Annual Report and Accounts 2019
DUMFRIES NEWBURGH WANTAGE BRISTOL KIRKDALE TEWKESBURY NECHELLS THETFORD FARNHAM DONCASTER ROCHFORD ALSTON CLOWNE EVESHAM GLEMSFORD SUDBURY SOUTHSEA LOCHGILPHEAD WIRRAL ASHMORE BOURNEMOUTH MENAI
BRIDGE DARLINGTON ABBOTS BROMLEY ELLAND BUTTERSHAW BURTON UPON TRENT IPSWICH BARROW-IN-FURNESS CUDDESDON OTLEY THAME DUNDEE BEDFORD HINDLEY STRETTON GREAT WALTHAM SOUTH SHIELDS BLOXWICH KERESLEY TAYPORT
BOTTISHAM CAWSTON TONBRIDGE STANDON ROUGHAM DURSLEY WORDLEY KINGS LYNN MONTROSE HALTWHISTLE WALSALL WOOD SKIPTON CHESTERTON CHELMSFORD MARKET HARBOROUGH ELLESMERE DUNMOW HORNCASTLE KIRBYMOORSIDE
OXFORD DARLEY STOCKTON-ON-TEES BLAXTON BRIERLEY HILL DOVER BARNSLEY STANHOPE CHIPPING SODBURY POULTON LE FYLDE GOITSIDE IPSWICH TIBBERTON TELFORD ADLINGTON ABERDARE ODSAL HEREFORD GREAT YARMOUTH GLOSSOP
GATEACRE LEIGHTON BUZZARD BURROUGH GREEN SWINTON STALYBRIDGE BUCKHAVEN YEOVIL LEEDS HUDDERSFIELD NEW ELGIN HOLYHEAD WELLINGBOROUGH LISKEARD KELVINBRIDGE BURFORD YORK BANFF NEWTOWN BIRKENHEAD CARDIFF
INVERKEITHING SUTTON WIGSTON FELSTED COLCHESTER LUTTERWORTH NEWPORT PAGNELL BARNSLEY INGOLDMELLS CREWE STOWMARKET MATLOCK CLYDEBANK KENDAL LANARK SHAW DUKINFIELD ABERTILLERY DUNFERMLINE ROTHERHAM BLACKPOOL
COALVILLE SALTNEY CAMBORNE SOMERCOTES READING UDDINGSTON SMALL HEATH OWSTON FERRY EPPERSTONE PORTSMOUTH GREAT HORTON ST GERMANS RISBY IRVINE KEITH NETHERTON FAKENHAM ELY ROYSTON LITTLEHAMPTON REEPHAM
STADHAMPTON GANSTEAD BEIGHTON BRIDGE OF EARN WATH UPON DEARNE ALEXANDRIA TORQUAY HATHERN DRINGHOUSES GREAT LEIGHS WALKINGTON NORTH SHIELDS SNAITH INVERNESS MOLD BURTON UPON TRENT STRATHAVEN PORTSWOOD
BEWDLEY ST LEONARDS-ON-SEA FINNIESTON BARDWELL PATRICROFT MILTON KEYNES BRAINTREE GALLEYWOOD CRABBS CROSS GRANGEMOUTH 665 PUBS SHEFFIELD ABBOTSLEY DUDLEY LOWER GORNAL PELSALL CAMBUSLANG GOSPORT COPLE
GREAT CORNARD MINERA BRAIDFAULD MOUNT FLORIDA MACCLESFIELD BARNSTAPLE LISS GIRVAN ANNESLEY WOODHOUSE CHASETOWN STROUD RAVENSCLIFFE FOUR ASHES WISHAW BLYTH GODSTONE GLOUCESTER WILBARSTON BUNTINGFORD
FREEMANTLE HALIFAX LAUGHERTON FROSTERELY NEWCASTLE-UNDER-LYME DORCHESTER BURY ALDERSHOT BIGGLESWADE CHEDDAR HADDINGTON NORTHAMPTON TOSTOCK LUTON KINCARDINE BRANSTON SAFFRON WALDEN HAGWORTHINGHAM
LICHFIELD TUDELEY UPTON HAMILTON DENTON WHITHAM COVENTRY BATHGATE DUMBARTON LOCHSIDE CANNINGTON BRIDGWATER ANDOVER GUISBOROUGH LITTLEMORE REDDITCH KNOTTINGLEY HARLOW ABERDEEN WORCESTER EAST CALDER
MELKSHAM GREAT WYMONDLEY SOUTHAM LONDON LYDNEY CHESTER CROMFORD HAVERSHAM ORMSKIRK CUSWORTH JOHNSTONE EXETER CHINDER THORTON COLEHAM WOLLESCOTE WARSOP NEWBURY HARLESCOTT BOLTON HINCKLEY STOCKINGFORD
BALDOCK LINWOOD WARE MUSSELBURGH LEAMINGTON SPA HINCKLEY KILWINNING GRIMSBY CONSETT ROTHERHAM MILNSBRIDGE DIDCOT HEYWOOD NORMANTON DARLASTON ROSS-ON-WYE MOTHERWELL AIRDRIE BAMPTON BOURNE ST. NEOTS
GOOLE STONEYCROFT WHITEHAVEN CHATHAM STOCKPORT FALKIRK NEWTON HALL WINSHILL ANDERSTON SANDY WHEATLEY BLACKENHALL FEN DITTON WEST HEATH WIDNES PERTH OLDSWINFORD WHITWICK OTTERY ST. MARY STAFFORD CHORLEY
BALLACHULISH BOLTON FEATHERSTONE WHITCHURCH COALVILLE ISHAM BURBAGE BULLWELL GREENOCK HEATHHALL KINGSBRIDGE CALNE CHOPPINGTON GORTON NELSON DERBY LARGS WARE STAPLEFORD BRADFIELD COMBUST PAISLEY BRACKLEY
DRIFFIELD LIVERPOOL FARNWORTH WARRINGTON LINCOLN FORT WILLIAM DINNINGTON DONCASTER THAXTED EDINBURGH ST NEOTS SEVENOAKS LEITH HITCHIN MABLETHORPE HONITON SHAWLANDS MUIRHEAD POLBETH SHILLINGTON BRAINTREE
BUCKINGHAM LITTLE SHELFORD STUDLEY NOTTINGHAM HULL TOTTERDOWN WIGAN WARLEY BUCKINGHAM CLAY CROSS ILKESTON BELPER BRISTOL WRENTHORPE DUNBAR CWMBRAN ALNWICK SUTTON IN ASHFIELD BRIDGEND SMALLSHAW RHOSTYLLEN
WORDSLEY KINGSWINFORD SPON END WOODBRIDGE MACCLESFIELD STOKE-ON-TRENT KEIGHLEY EASTWOOD WHITBURN MERCHANT CITY LONGFORD WOOD HAYES HYDE CHADDERTON HOLYWELL BRADFORD WEYMOUTH CARDONALD TENBURY WELLS
NORWICH PENRITH ENFIELD GORBALS DAVENTRY WYBURTON ABINGDON CAMBRIDGE KINGS WALDEN LITTLE WYMONDLEY BISHOP AUCKLAND ARBROATH STAPLE HILL LEEK GLASGOW FORFAR HARSTON MAIDSTONE BLAENAU FFESTINIOG CROSSHILL
YEOVIL HATTON HUDDERSFIELD WEST CALDER SCROPTON HOCKLEY STEPPS HOLT STOURBRIDGE BROOMFIELDS BREACHWOOD GREEN WITNEY GREAT BRICETT HEANOR PENZANCE PRESWICK SANDIACRE WALSALL WREXHAM YARNTON ARMADALE
MOUNT PLEASANT MANSFIELD PRESTON BEWDLEY CALLANDER BASFORD BUGLAWTON EDWINSTOWE OVERSEAL ROPEWALKS BANBURY NETHER STOWEY SLOUGH HADDENHAM CALDICOT WILLINGTON HALESOWEN SHILDON BARNINGHAM CASTOR HUNTLY
KEMPSTON KINGS BROMLEY LONG BENNINGTON LOUGHBOROUGH PLATTS COMMON RUDGE HEATH SWADLINCOTE WOBURN SANDS FOLKESTONE HILLHEAD CANTERBURY YORK LIVERPOOL FISHLEY SHREWSBURY SOUTHAMPTON KINROSS STIRLING
BRAMHALL SCARBOROUGH STANDISH SPRING HILL MALTBY HORNCASTLE SKEGNESS MARCH ST. COLUMB BARROW-UPON-HUMBER FELSHAM KIDLINGTON RHYL WALSHAM LE WILLOWS ECCLESHILL AYLESBURY HIGH WYCOMBE RYDE PARTICK NR
PENRITH PENKETH CRADLEY HEATH HULL GATESHEAD BRIDGNORTH RUGBY GARSWOOD ROCHESTER CARNOUSTIE WOLVERHAMPTON DURHAM PICKERING CHESTERFIELD MEPPERSHALL CUMNOCK TUNBRIDGE WELLS HAVANT CLARE KIDDERMINSTER
ANGLESEY CHEADLE KETTERING CWMBRAN PONTEFRACT WAKEFIELD STOCKPORT LOCHWINNOCH BURY ST EDMUNDS HINXWORTH MEDEN VALE POWICK TAMWORTH NEWCASTLE UPON TYNE KINGUSSIE STRATHBUNGO 34 SHOPPING CENTRES COLWYN
BAY LIVERSEDGE STEVENAGE SHEPSHED TRANENT LIVINGSTON OLDHAM ALDERSHOT HARWICH TICKHILL BROCKHOLES STANLEY TONYPANDY RHOS-DDU TROWBRIDGE LONG EATON NANTWICH WILLENHALL BLACKBURN LANGSIDE RUTHERGLEN SHEPTON
MALLET SHAVINGTON ST HELENS WESTHOUGHTON CHELMSFORD PETERBOROUGH WALTON-ON-THE-NAZE SCARBOROUGH BRENTFORD ATHERTON CUMBERNAULD BRIGHTON DROITWICH BOSTON BISHOPS STORTFORD HALSTEAD NEWMARKET HATFIELD
PEVEREL KIRKCALDY MANCHESTER NEW MILTON NEWARK COATBRIDGE DUNS CONINGSBY MUIREND HOPE VALLEY NEWNHAM SHEFFORD MARSDEN CRANBROOK DROXFORD FAREHAM CHESLYN HAY WITHAM BRINKLOW DENBIGH DOWNEND ESSINGTON
HALESOWEN KEYNSHAM OLDBURY WELLINGTON TELFORD GAINSBOROUGH STOURPORT-ON-SEVERN DERBY BEXLEYHEATH NEWTOWNABBEY WIDNES MORECAMBE PENGE KILMARNOCK CARDIFF ERDINGTON DARLINGTON 19 RETAIL PARKS MARKET DEEPING
WALLSEND OXFORD GRAYS SKEGNESS MIDDLESBROUGH WISBECH FAREHAM CARMARTHEN WORTHING LEITH WITHAM HASTINGS BRIDLINGTON HULL BOSCOMBE LLANELLI COWLEY NEWTON MEARNS NORTH SHIELDS BURGESS HILL HUDDERSFIELD
PAISLEY WAKEFIELD WARMINSTER GATESHEAD BLACKBURN CANVEY ISLAND CHESTER YORK DAVENTRY WIRRAL BRADFORD FELIXSTOWE BARROW-IN-FURNESS LEEDS DEWSBURY SHEFFIELD KENDAL LIVERPOOL STAMFORD CARDIFF BEVERLEY BARRY
w
N
A
A
R
R
R
0
9
2
d
p
p
E
T
o
o
n
n
n
n
u
u
e
e
e
a
a
v
c
c
c
s
1
r
r
t
t
I
l
i
l
FY18: £107.0m
Funds From Operations
IFRS (loss) / profit
after tax1
Our financial highlights
Revenue
(proportionally consolidated)
£56.4M
£127.1M
NewRiver has a Premium Listing on the Main Market of the
London Stock Exchange and is a constituent of the FTSE 250
and EPRA indices.
NewRiver REIT plc (‘NewRiver’) is a leading Real Estate
Investment Trust specialising in buying, managing, developing
and recycling convenience-led, community-focused retail and
leisure assets throughout the UK.
DUMFRIES NEWBURGH WANTAGE BRISTOL KIRKDALE TEWKESBURY NECHELLS THETFORD FARNHAM DONCASTER ROCHFORD ALSTON CLOWNE EVESHAM GLEMSFORD SUDBURY SOUTHSEA LOCHGILPHEAD WIRRAL ASHMORE BOURNEMOUTH MENAI
BRIDGE DARLINGTON ABBOTS BROMLEY ELLAND BUTTERSHAW BURTON UPON TRENT IPSWICH BARROW-IN-FURNESS CUDDESDON OTLEY THAME DUNDEE BEDFORD HINDLEY STRETTON GREAT WALTHAM SOUTH SHIELDS BLOXWICH KERESLEY TAYPORT
BOTTISHAM CAWSTON TONBRIDGE STANDON ROUGHAM DURSLEY WORDLEY KINGS LYNN MONTROSE HALTWHISTLE WALSALL WOOD SKIPTON CHESTERTON CHELMSFORD MARKET HARBOROUGH ELLESMERE DUNMOW HORNCASTLE KIRBYMOORSIDE
OXFORD DARLEY STOCKTON-ON-TEES BLAXTON BRIERLEY HILL DOVER BARNSLEY STANHOPE CHIPPING SODBURY POULTON LE FYLDE GOITSIDE IPSWICH TIBBERTON TELFORD ADLINGTON ABERDARE ODSAL HEREFORD GREAT YARMOUTH GLOSSOP
GATEACRE LEIGHTON BUZZARD BURROUGH GREEN SWINTON STALYBRIDGE BUCKHAVEN YEOVIL LEEDS HUDDERSFIELD NEW ELGIN HOLYHEAD WELLINGBOROUGH LISKEARD KELVINBRIDGE BURFORD YORK BANFF NEWTOWN BIRKENHEAD CARDIFF
INVERKEITHING SUTTON WIGSTON FELSTED COLCHESTER LUTTERWORTH NEWPORT PAGNELL BARNSLEY INGOLDMELLS CREWE STOWMARKET MATLOCK CLYDEBANK KENDAL LANARK SHAW DUKINFIELD ABERTILLERY DUNFERMLINE ROTHERHAM BLACKPOOL
COALVILLE SALTNEY CAMBORNE SOMERCOTES READING UDDINGSTON SMALL HEATH OWSTON FERRY EPPERSTONE PORTSMOUTH GREAT HORTON ST GERMANS RISBY IRVINE KEITH NETHERTON FAKENHAM ELY ROYSTON LITTLEHAMPTON REEPHAM
STADHAMPTON GANSTEAD BEIGHTON BRIDGE OF EARN WATH UPON DEARNE ALEXANDRIA TORQUAY HATHERN DRINGHOUSES GREAT LEIGHS WALKINGTON NORTH SHIELDS SNAITH INVERNESS MOLD BURTON UPON TRENT STRATHAVEN PORTSWOOD
BEWDLEY ST LEONARDS-ON-SEA FINNIESTON BARDWELL PATRICROFT MILTON KEYNES BRAINTREE GALLEYWOOD CRABBS CROSS GRANGEMOUTH 665 PUBS SHEFFIELD ABBOTSLEY DUDLEY LOWER GORNAL PELSALL CAMBUSLANG GOSPORT COPLE
GREAT CORNARD MINERA BRAIDFAULD MOUNT FLORIDA MACCLESFIELD BARNSTAPLE LISS GIRVAN ANNESLEY WOODHOUSE CHASETOWN STROUD RAVENSCLIFFE FOUR ASHES WISHAW BLYTH GODSTONE GLOUCESTER WILBARSTON BUNTINGFORD
FREEMANTLE HALIFAX LAUGHERTON FROSTERELY NEWCASTLE-UNDER-LYME DORCHESTER BURY ALDERSHOT BIGGLESWADE CHEDDAR HADDINGTON NORTHAMPTON TOSTOCK LUTON KINCARDINE BRANSTON SAFFRON WALDEN HAGWORTHINGHAM
LICHFIELD TUDELEY UPTON HAMILTON DENTON WHITHAM COVENTRY BATHGATE DUMBARTON LOCHSIDE CANNINGTON BRIDGWATER ANDOVER GUISBOROUGH LITTLEMORE REDDITCH KNOTTINGLEY HARLOW ABERDEEN WORCESTER EAST CALDER
MELKSHAM GREAT WYMONDLEY SOUTHAM LONDON LYDNEY CHESTER CROMFORD HAVERSHAM ORMSKIRK CUSWORTH JOHNSTONE EXETER CHINDER THORTON COLEHAM WOLLESCOTE WARSOP NEWBURY HARLESCOTT BOLTON HINCKLEY STOCKINGFORD
BALDOCK LINWOOD WARE MUSSELBURGH LEAMINGTON SPA HINCKLEY KILWINNING GRIMSBY CONSETT ROTHERHAM MILNSBRIDGE DIDCOT HEYWOOD NORMANTON DARLASTON ROSS-ON-WYE MOTHERWELL AIRDRIE BAMPTON BOURNE ST. NEOTS
GOOLE STONEYCROFT WHITEHAVEN CHATHAM STOCKPORT FALKIRK NEWTON HALL WINSHILL ANDERSTON SANDY WHEATLEY BLACKENHALL FEN DITTON WEST HEATH WIDNES PERTH OLDSWINFORD WHITWICK OTTERY ST. MARY STAFFORD CHORLEY
BALLACHULISH BOLTON FEATHERSTONE WHITCHURCH COALVILLE ISHAM BURBAGE BULLWELL GREENOCK HEATHHALL KINGSBRIDGE CALNE CHOPPINGTON GORTON NELSON DERBY LARGS WARE STAPLEFORD BRADFIELD COMBUST PAISLEY BRACKLEY
DRIFFIELD LIVERPOOL FARNWORTH WARRINGTON LINCOLN FORT WILLIAM DINNINGTON DONCASTER THAXTED EDINBURGH ST NEOTS SEVENOAKS LEITH HITCHIN MABLETHORPE HONITON SHAWLANDS MUIRHEAD POLBETH SHILLINGTON BRAINTREE
BUCKINGHAM LITTLE SHELFORD STUDLEY NOTTINGHAM HULL TOTTERDOWN WIGAN WARLEY BUCKINGHAM CLAY CROSS ILKESTON BELPER BRISTOL WRENTHORPE DUNBAR CWMBRAN ALNWICK SUTTON IN ASHFIELD BRIDGEND SMALLSHAW RHOSTYLLEN
WORDSLEY KINGSWINFORD SPON END WOODBRIDGE MACCLESFIELD STOKE-ON-TRENT KEIGHLEY EASTWOOD WHITBURN MERCHANT CITY LONGFORD WOOD HAYES HYDE CHADDERTON HOLYWELL BRADFORD WEYMOUTH CARDONALD TENBURY WELLS
NORWICH PENRITH ENFIELD GORBALS DAVENTRY WYBURTON ABINGDON CAMBRIDGE KINGS WALDEN LITTLE WYMONDLEY BISHOP AUCKLAND ARBROATH STAPLE HILL LEEK GLASGOW FORFAR HARSTON MAIDSTONE BLAENAU FFESTINIOG CROSSHILL
YEOVIL HATTON HUDDERSFIELD WEST CALDER SCROPTON HOCKLEY STEPPS HOLT STOURBRIDGE BROOMFIELDS BREACHWOOD GREEN WITNEY GREAT BRICETT HEANOR PENZANCE PRESWICK SANDIACRE WALSALL WREXHAM YARNTON ARMADALE
MOUNT PLEASANT MANSFIELD PRESTON BEWDLEY CALLANDER BASFORD BUGLAWTON EDWINSTOWE OVERSEAL ROPEWALKS BANBURY NETHER STOWEY SLOUGH HADDENHAM CALDICOT WILLINGTON HALESOWEN SHILDON BARNINGHAM CASTOR HUNTLY
KEMPSTON KINGS BROMLEY LONG BENNINGTON LOUGHBOROUGH PLATTS COMMON RUDGE HEATH SWADLINCOTE WOBURN SANDS FOLKESTONE HILLHEAD CANTERBURY YORK LIVERPOOL FISHLEY SHREWSBURY SOUTHAMPTON KINROSS STIRLING
BRAMHALL SCARBOROUGH STANDISH SPRING HILL MALTBY HORNCASTLE SKEGNESS MARCH ST. COLUMB BARROW-UPON-HUMBER FELSHAM KIDLINGTON RHYL WALSHAM LE WILLOWS ECCLESHILL AYLESBURY HIGH WYCOMBE RYDE PARTICK NR
PENRITH PENKETH CRADLEY HEATH HULL GATESHEAD BRIDGNORTH RUGBY GARSWOOD ROCHESTER CARNOUSTIE WOLVERHAMPTON DURHAM PICKERING CHESTERFIELD MEPPERSHALL CUMNOCK TUNBRIDGE WELLS HAVANT CLARE KIDDERMINSTER
ANGLESEY CHEADLE KETTERING CWMBRAN PONTEFRACT WAKEFIELD STOCKPORT LOCHWINNOCH BURY ST EDMUNDS HINXWORTH MEDEN VALE POWICK TAMWORTH NEWCASTLE UPON TYNE KINGUSSIE STRATHBUNGO 34 SHOPPING CENTRES COLWYN
BAY LIVERSEDGE STEVENAGE SHEPSHED TRANENT LIVINGSTON OLDHAM ALDERSHOT HARWICH TICKHILL BROCKHOLES STANLEY TONYPANDY RHOS-DDU TROWBRIDGE LONG EATON NANTWICH WILLENHALL BLACKBURN LANGSIDE RUTHERGLEN SHEPTON
MALLET SHAVINGTON ST HELENS WESTHOUGHTON CHELMSFORD PETERBOROUGH WALTON-ON-THE-NAZE SCARBOROUGH BRENTFORD ATHERTON CUMBERNAULD BRIGHTON DROITWICH BOSTON BISHOPS STORTFORD HALSTEAD NEWMARKET HATFIELD
PEVEREL KIRKCALDY MANCHESTER NEW MILTON NEWARK COATBRIDGE DUNS CONINGSBY MUIREND HOPE VALLEY NEWNHAM SHEFFORD MARSDEN CRANBROOK DROXFORD FAREHAM CHESLYN HAY WITHAM BRINKLOW DENBIGH DOWNEND ESSINGTON
HALESOWEN KEYNSHAM OLDBURY WELLINGTON TELFORD GAINSBOROUGH STOURPORT-ON-SEVERN DERBY BEXLEYHEATH NEWTOWNABBEY WIDNES MORECAMBE PENGE KILMARNOCK CARDIFF ERDINGTON DARLINGTON 19 RETAIL PARKS MARKET DEEPING
WALLSEND OXFORD GRAYS SKEGNESS MIDDLESBROUGH WISBECH FAREHAM CARMARTHEN WORTHING LEITH WITHAM HASTINGS BRIDLINGTON HULL BOSCOMBE LLANELLI COWLEY NEWTON MEARNS NORTH SHIELDS BURGESS HILL HUDDERSFIELD
PAISLEY WAKEFIELD WARMINSTER GATESHEAD BLACKBURN CANVEY ISLAND CHESTER YORK DAVENTRY WIRRAL BRADFORD FELIXSTOWE BARROW-IN-FURNESS LEEDS DEWSBURY SHEFFIELD KENDAL LIVERPOOL STAMFORD CARDIFF BEVERLEY BARRY
Strategic Report
Our investment case ��������������������������������������������������������������������������������01
Our business at a glance ��������������������������������������������������������������������� 02
Chairman’s statement���������������������������������������������������������������������������� 06
Chief Executive’s review ����������������������������������������������������������������������� 08
