at a lower salary than those that had left.
2
The actual average increase in base salaries for all employees eligible for a pay rise (inclusive of promotions, career progression and market salary alignments)
effective from 1 January:
•
2025: 5.9%
•
2024: 6.2%
•
2023: 6.1%
•
2022: 3.2%
•
2021: 5.5%
Executive Director base salaries and annual bonuses
3
Since Paul Williams’ appointment to CEO in May 2019, the Committee had disclosed its commitment to keep Paul’s salary level under review as he developed
and gained experience in the role with a view to moving his salary level closer to the market rate over time. As a result of its review during 2022, the Committee
approved a 7.8% increase to Paul’s salary from 1 January 2023.
4
Emily Prideaux was appointed an Executive Director on 1 March 2021 with a base salary of £410,000, to reflect that she was stepping into an Executive Director
role, and was aligned with the other Executive Directors’ salaries over three years as her role and experience developed (i.e. aligned from 1 January 2024). Emily
Prideaux’s percentage change in annual bonus from 2021 to 2022 also reflects that her 2021 annual bonus was for the period 1 March to 31 December 2021 only.
Non-Executive Director fees
5
Cilla Snowball’s percentage change in fee for ‘2022 to 2023’ relates to her appointment as an Audit Committee member with effect from 1 August 2023.
6
Sanjeev Sharma’s percentage change in fee for ‘2023 to 2024’ relates to his appointment as Remuneration Committee Chair with effect from 10 May 2024.
7
Robert Wilkinson and Madeleine McDougall were appointed as Non-Executive Directors on 1 June 2024 and 1 November 2024, respectively, and therefore the
percentage change in remuneration for 2023 to 2024 is not applicable.
8
Claudia Arney stepped down from the Board on 10 May 2024 and therefore, the percentage change in remuneration for 2023 to 2024 is not applicable. Claudia
Arney received her normal fees for the period 1 January 2024 until her leaving date. There was no payment for loss of office in respect of Claudia Arney’s departure.
Benefits
9
There has been no change in the benefits received by the average employee or the Executive Directors. The change in the annual cost is due to the cost of
purchasing private medical and life insurance. Non-Executive Directors and the Chairman did not receive taxable benefits during the relevant years.
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Derwent London plc
188
Chief Executive pay ratio
As Derwent London has less than 250 employees, we are not required to disclose the CEO pay ratio. However, given our commitment
to high standards of transparency and corporate governance, the Committee considers it appropriate to disclose the CEO pay
ratio voluntarily. For the years ended 31 December 2018 to 31 December 2024, the Chief Executive’s total remuneration as a ratio
against the full-time equivalent remuneration of UK employees is detailed in the table below.
Employee remuneration2
Base salary
Total
remuneration
CEO pay ratio3
Year ended 31 December 20241
25th percentile
£50,000
£69,522
22:1
50th percentile
£63,950
£89,208
17:1
75th percentile
£70,323
£126,873
12:1
Year ended 31 December 2023
25th percentile
£51,750
£63,380
18:1
50th percentile
£58,750
£80,512
14:1
75th percentile
£90,000
£127,822
9:1
Year ended 31 December 2022
25th percentile
£45,219
£60,909
25:1
50th percentile
£56,000
£81,266
19:1
75th percentile
£80,000
£124,481
12:1
Year ended 31 December 2021
25th percentile
£48,500
£67,908
19:1
50th percentile
£63,750
£90,289
14:1
75th percentile
£91,750
£143,168
9:1
Year ended 31 December 2020
25th percentile
£47,000
£62,499
35:1
50th percentile
£64,000
£86,463
26:1
75th percentile
£95,266
£137,452
16:1
Year ended 31 December 2019
25th percentile
£40,993
£63,211
40:1
50th percentile
£68,462
£89,274
28:1
75th percentile
£67,500
£153,828
17:1
Year ended 31 December 2018
25th percentile
£45,057
£58,237
38:1
50th percentile
£59,250
£76,842
29:1
75th percentile
£75,000
£148,867
15:1
1
The Chief Executive’s remuneration is calculated on the same basis as the single figure of remuneration table on page 190.
2
The workforce comparison is based on the payroll data for the period 1 January to 31 December for all employees (including the Chief Executive but excluding the
Non-Executive Directors) and includes salary, employer pension contributions, life assurance and the healthcare cash plan, annual bonuses earned in respect of
the year and one-off gains received through the exercise of options granted under the Employee Share Option Plan (see pages 187 and 227).
3
The CEO pay ratio has been rounded to the nearest whole number.
A substantial proportion of the CEO’s remuneration is performance-related and delivered in shares. The CEO pay ratio will
therefore depend significantly on the CEO’s annual bonus and PSP outcomes and may fluctuate year-on-year. The CEO’s total
remuneration for 2024 was higher compared to 2023 primarily as a result of a higher 2024 bonus outcome compared to 2023.
Consequently, the CEO pay ratio for 2024 has risen compared to 2023.
For each year, the Company has calculated the ratio in line with the reporting regulations using ‘Method A’ (determine total full-
time equivalent remuneration for all UK employees for the relevant financial year as at 31 December; rank the data and identify
employees whose remuneration places them at the 25th, 50th and 75th percentile). This method was used due to being the most
accurate way of calculating the ratio. The Board has confirmed that the ratio is consistent with the Company’s wider policies on
employee pay, reward and progression.
Report and Accounts 2024
189
Governance
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Executive Directors’ remuneration in 2024
Total remuneration (audited)
The table below sets out the remuneration paid to each Director for the financial years ended 31 December 2024 and 31 December
2023 as a single figure. A full breakdown of fixed pay and pay for performance in 2024 can be found on pages 191 to 194.
Executive Directors
Fixed pay
Pay for performance
(£’000)
Salary
Taxable
benefits
Pension
and life
assurance
Subtotal
Bonus
Performance
LTIPs1
Subtotal
Other items in
the nature of
remuneration²
Total
remuneration
Cash
Deferred
2024
Paul Williams
707
23
115
845
531
120
–
651
–
1,496
Damian
Wisniewski
546
24
89
659
409
93
–
502
1
1,162
Nigel George
546
24
90
660
409
93
–
502
–
1,162
Emily Prideaux
546
20
89
655
409
93
–
502
–
1,157
2023
Paul Williams
680
23
111
814
316
–
–
316
3
1,133
Damian
Wisniewski
525
24
85
634
244
–
–
244
1
879
Nigel George
525
23
87
635
244
–
–
244
3
882
Emily Prideaux
493
19
80
592
229
–
–
229
3
824
Non-Executive Directors
2024
2023
(£’000)
Fees
Taxable
benefits
Total
Fees
Taxable
benefits
Total
Mark Breuer
280
–
280
250
–
250
Cilla Snowball
87
–
87
80
–
80
Helen Gordon
95
–
95
86
–
86
Lucinda Bell
90
–
90
83
–
83
Sanjeev Sharma
83
–
83
73
–
73
Robert Wilkinson3
39
–
39
–
–
–
Madeleine McDougall3
12
–
12
–
–
–
Former Director
Claudia Arney4
31
–
31
83
–
83
1
Performance LTIPs for 2024 relate to the 2022 PSP awards for which the performance conditions related to the year ended 31 December 2024. As the performance
conditions have not been satisfied, the 2022 PSP awards will lapse on 9 March 2025 (see page 194).
2
Included in the column for ‘other items in the nature of remuneration’ is the grant under the Derwent London Sharesave Plan made on 19 September 2024. These
have been calculated based on the middle market share price on the date of grant being £24.76 minus the value of the awards at the option price which was
£19.00. Further information on the Derwent London Sharesave Plan is on page 198.
3 Robert Wilkinson and Madeleine McDougall were appointed to the Board on 1 June 2024 and 1 November 2024, respectively. The fees for 2024 shown in the table
above are the actual fees paid to them for the periods they were Non-Executive Directors.
4
Claudia Arney stepped down from the Board on 10 May 2024. The fees for 2024 shown in the table above are the actual fees paid to Claudia Arney for the period
1 January 2024 to 10 May 2024.
Payments to former Directors and for loss of office (audited)
No payments were made to past Directors or in respect of loss of office during 2024.
Derwent London plc
190
Fixed pay
Base salaries and fees (audited)
Salaries for the Executive Directors were increased by 4.0% with effect from 1 January 2024. The average salary increase for the
wider workforce was 6.2%. The Committee approved a 10.8% increase to Emily Prideaux’s salary from 1 January 2024, as part of
a phased alignment with the other Executive Directors’ salaries. Further information is on page 173 of the 2023 Report & Accounts.
2024 base salary/fee
2023 base salary/fee
Executive Directors
Paul Williams
£707,200
£680,000
Damian Wisniewski
£545,500
£524,500
Nigel George
£545,500
£524,500
Emily Prideaux
£545,500
£492,500
Non-Executive Directors
Mark Breuer
£280,000
£250,000
Cilla Snowball
£87,000
£79,583
Helen Gordon
£94,500
£85,833
Lucinda Bell
£89,500
£82,500
Sanjeev Sharma1
£83,438
£72,500
Robert Wilkinson2
£39,282
–
Madeleine McDougall2
£12,033
–
Former Director
Claudia Arney3
£30,987
£82,500
1
From 10 May 2024, Sanjeev Sharma succeeded Claudia Arney as Chair of the Remuneration Committee.
2
Robert Wilkinson and Madeleine McDougall were appointed to the Board on 1 June 2024 and 1 November 2024, respectively. The fees for 2024 shown in the table
above are the actual fees paid to them for the periods they were Non-Executive Directors.
3
Claudia Arney stepped down from the Board on 10 May 2024. The fees for 2024 shown in the table above are the actual fees paid to Claudia Arney for the period
1 January 2024 to 10 May 2024.
Benefits (audited)
Executive Directors are entitled to a car allowance, fuel allowance, private medical insurance and life assurance. Further details of
the taxable benefits paid in 2024 can be found in the table below.
Car allowance1
Private medical
insurance
Total 2024
taxable benefits
Executive Directors
Paul Williams
£16,000
£6,897
£22,897
Damian Wisniewski
£16,000
£8,295
£24,295
Nigel George
£16,000
£8,341
£24,341
Emily Prideaux
£16,000
£4,470
£20,470
1
Damian Wisniewski and Emily Prideaux participate in the Electric Car Salary Sacrifice Scheme and as such sacrifice a significant proportion of their car allowance
in return for leasing an electric car.
Pension and life assurance (audited)
All of the Executive Directors paid into the Group’s defined contribution scheme, being the Fidelity Master Trust pension scheme,
with the remainder of their entitlement paid as a cash supplement. No other Directors are accruing benefits under a defined
benefit or money purchase pension scheme.
Paid into defined
contribution scheme
Pension cash
supplement
Total pension
Life assurance1
Total 2024 pension
and life assurance
Executive Directors
Paul Williams
£10,000
£96,080
£106,080
£9,406
£115,486
Damian Wisniewski
£10,000
£71,825
£81,825
£7,530
£89,355
Nigel George
£10,000
£71,825
£81,825
£8,728
£90,553
Emily Prideaux
£10,000
£71,825
£81,825
£7,204
£89,029
1
There was no change in the life assurance benefits received by the Executive Directors in 2024. The change in the annual cost is due to changes in premiums.
Report and Accounts 2024
191
Governance
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Pay for performance
Annual bonus (audited)
Determination of 2024 annual bonus outcome
The performance measures set for the year under review were a combination of financial-based metrics (worth 75% of the bonus
potential) and strategic targets (worth 25% of the bonus potential). The maximum bonus potential for Executive Directors is 150%
of salary. Based on actual 2024 performance, the annual bonus payout for Executive Directors is 61.3% of the maximum potential
(2023: 31.0%; 2022: 83.1%). Further information is available on page 193.
The Committee considered the formulaic performance outcome alongside broader perspectives including: underlying business
performance and affordability; the experience of shareholders; and the experience of employees and other stakeholders. Points
specifically considered are set out in the Chair’s Annual statement on pages 174 and 175. The Committee determined that it was
not appropriate to apply discretion to adjust the formulaic outcome.
In accordance with our current Remuneration Policy, bonuses of up to 75% of base salary are paid as cash. Amounts in excess of
75% are deferred into shares and released after three years, subject to continued employment. The total bonus for each Executive
Director based on performance is therefore:
Deferred bonus
Bonus payable
as % of salary
Cash bonus payable
£’000
£’000
% of salary
Executive Directors
Paul Williams
92%
530.4
120.2
17.0
Damian Wisniewski
92%
409.1
92.7
17.0
Nigel George
92%
409.1
92.7
17.0
Emily Prideaux
92%
409.1
92.7
17.0
An element of the Executive Directors’ annual bonus relates to
health and safety and its achievement is conditional upon each
Director completing an annual health and safety leadership tour.
During 2024, all Executive Directors attended at least one health
and safety leadership tour.
Middlesex House W1
The tour conducted on 12 June 2024 was attended by
Nigel George and Damian Wisniewski and focused on the
refurbishment project being undertaken at Middlesex House.
The project involves significant and complex scaffold design
to enable window replacement and refurbishment of the
third floor. The Directors gained on-site understanding of the
safety measures in place for working at height and the health
measures in place for asbestos/lead management.
One Oliver’s Yard EC1
The tour conducted on 18 September 2024 was attended by
Emily Prideaux, Nigel George and Paul Williams and focused
on the strip-out and refurbishment project being undertaken
at Oliver’s Yard. The tour of the site included discussions on
the health and safety aspects of undertaking demolition and
refurbishment work in proximity of occupiers and how we were
seeking to reduce worker exposure to noise, dust and vibration.
Health and safety
leadership tours
Derwent London plc
192
2024 Annual bonus outcome
Bonus payable for financial-based performance
37.5% out of 75%
Bonus payable for strategic target performance
23.8% out of 25%
Financial-based metrics
Performance measure
Weighting
% of bonus
Basis of calculation
Threshold2
%
Maximum3
%
Actual
%
Payable
%
Total return
37.5
Total return versus other
major real estate companies1
4.7
10.0
3.2
0.0
Total property return (TPR)
37.5
Versus the MSCI Quarterly Central
London Office Total Return Index
1.31
3.31
4.15
37.5
Total bonus payable for financial-based metrics
37.5
1
The major real estate companies contained in the comparator group for the 2024 annual bonus are: Big Yellow Group plc, The British Land Company plc,
CLS Holdings plc, Great Portland Estates plc, Hammerson plc, Helical plc, Landsec plc, LondonMetric Property plc, Segro plc, Shaftesbury Capital plc,
UK Commercial Property, Unite Group plc and Workspace Group plc. The comparator group remains unchanged for the 2025 annual bonus.
2
For achieving the threshold performance target, i.e. at the median total return against our sector peers or MSCI Index, 22.5% of the maximum bonus opportunity
will become payable.
3
Total return payout accrues on a straight-line basis between the threshold level for median performance and maximum payment for upper quartile performance
or better. For TPR, the payout accrues on a straight-line basis between the threshold level for Index performance and maximum payment for Index +2%.
Strategic targets
Performance measure
Link to
strategic
objectives1
Target range2
Maximum
award
2024
achievement
Proportion
awarded for 2024
Void management
This is measured by the Group’s EPRA vacancy rate for the
year calculated as the average of each quarter end figure.
1 2
10% to 2%
5.0%
3.2%
4.3%
Tenant retention
This is measured by the percentage of tenants that remain
in their space when their lease expires or the space is re-let
during the reporting period.
1 2
50% to 75%
5.0%
85.4%
5.0%
Staff satisfaction
Staff surveys are used to assess this measure. In assessing
this target the Committee will consider any variance in
staff satisfaction scores between genders3.
3
80% to 90%
4.0%
91.2%
4.0%
Accident rate
The Group’s RIDDOR Accident Frequency Rate (AFR) is
calculated based on significant (‘Direct’) RIDDOR injuries
and incidents during the year4, multiplied by 1,000,000 and
divided by ‘total work exposure hours’. This target is also
conditional on each Executive Director completing, during
2024, an annual health and safety leadership tour5.
4
4.0 to 1.0
4.0%
1.35
3.5%
Portfolio development potential
This is measured by the percentage of the Group’s portfolio
by area where a potential development scheme has been
identified, including committed acquisitions6.
1
35% to 50%
7.0%
50.8%
7.0%
25%
23.8%
1
Success against our strategic objectives is measured using our KPIs (see pages 33 to 37) and rewarded through our incentive schemes and annual bonus.
The references above show the link between our strategic objectives and our annual bonus targets (further information on our five strategic objectives
can be found on pages 28 to 32).
2
Payout accrues on a straight-line basis, between threshold and maximum performance.
3
The variance between genders in response to employee surveys is taken into account by the Committee when determining the payout for staff satisfaction.
In 2024, the results showed a 2.1% variance between genders, with female satisfaction being at 93.9% and male satisfaction at 91.8%.
4
The RIDDOR reportable injuries that we capture in our AFR are all HSE-reportable accidents or incidents which result in a fatality or ‘specified injuries’
(such as fractures, serious burns etc). In addition, we will include all injuries caused to members of the public, where we may have contributed to the causation
and where they are taken directly to hospital, and injuries to our employees which result in them being unable to return to work for seven consecutive days.
Our key health and safety statistics are available on page 53.
5
All Executive Directors completed health and safety leadership tours during 2024. There were no work-based fatalities during 2024 (see page 53).
6
The target range for portfolio development potential includes Old Street Quarter.
Report and Accounts 2024
193
Governance
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Outstanding deferred bonus awards
In accordance with our Remuneration Policy, annual bonuses earned in excess of 75% of salary are deferred into shares and
released after three years, subject to continued employment. As the 2023 annual bonus outcome was 31% of maximum, no
deferred bonus awards were granted during 2024. The outstanding deferred bonus awards held by Directors are set out below:
At grant
During the year (number)
Date of
award
Market price
at date of
grant1
£
Original
grant
1 January
2024
Deferred
Released
31 December
2024
Market price
at date of
release
£
Value
release
£’000
Release
date
Executive
Directors
Paul
Williams
04/04/2023
23.70
6,570
6,570
–
–
6,570
–
– 04/04/2026
6,570
6,570
–
–
6,570
–
–
Damian
Wisniewski
04/04/2023
23.70
5,256
5,256
–
–
5,256
–
– 04/04/2026
5,256
5,256
–
–
5,256
–
–
Nigel
George
04/04/2023
23.70
5,256
5,256
–
–
5,256
–
– 04/04/2026
5,256
5,256
–
–
5,256
–
–
Emily
Prideaux
04/04/2023
23.70
4,690
4,690
–
–
4,690
–
– 04/04/2026
4,690
4,690
–
–
4,690
–
–
Other
employees 04/04/2023
23.70
562
562
–
–
562
–
– 04/04/2026
562
562
–
–
562
–
–
Total
22,334
22,334
–
–
22,334
–
–
1
The share price on the dealing day immediately preceding the grant date.
Performance Share Plan (PSP) (audited)
Vesting of PSP awards
The Group granted share-based awards under the PSP on 9 March 2022. The grant was subject to performance conditions over a
three-year performance period which ended on 31 December 2024. As shown in the table below, the PSP awards granted in 2022
will not vest, and will lapse in full on 9 March 2025.
Performance measure
Weighting
% of award Basis of calculation1
Threshold2
%
Maximum3
%
Actual
%
% vesting/
estimated
vesting
Total property return (TPR)
50
MSCI Quarterly UK All Property Total Return Index
(1.64)
0.36
(2.30)
0.0
Total shareholder return (TSR) 50
FTSE 350 Super Sector Real Estate Index
(19.5)
(11.6) (30.0)
0.0
1
The constituents of the FTSE 350 Super Sector Real Estate Index as at the start of the performance period (i.e. 1 January 2022). The Company’s annualised TPR is
calculated on a compound annual growth basis over the three-year performance period.
2
For achieving the threshold performance target, i.e. at the MSCI Index or median TSR against our sector peers, 22.5% of the maximum award will vest.
3
For TSR (which is calculated based on a three-month weekday average Return Index excluding UK public holidays ended on: (1) the day before the performance
period start date; and (2) the performance period end date) vesting accrues on a straight-line basis between the threshold level for median performance and
maximum level for upper quartile performance or better. For TPR, vesting accrues on a straight-line basis between the threshold level for Index performance and
maximum level for Index +2%.
The Committee determined that it was not appropriate to apply discretion to adjust the formulaic outcome. Therefore, the vesting
for each executive will be:
Executive Directors
Number of
awards granted
Number of shares vesting
based on performance (0.0%)
Paul Williams
42,942
–
Damian Wisniewski
34,352
–
Nigel George
34,352
–
Emily Prideaux
30,653
–
Derwent London plc
194
Holding period
In accordance with the PSP rules, vested awards are subject to a two-year holding period whereby at least the after-tax number
of vested shares must be retained by the executive for a minimum of two years from the point of vesting. The 2020, 2021 and 2022
grants have been removed from the table below as they each lapsed in full.
Grant
Grant date
Performance period
Vesting date
Holding period
Holding period ceases
2019 Grants
12 March 2019
1 January 2019 to
12 March 2022
Two years
12 March 2024
14 August 2019
31 December 2021
14 August 2022
14 August 2024
2023 Grant
14 March 2023
1 January 2023 to
14 March 2026
Two years
14 March 2028
31 December 2025
2024 Grant
11 March 2024
1 January 2024 to
11 March 2027
Two years
11 March 2029
31 December 2026
Grant of PSP awards
On 11 March 2024, the Committee made an award to Executive Directors on the following basis:
Executive Directors
Number of shares
awarded
Face value of award
£
Paul Williams
67,352
1,414,392
Damian Wisniewski
51,952
1,090,992
Nigel George
51,952
1,090,992
Emily Prideaux
51,952
1,090,992
Awards were granted as nil-cost options and equivalent to 200% of base salary, with 22.5% of the award vesting at threshold
performance. The share price used to determine the level of the awards was the closing share price on the day immediately
preceding the grant date of £21.00. The performance period will run over three financial years ending on 31 December 2026 and,
dependent upon the achievement of the performance conditions, the awards will vest on 11 March 2027 and will be subject to a
two-year holding period as outlined in the table above.
The Committee has discretion to reduce the extent of vesting in the event that it considers that performance against either
measure is inconsistent with underlying financial performance and/or the experience of key stakeholders. At least the after-tax
number of vested shares must be retained for a minimum holding period of two years. To the extent that awards vest, the
Committee has discretion to allow the Executive Directors to receive the benefit of any dividends paid over the vesting period
in the form of additional vesting shares.
The balance of performance metrics reflects Derwent London’s continued focus on delivering above average long-term returns
to shareholders, together with our commitment to sustainability and ambition to be a net zero carbon business by 2030.
The performance conditions for the 2024 Awards are:
Metric
Basis of calculation
Weighting of PSP
Threshold1
Maximum
Total shareholder return
(TSR)
Position of the Company’s TSR against the TSR
of the ranked members of the FTSE 350 Super
Sector Real Estate Index assessed over the
three-year performance period ending
31 December 2026
50%
Median
Upper quartile
and above
Total property return
(TPR)
The Company’s annualised TPR calculated on
a compound annual growth basis relative to
the MSCI Quarterly UK All Property Total Return
Index assessed over the three-year performance
period ending 31 December 2026
40%
At Index
Index +2%
Embodied carbon
intensity
Weighted average embodied carbon for all
Projects during the three-year performance
period ending 31 December 2026
5%
600 kgCO2e/m2
500 kgCO2e/m2
Energy intensity
Average energy intensity for 2024, 2025 and
2026 assessed based on the electricity and gas
consumption across the managed portfolio
5%
127 kWh/m2
124 kWh/m2
1
For achieving the threshold performance target, 22.5% of the maximum award will vest.
Report and Accounts 2024
195
Governance
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Outstanding PSP awards
The outstanding PSP awards held by Directors and employees are set out in the table below:
At grant
During the year (number)
Date of award
Market
price at
date of
grant1
£
1 January
2024
Granted2
Vested
Lapsed3
31 December
2024
Market
price at
date of
vesting
£
Value vested
(inclusive
of dividend
equivalents)
£’000
Earliest
vesting date
Executive Directors
Paul
Williams
12/03/2021
33.16
36,911
–
–
(36,911)
–
–
–
12/03/2024
09/03/2022
29.36
42,942
–
–
–
42,942
–
–
09/03/2025
14/03/2023
24.32
55,921
–
–
–
55,921
–
–
14/03/2026
11/03/2024
21.00
–
67,352
–
–
67,352
–
–
11/03/2027
135,774
67,352
–
(36,911)
166,215
–
–
Damian
Wisniewski4
12/03/2021
33.16
29,529
–
–
(29,529)
–
–
–
12/03/2024
09/03/2022
29.36
34,352
–
–
–
34,352
–
–
09/03/2025
14/03/2023
24.32
43,133
–
–
–
43,133
–
–
14/03/2026
11/03/2024
21.00
–
51,952
–
–
51,952
–
–
11/03/2027
107,014
51,952
–
(29,529)
129,437
–
–
Nigel
George
12/03/2021
33.16
29,529
–
–
(29,529)
–
–
–
12/03/2024
09/03/2022
29.36
34,352
–
–
–
34,352
–
–
09/03/2025
14/03/2023
24.32
43,133
–
–
–
43,133
–
–
14/03/2026
11/03/2024
21.00
–
51,952
–
–
51,952
–
–
11/03/2027
107,014
51,952
–
(29,529)
129,437
–
–
Emily
Prideaux
12/03/2021
33.16
24,728
–
–
(24,728)
–
–
–
12/03/2024
09/03/2022
29.36
30,653
–
–
–
30,653
–
–
09/03/2025
14/03/2023
24.32
40,501
–
–
–
40,501
–
–
14/03/2026
11/03/2024
21.00
–
51,952
–
–
51,952
–
–
11/03/2027
95,882
51,952
–
(24,728)
123,106
–
–
Former Executive Directors
David
Silverman
12/03/2021
33.16
29,529
–
–
(29,529)
–
–
–
12/03/2024
29,529
–
–
(29,529)
–
–
–
Other
employees
12/03/2021
33.16
31,654
–
–
(31,654)
–
–
–
12/03/2024
09/03/2022
29.36
61,199
–
–
–
61,199
–
–
09/03/2025
14/03/2023
24.32
116,698
–
–
–
116,698
–
–
14/03/2026
11/03/2024
21.00
–
148,989
–
–
148,989
–
–
11/03/2027
209,551
148,989
–
(31,654)
326,886
–
–
Total
684,764
372,197
–
(181,880)
875,081
–
–
1
The share price on the dealing day immediately preceding the grant date.
2
The PSP awards granted on 11 March 2024 will vest on 11 March 2027. The performance targets attached to these awards are detailed on page 195.
3
The PSP awards granted on 12 March 2021 lapsed in full during 2024. The weighted average exercise price of awards that lapsed in 2024 was £nil (2023: £nil).
4
Damian Wisniewski has a vested but unexercised PSP 2019 award of 5,253 shares (see pages 199 and 203).
31 December
2024
31 December
2023
31 December
2022
Weighted average exercise price of PSP awards
—
—
—
Weighted average remaining contracted life of PSP awards
1.19 years
1.20 years
1.19 years
Derwent London plc
196
Pay for performance comparison
The graph below shows the value on 31 December 2024 of £100 invested in Derwent London on 31 December 2014, compared
to that of £100 invested in the FTSE 350 Super Sector Real Estate Index. The other points plotted are the values at intervening
financial year ends. This index has been chosen by the Committee as it is considered the most appropriate benchmark against
which to assess the relative performance of the Company for this purpose.
Derwent London
FTSE United Kingdom 350 Super Sector Real Estate Index
75
150
125
100
31 Dec 2014
31 Dec 2015
31 Dec 2016
31 Dec 2017
31 Dec 2018
31 Dec 2019
31 Dec 2020
31 Dec 2021
31 Dec 2022
31 Dec 2023
31 Dec 2024
Source: LSEG Datastream
Note: The TSR chart data is based on the 30-day average over the period 2 December to 31 December for each year.
Total shareholder return (TSR)
Remuneration of the Chief Executive
The table below shows the remuneration earned by the Chief Executive over the past 10 years.
Financial year ended
31/12/2015
31/12/2016
31/12/2017
31/12/2018
31/12/20191,2
31/12/2020
31/12/2021
31/12/2022
31/12/2023
31/12/2024
Chief Executive
John
Burns
John
Burns
John
Burns
John
Burns
John
Burns
Paul
Williams
Paul
Williams
Paul
Williams
Paul
Williams
Paul
Williams
Paul
Williams
Total remuneration
(single figure)
(£’000)
2,529
1,403
1,681
2,219
1,399
2,100
2,214
1,238
1,549
1,133
1,496
Annual bonus
(% of maximum)
74.2
23.3
53.6
68.5
97.0
97.0
66.3
30.9
83.1
31.0
61.3
Long-term
variable pay
(% of maximum)
65.7
24.9
26.5
46.0
65.75
65.75
81.6
18.1
0.0
0.0
0.0
1
Paul Williams’ 2019 total remuneration is in respect of his tenure as Chief Executive from 17 May 2019. His salary, bonus and PSP were subject to a pro rata time reduction.
2
The annual bonus (% of maximum) and long-term variable pay (% of maximum) for John Burns in 2019 is based on remuneration in the role of the Chief Executive.
Report and Accounts 2024
197
Governance
Annual report on remuneration continued
REMUNERATION COMMITTEE REPORT continued
Sharesave Plan (audited)
Grant of Sharesave options
To encourage Group-wide share ownership, the Company has operated an HMRC tax efficient Sharesave Plan since the 2018 AGM.
On 19 September 2024, the Company granted options under the Derwent London Sharesave Plan. The three-year contract for the
options started on 1 November 2024. These options are exercisable at a price of £19.00 per share from 1 November 2027 and are
not subject to any performance conditions.
Executive Director
Monthly saving
amount
Number of shares
under option
Option price
Market price
at grant
Value of award1
Damian Wisniewski
£125
244
£19.00
£24.76
£1,405
1
The value of the award is based on the middle market share price on the grant date minus the option price.
Outstanding Sharesave options
The outstanding Sharesave options held by Directors and employees are set out in the table below:
At grant
During the year (number)
Date of
award
Option
price
£
1 January
2024
Granted
Exercised
Lapsed
31 December
2024
Maturity
date
Market price
at date of
exercise
£
Value of
award at
exercise
£’000
Executive Directors
Paul
Williams
21/09/2022
19.61
458
–
–
–
458
01/12/2025
–
–
21/09/2023
14.87
623
–
–
–
623
01/11/2026
–
–
1,081
–
–
–
1,081
–
–
Damian
Wisniewski
15/04/20211
25.93
173
–
–
(173)
–
01/06/2024
–
–
21/09/2022
19.61
458
–
–
–
458
01/12/2025
–
–
21/09/2023
14.87
311
–
–
–
311
01/11/2026
–
–
19/09/2024
19.00
–
244
–
–
244
01/11/2027
–
–
942
244
–
(173)
1,013
–
–
Nigel
George
21/09/2022
19.61
458
–
–
–
458
01/12/2025
–
–
21/09/2023
14.87
623
–
–
–
623
01/11/2026
–
–
1,081
–
–
–
1,081
–
–
Emily
Prideaux
21/09/2022
19.61
458
–
–
–
458
01/11/2025
–
–
21/09/2023
14.87
623
–
–
–
623
01/11/2026
–
–
1,081
–
–
–
1,081
–
–
Other
employees
15/04/20211
25.93
4,836
–
–
(4,836)
–
01/06/2024
–
–
21/09/2022
19.61
27,582
–
–
(6,338)
21,244
01/12/2025
–
–
21/09/2023
14.87
48,115
–
–
(7,600)
40,515
01/11/2026
–
–
19/09/2024
19.00
–
13,851
–
–
13,851
01/11/2027
–
–
80,533
13,851
–
(18,774)
75,610
Total
84,718
14,095
–
(18,947)
79,866
–
–
1
On 1 June 2024, the options granted on 15 April 2021 became capable of exercise at a price of £25.93 per share. As the option price was higher than the market
value of the shares, the options were deemed to be ‘underwater’ and lapsed at the end of the exercise period (on 1 December 2024).