Our marketplace ���������������������������������������������������������������������������������������14
Leveraging our operating platform �����������������������������������������������������19
Our business model ������������������������������������������������������������������������������� 22
Our strategy �����������������������������������������������������������������������������������������������24
Our KPIs ����������������������������������������������������������������������������������������������������� 26
Property review ����������������������������������������������������������������������������������������30
Financial review ����������������������������������������������������������������������������������������48
Our people ������������������������������������������������������������������������������������������������ 56
Our approach to ESG ���������������������������������������������������������������������������� 58
Our approach to risk management ���������������������������������������������������70
Financial Statements
Independent auditor’s report ������������������������������������������������������������� 108
Consolidated Statement of
Comprehensive Income ����������������������������������������������������������������������� 116
Consolidated Balance Sheet ���������������������������������������������������������������117
Consolidated Cash Flow Statement ������������������������������������������������� 118
Consolidated Statement
of Changes in Equity ������������������������������������������������������������������������������ 119
Notes to the Financial Statements ��������������������������������������������������� 120
Glossary ����������������������������������������������������������������������������������������������������156
Company information ���������������������������������������������������������������������������159
Governance
Board of Directors �����������������������������������������������������������������������������������74
Corporate governance report �������������������������������������������������������������76
Audit Committee report �������������������������������������������������������������������������82
Nomination Committee report ������������������������������������������������������������85
Remuneration Committee report �������������������������������������������������������87
Directors’ report��������������������������������������������������������������������������������������105
Directors’ responsibilities statement ����������������������������������������������� 107
1� Adversely impacted by a non-cash valuation decline of £89�5 million in FY19, compared to a non-cash valuation decline of £13�4 million in FY18
Reconciliations between Alternative Performance Measures (APMs) and their nearest IFRS equivalent can be found on page 155
£ 36.9 M
£1.3BN
18.5P
21.6P
Ordinary dividend per share
Contents
Portfolio valuation
FFO per share
FY18: £60.3m
FY18: £45.7m
FY18: £1.2bn
FY18: 21.2p
FY18: 21.0p
OUR INVEST MENT CASE
Our assets are
INTEGRAL
to the communities
they serve
Our community shopping
centres, conveniently-located retail parks
and community pubs are a key part of daily
life for consumers, providing value for
money on everyday essential goods and
services.
Our income is
DIVERSIFIED
and sustainable
Our portfolio is diversified by asset
type, geography and tenant base,
with over 800 different occupiers
across our retail portfolio and over
600 individual tenants across
our pub portfolio.
SEE MORE ON PAGE 4
SEE MORE ON PAGE 2
We are
FOCUSED
We extract further
VALUE
on growing sub-sectors of the
retail & leisure markets
Our retail portfolio is focused on food &
grocery, discounters, value fashion, health &
beauty and grab and go food. These
sub-sectors are growing and are
online resilient.
from assets, through
our proven business model
Our active approach to
asset management, our risk-controlled
development pipeline and our ability to
recycle capital profitably enable
us to consistently grow returns.
SEE MORE ON PAGE 14
SEE MORE ON PAGE 22
We have a strong and
UNENCUMBERED
balance sheet
Our diversified source of funding
and low levels of debt, which is unsecured,
provide us with flexibility and firepower.
SEE MORE ON PAGE 48
We are
COMMITTED
to operating responsibly
We aim to enhance the lives of
consumers and minimise our impact
on the environment. This ensures
thriving communities, reduces operating
costs and unlocks opportunities.
SEE MORE ON PAGE 58
NewRiver REIT plc Annual Report and Accounts 2019
1
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR BUSINESS AT A GLANCE
Specialists in
Convenience & Community
NewRiver’s diverse portfolio of community pubs, conveniently-located
retail parks and community shopping centres meet the everyday
needs of consumers, providing a combination of convenience,
value and services, and generating resilient cash returns.
Conveniently-located
retail parks
Our retail parks are typically located on the
edge of town centres and in close proximity to
supermarkets� They offer a diverse line-up of
retail and leisure operators and often have grab
& go food provision through a drive-thru pod in
the car park� With free parking and excellent
transport links, they are the ideal location for
retailers providing click & collect and other
in-store services�
Community shopping centres
Our community shopping centres are conveniently
located in town centres� They have an occupier line-up
focused on convenience, value and services and
typically include a value leisure element� These centres
have income-generating car parks and other
commercialisation opportunities, and often have the
potential to develop residential units in the space
above and adjacent to them� Their location also means
these assets have strong alternative use potential�
Committed to
sustainability
We have installed 18 electric vehicle
chargers across our portfolio to date,
which is just one of the ways in
which we are minimising our
environmental impact�
FIND OUT MORE ON PAGE 58
2
NewRiver REIT plc Annual Report and Accounts 2019
Community pubs
Our pubs are located in the heart of communities,
within walking distance of residential areas and with
good roadside visibility� The vast majority of our pubs
are wet-led and operated through a leased and
tenanted model, with occupiers often living in the
free accommodation above� Many of our pubs have
excess land on which we have received planning
consent for residential units or to build convenience
stores (‘c-stores’)�
G
O
V
E
R
N
A
N
C
E
I
F
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
C-store development
programme
In 2015 we signed an overarching
agreement with the Co-op to develop
c-stores on surplus pub land� This year
saw the opening of our 25th c-store�
FIND OUT MORE ON PAGE 44
Residential development
We have identified the potential to deliver up to
2,400 residential units across our portfolio over
the next 5-10 years, resulting in up to
£140 million of development profit�
FIND OUT MORE ON PAGE 40
NewRiver REIT plc Annual Report and Accounts 2019
3
STRATEGIC REPORT
OUR BUSINESS AT A GLANCE
Our diversified
portfolio
NewRiver owns and manages a diversified portfolio
of community shopping centres, conveniently-located
retail parks and community pubs across the UK.
Well-balanced portfolio
Top 10 occupiers are focused
on convenience and value
% of rent roll
1.9%
1.8%
1.7%
1.7%
1.5%
1.3%
1.3%
1.2%
1.2%
1.2%
Extracting growth through our
risk-controlled development pipeline
1.9M
SQ FT
Residential
Shopping centres
Retail parks
Healthcare
Hotels
C-stores
1.1m
0.4m
0.1m
0.1m
0.1m
<0.1m
£1.3BN
Shopping centres
Retail parks
Pubs & c-stores
High Street
Development
58%
13%
22%
1%
6%
Retail occupancy
Pub occupancy
95.2%
97.9%
Average retail rent
Portfolio initial yield
£12.52
Per sq ft
7.9%
Active in the investment markets in FY19
£162.1M
£67.5M
of acquisitions,
NIY of 12.9%
of disposals,
NIY of 5.3%
Net neutral in retail, investing into pubs
4
NewRiver REIT plc Annual Report and Accounts 2019
Hollywood Retail & Leisure
Park, Barrow-in-Furness
acquired in July 2018 for
£15.3m, NIY of 8.7%
Grays Shopping
Centre acquired in
June 2018 for
£20.2m, NIY of 9.4%
Canvey Island Retail
Park development
completed in
November 2018,
yield on cost of 9%
25th convenience
store delivered in
March 2019 as part of
our development
programme for the
Co-op (nine sold
to date)
Hawthorn Leisure,
and its portfolio of
298 community pubs,
acquired in May 2018
for an enterprise
value of £106.8m,
NIY of 13.6%
34
Shopping
centres
19
Retail
parks
16
Convenience
stores
665
Pubs
NewRiver REIT plc Annual Report and Accounts 2019
5
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CH AIRMAN’S STAT EMENT
Confidence in a
challenging market
I have great pleasure in presenting my first review as
Chairman of NewRiver. I was privileged to assume the
chair of the Company on 1 October 2018 and would like
to pay tribute to the stewardship of my predecessor,
Paul Roy, whose wise counsel had guided the Company
since its inception.
I would also like to welcome Colin Rutherford to the
Board, following his appointment as a Non-Executive
Director in February 2019� Colin brings with him a
wealth of experience from his various leadership
roles in public and private companies across a wide
range of relevant sectors and we are already
benefiting from his insight and expertise�
Agreeing to chair NewRiver was not a difficult
decision to take� I was well acquainted with the
Company’s affairs as a long-standing shareholder
and had closely watched the highly talented
management team build an impressive portfolio
in the years following the global financial crisis�
The skill and judgement that the management team
has exercised in building up the Company is exactly
why the Board has tremendous confidence that the
same team will address the current challenges in the
retail sector, regarding them as opportunities rather
than as threats�
Our confidence stems from our core strength in
four areas� First, management’s ability to select
the right assets� In any market dislocation there
are winners and losers, and we are determined
to emerge from the present dislocation in retail
as clear winners� The skill with which NewRiver has
built up a convenience-led, highly resilient portfolio
is unique in the UK real estate industry� Our relative
immunity from the various retailer restructuring
programmes that have caused other landlords real
concern continues to vindicate management’s skill
in selecting the right locations and in partnering
with the right retailers� Consumers are still shopping
in physical stores, but they must be the right kind
of offer and they must be conveniently located�
The Board is very confident that our portfolio
delivers just that�
Secondly, we have confidence in our ability to take
decisive action� Our management team was early to
see the strategic implications of the changing shape
of retailing in the UK and took action to diversify our
retail assets with complementary assets in the shape
of our community pub portfolio� This has added high
quality and diversified income to our Funds From
Operations and made a positive contribution to our
asset values� At the same time, the pub portfolio has
continued to build our presence in the communities
we exist to serve�
Thirdly, our balance sheet is very strong following
last year’s successful debt refinancing, all of which
is now entirely unsecured� Consequently, we have
positioned ourselves well to take advantage of the
attractive opportunities that we believe will present
themselves in the coming period�
Finally, we have tremendous confidence in our
asset management capability� It is our view that
the winners in the current market conditions will
be those companies which not only make the right
strategic calls, but essentially, can deliver on the
execution of those calls� In 40 years in the property
industry, I have never seen more accomplished
asset managers than the team at NewRiver, and
we are determined to nurture and develop this talent
further� The skill, energy and attention to detail that
is evident in the management of our assets means
that our investments are carefully stewarded and
constantly improving� Critically, through our best in
class platform, we can add value not only to assets
under our own management, but to those held in
joint ventures and by third parties�
6
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver was built by
capitalising on opportunities
that emerged following the
global financial crisis, and we
will adopt the same
intelligent approach to
opportunities that will arise
from the present
restructuring of UK retail.
As we develop our business over the next few years,
all of these core strengths will stand us in good
stead� NewRiver was built by capitalising on
opportunities that emerged following the global
financial crisis, and we will adopt the same intelligent
approach to opportunities that will arise from the
present restructuring of UK retail�
I have had the pleasure of working with exceptional
Board colleagues and a highly talented team at all
levels at NewRiver, whose commitment and energy
are second to none� On behalf of the Board, I would
like to extend my thanks to them for an outstanding
effort this year�
Baroness Ford OBE
Non-Executive Chairman
22 May 2019
NewRiver REIT plc Annual Report and Accounts 2019
7
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CH IEF EX ECUTIVE ’S REVI EW
Delivering robust
performance
I am pleased to report a
year of robust performance,
against a difficult market
backdrop for the retail sector.
Once again, our portfolio
centred around community
shopping centres,
conveniently-located retail
parks and community pubs,
and our focus on growing
and sustainable retail market
sub-sectors, positioned us
well to navigate market
headwinds and deliver
resilient cash returns to
our shareholders.