Derwent London plc
198
Directors’ interests in shares (audited)
Details of the Directors’ (and their connected persons) interests in shares are provided in the table below.
Number at 31 December 2024
Number at 31 December 2023
Beneficially
held1
Deferred
shares
Conditional
shares3
Share
options4
Total
Beneficially
held
Deferred
shares
Conditional
shares
Share
options
Total
Executive Directors
Paul Williams1
92,921
6,570
166,215
1,081
266,787
95,497
6,570
135,774
1,081
238,922
Damian Wisniewski
69,095
5,256
129,437
6,266
210,054
69,095
5,256
112,267
942
187,560
Nigel George
100,046
5,256
129,437
1,081
235,820
100,046
5,256
107,014
1,081
213,397
Emily Prideaux
6,081
4,690
123,106
4,001
137,878
6,081
4,690
95,882
4,001
110,654
Total
268,143
21,772
548,195
12,429
850,539
270,719
21,772
450,937
7,105
750,533
Non-Executive
Directors
Mark Breuer
7,000
–
–
–
7,000
7,000
–
–
–
7,000
Cilla Snowball
–
–
–
–
–
–
–
–
–
–
Helen Gordon1
1,009
–
–
–
1,009
990
–
–
–
990
Lucinda Bell
1,000
–
–
–
1,000
1,000
–
–
–
1,000
Sanjeev Sharma
1,261
–
–
–
1,261
1,261
–
–
–
1,261
Robert Wilkinson2
1,500
–
–
–
1,500
–
–
–
–
–
Madeleine McDougall
–
–
–
–
–
–
–
–
–
–
Former Directors
Claudia Arney
–
–
–
–
–
2,500
–
–
–
2,500
Total
11,770
–
–
–
11,770
12,751
–
–
–
12,751
There have been no other changes to the above interests between 31 December 2024 and 26 February 2025.
1
There was no change in the shares beneficially held by the Directors during the year ended 31 December 2024, except for:
•
Helen Gordon: Helen reinvested her dividend to purchase an additional 19 shares; and
•
Paul Williams: Shareholding was adjusted by 2,576 shares to reflect a family member no longer falling under the definition of a connected persons.
2
On 10 June 2024, Robert Wilkinson purchased 1,500 shares at an average share price of £23.18.
3
Conditional shares are those which are subject to performance conditions. For further information on the Performance Share Plan see pages 194 to 196.
4
Share options principally relate to the Sharesave Plan (see page 198) and are unvested, except for:
•
Damian Wisniewski: Damian’s share options also include his vested but unexercised PSP 2019 award (5,253 shares); and
•
Emily Prideaux: Emily has outstanding Employee Share Option Plan (ESOP) awards which were granted in respect of her role prior to being appointed an
Executive Director.
Managing shareholder dilution
The table below sets out the available dilution capacity for the Company’s employee share plans based on the limits set out in the
rules of those plans that relate to issuing new shares.
2024
2023
Total issued share capital as at 31 December
112.3m
112.3m
Employee share plan limits (in any consecutive 10-year period):
Current dilution for all share plans
2.7%
2.5%
Headroom relative to 10% limit
7.3%
7.5%
5% for executive plans – current dilution for discretionary (executive) plans
1.3%
1.1%
Headroom relative to 5% limit
3.7%
3.9%
Report and Accounts 2024
199
Governance
The Directors present their Report &
Accounts and audited financial statements
for the year ended 31 December 2024.
This Report & Accounts contains certain forward-looking
statements. By their nature, any statements about the future
outlook involve risk and uncertainty because they relate to
events and depend on circumstances that may or may not
occur in the future. Actual results, performance or outcomes
may differ materially from any results, performance or outcomes
expressed or implied by such forward-looking statements.
Each forward-looking statement speaks only as of the date
of that particular statement. No representation or warranty
is given in relation to any forward-looking statements made
by Derwent London, including as to their completeness
or accuracy. Nothing in this Report & Accounts should be
construed as a profit forecast.
Both the Strategic report and the Directors’ report have been
drawn up and presented in accordance with and in reliance
upon applicable English company law, and the liabilities of the
Directors in connection with that report shall be subject to the
limitations and restrictions provided by such law.
Corporate governance arrangements
During the year ended 31 December 2024, we have applied the
principles and complied with the provisions of good governance
contained in the UK Corporate Governance Code 2018
(the Code). Further details on how we have applied the Code
can be found in the Governance section on pages 116 to 199.
The Code can be found in the standards, codes & policy section
of the Financial Reporting Council’s website: www.frc.org.uk.
Amendment of Articles of Association
Unless expressly specified to the contrary in the Company’s
Articles of Association (the Articles), the Articles may be
amended by a special resolution of the Company’s shareholders.
Company status and branches
Derwent London plc is a Real Estate Investment Trust (REIT)
and the holding company of the Derwent London group of
companies, which includes no branches. Derwent London plc
is listed in the commercial companies’ category of the London
Stock Exchange Main Market. Derwent London plc is a public
limited company, registered and domiciled in England and
Wales (company number 01819699).
Key stakeholders
The long-term success of the Group is dependent on its
relationships with its key stakeholders. On pages 38 to 39
and 131, we outline the ways in which we have engaged with
our key stakeholders to understand their material concerns
and factor them into our decision making.
DIRECTORS’ REPORT
The Directors’ report for the financial year ended
31 December 2024 is set out on pages 200 to 204.
Additional information, which is incorporated into this
Directors’ report by reference, including information
required in accordance with the Companies Act 2006
and UK Listing Rule 6.6.1, can be located on the
following pages:
Pages
Future business developments
1 to 115
Stakeholder engagement
38 and 39
Diversity and inclusion
51 and 172
Charitable donations
48
Going concern & viability
86 to 89
The Section 172(1) Statement
132
Monitoring purpose, values and culture
130
Training
137 and 165
Review of the 2024 Report & Accounts
145
Internal financial control
150 to 151
Risk management and internal controls
94 to 101
Rewarding our employees
186
Total remuneration in 2024
190
Long-term incentive schemes
194 to 196
Interest capitalised
233
Financial instruments
244
Financial risk management
247
Credit, market and liquidity risks
247 and 248
Related party disclosures
254
David Lawler Company Secretary
Derwent London plc
200
Substantial shareholders
The table below shows the holdings in the Company’s issued share capital which had been notified to the Company pursuant to
the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules. The information below was correct at the date of
notification. It should be noted that these holdings may have changed since the Company was notified. However, notification of
any change is not required until the next notifiable threshold is crossed.
31 December 2024
26 February 2025
Direct/
indirect
Number of
shares (m)
%
Direct/
indirect
Number of
shares (m)
%
Norges Bank
Direct
8.9
7.9
Direct
6.6
5.9
BlackRock Investment Management (UK) Ltd
Indirect
6.0
5.4
Indirect
6.0
5.4
First Eagle Investment Management LLC
Direct
5.7
5.1
Direct
5.7
5.1
Resolution Capital Limited
Direct
5.6
5.0
Direct
5.6
5.0
APG Asset Management N.V.
Direct
5.6
5.0
Direct
5.6
5.0
Ameriprise Financial Inc (Columbia Threadneedle)
Indirect
4.9
4.8
Indirect
4.9
4.8
Lady Jane Rayne
Direct
4.1
3.6
Direct
4.1
3.6
Canada Pension Plan Investment Board
Direct
3.5
3.1
Direct
3.5
3.1
Employees
The Board recognises the importance of attracting, developing
and retaining the right people. In accordance with best
practice, we have employment policies in place which provide
equal opportunities for all employees, irrespective of sex, race,
colour, disability, sexual orientation, gender identity, religious
beliefs or marital status.
During the year under review, Dame Cilla Snowball was the
designated director responsible for gathering the views of the
workforce. Following Cilla’s retirement from the Board no later
than the 2025 AGM, this role will be undertaken by Madeleine
McDougall. Further information on the Board’s methods for
engaging with the workforce is on page 131.
Greenhouse gas emissions
In line with our commitment to transparent and best practice
reporting, we have included our streamlined energy and
carbon reporting (SECR) disclosures on pages 58 and 59,
which includes our annual GHG (greenhouse gas) emissions
footprint and an intensity ratio appropriate for our business,
which fulfil the requirements of the Companies Act 2006
(Strategic and Directors’ report) Regulations 2013. For
further analysis and detail on our GHG emissions, please
see our latest Responsibility Report, which can be found at:
www.derwentlondon.com/responsibility/publications.
Directors
The Directors of the Company are set out on pages 122 and
123, all of which were in office during the year under review,
except for Robert Wilkinson and Madeleine McDougall, who
were appointed to the Board from 1 June 2024 and 1 November
2024, respectively. Claudia Arney served on the Board for the
period 1 January 2024 to 10 May 2024. The Board is required
to consist of no fewer than two Directors and not more than
15. Shareholders may vary the minimum and/or maximum
number of Directors by passing an ordinary resolution.
Copies of the Executive Directors’ service contracts are
available to shareholders for inspection at the Company’s
registered office and at the Annual General Meeting (AGM).
Details of the Directors’ remuneration and service contracts
and their interests in the shares of the Company are set out
on pages 174 and 199. A summary of the key elements of the
Directors’ service contracts is available in the Remuneration
Policy Report available on our website www.derwentlondon.
com/investors/governance/board-committees.
Directors’ indemnity
The Company maintains appropriate Directors’ and Officers’
liability insurance cover in respect of any potential legal
action brought against its Directors. The Company has also
indemnified each Director to the extent permitted by law
against any liability incurred in relation to acts or omissions
arising in the ordinary course of their duties. The indemnity
arrangements were in force throughout the year (and at
the date of approval of the financial statements) and are
qualifying indemnity provisions under the Companies Act 2006.
Powers of the Directors
Subject to the Company’s Articles of Association, the Companies
Act 2006 and any directions given by special resolution, the
business of the Company is managed by the Board, which
may exercise all the powers of the Company, whether relating
to the management of the business of the Company or not.
In particular, the Board may exercise all the powers of the
Company to borrow money, to guarantee, to indemnify,
to mortgage or charge any of its undertakings, property,
assets (present and future) and uncalled capital and to issue
debentures and other securities and to give security for any
debt, liability or obligation of the Company or of any third party.
Directors’ training and development
Details of the training that has been provided to the Executive
and Non-Executive Directors during the year can be found on
pages 137 and 165.
Report and Accounts 2024
201
Governance
DIRECTORS’ REPORT continued
Appointment and replacement of Directors
Directors may be appointed by ordinary resolution of the
shareholders, or by the Board. Appointment of a Director from
outside the Group is on the recommendation of the Nominations
Committee, whilst internal promotion is a matter decided by the
Board unless it is considered appropriate for a recommendation
to be requested from the Nominations Committee.
Notwithstanding provisions in the Company’s Articles of
Association, the Board has agreed, in accordance with the Code
and in line with previous years, that all of the Directors wishing
to continue will retire and, being eligible, offer themselves for
re-election by the shareholders at the 2025 AGM, except for
Cilla Snowball, Robert Wilkinson and Madeleine McDougall.
After serving nine years on the Board, Cilla Snowball will
not be seeking re-election and will step down from the
Board no later than at the 2025 AGM. Robert Wilkinson and
Madeleine McDougall shall seek election by the members
following their appointments on 1 June 2024 and 1 November
2024, respectively.
Significant agreements
There are no agreements between the Company and its
Directors or employees providing for compensation for loss
of office or employment that occurs because of a takeover
bid, except that, under the rules of the Group’s share-based
remuneration schemes some awards may vest following a
change of control.
Some of the Group’s banking and financial arrangements are
terminable upon a change of control of the Company. As a
REIT, a tax charge may be levied on the Company if it makes a
distribution to another company which is beneficially entitled
to 10% or more of the shares or dividends in the Company
or controls 10% or more of the voting rights in the Company
(a substantial shareholder), unless the Company has taken
reasonable steps to avoid such a distribution being made.
The Company’s Articles of Association give the Directors power
to take such steps, including the power to:
• identify a substantial shareholder;
• withhold the payment of dividends to a substantial
shareholder; and
• require the disposal of shares forming part of a substantial
shareholding.
There is no person with whom the Group has a contractual
or other arrangement that is essential to the business of
the Company.
Annual General Meeting (AGM)
At the 2024 AGM, we were delighted to receive in excess of
89% votes in favour of all resolutions. In total, 88.6% of our
shareholders (voting capital) voted.
The 41st AGM of Derwent London plc will be held in DL/78
at 78 Charlotte Street, London W1T 4QS on 16 May 2025 at
9.30am. The Notice of Meeting together with explanatory
notes is contained in the circular to shareholders that
accompanies the Report & Accounts.
In the event we receive 20% or more votes against a
recommended resolution at a general meeting, we would
announce the actions we intend to take to engage with our
shareholders to understand the result in accordance with the
Code. We would follow this announcement with a further
update within six months of the meeting, with an overview of
our shareholders’ views on the resolutions and the remedial
actions we have taken. All announcements made via RNS are
available to shareholders on our website.
To date, the Board has not been required to follow these
procedures due to the high level of support received from
shareholders.
Voting
Shareholders will be entitled to vote at a general meeting
whether on a show of hands or a poll, as provided in the
Companies Act 2006. Voting at the 2025 AGM will be via poll.
Where a proxy is given discretion as to how to vote on a show
of hands, this will be treated as an instruction by the relevant
shareholder to vote in the way in which the proxy decides to
exercise that discretion. This is subject to any special rights or
restrictions as to voting which are given to any shares or upon
which any shares may be held at the relevant time and to the
Articles of Association.
If more than one joint holder votes (including voting by proxy),
the only vote which will count is the vote of the person whose
name is listed first on the register for the share.
Restrictions on voting
Unless the Directors decide otherwise, a shareholder cannot
attend or vote shares at any general meeting of the Company
or upon a poll or exercise any other right conferred by
membership in relation to general meetings or polls if they
have not paid all amounts relating to those shares which
are due at the time of the meeting, or if they have been
served with a restriction notice (as defined in the Articles
of Association) after failure to provide the Company with
information concerning interests in those shares required
to be provided under the Companies Act 2006.
The Company is not aware of any agreements between
shareholders that may result in restrictions on voting rights.
Capital structure
As at 26 February 2025, the Company’s issued share
capital comprised a single class of 5p ordinary shares
(ISIN: GB0002652740) and equalled an amount of
£5,614,546.45 divided into 112,290,929 ordinary shares.
The market price of the 5p ordinary shares at 31 December
2024 was £19.59 (2023: £23.60). During the year, they traded in
a range between £18.74 and £25.28 (2023: £17.66 and £27.50).
Details of the ordinary share capital and shares issued during
the year can be found in note 30 to the financial statements.
Derwent London plc
202
Rights and restrictions attaching to shares
Subject to the Articles of Association, the Companies Act 2006
and other shareholders’ rights, shares in the Company may
be issued with such rights and restrictions as the shareholders
may by ordinary resolution decide, or if there is no such
resolution, as the Board may decide provided it does not
conflict with any resolution passed by the shareholders. These
rights and restrictions will apply to the relevant shares as if
they were set out in the Articles of Association. Subject to the
Articles of Association, the Companies Act 2006 and other
shareholders’ rights, unissued shares are at the disposal of
the Board.
Variation of rights
The rights attached to any class of shares can be amended
if approved, either by 75% of shareholders holding the issued
shares in that class by amount, or by special resolution passed
at a separate meeting of the holders of the relevant class
of shares.
Every member and every duly appointed proxy present at a
general meeting or class meeting has, upon a show of hands,
one vote and every member present in person or by proxy
has, upon a poll, one vote for every share held by him or her.
No person holds securities in the Company carrying special
rights with regard to control of the Company.
Restrictions on transfer of securities in
the Company
There are no specific restrictions on the transfer of securities in
the Company, which is governed by its Articles of Association
and prevailing legislation. The Company is not aware of
any agreements between shareholders that may result in
restrictions on the transfer of securities.
Directors’ interests in shares/ See page 199
Managing shareholder dilution / See page 199
Results and dividends
The financial statements set out the results of the Group for
the financial year ended 31 December 2024 and are shown on
pages 216 to 277. The Directors recommend a final dividend
of 55.50p per ordinary share for the year ended 31 December
2024. When taken together with the interim dividend of
25.00p per ordinary share paid in October 2024, this results
in a total dividend for the year of 80.50p (2023: 79.50p) per
ordinary share. Subject to approval by shareholders of the
recommended final dividend, the dividend to shareholders for
2024 will total £90.4m. If approved, the Company will pay the
final dividend on 30 May 2025 to shareholders on the register
of members at 25 April 2025.
PID and non-PID dividends
As a REIT, Derwent London must distribute at least 90% of the
Group’s income profits from its tax-exempt property rental
business by way of a dividend, which is known as a property
income distribution (PID). These distributions can be subject to
withholding tax at 20%. Dividends from profits of the Group’s
taxable residual business are non-PID and will be taxed as an
ordinary dividend.
Derwent London shares held by the Group
As at 31 December 2024, the Group holds 33,000 Derwent London shares in order to deliver vesting shares under the Performance
Share Plan (PSP) to participants, allot dividend equivalents as additional vesting shares and deliver deferred bonus shares when
the deferral periods expire. Movements on the holding of these shares are detailed below. The shares held as at 31 December
2024 include the 22,334 deferred bonus shares purchased on 4 April 2023 (see page 194) and Damian Wisniewski’s vested but
unexercised PSP 2019 award (5,253 shares). The outstanding balance (5,413 shares) will be utilised for future PSP vestings.
During the year
1 January 2024
Acquired
Allotted
Disposal
31 December 2024
Deferred bonus
22,334
–
–
–
22,334
Performance Share Plan
10,666
–
–
–
10,666
Total
33,000
–
–
–
33,000
Price (£)
Percentage of issued share capital
0%
Dividend payments
Derwent London plc is committed to reducing
its impact on the environment. As such, from
October 2025, dividend payments will no longer
be made by cheque. Receiving dividends by
direct payment rather than cheque is quicker,
more secure and better for the environment.
Further information will be contained on our
dividend tax vouchers.
Report and Accounts 2024
203
Governance
DIRECTORS’ REPORT continued
Disapplication of pre-emption rights
At the 2025 AGM, the Company will seek approval from its
shareholders to disapply pre-emption rights in accordance
with the Pre-Emption Group’s 2022 Statement of Principles.
Special resolutions 17 and 18 will seek authority to:
• disapply pre-emption rights on up to a nominal amount
of £561,455 (representing 10% of our issued share capital),
with a further disapplication for up to 2 per cent to be used
only for the purposes of a follow-on offer; and
• disapply pre-emption rights for an additional 10 per cent
for transactions which the Board determines to be either
an acquisition or a specified capital investment as defined
by the Statement of Principles, with a further disapplication
for up to 2 per cent to be used only for the purposes of a
follow-on offer.
The Company confirms its intention to comply with the
‘letter and spirit’ of the Pre-Emption Group’s Statement of
Principles in respect of the use of the annual disapplication
of pre-emption rights.
Powers in relation to the Company issuing or
buying back its own shares
At the 2024 AGM, shareholders authorised the Company to
allot relevant securities:
(i) up to a nominal amount of £1,871,328; and
(ii) up to a nominal amount of £3,743,218, after deducting
from such limit any relevant securities allotted under (i),
in connection with an offer by way of a rights issue.
This authority is renewable annually. An ordinary resolution
will be proposed at the 2025 AGM to grant a similar authority
to allot:
(i) up to a nominal amount of £1,871,328 (being one-third
of the issued share capital of the Company); and
(ii) up to a nominal amount of £3,743,218, after deducting
from such limit any relevant securities allotted under (i),
in connection with an offer by way of a rights issue
(being two-thirds of the issued share capital).
A further special resolution will be proposed to renew the
Directors’ authority to repurchase the Company’s ordinary
shares in the market. The authority will be limited to a
maximum of 11,229,093 ordinary shares and the resolution sets
the minimum and maximum prices which may be paid. The
Directors will only purchase the Company’s shares in the market
if they believe it is in the best interests of shareholders generally.
Fixed assets
The Group’s portfolio was professionally revalued at
31 December 2024, resulting in a deficit of £1.8m, before
accounting adjustments of £2.0m. The portfolio is included
in the Group balance sheet at a carrying value of £4,860.5m.
Further details are given in note 16 of the financial statements.
Post-balance sheet events
There are no post-balance sheet events requiring disclosure.
Political donations
There were no political donations during 2024 (2023: nil).
Audit exemption
For the year ending 31 December 2024, a number of the
Group’s wholly owned subsidiaries are entitled to exemption
from audit, under section 479A of the Companies Act 2006.
We have identified in the table on pages 274 to 276 which
subsidiaries intend to utilise the audit exemption. As the
ultimate parent of these companies, Derwent London plc has
unanimously agreed to the adoption of the exemptions and to
the granting of a guarantee in accordance with section 479C
of the Companies Act 2006.
Auditor
PricewaterhouseCoopers LLP (PwC) were reappointed in 2024
following a competitive tender process during 2023. PwC has
expressed its willingness to continue in office as the Group’s
external Auditor and, accordingly, resolutions to appoint and
authorise the Audit Committee, for and on behalf of the
Directors, to determine its remuneration will be proposed at
the AGM. These are resolutions 14 and 15 as set out in the
Notice of Meeting.
As Sandra Dowling approaches the end of her tenure as Lead
Audit Partner, the Board approved the appointment of Allan
McGrath as Lead Audit Partner for the year ending
31 December 2025.
The Directors who held office at the date of approval of this
Directors’ report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s
external Auditor is unaware and that each Director has taken
all the steps that they ought to have taken as a Director to
make themselves aware of any relevant audit information and
ensure that the Auditor is aware of such information.
The Strategic report and Directors’ report have been approved
by the Board of Directors and signed by order of the Board by:
David Lawler
Company Secretary
26 February 2025
Derwent London plc
204
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group financial
statements in accordance with UK-adopted international accounting standards and
the Company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards, comprising
FRS 101 ‘Reduced Disclosure Framework’, and applicable law).
Under Company law, directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the group
and company and of the profit or loss of the group for that period. In preparing the
financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently.
• State whether applicable UK-adopted international accounting standards have
been followed for the group financial statements and United Kingdom Accounting
Standards, comprising FRS 101 have been followed for the company financial
statements, subject to any material departures disclosed and explained in the
financial statements.
• Make judgements and accounting estimates that are reasonable and prudent.
• Prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and Company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and Company
and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are also responsible for keeping adequate accounting records that
are sufficient to show and explain the Group’s and Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the Group
and Company and enable them to ensure that the financial statements and the
Directors’ Remuneration report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company’s
website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the annual Report & Accounts, taken as a whole, is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the Group’s and Company’s position and performance,
business model and strategy. Each of the Directors, whose names and functions
are listed on pages 122 to 123 confirm that, to the best of their knowledge:
• the Group financial statements, which have been prepared in accordance with
UK-adopted international accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit of the Group;
• the Company financial statements, which have been prepared in accordance with
United Kingdom Accounting Standards, comprising FRS 101, give a true and fair
view of the assets, liabilities and financial position of the Company; and
• the Strategic report includes a fair review of the development and performance
of the business and the position of the Group and Company, together with a
description of the principal risks and uncertainties that it faces.
On behalf of the Board
Paul Williams
Damian Wisniewski
Chief Executive
Chief Financial Officer
26 February 2025
The Directors are responsible for preparing the Report
and Accounts 2024 and the financial statements in
accordance with applicable law and regulation.
45 Whitfield Street W1
Report and Accounts 2024
205
Governance
Derwent London plc
206
FINANCIAL
STATEMENTS
208 Independent Auditors’ report
216 Consolidated income statement
217 Consolidated statement of
comprehensive income
218 Consolidated balance sheet
219 Consolidated statement of
changes in equity
220 Consolidated cash flow statement
221 Notes to the consolidated
financial statements
268 Company balance sheet
269 Company statement of changes
in equity
270 Notes to the Company
financial statements
Other information
277 Ten-year summary
278 EPRA summary
281 Principal properties
283 List of definitions
287 Shareholder information
288 Awards and recognition
Space for Change has
not only boosted our
confidence but also highlights
how Derwent London’s
commitment to providing
valuable workspace resources
and integrating startups into
their vibrant community can
truly empower and accelerate
new ventures.
Disruptor London
Space for Change winner
Network W1
Report and Accounts 2024
207
Financial statements
INDEPENDENT AUDITORS’ REPORT
to the members of Derwent London plc
Report on the audit of the financial statements
Opinion
In our opinion:
• Derwent London plc’s group financial statements and company financial statements (the “financial statements”) give a true
and fair view of the state of the group’s and of the company’s affairs as at 31 December 2024 and of the group’s profit and the
group’s cash flows for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards as applied in accordance with the provisions of the Companies Act 2006;
• the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Report and Accounts 2024 (the “Annual Report”), which comprise:
the consolidated and company balance sheets as at 31 December 2024; the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated cash flow statement, and the consolidated and company statements
of changes in equity for the year then ended; and the notes to the financial statements, comprising material accounting policy
information and other explanatory information.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 10 to the consolidated financial statements, we have provided no non-audit services to the
company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
• We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the geographic structure of the group, the accounting processes and controls, and
the industry in which the group operates.
• The group’s properties are spread across a number of statutory entities, with the group financial statements being a
consolidation of these entities, the company and the group’s joint ventures. All work was carried out by the group audit team.
Key audit matters
• Valuation of investment properties (group)
• Compliance with REIT guidelines (group)
• Valuation of investments in and loans to subsidiaries (company)
Materiality
• Overall group materiality: £52.1 million (2023: £50.2 million) based on 1% of Total assets.
• Specific group materiality: £5.9 million (2022: £5.7 million) based on 5% of Profit before tax after removing revaluation of
investment properties (whether held directly or through joint ventures), profit on disposal and fair value movements on
derivatives, which is applied to the group income statement except for these removed items.
• Overall company materiality: £45.7 million (2023: £46.0 million) based on 1% of Total assets.
• Performance materiality: £39.1 million (2023: £37.6 million) (group) and £34.3 million (2023: £34.5 million) (company).
Derwent London plc
208
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, 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.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Valuation of investment properties (group)
Refer to the Audit Committee report (Significant financial
judgements, key assumptions and estimates), note 3
(Significant judgements, key assumptions and estimates)
and note 16 (Property portfolio) to the consolidated financial
statements.
The group has investment properties totalling £4,670.1 million
(2023: £4,551.4 million).
The group’s property portfolio principally consists of offices
and commercial space within central London. The remainder
of the portfolio represents a retail park, farming woodland
and strategic residential development land in Scotland.
Valuations are carried out by third party valuers
(the ‘Valuers’) in accordance with the Royal Institution of
Chartered Surveyors (‘RICS’) Valuation – Global Standards 2022,
International Accounting Standard 40 (Investment Property)
and International Financial Reporting Standard 13
(Fair Value Measurement).
There are significant judgements and estimates to be made in
relation to the valuation of the group’s investment properties.
Where available, the valuations take into account evidence of
market transactions for properties and locations comparable
to those of the group. The central London investment property
portfolio mainly features office accommodation and includes:
• Standing investments: These are existing properties that
are currently let. They are valued using the income
capitalisation method.
• Development properties: These are properties currently under
development or identified for future development. They
have a different risk and investment profile to the standing
investments. These are valued using the residual appraisal
method (i.e. by estimating the fair value of the completed
project using the income capitalisation method less
estimated costs to completion and a risk premium).
The most significant estimates affecting the valuation
included yields and estimated rental value (“ERV”) growth
(as described in note 16 of the consolidated financial
statements). For development projects, other assumptions
included costs to completion and risk premium assumptions
are also factored into the valuation.
The existence of significant estimation uncertainty, coupled
with the fact that only a small percentage difference in
individual property valuations when aggregated could result
in material misstatement, is why we have given specific audit
focus and attention to this area.
Given the inherent subjectivity involved in the valuation
of the property portfolio, and therefore the need for
deep market knowledge when determining the most
appropriate assumptions and the technicalities of valuation
methodology, we engaged our internal valuation experts to
assist us in our audit of this matter.
Assessing group’s external Valuers’ expertise
and objectivity
The Valuers used by the group are Knight Frank. They are a
well-known firm, with sufficient experience of the group’s
market. We assessed the competence and capabilities of
the Valuers and verified their qualifications by discussing
the scope of their work and reviewing the terms of their
engagements for unusual terms or fee arrangements.
Based on this work, we are satisfied that the Valuers remain
objective and competent and that the scope of their work
was appropriate.
Testing the valuations assumptions and
capital movement
We obtained details of each property held by the group and
set an expected range for yield and capital value movement,
determined by reference to published benchmarks and using
our experience and knowledge of the market. We obtained
and read the Valuers’ valuation reports covering all of the
group’s investment properties and confirmed that the
valuation approach was in accordance with RICS standards.
We held meetings with management and the Valuers,
at which the valuations and the key assumptions therein
were discussed. We focused on the largest properties,
development properties, and any outliers (where the year-
on-year capital value, yield and or ERV movement were
out of line with our range of assumptions developed using
externally published market data for the relevant sector).
We also focused on properties where assumptions did not
fall within our expected range, by obtaining the additional
evidence used in arriving at the final valuations and
assessing its appropriateness.
Furthermore, we challenged the Valuers as to the extent
to which recent market transactions and expected rental
values which they made use of in deriving their valuations
took into account the impact of climate change and related
ESG considerations.Specifically, we challenged the Valuers
on their consideration of any Energy Performance Certificate
related costs identified by management and how that was
reflected within the underlying property valuations.
Report and Accounts 2024
209
Financial statements
INDEPENDENT AUDITORS’ REPORT continued
to the members of Derwent London plc
Key audit matter
How our audit addressed the key audit matter
Valuation of investment properties (group)
continued
Information and standing data
We tested the data inputs underpinning the investment
property valuation for a sample of properties, including
rental income, acquisitions and capital expenditure, by
agreeing the inputs to the underlying property records
held by the group to assess the reliability, completeness
and accuracy of the underlying data used by the Valuers.
The underlying property records were assessed for reliability
by obtaining signed and approved lease contracts or
sale/purchase contracts and by inspecting approved third
party invoices and tracing back to bank statements on a
sample basis.
For development properties, we agreed the costs to date
included within development appraisals to quantity surveyor
reports and capitalised expenditure was tested on a sample
basis to invoices. We agreed the total forecasted cost of
upgrading buildings to Energy Performance Certificate B
to a third party report commissioned by the group.
We also challenged the valuer on the profit on cost
assumptions used as this reflects the risk premium of the
development property.
We considered reasons why the market capitalisation was
lower than the net asset value of the group.
We have no matters to report in respect of this work.