8
NewRiver REIT plc Annual Report and Accounts 2019
Dividend per share
21.6P
FY18: 21.0p
Funds From Operations
£56.4M
FY18: £60.3m
Portfolio valuation
£1.3BN
FY18: £1.2bn
IFRS Net Assets
£796.1M
FY18: £892.4m
Market backdrop
In retail, the challenges facing the sector have
remained relatively constant throughout the year�
Retailers continue to face cost pressures including
business rate increases, the National Living Wage,
the need to invest in supply chain infrastructure and
the weaker pound, while at the same time, increased
competition, online shopping and changing
consumer behaviour, driven by squeezed household
budgets, are reshaping the retail landscape�
Against this backdrop, a clear divergence in retailer
performance has emerged� Retailers delivering sales
growth and expanding their store estates are
typically focused on providing either convenience,
value or services� Our focus market sub-sectors of
value fashion, food & grocery, discounter, health &
beauty and grab & go food all exhibit one or more
of these three key attributes� These retailers are
less affected by wider economic conditions as they
provide essential everyday goods and services,
and are more resilient to online, either because
they provide a face-to-face service that cannot be
replicated electronically, or because online fulfilment
would be too costly�
Retailer underperformance in these market
conditions has generally been a result of operating
in structurally challenged sub-sectors, poor
management, or a combination of both of these
factors� In the mid-market fashion and department
store sub-sectors for example, online retail has
intensified competition and given consumers
complete price transparency, making it difficult for
traditional retailers, challenged by over-spaced store
estates and outdated supply chain infrastructure,
to adapt and maintain market share� Some of these
underperforming retailers have entered into
Company Voluntary Arrangements (‘CVAs’) in an
attempt to reduce rent costs, and in extreme cases,
have exited the market completely�
In the investment market for retail property, the
challenges facing the sector have weighed heavily
on sentiment, and this has been reflected in a lower
volume of transactions in the last 12 months, and a
decline in valuations� We have not been immune
from this negative sentiment, but our portfolio has
several differentiating characteristics that position
it better than most in the face of these headwinds:
first, our portfolio yield has been consistently higher
than all other IPD sectors and has maintained
approximately 250 bps of headroom above the IPD
equivalent yield benchmark over the past four years,
meaning we’re less reliant on income growth to
drive returns at our assets; secondly, our average
lot size, at £23 million, is significantly lower than
peers, providing better liquidity; and finally, an
internal review of our entire portfolio has shown
that our current valuations are 90% underpinned
by the valuation of the next-best alternative use for
each of our assets�
In pubs, data from the British Beer & Pub Association
(‘BBPA’) shows that demand for drinking in pubs
remained strong in 2018, and has been relatively
unchanged in the past five years� Despite squeezes
on consumer incomes, the pub remains an integral
part of community life across the UK, offering an
affordable treat and a valuable social interaction that
often cannot be replicated at home� Sales across the
pub market have continued to grow, managing to
offset the cost pressures facing the industry, which
include business rates, the National Living Wage, the
Apprenticeship Levy, and the ‘Sugar Tax’�
The number of pubs operating in the UK is often
viewed as a measure for the health of the pub
industry� In recent decades, pub numbers have
declined due to a range of factors, including lifestyle
changes, increased alcohol sales in supermarkets
and government interventions such as the smoking
ban� However, in recent years the number of pub
closures has slowed substantially, suggesting the
market is reaching a sustainable, equilibrium number
of pubs, which industry analysts believe to be
around 45,000 outlets�
The investment market for pubs has remained
strong, with transactions totalling £0�8 billion during
the year to 31 March 2019, in line with the previous
year and above the level seen in the year before,
according to Property Data� Pub portfolios continue
to attract a diverse range of buyers, with private
equity, public and private companies, and
institutional investors all active in the market�
NewRiver itself has been active in the market during
the year, with the acquisition of Hawthorn Leisure,
and we foresee further opportunities to invest
directly and to provide our pub management
platform to other pub portfolio acquirers�
Financial performance
In the context of these challenges, our financial
performance remained resilient during the year,
with Funds From Operations (‘FFO’) decreased
from £60�3 million to £56�4 million, with the
additional income generated through net acquisition
activity offset by the absence of one-off receipts
seen in the prior year, including profits on disposal
of investment properties� Underlying Funds From
Operations (‘UFFO’), which excludes profits on
disposal of investment properties, was in-line with
the prior year at £55�1 million (FY18: £55�5 million)�
Our IFRS loss after tax was £36�9 million, reduced
from a profit of £45�7 million in FY18, predominantly
due to a non-cash reduction in portfolio valuation
of £89�5 million�
NewRiver REIT plc Annual Report and Accounts 2019
9
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CH IEF EX ECUTIVE ’S REVI EW
The Board has approved a final quarterly dividend
of 5�4 pence per share, resulting in an ordinary
dividend for the year of 21�6 pence per share, up 3%
compared to the previous year� Our full year ordinary
dividend cover, calculated with reference to UFFO,
was 84%, an improvement from the position at the
half year, but short of the full cover position we are
used to presenting� We are determined to
re-establish a fully covered dividend, and we have
identified a series of strategies to generate UFFO
growth and re-establish ordinary dividend cover
while maintaining our conservative balance sheet
position, which are covered in more detail later
in this review�
Looking ahead, we have held our Q1 FY20 dividend
at 5�4 pence per share, in-line with the prior year,
which reflects our confidence in the strength of the
underlying cashflows of our business� We are
committed to first re-establishing full cover and then
growing the dividend in the future in line with UFFO�
Our portfolio valuation now stands at £1�3 billion,
increased from £1�2 billion at 31 March 2018 due
primarily to the acquisition of Hawthorn Leisure in
the year, offset by a non-cash reduction in portfolio
valuation� Our EPRA net asset value per share
decreased by 31 pence to 261 pence, reflecting the
6�4% reduction in portfolio valuation in the year�
Our IFRS net assets reduced to £796�1 million, due
principally to the same factor�
We continue to benefit from our transformational
actions in the debt capital markets in the last
financial year, which mean that we have now
diversified our sources of funding, increased
operational flexibility, increased debt maturity to
6�9 years and reduced our cost of debt� Our fully
unsecured and unencumbered balance sheet
remains conservatively positioned, with LTV
increased to 37%, principally reflecting acquisition
activity completed during the year and well within
our stated guidance� The profitability of our platform
is underpinned by the significant arbitrage between
our portfolio net initial yield of 7�9% and cost of debt
of 3�2%, and our efficient operating cost structure,
which means that our interest cover is high at 4�0x,
significantly ahead of our stated policy of >2�0x�
Operational performance
During the year we completed £162�1 million of
acquisitions across our community shopping
centres, conveniently-located retail parks and
community pubs portfolios, at an average net
initial yield (‘NIY’) of 12�9%�
In our retail portfolio, in June 2018 we acquired
Grays Shopping Centre in Essex for £20�2 million,
equating to a NIY of 9�4% on the shopping centre
element� The acquisition comprised a community
shopping centre with 177,300 sq ft of retail space,
Key events during the year
May 2018
Acquisition of
Hawthorn
Leisure for
£106�8 million,
NIY of 13�6%
July 2018
Acquisition of
Hollywood Retail &
Leisure Park,
Barrow-in-Furness for
£15�3m, NIY of 8�7%
October 2018
Disposal of
22 pubs
let to Marston’s
for £14�8 million,
NIY of 5�6%
June 2018
Acquisition of Grays
Shopping Centre
for £20�2m, NIY
of 9�4%
September 2018
Asset management agreement
signed with Canterbury City
Council for the management of
Whitefriars Shopping Centre
10
NewRiver REIT plc Annual Report and Accounts 2019
anchored by value and grocery retailers, and a
32,000 sq ft office building with permitted
development rights for residential conversion�
We have already identified a number of value-
creating opportunities at the asset, to meet demand
for a budget hotel, budget gym and discount food
retailer, and to deliver much needed residential
units, and are currently engaging with the local
council to bring plans forward� In July 2018 we
acquired Hollywood Retail & Leisure Park in
Barrow-in-Furness, Cumbria for £15�3 million,
equating to a NIY of 8�7%� The acquisition comprised
a ten-unit 124,400 sq ft retail and leisure park with
an occupier line-up including TK Maxx, Currys PC
World, Dunelm, Nuffield Health and a six-screen Vue
cinema� The asset offers a number of opportunities
to extract further value, including the immediate
conversion of two existing units to introduce a
20,000 sq ft store let to Aldi, which opened in
May 2019�
In our community pub portfolio, in May 2018 we
acquired Hawthorn Leisure for an enterprise value
of £106�8 million, comprising a portfolio of 298 pubs
and a best-in-class pub management platform� The
integration of the business completed in January
2019, transferring all of NewRiver’s community pubs
to the Hawthorn Leisure platform and immediately
unlocking £2�1 million of the £3�0 million of
scale-based synergies identified at acquisition�
The remaining £0�9 million of synergies is expected
to follow in FY20�
Across our retail portfolio we continued to see
robust operational metrics� Occupancy remained
high at 95�2% (March 2018: 96�5%), reflecting our
focus on growing and online-resilient retail
sub-sectors, and our active approach to asset
management� Our average rent remained low at
£12�52 psf (March 2018: £12�36 psf), reflecting our
commitment to affordability for retailers and
underpinning the sustainability of our income�
Our shopping centre like-for-like footfall declined
by 2�4% during the year, ahead of the UK benchmark
by 20 bps�
Over the year we completed 1�2 million sq ft of new
lettings and renewals across our retail portfolio�
On average, long-term deals were signed 0�5%
ahead of previous passing rent and in-line with
March 2018 ERV� Our leasing activity in the year
continued to reflect our focus on growing and
resilient retail sub-sectors, as we signed five leases
with B&M Group, including on new-build stores at
Canvey Island Retail Park and Victoria Retail Park,
Beverley, as well as leases with discounters
Poundstretcher, Poundland and Wilko� Elsewhere
in our focus sub-sectors we signed deals with food
and grocery retailers including Aldi, Sainsbury’s,
M&S Foodhall and Iceland; value fashion retailers
such as TK Maxx, Yours Clothing and Claire’s
Accessories; grab & go food operators including
Burger King and Costa; and health & beauty retailers
Boots, Savers, Superdrug and Holland & Barrett�
Other significant deals saw us introduce new value
December 2018
Acquisition of 76
pubs from Star
Pubs & Bars for
£12�0m, NIY of 17�1%
February 2019
Disposal of Mount
Street Retail Park,
Wrexham and Saltney
Retail Park, Chester for
£12�3m, NIY of 7�6%
November 2018
Completion of
62,000 sq ft Canvey
Island Retail Park,
yield on cost of 9%
January 2019
Completion of
Hawthorn Leisure
integration, meaning all
NewRiver pubs are now
managed from a
single platform
March 2019
25th c-store
delivered
to the Co-op
NewRiver REIT plc Annual Report and Accounts 2019
11
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CH IEF EX ECUTIVE ’S REVI EW
leisure provision to our assets, including the signing
of a 15-year lease with community cinema operator
Reel Cinemas to open a five-screen cinema at
The Ridings shopping centre in Wakefield,
occupying a space created by the conversion of
three former retail units with minimal structural
alterations, and the opening of The Gym in
Broadway Shopping Centre, Bexleyheath in a new
12,900 sq ft unit created by converting a previously
vacant storage area on the second floor of the
shopping centre�
Retail failures in the form of Company Voluntary
Arrangements (‘CVAs’) or administrations continue
to have a limited impact on our rental income,
having deliberately limited our exposure to sub-
sectors facing structural challenges such as casual
dining, department stores and mid-market fashion�
Total exposure to retailers involved in CVAs or
administrations during the year was £2�6 million,
or 2�6%, of our annual net rental income at the start
of the year, and the majority of this related to
Poundworld and Homebase� Stores representing
£0�7 million of this rent were unaffected by CVAs,
and a further £1�2 million was recovered through
new deals or deals currently in legals on impacted
units� This results in a current estimated impact
on FFO in FY20 of £0�6 million, which we are
working to reduce further, encouraged by the strong
progress we have made in mitigating the impact of
CVAs and administrations occurring in the previous
financial year�
We made good progress with our 1�9 million sq ft
risk-controlled development pipeline during the year�
In November 2018 we completed our 62,000 sq ft
retail park development in Canvey Island, Essex,
our largest development to date� The scheme was
75% pre-let on completion to M&S Foodhall, B&M,
Sports Direct and Costa, and these retailers opened
at the site in early 2019� Once fully-let, the scheme
will deliver £1�0 million of annualised rental income�
Elsewhere in our development pipeline, our
convenience store (‘c-store’) development
programme for the Co-operative saw the completion
of six new c-stores during the year, bringing the total
number delivered to date to 25�
During the year we made £67�5 million of disposals
across our retail park, community pub and high
street unit portfolios, on terms on average 4%
ahead of March 2018 valuations� These disposals
demonstrate our commitment to profitably recycling
capital out of mature assets and into higher yielding
assets with greater opportunities to extract value�
The fact these disposals were made at a premium
to valuations underscores their conservative nature
and the attractive nature of our assets to a wide
range of potential buyers�
We are committed to operating in a way that
enhances the lives of the communities we serve
and minimises our impact on the environment, as
we believe this in the best interests of all of our key
stakeholders� To this end we were delighted to
receive a Green Star in the 2018 Global Real Estate
Sustainability Benchmark (‘GRESB’) assessment
during the year, with a 35% improvement in our
overall score compared to the prior year� We have
been a GRESB participant since 2015 and these
latest results recognise the significant progress
we have made in integrating environmental, social
and governance considerations into our strategy
and operations�
Capitalising on opportunities arising
from increased risk in the UK retail
real estate market
We are committed to delivering growing cash
returns to our shareholders and have a track-record
of extracting further value from our assets and our
in-house expertise� Last year we identified a number
of strategic opportunities arising from the changing
ways in which we live, work and consume, and the
increased levels of risk in the UK retail real estate
market� Through pursuing these opportunities, we
can continue to grow our income while maintaining
a conservative balance sheet position, in turn
re-establishing full dividend cover�
12
NewRiver REIT plc Annual Report and Accounts 2019
The strategic opportunity we have progressed
furthest during the year is the use of our asset
management platform to manage retail assets
wholly owned by third parties, or owned by joint
ventures between NewRiver and third parties, and
it will continue to be a major area of focus for us in
the year ahead� Local Authorities have been buying
retail real estate in recent years, partly because they
require income to fund local services and partly
because they have become more interventionalist
in order to protect the communities they serve�
More recently, current levels of pricing have started
to attract the interest of private equity investors�
Local Authorities have been encouraged to acquire
real estate assets through a range of policies aimed
at making them take a more enterprising and
commercial approach to raising revenue, and
through the inexpensive loans available to them
through the Public Works Loan Board� Figures from
Property Data show that Local Authorities have
acquired £4�8 billion of properties over the past
three years, 16-times more than in the prior three
years, and this includes £1�6 billion of retail property�
A key motivation for Local Authorities purchasing
these assets is the desire to take greater control of
their town centres and ensure they better meet the
needs of their communities in the current retail
environment� However, in most cases Local
Authorities lack the personnel, expertise or
relationships to successfully manage these assets
on their own, and have turned to professional asset
managers such as NewRiver to ensure income
streams are sustainable� During the year, we signed
two asset management agreements, with
Canterbury City Council for Whitefriars Shopping
Centre and with Market Harborough District Council
for the management of two high street assets�
For private equity investors, decline in valuations
of some assets has meant that retail assets present
attractive returns, with yields capable of meeting
the c�15% IRRs that private equity requires� These
investors typically want to co-invest with an active
and specialist retail real estate partner� NewRiver is
only one of a few of these partners with the scale
and expertise required, and by recycling capital into
these joint ventures, we gain exposure to high
yielding assets with a reduced capital outlay, and
receive asset management and promote fees, in
addition to capital growth� In May 2019, we entered
into a joint venture with Bravo III to acquire four retail
park assets, re-establishing a successful partnership
with a track record of delivering growing cash
returns, and demonstrating an endorsement of our
asset management capabilities by a leading
property investor�
Outlook
We recognise that the challenges facing the UK
retail sector will continue in the near-term, but we
remain confident in our operating platform and
excited about the opportunities this presents�
In pubs, we expect those with a wet-led offer to
continue to deliver performance due to their
resilience to changes in consumer behaviour and
their position at the centre of everyday life in
communities across the UK�
Our priority for the year ahead is to leverage our
in-house expertise to re-establish a fully covered
dividend, by growing our income while maintaining
a conservative balance sheet position� In order to
achieve this, we must capitalise on the opportunity
created from the increased risk in UK retail real
estate market, and the resulting changes in
ownership of retail assets and need for specialist
asset management� Our track-record of success
has been built on our ability to adapt to changing
market conditions, and we must act innovatively
to continue delivering growing cash returns and
thriving communities�
We recognise that there are significant threats in
the UK retail real estate market, and it is tough, but
we remain optimistic, we have limited competition
and we are very clear what we want to deliver�
Allan Lockhart
Chief Executive
22 May 2019
NewRiver REIT plc Annual Report and Accounts 2019
13
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR MARKETPLACE
Resilience in a
changing market
Retail
Operating market
The challenges facing the £335 billion UK
retail sector have remained relatively constant
throughout the year� Retailers face cost pressures
arising from factors such as increases to business
rates and the National Living Wage, the need to
invest in their supply chains and distribution
infrastructure to meet customer expectations,
and the weaker pound�
At the same time, increased competition,
the growth of online, and changing consumer
behaviour is rapidly reshaping the retail
landscape� As household budgets have
continued to be squeezed, consumers have
become more focused on costs and less
brand-loyal, making it difficult for retailers to
pass on their increased costs to customers
and requiring them to invest further in their
infrastructure and store estates in order to
protect their market share�
Against this backdrop, a clear divergence in
retailer performance has emerged� Retailers
posting strong results and growing their store
estates have typically focused on providing a
combination of either convenience, value or
services� These retailers are less affected by
wider economic conditions as a result of
providing essential, everyday goods and
services at a low price point, and are more
resilient to online, either because they provide
a face-to-face service that cannot be replicated
online, or because online fulfilment would be
uneconomical� Data from the Local Data
Company confirms this trend, showing that, in the
year to March 2019, the Top 50 top expanding
operators by net store openings was dominated
by retailers offering convenience, value or
services� NewRiver’s focus market sub-sectors
of value fashion, food & grocery, discounters,
health & beauty and grab & go food all exhibit
one or more of these three key attributes�
Underperformance in these market conditions
has generally been a result of operating in
structurally challenged sub-sectors, poor
management, or a combination of both of these
factors� For example, in the mid-market fashion
and department store sub-sectors, online retail
has intensified competition and given consumers
complete price transparency, making it difficult for
traditional retailers, with over-spaced store
estates and outdated supply chain infrastructure,
to adapt and maintain market share� Elsewhere,
in the casual dining sub-sector, the market has
suffered from overcapacity and the squeeze on
household budgets, exposing the fact that a
number of operators have expanded too rapidly,
with corporate structures that are heavily
indebted and therefore unsustainable in this
market� These headwinds have led to operators
posting weaker performance, entering into
Company Voluntary Arrangements (‘CVA’s) in
an attempt to reduce rent costs and, in extreme
cases, entering administration or exiting the
market completely�
Investment market
The challenges facing the sector have weighed
heavily on sentiment, and this has been reflected
in valuation declines and lower transaction
volumes� Data from Property Data shows that
the total value of shopping centre and retail park
transactions in the year to 31 March 2019 was
£1�0 billion and £1�8 billion respectively� For
shopping centres this represents a 40% decline
from the previous year and a near 60% fall
compared to two years ago� For retail parks,
it marks a 34% decline from the previous year
and a 40% fall compared to two years ago�
We have not been immune from the negative
sentiment, but our portfolio has several
differentiating characteristics that leave it
better positioned than most in the face of these
headwinds, as evidenced by the disposal of 5%
of our portfolio during the year, despite the
slowdown in transaction volumes� First, our
portfolio yield has been consistently higher
than all other IPD sectors and has maintained
approximately 250 bps of headroom above the
IPD benchmark over the past four years, meaning
we are less reliant on income growth to drive
returns at our assets; secondly, our average lot
size, at £23 million, is significantly lower than
peers, providing better liquidity; and finally, a
detailed internal review of our entire retail
portfolio has found that our current valuations are
90% underpinned by alternative use valuations�
14
NewRiver REIT plc Annual Report and Accounts 2019
r
e
O t h
C
o
n
v
e
n
i
e
n
c
e
Top 50 retailers
by net openings
in last 12 months1
V
alu
e Retail
e
c
i
v
r
e
S
e
r
u
s
i
e
L
e
u
l
a
V
deals agreed with NewRiver in last 12 months
1� Source: The Local Data Company, May 2019� Data presented is for the 12 months to 31 March 2019
NewRiver REIT plc Annual Report and Accounts 2019
15
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OUR MARKETPLACE
Pubs
Operating market
Data from the British Beer & Pub Association
(‘BBPA’) shows that demand for drinking in pubs
remained strong in 2018, and has been relatively