Compliance with REIT guidelines (group)
Refer to the Audit Committee report (Significant financial
judgements, key assumptions and estimates) and note 3
(Significant judgements, key assumptions and estimates)
to the consolidated financial statements.
The UK REIT regime grants companies tax exempt status
provided they meet the rules within the regime. The rules are
complex and the tax exempt status has a significant impact
on the financial statements. The complexity of the rules creates
a risk of an inadvertent breach and the group’s profit becoming
subject to tax.
The obligations of the REIT regime include requirements to
comply with balance of business, dividend and income cover
tests. The group’s status as a REIT underpins its business model
and shareholder returns. For this reason, it warrants special
audit focus.
We confirmed our understanding of management’s
approach to ensuring compliance with the REIT regime rules.
We obtained management’s calculations and supporting
documentation, checking their accuracy by verifying the
inputs and calculations. We involved our internal taxation
experts to verify the accuracy of the application of the rules
and to re-perform the REIT compliance tests.
We have no matters to report in respect of this work.
Derwent London plc
210
Key audit matter
How our audit addressed the key audit matter
Valuation of investments in and loans to
subsidiaries (company)
Refer to notes vi (Investments) and vii (Receivables) to the
company financial statements.
The company has investments in subsidiaries of £2,578.3 million
(2023: £2,189.8 million) and loans to subsidiaries of £1,920.4
million (2023: £2,327.3 million) as at 31 December 2024.
This is following the recognition of a net impairment reversal
of £0.5 million (2023: net impairment charge of £169.9 million)
net provision for impairment on investments in subsidiaries
and an expected credit loss impairment of £nil (2023: £nil)
recognised on loans to subsidiaries in the year.
The company’s accounting policy for investments and loans is
to hold them at cost less any impairment. Impairment of the
loans is calculated in accordance with International Financial
Reporting Standard 9 (Financial Instruments). Investments
in subsidiaries are assessed for impairment in line with
International Accounting Standard 36 (Impairment of Assets).
Given the inherent judgement and complexity in assessing
both the carrying value of a subsidiary company and the
expected credit loss of intercompany receivables, this was
identified as a key audit matter.
We obtained management’s impairment assessment for
the recoverability of investments in and loans to subsidiaries
as at 31 December 2024.
We assessed the accounting policy for investments and
loans to subsidiaries to ensure they were compliant with
FRS 101 “Reduced Disclosure Framework”. We verified that
the methodology used by management in arriving at the
carrying value of each subsidiary, and the expected credit
loss for intercompany receivables, was compliant with
FRS 101.
We identified the key judgement within the requirement
for impairment of both the investments and loans to
subsidiaries to be the underlying valuation of investment
property held by the subsidiaries. For details of our
procedures over investment property valuations please refer
to the group key audit matter above.
We have no matters to report in respect of this work.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls,
and the industry in which they operate.
The group’s properties are spread across a number of statutory entities, with the group financial statements being a consolidation
of these entities, the company and the group’s joint ventures. All work was carried out by the group audit team.
The impact of climate risk on our audit
In planning our audit, we made enquiries with management to understand the extent of the potential impact of climate change
risk on the financial statements. Our evaluation of this conclusion included challenging key judgements and estimates in areas
where we considered that there was greatest potential for climate change impact. We particularly considered how climate change
risks would impact the assumptions made in the valuation of investment properties as explained in our key audit matter above.
We also considered the consistency of the disclosures in relation to climate change made within the Annual Report, the financial
statements and the knowledge obtained from our audit. We assessed the consideration of the cost of delivering the group’s
climate change and sustainability strategy within the going concern and viability forecasts.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group
Financial statements – company
Overall materiality
£52.1 million (2023: £50.2 million).
£45.7 million (2023: £46.0 million).
How we determined it
1% of Total assets
1% of Total assets
Rationale for
benchmark applied
The primary measurement attribute of the group
is the carrying value of property investments.
On this basis, we set an overall group materiality
level based on total assets.
The primary measurement attribute of the company
is the carrying value of investments in subsidiaries.
On this basis, we set an overall company materiality
level based on total assets.
Report and Accounts 2024
211
Financial statements
INDEPENDENT AUDITORS’ REPORT continued
to the members of Derwent London plc
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of
our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (2023: 75%) of overall materiality, amounting to £39.1 million
(2023: £37.6 million) for the group financial statements and £34.3 million (2023: £34.5 million) for the company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range
was appropriate.
In addition, we set a specific group materiality level of £5.9 million (2023: £5.7 million) which is calculated based on 5% of Profit
Before Tax after removing revaluation of investment properties (whether held directly or through joint ventures), profit on disposal
and fair value movements on derivatives, and which is applied to the group income statement except for these removed items.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £2.6 million
(group audit) (2023: £2.5 million) and £2.3 million (company audit) (2023: £2.3 million) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern basis
of accounting included:
• Agreed the underlying cash flow projections to Board approved forecast and assess how this forecast is compiled;
• Considered management’s forecasting accuracy by comparing how the forecast made at the half year compares to the actual
performance in the second half of the year;
• Tested the integrity of the underlying formulas and calculations within the going concern and cash flow models;
• Understood and assessed the appropriateness of the key assumptions used in the base case and in the severe but plausible
downside scenarios, including assessing whether we considered the downside sensitivities to be appropriately severe;
• Performed sample testing over the data and information of the properties used in the forecast made by the MRI forecasting
system to the supporting documents to gain comfort over the accuracy of the data and information in the MRI forecasting system;
• Assessed the consideration of the cost of delivering the group’s climate change and sustainability strategy within the underlying
going concern and viability forecasts;
• Evaluated whether the directors’ conclusion, that sufficient liquidity and covenant headroom existed to continue trading
operationally throughout the going concern period under the base and severe but plausible scenarios, is appropriate; and
• Reviewed the disclosures provided relating to the going concern basis of preparation and found that these provided an
explanation of the directors’ assessment that was consistent with the evidence we obtained.
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 the 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 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.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and the
company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have 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.
Derwent London plc
212
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors’ report for the year ended 31 December 2024 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic report and Directors’ report.
Directors’ remuneration
In our opinion, the part of the Remuneration Committee report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of this report.
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, and
we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks
and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and company’s
ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment covers
and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and company was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements and our knowledge and understanding of the group and
company and their environment obtained in the course of the audit.
Report and Accounts 2024
213
Financial statements
INDEPENDENT AUDITORS’ REPORT continued
to the members of Derwent London plc
In addition, 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 that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the group’s and company’s position, performance, business
model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the 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 company or to cease operations, or have no realistic alternative but
to do so.
Auditors’ 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 auditors’ 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.
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.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to compliance with the Real Estate Investment Trust (REIT) status Part 12 of the Corporation Tax Act 2010 and
the UK regulatory principles, such as those governed by the Listings Rules, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We also considered those laws and regulations that have a direct
impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities
for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the
principal risks were related to posting inappropriate journal entries to increase revenue, and management bias in accounting
estimates and judgemental areas of the financial statements such as the valuation of investment properties. Audit procedures
performed by the engagement team included:
• Discussions with management, including the Company Secretary, as well as those charged with governance, over their
consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
• Understanding and evaluating management’s controls designed to prevent and detect irregularities;
• Reviewing the reports made by internal audit;
• Assessment of matters reported through the group’s whistleblowing helpline and the results of management’s investigation of
such matters where relevant;
• Review of tax compliance with the involvement of our tax experts in the audit;
• Procedures relating to the valuation of investment properties described in the related key audit matter above;
• Reviewing relevant meeting minutes, including those of the Board of Directors, Risk Committee and the Audit Committee; and
• Identifying and testing journal entries, in particular any journal entries posted with unexpected account combinations, post
close entries and posted by unexpected users.
Derwent London plc
214
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
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 auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received
from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Remuneration Committee report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the directors on 14 May 2014 to audit the financial
statements for the year ended 31 December 2014 and subsequent financial periods. The period of total uninterrupted engagement
is eleven years, covering the years ended 31 December 2014 to 31 December 2024.
Other matter
The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these financial
statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R – 4.1.18R and filed
on the National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance over whether
the structured digital format annual financial report has been prepared in accordance with those requirements.
Sandra Dowling (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
26 February 2025
Report and Accounts 2024
215
Financial statements
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2024
Note
2024
£m
2023
£m
Gross property and other income
5
276.9
265.9
Net property and other income
5
198.3
190.5
Administrative expenses
(41.1)
(39.1)
Revaluation deficit
16
(2.7)
(581.5)
Profit on disposal
6
1.9
1.2
Profit/(loss) from operations
156.4
(428.9)
Finance income
7
0.3
0.9
Finance costs
7
(39.9)
(40.4)
Movement in fair value of derivative financial instruments
(2.3)
(2.1)
Financial derivative termination income
8
–
1.8
Share of results of joint ventures
9
1.5
(7.2)
Profit/(loss) before tax
10
116.0
(475.9)
Tax charge
15
(0.1)
(0.5)
Profit/(loss) for the year
115.9
(476.4)
Basic earnings/(loss) per share
38
103.24p
(424.25p)
Diluted earnings/(loss) per share
38
102.93p
(424.25p)
The notes on pages 221 to 267 form part of these financial statements.
Derwent London plc
216
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
for the year ended 31 December 2024
Note
2024
£m
2023
£m
Profit/(loss) for the year
115.9
(476.4)
Actuarial losses on defined benefit pension scheme
14
(0.4)
(0.7)
Revaluation surplus/(deficit) of owner-occupied property
16
2.9
(3.9)
Deferred tax (charge)/credit on revaluation
29
(0.6)
1.0
Other comprehensive income/(expense) that will not be reclassified to profit or loss
1.9
(3.6)
Total comprehensive income/(expense) relating to the year
117.8
(480.0)
The notes on pages 221 to 267 form part of these financial statements.
Report and Accounts 2024
217
Financial statements
CONSOLIDATED BALANCE SHEET
as at 31 December 2024
Registered No. 1819699
Note
2024
£m
2023
£m
Non-current assets
Investment property
16
4,670.1
4,551.4
Property, plant and equipment
17
52.0
49.9
Investments
19
–
35.8
Derivative financial instruments
25
–
2.9
Pension scheme surplus
14
1.8
2.0
Other receivables
20
201.0
201.0
4,924.9
4,843.0
Current assets
Trading property
16
115.7
60.0
Trading stock
18
17.5
8.9
Trade and other receivables
21
57.8
42.7
Derivative financial instruments
25
0.6
–
Corporation tax asset
0.4
0.4
Cash and cash equivalents
33
71.4
73.0
263.4
185.0
Non-current assets held for sale
22
25.7
–
Total assets
5,214.0
5,028.0
Current liabilities
Borrowings
25
194.1
102.9
Leasehold liabilities
25
0.4
0.4
Trade and other payables
23
174.7
148.0
Provisions
24
0.2
0.1
369.4
251.4
Non-current liabilities
Borrowings
25
1,269.4
1,233.2
Leasehold liabilities
25
34.2
34.2
Provisions
24
0.4
0.3
Deferred tax
29
0.8
0.1
1,304.8
1,267.8
Total liabilities
1,674.2
1,519.2
Total net assets
3,539.8
3,508.8
Equity
Share capital
30
5.6
5.6
Share premium
31
196.6
196.6
Other reserves
31
943.2
939.3
Retained earnings
31
2,394.4
2,367.3
Total equity
3,539.8
3,508.8
The financial statements were approved by the Board of Directors and authorised for issue on 26 February 2025.
Paul Williams
Damian Wisniewski
Chief Executive
Chief Financial Officer
The notes on pages 221 to 267 form part of these financial statements.
Derwent London plc
218
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2024
Share
capital
£m
Share
premium
£m
Other
reserves1
£m
Retained
earnings
£m
Total
equity
£m
At 1 January 2024
5.6
196.6
939.3
2,367.3
3,508.8
Profit for the year
–
–
–
115.9
115.9
Other comprehensive income/(expense)
–
–
2.3
(0.4)
1.9
Share-based payments
–
–
1.6
1.4
3.0
Dividends paid
–
–
–
(89.8)
(89.8)
At 31 December 2024
5.6
196.6
943.2
2,394.4
3,539.8
At 1 January 2023
5.6
196.6
941.9
2,931.4
4,075.5
Loss for the year
–
–
–
(476.4)
(476.4)
Other comprehensive expense
–
–
(2.9)
(0.7)
(3.6)
Share-based payments
–
–
0.3
1.7
2.0
Dividends paid
–
–
–
(88.7)
(88.7)
At 31 December 2023
5.6
196.6
939.3
2,367.3
3,508.8
1
See note 31.
Report and Accounts 2024
219
Financial statements
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2024
Note
2024
£m
2023
£m
Operating activities
Cash generated from operations
28
102.6
135.3
Interest received
0.3
0.8
Interest and other finance costs paid
(38.3)
(38.1)
Distributions from joint ventures
–
0.3
Tax paid in respect of operating activities
–
(1.3)
Net cash from operating activities
64.6
97.0
Investing activities
Acquisition of properties
(47.0)
(3.8)
Capital expenditure1
(139.9)
(151.5)
Disposal of investment properties
85.5
65.4
Repayment of joint venture loans
–
0.6
Purchase of property, plant and equipment
(1.6)
(0.7)
Indirect taxes received/(paid) in respect of investing activities
1.1
(8.0)
Net cash used in investing activities
(101.9)
(98.0)
Financing activities
Net movement in revolving bank loans
27
26.5
84.0
Drawdown of term bank loans
27
182.5
–
Payment of loan arrangement fees
(0.7)
–
Proceeds from other loan
–
0.3
Repayment of secured bank loan
(83.0)
–
Financial derivative termination income
8
–
1.8
Dividends paid
32
(89.6)
(88.7)
Net cash from/(used in) financing activities
35.7
(2.6)
Decrease in cash and cash equivalents in the year
(1.6)
(3.6)
Cash and cash equivalents at the beginning of the year
33
73.0
76.6
Cash and cash equivalents at the end of the year
33
71.4
73.0
1
Finance costs of £11.2m (2023: £6.5m) are included in capital expenditure (see note 7).
The notes on pages 221 to 267 form part of these financial statements.
Derwent London plc
220
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
1 Basis of preparation
The consolidated financial statements have been prepared in accordance with UK-adopted International Accounting Standards,
(the “applicable framework”), and have been prepared in accordance with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards. The financial statements have been prepared under the historical cost
convention as modified by the revaluation of investment properties, the revaluation of property, plant and equipment, assets held
for sale, pension scheme, and financial assets and liabilities held at fair value through profit and loss.
These financial statements have been presented in Pounds Sterling, which is the functional currency of the Group, to the nearest million.
The financial statements of Derwent London plc (the “Company”) have been prepared under FRS 101 and can be found on pages
268 to 269.
Going concern
The Board continues to adopt the going concern basis in preparing these consolidated financial statements. In considering this
requirement, the Directors have taken into account the following:
• The Group’s latest rolling forecast for the next two years, in particular the cash flows, borrowings and undrawn facilities,
including the ‘severe but plausible’ downside case.
• The headroom under the Group’s financial covenants.
• The risks included on the Group’s risk register that could impact on the Group’s liquidity and solvency over the 12 months.
• The risks on the Group’s risk register that could be a threat to the Group’s business model and capital adequacy.
The Directors have considered the relatively long-term and predictable nature of the income receivable under the tenant leases,
the Group’s year end loan-to-value ratio for 2024 of 29.9%, the interest cover ratio of 387%, the £487m total of undrawn facilities
and cash and the fact that the average maturity of borrowings was 4.0 years at 31 December 2024. The impact of the current
economic situation, interest rates and cost inflation on the business and its occupiers has been considered. The likely impact of
climate change has been incorporated into the Group’s forecasts which have also taken account of a programme of EPC upgrades
across the portfolio. Based on the year end position, rental income would need to decline by 62% and property values would need
to fall by 50% before breaching its financial covenants.
The £175m unsecured convertible bond, which matures in June 2025, is a current liability and therefore the Group is in a net current
liabilities position. However, the Group has significant liquidity to fund its ongoing operations and, as noted above, has access to
£487m of available undrawn facilities and cash as at year end. In addition, a new £115m unsecured term/revolving bank facility
was signed in February 2025, which provides the Directors with a reasonable expectation that the Group will be able to meet these
current liabilities as they fall due.
Having due regard to these matters and after making appropriate enquiries, the Directors have reasonable expectation that the
Group has adequate resources to continue in operational existence for a period of at least 12 months from the date of signing of
these consolidated financial statements and, therefore, the Directors continue to adopt the going concern basis in their preparation.
2 Changes in accounting policies
The principal accounting policies are described in note 41 and are consistent with those applied in the Group’s financial statements
for the year to 31 December 2023, as amended to reflect the adoption of new standards, amendments and interpretations which
became effective in the year as shown below.
New standards adopted during the year
The following standards, amendments and interpretations were effective for the first time for the Group’s current accounting
period. They did not have any material impact on the amounts recognised in prior periods and are not expected to significantly
affect the current or future periods.
IAS 1 (amended) – Classification of liabilities as current or non-current, Non-current Liabilities with Covenants;
IAS 7 and IFRS 7 (amended) – Supplier Finance Arrangements;
IFRS 16 (amended) – Lease Liability in a Sale and Leaseback.
Report and Accounts 2024
221
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
2 Changes in accounting policies continued
Standards in issue but not yet effective
The following standards, amendments and interpretations were in issue at the date of approval of these financial statements
but were not yet effective for the current accounting period and have not been adopted early. Based on the Group’s current
circumstances the Directors do not anticipate that their adoption in future periods will have a material impact on the financial
statements of the Group, with the exception of IFRS 18 where the Directors are assessing its potential impact.
IAS 21 (amended) – The Effects of Changes in Foreign Exchange rates;
IFRS 7 and IFRS 9 (amended) – Classification and Measurement of Financial Instruments;
IFRS 10 and IAS 28 (amended) – Sale or Contribution of Assets between an investor and its Associate or Joint Venture;
IFRS 18 – Presentation and Disclosure in Financial Statements’;
IFRS 19 – Subsidiaries without Public Accountability: Disclosures.
3 Significant judgements, key assumptions and estimates
The preparation of financial statements in accordance with the applicable framework requires the use of certain significant
accounting estimates and judgements. It also requires management to exercise judgement in the process of applying the Group’s
accounting policies. The Group’s significant accounting policies are stated in note 41. Not all of these accounting policies require
management to make difficult, subjective or complex judgements or estimates. Estimates and judgements are continually
evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Although these estimates are based on management’s best knowledge of the amount, event
or actions, actual results may differ from those estimates. The following is intended to provide an understanding of the policies
that management consider critical because of the level of complexity, judgement or estimation involved in their application and
their impact on these consolidated financial statements.
Significant judgements
Compliance with the real estate investment trust (REIT) taxation regime
As a REIT, the Group benefits from tax advantages. Income and chargeable gains on the qualifying property rental business are
exempt from corporation tax. Income that does not qualify as property income within the REIT rules is subject to corporation tax
in the normal way. There are a number of tests that are applied annually, and in relation to forecasts, to ensure the Group remains
well within the limits allowed within those tests.
The Group met all the criteria in 2024 in each case, thereby ensuring its REIT status is maintained. The Directors intend that the
Group should continue as a REIT for the foreseeable future.
Key sources of estimation uncertainty
Property portfolio valuation
The Group uses the valuation carried out by external valuers as the fair value of its property portfolio. The valuation considers a range
of assumptions including future rental income, investment yields, anticipated outgoings and maintenance costs, future development
expenditure and appropriate discount rates. The external valuers also make reference to market evidence of transaction prices
for similar properties and take into account the impact of climate change and related environmental, social and governance
considerations. More information is provided in note 16, including sensitivity disclosures.
Other areas of estimation
Impairment testing of trade receivables and other financial assets
Trade receivables and accrued rental income recognised in advance of receipt are subject to impairment testing under IFRS 9
and IAS 36, respectively. This accrued rental income arises due to the spreading of rent-free and reduced rent periods, capital
contributions and contracted rent uplifts in accordance with IFRS 16 Leases.
Impairment testing of trade receivables and other financial assets is no longer considered a key source of estimation uncertainty
as the Group no longer deems that the inherent uncertainty is likely to have a material impact within the next 12 months.
Accordingly, the associated sensitivities and balances have not been disclosed.
Due to their size, the lease incentive receivables (non-current) of £173.6m and lease incentive receivables (current) of £22.0m,
net of impairments, remain an area of estimation uncertainty for the Group.
Derwent London plc
222
4 Segmental information
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal financial reports about
components of the Group that are regularly reviewed by the chief operating decision makers (which in the Group’s case are the
four Executive Directors who are assisted by the other 13 members of the Executive Committee) in order to allocate resources to
the segments and to assess their performance.
The internal financial reports received by the Group’s Executive Committee contain financial information at a Group level as a
whole and there are no reconciling items between the results contained in these reports and the amounts reported in the financial
statements. These internal financial reports include IFRS figures but also report non-IFRS figures for the EPRA earnings and net
asset value. Reconciliations of each of these figures to their statutory equivalents are detailed in note 38. Additionally, information
is provided to the Executive Committee showing gross property income and property valuation by individual property. Therefore,
for the purposes of IFRS 8, each individual property is considered to be a separate operating segment in that its performance is
monitored individually.
The Group’s property portfolio includes investment property, owner-occupied property and trading property and comprised 95%
office buildings1 by value at 31 December 2024 (2023: 96%). The Directors consider that these individual properties have similar
economic characteristics and therefore have been aggregated into a single reportable segment. The remaining 5% (2023: 4%)
represented a mixture of retail, residential and light industrial properties, as well as land, each of which is de minimis in its own
right and below the quantitative threshold in aggregate. Therefore, in the view of the Directors, there is one reportable segment
under the provisions of IFRS 8.
All of the Group’s properties are based in the UK. No geographical grouping is contained in any of the internal financial reports
provided to the Group’s Executive Committee and, therefore, no geographical segmental analysis is required by IFRS 8. However,
geographical analysis is included in the tables below to provide users with additional information regarding the areas contained in
the Strategic report. The majority of the Group’s properties are located in London (West End central, West End borders/other and
City borders), with the remainder in Scotland (Provincial).
1
Some office buildings have an ancillary element such as retail or residential.
Gross property income
2024
2023
Office
buildings
£m
Other
£m
Total
£m
Office
buildings
£m
Other
£m
Total
£m
West End central
126.9
2.2
129.1
123.7
1.7
125.4
West End borders/other
17.0
–
17.0
17.3
–
17.3
City borders
66.3
0.7
67.0
65.2
0.5
65.7
Provincial
–
4.5
4.5
–
4.5
4.5
Gross property income (excl. joint venture)
210.2
7.4
217.6
206.2
6.7
212.9
Share of joint venture gross property income
1.9
–
1.9
2.2
–
2.2
212.1
7.4
219.5
208.4
6.7
215.1
A reconciliation of gross property income to gross property and other income is given in note 5.
Report and Accounts 2024
223
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
4 Segmental information continued
Property portfolio
2024
2023
Office
buildings
£m
Other
£m
Total
£m
Office
buildings
£m
Other
£m
Total
£m
Carrying value
West End central
3,172.5
164.3
3,336.8
2,945.4
99.2
3,044.6
West End borders/other
288.8
–
288.8
302.3
–
302.3
City borders
1,136.5
6.1
1,142.6
1,228.8
6.7
1,235.5
Provincial
–
92.3
92.3
–
75.1
75.1
Group (excl. joint venture)
4,597.8
262.7
4,860.5
4,476.5
181.0
4,657.5
Share of joint venture
–
–
–
34.0
–
34.0
4,597.8
262.7
4,860.5
4,510.5
181.0
4,691.5
Fair value
West End central
3,307.7
165.4
3,473.1
3,068.1
109.5
3,177.6
West End borders/other
301.7
–
301.7
318.4
–
318.4
City borders
1,167.3
6.1
1,173.4
1,266.3
6.7
1,273.0
Provincial
–
92.9
92.9
–
75.7
75.7
Group (excl. joint venture)
4,776.7
264.4
5,041.1
4,652.8
191.9
4,844.7
Share of joint venture
–
–
–
33.8
–
33.8
4,776.7
264.4
5,041.1
4,686.6
191.9
4,878.5
A reconciliation between the fair value and carrying value of the portfolio is set out in note 16.
5 Property and other income
2024
£m
2023
£m
Gross rental income
214.8
212.8
Surrender premiums received
2.7
0.1
Other property income
0.1
–
Gross property income
217.6
212.9
Trading property sales proceeds1
3.7
–
Service charge income1
50.5
48.5
Other income1
5.1
4.5
Gross property and other income
276.9
265.9
Gross rental income
214.8
212.8
Movement in impairment of receivables
(0.2)
(2.0)
Movement in impairment of prepayments
(0.2)
(0.6)
Service charge income1
50.5
48.5
Service charge expenses
(57.1)
(55.1)
(6.6)
(6.6)
Property costs
(18.2)
(17.4)
Net rental income
189.6
186.2
Trading property sales proceeds1
3.7
–
Trading property cost of sales
(3.7)
–
Profit on trading property disposals
–
–
Other property income
0.1
–
Other income1
5.1
4.5
Surrender premiums received
2.7
0.1
Dilapidation receipts
0.8
0.1
Write-down of trading property
–
(0.4)
Net property and other income
198.3
190.5
1
In line with IFRS 15 Revenue from Contracts with Customers, the Group recognised a total of £59.3m (2023: £53.0m) of other income, trading property sales
proceeds and service charge income within gross property and other income.
Derwent London plc
224
Gross rental income includes £6.3m (2023: £5.9m) relating to rents recognised in advance of cash receipts.
Other income relates to fees and commissions earned from tenants in relation to the management of the Group’s properties and
was recognised in the Group income statement in accordance with the delivery of services.
Property costs include amounts in relation to non-recoverable service charge costs associated with vacant units during periods
of refurbishment. These amounts are not significant and were previously capitalised in the carrying value of the property.
6 Profit on disposal
2024
£m
2023
£m
Investment property
Gross disposal proceeds
87.5
66.3
Costs of disposal
(0.7)
(0.7)
Net disposal proceeds
86.8
65.6
Carrying value
(79.3)
(64.0)
Adjustment for lease costs and rents recognised in advance
(5.4)
(0.4)
Profit on disposal of investment property
2.1
1.2
Artwork
Gross disposal proceeds
–
–
Costs of disposal
(0.2)
–
Net disposal proceeds
(0.2)
–
Carrying value
–
–
Loss on disposal of artwork
(0.2)
–
Profit on disposal
1.9
1.2
Included within gross disposal proceeds for 2024 is £77.4m relating to the disposal of the Group’s freehold interest in Turnmill EC1 in
June 2024, and £8.5m relating to the disposal of the Group’s freehold interest in Asta House W1 in July 2024.
7 Finance income and finance costs
2024
£m
2023
£m
Finance income
Net interest received on defined benefit pension scheme asset
(0.1)
(0.1)
Bank interest receivable
(0.2)
(0.8)
Finance income
(0.3)
(0.9)
Finance costs
Bank loans
6.1
1.1
Non-utilisation fees
1.9
2.2
Unsecured convertible bonds
4.0
3.9
Unsecured green bonds
6.7
6.7
Secured bonds
11.4
11.4
Unsecured private placement notes
15.6
15.6
Secured loan
2.7
3.3
Amortisation of issue and arrangement costs
2.6
2.6
Amortisation of the fair value of the secured bonds
(1.6)
(1.5)
Obligations under headleases
1.3
1.3
Other
0.4
0.3
Gross finance costs
51.1
46.9
Less: interest capitalised
(11.2)
(6.5)
Finance costs
39.9
40.4
Finance costs of £11.2m (2023: £6.5m) have been capitalised on development projects including trading stock and trading properties,
in accordance with IAS 23 Borrowing Costs, using the Group’s average cost of borrowings during each quarter. Total finance costs
paid to 31 December 2024 were £49.5m (2023: £44.6m) of which £11.2m (2023: £6.5m) out of a total of £139.9m (2023: £151.5m)
was included in capital expenditure on the property portfolio in the Group cash flow statement under investing activities.
Report and Accounts 2024
225
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
8 Financial derivative termination income
The Group incurred no costs or income in the year to 31 December 2024 (2023: £1.8m net receipts) deferring or terminating
interest rate swaps.
9 Share of results of joint ventures
2024
£m
2023
£m
Net property income
1.9
2.2
Administrative expenses
(0.1)
(0.2)
Revaluation surplus/(deficit)
7.3
(9.2)
Share of result of underlying joint ventures
9.1
(7.2)
Impairment of additional deferred consideration (see note 19)
(7.6)
–
Group share of results of joint ventures
1.5
(7.2)
The share of results of joint ventures for the year ended 31 December 2024 includes the Group’s 50% share in the Derwent Lazari
Baker Street Limited Partnership up to 31 October 2024, when the Group acquired the remaining interest in the partnership.
See note 19 for further details of the Group’s joint ventures.
10 Profit/(loss) before tax
2024
£m
2023
£m
This is arrived at after charging:
Depreciation
1.0
1.1
Rent payable under headleases
1.5
2.3
Auditor’s remuneration
Audit – Group
0.6
0.5
Audit – subsidiaries
0.1
0.1
In 2024, audit fees for the Group were £572,650 (2023: £501,000) and for the subsidiaries £101,325 (2023: £118,500). In addition,
PwC were remunerated £74,025 (2023: £70,500) for the review of the interim results, £40,000 (2023: £nil) for green finance
assurance, and £71,000 (2023: £nil) for other non-assurance related services.
11 Directors’ emoluments
2024
£m
2023
£m
Remuneration for management services
4.6
3.3
Post-employment benefits
0.4
0.4
5.0
3.7
National insurance contributions
0.7
0.5
5.7
4.2
An amount of £1.2m (2023: £0.9m) attributable to the Directors is included within share-based payments expense of £3.1m
(2023: £2.5m) relating to equity-settled schemes in note 12. This is in accordance with IFRS 2 Share-based Payment.
Details of the Directors’ remuneration awards under the long-term incentive plan and options held by the Directors under
the Group share option schemes are given on pages 194 to 199 of the report of the Remuneration Committee. The only key
management personnel are the Directors.
Derwent London plc
226
12 Employees
2024
£m
2023
£m
Staff costs, including those of Directors:
Wages and salaries
20.2
19.9
Social security costs
3.4
2.9
Other pension costs
3.0
2.6
Share-based payments expense relating to equity-settled schemes
3.1
2.5
29.7
27.9
Of the £29.7m (2023: £27.9m) costs related to employees for the year, £24.5m (2023: £25.7m) is included within administrative
expenses and £2.5m (2023: £nil) is capitalised within interest capitalisation and staff costs in note 16. Additional employee costs of
£2.7m (2023: £2.2m) are included within service charge expense.
The monthly average number of employees in the Group during the year, excluding Directors, was 185 (2023: 178). Of the Group’s
employees, there were 64 (2023: 59) whose costs were recharged or partially recharged to tenants via service charges.
Staff and associated costs directly attributable to major developments and projects have been capitalised in the carrying value of
the property portfolio, based on an estimation of time spent by staff on individual developments or projects. These costs, which
are not significant, were previously included within employee costs as part of administrative expenses.
13 Share-based payments
Details of the options held by Directors under the Performance Share Plan (PSP) are given in the report of the Remuneration
Committee on page 196.
Equity-settled option scheme
The Employee Share Option Plan (ESOP) is designed to incentivise and retain eligible employees. The ESOP is separate to the PSP
disclosed in the report of the Remuneration Committee. The Directors are not entitled to any awards under the ESOP.
Year of grant
Exercise
price
£
Adjusted
exercise price1
£
Outstanding at
1 January
Movement in options
Outstanding at
31 December
Granted
Exercised
Lapsed
For the year to 31 December 2024
2014
27.39
26.27
11,474
–
–
(11,474)
–
2015
34.65
33.23
26,625
–
–
(2,084)
24,541
2016
31.20
29.93
29,041
–
–
(2,845)
26,196
2017
28.93
27.75
57,668
–
–
(3,605)
54,063
2018
30.29
29.57
78,531
–
–
(5,744)
72,787
2019
32.43
32.43
100,515
–
–
(8,440)
92,075
2020
30.02
30.02
136,186
–
–
(15,639)
120,547
2021
33.28
33.28
165,629
–
–
(14,354)
151,275
2022
31.10
31.10
223,000
–
–
(21,710)
201,290
2023
22.86
22.86
324,850
–
–
(48,833)
276,017
2024
21.00
21.00
–
380,200
–
(39,105)
341,095
1,153,519
380,200
–
(173,833)
1,359,886
For the year to 31 December 2023
2013
21.99
21.09
250
–
(250)
–
–
2014
27.39
26.27
13,443
–
–
(1,969)
11,474
2015
34.65
33.23
31,050
–
–
(4,425)
26,625
2016
31.20
29.93
33,987
–
–
(4,946)
29,041
2017
28.93
27.75
63,550
–
–
(5,882)
57,668
2018
30.29
29.57
84,417
–
–
(5,886)
78,531
2019
32.43
32.43
108,825
–
–
(8,310)
100,515
2020
30.02
30.02
147,358
–
–
(11,172)
136,186
2021
33.28
33.28
182,414
–
–
(16,785)
165,629
2022
31.10
31.10
243,341
–
–
(20,341)
223,000
2023
22.86
22.86
–
331,850
–
(7,000)
324,850
908,635
331,850
(250)
(86,716)
1,153,519
Report and Accounts 2024
227
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
13 Share-based payments continued
Equity-settled option scheme continued
31 December
2024
31 December
2023
1 January
2023
Number of shares:
Exercisable
541,484
440,040
335,522
Non-exercisable
818,402
713,479
573,113
Weighted average exercise price of share options:
Exercisable
£31.24
£30.33
£30.46
Non-exercisable
£24.11
£27.86
£31.52
Weighted average remaining contracted life of share options:
Exercisable
4.35 years
4.53 years
4.72 years
Non-exercisable
8.40 years
8.47 years
7.47 years
Weighted average exercise price of share options that lapsed:
Exercisable
£30.35
£30.31
£31.87
Non-exercisable
£23.83
£30.58
£31.51
1
In 2018, following the payment of the special dividend of 75 pence per share, the Remuneration Committee exercised their discretion and adjusted the number of
outstanding unapproved ‘B’ options and their option price, to ensure participants were not disadvantaged by the payment to shareholders of the special dividend.
The weighted average share price at which options were exercised during 2024 was £nil (2023: £25.00).
The weighted average fair value of options granted during 2024 was £5.61 (2023: £5.71).
The following information is relevant in the determination of the fair value of the options granted during 2024 and 2023 under the
equity-settled employee share plan operated by the Group.
2024
2023
Option pricing model used
Binomial lattice
Binomial lattice
Risk free interest rate
4.1%
3.4%
Volatility
31.0%
28.0%
Dividend yield
3.4%
3.4%
For both the 2024 and 2023 grants, additional assumptions have been made that there is no employee turnover and 50% of
employees exercise early when the share options are 20% in the money and 50% of employees exercise early when the share
options are 100% in the money.
The volatility assumption, measured as the standard deviation of expected share price returns, is based on a statistical analysis of
daily prices over the last four years.
Save As You Earn scheme
The Save As You Earn (SAYE) is designed to allow employees (including Directors) to purchase shares in the Company in a tax
efficient manner. The SAYE plan is an HMRC approved scheme. Employees can participate on an annual basis and save up to
£250 per month per grant. Further details are given in the report of the Remuneration Committee on page 198.
Derwent London plc
228
14 Pension costs
The Group operates both a defined contribution scheme and a defined benefit scheme. The latter was acquired as part of the
acquisition of London Merchant Securities plc in 2007 and is closed to new members. All new employees are entitled to join the
defined contribution scheme. The assets of the pension schemes are held separately from those of Group companies.
Defined contribution plan
The total expense relating to this plan in the current year was £2.3m (2023: £2.3m).
Defined benefit plan
The Group sponsors the scheme which is a funded defined benefit arrangement. This is a separate trustee-administered fund
holding the pension scheme assets to meet long-term pension liabilities for past employees. The scheme closed to future benefit
accrual on 31 July 2019. The level of retirement benefit is principally based on basic salary at the last scheme anniversary of
employment prior to leaving active service and increases at 5% pa in deferment.
The trustees of the scheme are required to act in the best interest of the scheme’s beneficiaries. The appointment of the trustees
is determined by the scheme’s trust documentation. It is policy that one third of all trustees should be nominated by the members.
A full actuarial valuation was carried out as at 31 October 2022 in accordance with the scheme funding requirements of the
Pensions Act 2004 and the funding of the scheme is agreed between the Group and the trustees in line with those requirements.
The funding valuation requires the surplus/deficit to be calculated using prudent actuarial assumptions, as opposed to best
estimate assumptions required for pensions accounting purposes.
The 2022 actuarial valuation showed a deficit of £2.8m. The Group agreed with the trustees that it will aim to eliminate the
deficit over a period of 3 years and 2 months from 31 October 2022 by three payments of £1.4m payable by 31 December 2022,
31 December 2023 and the final contribution by 31 December 2026. In addition, the Group has agreed with the trustees that the
Group will meet expenses of running the scheme and levies to the Pension Protection Fund separately. The estimated amount of
total employer contributions expected to be paid to the scheme during the year to 31 December 2025 is £nil (31 December 2024
actual: £1.4m).
For the purposes of IAS 19 the actuarial valuation as at 31 October 2022, which was carried out by a qualified independent actuary,
has been updated on an approximate basis to 31 December 2024.
Amounts included in the balance sheet
2024
£m
2023
£m
2022
£m
Fair value of plan assets
35.2
39.6
42.2
Present value of defined benefit obligation
(33.4)
(37.6)
(41.0)
Net asset
1.8
2.0
1.2
The present value of the scheme liabilities is measured by discounting the best estimate of future cash flows to be paid out by the
scheme. The value calculated in this way is reflected in the net asset in the balance sheet as shown above.
All actuarial gains and losses are recognised in the year in which they occur in the Group Statement of Comprehensive income.
Reconciliation of the impact of the asset ceiling
We have considered the application of IFRIC 14 and deemed it to have no material effect on the IAS 19 figures.
Reconciliation of the opening and closing present value of the defined benefit obligation
2024
£m
2023
£m
At 1 January
37.6
41.0
Interest cost
1.6
1.9
Actuarial gains due to scheme experience
–
(3.0)
Actuarial gains due to changes in demographic assumptions
–
(0.8)
Actuarial (gains)/losses due to changes in financial assumptions
(3.3)
1.2
Benefits paid, death in service premiums and expenses
(2.5)
(2.7)
At 31 December
33.4
37.6
There have been no scheme amendments, curtailments or settlements in the year.
Report and Accounts 2024
229
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
14 Pension costs continued
Reconciliation of opening and closing values of the fair value of plan assets
2024
£m
2023
£m
At 1 January
39.6
42.2
Interest income
1.7
2.0
Loss on plan assets (excluding amounts included in interest income)
(3.7)
(3.3)
Contributions by the Group
–
1.4
Benefits paid, death in service premiums and expenses
(2.5)
(2.7)
Other
0.1
–
At 31 December
35.2
39.6
The actual return on the plan assets including interest income over the year was a loss of £2.0m (2023: loss of £1.3m).
Defined benefit income recognised in the income statement
2024
£m
2023
£m
Net interest income
(0.1)
(0.1)
Defined benefit income recognised in the income statement
(0.1)
(0.1)
Amounts recognised in other comprehensive income
2024
£m
2023
£m
Loss on plan assets (excluding amounts recognised in net interest cost)
(3.7)
(3.3)
Experience gains arising on the defined benefit obligation
–
3.0
Gain from changes in the demographic assumptions underlying the present value of the defined
benefit obligation
–
0.8
Gain/(Loss) from changes in the financial assumptions underlying the present value of the defined
benefit obligation
3.3
(1.2)
Total loss recognised in other comprehensive income
(0.4)
(0.7)
Fair value of plan assets
2024
£m
2023
£m
2022
£m
LDI
12.0
13.8
4.5
Buy and maintain credit
–
–
2.7
Cash
–
0.1
1.2
Other
0.1
–
4.2
Insured assets
23.1
25.7
29.6
Total assets
35.2
39.6
42.2
The £nil (2023: £nil, 2022: £4.2m) in the ‘other’ asset class is made up of holdings of £nil (2023: £nil, 2022: £2.7m) in equity-linked
bonds and £nil (2023: £nil, 2022: £1.5m) in Sterling liquidity funds.
The scheme’s assets are held exclusively within instruments that are valued with inputs other than quoted prices in active markets,
but which are observable, with the exception of the holdings in insurance policies and the trustee’s bank account. The insured
assets have been set equal to the value of the insured liabilities but before allowance has been made for the impact of equalising
benefits for the different effects of Guaranteed Minimum Pensions for males and females.
The scheme does not invest directly in property occupied by the Group or in financial securities issued by the Group.
It is the policy of the trustees and the Group to review the investment strategy at the time of each funding valuation. The trustees’
investment objectives and the processes undertaken to measure and manage the risks inherent in the plan investment strategy
are illustrated by the asset allocation at 31 December 2024.
Derwent London plc
230
Significant actuarial assumptions
2024
%
2023
%
2022
%
Discount rate
5.4
4.5
4.8
Inflation (RPI)
n/a
n/a
n/a
Salary increases
n/a
n/a
n/a
The mortality assumptions adopted at 31 December 2024 are 85% of the standard tables S3NXA_L, year of birth, no age rating for
males and females, projected using CMI 2023 converging to 1.25% p.a. These imply the following life expectancies:
Life expectancy at age 65
Years
Male retiring in 2024
24.4
Female retiring in 2024
26.2
Male retiring in 2044
25.6
Female retiring in 2044
27.5
Analysis of the sensitivity to the principal assumptions of the present value of the defined benefit
obligation
Change in assumption
Change in liabilities
Discount rate
Decrease of 0.25% p.a
Increase by 3.0%
Rate of mortality
Increase in life expectancy of one year
Increase by 5.0%
The sensitivities shown above are approximate. Each sensitivity considers one change in isolation. The average duration of the
defined benefit obligation at the year ended 31 December 2024 is 11 years (2023: 12 years) for the scheme as a whole or 18 years
(2023: 20 years) when only considering non-insured members.
The scheme typically exposes the Group to actuarial risks such as investment risk, interest rate risk, salary growth risk, mortality
risk and longevity risk. A decrease in corporate bond yields or an increase in life expectancy would result in an increase to the
scheme’s liabilities. This would detrimentally impact the balance sheet position and may give rise to increased charges in the
income statement. This effect would be partially offset by an increase in the value of the scheme’s LDI and gilt holdings.
The best estimate of contributions to be paid by the Group to the plan for the year commencing 1 January 2025 is £nil.
Report and Accounts 2024
231
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
15 Tax charge
2024
£m
2023
£m
Corporation tax
UK corporation tax and income tax in respect of results for the year
–
–
Corporation tax charge
–
–
Deferred tax
Origination and reversal of temporary differences
0.1
0.5
Deferred tax charge
0.1
0.5
Tax charge
0.1
0.5
A deferred tax charge of £0.1m has passed through the Group income statement (2023: charge of £0.5m). More information
regarding deferred tax can be found in note 29.
The main rate of corporation tax for 2024 was 25.0% (2023: 23.5%). The difference between the main rate and the tax charge for
the Group are explained below:
2024
£m
2023
£m
Profit/(loss) before tax
116.0
(475.9)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 25.00%
(2023: 23.50%)1
29.0
(111.8)
Difference between tax and accounting profit on disposals
(2.1)
6.1
REIT exempt income
(23.7)
(20.8)
Revaluation deficit attributable to REIT properties
1.2
131.7
Expenses and fair value adjustments not allowable for tax purposes
3.6
2.1
Capital allowances
(8.2)
(7.6)
Other differences
0.3
0.8
Tax charge
0.1
0.5
1
Changes to the UK corporation tax rates were substantively enacted as part of the Finance Bill 2021 (on 24 May 2021) and include increasing the main rate to
25% effective on or after 1 April 2023. Deferred taxes at the balance sheet date have been measured using the enacted tax rate and this is reflected in these
financial statements.
Derwent London plc
232
16 Property portfolio
Freehold
£m
Leasehold
£m
Total
investment
property
£m
Owner-
occupied
property
£m
Assets
held for
sale
£m
Trading
property
£m
Total
property
portfolio
£m
Carrying value
At 1 January 2024
3,280.5
1,270.9
4,551.4
46.1
–
60.0
4,657.5
Acquisitions
–
47.0
47.0
–
–
–
47.0
Capital expenditure
82.0
42.8
124.8
–
–
57.3
182.1
Interest capitalisation and staff costs
3.4
7.5
10.9
–
–
2.0
12.9
Additions
85.4
97.3
182.7
–
–
59.3
242.0
Disposals
(78.7)
(0.6)
(79.3)
–
–
(3.6)
(82.9)
Transfer from joint venture
–
44.4
44.4
–
–
–
44.4
Transfers
(25.7)
–
(25.7)
–
25.7
–
–
Revaluation
(51.8)
49.1
(2.7)
2.9
–
–
0.2
Movement in grossing up of headlease liabilities
–
(0.7)
(0.7)
–
–
–
(0.7)
At 31 December 2024
3,209.7
1,460.4
4,670.1
49.0
25.7
115.7
4,860.5
At 1 January 2023
3,700.5
1,301.5
5,002.0
50.0
54.2
39.4
5,145.6
Acquisitions
3.8
–
3.8
–
–
–
3.8
Capital expenditure
59.8
72.5
132.3
–
–
20.0
152.3
Interest capitalisation
1.1
4.2
5.3
–
–
1.0
6.3
Additions
64.7
76.7
141.4
–
–
21.0
162.4
Disposals
(7.3)
(2.5)
(9.8)
–
(54.2)
–
(64.0)
Revaluation
(477.4)
(104.1)
(581.5)
(3.9)
–
–
(585.4)
Write-down of trading property
–
–
–
–
–
(0.4)
(0.4)
Movement in grossing up of headlease liabilities
–
(0.7)
(0.7)
–
–
–
(0.7)
At 31 December 2023
3,280.5
1,270.9
4,551.4
46.1
–
60.0
4,657.5
Adjustments from fair value to carrying value
At 31 December 2024
Fair value
3,374.1
1,475.7
4,849.8
49.0
26.0
116.3
5,041.1
Selling costs relating to assets held for sale
–
–
–
–
(0.3)
–
(0.3)
Revaluation of trading property
–
–
–
–
–
(0.6)
(0.6)
Lease incentives and costs included in receivables
(164.4)
(48.4)
(212.8)
–
–
–
(212.8)
Grossing up of headlease liabilities
–
33.1
33.1
–
–
–
33.1
Carrying value
3,209.7
1,460.4
4,670.1
49.0
25.7
115.7
4,860.5
At 31 December 2023
Fair value
3,450.0
1,278.8
4,728.8
46.1
–
69.8
4,844.7
Revaluation of trading property
–
–
–
–
–
(9.8)
(9.8)
Lease incentives and costs included in receivables
(169.5)
(41.5)
(211.0)
–
–
–
(211.0)
Grossing up of headlease liabilities
–
33.6
33.6
–
–
–
33.6
Carrying value
3,280.5
1,270.9
4,551.4
46.1
–
60.0
4,657.5
Reconciliation of fair value
2024
£m
2023
£m
Portfolio including the Group’s share of joint ventures
5,041.1
4,878.5
Less: joint ventures
–
(33.8)
IFRS property portfolio
5,041.1
4,844.7
The property portfolio is subject to semi-annual external valuations and was revalued at 31 December 2024 by external valuers
on the basis of fair value in accordance with The RICS Valuation – Professional Standards, which takes account of the properties’
highest and best use. When considering the highest and best use of a property, the external valuers will consider its existing and
potential uses which are physically, legally and financially viable. Where the highest and best use differs from the existing use, the
external valuers will consider the costs and the likelihood of achieving and implementing this change in arriving at the property
valuation. There were no such instances in the year.
Report and Accounts 2024
233
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
16 Property portfolio continued
Reconciliation of fair value continued
The external valuations for the portfolio at December 2024 were carried out by Knight Frank LLP.
Knight Frank valued properties at £5,041.1m (2023: £4,807.9m) and other valuers at £nil (2023: £36.8m), giving a combined value
of £5,041.1m (2023: £4,844.7m). Of the properties revalued, £49.0m (2023: £46.1m) relating to owner-occupied property was
included within property, plant and equipment and £116.3m (2023: £69.8m) was in relation to trading property.
The total fees, including the fee for this assignment, earned by Knight Frank (or other companies forming part of the same group
of companies within the UK) from the Group is less than 5.0% of their total UK revenues.
In October 2024, the Group acquired the remaining 50% interest of the Derwent Lazari Baker Street Partnership (the ‘joint
venture’) from Lazari Investments Limited (‘Lazari’) for £47.0m. The joint venture held an interest in three leasehold properties,
38-52, 54-60 and 66-70 Baker Street W1. The fair value of the properties at the date of acquisition was £88.8m. The £47.0m
included in ‘acquisitions’ (see table above) comprises £44.4m for the fair value of Lazari’s 50% share in the properties, £2.2m in
acquisition costs, and £0.4m in carrying value adjustments for the gross-up of headlease liabilities. Following the acquisition, the
Group’s 50% interest in the joint venture shown as a £44.4m ‘transfer from investments’ in the table above, has been consolidated
in the Group’s property portfolio. See note 19 for further details.
Certain internal staff and associated costs directly attributable to the management of major schemes are capitalised, based
on the proportion of time spent on each relevant scheme. These costs are capitalised from the date the Group determines it is
probable that the development will progress until the date of practical completion and can be measured reliably.
Net zero carbon and EPC compliance
The Group published its pathway to net zero carbon in July 2020 and has set 2030 as its target date to achieve this. £123.9m
(year to 31 December 2023: £102.4m) of eligible ‘green’ capital expenditure, in accordance with the Group’s Green Finance
Framework, was incurred in the year to 31 December 2024 on the major developments at 80 Charlotte Street W1, 1 Soho Place W1,
The Featherstone Building EC1, 25 Baker Street W1 and Network W1. In addition, the Group continues to utilise carbon credits to
support externally validated green projects to offset embodied carbon. In 2024, the Group paid £1.7m for carbon credits of which
£1.8m is held in prepayments.
To quantify one of the impacts of climate change on the valuation, an independent third-party assessment was carried out in 2021
to estimate the cost of EPC upgrades across the portfolio. Following a review of the latest scope changes in building regulation,
subsequent inflation, disposals, and work carried out to date, the estimated amount was £86m at the end of 2024. Of this amount, a
specific deduction of £41m was included in the 31 December 2024 external valuation. In addition, further amounts have been allowed
for in the expected costs of future refurbishment projects. Any committed capital expenditure has been included in note 34.
Reconciliation of revaluation surplus/(deficit)
2024
£m
2023
£m
Total revaluation deficit
(1.8)
(583.3)
Less:
Share of joint ventures
–
9.3
Lease incentives and costs
(7.2)
(5.8)
Assets held for sale selling costs
(0.3)
–
Trading property revaluation adjustment
9.1
(5.2)
Other
0.4
(0.8)
IFRS revaluation surplus/(deficit)
0.2
(585.8)
Reported in the:
Revaluation deficit
(2.7)
(581.5)
Write-down of trading property
–
(0.4)
Group income statement
(2.7)
(581.9)
Group statement of comprehensive income
2.9
(3.9)
0.2
(585.8)
Derwent London plc
234
Valuation process
The valuation reports produced by the external valuers are based on information provided by the Group such as current rents,
terms and conditions of lease agreements, service charges and capital expenditure. This information is derived from the Group’s
financial and property management systems and is subject to the Group’s overall control environment. In addition, the valuation
reports are based on assumptions and valuation models used by the external valuers. The assumptions are typically market related,
such as yields and discount rates, and are based on their professional judgement and market observation and take into account
the impact of climate change and related Environmental, Social and Governance considerations. Each property is considered a
separate asset class based on the unique nature, characteristics and risks of the property.
Members of the Group’s Investments team, who report to the Executive Director responsible for the valuation process, verify all
major inputs to the external valuation reports, assess the individual property valuation changes from the prior year valuation
report and hold discussions with the external valuers. When this process is complete, the valuation report is recommended to the
Audit Committee, which considers it as part of its overall responsibilities.
Valuation techniques
The fair value of the property portfolio has been determined using an income capitalisation technique, whereby contracted and market
rental values are capitalised with a market capitalisation rate. The resulting valuations are cross-checked against the equivalent yields
and the fair market values per square foot derived from comparable recent market transactions on arm’s length terms.
For properties under construction, the fair value is calculated by estimating the fair value of the completed property using the
income capitalisation technique less estimated costs to completion and a risk premium.
These techniques are consistent with the principles in IFRS 13 Fair Value Measurement and use significant unobservable inputs such
that the fair value measurement of each property within the portfolio has been classified as Level 3 in the fair value hierarchy.
There were no transfers between levels in the fair value hierarchy during either 2024 or 2023.
Gains and losses recorded in profit or loss for recurring fair value measurements categorised within Level 3 of the fair value
hierarchy amount to a loss of £2.7m (2023: loss of £581.5m) and are presented in the Group income statement in the line item
‘revaluation deficit’. The revaluation surplus for the owner-occupied property of £2.9m (2023: deficit of £3.9m) was included within
the Group statement of comprehensive income.
All gains and losses recorded in profit or loss in 2024 and 2023 for recurring fair value measurements categorised within Level 3
of the fair value hierarchy are attributable to changes in unrealised gains or losses relating to investment property held at
31 December 2024 and 31 December 2023, respectively.
Report and Accounts 2024
235
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
16 Property portfolio continued
Quantitative information about fair value measurement using unobservable inputs (Level 3)
At 31 December 2024
West End central
West End
borders/other
City
borders
Provincial
commercial
Provincial
land
Total
Valuation technique
Income
capitalisation
Income
capitalisation
Income
capitalisation
Income
capitalisation
Income
capitalisation
Fair value (£m)1
3,473.1
301.7
1,173.4
53.9
39.0
5,041.1
Area (‘000 sq ft)
3,040
429
1,562
325
–
5,356
Range of unobservable inputs2:
Gross ERV (per sq ft pa)
Minimum
£32
£24
£38
£nil
n/a3
Maximum
£118
£59
£75
£15
n/a3
Weighted average
£69
£52
£57
£15
n/a3
Net initial yield
Minimum
3.1%
2.5%
3.3%
7.0%
0.0%
Maximum
9.9%
6.8%
6.9%
7.0%
1.4%
Weighted average
3.1%
5.6%
5.2%
7.0%
1.4%
Reversionary yield
Minimum
3.2%
4.8%
3.3%
6.9%
0.0%
Maximum
9.7%
11.4%
8.3%
6.9%
1.4%
Weighted average
5.4%
6.9%
6.9%
6.9%
1.4%
True equivalent yield
(EPRA basis)
Minimum
3.2%
4.4%
5.3%
7.2%
0.0%
Maximum
6.6%
7.1%
6.9%
7.2%
0.0%
Weighted average
5.3%
6.8%
6.3%
7.2%
0.0%
At 31 December 2023
Valuation technique
Income
capitalisation
Income
capitalisation
Income
capitalisation
Income
capitalisation
Income
capitalisation
Fair value (£m)1
3,211.5
318.4
1,272.9
38.8
36.9
4,878.5
Area (‘000 sq ft)
2,999
429
1,641
325
–
5,394
Range of unobservable inputs2:
Gross ERV (per sq ft pa)
Minimum
£32
£23
£37
£nil
n/a3
Maximum
£103
£59
£74
£13
n/a3
Weighted average
£67
£52
£54
£13
n/a3
Net initial yield
Minimum
3.0%
6.4%
2.6%
9.5%
0.0%
Maximum
8.3%
8.3%
6.6%
9.5%
1.5%
Weighted average
3.4%
6.2%
4.8%
9.5%
1.3%
Reversionary yield
Minimum
3.2%
4.6%
3.3%
7.2%
0.0%
Maximum
10.2%
9.0%
7.5%
7.2%
1.5%
Weighted average
5.4%
6.5%
6.4%
7.2%
1.3%
True equivalent yield
(EPRA basis)
Minimum
3.2%
4.3%
5.2%
10.5%
0.0%
Maximum
6.8%
6.9%
6.8%
10.5%
0.0%
Weighted average
5.1%
6.5%
6.1%
10.5%
0.0%
1
Includes the Group’s share of joint ventures.
2 Costs to complete are not deemed a significant unobservable input by virtue of the high percentage that is already fixed.
3 There is no calculation of gross ERV per sq ft pa. The land totals 5,500 acres.
Derwent London plc
236
Sensitivity of measurement to variations in the significant unobservable inputs
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of the
Group’s property portfolio, together with the impact of significant movements in these inputs on the fair value measurement, are
shown below:
Unobservable input
Impact on fair value measurement
of significant increase in input
Impact on fair value measurement
of significant decrease in input
Gross ERV
Increase
Decrease
Net initial yield
Decrease
Increase
Reversionary yield
Decrease
Increase
True equivalent yield
Decrease
Increase
There are inter-relationships between these inputs as they are partially determined by market conditions. An increase in the
reversionary yield may accompany an increase in gross ERV and would mitigate its impact on the fair value measurement.
A sensitivity analysis has been performed to ascertain the impact of a 25 basis point shift in true equivalent yield and a £2.50
per sq ft shift in ERV on the property valuations. The Group believes this captures the range of variations in these key valuation
assumptions. The results are shown in the tables below:
West End
central1
West End
borders/other
City
borders
Provincial
commercial
Total
At 31 December 2024
True equivalent yield
+25bp
(4.5%)
(3.5%)
(3.8%)
(3.4%)
(4.2%)
- 25bp
5.0%
3.8%
4.1%
3.6%
4.6%
ERV
+£2.50 psf
3.6%
4.8%
4.4%
14.8%
4.1%
- £2.50 psf
(3.6%)
(4.8%)
(4.4%)
(14.8%)
(4.1%)
At 31 December 2023
True equivalent yield
+25bp
(4.7%)
(3.7%)
(3.9%)
(2.3%)
(4.3%)
- 25bp
5.2%
4.0%
4.3%
2.4%
4.7%
ERV
+£2.50 psf
3.8%
4.8%
4.6%
18.8%
4.3%
- £2.50 psf
(3.8%)
(4.8%)
(4.6%)
(18.8%)
(4.3%)
1
Includes the Group’s share of joint ventures.
Historical cost
2024
£m
2023
£m
Investment property
3,746.4
3,602.6
Owner-occupied property
19.6
19.6
Assets held for sale
28.8
–
Trading property
132.9
81.8
Total property portfolio
3,927.7
3,704.0
Report and Accounts 2024
237
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
17 Property, plant and equipment
Owner-
occupied
property
£m
Artwork
£m
Other
£m
Total
£m
At 1 January 2024
46.1
0.8
3.0
49.9
Additions
–
–
0.3
0.3
Depreciation
–
–
(1.0)
(1.0)
Revaluation
2.9
(0.1)
–
2.8
At 31 December 2024
49.0
0.7
2.3
52.0
At 1 January 2023
50.0
0.8
3.5
54.3
Additions
–
–
0.6
0.6
Depreciation
–
–
(1.1)
(1.1)
Revaluation
(3.9)
–
–
(3.9)
At 31 December 2023
46.1
0.8
3.0
49.9
Net book value
Cost or valuation
49.0
0.7
8.7
58.4
Accumulated depreciation
–
–
(6.4)
(6.4)
At 31 December 2024
49.0
0.7
2.3
52.0
Net book value
Cost or valuation
46.1
0.8
8.4
55.3
Accumulated depreciation
–
–
(5.4)
(5.4)
At 31 December 2023
46.1
0.8
3.0
49.9
The artwork is periodically valued by Bonhams on the basis of fair value using their extensive market knowledge. The latest
valuation was carried out in December 2024. In accordance with IFRS 13 Fair Value Measurement, the artwork is deemed to be
classified as Level 3.
The historical cost of the artwork in the Group at 31 December 2024 was £0.9m (2023: £0.9m). See note 16 for the historical cost
of owner-occupied property and IFRS 13 Fair Value Measurement disclosures.
18 Trading stock
2024
£m
2023
£m
Trading stock
17.5
8.9
Trading stock relates to capitalised development expenditure incurred which is due to be transferred under development agreements
to a third party upon completion. This has been included in trading stock, as opposed to trading property, as the Group does not
have an ownership interest in the property.
Derwent London plc
238
19 Investments
At 31 December 2024 the Group had a 50% interest in two (2023: four) joint venture vehicles, Dorrington Derwent Holdings
Limited and Primister Limited.
In October 2024, the Group acquired the remaining 50% interest of the Derwent Lazari Baker Street Partnership from Lazari
Investments Limited, this was accounted for as an asset acquisition. This resulted in full ownership of the assets and liabilities
of the partnership.
As part of the acquisition of the Group’s initial 50% interest in the Derwent Lazari Baker Street Partnership in 2021, additional
deferred consideration of £7.3m was agreed, subject to certain conditions being satisfied in relation to planning and regearing of
the headlease. This has previously been disclosed as a contingent liability as the conditions had not been met and the outcome
was uncertain.
In August 2024, resolution to grant planning was received and, as a result, this amount is now being accrued for as deferred
consideration, along with fees of £0.3m (total £7.6m). This was recognised as an addition to the Group’s investment in the joint
venture, with settlement expected in 2025.
Following the acquisition of the remaining 50%, the initial 50% interest held by the Group was transferred from investments at fair
value of £44.4m to investment property (see note 16) and the remaining assets and liabilities of £0.5m have been consolidated
in the Group’s balance sheet. The £7.6m deferred consideration was impaired as it does not form part of the fair value of the
properties being transferred.
2024
£m
2023
£m
At 1 January
35.8
43.9
Deferred consideration and fees on initial formation of joint venture
7.6
–
Revaluation surplus/(deficit)
7.3
(9.2)
Other profit from operations
1.8
2.0
Transfer to investment property (see note 16)
(44.4)
–
Transfer to assets and liabilities
(0.5)
–
Impairment of additional deferred consideration
(7.6)
–
Repayment of joint venture loans
–
(0.6)
Distributions received
–
(0.3)
At 31 December
–
35.8
The Group’s share of its investments in joint ventures is represented by the following amounts in the underlying joint venture entities.