unchanged in the past five years� Despite wider
economic conditions weighing on consumer
sentiment, the pub remains an integral part of
community life across the UK, offering an
affordable treat and an experience that cannot
be replicated at home� Sales across the pub
market have continued to grow, as an increase
in drinks prices has more than offset declining
volumes, driven by customers drinking less but
higher quality products� Rising sales have partially
offset the cost pressures facing the industry,
with increases in the National Living Wage,
the Apprenticeship Levy, and the ‘Sugar Tax’
all contributing to a tightening of pub
operator margins�
BBPA data also shows that in 2018, sales growth
at wet-led pubs, which account for the vast
majority of NewRiver’s community pub portfolio,
outpaced those of food-focused pubs for the first
time since 2008� Wet-led pubs in particular
Pub numbers in the UK since 1980
benefited from a general trend towards more
experiential spending, prolonged periods of
warm weather and a strong line-up of sporting
events during the year� In contrast, the
performance of food-focused pubs was held
back by the headwinds facing the wider casual
dining market, predominantly market oversupply
and competition from growing sub-sectors such
as home delivery�
The number of pubs operating in the UK is
often viewed as a measure of the health of
the industry� In recent decades, pub numbers
have declined due to a range of factors, including
lifestyle changes, increased off-trade sales and
government interventions such as the smoking
ban� However, more recently the number of pub
closures has slowed, suggesting the market is
reaching and a sustainable, equilibrium number
of pubs, which industry analysts believe to be
around 45,000�
Industry analysts
believe 45,000 UK pubs
to be sustainable level
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
0
8
9
1
1
8
9
1
2
8
9
1
3
8
9
1
4
8
9
1
5
8
9
1
6
8
9
1
8
8
9
1
9
8
9
1
0
9
9
1
1
9
9
1
2
9
9
1
3
9
9
1
4
9
9
1
5
9
9
1
6
9
9
1
7
9
9
1
8
9
9
1
9
9
9
1
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
Source: BBPA
Independent
Tenant and Leased
Managed
Total (split not
yet available)
Investment market
The investment market for pubs saw a significant
increase in activity in the year to 31 March 2019,
with transactions totalling £828 million according
to the Property Data database� This is significantly
higher than in the previous two years, which both
saw transaction levels of around £300 million�
Pub portfolios continue to attract a diverse range
of buyers, with private equity, public and private
companies, and institutional investors all active in
the market during the year� NewRiver was active
in the market, with the acquisition of Hawthorn
Leisure in May 2018, and we foresee further
opportunities to invest in pub portfolios, including
through joint ventures�
16
NewRiver REIT plc Annual Report and Accounts 2019
Consumer and societal trends
Urbanisation and
housing supply
The ONS forecasts that the UK population will
grow by 5�5% to 69�2 million people over the
decade to 2026, and the proportion of people
living in urban areas is expected to reach almost
90% by this time� In order to address population
growth, deal with long-standing undersupply and
improve affordability, the Government has set a
target of building around 300,000 homes a year�
To meet this target, planning policy has become
strongly supportive of residential development
in town centres, with the National Planning Policy
Framework encouraging planning policies that
“recognise that residential development often
plays an important role in ensuring the vitality
of town centres” and “support opportunities to
use the airspace above existing residential
and commercial premises for new homes”�
At the same time, the nature of housing tenure
in the UK is changing, with the private rental
sector (‘PRS’) now accounting for 20% of all
UK households, compared to 13% just ten years
ago, according to ONS data� The key drivers
of PRS growth have been a lack of housing
affordability and societal lifestyle changes,
and these factors, combined with favourable
government policies towards PRS, have led to
growth of the large scale institutional PRS market
and the forward-funding of purpose-build PRS
schemes in town centres�
The rise of multi-channel retailing
and click & collect
According to GlobalData, online transactions
accounted for 14% of all retail sales in the UK
in 2018, and this is forecast to grow to 18% by
2023� As online sales have grown, so too have
customer expectations around the speed and
cost of order fulfilment and returns, placing
additional cost pressures on both physical
and online retailers as they invest in systems
and infrastructure to remain competitive�
In this environment, many retailers have
leveraged their physical store networks and third
party click & collect providers to fulfil online
orders and returns, with the value of transactions
through the click & collect channel increasing
by 49% between 2015 and 2018, according to
GlobalData, and 69% of online shoppers having
recently used the service� The key benefits of
click & collect for physical retailers are
significantly reduced costs, the ability to resolve
customer queries quicker, and the driving footfall
and ancillary purchases in-store, and for online
retailers physical click & collect points give them
a wider reach and reduced costs in processing
returns� For customers, the benefits of click &
collect are better customer service, and the
ability to collect an order at a time that is
convenient for them, which can be especially
important during the week when many people
are away from home�
Click & Collect sales expected to
continue to grow (£bn)
9.9
9.2
+48%
8.7
8.0
7.4
6.7
+49%
6.0
5.3
4.5
2016
2017
2015
Source: Global Data
2018 2019 2020 2021 2022 2023
10
8
6
4
2
0
NewRiver REIT plc Annual Report and Accounts 2019
17
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR MARKETPLACE
Ageing population and changing
healthcare provision
As the UK population grows, it is also set to
become older and less healthy� The ONS
forecasts that the number of the people more
than 85 years old in the UK is forecast to double
from 1�6 million in 2018 to 3�2 million in 2040,
and increasing affluence and advancements in
medicine mean our medical needs are becoming
more complex too�
All these factors are putting intense pressure
on the NHS, which has responded with a
five-year transformation programme focused
on extending primary care and access to services
closer to home, providing treatment and advice
in a way that is convenient to patients and
delivered at a substantially lower cost than in
hospitals� Key to delivering this programme
will be the development of new, purpose-built
facilities in town centres which are accessible
and close to existing public amenities�
Local Authority investment in commercial
property
Local Authority investment in
commercial property
Over the last decade, Local Authorities have
faced substantial falls in central government
grants and the introduction of legislation and
policies aimed at making them more enterprising,
independent, and forward thinking� Against this
backdrop, and with inexpensive loans available to
them through the Public Works Loan Board, Local
Authorities have built significant property
portfolios of commercial buildings, in order to
generate revenue but also to take control of their
town centres and better respond to the needs of
the local community�
According to Property Data, Local Authorities
have acquired £4�8 billion of properties over the
past three years, including £1�6 billion of retail
property� However, most Local Authorities lack
the scale, expertise or relationships to
successfully manage these assets on their own,
and have turned to professional asset managers
to ensure income streams are sustainable�
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
2013
Retail/Leisure
2014
2015
Industrial
2016
2017
Offices
2018
Other
£1.6 billion of retail
property acquired by
Local Authorities in the
last three years
18
NewRiver REIT plc Annual Report and Accounts 2019
LEVERAGING OUR OPERATI NG PLAT FOR M
Strategies to deliver Underlying
FFO growth with a net neutral
investment approach
Our strategies aim to take advantage of the current market dislocation
and leverage our market leading operating platform to deliver
Underlying FFO growth while maintaining a conservative balance sheet.
Maintain a
conservative balance
sheet
Target dividend cover
through Underlying
FFO growth
Disposal
target
Yield 5-7%
Acquisition
target
Yield 9-15%
1
2
3
4
5
Capital recycling
Primarily into Joint
Ventures
Asset management
platform
Sharper asset
management &
operational efficiencies
Underlying FFO + £3-6m
Underlying FFO + £3-5m
Underlying FFO + £1-3m
Growth from our pubs
Underlying FFO + £1-2m
Medium term Underlying FFO
target +£8-16m
NewRiver REIT plc Annual Report and Accounts 2019
19
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT LE VERAGING OUR OPERATI NG PLAT FO R M
Capital recycling
into joint ventures
Market dislocation resulting from the negative sentiment
towards the retail sector, and the subsequent falls in valuations,
has meant that retail assets once again present attractive
returns for private equity buyers.
These investors typically want to co-invest with
an active and specialist real estate partner, and
NewRiver is one of only a few of these partners
with the scale and expertise required�
By recycling capital into these joint ventures, we gain
exposure to high yielding assets with a reduced capital
outlay, and receive asset management fees and promotes
in addition to rental income, boosting our returns�
Progress to date
In May 2019, NewRiver agreed terms, in
principle, relating to a new 50:50 joint venture
with BRAVO Strategies III LLC ("BRAVO"), and
also announced that it has exchanged contracts
to acquire a portfolio of four retail parks for total
consideration of £60�5 million, reflecting a net
initial yield of 9�8%� NewRiver will hold a 50%
interest in the gross assets of the joint venture
(NRR share: £30�2 million) and NewRiver will
benefit from 50% of the net rental income
(NRR share: £3�1 million per annum)�
Our relationship
with BRAVO
– Our relationship with BRAVO was first
established in December 2012 and grew
to a portfolio of £0�6 billion by FY17
– Backed by a large US private equity firm,
BRAVO chose us as a preferred partner
on UK retail opportunities
– We were responsible for asset
management for the portfolio, and the
assets were typically acquired in 50:50 JV
– We acquired JV partner’s share of assets
as the Company grew, crystallising
promote receipts linked to performance
– FFO benefit peaked at £6�2 million in
FY15, with £4�5 million of promote receipts
and £1�7 million of asset management fees
20
NewRiver REIT plc Annual Report and Accounts 2019
Once established, it is intended that the joint venture will
acquire and manage a portfolio of retail parks in the UK,
as well as identifying and pursuing other opportunities
in the UK retail sector� It is intended that NewRiver will be
appointed as asset manager to the portfolio, in return for
a management fee calculated with reference to the gross
rental income of the portfolio, and will also receive a
promote based on financial performance�
BRAVO JVs: Assets Under
Management (£bn)
Acquisitions:
6 shopping
centres
Acquisitions:
6 shopping centres
202 pubs
Acquisitions:
3 shopping
centres
0.6
0.5
0.5
0.5
0.3
0.1
FY13
FY14
FY15
FY16
FY17
FY18
Fees (£m)
AM fees
0�1
Promotes –
Total fees 0.1
1�1
–
1.1
1�7
4�5
6.2
0�7
3�4
4.0
0�7
–
0.7
0�3
2�2
2.5
Third-party asset
management mandates
Local Authorities have been encouraged to buy
commercial properties by policies aimed at making
them more enterprising and commercial, and through
the inexpensive loans available to them through the
Public Works Loan Board.
However, Local Authorities often lack the
in-house expertise to manage the assets they
own, and require specialist asset managers
with the scale, expertise, relationships and
governance to successfully manage the assets
on their behalf�
NewRiver launched its asset management platform for
assets owned by third parties in May 2018, and has since
signed three mandates with a number of partners aiming
to improve town centres for the benefit of their local
communities� We are in active discussions with a further
30 Local Authorities to explore other opportunities�
Progress to date
September 2018
Whitefriars
Shopping
Centre,
Canterbury
Owner: Canterbury
City Council
March 2019
High street
units,
Market
Harborough
Owner: Market
Harborough DC
May 2019
Nicholsons
Shopping
Centre,
Maidenhead
Owner: Areli
Real Estate
Our purchase of Whitefriars Shopping
Centre in February 2018 was a once-in-a-
generation opportunity to take control of
one of our city’s key sites and ensure it
works for the benefit of the community.
The Council is very pleased to be
partnering with one of the UK’s leading
retail asset managers in NewRiver to
realise this ambition.
Colin Carmichael, Chief Executive,
Canterbury City Council
The purchase of these buildings will not
only support the future economic
regeneration of Market Harborough, but
also provide a return on the Council
investment and this will be used to
support wider council services across
the district.
Norman Proudfoot, Director
of Harborough District Commercial
Services
We are very pleased to have appointed
NewRiver to manage the Nicholsons
Shopping Centre. NewRiver’s deep retail
expertise and great relationships with key
retailers made them the clear choice to
protect and enhance our income returns at
this asset.
Andrea Vanni, Partner, Areli
£0.5m of third-party mandates secured to date
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
21
21
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR BUSINESS MODEL
Delivering growing cash returns
and thriving communities
Community Shopping
Centres
Located within the heart of communities
–
Focused on food and grocery,
discounters, value fashion, health &
beauty and grab & go food
Conveniently-located
Retail Parks
Located at the edge of urban areas
–
Free parking, a diverse retailer
line-up and ideal for click & collect
and other services
Community
Pubs
Located within residential areas,
with good roadside visibility
–
Predominantly leased & tenanted,
wet-led and profitable
1
Disciplined stock
selection
g o u r operating p
l
a
Growing cash
returns
t
f
o
r
m
veragin
5
e
L
C
o
n
Profitable
capital
recycling
4
Thriving
communities
s
ervative ba l a n
e sheet
c
Active
asset
management
2
Risk-controlled
development
3
Supported by our Environmental,
Social & Governance (‘ESG’) objectives
Minimising our
environmental impact
Engaging our staff
and occupiers
Supporting our
communities
Leading on governance
and disclosure
22
NewRiver REIT plc Annual Report and Accounts 2019
Our key stakeholders
Staff
The expertise and
dedication of our
employees is the driving
force behind our success
Occupiers
We have over 800 retailers
across our retail portfolio
and over 600 individual
tenants in our community
pub portfolio
Councils and
communities
We work with councils and
local groups across the UK
to deliver sustainable and
thriving communities
Lenders
Our relationship banks and
bondholders provide us
with the funding to
execute our strategy
Shareholders
An open and continuous
dialogue with the owners
of our business ensures
we build and maintain
their support
For a company of our size we have a
relatively small headcount, with just 120 full
time employees working across our asset
management, development, finance and
support functions�
The wellbeing of our staff is a top priority
for us� In 2018 we launched a staff wellbeing
programme which includes initiatives to
encourage physical activities and healthy
eating and to support flexible working�
Our diverse range of occupiers meet the
everyday needs of our customers, providing
convenience, value and services�
As an active owner, we work closely with
occupiers to ensure our centres are clean,
secure and inviting, that our rents are
affordable, and our occupational costs
are low� During the year we completed our
most comprehensive occupier satisfaction
survey to date�
Our relationships with Local Authorities and
communities that our assets serve are key
to ensuring their successful operation and
that they continue to serve the needs of the
community today and in the future�
This year we have introduced our asset
management platform for third party assets,
and are actively engaging with a number of
Local Authorities on applying our asset
management expertise to their assets�
We continue to benefit from our
transformational actions in the debt capital
markets in the prior financial year, which
mean that we have a fully unsecured balance
sheet with increased operational flexibility,
increased debt maturity and a reduced cost
of debt�
We will continue to work closely with our
relationship banks and bondholders to
maintain our strong balance sheet position�
We engage our shareholders through an
active programme of meetings, presentations
and site visits through the year�
The Chief Executive, Chief Financial Officer
and Head of Investor Relations & Strategy
are our principal spokespersons for
investors, with our asset managers also
meeting investors where appropriate�
The Non-Executive Chairman and Senior
Independent Director are available to meet
with shareholders to discuss governance
and other matters�
Our contribution
87%
of staff received
professional training
during the year
650
responses to our
2018 occupier
satisfaction survey
Invested in over
700
communities
throughout the UK
Fitch Ratings rated
our £300 million
unsecured
corporate bond
BBB+
171
contacts with
investors in FY19
NewRiver REIT plc Annual Report and Accounts 2019
23
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR STRATEGY
Delivering growing cash returns
and thriving communities
The execution of our proven business model, and focus on our
ESG objectives, enables us to deliver beneficial outcomes for all
our stakeholders.
Our strategic priorities
Disciplined
stock
selection
Active
asset
management
Risk-
controlled
development
What we do
We target high yielding assets with low risk
characteristics in our key sectors of
community shopping centres, conveniently-
located retail parks and community pubs�
We acquire these assets either directly or
through joint ventures� Our significant market
experience and in-depth analysis enable us
to price risk appropriately and buy assets at
the right prices�
What we do
We enhance and protect income returns
through our asset management initiatives,
which range from the deployment of targeted
capex to improve asset environments to
measures to reduce occupational costs
for occupiers� We draw on our in-house
expertise, a deep understanding of our
market and strong relationships with our
occupiers to achieve this�
What we do
We create income and capital growth
through our risk-controlled development
pipeline� Our in-house development team
works with stakeholders to obtain valuable
planning consents, which we can develop
ourselves or sell to crystallise a profit�
Our risk-controlled approach means that
we will not commit to developments without
securing significant pre-lets or pre-sales�
Progress in FY19
– We acquired £35�5 million of retail
assets at a NIY of 9�1%, comprising Grays
Shopping Centre in Essex and Hollywood
Retail & Leisure Park, Barrow-in-Furness
– In May 2018 acquired Hawthorn Leisure
for an enterprise value of £106�8 million,
a NIY of 13�6%, comprising a portfolio
of 298 community pubs and a pub
management platform
– Acquired a portfolio of 76 pubs from
Star Pubs & Bars for £12�0 million, at
a NIY of 17�1%
Priorities for FY20
– Continue to target high yielding assets
with low risk characteristics, leveraging
the opportunities created by dislocation
in the UK retail real estate market
– Invest through joint ventures to grow
income while maintaining a conservative
balance sheet
KPIs
– Annualised rent roll
– Funds From Operations
– Total Accounting Return
– Total Property Return
– GRESB Score
Progress in FY19
– Completed 294 retail leasing events
across 1�2 million sq ft with long term
deals on terms 0�5% ahead of previous
rent and with occupiers focused on value,
convenience and services
– Signed deals to introduce new value
leisure operators to our centres, including
Reel Cinemas in Wakefield and The Gym
in Bexleyheath
– Reduced service charge budgets by
£1�7 million across the portfolio
Progress in FY19
– In November 2018, completed the 62,000
sq ft Canvey Island Retail Park in Essex�
M&S Foodhall, B&M, Sports Direct and
Costa are now open at the park, which
has a fully-let annualised rent roll of
£1�0 million
– Convenience store development
programme for The Co-operative saw
the completion of six c-stores during
the year, bringing the total number
delivered to date to 25
Priorities for FY20
– Continue asset management initiatives
Priorities for FY20
– Deliver currently under-construction
across the portfolio
– Sustain high levels of retail occupancy
– Maintain affordable rents and reduce
occupier costs to ensure sustainability of
cash income
c-stores and explore further
development opportunities
– Progress the Burgess Hill and
Cowley developments
– Submit planning for Penge development
KPIs
– Annualised rent roll
– Funds From Operations
– Retail occupancy
– Total Accounting Return
– Total Property Return
– GRESB Score
KPIs
– Annualised rent roll
– Funds From Operations
– Retail occupancy
– Total Accounting Return
– Total Property Return
– GRESB Score
24
NewRiver REIT plc Annual Report and Accounts 2019
Our strategic priorities
Profitable
capital
recycling
What we do
We regularly assess potential upside
opportunities in disposing of assets and
recycling capital into new opportunities,
and we have a track record of doing this
profitably� These disposals are typically
of mature assets where our estimates of
forward looking returns are below target
levels, assets where we believe the risk
profile has changed, or assets sold to
special purchasers�
Progress in FY19
– Made £67�5 million of disposals on
terms on average 4% ahead of March
2018 valuations
– In October 2018 disposed of 22
community pubs let to Marston’s for
£14�8 million, representing a NIY of 5�6%
– In February 2019 disposed of Mount
Street Retail Park, Wrexham and Saltney
Retail Park, Chester for £12�3 million,
representing a NIY of 7�6%
– Sold nine c-stores to date, in-line
with valuation
Leveraging our
operating platform
with a conservative
balance sheet
What we do
We leverage the scale and expertise of our
platform, underpinned by a conservative
and unencumbered balance sheet, to drive
further returns� This includes using our
platform to manage assets owned by third
parties or which we own through joint
ventures with third parties�
Progress in FY19
– Completed the integration of Hawthorn
Leisure, providing us with an industry-
leading pub management platform to
grow our pubs business further
– Signed third-party asset management
agreements for assets owned by
Canterbury City Council, Harborough
District Council and Areli
– Maintained unencumbered balance sheet
and an LTV of 37%, within our guidance
– Investment-grade credit rating of BBB+
for our corporate bond re-affirmed by
Fitch Ratings
Priorities for FY20
– Continue to recycle assets that no longer
Priorities for FY20
– Continue to abide by our financial
meet our return criteria
policies and guidance
– Continue to make opportunistic disposals
– Maintain a conservative balance
to special purchasers
sheet as we pursue our net neutral
investment strategy
KPIs
– Funds From Operations
– Total Accounting Return
– GRESB Score
KPIs
– Admin cost ratio
– Funds From Operations
– Interest cover
– Loan To Value
– GRESB Score
– Total Accounting Return
ESG objectives
Minimising our
environmental impact
Reducing greenhouse gas emissions
in order to prevent climate change is
one of the biggest challenges facing
our society� We aim to minimise our
environmental impact through
procuring energy from renewable
resources, reducing our consumption
and encouraging stakeholders to be
more sustainable�
Engaging our staff
and occupiers
Our staff and occupiers are key
stakeholders in our business, and
their wellbeing is vital to the long-term
success of our company� We aim to
engage our staff and occupiers
through maintaining an ongoing
dialogue to understand and act
upon their needs�
Supporting our
communities
Our assets are located in communities
across the UK and play an integral role
in the lives of our customers� We aim
to enrich lives and strengthen
communities through meeting the
needs of all our customers and
supporting and championing
local causes�
Leading on governance
and disclosure
High standards of corporate
governance and disclosure are
essential to ensuring the effective
operation of our company and instilling
confidence amongst our stakeholders�
We aim to continually improve our
levels of governance and disclosure
to achieve industry best practice�
NewRiver REIT plc Annual Report and Accounts 2019
25
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OUR KPIs
Measuring our progress
over time
We measure our progress against our strategic priorities
and ESG objectives with reference to our key performance
indicators (KPIs).