2024
2023
Joint ventures
£m
Group share
£m
Joint ventures
£m
Group share
£m
Non-current assets
–
–
67.9
33.9
Current assets
–
–
7.2
3.6
Current liabilities
–
–
(2.8)
(1.4)
Non-current liabilities
–
–
(121.0)
(60.5)
Net liabilities
–
–
(48.7)
(24.4)
Loans provided to joint ventures
–
60.2
Total investment in underlying joint ventures
–
35.8
Net property income
3.8
1.9
4.4
2.2
Administrative expenses
(0.3)
(0.1)
(0.4)
(0.2)
Revaluation surplus/(deficit)
14.6
7.3
(18.4)
(9.2)
Share of results of underlying joint ventures
18.1
9.1
(14.4)
(7.2)
Impairment of additional deferred consideration
(7.6)
–
Group share of results of joint ventures
1.5
(7.2)
Report and Accounts 2024
239
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
20 Other receivables (non-current)
2024
£m
2023
£m
Rents recognised in advance
173.6
173.9
Initial direct letting costs
14.4
14.5
Prepayments
13.0
12.6
Other receivables
201.0
201.0
Other receivables includes £173.6m (2023: £173.9m) after impairments relating to rents recognised in advance as a result of
spreading tenant lease incentives over the expected terms of their respective leases. This includes rent-free and reduced rent
periods, capital contributions in lieu of rent-free periods and contracted rent uplifts. In addition, £14.4m (2023: £14.5m) relates
to the spreading effect of the initial direct costs of letting over the same term. Together with £24.8m (2023: £22.6m), which was
included as accrued income within trade and other receivables (see note 21), these amounts totalled £212.8m at 31 December
2024 (2023: £211.0m).
Prepayments represent £13.0m (2023: £12.6m) of costs incurred in relation to Old Street Quarter EC1, stated net of a £0.8m
(2023: £0.6m) impairment in accordance with IAS 36 Impairment of Assets. In May 2022, the Group entered into a conditional
contract to acquire the freehold of Old Street Quarter island site. The site is being sold by Moorfields Eye Hospital NHS Foundation
Trust and UCL, together the Oriel joint initiative (‘Oriel’). Completion is subject to delivery by Oriel of a new hospital at St Pancras
and subsequent vacant possession of the site, which is anticipated no earlier than 2027.
The total movement in tenant lease incentives is shown below:
2024
£m
2023
£m
At 1 January
194.1
188.8
Amounts taken to income statement
6.3
5.9
Movement in lease incentive impairment
0.3
0.5
Disposal of investment properties
(4.9)
(0.3)
Write off to bad debt
(0.2)
(0.8)
195.6
194.1
Amounts included in trade and other receivables (see note 21)
(22.0)
(20.2)
At 31 December
173.6
173.9
21 Trade and other receivables
2024
£m
2023
£m
Trade receivables
13.3
10.4
Other receivables
3.2
2.0
Prepayments
15.4
6.9
Accrued income
Rents recognised in advance
22.0
20.2
Initial direct letting costs
2.8
2.4
Other
1.1
0.8
57.8
42.7
2024
£m
2023
£m
Group trade receivables are split as follows:
less than three months due
12.9
10.3
between three and six months due
0.2
0.1
between six and twelve months due
0.2
–
13.3
10.4
Group trade receivables are stated net of impairment.
Derwent London plc
240
In response to the Group’s climate change agenda, costs of £2.5m (2023: £1.1m) were incurred in relation to a c.100 acre, 18.4MW
solar park on its Scottish land and have been included within prepayments. Resolution to grant planning consent for this project
was received in 2022. Additionally, during 2024 the Group paid £1.7m for carbon credits, bringing the total included in prepayments
to £1.8m.
The Group has £4.6m (2023: £4.6m) of provision for bad debts as shown below. £2.4m (2023: £1.9m) is included in trade receivables,
£0.4m (2023: £0.5m) in accrued income and £1.8m (2023: £2.2m) in prepayments and accrued income within other receivables
(non-current) (note 20).
2024
£m
2023
£m
Provision for bad debts
At 1 January
4.6
5.0
Trade receivables provision
0.7
0.5
Lease incentive provision
(0.4)
–
Service charge provision
(0.2)
0.7
Released
(0.1)
(1.6)
At 31 December
4.6
4.6
The provision for bad debts are split as follows:
less than three months due
0.9
0.7
between three and six months due
0.5
0.3
between six and twelve months due
0.5
0.8
over twelve months due
2.7
2.8
4.6
4.6
22 Non-current assets held for sale
2024
£m
2023
£m
Transferred from investment properties (see note 16)
25.7
–
25.7
–
In October 2024, the Group exchanged contracts for the disposal of its freehold interest in 4 & 10 Pentonville Road N1. The property
was valued at £26.0m as at 31 December 2024. In accordance with IFRS 5 Non-current Assets Held for Sale, this property was
recognised as a non-current asset held for sale and, after deducting selling costs of £0.3m, the carrying value was £25.7m
(see note 16). The transaction completed in January 2025 for £26.0m before costs.
23 Trade and other payables
2024
£m
2023
£m
Trade payables
0.6
0.7
Other payables
3.6
3.6
Other taxes
7.3
3.3
Accruals
57.2
30.5
Deferred income
50.0
50.8
Tenant rent deposits
27.9
27.0
Service charge balances
28.1
32.1
174.7
148.0
Deferred income primarily relates to rents received in advance.
Report and Accounts 2024
241
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
24 Provisions
2024
£m
2023
£m
At 1 January
0.4
0.2
Provided in the income statement
0.2
0.2
At 31 December
0.6
0.4
Due within one year
0.2
0.1
Due after one year
0.4
0.3
0.6
0.4
The provisions in the Group relate to national insurance that is payable on gains made by employees on the exercise of share
options granted to them. The eventual liability to national insurance is dependent on:
• the market price of the Company’s shares at the date of exercise;
• the number of equity share options that are exercised; and
• the prevailing rate of national insurance at the date of exercise.
25 Net debt and derivative financial instruments
2024
£m
2023
£m
Current liabilities
Other loans
20.0
20.0
3.99% secured loan 2024
–
82.9
1.5% unsecured convertible bonds 2025
174.1
–
194.1
102.9
Non-current liabilities
1.5% unsecured convertible bonds 2025
–
172.1
6.5% secured bonds 2026
178.1
179.6
1.875% unsecured green bonds 2031
347.2
346.8
2.68% unsecured private placement notes 2026
54.9
54.9
3.46% unsecured private placement notes 2028
29.9
29.9
4.41% unsecured private placement notes 2029
24.9
24.9
2.87% unsecured private placement notes 2029
92.8
92.8
2.97% unsecured private placement notes 2031
49.9
49.8
3.57% unsecured private placement notes 2031
74.8
74.8
3.09% unsecured private placement notes 2034
51.8
51.8
4.68% unsecured private placement notes 2034
74.6
74.6
Unsecured bank loans
290.5
81.2
1,269.4
1,233.2
Borrowings
1,463.5
1,336.1
Leasehold liabilities – current
0.4
0.4
Leasehold liabilities – non-current
34.2
34.2
Derivative financial instruments – current
(0.6)
–
Derivative financial instruments – non-current
–
(2.9)
Gross debt
1,497.5
1,367.8
Reconciliation to net debt:
Gross debt
1,497.5
1,367.8
Derivative financial instruments
0.6
2.9
Cash at bank excluding restricted cash (see note 33)
(15.4)
(13.9)
Net debt
1,482.7
1,356.8
Derwent London plc
242
1.5% unsecured convertible bonds 2025
In June 2019 the Group issued £175m of convertible bonds. The unsecured instruments pay a coupon of 1.5% until June 2025 or the
conversion date, if earlier. The initial conversion price was set at £44.96 per share. In accordance with IAS 32, the equity and debt
components of the bonds are accounted for separately and the fair value of the debt component has been determined using the
market interest rate for an equivalent non-convertible bond, deemed to be 2.3%. As a result, £167.3m was recognised as a liability
in the balance sheet on issue and the remainder of the proceeds, £7.7m, which represents the equity component, was credited
to reserves. The difference between the fair value of the liability and the principal value is being amortised through the income
statement from the date of issue. Issue costs of £4.0m were allocated between equity and debt and the element relating to the
debt component is being amortised over the life of the bonds. The issue costs apportioned to equity of £0.2m were not amortised.
The fair value was determined by the ask-price of £98.38 per £100 as at 31 December 2024 (2023: £95.25 per £100), representing
Level 1 fair value measurement as defined by IFRS 13 Fair Value Measurement. The carrying value at 31 December 2024 was £174.1m
(2023: £172.1m).
Reconciliation of nominal value to carrying value:
£m
Nominal value
175.0
Fair value adjustment on issue allocated to equity
(7.7)
Debt component on issue
167.3
Unamortised issue costs
(0.3)
Amortisation of fair value adjustment
7.1
Carrying amount included in borrowings
174.1
6.5% secured bonds 2026
As a result of the acquisition of London Merchant Securities plc in 2007, the secured bonds 2026 were included at fair value less
unamortised issue costs. This difference between fair value at acquisition and principal value is being amortised through the
income statement. The fair value at 31 December 2024 was determined by the ask-price of £100.99 per £100 (2023: £101.77
per £100), representing Level 1 fair value measurement. The carrying value at 31 December 2024 was £178.1m (2023: £179.6m).
1.875% unsecured green bonds 2031
In November 2021, the Group issued £350m of green bonds on a 10-year term maturing in 2031. The unsecured instrument pays a
coupon of 1.875% and the effective interest rate is 1.934%. This represents an issue discount of £1.8m. The unsecured green bonds
2031 are accounted for at amortised cost. The fair value at 31 December 2024 was determined by the ask-price of £80.36 per
£100 (2023: £79.71 per £100), representing Level 1 fair value measurement. The carrying value at 31 December 2024 was £347.2m
(2023: £346.8m). The £350m green bonds are used to fund qualifying ‘green’ expenditure in accordance with the Group’s Green
Finance Framework.
2.68% unsecured private placement notes 2026, 2.87% unsecured private placement notes 2029,
2.97% unsecured private placement notes 2031 and 3.09% unsecured private placement notes 2034
In October 2018, the Group arranged unsecured private placement notes, comprising £55m for 7 years, £93m for 10 years, £50m
for 12 years and £52m for 15 years. The funds were drawn on 31 January 2019. The fair values were determined by discounting
the contractual cash flows by the replacement rate. The replacement rate is the sum of the current underlying Gilt rate plus the
market implied margin. These represent Level 2 fair value measurement. The carrying values at 31 December 2024 were £54.9m
(2023: £54.9m), £92.8m (2023: £92.8m), £49.9m (2023: £49.8m) and £51.8m (2023: £51.8m), respectively.
3.46% unsecured private placement notes 2028 and 3.57% unsecured private placement notes 2031
In February 2016, the Group arranged unsecured private placement notes, comprising £30m for 12 years and £75m for 15 years.
The funds were drawn on 4 May 2016. The fair values were determined by discounting the contractual cash flows by the
replacement rate. The replacement rate is the sum of the current underlying Gilt rate plus the market implied margin. These
represent Level 2 fair value measurement. The carrying values at 31 December 2024 were £29.9m (2023: £29.9m) and £74.8m
(2023: £74.8m), respectively.
4.41% unsecured private placement notes 2029 and 4.68% unsecured private placement notes 2034
In November 2013, the Group arranged unsecured private placement notes, comprising £25m for 15 years and £75m for 20 years.
The funds were drawn on 8 January 2014. The fair values were determined by discounting the contractual cash flows by the
replacement rate. The replacement rate is the sum of the current underlying Gilt rate plus the market implied margin. These
represent Level 2 fair value measurement. The carrying values at 31 December 2024 were £24.9m (2023: £24.9m) and £74.6m
(2023: £74.6m), respectively.
Report and Accounts 2024
243
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
25 Net debt and derivative financial instruments continued
3.99% secured loan 2024
In July 2012, the Group arranged a 12¼-year secured fixed rate loan. The loan was drawn on 1 August 2012. The fair value was
determined by discounting the contractual cash flows by the replacement rate. The replacement rate is the sum of the current
underlying Gilt rate plus the market implied margin. This represents Level 2 fair value measurement. On 21 October 2024 the loan
was repaid in full and security released, as a result of which the carrying value at 31 December 2024 was £nil (2023: £82.9m).
Unsecured bank loans
In June 2024, Derwent London plc signed an agreement for an unsecured term loan facility of £100m. As of 31 December 2024,
the Group had fully drawn all funds from this facility. The loan is for a three-year term and has two one-year extension options.
In December 2024, Derwent London plc signed an agreement for an unsecured facility of £115m, consisting of a £82.5m term loan
and £32.5m revolving credit facility (RCF). As of 31 December 2024, the Group had fully drawn all funds from the term loan facility.
The loan is for a two-year term and has two one-year extension options.
Unsecured bank borrowings are accounted for at amortised cost. At 31 December 2024, there was £110.5m (2023: £84.0m)
drawn on the RCFs, £182.5m (2023: £nil) drawn on term loans and the combined unamortised arrangement fees were £2.5m
(2023: £2.8m), resulting in the carrying value being £290.5m (2023: £81.2m).
The main corporate £450m RCF includes a £300m ‘green tranche’ to fund qualifying ‘green’ expenditure in accordance with the
Group’s Green Finance Framework.
As all main corporate facilities were refinanced or amended recently, the fair values of the Group’s bank loans are deemed to be
approximately the same as their carrying amount, after adjusting for the unamortised arrangement fees, and represent Level 2
fair value measurement.
Undrawn committed bank facilities – maturity profile
< 1 year
£m
1 to 2 years
£m
2 to 3 years
£m
3 to 4 years
£m
4 to 5 years
£m
> 5 years
£m
Total
£m
At 31 December 2024
–
395.5
76.5
–
–
–
472.0
At 31 December 2023
–
–
383.5
82.5
–
–
466.0
Other loans
Other loans consist of a £20.0m interest-free loan with no fixed repayment date from a third party providing development
consultancy services on the residential element of the 25 Baker Street W1 development. The loan will be repaid from the sale
proceeds of these residential apartments after completion of the scheme. The agreement provides for a profit share on completion
of the sales which, under IFRS 9 Financial Instruments, has been deemed to have a carrying value of £nil at 31 December 2024
(2023: £nil). The carrying value of the loan at 31 December 2024 was £20.0m (2023: £20.0m).
Derivative financial instruments
The derivative financial instruments consist of interest rate swaps, the fair values of which represent the net present value of the
difference between the contracted fixed rates and the fixed rates payable if the swaps were to be replaced on 31 December 2024
for the period to the contracted expiry dates. These represent Level 2 fair value measurement.
The fair values of the Group’s outstanding interest rate swaps have been estimated using the mid-point of the yield curves
prevailing on the reporting date and represent the net present value of the differences between the contracted rate and the
valuation rate when applied to the projected balances for the period from the reporting date to the contracted expiry dates.
These represent Level 2 fair value measurement.
Group
Principal
£m
Weighted average
interest rate
%
Average life
Years
At 31 December 2024
Interest rate swaps
75.0
1.36
0.3
At 31 December 2023
Interest rate swaps
55.0
1.36
1.3
Derwent London plc
244
Secured and unsecured debt
2024
£m
2023
£m
Secured
6.5% secured bonds 2026
178.1
179.6
3.99% secured loan 2024
–
82.9
178.1
262.5
Unsecured
1.5% unsecured convertible bonds 2025
174.1
172.1
1.875% unsecured green bonds 2031
347.2
346.8
Unsecured private placement notes 2026 – 2034
453.6
453.5
Unsecured bank loans
290.5
81.2
Other loans
20.0
20.0
1,285.4
1,073.6
Borrowings
1,463.5
1,336.1
As at 31 December 2024, the Group’s secured bonds 2026 were secured by a floating charge over a number of the Group’s
subsidiary companies which contained £376.3m (2023: £395.9m) of the Group’s properties.
Fixed interest rate and hedged debt
At 31 December 2024 and 31 December 2023, the Group’s fixed rate and hedged debt included the unsecured convertible bonds,
the unsecured green bonds, the secured bonds, the unsecured private placement notes, other loans and unsecured term loans.
Interest rate exposure
After taking into account the various interest rate hedging instruments entered into by the Group and the Company, the interest
rate exposure of the Group’s and Company’s borrowings were:
Floating rate
£m
Hedged
£m
Fixed rate
£m
Borrowings
£m
Weighted
average
interest rate1
%
Weighted
average
life
Years
At 31 December 2024
1.5% unsecured convertible bonds 2025
–
–
174.1
174.1
2.30
0.4
6.5% secured bonds 2026
–
–
178.1
178.1
6.50
1.2
1.875% unsecured green bonds 2031
–
–
347.2
347.2
1.88
6.9
Unsecured private placement notes 2026 – 2034
–
–
453.6
453.6
3.42
5.6
Unsecured bank loans
216.1
74.4
–
290.5
4.81
2.2
Other loans2
–
–
20.0
20.0
–
–
216.1
74.4
1,173.0
1,463.5
3.53
4.0
At 31 December 2023
1.5% unsecured convertible bonds 2025
–
–
172.1
172.1
2.30
1.4
6.5% secured bonds 2026
–
–
179.6
179.6
6.50
2.2
1.875% unsecured green bonds 2031
–
–
346.8
346.8
1.88
7.9
Unsecured private placement notes 2026 – 2034
–
–
453.5
453.5
3.42
6.6
3.99% secured loan 2024
–
–
82.9
82.9
3.99
0.8
Unsecured bank loans
28.0
53.2
–
81.2
3.71
3.0
Other loans2
–
–
20.0
20.0
–
–
28.0
53.2
1,254.9
1,336.1
3.29
5.0
1
The weighted average interest rates are based on the nominal amounts of the debt facilities.
2
Other loans shown above are interest free and have no fixed repayment date. For further detail, see Other loans section above.
Report and Accounts 2024
245
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
25 Net debt and derivative financial instruments continued
Contractual undiscounted cash outflows
IFRS 7 Financial Instruments: Disclosure, requires disclosure of the maturity of the Group’s remaining contractual financial
liabilities. The tables below show the contractual undiscounted cash outflows arising from the Group’s gross debt.
< 1 year
£m
1 to 2 years
£m
2 to 3 years
£m
3 to 4 years
£m
4 to 5 years
£m
> 5 years
£m
Total
£m
At 31 December 2024
1.5% unsecured convertible bonds 2025
175.0
–
–
–
–
–
175.0
6.5% secured bonds 2026
–
175.0
–
–
–
–
175.0
1.875% unsecured green bonds 2031
–
–
–
–
–
350.0
350.0
Unsecured private placement notes 2026 – 2034
–
55.0
–
30.0
118.0
252.0
455.0
Unsecured bank loans
–
169.5
123.5
–
–
–
293.0
Other loans
20.0
–
–
–
–
–
20.0
Total on maturity
195.0
399.5
123.5
30.0
118.0
602.0
1,468.0
Leasehold liabilities
1.7
1.8
1.8
1.8
1.6
208.6
217.3
Interest on borrowings
50.7
37.4
24.1
20.0
16.1
15.8
164.1
Effect of interest rate swaps
(0.8)
–
–
–
–
–
(0.8)
Gross loan commitments
246.6
438.7
149.4
51.8
135.7
826.4
1,848.6
At 31 December 2023
1.5% unsecured convertible bonds 2025
–
175.0
–
–
–
–
175.0
6.5% secured bonds 2026
–
–
175.0
–
–
–
175.0
1.875% unsecured green bonds 2031
–
–
–
–
–
350.0
350.0
Unsecured private placement notes 2026 – 2034
–
–
55.0
–
30.0
370.0
455.0
3.99% secured loan 2024
83.0
–
–
–
–
–
83.0
Unsecured bank loans
–
–
66.5
17.5
–
–
84.0
Other loans
–
20.0
–
–
–
–
20.0
Total on maturity
83.0
195.0
296.5
17.5
30.0
720.0
1,342.0
Leasehold liabilities
1.7
1.7
1.7
1.7
1.8
209.6
218.2
Interest on borrowings
42.9
37.5
25.4
21.1
20.0
54.3
201.2
Effect of interest rate swaps
(2.4)
(0.4)
–
–
–
–
(2.8)
Gross loan commitments
125.2
233.8
323.6
40.3
51.8
983.9
1,758.6
Reconciliation to borrowings:
Adjustments
Gross loan
commitments
£m
Interest on
gross debt
£m
Effect of interest
rate swaps
£m
Leasehold
liabilities
£m
Non-cash
amortisation
£m
Borrowings
£m
At 31 December 2024
Maturing in:
< 1 year
246.6
(50.7)
0.8
(1.7)
–
195.0
1 to 2 years
438.7
(37.4)
–
(1.8)
(1.8)
397.7
2 to 3 years
149.4
(24.1)
–
(1.8)
(1.9)
121.6
3 to 4 years
51.8
(20.0)
–
(1.8)
3.0
33.0
4 to 5 years
135.7
(16.1)
–
(1.6)
(0.3)
117.7
> 5 years
826.4
(15.8)
–
(208.6)
(3.5)
598.5
1,848.6
(164.1)
0.8
(217.3)
(4.5)
1,463.5
At 31 December 2023
Maturing in:
< 1 year
125.2
(42.9)
2.4
(1.7)
(0.1)
82.9
1 to 2 years
233.8
(37.5)
0.4
(1.7)
–
195.0
2 to 3 years
323.6
(25.4)
–
(1.7)
(5.4)
291.1
3 to 4 years
40.3
(21.1)
–
(1.7)
4.1
21.6
4 to 5 years
51.8
(20.0)
–
(1.8)
(0.1)
29.9
> 5 years
983.9
(54.3)
–
(209.6)
(4.4)
715.6
1,758.6
(201.2)
2.8
(218.2)
(5.9)
1,336.1
Derwent London plc
246
Financial instruments – risk management
The Group is exposed through its operations to the following financial risks:
• credit risk;
• market risk; and
• liquidity risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. The following
describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout these financial statements. Further information on risk
as required by IFRS 7 is given on pages 90 to 115.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes
for managing those risks or the methods used to measure them from previous years. The Group’s EPRA loan-to-value ratio has
increased to 29.9% as at 31 December 2024 but remains moderate.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are trade receivables, accrued
income arising from the spreading of lease incentives, cash at bank, trade and other payables, floating rate bank loans and
private placement notes, secured and unsecured bonds and interest rate swaps.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the authority to executive management for designing and operating
processes that ensure the effective implementation of the objectives and policies.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
flexibility and its ability to maximise returns. Further details regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Group is mainly exposed to credit risk from lease contracts in relation to its property portfolio. It is
Group policy to assess the credit risk of new tenants before entering into such contracts. The Board has a Credit Committee which
assesses each new tenant before a new lease is signed. The review includes the latest sets of financial statements, external ratings
when available and, in some cases, forecast information and bank or trade references. The covenant strength of each tenant is
determined based on this review and, if appropriate, a deposit or a guarantee is obtained. The Committee also reviews existing
tenant covenants from time to time.
Impairment calculations have been carried out on trade receivables and lease incentive receivables, applying IFRS 9 and IAS
36, respectively. In addition, the Credit Committee has reviewed its register of tenants at higher risk, particularly in the retail or
hospitality sectors, those in administration or CVA and the top 50 tenants by size with the remaining occupiers considered on a
sector-by-sector basis.
As the Group operates predominantly in central London, it is subject to some geographical concentration risk. However, this is
mitigated by the wide range of tenants from a broad spectrum of business sectors.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial
institutions, only independently rated parties with a minimum rating of investment grade are accepted. This risk is also reduced by
the short periods that money is on deposit at any one time.
The carrying amount of financial assets recorded in the financial statements represents the Group’s maximum exposure to credit
risk without taking account of the value of any collateral obtained.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market
prices. Market risk arises for the Group from its use of variable interest-bearing instruments (interest rate risk).
The Group monitors its interest rate exposure on at least a quarterly basis. Sensitivity analysis performed to ascertain the impact
on profit or loss and net assets of a 50-basis point shift in interest rates would result in an increase of £1.1m (2023: £0.1m) or
decrease of £1.1m (2023: £0.1m).
Report and Accounts 2024
247
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
25 Net debt and derivative financial instruments continued
Market risk continued
It is currently Group policy that generally between 60% and 85% of external Group borrowings (excluding finance lease payables)
are at fixed rates. Where the Group wishes to vary the amount of external fixed rate debt it holds (subject to it being generally
between 60% and 85% of expected Group borrowings, as noted above), the Group makes use of interest rate derivatives to
achieve the desired interest rate profile. 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 cash flow risk associated with variability in interest
payments, it considers that it achieves an appropriate balance of exposure to these risks. At 31 December 2024, the proportion
of fixed debt held by the Group was within this range at 85% (2023: 98%). During both 2024 and 2023, the Group’s borrowings
at variable rate were denominated in Sterling.
The Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. When the Group raises long-term
borrowings, it is generally at fixed rates.
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 difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient headroom in its loan facilities to allow it to meet its liabilities
when they become due. To achieve this aim, it seeks to maintain committed facilities to meet the expected requirements. The
Group also seeks to reduce liquidity risk by fixing interest rates (and hence cash flows) on a portion of its long-term borrowings.
This is further explained in the ‘market risk’ section above.
Executive management receives rolling three-year projections of cash flow and loan balances on a regular basis as part of the
Group’s forecasting processes. At the balance sheet date, these projections indicated that the Group expected to have sufficient
liquid resources to meet its obligations under all reasonably expected circumstances.
The Group’s loan facilities and other borrowings are spread across a range of banks and financial institutions so as to minimise any
potential concentration of risk. The liquidity risk of the Group is managed centrally by the finance department.
Capital disclosures
The Group’s capital comprises all components of equity (share capital, share premium, other reserves and retained earnings).
The Group’s objectives when maintaining capital are:
• to safeguard the entity’s ability to continue as a going concern so that it can continue to provide above average long-term
returns for shareholders; and
• to provide an above average annualised total return to shareholders.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes
adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group may vary the amount of dividends paid to shareholders subject to the rules
imposed by its REIT status. It may also seek to redeem bonds, return capital to shareholders, issue new shares or sell assets to
reduce debt. Consistent with others in its industry, the Group monitors capital on the basis of NAV gearing and loan-to-value
ratio. During 2024, the Group’s strategy, which was unchanged from 2023, was to maintain the NAV gearing below 80% in normal
circumstances. These two gearing ratios, as well as the net interest cover ratio, are defined in the list of definitions on pages 284
and 285 and are derived in note 40.
The Group is also required to ensure that it has sufficient property assets which are not subject to fixed or floating charges or
other encumbrances. Most of the Group’s debt is unsecured and, accordingly, there was £4.7bn (2023: £4.2bn) of uncharged
property as at 31 December 2024.
Derwent London plc
248
26 Financial assets and liabilities and fair values
Categories of financial assets and liabilities
Fair value
through profit
and loss
£m
Financial
assets held at
amortised cost
£m
Financial
liabilities held at
amortised cost
£m
Total
carrying
value
£m
Financial assets
Cash and cash equivalents
–
71.4
–
71.4
Other assets – current
–
17.6
–
17.6
–
89.0
–
89.0
Financial liabilities
1.5% unsecured convertible bonds 2025
–
–
(174.1)
(174.1)
6.5% secured bonds 2026
–
–
(178.1)
(178.1)
1.875% unsecured green bonds 2031
–
–
(347.2)
(347.2)
Unsecured private placement notes 2026 – 2034
–
–
(453.6)
(453.6)
Bank borrowings due after one year
–
–
(290.5)
(290.5)
Other loans
–
–
(20.0)
(20.0)
Leasehold liabilities
–
–
(34.6)
(34.6)
Derivative financial instruments
0.6
–
–
0.6
Other liabilities – current
–
–
(117.4)
(117.4)
0.6
–
(1,615.5)
(1,614.9)
At 31 December 2024
0.6
89.0
(1,615.5)
(1,525.9)
Financial assets
Cash and cash equivalents
–
73.0
–
73.0
Other assets – current
–
13.2
–
13.2
–
86.2
–
86.2
Financial liabilities
1.5% unsecured convertible bonds 2025
–
–
(172.1)
(172.1)
6.5% secured bonds 2026
–
–
(179.6)
(179.6)
1.875% unsecured green bonds 2031
–
–
(346.8)
(346.8)
Unsecured private placement notes 2026 – 2034
–
–
(453.5)
(453.5)
3.99% secured loan 2024
–
–
(82.9)
(82.9)
Bank borrowings due after one year
–
–
(81.2)
(81.2)
Other loans
–
–
(20.0)
(20.0)
Leasehold liabilities
–
–
(34.6)
(34.6)
Derivative financial instruments
2.9
–
–
2.9
Other liabilities – current
–
–
(93.9)
(93.9)
2.9
–
(1,464.6)
(1,461.7)
At 31 December 2023
2.9
86.2
(1,464.6)
(1,375.5)
Reconciliation of net financial assets and liabilities to gross debt
2024
£m
2023
£m
Net financial assets and liabilities
(1,525.9)
(1,375.5)
Other assets – current
(17.6)
(13.2)
Other liabilities – current
117.4
93.9
Cash and cash equivalents
(71.4)
(73.0)
Gross debt
(1,497.5)
(1,367.8)
Report and Accounts 2024
249
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
26 Financial assets and liabilities and fair values continued
Fair value measurement
The table below shows the fair values, where applicable, of borrowings and derivative financial instruments held by the Group,
together with a reconciliation to net financial assets and liabilities. Details of inputs and valuation methods used to derive the fair
values are shown in note 25.
Group
Carrying value
£m
Fair value
£m
Fair value
hierarchy
At 31 December 2024
1.5% unsecured convertible bonds 2025
(174.1)
(171.6)
Level 1
6.5% secured bonds 2026
(178.1)
(176.7)
Level 1
1.875% unsecured green bonds 2031
(347.2)
(281.2)
Level 1
Unsecured private placement notes 2026 – 2034
(453.6)
(391.3)
Level 2
Bank borrowings due after one year
(290.5)
(293.0)
Level 2
Other loans
(20.0)
(20.0)
Level 2
Derivative financial instruments
0.6
0.6
Level 2
(1,462.9)
(1,333.2)
Amounts not fair valued:
Cash and cash equivalents
71.4
Other assets – current
17.6
Leasehold liabilities
(34.6)
Other liabilities – current
(117.4)
Net financial assets and liabilities
(1,525.9)
At 31 December 2023
1.5% unsecured convertible bonds 2025
(172.1)
(164.7)
Level 1
6.5% secured bonds 2026
(179.6)
(178.1)
Level 1
1.875% unsecured green bonds 2031
(346.8)
(279.0)
Level 1
Unsecured private placement notes 2026 – 2034
(453.5)
(399.0)
Level 2
3.99% secured loan 2024
(82.9)
(81.8)
Level 2
Bank borrowings due after one year
(81.2)
(84.0)
Level 2
Other loans
(20.0)
(20.0)
Level 2
Derivative financial instruments
2.9
2.9
Level 2
(1,333.2)
(1,203.7)
Amounts not fair valued:
Cash and cash equivalents
73.0
Other assets – current
13.2
Leasehold liabilities
(34.6)
Other liabilities – current
(93.9)
Net financial assets and liabilities
(1,375.5)
The fair values of the following financial assets and liabilities are the same as their carrying values:
• Cash and cash equivalents.
• Trade receivables, other receivables and accrued income included within trade and other receivables.
• Trade payables, other payables and accruals included within trade and other payables.
• Leasehold liabilities.
There have been no transfers between levels in either 2024 or 2023.
Derwent London plc
250
27 Net debt to cash flow reconciliation
Net debt reconciliation
The table below shows net debt movement during the year as a result of cash flows and other non-cash movements.