KPI
Description
Our performance
Total Accounting Return
-3.3%
1
.
8
7 1
5
1
.
1
.
8
.
7
5
.
3
3
-
FY15 FY16 FY17 FY18 FY19
Total Property Return
1.3%
.
2
8
.
8
6
/
A
N
/
A
N
3
.
1
FY15 FY16 FY17 FY18 FY19
Funds From Operations
£56.4M
.
2
8
1 5
7
4
.
.
3
0
6
.
4
6
5
Our TAR was -3�3% during
the year, as our EPRA NAV
reduced 11%, mainly due
to a decline in the valuation
of our assets partially offset
by our dividend, which
increased by 3%�
Total Accounting Return
(‘TAR’) is the change in EPRA
Net Asset Value (‘NAV’) per
share over the year, plus
dividend paid, as a percentage
of the EPRA NAV at the start
of the year� TAR performance
relative to UK-listed Real Estate
Investment Trusts is a key
metric used in setting the
long-term incentive plan�
We delivered a Total Property
Return of 1�3%, outperforming
the MSCI-IPD benchmark by
410 bps� This outperformance
was driven by our Income
Return of 7�5%, outperforming
the benchmark by 230 bps�
Total Property Return is a
measure of the income and
capital growth generated
across our portfolio� It is
calculated by MSCI Real Estate
(formerly known as IPD) on our
behalf, using independent
valuers, and we assess our
performance against the
market by comparing our
returns to the MSCI-IPD All
Retail benchmark�
Funds From Operations
(‘FFO’) is a Company measure
determined by cash profits
which includes realised
recurring cash profits plus
realised cash profits or losses
on the sale of properties and
excludes other one off or
non-cash adjustments�
FFO decreased from
£60�3 million to £56�4 million
during the year, with the
additional income generated
through net acquisition
activity offset by the absence
of one-off receipts seen in
the prior year, including
profits on disposal of
investment properties�
.
9
0
2
FY15 FY16 FY17 FY18 FY19
26
NewRiver REIT plc Annual Report and Accounts 2019
KPI
Description
Our performance
Annualised rent roll
£114.6M
.
6
4
1
1
.
5
6
9
1
.
0
0
1
1
.
5
8
.
2
6
5
FY15 FY16 FY17 FY18 FY19
Admin cost ratio
13%
3
2
9
1
5
4 1
1
3
1
FY15 FY16 FY17 FY18 FY19
Annualised rent roll is a
measure of the scale of our
business and the success of
our active asset management
and risk-controlled
development� It is disclosed
on a proportionally consolidated
basis, including rental income
from joint ventures at our share�
Our annualised rent roll
increased 14% to £114�6 million
during the year, as increased
rental income from
acquisitions, including
Hawthorn Leisure, and asset
management initiatives more
than offset rental income lost
through disposals�
The admin cost ratio is total
administrative expenses as a
proportion of gross revenue
on a proportionally consolidated
basis, including our share of
administrative expenses and
gross revenue from joint
ventures� It is a measure of
the operational efficiency of
the Company�
Our admin cost ratio was
13% for the year, reduced
from 15% for FY18, as our
scale meant that the
proportional growth of our
gross revenue was greater
than the proportional growth
in our administrative
expenses�
Links to our strategic priorities
Disciplined stock selection
Active asset management
Risk-controlled development
Profitable capital recycling
Leveraging our operating
platform with a conservative
balance sheet
Management remuneration
NewRiver REIT plc Annual Report and Accounts 2019
27
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR KPIs
KPI
Description
Our performance
Retail occupancy
95.2%
.
0
6
9
.
9
5
9
.
6
6
9
.
5
6
9
.
2
5
9
Retail occupancy is the
estimated rental value of units
expressed as a percentage of
the total estimated rental value
of the retail portfolio, excluding
development activities�
Retail occupancy remained
high at 95�2% at the year end,
due to our active asset
management, affordable
rents, and efforts to reduce
occupational costs for
our retailers�
FY15 FY16 FY17 FY18 FY19
Loan to Value
37%
9
3
7
3
7
3
7
2
8
2
FY15 FY16 FY17 FY18 FY19
Interest cover
4.0X
3
9 4
3
.
.
7
5 4
4
.
.
0
4
.
Our LTV increased over
the year, from 28% to 37%,
principally reflecting
acquisition activity
completed during the
year and well within our
stated guidance�
Loan to Value (‘LTV’) is the
proportion of our properties
that are funded by borrowings�
The measure is presented on
a proportionally consolidated
basis, including our share of
properties and borrowings held
in joint ventures� Maintaining an
LTV of less than 50% is one of
our five key Financial Policies�
Our guidance is that LTV will
remain below 40%�
Our interest cover was
4�0x in FY19, reduced from
4�7x in the previous year
but still significantly ahead
of our stated policy�
Interest cover is the ratio of
our operating profit to our
net financing costs, on a
proportionally consolidated
basis, including our share of
operating profit and net
financing costs from joint
ventures� Maintaining
interest cover of more than
2�0x is one of our five key
Financial Policies�
FY15 FY16 FY17 FY18 FY19
28
NewRiver REIT plc Annual Report and Accounts 2019
KPI
Description
Our performance
GRESB Score
62
2
6
6
4
6
3
/
A
N
/
A
N
FY15 FY16 FY17 FY18 FY19
The Global Real Estate
Sustainability Benchmark
(‘GRESB’) is the leading
sustainability benchmark for
the global real estate sector�
Assessments take place
annually and are guided by
factors that investors and the
industry consider to be material
issues in the sustainability
performance of real asset
investments, resulting in an
overall score marked out
of 100�
NewRiver has been a GRESB
participant since 2016� In our
2018 GRESB Assessment we
received a GRESB Score of
62, a 35% improvement
compared to our 2017 score,
and one which qualified us for
Green Star status�
Our GRESB Score is
just one of the ways we
measure progress against
our ESG Objectives.
For more information on
our ESG programme
see page 58
Links to our strategic priorities
Disciplined stock selection
Active asset management
Risk-controlled development
Profitable capital recycling
Leveraging our operating
platform with a conservative
balance sheet
Management remuneration
NewRiver REIT plc Annual Report and Accounts 2019
29
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 5
deals with B&M Group,
including a new-build
store in Victoria Retail
Park, Beverley
62,000 SQ FT
Canvey Island Retail Park
development completed
in November 2018
25TH
C-store delivered to the Co-op.
9 sold to date
80,000 SQ FT
of Primark openings
in former BHS units, including
Priory Meadow, Hastings
£162.1M
of acquisitions, including
Hollywood Retail & Leisure Park,
Barrow-in-Furners
30
3
Asset Management
Agreements signed, including
with Canterbury City Council
for Whitefriars Shopping
Centre
Completed the integration of
Hawthorn Leisure and unlocked
£2.1M
of scale-based synergies
PROPERTY REVIEW
Highlights
• Portfolio increased by 4% to £1�3 billion
(March 2018: £1�2 billion), driven by
net acquisitions
• Impact of CVAs/administrations mitigated;
reduced FY19 FFO by £1�4 million vs
£1�6 million impact expected at H1
• Ungeared total property return of 1�3%,
• Completed 62,000 sq ft Canvey Island
Retail Park; annualised rent roll of
£1�0 million once fully-let, and projected
yield on cost of 9%
• Delivered six c-stores to the Co-op,
bringing total number developed to 25;
sold eight during the year
• Completed £67�5 million of disposals
on terms on average 4% ahead of March
2018 valuation
outperforming the MSCI-IPD benchmark
by 410 bps
• Completed £162�1 million of acquisitions
in six separate transactions, at an average
equivalent yield of 12�9%
• Retail occupancy remains high at 95�2%
(March 2018: 96�5%), with impact of CVAs/
administrations mitigated
• Completed 1�2 million sq ft of new
lettings and renewals in retail portfolio;
long-term deals on average 0�5% ahead
of previous passing rent and in-line with
March 2018 ERV
Portfolio overview
As at 31 March 2019
Shopping centres
Regional shopping centres
London shopping centres
Retail parks
High street
Pubs & c-stores
Development
Total
Valuation
NRR
share
(£m)
741
585
156
165
17
288
77
1,288
Weighting
NRR
share
(%)
58
46
12
13
1
22
6
100
Valuation
surplus/
(deficit)
(%)
(9�2)
(11�3)
(0�3)
(2�5)
(11�1)
1�3
(13�2)
(6.4)
Topped-up
NIY
NEY
LFL ERV
Movement
(%)
7�1
7�5
5�7
6�2
9�0
10�8
N/A
7.9
(%)
7�6
8�2
5�7
6�9
8�4
10�8
N/A
8.3
(%)
(3�1)
(3�5)
(1�0)
(2�4)
(4�8)
N/A
N/A
(3.0)
During the year our portfolio valuation increased to £1�3 billion, from £1�2 billion in March 2018� This was the
result of £162�1 million of acquisitions in the year being partially offset by £67�5 million of disposals and a 6�4%
decline in valuations�
The portfolio initial yield stood at 7�9% in March 2019, increased from 7�2% in March 2018, due primarily to the
acquisition of Hawthorn Leisure in May 2018�
Year ended 31 March 2019
NRR portfolio
MSCI-IPD Benchmark1
Relative performance
Total Return
(%)
1�3
(2�6)
+410 bps
Income Return
(%)
7�5
5�0
+230 bps
Capital Growth
(%)
(5�7)
(7�3)
+170 bps
1� Benchmark includes monthly & quarterly valued retails
Our portfolio outperformed the MSCI-IPD benchmark for income return and capital growth, delivering a total
return of 1�3%, compared to the benchmark of (2�6)%, an outperformance of 410 bps�
NewRiver REIT plc Annual Report and Accounts 2019
31
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
PR OPERTY REVIEW
Disciplined stock
selection
Retail
During the year we completed £35�5 million of acquisitions in two separate transactions, at a blended
equivalent yield of 9�1%�
Acquisition price
(£m)
20�2
15�3
35.5
Net initial yield
(%)
9�4
8�7
9.1
Equivalent yield
(%)
9�8
8�2
9.1
The asset offers a number of opportunities to extract
further value, including the conversion of two units
into a 20,000 sq ft store let to Aldi, which opened
in May 2019 and resulted in the asset being 100%
occupied� Proforma for the Aldi store, at acquisition
the retail park had a weighted average unexpired
lease term of 8�3 years and an affordable average
rent of £11�36 per sq ft� The asset is conveniently
located in the main retail park concentration in
Barrow-in-Furness, a town with a large catchment
and limited retail competition, and with the
introduction of Aldi, provides the primary discount
food offer for the community�
Since 1 April 2018
Grays Shopping Centre, Grays
Hollywood Retail & Leisure Park, Barrow-in-Furness
Total
Grays Shopping Centre, Grays
In June 2018, we acquired Grays Shopping Centre
in Grays, Essex� The acquisition comprised a
community shopping centre with 177,300 sq ft of
retail space and a 32,000 sq ft office building with
permitted development rights for residential
conversion, across a 4�7 acre site located in the
centre of Grays, with the City of London accessible
by train in less than 35 minutes�
The convenience-led community shopping centre
is anchored by value and grocery retailers including
Wilko, Poundland, Iceland and Peacocks, and has
a 700-space multi-storey car park� At acquisition,
it had an affordable average rent of £9�62 per sq ft
and a weighted average unexpired lease term of
4�6 years, which will facilitate asset management
and risk-controlled development opportunities�
We have already identified a number of value-
creating opportunities at the asset, to meet demand
for a budget hotel, budget gym and discount food
retailer, and to deliver much needed residential
units� These plans are in line with the Grays Town
Centre Framework, produced by Thurrock Council,
and NewRiver will work closely with them in
redeveloping the site as part of the wider masterplan
to regenerate the town, while continuing to receive
an attractive income in the interim� The masterplan
is likely to include improved public realm in and
around our ownership, together with significant
numbers of new residential apartments above the
shopping centre�
Hollywood Retail & Leisure Park, Barrow-in-
Furness
In July 2018, we acquired Hollywood Retail & Leisure
Park in Barrow-in-Furness, Cumbria� The acquisition
comprised a ten-unit 124,400 sq ft retail and leisure
park providing 665 free car parking spaces, with a
line-up consisting of quality national retailers and
leisure operators including TK Maxx, Currys PC
World, Dunelm, Nuffield Health and a six-screen
Vue cinema�
32
NewRiver REIT plc Annual Report and Accounts 2019
HOLLYWOOD RETAIL
& LEISURE PARK
In July 2018, we acquired
Hollywood Retail &
Leisure Park, Barrow-in-
Furness for £15.3 million,
representing a net initial
yield of 8.7%.
The acquisition comprises a ten-unit
124,400 sq ft retail park with 665 free
car parking spaces and an occupier
line-up consisting of quality national
retailers and leisure operators,
including TK Maxx, Currys PC World,
Dunelm, Nuffield Health and a
six-screen Vue Cinema�
Barrow-in-Furness
Conveniently located in the main retail park
concentration in the town, which has a large
catchment and limited retail competition
£11.36 per sq ft affordable average rent, and
100% occupied with an unexpired average
lease term of 8.3 years
Primary discount food offer in town following
the opening of Aldi in May 2019
Employment level above national and regional
averages, and BAE Systems, the dominant local
employer, awarded £2.4bn government contract
in May 2018, which will lead to further
investment and jobs in the area
Opportunity to
improve frontages
with light
refurbishment
Agreed a new
10-year lease with
Currys PC World in
January 2019
Potential to
develop new
drive-thru pod
next to Cinema
Immediate conversion
of two existing units into
a 20,000 sq ft Aldi, which
opened in May 2019
NewRiver REIT plc Annual Report and Accounts 2019
33
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR COMMUNITY PUBS
NewRiver has been invested in
pubs since 2013, and today owns
a portfolio of 665 pubs, which
account for 21% of our total assets.