Non-cash changes
2023
£m
Cash flows
£m
Impact of issue
and arrangement
costs
£m
Other
£m
Fair value
adjustments
£m
Transfer from
non-current to
current
£m
2024
£m
Current liabilities
Borrowings
102.9
(83.0)
0.3
(0.2)
–
174.1
194.1
Leasehold liabilities
0.4
–
–
–
–
–
0.4
Non-current liabilities
Borrowings
1,233.2
208.3
1.9
–
0.1
(174.1)
1,269.4
Leasehold liabilities
34.2
–
–
–
–
–
34.2
Total liabilities from financing activities
1,370.7
125.3
2.2
(0.2)
0.1
–
1,498.1
Cash at bank1
(13.9)
(1.5)
–
–
–
–
(15.4)
Net debt
1,356.8
123.8
2.2
(0.2)
0.1
–
1,482.7
1
Cash at bank excluding restricted cash (see note 33).
28 Cash generated from operations
The table below shows the reconciliation of cash generated from operations.
2024
£m
2023
£m
Profit/(loss) from operations
156.4
(428.9)
Adjustment for non-cash items:
Revaluation deficit
2.7
581.5
Depreciation
1.0
1.1
Lease incentive/cost spreading
(6.8)
(6.6)
Share-based payments
3.1
2.5
Ground rent adjustment
0.7
0.3
Adjustment for other items:
Profit on disposal
(1.9)
(1.2)
Changes in working capital:
Increase in receivables balance
(8.8)
(3.7)
Increase in payables balance
9.5
17.5
Increase in trading property and trading stock
(53.3)
(27.2)
Cash generated from operations
102.6
135.3
Cash generated from operations includes £3.6m (2023: £nil) cash inflows from disposal of trading properties, £43.0m (2023: £19.2m)
cash outflows in relation to expenditure on trading properties and £9.8m (2023: £5.5m) cash outflows in relation to expenditure
on trading stock.
Report and Accounts 2024
251
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
29 Deferred tax
Revaluation
£m
Other
£m
Total
£m
At 1 January 2024
2.8
(2.7)
0.1
Charged to the income statement
0.1
–
0.1
Charged to other comprehensive income
0.6
–
0.6
At 31 December 2024
3.5
(2.7)
0.8
At 1 January 2023
3.7
(3.1)
0.6
Charged to the income statement
0.1
0.4
0.5
Credited to other comprehensive income
(1.0)
–
(1.0)
At 31 December 2023
2.8
(2.7)
0.1
Deferred tax has been recognised at the main rate of corporation tax of 25.0% which is the rate enacted for the purposes of IAS 12
on the basis of the expected timing of the realisation of the deferred tax.
Deferred tax on the balance sheet revaluation deficit/surplus is calculated on the basis of the chargeable gains that would
crystallise on the sale of the property portfolio at each balance sheet date. The calculation takes account of any available
indexation on the historical cost of the properties. Due to the Group’s REIT status, deferred tax is only provided at each balance
sheet date on properties outside the REIT ring-fence. As a result, the Group has recognised an increase in the deferred tax liability
on owner-occupied property of £0.6m through other comprehensive income.
A deferred tax charge has been recognised through the income statement of £0.1m. This is due to a £1.0m reduction in the
deferred tax asset in relation to share-based payments and other temporary timing differences, offset by an increase in the
deferred tax asset of £0.9m in respect of tax losses which the Directors believe will be recovered in the future.
30 Share capital
The movement in the number of 5p ordinary shares in issue is shown in the table below:
Number of shares in issue fully paid
Number
At 1 January 2023
112,290,679
Issued as a result of the exercise of share options1
250
At 31 December 2023 and 2024
112,290,929
1
Proceeds from these issues were £nil (2023: £nil).
The number of outstanding share options and other share awards granted are disclosed in the report of the Remuneration
Committee and note 13.
31 Reserves
The following describes the nature and purpose of each reserve within shareholders’ equity:
Reserve
Description and purpose
Share premium
Amount subscribed for share capital in excess of nominal value less directly attributable issue costs.
Other
reserves:
Merger
Premium on the issue of shares as equity consideration for the acquisition of London Merchant
Securities plc (LMS).
Revaluation
Revaluation of the owner-occupied property and the associated deferred tax.
Other
Equity portion of the convertible bonds for the Group and intercompany loans for the Company.
Fair value of equity instruments granted but not yet exercised under share-based payments.
Retained earnings
Cumulative net gains and losses recognised in the Group income statement together with other
items such as dividends.
Derwent London plc
252
Other reserves
2024
£m
2023
£m
Merger reserve
910.5
910.5
Revaluation reserve
15.4
13.1
Equity portion of the convertible bonds
7.5
7.5
Fair value of equity instruments under share-based payments
9.8
8.2
943.2
939.3
32 Dividend
Dividend per share
Payment date
PID
p
Non-PID
p
Total
p
2024
£m
2023
£m
Current year
2024 final dividend1
30 May 2025
45.50
10.00
55.50
–
–
2024 interim dividend
11 October 2024
25.00
–
25.00
28.1
–
70.50
10.00
80.50
28.1
–
Prior year
2023 final dividend
31 May 2024
39.00
16.00
55.00
61.7
–
2023 interim dividend
13 October 2023
24.50
–
24.50
–
27.5
63.50
16.00
79.50
61.7
27.5
2022 final dividend
2 June 2023
38.50
16.00
54.50
–
61.2
Dividends as reported in the Group
statement of changes in equity
89.8
88.7
2024 interim dividend withholding tax
14 January 2025
(3.9)
–
2023 interim dividend withholding tax
12 January 2024
3.7
(3.7)
2022 interim dividend withholding tax
13 January 2023
–
3.7
Dividends paid as reported in the
Consolidated cash flow statement
89.6
88.7
1
Subject to shareholder approval at the AGM on 16 May 2025.
33 Cash and cash equivalents
2024
£m
2023
£
Cash at bank
15.4
13.9
Cash held in restricted accounts
Tenant rent deposits
27.9
27.0
Service charge balances
28.1
32.1
71.4
73.0
34 Capital commitments and contingent liabilities
Contracts for capital expenditure entered into by the Group at 31 December 2024 and not provided for in the accounts relating
to the construction, development or enhancement of the Group’s investment properties amounted to £101.0m (2023: £156.0m),
whilst that relating to the Group’s trading properties amounted to £29.3m (2023: £77.6m). At 31 December 2024 and 31 December
2023, there were no material contractual obligations for the purchase, repair or maintenance of investment or trading properties.
In May 2022, Derwent London exchanged a conditional contract to acquire the freehold of the Old Street Quarter site, the existing
site of the Moorfields Eye Hospital and the UCL Institute of Ophthalmology, together the Oriel joint initiative (‘Oriel’). Consideration
for the site has been agreed as £239m before costs. Completion is subject to delivery by Oriel of a new hospital at St Pancras and
subsequent vacant possession of the site, which is anticipated no earlier than 2027.
Report and Accounts 2024
253
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
35 Leases
2024
£m
2023
£m
Operating lease receipts
Minimum lease receipts under non-cancellable operating leases to be received:
not later than one year
207.8
205.6
later than one year and not later than five years
634.9
676.2
later than five years
698.1
809.6
1,540.8
1,691.4
2024
£m
2023
£m
Headlease obligations
Minimum lease payments under headleases that fall due:
not later than one year
1.7
1.7
later than one year and not later than five years
7.0
6.9
later than five years
208.6
209.6
217.3
218.2
Future finance charges on headleases
(182.7)
(183.6)
Present value of headlease liabilities
34.6
34.6
Present value of minimum headlease obligations:
not later than one year
0.4
0.4
later than one year and not later than five years
1.9
1.8
later than five years
32.3
32.4
34.6
34.6
The Group has approximately 758 leases granted to its tenants. These vary depending on the individual tenant and the respective
property and demise but typically are let for a term of five to 20 years, at a market rent with provisions to review to market rent
every five years. Standard lease provisions include service charge payments and recovery of other direct costs. The weighted
average lease length of the leases commencing during 2024 was 5.4 years (2023: 8.6 years). Of these leases, on a weighted
average basis, 73% (2023: 84%) included a rent-free or half rent period.
36 Post balance sheet events
In January 2025, the Group completed the disposal of its freehold interest in 4 & 10 Pentonville Road N1 for £26.0m before costs.
At 31 December 2024, in line with IFRS 5, this property was classified as a non-current asset held for sale, see note 22.
Following the bank facility signed in December 2024, the Group signed a new £115 million unsecured bank facility in February 2025.
The new facility bears interest at compounded SONIA plus a margin and includes an £82.5m term loan and a £32.5m revolving
credit facility. The new facility is for an initial two-year term and includes one extension option.
37 Related party disclosure
Details of Directors’ remuneration are given in the report of the Remuneration Committee on pages 174 to 199 and note 11.
Details of transactions with joint ventures are shown in note 19. A full list of subsidiaries and joint ventures is given in note xii
of the Company financial statements. Other related party transactions are as follows:
The Group earned fees of £0.4m (2023: £0.5m) for the period up to 31 October 2024 in relation to development management,
asset management and administration of the Derwent Lazari Baker Street Limited Partnership. See note 19 for further information.
Derwent London plc
254
38 EPRA performance measures and core recommendations
Unaudited unless stated otherwise.
As with most other UK property companies and real estate investment trusts (REITs), the Group presents many of its financial
measures in accordance with the guidance criteria issued by the European Public Real Estate Association (EPRA). These measures,
which provide consistency across the sector, are all derived from the IFRS figures.
Summary table of EPRA performance measures
2024
2023
Pence
per share
p
Pence
per share
p
EPRA earnings (audited)
£119.5m
106.45
£114.5m
101.97
EPRA Net Tangible Assets (audited)
£3,545.0m
3,149
£3,522.1m
3,129
EPRA Net Disposal Value (audited)
£3,671.4m
3,261
£3,649.6m
3,243
EPRA Net Reinstatement Value (audited)
£3,889.5m
3,455
£3,852.9m
3,423
EPRA Cost Ratio (including direct vacancy costs)
27.0%
27.3%
EPRA Cost Ratio (excluding direct vacancy costs)
21.7%
22.3%
EPRA Net Initial Yield
4.3%
4.3%
EPRA ‘topped-up’ Net Initial Yield
5.2%
5.2%
EPRA Vacancy Rate
3.1%
4.0%
The definition of these measures can be found on pages 283 and 284.
Number of shares
Earnings per share
Net asset value per share
Weighted average
At 31 December
2024
Audited
‘000
2023
Audited
‘000
2024
Audited
‘000
2023
Audited
‘000
For use in basic measures
112,258
112,291
112,258
112,291
Dilutive effect of share-based payments
342
243
323
257
For use in diluted measures
112,600
112,534
112,581
112,548
The £175m unsecured convertible bonds 2025 (‘1.5% convertible bonds 2025’) have an initial conversion price set at £44.96.
The Group recognises the effect of conversion of the bonds if they are both dilutive and, based on the share price, likely to convert.
For the year ended 31 December 2023 and 2024, the Group did not recognise the dilutive impact of the conversion of the 2025
bonds on its earnings per share (EPS) or net asset value (NAV) per share metrics as, based on the share price at the end of each
year, the bonds were not expected to convert.
The following tables set out reconciliations between the IFRS and EPRA earnings for the year and earnings per share.
The adjustments made between the figures are as follows:
A – Disposal of investment and trading property (including the Group’s share in joint ventures), and associated tax.
B – Revaluation movement on investment property, in joint ventures and other interests, write-down of trading property and
associated deferred tax.
C – Fair value movement and termination income relating to derivative financial instruments.
Report and Accounts 2024
255
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
38 EPRA performance measures and core recommendations continued
Earnings and earnings per share (audited)
Adjustments
IFRS
£m
A
£m
B
£m
C
£m
EPRA
basis
£m
Year ended 31 December 2024
Net property and other income
198.3
–
0.2
–
198.5
Total administrative expenses
(41.1)
–
–
–
(41.1)
Revaluation deficit
(2.7)
–
2.7
–
–
Profit on disposal of investments
1.9
(1.9)
–
–
–
Net finance costs
(39.6)
–
–
–
(39.6)
Movement in fair value of derivative financial instruments
(2.3)
–
–
2.3
–
Share of results of joint ventures
1.5
–
0.3
–
1.8
Profit before tax
116.0
(1.9)
3.2
2.3
119.6
Tax charge
(0.1)
–
–
–
(0.1)
Profit for the year
115.9
(1.9)
3.2
2.3
119.5
Earnings attributable to equity shareholders
115.9
(1.9)
3.2
2.3
119.5
Earnings per share
103.24p
106.45p
Diluted earnings per share
102.93p
106.13p
Year ended 31 December 2023
Net property and other income
190.5
–
1.0
–
191.5
Total administrative expenses
(39.1)
–
–
–
(39.1)
Revaluation deficit
(581.5)
–
581.5
–
–
Profit on disposal of investments
1.2
(1.2)
–
–
–
Net finance costs
(39.5)
–
–
–
(39.5)
Movement in fair value of derivative financial instruments
(2.1)
–
–
2.1
–
Financial derivative termination income
1.8
–
–
(1.8)
–
Share of results of joint ventures
(7.2)
–
9.2
–
2.0
Loss before tax
(475.9)
(1.2)
591.7
0.3
114.9
Tax charge
(0.5)
–
0.1
–
(0.4)
(Loss)/earnings attributable to equity shareholders
(476.4)
(1.2)
591.8
0.3
114.5
(Loss)/earnings per share
(424.25p)
101.97p
Diluted (loss)/earnings per share
(424.25p)
101.75p
The diluted loss per share for the year to 31 December 2023 was restricted to a loss of 424.25p per share, as the loss per share
cannot be reduced by dilution in accordance with IAS 33 Earnings per Share.
Derwent London plc
256
EPRA Net Asset Value metrics (audited)
2024
£m
2023
£m
Net assets attributable to equity shareholders
3,539.8
3,508.8
Adjustment for:
Revaluation of trading properties
0.6
9.8
Deferred tax on revaluation surplus1
1.8
1.4
Fair value of derivative financial instruments
(0.6)
(2.9)
Fair value adjustment to secured bonds
3.4
5.0
EPRA Net Tangible Assets
3,545.0
3,522.1
Per share measure – diluted
3,149p
3,129p
Net assets attributable to equity shareholders
3,539.8
3,508.8
Adjustment for:
Revaluation of trading properties
0.6
9.8
Fair value adjustment to secured bonds
3.4
5.0
Mark-to-market of fixed rate debt
133.6
133.4
Unamortised issue and arrangement costs
(6.0)
(7.4)
EPRA Net Disposal Value
3,671.4
3,649.6
Per share measure – diluted
3,261p
3,243p
Net assets attributable to equity shareholders
3,539.8
3,508.8
Adjustment for:
Revaluation of trading properties
0.6
9.8
Deferred tax on revaluation surplus
3.5
2.8
Fair value of derivative financial instruments
(0.6)
(2.9)
Fair value adjustment to secured bonds
3.4
5.0
Purchasers’ costs2
342.8
329.4
EPRA Net Reinstatement Value
3,889.5
3,852.9
Per share measure – diluted
3,455p
3,423p
1
Only 50% of the deferred tax on the revaluation surplus is excluded.
2
Includes Stamp Duty Land Tax. Total costs assumed to be 6.8% of the portfolio’s fair value.
Report and Accounts 2024
257
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
38 EPRA performance measures and core recommendations continued
Cost ratio
2024
£m
2023
£m
Administrative expenses
41.1
39.1
Write-off/impairment of receivables
0.2
2.0
Other property costs
16.7
15.2
Dilapidation receipts
(0.8)
(0.1)
Net service charge costs
6.6
6.6
Service charge costs recovered through rents but not separately invoiced
(1.3)
(0.9)
Management fees received less estimated profit element
(5.1)
(4.5)
Share of joint ventures’ expenses
0.3
0.4
EPRA costs (including direct vacancy costs) (A)
57.7
57.8
Direct vacancy costs
(11.3)
(10.4)
EPRA costs (excluding direct vacancy costs) (B)
46.4
47.4
Gross rental income
214.8
212.8
Ground rent
(1.5)
(2.2)
Service charge components of rental income
(1.3)
(0.9)
Share of joint ventures’ rental income less ground rent
2.0
2.4
Adjusted gross rental income (C)
214.0
212.1
EPRA cost ratio (including direct vacancy costs) (A/C)
27.0%
27.3%
EPRA cost ratio (excluding direct vacancy costs) (B/C)
21.7%
22.3%
In addition to the two EPRA cost ratios, the Group has calculated an additional cost ratio based on its property portfolio fair value
to recognise the ‘total return’ nature of the Group’s activities.
2024
£m
2023
£m
Property portfolio at fair value (D)
5,041.1
4,844.7
Portfolio cost ratio (A/D)
1.1%
1.2%
Derwent London plc
258
Net Initial Yield and ‘topped-up’ Net Initial Yield
2024
£m
2023
£m
Property portfolio – wholly owned
5,041.1
4,844.7
Investment property – share of joint ventures
Share of joint ventures
–
33.8
Less non-EPRA properties1
(696.0)
(488.3)
Completed property portfolio
4,345.1
4,390.2
Allowance for:
Estimated purchasers’ costs
295.5
298.5
EPRA property portfolio valuation (A)
4,640.6
4,688.7
Annualised contracted rental income, net of ground rents
204.9
204.9
Share of joint ventures
–
2.5
Less non-EPRA properties1
(0.7)
(0.7)
Add outstanding rent reviews
0.7
0.1
Less estimate of non-recoverable expenses
(5.6)
(6.6)
(5.6)
(7.2)
Current income net of non-recoverable expenses (B)
198.7
200.2
Contractual rental increases across the portfolio
42.2
44.6
Contractual rental increases across the EPRA portfolio
42.2
44.6
‘Topped-up’ net annualised rent (C)
240.9
244.8
EPRA net initial yield (B/A)
4.3%
4.3%
EPRA ‘topped-up’ net initial yield (C/A)
5.2%
5.2%
Vacancy rate
2024
£m
2023
£m
Annualised estimated rental value of vacant premises
8.4
10.8
Portfolio estimated rental value
324.3
314.0
Less non-EPRA properties1
(49.7)
(46.0)
274.6
268.0
EPRA vacancy rate
3.1%
4.0%
1
In accordance with EPRA best practice guidelines, deductions are made for development properties, land and long-dated reversions.
Report and Accounts 2024
259
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
38 EPRA performance measures and core recommendations continued
Like-for-like rental growth
Like-for-like
portfolio
£m
Development
property
£m
Acquisitions
and disposals
£m
Total
£m
2024
Gross rental income
199.6
12.5
2.7
214.8
Other property expenditure
(18.8)
(5.9)
(0.1)
(24.8)
Write-off/impairment of receivables
(0.4)
0.2
–
(0.2)
Impairment included in prepayments (see note 20)
–
–
(0.2)
(0.2)
Net rental income
180.4
6.8
2.4
189.6
Other
7.8
0.9
–
8.7
Net property and other income
188.2
7.7
2.4
198.3
2023
Gross rental income
194.6
13.6
4.6
212.8
Other property expenditure
(20.7)
(3.1)
(0.2)
(24.0)
Write-off/impairment of receivables
(0.9)
(1.1)
–
(2.0)
Impairment included in prepayments (see note 20)
–
–
(0.6)
(0.6)
Net rental income
173.0
9.4
3.8
186.2
Other
4.7
(0.4)
–
4.3
Net property and other income
177.7
9.0
3.8
190.5
Change based on:
Gross rental income
2.6%
0.9%
Net rental income
4.3%
1.8%
Net property and other income
5.9%
4.1%
Property-related capital expenditure
2024
2023
Group
(excl. Joint
ventures)
£m
Joint ventures
(50% share)
£m
Total
Group
£m
Group
(excl. Joint
ventures)
£m
Joint ventures
(50% share)
£m
Total
Group
£m
Acquisitions
47.0
–
47.0
3.8
–
3.8
Development
136.2
3.3
139.5
127.3
0.6
127.9
Investment properties
Incremental lettable space
2.5
–
2.5
–
–
–
No incremental lettable space
45.3
–
45.3
25.0
–
25.0
Tenant incentives
0.3
–
0.3
–
–
–
Capitalised interest
10.7
–
10.7
6.3
–
6.3
Total capital expenditure
242.0
3.3
245.3
162.4
0.6
163.0
Conversion from accrual to cash basis
(12.1)
–
(12.1)
12.1
0.1
12.2
Total capital expenditure on a cash basis
229.9
3.3
233.2
174.5
0.7
175.2
Derwent London plc
260
39 Total return
2024
p
2023
p
EPRA Net Tangible Assets on a diluted basis
At end of year
3,149
3,129
At start of year
(3,129)
(3,632)
Increase/(decrease)
20
(503)
Dividend per share
80
79
Increase/(decrease) including dividend
100
(424)
Total return
3.2%
(11.7%)
40 Gearing and interest cover
NAV gearing
2024
£m
2023
£m
Net debt
1,482.7
1,356.8
Net assets
3,539.8
3,508.8
NAV gearing
41.9%
38.7%
Loan-to-value ratio
2024
£m
2023
£m
Group loan-to-value ratio
Net debt
1,482.7
1,356.8
Fair value adjustment of secured bonds
(3.4)
(5.0)
Unamortised discount on unsecured green bonds
1.3
1.5
Unamortised issue and arrangement costs
6.0
7.4
Leasehold liabilities
(34.6)
(34.6)
Drawn debt net of cash (A)
1,452.0
1,326.1
Fair value of property portfolio (B)
5,041.1
4,844.7
Loan-to-value ratio (A/B)
28.8%
27.4%
Proportionally consolidated loan-to-value ratio
Drawn debt net of cash (A)
1,452.0
1,326.1
Share of cash and cash equivalents in joint ventures
–
(2.2)
Drawn debt net of cash including Group’s share of joint ventures (C)
1,452.0
1,323.9
Fair value of property portfolio (B)
5,041.1
4,844.7
Share of fair value of property portfolio of joint ventures
–
33.8
Fair value of property portfolio including Group’s share of joint ventures (D)
5,041.1
4,878.5
Proportionally consolidated loan-to-value ratio (C/D)
28.8%
27.1%
EPRA loan-to-value ratio
Drawn debt net of cash including Group’s share of joint ventures (C)
1,452.0
1,323.9
Debt with equity characteristics
(20.0)
(20.0)
Adjustment for hybrid debt instruments
0.6
2.0
Net payables adjustment
72.7
57.2
Adjusted debt (E)
1,505.3
1,363.1
Fair value of property portfolio including Group’s share of joint ventures (D)
5,041.1
4,878.5
EPRA loan-to-value ratio (E/D)
29.9%
27.9%
Report and Accounts 2024
261
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
40 Gearing and interest cover continued
Net interest cover ratio
2024
£m
2023
£m
Group net interest cover ratio
Net property and other income
198.3
190.5
Adjustments for:
Other income
(5.1)
(4.5)
Other property income
(0.1)
–
Surrender premiums received
(2.7)
(0.1)
Write-down of trading property
–
0.4
Adjusted net property income
190.4
186.3
Finance income
(0.3)
(0.9)
Finance costs
39.9
40.4
39.6
39.5
Adjustments for:
Finance income
0.3
0.9
Other finance costs
(0.4)
(0.3)
Amortisation of fair value adjustment to secured bonds
1.6
1.5
Amortisation of issue and arrangement costs
(2.6)
(2.6)
Finance costs capitalised
11.2
6.5
Net interest payable
49.7
45.5
Group net interest cover ratio
383%
409%
Proportionally consolidated net interest cover ratio
Adjusted net property income
190.4
186.3
Share of joint ventures’ net property income
1.9
2.2
Adjusted net property income including share of joint ventures
192.3
188.5
Net interest payable
49.7
45.5
Proportionally consolidated net interest cover ratio
387%
414%
Net debt to EBITDA
2024
£m
2023
£m
Net debt (A)
1,482.7
1,356.8
Profit/(loss) for the year
115.9
(476.4)
Add back: tax charge
0.1
0.5
Profit/(loss) before tax
116.0
(475.9)
Add back: net finance charges
39.6
39.5
Add back: movement in fair value of derivative financial instruments
2.3
2.1
Add back: financial derivative termination income
–
(1.8)
157.9
(436.1)
Add back: profit on disposal of investment property
(1.9)
(1.2)
Add back: revaluation deficit
2.7
581.5
Add back: share of joint venture revaluation movement/impairment (note 9)
0.3
9.2
Add back: depreciation
1.0
1.1
EBITDA (B)
160.0
154.5
Net debt to EBITDA (A/B)
9.3
8.8
Derwent London plc
262
41 Material accounting policies
Basis of consolidation
The Group financial statements incorporate the financial statements of Derwent London plc and all of its subsidiaries, together
with the Group’s share of the results of its joint ventures.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group.
They are no longer consolidated from the date that control ceases.
Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement.
Interests in joint ventures are accounted for using the equity method of accounting as permitted by IFRS 11 Joint Arrangements,
and following the procedures for this method set out in IAS 28 Investments in Associates and Joint Ventures. The equity method
requires the Group’s share of the joint venture’s post-tax profit or loss for the year to be presented separately in the income
statement and the Group’s share of the joint venture’s net assets to be presented separately in the balance sheet.
Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the
consolidated financial statements. Unrealised gains arising from transactions with joint ventures are eliminated to the extent of
the Group’s interest in the joint venture concerned. Unrealised losses are eliminated in the same way, but only to the extent that
there is no evidence of impairment.
Gross property income
Gross property income arises from two main sources:
(i) Rental income – This arises from operating leases granted to tenants. An operating lease is a lease other than a finance lease.
A finance lease is one whereby substantially all the risks and rewards of ownership are passed to the lessee.
Rental income is recognised in the Group income statement on a straight-line basis over the term of the lease in accordance
with IFRS 16 Leases. This includes the effect of lease incentives given to tenants, which are normally in the form of rent-free or
half rent periods or capital contributions in lieu of rent-free periods, and the effect of contracted rent uplifts and payments
received from tenants on the grant of leases. Where the total consideration due under a lease is modified, the revised total
amount due under the lease is recognised on a straight-line basis over the remaining term of the lease. Where rent demanded
is forgiven for periods that have passed, these amounts are assessed under IFRS 9 and written off. Where rent is forgiven for
future periods, this is considered a lease modification and spread on a straight-line basis over the remaining lease term in
accordance with IFRS 16.
For income from property leased out under a finance lease, a lease receivable asset is recognised in the balance sheet at an
amount equal to the net investment in the lease, as defined in IFRS 16 Leases. Minimum lease payments receivable, again
defined in IFRS 16, are apportioned between finance income and the reduction of the outstanding lease receivable so as
to produce a constant periodic rate of return on the remaining net investment in the lease. Contingent rents, being the
difference between the rent currently receivable and the minimum lease payments when the net investment in the lease was
originally calculated, are recognised in property income in the years in which they are receivable.
(ii) Surrender premiums – Payments received from tenants to surrender their lease obligations are recognised immediately in the
Group income statement. In circumstances where surrender payments received relate to specific periods, they are deferred
and recognised in those periods.
Other income
Other income consists of commissions, fees charged to tenants for the management of certain Group properties and administration
services provided to joint ventures. Other income is recognised in the Group income statement in accordance with the delivery of
services as required by IFRS 15 Revenue from Contracts with Customers.
Service charges
Service charge income relates to expenditure that is directly recoverable from tenants, excluding management fees which are
included in ‘other income’. Service charge income is recognised as revenue in the period to which it relates as required by IFRS 15
Revenue from Contracts with Customers.
Expenses
(i) Lease payments – For leasehold investment properties held, a right of use asset is recognised at commencement date of
the lease within the investment property carrying value. The initial cost includes the lease liabilities recognised, initial direct
costs incurred and any lease payments made at commencement adjusted for any lease incentives received. In addition, a
corresponding lease liability is also included on the balance sheet. Minimum lease payments are apportioned between the
finance charge and the reduction of the outstanding liability so as to produce a constant periodic rate of interest on the
remaining lease liability.
Report and Accounts 2024
263
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
41 Material accounting policies continued
Expenses continued
(ii) Dilapidations – Dilapidations monies received from tenants in respect of their lease obligations are recognised immediately
in the Group income statement, unless they relate to future capital expenditure. In the latter case, where the costs are
considered to be recoverable they are capitalised as part of the carrying value of the property.
(iii) Reverse surrender premiums – Payments made to tenants to surrender their lease obligations are charged directly to the
Group income statement unless the payment is to enable the probable redevelopment of a property. In the latter case, where
the costs are considered to be recoverable, they are capitalised as part of the carrying value of the property.
(iv) Other property expenditure – Vacant property costs and other property costs are expensed in the year to which they relate,
with the exception of the initial direct costs incurred in negotiating and arranging leases which are, in accordance with IFRS
16 Leases, added to the carrying value of the relevant property and recognised as an expense over the lease term on the same
basis as the lease income.
Employee benefits
(i) Share-based remuneration
Equity-settled – The Company operates a long-term incentive plan and share option scheme. The fair value of the conditional
awards of shares granted under the long-term incentive plan and the options granted under the share option scheme are
determined at the date of grant. This fair value is then expensed on a straight-line basis over the vesting period, based on
an estimate of the number of shares that will eventually vest. At each reporting date, the non-market based performance
criteria of the long-term incentive plan are reconsidered and the expense is revised as necessary. In respect of the share
option scheme, the fair value of the options granted is calculated using a binomial lattice pricing model.
(ii) Pensions
Defined contribution plans – Obligations for contributions to defined contribution pension plans are recognised as an
expense in the Group income statement in the period to which they relate.
Defined benefit plans – The Group’s net obligation in respect of defined benefit post-employment plans, including pension
plans, is calculated separately for each plan by estimating the amount of future benefit that employees have earned in
return for their service in the current and prior periods. That benefit is discounted to determine its present value, and the fair
value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on AA credit rated bonds that
have maturity dates approximating the terms of the Group’s obligations. The calculation is performed by a qualified actuary
using the projected unit credit method. Any actuarial gain or loss in the period is recognised in full in the Group statement of
comprehensive income.
Business combinations
Business combinations are accounted for under the acquisition method. Any excess of the purchase price of business combinations
over the fair value of the assets, liabilities and contingent liabilities acquired and resulting deferred tax thereon is recognised as
goodwill. Any discount is credited to the Group income statement in the period of acquisition. Goodwill is recognised as an asset
and reviewed for impairment. Any impairment is recognised immediately in the Group income statement and is not subsequently
reversed. Any residual goodwill is reviewed annually for impairment.
Investment property
(i) Valuation – Investment properties are those that are held either to earn rental income or for capital appreciation or both,
including those that are undergoing redevelopment. Investment properties are measured initially at cost, including related
transaction costs. After initial recognition, they are carried in the Group balance sheet at fair value adjusted for the carrying
value of leasehold interests and lease incentive and letting cost receivables. Fair value is the price that would be received to
sell an investment property in an orderly transaction between market participants at the measurement date. The valuation is
undertaken by independent valuers who hold recognised and relevant professional qualifications and have recent experience
in the locations and categories of properties being valued.
Surpluses or deficits resulting from changes in the fair value of investment property are reported in the Group income
statement in the year in which they arise.
The Group leases out investment properties under operating leases with rents generally payable monthly or quarterly. The Group
is exposed to changes in the residual value of properties at the end of current lease agreements, and mitigates this risk by
actively managing its tenant mix in order to maximise the weighted average lease term, minimise vacancies across the portfolio
and maximise exposure to tenants with strong financial characteristics. The Group also grants lease incentives to encourage
high quality tenants to remain in properties for longer lease terms.