97.9%
Occupancy
95%
Under leased
and tenanted
model
92%
Wet-led
25
c-stores delivered
to the Co-op
Wet-led
Why we invest in pubs
• Strong cash flows
• Community assets
•
Inherently diversified
• Value-creating opportunities
through developing on
surplus land / change of use
Tenant lives
above
Surplus land for
development
Good roadside
visibility
/
n
o
i
t
i
s
i
u
q
c
A
s
l
a
s
o
p
s
i
d
s
t
n
e
v
e
y
e
K
December 2013
Acquired 202 pubs from
Marston’s PLC (the ‘Trent’
portfolio) under a four-year
leaseback agreement
September 2015
Acquired 158 pubs from
Punch Taverns plc (the
‘Mantle’ portfolio)
April 2014
Deal signed with the
Co-op to build
convenience stores
(‘c-stores’) on excess
pub land
Our main
pub
operating
model:
Leased &
Tenanted
Operational
arrangements
Supply
arrangements
Our
income
We enter into an Occupational
Lease Agreement with a
tenant� The tenant is self-
employed, and employs all
staff and manages the pub�
Often, the tenant lives in
free accommodation above
the pub�
Depending on the terms
of the lease agreement,
the tenant is required to
purchase drinks from us
and lease amusement
machines from suppliers
nominated by us� These are
known as tied agreements�
We receive rental income
under the lease agreement,
and often a share of
amusement machine profits�
We also receive a margin on
the difference between the
wholesale purchase price we
pay for drinks and the price at
which we sell these to tenants
under tied agreements�
34
NewRiver REIT plc Annual Report and Accounts 2019
Our specialist platform
Hawthorn Leisure is an award-winning
pub management platform which now manages
NewRiver’s portfolio of 665 community pubs from
their head office in Solihull, West Midlands�
By working together with pub occupiers, Hawthorn
Leisure helps to ensure they have the tools and
support they need, and provides targeted capex
to create long-term, sustainable businesses�
Finance
32
professionals 20
11
Business
development
managers
low ratio of
33 pubs per
BDM
Property
professionals
May 2018
Acquisition of Hawthorn
Leisure for £106�8 million,
NIY of 13�6%
October 2018
Disposal of 22 pubs
let on long-term
leases to Marston’s,
NIY of 5�6%
November 2018
Acquisition of 76 pubs
from Star Pubs & Bars,
NIY of 17�1%
October 2018
Completion of supply
contract negotiation –
unlocking scale-based
synergies
January 2019
Integration of Hawthorn
Leisure completed,
meaning all NewRiver
pubs managed from a
single platform
Worked
example
This representative
example shows
how income is
derived from our
pubs, from both a
tenant and
NewRiver
perspective�
Tenant income statement
Wet income (Beer, wine, spirits)
Wet cost of sales
Net food income
Total operating income
Machine income
Machine income – share to NRR
Gross Profit
Rent
Direct operating costs
Publican site profit
Notional benefit of free
accommodation above pub
£’000
280
(140)
40
180
15
(7)
188
(25)
(110)
53
12
NewRiver income statement
£’000
Wet income to NRR
Wet cost of sales (from brewer)
Net wet income
Machine income (NRR share)
Rental income
Outlet EBITDA
140
(90)
50
7
25
82
NewRiver REIT plc Annual Report and Accounts 2019
35
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT PR OPERTY REVIEW
Pubs
During the year we completed £126�6 million of property acquisitions in four separate transactions, at an
equivalent yield of 13�9%�
Since 1 April 2018
Hawthorn Leisure (298 pubs)
Star Pubs & Bars portfolio (76 pubs)
Individual pubs (two pubs)
Total
Acquisition price
(£m)
114�0
12�0
0�6
126.6
Net initial yield
(%)
13�6
17�1
N/A
13.9
Equivalent yield
(%)
13�6
17�1
N/A
13.9
Hawthorn Leisure
In May 2018, we acquired Hawthorn Leisure
Holdings Limited (‘Hawthorn Leisure’), comprising
a portfolio of 298 high quality community pubs, an
established brand and a pub management platform�
By combining NewRiver’s existing pub portfolio with
Hawthorn Leisure we aim to achieve scale-based
benefits and other improvements in purchasing and
logistics in order to realise synergies of £3 million
per annum� The integration of the business
completed on schedule in January 2019, and to
date we have unlocked £2�1 million of the synergies�
The unlocking of the remaining £0�9 million of
synergies is expected to follow in FY20�
Star Pubs & Bars portfolio
In December 2018, we acquired a portfolio of
pubs from Star Pubs & Bars, a subsidiary of
Heineken, for £12�0 million� The portfolio comprises
76 wet-led community pubs located across the UK�
The pubs were predominantly let on short-term
leases, with a weighted average unexpired lease
term across the portfolio of one year, which
facilitated immediate active asset management
initiatives, such as signing new long-term leases
with new and existing occupiers, and the
deployment of targeted capex, including into
risk-controlled development opportunities�
36
NewRiver REIT plc Annual Report and Accounts 2019
Active asset
management
We have developed a best in class retail asset
management platform since NewRiver was founded
10 years ago� In addition, having acquired the
Hawthorn Leisure business in May 2018, we now
own a high quality and specialist pub management
platform based in the Midlands, which is the
heartland of the UK brewing industry�
We have a hands-on approach to asset
management drawing on our expertise, scale,
and strong relationships with our occupiers and
publicans, which enables us to deliver the right
space in the right locations on terms beneficial to
all parties� We believe that our asset management
platform contains inherent monetary value which
we will plan to extract through third party asset
management mandates and recycling our capital
into joint ventures�
Retail
During the year we completed 1�2 million sq ft of
new lettings and renewals across our retail portfolio�
This high volume of leasing activity means that our
occupancy rate remained high at 95�2% despite the
challenging market backdrop� On average, long-
term deals were signed 0�5% ahead of previous
passing rent and in-line with March 2018 ERV�
Our leasing activity in the year continued to reflect
our focus on growing and online-resilient retail
sub-sectors, as we signed five leases with B&M,
including on new-build stores at Canvey Island Retail
Park and Victoria Retail Park, Beverley, as well as
leases with discounters Poundstretcher, Poundland
and Wilko� Elsewhere in our focus sub-sectors we
signed deals with food and grocery retailers
including Aldi, Sainsbury’s, M&S Foodhall and
Iceland; value fashion retailers such as TK Maxx,
Yours Clothing and Claire’s Accessories; grab & go
food operators including Burger King and Costa;
and health & beauty retailers Boots, Savers,
Superdrug and Holland & Barrett�
Other significant deals saw us introduce new value
leisure provision to our assets, including the signing
of a 15-year lease with community cinema operator
Reel Cinemas to open a five-screen cinema at The
Ridings shopping centre in Wakefield, occupying a
space created by the conversion of three former
retail units with minimal structural alterations, and the
opening of The Gym in Broadway Shopping Centre,
Bexleyheath in a new 12,900 sq ft unit, created by
converting a previously vacant storage area on the
second floor of the shopping centre�
Since the start of FY19 we have also opened two
40,000 sq ft Primark stores, at the Abbey Centre,
Newtownabbey and Priory Meadow Shopping
Centre, Hastings, in units vacated by BHS following
its administration� In Hastings, the store opened in
March 2019 to an 800-strong crowd and the centre
saw a 34% increase in footfall on opening day
compared to the previous year� In Newtownabbey,
the store opened in May 2019, having upsized from
a 19,000 sq ft unit elsewhere in the centre, which
has been let to Poundland�
Our rental income is well-diversified, with no single
retailer accounting for more than 1�9% of contracted
rents, and our policy is that no single retailer will
account for more than 5% of total rent� Continuing
a trend seen in FY18, the year saw a number of
retailers enter into Company Voluntary
Arrangements (‘CVAs’) or administrations, some of
which have impacted our annualised FFO� The table
below analyses the impact of CVAs and
administrations relating to occupiers in our portfolio�
In summary, our retail net property income was
reduced by £1�4 million due to the impact of CVAs/
administrations, which compared to the estimated
impact when we reported results for the first half of
£1�6 million, which demonstrates that we have been
able to further mitigate the adverse impact of retailer
restructurings during the year through our active
asset management approach� In addition, in the
second half of the financial year, and in calendar
year 2019 to date, we have seen limited further
impact from restructurings, which means that it is
our current expectation that the impact in FY20 will
be reduced further, to £1�2 million�
The retailer failures have given further weight to
our long-held view that it is affordability, rather than
lease length, that underpins the sustainability of
rental income� Our average rent remained affordable
at £12�52 psf in March 2019, compared to £12�36 psf
in March 2018, and in addition to this, we have made
significant early progress in our efforts to reduce
occupational costs for our occupiers, reducing
service charge budgets by £1�7 million in the year,
through reviews of areas such as staffing, soft
services and the monitoring and evaluation of
energy consumption�
NewRiver REIT plc Annual Report and Accounts 2019
37
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT SOUTH LAKELAND
RETAIL PARK
Kendal
South Lakeland Retail
Park, Kendal is a 73,600
sq ft retail park acquired
in July 2015 from
Morrisons as part of the
Ramsay Portfolio of nine
conveniently-located
retail parks and four
development sites.
Close proximity to high-performing food
stores, Morrisons and Aldi adjacent to asset
£13.47 per sq ft affordable average rent,
100% occupied with an unexpired average
lease term of 8.3 years
Diversified occupier line-up combining value
fashion, discount and retailers with added
services and click & collect
Limited retail competition in an affluent
and relatively isolated catchment
Agreed a new 10-year lease
with Halfords in June 2017
Next vacated at expiry
in June 2018 as we did not
accept renewal terms – replaced
on a new 10-year lease with
B&M at £15.29 psf, above the
£13.79 psf paid by Next
Opportunity to
add grab & go
food pod to
car park
38
NewRiver REIT plc Annual Report and Accounts 2019
FFO Impact of CVAs/Administrations
Operator
Byron Burger, Jamie’s Italian, Toys R Us,
Prezzo, House of Fraser, Carluccio’s
Maplin
Select
New Look
Carpetright
Mothercare
Total FY18
Gaucho, Gourmet Burger Kitchen, Coast,
Fabb Sofas, L K Bennett, Warren Evans,
Saltrock, Pretty Green, tReds, OddBins
Poundworld
Homebase
Office Outlet
HMV
Patisserie Valerie
Debenhams
Greenwoods
Blue Inc
American Golf
Total FY19
Total
Pubs
Pub portfolio movements
Annualised
rent roll
pre-CVA/
Admin
(%)
–
0�1
0�4
1�9
0�3
0�5
3.2
Rent
pre-CVA/
Admin
(£m)
–
0�2
0�4
1�9
0�3
0�5
3.3
–
–
1�0
0�7
0�2
0�3
–
0�1
0�1
0�1
0�1
2.6
5.8
1�0
0�6
0�2
0�4
–
0�1
0�1
0�1
0�1
2.6
5.9
Rent not
impacted
by CVA/
Admin
(£m)
Rent
secured
on new
deals
(£m)
Rent in
legals
Actual
FY19 FFO
Impact
(£m)
(£m)
Expected
FY20
FFO
impact
(£m)
–
–
–
0�1
–
–
–
–
0.1
–
0�1
0�1
0�3
0�9
–
0�2
1.5
–
0�6
0�4
0�1
1.1
2.6
0.1
0.2
–
–
0�6
0�3
0�2
1.1
–
–
0�1
–
0�3
–
0�1
–
0�1
0�1
0.7
1.8
–
0�0
0�1
0�4
–
0�1
0.6
–
0�3
0�1
0�1
0�1
0�0
–
–
–
0.6
1.2
0�2
–
0�5
–
0�1
0.8
0�4
0�1
–
–
–
–
0�1
–
0.6
1.4
Pubs held at 31 March 2018
331
Pubs acquired
376
Pubs sold
(40)
Pubs converted to c-stores
(2)
Pubs held at 31 March 2019
665
In January 2019 we completed the integration of
Hawthorn Leisure as scheduled, eight months after
its acquisition in May 2018� The integration of all IT,
Finance and HR systems, means that all of
NewRiver’s community pubs are now being
managed by the Hawthorn Leisure platform� At the
time of the acquisition we identified scale-based
synergies of £3�0 million on an annualised basis,
achieved through a ‘best of both’ approach whereby
expertise and best practice are shared between
the two portfolios� The integration resulted in the
immediate unlocking of £2�1 million of these
synergies, with the remaining £0�9 million expected
to follow in FY20�
Across the pub portfolio, we continued our
programme of targeted capital investment projects
aimed at enhancing the customer experience,
further improving trade and increasing capital
values� We completed 75 such projects at a total
cost of £2�8 million during the year which in
aggregate have delivered a return on investment
of 13�4%� Returning capex invested in our leased and
tenanted estate (85% of the total number of projects)
have delivered a return of 19�4%�
NewRiver REIT plc Annual Report and Accounts 2019
39
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
PR OPERTY REVIEW
Risk-controlled
development
During the year we completed 100,100 sq ft of
development, with 3,500 sq ft currently under
construction� This includes Canvey Island Retail Park,
our largest development to date, which was
completed in November 2018 and was 75% pre-let
at completion, in line with our risk-controlled
approach to development� Also during the year,
we progressed our 465,000 sq ft regeneration
project in Burgess Hill and 236,000 sq ft residential-
driven redevelopment of Templars Square Shopping
Centre in Cowley, Oxford� Looking at our longer-
term pipeline, we held our first public engagement
during the year on our 66-acre leisure park
development in Basingstoke�
During the year we made significant progress
across our risk-controlled development pipeline,
which totals 1�9 million sq ft (1�4 million sq ft in the
near-term) including our Retail (1�6 million sq ft)
and Pub (0�3 million sq ft) portfolios, and which
we believe will be a key driver of long-term returns
for our shareholders�
Our risk-controlled approach means that we will
not commit to a new development unless we have
pre-let or pre-sold at least 70% by area, and our
development strategy includes:
– Development of sites acquired in portfolio
acquisitions (e�g� Canvey Island Retail Park, Essex)
– Capitalising on opportunities within our
ownership above or adjacent to our assets
(e�g� Cowley, Oxford)
– Complete redevelopment of existing assets
(e�g� Burgess Hill, c-store pub conversions)
Total development pipeline
Shopping
Centre
Retail
Park
Health
care
Hotel
C-stores
Residential
Total
Pipeline
(Sq ft)
(Sq ft)
(Sq ft)
(Sq ft)
(Sq ft)
(Sq ft)
(Sq ft)
–
–
–
–
–
87,700
15,600
76,800
26,800
103,600
266,300
Completed in
year/ Under
construction
Planning
granted
In planning
Pre-planning
Near-term
pipeline
Early
feasibility
stages
Total pipeline 395,700 118,400 100,000 137,700 44,500 1,059,000 1,855,300
776,900 1,423,200
20,500
335,200
–
129,400
17,000
176,300
395,700 118,400
–
26,000
87,700 44,500
3,500
3,500
– 100,000
963,900
583,600
282,100
432,100
50,000
10,700
–
–
–
–
–
–
–
Retail &
Leisure
Pre-let
(%)
86
60
100
2
Resi
Pre-sold
(%)
–
28
–
–
–
–
Additional
residential
potential1
Basingstoke
Leisure Park
–
700,000
–
–
–
–
–
–
926,500
–
1� A strategic review of our entire retail portfolio identified the potential to deliver up to 1,300 residential units adjacent to or above our assets
over the next 5-10 years
40
NewRiver REIT plc Annual Report and Accounts 2019
Completed in
year/ Under
construction
Planning
granted
In planning
Pre-planning
Near-term
pipeline
Early
feasibility
stages
Total retail
pipeline
Additional
residential
potential1
Basingstoke
Leisure Park
Retail
Retail portfolio development pipeline
Shopping
Centre
Retail
Park
Health
care
Hotel
Residential
Total Pipeline
Resi Units
(Sq ft)
(Sq ft)
(Sq ft)
(Sq ft)
(Sq ft)
(Sq ft)
–
76,800
266,300
15,600
–
129,400
–
26,000
395,700 118,400
–
–
–
–
–
–
–
76,800
87,700
461,900
831,500
–
–
–
174,900
–
330,300
87,700 636,800 1,238,600
(#)
–
468
–
265
733
Retail &
Leisure
Pre-let
(%)
80
61
–
–
Resi
Pre-sold
(%)
–
35
–
–
–
– 100,000
20,000 245,000
365,000
350
–
–
395,700 118,400 100,000 107,700 881,800 1,603,600
1,083
–
700,000
–
–
– 926,500
1,315
–
–
1� A strategic review of our entire retail portfolio identified the potential to deliver an additional 1,300 residential units adjacent to or above
our assets over the next 5-10 years
Completed in year/Under construction
Canvey Island Retail Park
In November 2018 we completed our 62,000 sq ft
retail park development in Canvey Island, Essex, on
a site which we acquired for £1 million in July 2015
as part of the Ramsay portfolio� The asset was 75%
pre-let at completion and has a retailer line-up
comprising M&S Foodhall, Sports Direct, B&M and
Costa� These retailers are all now open and trading,
and we have had strong interest on the remaining
units at the retail park from health & beauty, value
fashion and value gym occupiers� Once fully-let, the
asset will have an annualised rent roll of £1�0 million
and a projected yield on cost of 9%�
Victoria Retail Park, Beverley
In August 2018 we completed the construction of a
13,000 sq ft extension to the retail parade at Victoria
Retail Park in Beverley, which we acquired in July
2015 as part of the Ramsay portfolio� The extension
was pre-let to B&M, which opened its new store in
September 2018� B&M joins a high-quality retailer
line-up comprising Halfords, Poundstretcher and
Poundland at the asset, which is adjacent to a
Morrisons superstore and now provides 36,600 sq ft
of fully-let retail space�
NewRiver REIT plc Annual Report and Accounts 2019
41
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
CANVEY ISLAND
RETAIL PARK
In November 2018 we
completed our largest
development to date, the
62,000 sq ft Canvey
Island Retail Park, Essex.
The retail park was built on a site
acquired for £1 million in July 2015 as
part of the Ramsay portfolio� In early
2019, M&S Foodhall, B&M, Costa and
Sports Direct opened at the asset,
and we have had strong interest for
the remaining units�
Canvey
Island
£1 million of annualised rent roll once fully let,
with a projected yield on cost of 9%
Conveniently-located adjacent to a high-
performing Morrisons store and in close
proximity to the A13
Diverse retailer line-up includes value fashion,
discounter, food & grocery and grab & go food
Large Morrisons
superstore
M&S Foodhall
opened in
January 2019
Strong interest for
the remaining units from
operators in the home
improvement and low-cost
gym sub-sectors
Sports Direct
opened in March
2019
Costa coffee pod with
drive-thru opened in
February 2019
256 free car
parking spaces
B&M home store with
garden centre opened
February 2019
42
NewRiver REIT plc Annual Report and Accounts 2019
Planning granted
Burgess Hill
During the year we made further progress at our
mixed-use regeneration of Burgess Hill town centre�
In late 2018 we completed remediation and site
preparation works at a contaminated brownfield site
on Leylands Road, close to the town centre, to allow
Lidl to relocate away from the development� We
completed the sale of that site to Lidl in November
2018 and expect their new store to open in summer
2019� Once the new Lidl at Leylands Road has
opened, the existing Lidl at the centre of the scheme
will be closed, removing one of the last obstacles to
redevelopment�
Meanwhile on site we have started the development
works to relocate the existing library to a new unit at
the heart of the scheme, and following close
engagement with the library services, these works
are now close to completion so that the existing
library can be demolished� Demolition works have
already begun on the Martlets Hall building adjacent
to the existing library to clear the site for the new
surface car park�
Our risk-controlled development pipeline currently
includes planning consent for a 465,000 sq ft
mixed-use scheme, and includes the pre-lets we
have secured to date with Travelodge, Cineworld,
Hollywood Bowl, Next, Nando’s and Superdrug as
well as the pre-sale of the entire residential element
of the development to Delph Property Group�
However, working closely with local stakeholders,
we have recently adjusted the design of the scheme
specifically to increase its leisure and residential
provision, introduce additional uses such as primary
health, and reduce space designated for retail,
reflecting the changing nature of the retail market
and needs of town centres� The revised scheme
will now include a 16-lane bowling alley, a 10-screen
multiplex cinema, and a larger hotel with a new
public café bar� In addition, the development will
provide a much improved public realm which would
provide functional space for managed outdoor
events� We plan to submit a variation to our
consented scheme in the first half of FY20�
Cowley, Oxford
In July 2017, Oxford City Council approved plans
for our major mixed-use development to regenerate
Templars Square Shopping Centre� The 236,000 sq
ft development will include 226 new residential
apartments, a 71-bed Travelodge hotel, two new
restaurant units, a modernised car park and major
improvements to the public realm� The hotel and
leisure element of the scheme is already
82% pre-let�
During the year we advanced discussions with local
authorities to finalise the Section 278 highways
agreement� This is now in agreed form with Oxford
County Council and Oxford City Council and once
signed, we will proceed to the technical design
phase of the development�
Pre-planning
Blenheim Shopping Centre, Penge
At the Blenheim Shopping Centre, we have plans to
revitalise this key Greater London asset and provide
a residential development in the airspace above the
shopping centre to meet significant local demand
for housing� During the year we have undertaken
a planning pre-application submission and held a
number of positive discussions regarding the site
with Bromley Council� The new London Plan is set
to significantly increase housing delivery targets in
Bromley, and we believe this will provide even more
support to our plans�
Early feasibility stages
We believe that our risk-controlled development
pipeline will be a key driver of future growth and we
are currently reviewing several medium-term
opportunities from within our retail portfolio� These
opportunities include 120,000 sq ft of extensions
across our shopping centre portfolio and over
245,000 sq ft of residential potential above and
adjacent to our shopping centres in Bexleyheath
and Witham�
Basingstoke Leisure Park
In March 2018, we exchanged contracts with
Basingstoke and Deane Borough Council on a
development agreement for a 66-acre leisure park
in a prominent location in Basingstoke, near Junction
6 of the M3 motorway�
Capitalising on the growing popularity of integrated
leisure and retail, our proposals currently comprise
approximately 500,000 sq ft of leisure and 200,000
sq ft of designer outlet shopping� We are confident
that this unique combination of leisure and designer
outlet shopping will appeal to the local community
and a catchment significantly beyond Basingstoke
in one of the UK’s most affluent regions� To facilitate
this development, we have entered into a long-term
Development Agreement with Basingstoke and
Deane Borough Council which is conditional on
achieving planning consent and pre-lets as well as
a viability assessment, amongst other conditions�
In the event that the development becomes
unconditional, NewRiver will be granted a 250-year
leasehold interest�
The project is currently paused, pending the
outcome of a legal challenge brought by a local
stakeholder against Basingstoke and Deane
Borough Council, in relation to the procurement
process that led to the appointment of NewRiver�
NewRiver REIT plc Annual Report and Accounts 2019
43
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT PR OPERTY REVIEW
Pubs
Pubs portfolio development pipeline
C-stores
Hotel
Residential
(Sq ft)
(Sq ft)
(Sq ft)
Total
Pipeline
(Sq ft)
Retail & Leisure
Pre-let
(%)
Residential
Pre-sold
(%)
Completed in year/ Under
construction
Planning granted
In planning
Pre-planning
Near-term pipeline
Early feasibility stages
Total pubs pipeline
26,800
10,700
3,500
3,500
44,500
–
44,500
–
–
26,800
–
–
–
–
30,000
30,000
121,700
17,000
1,400
140,100
37,100
177,200
132,400
20,500
4,900
184,600
67,100
251,700
100
100
100
100
–
–
–
–
–
–
As well as generating high levels of low risk cash
returns, our portfolio of community pubs contains
a number of inbuilt value creating development
opportunities� These include the potential to build
convenience stores or residential units on surplus
land adjacent to pubs which was effectively acquired
at zero cost, and opportunities to convert pubs into
convenience stores or residential units�
Convenience stores (‘c-stores’)
We have an overarching agreement with the
Co-operative (the ‘Co-op’) to deliver up to 40
c-stores and, based on planning achieved to
date and viability assessments, it is our current
expectation that we will deliver around 30 c-stores
in total� These stores are let on fixed lease terms of
15 years at rents ranging from £15�00-17�50 per sq ft,
with RPI linked increases capped at 4% and collared
at 1%� The agreement also includes performance
receipts linked to c-store delivery, with the first
receipt triggered by the delivery of our 15th c-store
to the Co-op, which took place in January 2018�
In total, we recognised performance receipts of
£0�2 million in the year�
During the year we completed six c-stores and
at the year end were on-site with a further one�
This brings our total number of c-stores delivered
to date to 25, of which 18 utilised surplus land
adjacent to existing pubs, three were the result
of pub conversions and four were new builds
on sites previously occupied by pubs�
Residential
To date we have received planning consent for
141 residential units, and our strategy with these
residential opportunities is to create value by
obtaining planning consent, and then to realise
value by selling on to local developers� During
the year we sold 13 parcels of land with planning
consent to build 20 dwellings for £1�5m, which
compares favourably with a valuation at March
2018 of £1�0m�
44
NewRiver REIT plc Annual Report and Accounts 2019
C-store development programme
C-store name
Heathcote Street
Spital Lane
Marford Hill
High Street
Town
Stoke-on-Trent
Chesterfield
Wrexham
Shifnal
St Michael’s Avenue
Yeovil
Sutton Road
Griffith’s Drive
Bodelwyddan
Milners Lane
Shrewsbury
Wolverhampton
Rhyl
Telford
Kings Bromley
Kings Bromley
Southwell Road
Mansfield
Thorngumbald
Thorngumbald
Greenwood Avenue
Hull
Stroud Road
Wyberton
Barker Street
Woodsetton
Newbold
Gloucester
Boston
Worcester
Dudley
Newbold, Chesterfield
Bembridge Drive
Derby
Alfreton Road
Sutton-in-Ashfield
Shavington
Bells Lane
Bassnage Road
Baslow
Hasbury
Shavington
Stourbridge
Halesowen
Bakewell
Halesowen
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Completed pre-FY19
Sold
Completed in FY19
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
NewRiver REIT plc Annual Report and Accounts 2019
45
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT PR OPERTY REVIEW
Profitable capital
recycling
During the year we completed £67�5 million of disposals, on terms on average 4% ahead of March 2018
valuation, and 11% above total cost (being purchase price plus subsequent capex), generating a cash profit
of £6�9 million� In line with our strategy, these disposals were typically of mature assets where our estimates
of forward looking returns were below target levels, assets where we believe that the risk profile has changed,
or assets sold to special purchasers�
Since 1 April 2018
Shopping centre
units
Retail parks
High street
Pubs and pub land
C-stores
Total
Number
of
Disposals1
(#)
2
3
3
33
8
49
Disposal
price
(£m)
3�9
22�2
10�1
22�3
9�0
67.5
Total
cost
(£m)
3�8
19�0
10�4
19�4
7�9
60.5
Disposal
vs
Total cost
(%)
March 2018
Valuation
(£m)
Disposal
vs
Valuation
(%)
2
17
(3)
15
14
11
3�3
22�0
8�8
21�7
9�0
64.8
18
1
16
3
–
4
Blended
NIY
Blended
IRR
(%)
6�5
7�3
4�3
3�7
4�9
5.3
(%)
7
12
7
22
9
10
1� Refers to the number of individual transactions
Whitwick Retail Park, Coalville
In September 2018 we completed the disposal of
Whitwick Retail Park in Coalville for £9�9 million,
reflecting a topped-up net initial yield of 6�9% and
delivering an unlevered IRR of 7�5%� The asset was
sold following the completion of a comprehensive
programme of asset management initiatives, which
saw us invest £1�2 million, increase the weighted
average unexpired lease term from 2�2 years at
acquisition to 10�7 years, and increase net rental
income across the park by 17%�
Mount Street Retail Park, Wrexham and
Saltney Retail Park, Chester
In February 2019 we sold Mount Street Retail Park
in Wrexham and Saltney Retail Park in Chester to M7
Real Estate for £12�3 million, representing a blended
net initial yield of 7�6% and a blended unlevered IRR
of 14�7% over their period of ownership�
Mount Street Retail Park is the final asset to be
disposed of from the Linear portfolio of four retail
parks acquired by NewRiver in June 2014 for
£17�3 million, representing a net initial yield of 9�1%�
In total, this portfolio generated an unlevered IRR
of 14�0% over its period of ownership�
Portfolio of 22 pubs let to Marston’s
In October 2018 we completed the disposal of 22
community pubs to a private equity investor for
£14�8 million, representing a net initial yield of 5�6%�
The 22 pubs were part of the Trent portfolio of 202
community pubs acquired from Marston’s PLC
(‘Marston’s) in December 2013 under a four-year
leaseback agreement, for a yield of 12�8%� The pubs
were acquired for total consideration of £10�7 million
and generated £5�6 million of EBITDA during their
period of ownership by NewRiver�
We secured contracted income on the 22 pubs
in December 2016 by surrendering the four-year
leaseback agreement with Marston’s 13 months
early and agreeing new 15-year RPI linked leases
with Marston’s� As a result of the transaction,
the return profile of the assets differed from the
remainder of our pub portfolio and we determined
the capital could be deployed more profitably
elsewhere� Demonstrating our strategy to recycle
capital profitably, shortly after this transaction we
acquired a portfolio of 76 pubs from Star Pubs &
Bars for £12�0 million, representing a net initial yield
of 17�1%, which compares favourably to the 5�6%
yield secured on this disposal�
Pubs and pub land
Throughout the year, we disposed of 40 pubs and
13 pieces of pub land� These were sales to special
purchasers, mainly the occupiers of pubs, in line
with our commitment to working with our pub
occupiers to best meet their needs and those of
the local community�
46
NewRiver REIT plc Annual Report and Accounts 2019
PROPERTY REVI E W / CON TINUE D
PROPERTY REVI E W / CON TINUE D
PROPERTY REVI E W / CON TINUE D
PROFITABLE CAPITAL
RECYCLING IN ACTION
During FY19 we disposed of a portfolio of 22 community pubs
let to Marston’s for £14.8 million, representing a NIY of 5.6%, and
reinvested the proceeds into a portfolio of 76 community pubs
from Star Pubs & Bars, representing a NIY of 17.1%.
17.1%
NIY
December 2018
Redeployed most of the proceeds to acquire
76 community pubs from Star Pubs & Bars for
£12�0 million, representing a NIY of 17�1%
5.6%
NIY
veragin
5
e
L
C
Profitable
capital
recycling
4
October 2018
We disposed of the 22
community pubs to a private
equity investor for £14�8 million,
representing a NIY of 5�6% and
a capital profit on cost of
£2�2 million
1
Disciplined
stock selection
December 2013
Acquired 202 pubs from
Marston’s plc (the ‘Trent’
portfolio) with four-year
leaseback agreement
g o u r operatin
g
p
l
Growing cash
returns
a
t
f
o
r
m
Thriving
communities
o
n
s
ervative b a l a n
c
e sheet
Active
asset
management
2
Risk-controlled
development
3
December 2016
To secure contracted income,
we surrendered the four-year
leaseback agreement with
Marston’s 13 months early on
22 pubs and agreed new
15-year RPI-linked leases with
Marston’s
December 2013 –
October 2018
The 22 pubs generated £5�6 million
of EBITDA during period
of ownership
NewRiver REIT plc Annual Report and Accounts 2019
47
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FINANCIAL REVIEW
Our financial performance
has remained resilient over
the last year, despite
challenges faced in the
wider UK retail sector, and
our fully unencumbered
balance sheet remains
conservatively positioned.
Funds From Operations (‘FFO’) has decreased from
£60�3 million to £56�4 million, with the additional
income generated through net acquisition activity
offset by the absence of one-off receipts seen in the
prior year, including profits on disposal of investment
properties� Underlying Funds From Operations
(‘UFFO’), which excludes profits on disposal of
investment properties, was in-line with the prior year
at £55�1 million (FY18: £55�5 million)�
Our full year ordinary dividend per share increased
by 3% to 21�6 pence (FY18: 21�0 pence), and was 84%
covered by UFFO per share of 18�1 pence� Our IFRS
loss after tax was £36�9 million, compared to a profit
of £45�7 million in the prior year predominantly due
to a non-cash reduction in portfolio valuation of
£89�5 million, which also caused IFRS net assets
to decrease by 11% from £892�4 million at
31 March 2018 to £796�1 million at 31 March 2019�
Our fully unsecured and unencumbered balance
sheet remains conservatively positioned, with LTV
increased to 37%, principally reflecting acquisition
activity completed during the year, and well within
our stated guidance� The profitability of our platform
is underpinned by the significant arbitrage between
our portfolio net initial yield of 7�9% and cost of debt
of 3�2%, and our efficient operating cost structure,
which means that our interest cover is high at 4�0x,
significantly ahead of our stated policy of >2�0x�
Key performance measures
The Group financial statements are prepared under
IFRS where the Group’s interests in joint ventures
are shown as a single line item on the income
statement and balance sheet� Management reviews
the performance of the business principally on a
proportionally consolidated basis which includes the
Group’s share of joint ventures on a line-by-line
basis� The Group’s financial key performance
indicators are presented on this basis�
In addition to information contained in the Group
financial statements, Alternative Performance
Measures (‘APMs’), being financial measures
which are not specified under IFRS, are also used
by management to assess the Group’s performance�
These APMs include a number of European Public
Real Estate Association (‘EPRA’) measures, prepared
in accordance with the EPRA Best Practice
Recommendations reporting framework� We report
a number of these measures because management
considers them to improve the transparency and
relevance of our published results as well as the
comparability with other listed European real estate
48
NewRiver REIT plc Annual Report and Accounts 2019
companies� Definitions for APMs are included in the
glossary and the most directly comparable IFRS
measure is also identified� The measures used in
the review below are all APMs presented on a
proportionally consolidated basis unless
otherwise stated�
and cover as it is an operational cash measure,
which is more closely aligned to the measures used
by our peer group and which will remove volatility
from our ordinary dividend cover calculation,
caused by the inclusion of profits or losses on the
sale of properties�
The APMs on which management places most
focus, reflecting the Company’s commitment to
driving cash income returns are Funds From
Operations (‘FFO’) and Underlying Funds From
Operations (‘UFFO’)� FFO is a measure familiar to
non-property and international investors and is
determined by cash profits which includes realised
recurring cash profits, realised profits or losses on
the sale of properties and excludes other one-off
or non-cash adjustments�
During the current financial year, we introduced
UFFO as an additional APM� UFFO is calculated
on the same basis as FFO, but excludes profits or
losses on the sale of properties� We believe UFFO
to be the most appropriate Company measure
when considering our ordinary dividend policy
The relevant sections of this Finance Review contain
supporting information, including reconciliations to
the financial statements and IFRS measures�
Definitions for APMs are also included in
the glossary�
Funds From Operations
The following table reconciles IFRS profit after
taxation to Funds From Operations (‘FFO’), which
is the Company’s measure of cash profits�
Reconciliation of profit after taxation to FFO
(Loss)/profit for the year after taxation
Adjustments
Revaluation of investment properties
Revaluation of joint ventures’ investment properties
Revaluation of derivatives
Profit on disposal of investment properties
Share-based payment charge
Depreciation of properties
Gain on bargain purchase
Cost in respect of unsecured refinancing
Acquisition and Integration costs in the respect of Hawthorn Leisure
Underlying Funds From Operations
Profit on disposal of investment properties
Funds From Operations
31 March 2019
(£m)
(36.9)
31 March 2018
(£m)
45�7
88�2
1�3
3�2
(1�3)
2�5
0�8
(7�0)
–
4�3
55.1
1�3
56.4
12�9
0�5
(3�7)
(4�8)
2�6
–
(3�0)
5�3
–
55�5
4�8
60�3
NewRiver REIT plc Annual Report and Accounts 2019
49
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FIN ANCIAL REVI EW
Funds From Operations is represented on a proportionally consolidated basis in the following table�
FUNDS FROM OPERATIONS
Revenue
Property operating expenses
Net property income
Administrative expenses
Net finance costs
Taxation
Underlying Funds From Operations
Profit on disposal of investment properties
Funds From Operations
Underlying FFO per share (pence)
FFO per share (pence)
Ordinary dividend per share (pence)
Ordinary dividend cover1
Admin cost ratio
Weighted average # shares
31 March 2019
£m
127.1
(36.6)
90.5
(16.2)
(18.7)
(0.5)
55.1
1.3
56.4
18.1
18.5
21.6
84%
13.1%
31 March 2018
£m
107�0
(19�9)
87�1
(15�1)
(15�3)
(1�2)
55�5
4�8
60�3
19�5
21�2
21�0
93%
15�0%
304.0
285�0
1� Calculated with reference to Underlying Funds From Operations� If calculated using FFO, as in prior years, ordinary dividend cover is 86%
in FY19 and 101% in FY18
Net property income
Analysis of retail net property income (£m)
Retail net property income for the year
ended 31 March 2018
BRAVO JV promote
Surrender premia impact
Like-for-like
Acquisitions
Disposals
Completed development
Held for development
Retail net property income for the year
ended 31 March 2019
74.4
(2�2)
(4�8)
(1�4)
5�8
(2�5)
0�2
(0�9)
68.6
On a proportionally consolidated basis, retail net
property income has decreased by 8% to
£68�6 million, from £74�4 million in FY18� A key driver
of this decrease is the number of one-off receipts in
the prior year� We received a one-off promote fee
of £2�2 million linked to the BRAVO JV and
£6�0 million of surrender premia, compared to
£1�2 million of surrender premia in the current
financial year, which reduced current year net
property income by £4�8 million�
Like-for-like within our retail portfolio fell by
£1�4 million (2�0% of retail net property income)
during the year, with £1�4 million of the reduction
due to the impact of CVAs/administrations entered
into by retailers in FY18 and FY19� As active and
50
NewRiver REIT plc Annual Report and Accounts 2019
specialist retail asset managers with well diversified
income streams, we have successfully mitigated the
impact of CVAs/administrations experienced to date,
and saw limited impact from new restructurings in
the second half of the financial year� In fact, the
£1�4 million of net property income impacted by
CVAs/administrations in FY19 was lower than our
expectation of £1�6 million which we communicated
at the half year�
Retail acquisitions accounted for an increase in net
retail property income of £5�8 million� The acquisition
of Hollywood Retail Park and Grays shopping centre
in the first quarter of the financial year increased net
retail property income by £2�1 million, and we
benefited from the full year impact of acquisitions
made part way through the prior year, namely the
acquisition of two retail parks in Cardiff and
Dewsbury and the remaining 50% share in the
BRAVO joint ventures in July 2017 which altogether
increased net property income by £3�7 million�
As part of our profitable capital recycling
programme, we sold £36�2 million of retail assets
in the year which, along with the full year impact of
the £53�8 million of disposals made in the prior year,
reduced net property income by £2�5 million� We
saw a £0�9 million reduction in net property income
due to assets held within our risk-controlled
development pipeline, where income is reducing
as we secure vacant possession in advance of
construction, and we saw a contribution of
£0�2 million in the year from completed
developments, principally Canvey Island Retail Park�
Analysis of pub net property income (£m)
Pub net property income for the year
ended 31 March 2018
Performance receipts for convenience
stores
Development (convenience stores)
Trent transfer programme
Disposals
Star Pubs & Bars acquisition