Derwent London plc
264
(ii) Capital expenditure – Capital expenditure, being costs directly attributable to the redevelopment or refurbishment of
an investment property, up to the point of it being completed for its intended use, are capitalised in the carrying value of
that property. In addition, in accordance with IAS 23 Borrowing Costs, finance costs that are directly attributable to such
expenditure are capitalised using the Group’s average cost of borrowings during each quarter.
Certain internal staff and associated costs directly attributable to the major development and refurbishment schemes are
also capitalised based on the proportion of time spent on the relevant scheme. These costs are capitalised from the date the
Group determines it is probable that the development will progress until the date of practical completion.
(iii) Disposal – Properties are treated as disposed when the Group transfers the significant risks and rewards of ownership to
the buyer. Generally this would occur on completion of contract. On disposal, any gain or loss is calculated as the difference
between the net disposal proceeds and the carrying value at the last year end plus subsequent capitalised expenditure during
the year. Where the net disposal proceeds have yet to be finalised at the balance sheet date, the proceeds recognised reflect
the Directors’ best estimate of the amounts expected to be received. Any contingent consideration is recognised at fair value
at the balance sheet date. The fair value is calculated using future discounted cash flows based on expected outcomes with
estimated probabilities taking account of the risk and uncertainty of each input.
(iv) Development – When the Group begins to redevelop an existing investment property for continued use as an investment
property or acquires a property with the subsequent intention of developing as an investment property, the property is classified
as an investment property and is accounted for as such. When the Group begins to redevelop an existing investment property
with a view to sale, the property is transferred to trading properties and held as a current asset. The property is remeasured
to fair value as at the date of transfer with any gain or loss being taken to the income statement. The remeasured amount
becomes the deemed cost at which the property is then carried in trading properties.
Trading property and trading stock
Trading property relates to property being developed for sale. Trading stock relates to development expenditure which is due to
be disposed of to third parties under development agreements. In accordance with IAS 2 Inventories, trading property and trading
stock are held at the lower of cost and net realisable value. Proceeds from sale are recognised in the Group’s income statement
when title has been transferred to the purchaser as required by IFRS 15 Revenue from Contracts with Customers.
Prepayment (non-current)
Acquisition and capital expenditure costs incurred in advance of ownership of a property are initially included as a prepayment
in the Group’s balance sheet and measured at cost. This asset is then tested for impairment under IAS 36 Impairment of Assets.
On completion of the purchase, the asset will be transferred to either investment property or trading property as appropriate.
Property, plant and equipment
(i) Owner-occupied property – Owner-occupied property is stated at its revalued amount, which is determined in the same
manner as investment property. It is depreciated over its remaining useful life (40 years) with the depreciation included in
administrative expenses. On revaluation, any accumulated depreciation is eliminated against the gross carrying amount of
the property concerned, and the net amount restated to the revalued amount. Subsequent depreciation charges are adjusted
based on the revalued amount for each property. Any difference between the depreciation charge on the revalued amount
and that which would have been charged under historic cost is transferred, net of any related deferred tax, between the
revaluation reserve and retained earnings as the property is utilised. Surpluses or deficits resulting from changes in the fair
value are reported in the Group statement of comprehensive income. The land element of the property is not depreciated.
(ii) Artwork – Artwork is stated at revalued amounts on the basis of open market value.
(iii) Other – Plant and equipment is depreciated at a rate of between 10% and 25% per annum which is calculated to write off the
cost, less estimated residual value of the individual assets, over their expected useful lives.
Investments
Investments in joint ventures, being those entities over whose activities the Group has joint control, as established by contractual
agreement, are included in the Group’s balance sheet at cost together with the Group’s share of post-acquisition reserves, on a
net equity basis. Investments in subsidiaries and joint ventures are included in the Company’s balance sheet at the lower of cost
and recoverable amount. Any impairment is recognised immediately in the income statement.
Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying value will be recovered through a sale transaction rather than
through continuing use. This condition is regarded as met if the sale is highly probable, the asset is available for immediate sale
in its present condition, being actively marketed and management is committed to the sale which should be expected to qualify
for recognition as a completed sale within one year from the date of classification.
In accordance with IFRS 5, non-current assets, including related liabilities, classified as held for sale are measured at the lower of
carrying value and fair value less costs of disposal.
Report and Accounts 2024
265
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
41 Material accounting policies continued
Financial assets
(i) Cash and cash equivalents – Cash at bank comprises cash in hand and on-demand deposits. Cash at bank comprises
short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
Tenant rent deposits are subject to contractual restrictions and meet the definition of ‘cash and cash equivalents’ under
IAS 7 and are recognised as restricted cash.
Cash collected on behalf of tenants to fund service charges of properties in the portfolio meet the definition of ‘cash and
cash equivalents’ under IAS 7 and are recognised as restricted cash.
(ii) Trade receivables – Trade receivables are recognised and carried at the original transaction value. This balance is subject
to impairment testing under IFRS 9 using the forward-looking, simplified approach to the expected credit loss model.
Lease incentive receivables
In accordance with IFRS 16, rental income is recognised in the Group income statement on a straight-line basis over the term of
the lease. This includes the effect of lease incentives given to tenants (in the form of rent-free periods, half rent periods or capital
contributions in lieu of rent-free periods) and any contracted rental uplifts granted at lease inception. The result is included within
accrued income in the balance sheet. This balance is subject to impairment testing under IAS 36.
Financial liabilities
(i) Bank loans and fixed rate loans – Bank loans and fixed rate loans are included as financial liabilities on the balance sheets
at amortised cost. Interest payable is expensed as a finance cost in the year to which it relates.
Where there has been a change to the terms of a debt agreement, such as the applicable interest rate or benchmark
rate, this is assessed under IFRS 9 using quantitative and qualitative assessments to determine if the debt modification
is considered substantial enough to be deemed an extinguishment. It is common for loan facilities agreements to include
extension options which extend the loan maturity out by one year. When these options are exercised as per the agreement,
with no changes to other terms, this is deemed to be a modification of the loan and not an extinguishment.
(ii) Non-convertible bonds – These are included as a financial liability on the balance sheet net of the unamortised discount
and costs on issue. The difference between this carrying value and the redemption value is recognised in the Group income
statement over the life of the bond on an effective interest basis. Interest payable to bond holders is expensed in the year to
which it relates.
(iii) Convertible bonds – The fair value of the liability component of a convertible bond is determined using the market
interest rate for an equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis until
extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option.
This is recognised and included in shareholders’ equity, net of income tax effects and is not subsequently re-measured. Issue
costs are apportioned between the liability and the equity components of the convertible bonds based on their carrying
amounts at the date of issue. The portion relating to the equity component is charged directly against equity. The issue costs
apportioned to the liability are amortised over the life of the bond. The issue costs apportioned to equity are not amortised.
(iv) Finance lease liabilities – Finance lease liabilities arise for those investment properties held under a leasehold interest and
accounted for as investment property. The liability is initially calculated as the present value of the minimum lease payments,
reducing in subsequent years by the apportionment of payments to the lessor, as described above under the heading for lease
payments.
(v) Interest rate derivatives – The Group uses derivative financial instruments to manage the interest rate risk associated with
the financing of the Group’s business. No trading in financial instruments is undertaken.
At each reporting date, these interest rate derivatives are measured at fair value, being the estimated amount that the Group
would receive or pay to terminate the agreement at the balance sheet date, taking into account current interest rates and
the current credit rating of the counterparties. The gain or loss at each fair value remeasurement is recognised in the Group
income statement because the Group does not apply hedge accounting.
(vi) Trade payables – Trade payables are recognised and carried at the original transaction value.
Derwent London plc
266
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the tax computations, and is accounted for using
the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. In respect of the deferred tax on the revaluation surplus, this is calculated on the basis of
the chargeable gains that would crystallise on the sale of the investment portfolio as at the reporting date. The calculation takes
account of available indexation on the historical cost of the properties.
Deferred tax is calculated at the tax rates that are expected to apply in the period, based on Acts substantially enacted at the
year end, when the liability is settled or the asset is realised. Deferred tax is included in profit or loss for the period, except when
it relates to items recognised in other comprehensive income or directly in equity.
Cash flow
Transactions in the cash flow statement under operating, investing and financing activities have been prepared net of value
added tax in order to reflect the true cash inflows and outflows of the Group.
Dividends
Dividends payable on the ordinary share capital are recognised in the year in which they are declared.
Report and Accounts 2024
267
Financial statements
Note
2024
£m
2023
Restated1
£m
Non-current assets
Property, plant and equipment
17.1
19.1
Investments
vi
2,578.3
2,189.8
Receivables: amounts falling due after more than one year
vii
1,920.4
2,327.3
Derivative financial instruments
ix
–
2.9
Deferred tax
x
0.8
2.6
Pension scheme surplus
vi
1.8
2.0
4,518.4
4,543.7
Current assets
Receivables: amounts falling due within one year
vii
33.4
31.8
Derivative financial instruments
ix
0.6
–
Corporation tax asset
0.3
0.3
Cash and cash equivalents
20.7
24.8
55.0
56.9
Total assets
4,573.4
4,600.6
Current liabilities
Borrowings
ix
174.1
82.9
Leasehold liabilities
ix
1.3
1.3
Payables: amounts falling due within one year
viii
1,615.5
2,009.6
Provisions
0.2
0.1
1,791.1
2,093.9
Non-current liabilities
Borrowings
ix
1,091.3
1,053.6
Leasehold liabilities
ix
19.0
20.3
Provisions
0.4
0.3
1,110.7
1,074.2
Total liabilities
2,901.8
3,168.1
Total net assets
1,671.6
1,432.5
Equity
Share capital
xi
5.6
5.6
Share premium
196.6
196.6
Other reserves
927.8
926.2
Retained earnings
541.6
304.1
Total equity
1,671.6
1,432.5
1
Prior year figures for the Company have been restated. See note i for additional information.
The financial statements were approved by the Board of Directors and authorised for issue on 26 February 2025.
Paul Williams
Damian Wisniewski
Chief Executive
Chief Financial Officer
The notes on pages 270 to 276 form part of these financial statements.
COMPANY BALANCE SHEET
as at 31 December 2024
Registered No. 1819699
Derwent London plc
268
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2024
Share
capital
£m
Share
premium
£m
Other
reserves
£m
Retained
earnings
£m
Equity
shareholders’
funds
£m
Total
equity
£m
At 1 January 2024
5.6
196.6
926.2
304.1
1,432.5
1,432.5
Profit for the year
–
–
–
326.3
326.3
326.3
Other comprehensive expense
–
–
–
(0.4)
(0.4)
(0.4)
Share-based payments
–
–
1.6
1.4
3.0
3.0
Dividends paid
–
–
–
(89.8)
(89.8)
(89.8)
At 31 December 2024
5.6
196.6
927.8
541.6
1,671.6
1,671.6
At 1 January 2023
5.6
196.6
925.9
202.2
1,330.3
1,330.3
Profit for the year
–
–
–
189.6
189.6
189.6
Other comprehensive expense
–
–
–
(0.7)
(0.7)
(0.7)
Share-based payments
–
–
0.3
1.7
2.0
2.0
Dividends paid
–
–
–
(88.7)
(88.7)
(88.7)
At 31 December 2023
5.6
196.6
926.2
304.1
1,432.5
1,432.5
Report and Accounts 2024
269
Financial statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
for the year ended 31 December 2024
i Basis of preparation
Derwent London plc is a public limited company, limited by shares, incorporated, domiciled and registered in England in the
United Kingdom under the Companies Act. The address of the registered office is given on the back cover.
Consolidated financial statements are on pages 216 to 220.
The Company has prepared its financial statements in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’ (FRS 101). The financial statements have been prepared on a going concern basis under the historical cost convention,
except for the revaluation of derivatives which are measured at fair value.
Transition to FRS 101
These are the Company’s first financial statements prepared in accordance with FRS 101. Previously, the financial statements
were prepared in accordance with UK-adopted International Accounting Standards in conformity with the requirements of the
Companies Act 2006. The date of transition to FRS 101 is 1 January 2023.
The transition to FRS 101 has been made in accordance with the provisions set out in the standard. The Company has applied the
recognition, measurement, and presentation requirements of UK-adopted International Accounting Standards in conformity with
the requirements of the Companies Act 2006.
As permitted by FRS 101, the exemptions that have been applied in preparation of these financial statements are as follows:
• A cash flow statement and related notes have not been presented in line with IAS 7 Statement of Cash Flows.
• Disclosures in respect of new standards and interpretations that have been issued but which are not yet effective have not
been provided, in line with paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
• Disclosures in respect of transactions with wholly owned subsidiaries have not been made in line with IAS 24 Related
Party Disclosures.
• Disclosures required by paragraphs 91 to 99 of IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial
Instruments: Disclosures have not been made.
• Paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based payment (details of the number and weighted average exercise
prices of share options, and how the fair value of goods or services received was determined), have not been presented.
• Disclosures under paragraphs 17 and 18A of IAS 24 Related Party Disclosures to disclose key management personnel
compensation have not been presented.
• The requirements of paragraphs 10(f); 40A to 40D; and 134 to 136 of IAS 1 Presentation of Financial Statements are no
longer required.
No material adjustments were necessary to previously reported figures as a result of adopting FRS 101, except for the reduced
disclosures as noted above.
Going concern
The Company balance sheet shows a net current liability position of £1,736.1m, primarily as a result of amounts owed to
subsidiaries of £1,593.3m being classified as current liabilities. The subsidiaries are all under common control in the Group, and
the balances are not due to external counterparties. Although they are repayable on demand, there is no intention or expectation
for them to be called or repaid within the next 12 months. The net current liability position also results from the £175m of finance
facilities that reach maturity within the next 12 months. As at 31 December 2024, the Company had access to £487m of available
undrawn facilities and cash to meet current liabilities as they fall due. In addition, a new £115m unsecured term/revolving bank
facility was signed in February 2025, which provides the Directors with a reasonable expectation that the Group will be able to
meet these current liabilities as they fall due.
Having due regard to these matters and after making appropriate enquiries, the Directors have reasonable expectation that the
Company has adequate resources to continue in operational existence for a period of at least 12 months from the date of signing
of these financial statements and, therefore, the Directors continue to adopt the going concern basis in their preparation.
Restatement of amounts owed by subsidiaries in Company balance sheet
The Company reassessed the amounts owed by subsidiaries under ‘IAS 1 Presentation of Financial Statements’ and, based on
expected timing of receipts, £2,327.3m from amounts falling due within one year should have been classified to amounts falling
due after more than one year as of 31 December 2023. Comparatives have been restated accordingly. Please refer to note vii for
further details.
Derwent London plc
270
ii Accounting policies
The principal accounting policies are described in the Group’s note 41 and are consistent with those applied in the Group’s
financial statements for the year to 31 December 2023, as amended to reflect the adoption of new standards, amendments
and interpretations which became effective in the year as shown below.
New standards adopted during the year
The following standards, amendments and interpretations were effective for the first time for the Group’s current accounting
period. They did not have any material impact on the amounts recognised in prior periods and are not expected to significantly
affect the current or future periods.
IAS 1 (amended) – Classification of liabilities as current or non-current, Non-current Liabilities with Covenants;
IAS 7 and IFRS 7 (amended) – Supplier Finance Arrangements;
IFRS 16 (amended) – Lease Liability in a Sale and Leaseback.
iii Profit for the year attributable to members of Derwent London plc
Company retained earnings includes a profit of £326.3m (2023: £189.6m) for the year. The Company has taken advantage
of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own income statement in
these financial statements. The employees of the Company are the Directors and the Company Secretary. Full disclosure of the
Directors’ remuneration can be found on pages 174 to 199.
iv Employees
Employee costs for the year include wages and salaries of £20.5m (2023: £20.2m), social security costs of £3.1m (2023: £2.7m),
pension costs of £2.7m (2023: £2.3m) and share-based payment expenses relating to equity-settled schemes of £3.1m
(2023: £2.5m). Details of the Executive Directors’ remuneration are disclosed in the Remuneration Report on pages 174 to 199.
The monthly average number of employees in the Company during the year, excluding Directors, was 146 (2023: 142).
v Pension
The Company operates both a defined contribution scheme and a defined benefit scheme and details are set out in note 14 of the
consolidated financial statements.
vi Investments
Subsidiaries
£m
At 1 January 2023
2,224.7
Additions
135.0
Reversal of impairment
0.2
Impairment
(170.1)
At 31 December 2023
2,189.8
Additions
390.0
Repayment of capital
(2.0)
Reversal of impairment
0.5
At 31 December 2024
2,578.3
At 31 December 2024, the carrying values of the investment in wholly owned subsidiaries were reviewed in accordance with IAS 36
Impairment of Assets on both a ‘value in use’ and ‘fair value less costs to sell’ basis. The Company’s accounting policy is to carry
investments in subsidiary undertakings at the lower of cost and recoverable amount and recognise any impairment, or reversal
thereof, in the income statement. As a result, the Company recognised a net impairment reversal of £0.5m (2023: net impairment
charge of £169.9m). This was due to property revaluation surpluses charged to the income statement in a number of the property
investment subsidiaries held directly or indirectly by the Company. Investment properties are held by the property investment
subsidiaries with any surpluses or deficits on revaluation being reported in the income statement of those subsidiaries. The Group
uses the valuation carried out by external valuers as the fair value of its property portfolio. See note 3 of the consolidated financial
statements for further details.
Report and Accounts 2024
271
Financial statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
vii Receivables
2024
£m
2023
£m
Amounts falling due within one year:
Other receivables
3.7
1.0
Prepayments
4.1
2.6
Other taxes
–
4.0
Accrued income
Other
25.6
24.2
33.4
31.8
2024
£m
2023
Restated
£m
Amounts falling due after more than one year:
Amounts owed by subsidiaries
1,920.4
2,327.3
1,920.4
2,327.3
Following a reassessment of when certain amounts owed by subsidiaries are expected to be realised, the Company has determined
that it did not intend to require settlement for certain amounts within 12 months of the balance sheet date. Accordingly, the
comparatives have been restated, reclassifying £2,327.3m to amounts falling due greater than one year.
Amounts owed by subsidiaries in the Company are unsecured, have no fixed date of repayment and are repayable on demand,
however, there is no intention or expectation for them to be paid within the next 12 months. Interest is charged at a rate
dependent on the Group’s overall debt funding cost for the year. For the year ended 31 December 2024, interest was charged at
3.90% (2023: 3.89%). These balances have been considered as part of the full expected credit loss assessment under IFRS 9 and
no impairments were determined to be required (2023: £nil).
viii Payables
2024
£m
2023
£m
Amounts falling due within one year:
Amounts owed to subsidiaries
1,593.3
1,992.2
Taxation and social security
0.5
–
Trade payables
–
0.4
Other payables
0.9
0.4
Accruals
20.7
16.4
Deferred income
0.1
0.2
1,615.5
2,009.6
Amounts owed to subsidiaries in the Company are unsecured, have no fixed date of repayment and are repayable on demand,
however, there is no intention or expectation for them to be paid within the next 12 months. Interest is charged at a rate dependent
on the Group’s overall debt funding cost for the year. For the year ended 31 December 2024, interest was charged at 3.90%
(2023: 3.89%).
Derwent London plc
272
ix Net debt
Secured and unsecured debt
2024
£m
2023
£m
Secured
3.99% secured loan 2024
–
82.9
–
82.9
Unsecured
1.875% unsecured green bonds 2031
347.2
346.8
Unsecured private placement notes 2026 – 2034
453.6
453.5
Unsecured bank loans
290.5
81.2
Intercompany loan
174.1
172.1
1,265.4
1,053.6
Borrowings
1,265.4
1,136.5
Leasehold liabilities – current
1.3
1.3
Leasehold liabilities – non-current
19.0
20.3
Derivative financial instruments – current
(0.6)
–
Derivative financial instruments – non-current
–
(2.9)
Gross debt
1,285.1
1,155.2
Reconciliation to net debt:
Gross debt
1,285.1
1,155.2
Derivative financial instruments
0.6
2.9
Cash at bank excluding restricted cash
(12.9)
(11.6)
Net debt
1,272.8
1,146.5
Reconciliation to borrowings:
Adjustments
Gross loan
commitments
£m
Interest on
gross debt
£m
Effect of
interest
rate swaps
£m
Leasehold
liabilities
£m
Non-cash
amortisation
£m
Borrowings
£m
Company
At 31 December 2024
Maturing in:
< 1 year
215.6
(39.3)
0.8
(2.1)
–
175.0
1 to 2 years
261.7
(35.1)
–
(2.1)
(1.8)
222.7
2 to 3 years
149.7
(24.1)
–
(2.1)
(1.9)
121.6
3 to 4 years
52.1
(20.0)
–
(2.1)
(0.1)
29.9
4 to 5 years
136.2
(16.1)
–
(2.1)
(0.3)
117.7
> 5 years
632.5
(15.8)
–
(14.7)
(3.5)
598.5
1,447.8
(150.4)
0.8
(25.2)
(7.6)
1,265.4
At 31 December 2023
Maturing in:
< 1 year
114.2
(31.5)
2.4
(2.1)
(0.1)
82.9
1 to 2 years
202.8
(26.1)
0.4
(2.1)
–
175.0
2 to 3 years
146.6
(23.0)
–
(2.1)
(5.4)
116.1
3 to 4 years
40.7
(21.1)
–
(2.1)
(0.5)
17.0
4 to 5 years
52.1
(20.0)
–
(2.1)
(0.1)
29.9
> 5 years
791.1
(54.3)
–
(16.8)
(4.4)
715.6
1,347.5
(176.0)
2.8
(27.3)
(10.5)
1,136.5
Report and Accounts 2024
273
Financial statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
x Deferred tax
Other
£m
Total
£m
At 1 January 2024
(2.6)
(2.6)
Charged to the income statement
1.8
1.8
At 31 December 2024
(0.8)
(0.8)
At 1 January 2023
(3.0)
(3.0)
Charged to the income statement
0.4
0.4
At 31 December 2023
(2.6)
(2.6)
Deferred tax on the balance sheet revaluation deficit/surplus is calculated on the basis of the chargeable gains that would
crystallise on the sale of the property portfolio at each balance sheet date. The calculation takes account of any available
indexation on the historical cost of the properties. Due to the Group’s REIT status, deferred tax is only provided at each balance
sheet date on properties outside the REIT ring-fence.
xi Share capital
The movement in the number of 5p ordinary shares in issue is shown in the table below:
Number of shares in issue fully paid
Number
At 1 January 2023
112,290,679
Issued as a result of the exercise of share options1
250
At 31 December 2023 and 2024
112,290,929
1
Proceeds from these issues were £nil (2023: £nil).
xii List of subsidiaries and joint ventures
A full list of subsidiaries and joint ventures as at 31 December 2024 is set out below.
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 the Act. These subsidiaries are identified in the table below (superscript/footnote 2):
Company number
Ownership3
Principal activity
Subsidiaries
Asta Commercial Limited2
09644973
100%
Property investment
BBR Property Limited1
08486476
100%
Dormant
Caledonian Properties Limited2
00669924
100%
Property investment
Caledonian Property Estates Limited2
07412270
100%
Property investment
Caledonian Property Investments Limited2
00669923
100%
Property investment
Carlton Construction & Development Company Limited
00538216
100%
Dormant
Central London Commercial Estates Limited
00656914
100%
Property investment
Charlotte Apartments Limited2
09642563
100%
Property investment
80 Charlotte Street Limited1, 2
10579271
100%
Property investment
Derwent Asset Management Limited1, 2
07325387
100%
Property management
Derwent Central Cross Limited1, 2
07320070
100%
Property investment
Derwent Henry Wood Limited1, 2
07412653
100%
Property investment
Derwent London 50 Baker Street Limited
13644777
100%
Property investment
Derwent London Angel Building Limited
13247175
100%
Property investment
Derwent London AD Limited1
13227143
100%
Dormant
Derwent London Asta Limited2
09643005
100%
Property trading
Derwent London Baker Street Limited
00806862
100%
Property investment
Derwent London BH Limited1, 2
13136439
100%
Property investment
Derwent London Blackfriars Limited1, 2
13655681
100%
Property investment
Derwent London plc
274
Company number
Ownership3
Principal activity
Derwent London Brixton Limited1, 2
12405614
100%
Property investment
Derwent London BSP Limited2
13635308
100%
Property investment
Derwent London Capital No. 3 (Jersey) Limited1
00129106
100%
Finance company
Derwent London Development Services Limited1
09850541
100%
Development services
Derwent London Euston Road Limited1, 2
13136412
100%
Property investment
Derwent London Farringdon Limited1, 2
09310500
100%
Property investment
Derwent London Featherstone Limited1, 2
11296132
100%
Property investment
Derwent London Gallery Limited1, 2
12752908
100%
Property investment
Derwent London George Street Limited1
13034088
100%
Property trading
Derwent London Green Energy Limited1, 2
12824452
100%
Energy production
Derwent London Holden House Limited1, 2
11325906
100%
Property investment
Derwent London Holford Works Limited1, 2
13302967
100%
Property investment
Derwent London Horseferry Limited1, 2
13136399
100%
Property investment
Derwent London KSW Limited1, 2
08802313
100%
Property investment
Derwent London Member Services Limited1, 2
14958936
100%
Events & catering services
Derwent London No.5 Limited1, 2
13906854
100%
Property investment
Derwent London Network Limited1
14009618
100%
Property investment
Derwent London Oliver’s Yard Limited1, 2
10775826
100%
Property investment
Derwent London Page Street (Nominee) Limited
07540717
100%
Dormant
Derwent London Page Street Limited1, 2
07540699
100%
Property investment
Derwent London Savile Row Limited1, 2
12902975
100%
Property investment
Derwent London White Chapel Limited1, 2
13136446
100%
Property investment
Derwent London White Collar Limited1, 2
13136415
100%
Property investment
Derwent London Whitfield Street Limited1,2
10775868
100%
Property investment
Derwent Valley Central Limited1
00205226
100%
Property investment
Derwent Valley Employee Trust Limited1, 2
04177132
100%
Employee trust
Derwent Valley Finance Limited2
05622597
100%
Investment holding
Derwent Valley Limited
00445037
100%
Holding company
Derwent Valley London Limited1
00229333
100%
Property investment
Derwent Valley Property Developments Limited1
02148266
100%
Property investment
Derwent Valley Property Investments Limited1, 2
01885847
100%
Property investment
Derwent Valley Property Trading Limited1,2
03087749
100%
Property trading
Derwent Valley Railway Company1
100%
Dormant
Derwent Valley West End Limited1, 2
02035801
100%
Property investment
Kensington Commercial Property Investments Limited
00590078
100%
Property investment
LMS (City Road) Limited2
05642456
100%
Property investment
LMS Finance Limited2
05622669
100%
Investment holding
LMS Offices Limited2
05308784
100%
Property investment
London Merchant Securities Limited1
00007064
100%
Holding company
The New River Company Limited
00085094
100%
Property investment
Urbanfirst Limited
02213216
100%
Investment holding
West London & Suburban Property Investments Limited
00538148
100%
Property investment
Joint ventures
Dorrington Derwent Holdings Limited
02355611
50%
Holding company
Dorrington Derwent Investments Limited
02359387
50%
Investment company
Primister Limited
02068292
50%
Property investment
1
Indicates subsidiary undertakings held directly.
2
Exempt from the requirement of the Companies Act 2006 relating to the audit of individual accounts by virtue of Section 479A of the Act.
3
All holdings are of ordinary shares.
Report and Accounts 2024
275
Financial statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
for the year ended 31 December 2024
xii List of subsidiaries and joint ventures continued
Audit exemption taken for subsidiaries continued
The Company controls 50% of the voting rights of its joint ventures, which are accounted for and disclosed in accordance with
IFRS 11 Joint Arrangements.
All of the entities above are incorporated and domiciled in England and Wales, with the exception of Derwent London Capital
No. 3 (Jersey) Limited which is incorporated and domiciled in Jersey. In addition, all the entities are registered at 25 Savile Row,
London, W1S 2ER, with the exception of:
• Derwent London Capital No. 3 (Jersey) Limited, which is registered at 47 Esplanade, St Helier, JE1 0BD, Channel Islands;
• Dorrington Derwent Holdings Limited and Dorrington Derwent Investments Limited, which are registered at 16 Hans Road,
London, SW3 1RT;
• Primister Limited, which is registered at Quadrant House, Floor 6, 4 Thomas More Square, London, E1W 1YW.
Derwent London plc
276
TEN-YEAR SUMMARY
(unaudited)
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
2017
£m
2016
£m
2015
£m
Income statement
Gross property income
217.6
212.9
208.4
200.9
205.2
192.7
196.0
172.2
156.0
152.0
Net property income and other
income
198.3
190.5
194.6
187.2
183.5
182.6
185.9
164.8
149.2
148.6
Profit on disposal of properties
and investments
1.9
1.2
25.6
10.4
1.7
13.8
5.2
50.3
7.5
40.2
Profit/(loss) before tax
116.0
(475.9)
(279.5)
252.5
(83.0)
280.6
221.6
314.8
54.5
779.5
Earnings and dividend per share
EPRA earnings
119.5
114.5
119.7
121.7
109.6
115.1
126.1
105.0
85.7
78.7
EPRA earnings per share (p)
106.45
101.97
106.62
108.53
97.93
103.09
113.07
94.23
76.99
71.34
Dividend paid (p)
80.00
79.00
77.50
75.45
73.45
67.75
136.50
107.83
44.66
40.60
Interim/final dividend for the year (p)
80.50
79.50
78.50
76.50
74.45
72.45
65.85
59.73
52.36
43.40
Special dividend paid (p)
–
–
–
–
–
–
–
75.00
52.00
–
Net asset value
Net assets
3,539.8
3,508.8 4,075.5
4,441.8
4,315.1
4,476.9 4,263.4
4,193.2
3,999.4 3,995.4
Net asset value per share (p) –
undiluted
3,153
3,125
3,629
3,959
3,808
3,956
3,767
3,703
3,530
3,528
EPRA NTA per share (p) – diluted
3,149
3,129
3,632
3,959
3,812
3,957
3,775
3,714
3,550
3,532
EPRA NDV per share (p) – diluted
3,261
3,243
3,768
3,884
3,682
3,847
3,696
3,617
3,450
3,463
EPRA NRV per share (p) – diluted
3,455
3,423
3,956
4,301
4,138
4,290
4,092
4,011
3,852
3,825
Total return (%)
3.2
(11.7)
(6.3)
5.8
(1.8)
6.6
5.3
7.7
1.7
23.0
Property portfolio
Property portfolio at fair value1
5,041.1
4,844.7
5,321.8 5,646.3 5,355.5
5,475.2
5,190.7 4,850.3
4,942.7 4,954.5
Revaluation surplus/(deficit)
0.2
(585.4)
(421.4)
134.8
(194.3)
154.6
84.1
149.7
(42.6)
651.4
Cash flow statement
Cash flow2
(126.9)
(89.7)
(27.1)
(142.0)
(63.4)
(22.3)
(245.9)
247.8
19.6
(43.6)
Net cash from/(used in)
financing activities
35.7
(2.6)
(88.6)
74.7
(27.2)
(16.6)
25.2
(298.2)
(57.0)
2.0
Gearing and debt
Net debt
1,482.7
1,356.8
1,257.2
1,251.5
1,049.1
981.6
956.9
657.9
904.8
911.7
NAV gearing (%)
41.9
38.7
30.8
28.2
24.3
21.9
22.4
15.7
22.6
22.8
Loan-to-value ratio (%)3
29.9
27.9
23.9
22.3
18.4
16.9
17.2
13.2
17.7
17.8
Net interest cover ratio (%)
387
414
423
464
446
462
491
454
370
362
1
Excludes share of joint ventures.
2 Cash flow is the net cash from operating and investing activities less the dividend paid.
3 Presented on an EPRA basis since 2021.
A list of definitions is provided on pages 283 to 286.
Report and Accounts 2024
277
Other information
EPRA SUMMARY
(unaudited)
EPRA Performance Measures
EPRA measure
Definition
2024
2023
EPRA Earnings
Earnings from operational activities
£119.5m
£114.5m
EPRA undiluted earnings per share
EPRA earnings divided by the weighted average number
of ordinary shares in issue during the financial year
106.45p
101.97p
EPRA Net Tangible Assets (NTA)
Assumes that entities buy and sell assets, thereby
crystallising certain levels of unavoidable deferred tax
£3,545.0m
£3,522.1m
EPRA diluted NTA per share
EPRA NTA divided by the number of ordinary shares in
issue at the financial year end adjusted to include the
effects of potential dilutive shares issuable under the
Group’s share option schemes and the convertible bonds
3,149p
3,129p
EPRA Net Disposal Value (NDV)
Represent the shareholders’ value under a disposal
scenario, where deferred tax, financial instruments
and certain other adjustments are calculated to the
full extent of their liability, net of any resulting tax
£3,671.4m
£3,649.6m
EPRA diluted NDV per share
EPRA NDV divided by the number of ordinary shares in
issue at the financial year end adjusted to include the
effects of potential dilutive shares issuable under the
Group’s share option schemes and the convertible bonds
3,261p
3,243p
EPRA Net Reinstatement Value (NRV)
NAV adjusted to reflect the value required to rebuild
the entity and assuming that entities never sell assets.
Assets and liabilities, such as fair value movements on
financial derivatives are not expected to crystallise in
normal circumstances and deferred taxes on property
valuation surpluses are excluded
£3,889.5m
£3,852.9m
EPRA diluted NRV per share
EPRA NRV divided by the number of ordinary shares in
issue at the financial year end adjusted to include the
effects of potential dilutive shares issuable under the
Group’s share option schemes and the convertible bonds
3,455p
3,423p
EPRA cost ratio
(including direct vacancy costs)
Administrative & operating costs (including costs
of direct vacancy) divided by gross rental income
27.0%
27.3%
EPRA net initial yield
Annualised rental income based on the cash rents
passing at the balance sheet date, less non-recoverable
property operating expenses, divided by the market value
of the EPRA property portfolio, increased by estimated
purchasers’ costs
4.3%
4.3%
EPRA ‘topped-up’ net initial yield
This measure incorporates an adjustment to the EPRA
NIY in respect of the expiration of rent-free periods
(or other unexpired lease incentives such as discounted
rent periods and stepped rents)
5.2%
5.2%
EPRA vacancy rate
Estimated rental value (ERV) of immediately available
space divided by the ERV of the EPRA portfolio
3.1%
4.0%
EPRA loan-to-value ratio
Debt divided by the property value. Debt is equal to drawn
facilities less cash, adjusted with equity characteristics,
adding back the equity portion of hybrid debt instruments
and including net payables if applicable. Property value is
equal to the fair value of the property portfolio including
net receivables if applicable
29.9%
27.9%
Derwent London plc
278
EPRA Sustainability Performance Measures
Environmental Sustainability Performance Measures
EPRA measure
Definition
2024
2023
Landlord Grid electricity consumption
Electricity use across our managed portfolio
(landlord/common areas) – annual kWh
12,725,755
13,236,503
Onsite renewable
electricity consumption
Electricity use across our managed portfolio
(onsite renewables) – annual kWh
86,136
97,440
DL Occupied Grid
electricity consumption
Electricity use across our managed portfolio
(landlord occupied areas) – annual kWh
338,291
262,094
Tenant Grid electricity consumption
Electricity use across our total managed portfolio
(tenant occupied areas) – annual kWh
25,713,301
26,642,461
Total electricity consumption
Electricity use across our total managed portfolio
38,863,483
40,238,497
Like-for-like landlord grid
electricity consumption
Energy use across our like-for-like portfolio
(landlord/common areas) – annual kWh
12,659,474
13,573,788
Like-for-like Onsite renewable electricity
consumption
Electricity use across our like-for-like portfolio
(onsite renewables) – annual kWh
86,136
97,440
Like-for-like DL Occupied
grid electricity consumption
Electricity use across our like-for-like portfolio
(landlord occupied areas) – annual kWh
266,746
244,947
Like-for-like tenant grid
electricity consumption
Electricity use across our like-for-like portfolio
(tenant occupied areas) – annual kWh
25,713,301
26,586,697
Total like-for-like electricity consumption
Electricity use across our like-for-like portfolio
38,833,714
40,160,485
Total fuel consumption
Fuel use (gas, oil, biomass) across our managed
portfolio (landlord/common areas) – annual kWh
12,981,252
16,424,375
Like-for-like total fuel consumption
Fuel use (gas, oil, biomass) across our like-for-like
portfolio (landlord/common areas) – annual kWh
12,981,252
16,424,375
Building energy intensity
Energy use across our total managed portfolio
(landlord/common areas) – kWh per m2
66
76
Building energy intensity
Energy use across our total managed portfolio
(landlord & tenants) – kWh per m2
137
149
Total direct greenhouse gas
(GHG) emissions
Total managed portfolio emissions
(landlord influenced portfolio emissions); a total of
gas Scope 1 emissions – annual metric tonnes CO2e
2,736
4,364
Total indirect greenhouse gas
(GHG) emissions
Total managed portfolio emissions
(landlord influenced portfolio emissions);
Scope 2 energy-use – annual metric tonnes CO2e
2,705
2,795
Like-for-like total direct
greenhouse gas (GHG) emissions
Like-for-like emissions (landlord influenced
portfolio emissions, building related only);
Scope 1 energy-use – annual metric tonnes CO2e
2,376
4,364
Like-for-like total indirect
greenhouse gas (GHG) emissions
Like-for-like emissions (landlord influenced
portfolio emissions, building related only);
Scope 2 energy-use – annual metric tonnes CO2e
2,699
2,791
Greenhouse gas (GHG) intensity
from building energy consumption
Intensity (Scopes 1 & 2) per m2 – tCO2e/ m2 /year
0.014
0.018
Greenhouse gas (GHG) intensity
from building energy consumption
Intensity (Scopes 1 & 2) per m2/£m fair market value
1.08
1.47
Greenhouse gas (GHG) intensity
from building energy consumption
Intensity (Scopes 1 & 2) per m2/£m turnover
25
34
Total water consumption
Water use across our total managed portfolio
(excluding retail consumption) – annual m3
192,899
179,627
Like-for-like total water consumption
Water use across our like-for-like portfolio
(excluding retail consumption) – annual m3
192,676
178,850
Building water intensity
Water use across our total managed portfolio
(excluding retail consumption) – m3/m2/year
0.47
0.44
Total weight of waste by disposal route
Waste generated across our total managed portfolio –
annual metric tonnes and proportion by disposal route
2,463
2,227
Like-for-like total weight of waste by
disposal route
Waste generated across our like-for-like portfolio –
annual metric tonnes and proportion by disposal route
2,390
2,194
Report and Accounts 2024
279
Other information
Social Performance Measures
Employee gender
diversity
Percentage of male and female employees in the organisation’s
governance bodies (committee or boards responsible for the
strategic guidance of the organisation)
See page 173
Gender pay ratio
Ratio of the basic salary and/or remuneration of men to
women. As we have less than 250 employees we are not
obliged by the Equality Act 2010 (Gender Pay Gap Information)
Regulations 2017 to disclose our gender pay gap information
Employee turnover
and retention
Total number and rate of new employee hires and employee
turnover during the reporting period
See pages 30 and 50
Employee health
and safety
Occupational health and safety performance with relation to
direct employees
See page 53
Asset health and
safety assessments
Proportion of assets controlled for which health and safety
impacts have been reviewed or assessed for compliance or
improvement
See pages 52 to 53
Asset health and
safety compliance
Any incidents of non-compliance with regulations and/or
voluntary standards concerning the health and safety impacts
of assets assessed during the reporting period
See pages 52 to 53
Employees training
and development
Average hours of training that the organisation’s employees
have undertaken in the reporting period
See the EPRA Reporting
section in our 2024 Annual
Responsibility Report
Employee performance
appraisals
Percentage of total employees who received regular
performance and career development reviews during the
reporting period
See page 130
Community engagement,
impact assessments and
development programs
Percentage of assets under operational control that have
implemented local community engagement, impact
assessments and/or development programmes
See pages 48 to 49
Governance Performance Measures
Composition of the
highest governance body
Number of executive board members, number of independent/
non-executive board members, average tenure of the
governance body and number of independent/non-executive
board members with competencies relating to environmental
and social topics
See pages 122 to 123, 137,
143 and 173
Process for nominating
and selecting the highest
governance body
Nomination and selection process for the highest governance
body and its members, and the criteria used to guide the
nomination and selection process
See pages 140 to 143
Process for managing
conflicts of interest
Process for the highest governance body to ensure conflicts of
interest are avoided and managed
See pages 128 and 136
EPRA SUMMARY continued
(unaudited)
Derwent London plc
280
PRINCIPAL PROPERTIES
(unaudited)
Value
banding
£m
Offices (O),
Retail/restaurant (R),
Residential (Re),
Industrial (I),
Leisure (L)
Freehold (F),
Leasehold (L)
BREEAM
Rating
Approximate
net area
sq ft
West End: Central (69%)
Fitzrovia (34%)
80 Charlotte Street W1
300+
O/R/Re
F
Excellent
336,500
1-2 Stephen Street & Tottenham Court Walk W1
200-300
O/R/L
F
Very Good
266,000
250 Euston Road NW1
100-200
O
F
165,900
Network, 10 Howland Street W1
100-200
O/R
F
*Outstanding
139,000
90 Whitfield Street W1
100-200
O/R
F
103,500
Holden House, 54-68 Oxford Street W1
50-100
O/R
F
90,600
Henry Wood House, 3-7 Langham Place W1
50-100
O/R/L
L
79,800
Middlesex House, 34-42 Cleveland Street W1
50-100
O
F
Very Good
66,500
Charlotte Building, 17 Gresse Street W1
25-50
O
L
47,200
88-94 Tottenham Court Road W1
25-50
O/R
F
45,900
3-10 Rathbone Place W1
25-50
O/R/Re/L
L/F
45,400
80-85 Tottenham Court Road W1
25-50
O/R
F
44,500
60 Whitfield Street W1
50-100
O
F
36,200
43 and 45-51 Whitfield Street W1
25-50
O
F
29,100
171-174 Tottenham Court Road W1
0-25
O/R
F
15,800
1-5 Maple Place W1
0-25
O
F
11,500
76-78 Charlotte Street W1
0-25
O
F
11,200
19-23 Fitzroy Street W1
0-25
O
F
8,100
50 Oxford Street W11
0-25
O/R
F
6,100
Marylebone (11%)
25 Baker Street W1
300+
O/R/Re
L
*Outstanding,
*Excellent,
*Very Good
298,000
50 Baker Street W1
50-100
O/R
L
122,000
Victoria (8%)
Horseferry House, Horseferry Road SW1
100-200
O
F
162,700
Greencoat and Gordon House, Francis Street SW1
50-100
O
F
138,300
1 Page Street SW1
50-100
O
F
Excellent
127,800
Francis House, 11 Francis Street SW1
50-100
O
F
51,800
6-8 Greencoat Place SW1
25-50
O
F
32,400
Soho/Covent Garden (8%)
1 Soho Place W1
300+
O/R
L
Outstanding
225,900
Paddington (6%)
Brunel Building, 2 Canalside Walk W2
300+
O/R
L
Excellent
243,400
Mayfair (2%)
25 Savile Row W1
100-200
O/R
F
Very Good
43,000
Report and Accounts 2024
281
Other information
Value
banding
£m
Offices (O),
Retail/restaurant (R),
Residential (Re),
Industrial (I),
Leisure (L)
Freehold (F),
Leasehold (L)
BREEAM
Rating
Approximate
net area
sq ft
West End: Borders/Other (6%)
Islington/Camden (5%)
Angel Building, 407 St. John Street EC1
200-300
O/R
F
Excellent
268,300
4 & 10 Pentonville Road N12
25-50
O
F
Very Good
53,400
Holford Works, Cruikshank Street WC1
0-25
O/I
F
41,600
401 St. John Street EC1
0-25
O
F
12,300
Brixton (1%)
Blue Star House, 234-244 Stockwell Road SW9
25-50
O/R
F
53,400
City: Borders (23%)
Old Street (11%)
White Collar Factory, Old Street Yard EC1
300+
O/R/Re
F
Outstanding,
Excellent,
Very Good
294,400
1 Oliver’s Yard EC1
100-200
O/R
F
185,900
The Featherstone Building, 66 City Road EC1
100-200
O/R
F
Outstanding
124,000
Shoreditch/Whitechapel (6%)
Tea Building, 56 Shoreditch High Street E1
200-300
O/R/L
F
272,200
The White Chapel Building E1
100-200
O/L
F
271,700
Clerkenwell (5%)
20 Farringdon Road EC1
100-200
O/R/L
L
166,300
88 Rosebery Avenue EC1
50-100
O
F
98,500
Morelands, 5-27 Old Street EC1
50-100
O/R
L
Outstanding
88,300
Southbank (1%)
230 Blackfriars Road SE1
25-50
O
L
60,100
Provincial (2%)
Scotland (2%)
Strathkelvin Retail Park, Bishopbriggs, Glasgow
50-100
R/L
F
325,500
Land, Bishopbriggs, Glasgow
25-50
–
F
5,500 acres
1
Includes 36-38 and 42-44 Hanway Street W1.
2 Sold in January 2025.
* On-track for Post Completion target.
( ) Percentages weighted by valuation.
PRINCIPAL PROPERTIES continued
(unaudited)
Derwent London plc
282
LIST OF DEFINITIONS
(unaudited)
Better Buildings Partnership (BBP)
The BBP is a collaboration of the UK’s leading commercial
property owners who are working together to improve the
sustainability of existing commercial building stock.
Building Research Establishment Environmental
Assessment Method (BREEAM)
An environmental impact assessment method for non-domestic
buildings. Performance is measured across a series of ratings –
Good, Very Good, Excellent and Outstanding.
Capital return
The annual valuation movement arising on the Group’s
portfolio expressed as a percentage return on the valuation
at the beginning of the year adjusted for acquisitions and
capital expenditure.
Carbon emissions Scopes 1, 2 and 3
Scope 1 – direct emissions;
Scope 2 – indirect emissions; and
Scope 3 – other indirect emissions.
CDP
The CDP is an organisation which works with shareholders
and listed companies to facilitate the disclosure and reporting
of climate change data and information.
Company Voluntary Arrangement (CVA)
An insolvency procedure allowing a company with debt
problems or that is insolvent to reach a voluntary agreement
with its creditors to repay its debt over a fixed period.
Department for Environment, Food and Rural
Affairs (DEFRA)
The government department responsible for environmental
protection, food production and standards, agriculture,
fisheries and rural communities in the United Kingdom.
Diluted figures
Reported results adjusted to include the effects of potential
dilutive shares issuable under the Group’s share option schemes
and the convertible bonds.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
Earnings/earnings per share (EPS)
Earnings represent the profit or loss for the year attributable
to equity shareholders and are divided by the weighted average
number of ordinary shares in issue during the financial year to
arrive at earnings per share.
Energy Performance Certificate (EPC)
An EPC is an asset rating detailing how energy efficient a
building is, rated by carbon dioxide emission on a scale of A-G,
where an A rating is the most energy efficient. They are legally
required for any building that is to be put on the market for
sale or rent.
Estimated rental value (ERV)
This is the external valuers’ opinion as to 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)
A not-for-profit association with a membership of Europe’s
leading property companies, investors and consultants which
strives to establish best practices in accounting, reporting and
corporate governance and to provide high-quality information
to investors. EPRA’s Best Practices Recommendations includes
guidelines for the calculation of the following performance
measures which the Group has adopted.
EPRA earnings per share
Earnings from operational activities.
EPRA Loan-To-Value (LTV)
Debt divided by the property value. Debt is equal to drawn
facilities less cash, adjusted with equity characteristics, adding
back the equity portion of hybrid debt instruments and
including net payables if applicable. Property value is equal to
the fair value of the property portfolio including net receivables
if applicable.
EPRA Net Reinstatement Value (NRV) per share
NAV adjusted to reflect the value required to rebuild the
entity and assuming that entities never sell assets. Assets and
liabilities, such as fair value movements on financial derivatives
are not expected to crystallise in normal circumstances and
deferred taxes on property valuation surpluses are excluded.
EPRA Net Tangible Assets (NTA) per share
Assumes that entities buy and sell assets, thereby crystallising
certain levels of unavoidable deferred tax.
EPRA Net Disposal Value (NDV) per share
Represent the shareholders’ value under a disposal scenario,
where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability,
net of any resulting tax.
EPRA capital expenditure
The total expenditure incurred on the acquisition,
enhancement, and development of investment properties.
This can include amounts spent on any investment properties
under construction or related development projects, as well as
the amounts spent on the completed (operational) investment
property portfolio. Capitalised finance costs included in the
financial statements are also presented within this total. The
costs are presented on both an accrual and a cash basis, for
both the Group and the proportionate share of joint ventures.
EPRA Cost Ratio (including direct vacancy costs)
EPRA costs as a percentage of gross rental income less
ground rent (including share of joint venture gross rental
income less ground rent). EPRA costs include administrative
expenses, other property costs, net service charge costs and
the share of joint ventures’ overheads and operating expenses
(net of any service charge costs), adjusted for service charge
costs recovered through rents and management fees.
Report and Accounts 2024
283
Other information
EPRA Cost Ratio (excluding direct vacancy costs)
Calculated as above, but with an adjustment to exclude direct
vacancy costs.
EPRA Net Initial Yield (NIY)
Annualised rental income based on the cash rents passing
at the balance sheet date, less non-recoverable property
operating expenses, divided by the market value of the EPRA
property portfolio, increased by estimated purchasers’ costs.
EPRA ‘topped-up’ Net Initial Yield
This measure incorporates an adjustment to the EPRA NIY
in respect of the expiration of rent-free periods (or other
unexpired lease incentives such as discounted rent periods
and stepped rents).
EPRA vacancy rate
Estimated rental value (ERV) of immediately available space
divided by the ERV of the EPRA portfolio.
In addition, the Group has adopted the following
recommendation for investment property reporting.
Like-for-like rental income growth
The growth in rental income on properties owned throughout
the current and previous year under review. This growth rate
includes revenue recognition and lease accounting adjustments
but excludes properties held for development in either year
and properties acquired or disposed of in either year.
Fair value adjustment
An accounting adjustment to change the book value of an
asset or liability to its market value.
Global Real Estate Sustainability Benchmark
(GRESB)
The Global Real Estate Sustainability Benchmark is an initiative
set up to assess the environmental and social performance of
public and private real estate investments and allow investors
to understand their performance.
Ground rent
The rent payable by the Group for its leasehold properties.
Under IFRS, a liability is recognised using the discounted
payments due. Fixed lease payments made are allocated
between the interest payable and the reduction in the
outstanding liability. Any variable payments are recognised
in the income statement in the period to which it relates.
Headroom
This is the amount left to draw under the Group’s loan facilities
(i.e. the total loan facilities less amounts already drawn).
Interest rate swap
A financial instrument where two parties agree to exchange
an interest rate obligation for a predetermined amount of
time. These are generally used by the Group to convert floating
rate debt to fixed rates.
ISS-Oekom
ISS-Oekom is an ESG rating service that provides corporate
and country ESG research and ratings that enables its
clients to identify material social and environmental risks
and opportunities.
Key Performance Indicators (KPIs)
Activities and behaviours, aligned to both business objectives
and individual goals, against which the performance of the
Group is annually assessed. Performance measured against
them is referenced in the Annual Report.
Leadership in Energy and Environmental Design
(LEED)
LEED is a US-based environmental impact assessment method
for buildings. Performance is measured across a series of
ratings – Certified, Silver, Gold and Platinum.
Lease incentives
Any incentive offered to occupiers to enter into a lease.
Typically the incentive will be an initial rent-free or half rent
period, stepped rents, or a cash contribution to fit-out or
similar costs.
Loan-to-value ratio (LTV)
Drawn debt net of cash divided by the fair value of the
property portfolio. Drawn debt is equal to drawn facilities
less unrestricted cash and the unamortised equity element
of the convertible bonds.
Mark-to-market
The difference between the book value of an asset or liability
and its market value.
MSCI Inc. (MSCI)
MSCI Inc. is a company that produces independent
benchmarks of property returns. The Group measures its
performance against both the Central London Offices Index
and the UK All Property Index.
National Australian Built Environment Rating
System (NABERS)
This is a building performance rating system which provides
an energy performance benchmark using a simple star rating
system on a 1 to 6 scale. This helps property owners understand
and communicate a building’s performance versus other
similar buildings to occupiers. Ratings are validated on an
annual basis.
NAV gearing
Net debt divided by net assets.
Net assets per share or net asset value (NAV)
Equity shareholders’ funds divided by the number of ordinary
shares in issue at the balance sheet date.
LIST OF DEFINITIONS continued
(unaudited)
Derwent London plc
284
Net debt
Borrowings plus bank overdraft less unrestricted cash and
cash equivalents.
Net debt to EBITDA
Net Debt to EBITDA is the ratio of gross debt less unrestricted
cash to earnings before interest, tax, depreciation and
amortisation (EBITDA).
Net interest cover ratio
Net property income, excluding all non-core items divided
by interest payable on borrowings and non-utilisation fees.
Property income distribution (PID)
Dividends from profits of the Group’s tax-exempt property
rental business under the REIT regulations.
Non-PID
Dividends from profits of the Group’s taxable residual business.
Real Estate Investment Trust (REIT)
The UK Real Estate Investment Trust (REIT) regime was
launched on 1 January 2007. On 1 July 2007, Derwent London plc
elected to convert to REIT status.
The REIT legislation was introduced to provide a structure which
closely mirrors the tax outcomes of direct ownership in property
and removes tax inequalities between different real estate
investors. It provides a liquid and publicly available vehicle
which opens the property market to a wide range of investors.
A REIT is exempt from corporation tax on qualifying income
and gains of its property rental business providing various
conditions are met. It remains subject to corporation tax on
non-exempt income and gains e.g. interest income, trading
activity and development fees.
REITs must distribute at least 90% of the Group’s income
profits from its tax exempt property rental business, by way
of dividend, known as a property income distribution (PID).
These distributions can be subject to withholding tax at 20%.
If the Group distributes profits from the non-tax exempt
business, the distribution will be taxed as an ordinary dividend
in the hands of the investors (non-PID).
Rent reviews
Rent reviews take place at intervals agreed in the lease
(typically every five years) and their purpose is usually to
adjust the rent to the current market level at the review date.
For upwards only rent reviews, the rent will either remain at
the same level or increase (if market rents are higher) at the
review date.
Renewable Energy Guarantees of Origin (REGO)
The REGO scheme administered by Ofgem provides
transparency to consumers about the proportion of electricity
that suppliers source/provide from renewable generation.
Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations (RIDDORs)
The regulations place a legal duty on employers to report
work-related deaths, major injuries or over-three-day
injuries, work related diseases and dangerous occurrences
(near miss accidents) to the Health and Safety Executive.
Reversion
The reversion is the amount by which ERV is higher than the
rent roll of a property or portfolio. The reversion is derived from
contractual rental increases, rent reviews, lease renewals and
the letting of space that is vacant and available to occupy or
under development or refurbishment.
Science Based Target initiative (SBTi)
The Science Based Targets initiative (SBTi) is a collaboration
between CDP, the United Nations Global Compact, World
Resources Institute (WRI) and the World Wide Fund for Nature
(WWF). The SBTi defines and promotes best practice in
science-based target setting and independently assesses and
approves companies’ targets. Science-based targets provide
companies with a clearly defined pathway to future-proof
growth by specifying how much and how quickly they need
to reduce their greenhouse gas emissions.
Scrip dividend
Derwent London plc sometimes offers its shareholders the
opportunity to receive dividends in the form of shares instead
of cash. This is known as a scrip dividend.
Streamlined energy and carbon reporting (SECR)
The SECR regulations were introduced in April 2019 and require
companies incorporated in the UK to undertake enhanced
disclosures of their energy and carbon emissions in their
financial reporting.
Task Force on Climate-related Financial
Disclosures (TCFD)
Set up by the Financial Stability Board (FSB) in response to the
G20 Finance Ministers and Central Bank Governors request for
greater levels of decision-useful, climate-related information;
the TCFD was asked to develop climate-related disclosures that
could promote more informed investment, credit (or lending),
and insurance underwriting decisions. In turn, this would enable
stakeholders to understand better the concentrations of
carbon-related assets in the financial sector and the financial
system’s exposures to climate-related risks.
‘Topped-up’ rent
Annualised rents generated by the portfolio plus rent contracted
from expiry of rent-free periods and uplifts agreed at the
balance sheet date.
Total property return (TPR)
Total property return is a performance measure calculated
by the MSCI and defined in the MSCI Global Methodology
Standards for Real Estate Investment as “the percentage
value change plus net income accrual, relative to the
capital employed.”
Report and Accounts 2024
285
Other information
Total return (TR) or total accounting return (TAR)
The movement in EPRA Net Tangible Assets per share on a
diluted basis between the beginning and the end of each
financial year plus the dividend per share paid during the year
expressed as a percentage of the EPRA Net Tangible Assets
per share on a diluted basis at the beginning of the year.
Total shareholder return (TSR)
The growth in the ordinary share price as quoted on the
London Stock Exchange plus dividends per share received
for the year, expressed as a percentage of the share price
at the beginning of the year.
Transmission and distribution (T&D)
The emissions associated with the transmission and
distribution losses in the grid from the transportation
of electricity from its generation source.
Underlying portfolio
Properties that have been held for the whole of the year (i.e.
excluding any acquisitions or disposals made during the year).
Underlying valuation increase/decrease
The valuation increase/decrease on the underlying portfolio.
Yields
Net initial yield
Annualised rental income based on the cash rents passing
at the balance sheet date, less non-recoverable property
operating expenses, divided by the market value of the
property, increased by estimated purchasers’ costs.
Reversionary yield
The anticipated yield to which the net initial yield will
rise once the rent reaches the estimated rental values.
True equivalent yield
The constant capitalisation rate which, if applied to all cash
flows from the portfolio, including current rent, reversions to
valuers’ estimated rental value and such items as voids and
expenditures, equates to the valuation having taken into
account notional purchasers’ costs. Rent is assumed to be
received quarterly in advance.
Yield shift
A movement in the yield of a property asset, or like-for-like
portfolio, over a given year. Yield compression is a commonly
used term for a reduction in yields.
LIST OF DEFINITIONS continued
(unaudited)
Derwent London plc
286
SHAREHOLDER INFORMATION
Our Registrar
Enquiries relating to shareholders, such as queries concerning
notification of change of address, dividend payments and lost
share certificates, should be made to the Company’s registrar,
Equiniti (EQ).
The Company has a share account, management and dealing
facility for all shareholders via Equiniti Limited. This offers
shareholders secure access to their account details held
on the share register, to amend address information and
payment instructions directly, as well as providing a simple and
convenient way of buying and selling the Company’s ordinary
shares. For internet services visit: www.shareview.co.uk.
The Shareview Dealing service is also available by telephone on
+44 (0) 3456 037 037 between 8.00am and 4.30pm, Monday
to Friday (excluding public holidays in England and Wales).
The best way to ensure that dividends are received as quickly
as possible is to instruct the Company’s registrars to pay them
directly into a bank or building society account; tax vouchers
are then mailed to shareholders separately. This method also
avoids the risk of dividend cheques being delayed or lost in
the post. Dividend mandate forms are available from the
registrars, either from their website at: www.shareview.co.uk
or by telephone on the Equiniti general shareholder helpline
number.
Financial and dividend calendar – 2025
Our forthcoming financial and dividend calendar for
2025 is provided in the adjacent table. These dates are
provisional and subject to change. For up to date information,
refer to the financial calendar on our corporate website at:
www.derwentlondon.com/investors/calendar.
Shareholder enquiries
Financial calendar
Final results announced
27 February
Q1 Business update
8 May
Annual General Meeting
16 May
Interim results announced
12 August
Q3 Business update
6 November
Dividend calendar
2024 Final dividend
2025 Interim dividend
Ex-dividend date
24 April
4 September
Record date
25 April
5 September
Dividend paid
30 May
10 October
Company information
As at 26 February 2025, the Company’s issued share capital
consisted of 112,290,929 ordinary shares of 5 pence each with
voting rights (ISIN: GB0002652740).
The Company is a public limited company, which is listed
on the London Stock Exchange and incorporated and
domiciled in the UK. Financial information about the Company,
including annual Report & Accounts, public announcements
and share price data, is available from the Company’s website
at: www.derwentlondon.com.
Dividend payments
Derwent London plc is committed to reducing its impact
on the environment. As such, from October 2025, dividend
payments will no longer be made by cheque. Receiving
dividends by direct payment rather than cheque is quicker,
more secure and better for the environment. Further
information will be contained on our dividend tax vouchers.
Useful contact information
Equiniti (EQ)
Equiniti Limited
Aspect House
Lancing Business Park, Lancing
West Sussex BN99 6DA
United Kingdom
Equiniti general shareholder helpline:
Calling from the UK: 0371 384 2192
Calling from overseas: +44 (0) 371 384 2192
Lines are open 8.30am to 5.30pm, Monday to Friday
(excluding public holidays in England and Wales)
Derwent London plc
For Company Secretarial or Investor enquiries:
David Lawler
Company Secretary
Telephone: +44 (0)20 7659 3000
Email: company.secretary@derwentlondon.com
Robert Duncan
Head of Investor Relations & Strategic Planning
Telephone: +44 (0)20 7659 3000
Email: ir@derwentlondon.com
Report and Accounts 2024
287
Other information
AWARDS AND RECOGNITION
Derwent London won numerous awards for its achievements
and buildings in 2024, a sample of which are shown below.
EPRA BPR
Gold Award 2024
RoSPA
Gold Award 2024
National Equality Standard
Re-accredited, scoring in top 5%
of recognised UK companies
BMAC
Silver Award in the Property sector
European Brand Awards
Strongest Brand UK –
Developers Office 2024
Build Architecture Award
Best Sustainable Office
Design Studio 2024 – London
Greenstar status
‘A’ rated public disclosure (100/100),
Development 5 Star (97/100),
Standing Assets 4 Star (84/100)
CDP 2024
Climate Change: A-rating
MSCI
AAA rating
EPRA Sustainability BPR
Gold Award 2024
ISS Oekom
Prime status C+
Corporate
Sustainability
Derwent London plc
288
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100% of the inks used are vegetable oil based, 95% of press chemicals are recycled
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CBP00019082504183028
Derwent London plc
Registered office:
25 Savile Row, London W1S 2ER
T: +44 (0)20 7659 3000
www.derwentlondon.com
Registered No: 1819699