Hawthorn Leisure acquisition
Hawthorn Leisure like-for-like
Hawthorn Leisure synergies
Pub net property income for the year
ended 31 March 2019
12.7
(1�4)
0�5
(1�8)
(0�7)
0�2
11�9
0�1
0�4
21.9
Net property income in the pub portfolio has
increased significantly, principally due to the
acquisition of Hawthorn Leisure, a portfolio of
298 pubs and a management platform, in May 2018�
Performance receipts for the delivery of
convenience stores to the Co-op reduced by
£1�4 million compared to the prior year, principally
because our agreement with the Co-op includes
performance receipts linked to c-store delivery, with
the larger receipt triggered by the delivery of our
15th c-store, which took place in the prior year�
Over the last 12 months, development income has
increased by £0�5 million due to the opening of five
c-stores� A further eight convenience stores were
sold in the year, as well as 40 community pubs and
13 parcels of land from pub sites, which contributed
to a decline of £0�7 million�
The Trent transfer programme led to a decline of
£1�8 million in net pub property income� When the
Trent portfolio was acquired in November 2013,
we entered into a four-year leaseback agreement
with Marston’s PLC (‘Marston’s’)� We started the
transfer programme from Marston’s to our
outsourced pub manager in November 2016 and
completed the process in December 2017� The
transfer was structured in such a way that the final
two tranches included those pubs in most need of
more active management and capital investment,
causing a reduction in income when compared to
the leaseback, which we are confident of recovering
having acquired the Hawthorn Leisure platform in
May 2018�
The acquisitions of the Hawthorn Leisure business
and a portfolio of 76 community pubs from Star Pubs
& Bars added £12�1 million to net property income in
the year� The acquisition of Hawthorn Leisure bought
its own established pub management platform
which our existing pub portfolio successfully
transferred to in January 2019� The Hawthorn
Leisure portfolio generated 1�2% like-for-like net
property income growth since it was acquired in
May 2018, adding £0�1 million to net property
income� Following on from the transfer and since
acquisition, the Group has realised £0�4 million of
the £3 million of synergies originally identified� In
FY20 we expect to see an increase in net pub
property income as we experience a full year of
benefit of the acquisition and further synergies are
unlocked�
Administrative expenses
Administrative expenses increased by 7% in the
year, from £15�1 million to £16�2 million, predominately
due to the acquisition of Hawthorn Leisure in May
2018� The administrative cost ratio has decreased
from 15�0% to 13�1%�
Net finance costs
Net finance costs increased by 22% to £18�7 million
from £15�3 million as a result of the Group’s net
acquisition activity which caused our weighted
average amount of gross debt to increase from
£412 million in the prior year to £518 million in the
current year�
Taxation
As a REIT we are exempt from UK corporation tax
in respect of our qualifying UK property rental
income and gains arising from disposal of exempt
property assets� The majority of the Group’s income
is therefore tax free as a result of its REIT status� The
Group’s REIT exemption does not extend to profits
arising from the margin made on the sale of drinks
within the pub portfolio and other sources of income,
resulting in a tax charge for the year of £0�5 million�
Profit on disposal
We raised proceeds of £67�5 million from capital
recycling in the year, delivering a profit on disposal
with reference to March 2018 valuation of
£1�3 million� The most notable disposal was the
disposal of the Travelodge within the Arndale
Centre, Morecambe, which generated a profit on
disposal of £0�6 million�
NewRiver REIT plc Annual Report and Accounts 2019
51
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FIN ANCIAL REVI EW
Dividends
We are committed to growing UFFO and re-
establishing a fully covered ordinary dividend�
Our dividend policy is driven by two key objectives:
– Growing UFFO and UFFO per share so that
we can re-establish a fully covered dividend
– The REIT requirement to pay out at least 90%
of recurring cash profits
FY18 Q4
FY19 Q1
FY19 Q2
FY19 Q3
FY19 Q4
Total
The Board has declared a final dividend of 5�4
pence in respect of the year ended 31 March 2019,
taking the total dividend declared to 21�60p, up 3%
on last year� Our first dividend of FY20 has also
been announced today of 5�4 pence, which will be
paid on 26 July 2019� The ex-dividend date will be
20 June 2019� The quarterly dividend will be
payable as a REIT Property Income Distribution (PID)�
Ordinary dividend cover, calculated with reference
to UFFO, improved to 84% in the year, from 78% in
the first half, reflecting the benefit of acquisitions
Paid in FY19 (pence)
Declared in relation to FY19 (pence)
Ordinary
5�25
5�40
5�40
5�40
–
21.45
Total
5.25
5.40
5.40
5.40
–
21.45
Ordinary
–
5�40
5�40
5�40
5�40
21.60
Total
–
5.40
5.40
5.40
5.40
21.60
made during the financial year� We have identified
a series of strategies to generate UFFO growth and
re-establish ordinary dividend cover by leveraging
our asset management platform to manage assets
on behalf of partners and third party owners, and
by recycling capital into joint ventures� Ordinary
dividend cover is one of our five key Financial
Policies which are explained in the ‘Financial
Policies’ section of this Review�
Balance sheet
EPRA net assets include a number of adjustments to the IFRS reported net assets and both measures are
presented below on a proportionally consolidated basis�
As at 31 March 2019
As at 31 March 2018
BALANCE SHEET
Properties at valuation
Investment in joint ventures
Other non-current assets
Cash
Other current assets
Total assets
Other current liabilities
Debt
Other non-current liabilities
Total liabilities
IFRS net assets
EPRA adjustments:
Warrants in issue
Unexercised employee awards
Deferred tax
Fair value derivatives
EPRA net assets
EPRA NAV per share
IFRS net assets per share
LTV
52
NewRiver REIT plc Annual Report and Accounts 2019
Group
(£m)
1,281�0
7�6
1�9
27�1
19�1
1,336.7
(35�7)
(502�7)
(2�2)
(540.6)
796.1
Joint
ventures
(£m)
7�4
(7�6)
–
0�5
–
0.3
(0�3)
–
–
(0.3)
–
Proportionally
consolidated
(£m)
1,288.4
–
1.9
27.6
19.1
1,337.0
(36.0)
(502.7)
(2.2)
(540.9)
796.1
0.4
1.3
1.6
(0.1)
799.3
261p
261p
37%
Proportionally
consolidated
(£m)
1,239�6
–
4�3
116�2
34�6
1,394�7
(41�2)
(460�9)
(0�2)
(502�3)
892�4
0�5
1�3
–
(3�3)
890�9
292p
294p
28%
Properties at valuation
Properties at valuation increased by £48�8 million
during the year, predominantly due to acquisitions
and capital expenditure, less disposals and a decline
in portfolio valuation of 6�4%� Hawthorn Leisure and
other accretive acquisitions added £181�1 million and
we incurred £24�6 million of capital expenditure
during the year, spending £7�5 million on our retail
park development in Canvey Island, which reached
practical completion during the year, and £3�3 million
constructing six c-stores which we completed during
the year� This was partially offset by disposals of
£64�7 million, and a decline in portfolio valuation of
£89�5 million�
Net assets
During the year, IFRS net assets decreased from
£892�4 million to £796�1 million� The reduction in
IFRS net assets was primarily due to a 6�4%
decrease in portfolio valuation, due predominantly
to the write down in value of our community
shopping centre portfolio by 9�2%�
EPRA NAV is calculated by adjusting net assets
to reflect the potential impact of dilutive ordinary
shares, and to remove the fair value of any
derivatives held on the balance sheet� These
adjustments are made with the aim of improving
comparability with other European real estate
companies� EPRA NAV decreased by 10% to
£799�3 million, from £890�9 million at 31 March 2018�
EPRA NAV per share decreased by 11% to 261 pence
per share at March 2019 compared to 292 pence
per share in March 2018� The decrease in EPRA NAV
and EPRA NAV per share is primarily due to the 6�4%
decrease in portfolio valuation�
Net debt & financing
Analysis of movement in proportionally consolidated net debt (£m)
Proportionally consolidated net debt at 31 March 2018
Operating activities
Net cash inflow from operations before working capital movements
Changes in working capital
Investing activities
Purchase of investment properties
Hawthorn Leisure acquisition
Disposal of investment properties
Purchase of plant and equipment
Development and other capital expenditure
Financing activities
Ordinary dividends paid
Other
Proportionally consolidated net debt at 31 March 2019
344.7
(50�6)
15�0
51�5
107�3
(78�7)
0�7
24�6
63�1
(2�5)
475.1
Net debt increased by £130�4 million over the year,
to £475�1 million, primarily as a result of net
investment activity completed during the year�
Operating activities generated a net cash inflow
from operations before working capital movements
of £50�6 million, compared with FFO of £56�4 million�
Investing activities included the acquisition of the
Hawthorn Leisure management platform and
portfolio of community pubs, which contributed
£107�3 million to the increase in net debt in the year,
and the purchase of investment properties, which
added £51�5 million, principally the acquisition of
retail assets in Grays and Barrow-in-Furness, and
a portfolio of 76 community pubs acquired from Star
Pubs & Bars� This acquisition activity was offset by
£78�7 million received following the disposal of
investment properties, with the largest being
Coalville Retail Park where we had completed a
comprehensive programme of asset management
initiatives and which we sold for £9�9 million, and
the sale of 22 community pubs which were let to
Marston’s on long-term RPI-linked leases for
£14�8 million, reflecting a net initial yield of 5�6%�
In addition, at the start of the year we received
£16�2 million relating to the disposal of the Primark
unit in the Hillstreet Shopping Centre in
Middlesbrough, which was sold in FY18�
NewRiver REIT plc Annual Report and Accounts 2019
53
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FIN ANCIAL REVI EW
Financial Policies
Net debt
Principal value of gross debt
Weighted average cost of drawn debt1
Weighted average debt maturity of drawn debt2
Financial policy
Proportionally consolidated
31 March 2019
31 March 2018
£475.1m
£510.0m
3.2%
6.9 yrs
£344�7m
£469�0m
3�1%
7�9 yrs
37%
28%
Loan to value3
Guidance <40%
Policy <50%
Net debt: EBITDA
Interest cover
Ordinary dividend cover4
Balance sheet gearing
<10x
>2�0x
>100%
<100%
31 March 2019
6.3x
4.0x
84%
Group
31 March 2018
4�5x
4�7x
93%
31 March 2019
60%
31 March 2018
38%
1� Cost of debt assuming £215 million revolving credit facility is fully drawn
2� Average debt maturity assumes one-year extension options are exercised and bank approved
3� See Note 25 of the Financial Statements for calculation of Loan to value
4� Calculated with reference to UFFO� If calculated using FFO, as in prior years, ordinary dividend cover is 86% in FY19 and 101% in FY18
Our conservative financial policies were put in
place in consultation with shareholders and form
a key component of our financial risk management
strategy�
– Loan to Value was 37% at 31 March 2019, an
increase from 28% on 31 March 2018� Our
guidance is that our LTV will remain below 40%�
– Net debt: EBITDA was 6�3x, an increase from
4�5x in the prior year� Our guidance is that Net
debt: EBITDA will remain below 10x�
– Interest cover was 4�0x at 31 March 2019, which
remains significantly ahead of our financing policy
which requires a minimum cover of 2�0x�
– Ordinary dividend cover, calculated with
reference to UFFO per share, was 84%�
Previously we have measured ordinary dividend
cover with reference to FFO per share, but during
the year we have introduced UFFO per share on
the basis that it is an operational cash measure
which is more closely aligned to the measures
used by our peer group and which will remove
volatility from our ordinary dividend cover
calculation, caused by the inclusion of profits
or losses on the sale of properties� We remain
committed to a delivering a fully covered
dividend to our shareholders, and establishing
ordinary dividend cover with reference to UFFO
will allow us to establish a strong platform from
which to grow the dividend in the future�
– Balance sheet gearing increased to 60% from
38% at 31 March 2018, largely due to the increase
in drawn debt from the funding of acquisitions in
the year�
54
NewRiver REIT plc Annual Report and Accounts 2019
Additional guidelines
Sitting alongside our financial policies are additional
guidelines, used by management when analysing
operational and financial risk, which we disclose in
the following table:
Single retailer
concentration
Development
expenditure
Risk-controlled
development
Pub weighting
Guideline
<5%
<10% of GAV
>70% pre-let or
pre-sold on
committed
<30% of GAV
31 March
2019
1.9%
1%
86%
21%
– Our largest single retailer concentration at the
year end was Poundland, with a single retailer
concentration, expressed as a percentage of total
rent roll, of 1�9%�
– Our development expenditure in the last
12 months as a proportion of total gross asset
value was less than 1%�
– Our risk-controlled approach to development
means that we will not commit to a new
development unless we have pre-let or pre-sold
at least 70% by area, and we are currently 86%
pre-let on committed developments�
– Our pub weighting is currently 21% excluding
c-stores� Previously we have guided that our
community pub portfolio would not account for
more than 20% of our total portfolio by valuation�
This self-imposed limit was established at a time
when we did not have an in-house management
solution� However, having acquired the Hawthorn
Leisure business in May 2018, complete with a
market leading specialist pub management
platform, and completed the integration of the
Hawthorn Leisure business in January 2019,
we now feel well positioned to increase our
weighting into community pubs�
Mark Davies
Chief Financial Officer
22 May 2019
NewRiver REIT plc Annual Report and Accounts 2019
55
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR PEOPLE
Our culture
Our approach
Our HR strategy and road map seeks to create
a competitive edge through people, enabling us
to attract and retain our employees� This is achieved
by putting the right people into the right roles and
developing their careers to ensure that they grow
with the business� A positive work environment
where employees feel valued and supported
underpins the success of our business�
Leadership
Our Executive Committee (ExCo) provides the
leadership and direction to drive our business
forward� In October 2018, Edith Monfries, Head
of HR, joined ExCo emphasising the importance
of our people agenda� Edith joins our existing ExCo
Team of Allan Lockhart, Chief Executive, Mark
Davies, Chief Financial Officer, David Lockhart,
Executive Deputy Chairman, Nick Sewell, Charles
Spooner, Emma Mackenzie, and Stuart Mitchell�
Communication
Effective communication starts at the top of the
business and permeates throughout the
organisation, ensuring that all our people
understand the strategy and key drivers for success�
It is equally important that our Board has the means
of hearing directly the views and concerns of the
wider team�
NewRiver has established a staff forum to liaise with
the Board and to create an environment where our
people can raise and discuss issues� This will ensure
that the Board has regard to our staff’s interests in
taking its decisions� We are facilitating, by ensuring
the accessibility of our Non-Executive Directors, an
environment in which employees can raise concerns
in confidence directly with the Board�
Recruitment
Following our acquisition of Hawthorn Leisure in
May 2018 we now have a total head count across
both businesses, including our Managed Pubs
division, of 226� Our gender diversity is 57% female
and 43% male across the entire business and 48%
female and 52% male within our head office
locations in London and Birmingham�
NewRiver has a collaborative and supportive
culture which gives every individual a sense of
purpose and an opportunity to thrive� Our people
are our key asset� Their hard-work, dedication
and entrepreneurial spirit sit at the heart of
our business�
Collaborative
and Supportive
Focused
and Flexible
We are
Hardworking
and Adaptable
Passionate
and Resilient
Our values
We have a set of values which lie at the core of our
business and have guided us through our journey
so far and are embraced by our people� They are
values that drive open and collegiate behaviour
and focus everyone on success�
Trusted
and
Respected
Brave
Smart
One
Team
Energetic
Beyond
Expectation
56
NewRiver REIT plc Annual Report and Accounts 2019
Our recruitment policies consider the needs of the
business today and our aspirations for the future,
whilst ensuring that our unique corporate culture
is maintained� During the year we hired four
additional experienced employees at NewRiver
across our portfolio management, development,
finance and HR teams taking NewRiver’s head count
to 55�
Hawthorn Leisure has a headcount of 65, including
individuals who were part of a TUPE process in
January 2019, where nine individuals transferred
to NewRiver during the integration project, which
also involved recruitment of 21 new staff�
Our Managed Pub division employs a further
106 staff�
Developing & Retaining
We are committed to maximising the skills, capability
and performance of all employees� We provide
all our colleagues with the opportunity to develop
themselves and progress in their careers� Our
support ranges from funding through professional
qualifications including RICS and ACCA to informal
weekly teach-ins with experts on a wide range
of topics, which all staff members are encouraged
to participate in� We also support the Apprenticeships
Scheme� Of our head office staff in both Birmingham
and London, 87% have received training during the
course of this year�
In addition, all employees benefit from a tailored
performance review and professional development
plan which allows them to measure their progress
and fulfil their potential� We have further developed
our appraisal processes this year and we completed
226 appraisals across the entire business� The
support we provide to our staff is reflected in our
excellent staff satisfaction and retention rates, and
this allows us to further attract the best talent� Across
our business we have a retention rate of 88%�
Reward & Recognition
We are committed to ensuring that we reward our
employees through our remuneration policies which
include bonus entitlements for all staff to reward
excellent performance and our Long Term
Incentive Plan�
We currently offer our employees comprehensive
benefits, ranging from paid family medical insurance
for all staff and dependents to income protection�
We review these benefits each year to ensure they
are meeting employee expectations� We also offer
enhanced shared parental pay entitlements�
Our remuneration policies are tailored to
reward excellence and ensure retention of our
talented team�
Health & wellbeing
We are committed to creating a safe and healthy
environment which improves the quality of our
employees’ lives�
In June 2018 over 80% of staff participated in a Staff
Wellbeing Survey the results of which have led to
our development of a health and wellbeing strategy
with a focus on:
– Enhancing employee engagement and
organisational commitment, and increase the
feeling of empowerment when at work
– Creating a safe and healthy environment where
employees thrive
– Improving physical and emotional wellbeing
– Improving staff engagement levels, recruitment
and retention
We currently have in place initiatives from exercise
bootcamps to fresh fruit and healthy snacks for all,
combined with an Employee Assistance Programme,
encouraging employees to live a healthier lifestyle�
Our flexible working practices enable our staff to
work in a way that is smart, focused and tailored
to their individual needs� The effect of this is visible
through our low absentee rates of less than 0�5%�
Our aim in FY20 is to implement more activities
which will help to foster a healthier working
environment� We are participating in “Thrive at
Work”, a programme seeking the highest level of
accreditation to demonstrate our commitment to
employee health and wellbeing�
We have also enrolled in a campaign called “This
is me”, whose core objective is to promote mental
health in the workplace and end the stigma around
mental health issues�
NewRiver REIT plc Annual Report and Accounts 2019
57
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR APPROACH TO ESG
Our ESG
activities
Used to inform
and shape
Used to inform
and shape
are applied through our
business model
1
External
benchmarks
and guidance
2
Our ESG
targets
5
4
3
to meet
Progress
measured against
Progress
measured against
Our ESG
objectives
Disciplined stock selection
Profitable capital recycling
Active asset management
Risk-controlled development
Leveraging our operating platform
with a conservative balance sheet
As an owner of assets located in communities
across the UK, we are committed to enhancing
the lives of the people we serve and minimising
our impact on the environment�
At the same time, we want to ensure we are good
neighbours in our communities, supporting and
championing local causes and innovating to address
the needs of local people� At a corporate level, we
are passionate about engaging with our staff and
our occupiers and maintaining our high standards of
governance, to ensure we are an excellent employer
and the best company to do business with�
58
NewRiver REIT plc Annual Report and Accounts 2019
Our ESG programme
Our ESG activities are informed and shaped by both
external benchmarks and guidance, and our own
ESG targets� These activities occur at every stage
of our business model in order to meet our ESG
objectives� Our progress against these objectives is
then measured against our ESG targets and external
benchmarks on an annual basis, and this is used to
determine our ESG activities for the following year�
This approach generates a feedback loop whereby
our programme can adapt as the business changes
and as best practice evolves�
ESG oversight
Our ESG programme is headed by Emma
Mackenzie, a Director with asset management
responsibilities for our Northern, Scottish and
Northern Ireland portfolios and a member of our
Executive Committee� The programme is developed
and reviewed by an internal ESG committee, headed
by Emma Mackenzie and comprises representatives
from our retail and pub asset management teams,
our Investor Relations and HR functions, and
representatives from Cushman & Wakefield, our
external environmental consultants� The committee
meets quarterly and its agenda is supplemented by
monthly updates from Cushman & Wakefield, who
are also responsible for the collection and collation
of environmental data from our assets�
Our ESG objectives
Minimising our
environmental
impact
Reducing greenhouse
gas emissions in
order to prevent
climate change is
one of the biggest
challenges facing
our society� We aim
to minimise our
environmental impact
through procuring
energy from
renewable resources,
reducing our
consumption and
encouraging
stakeholders to be
more sustainable�
Engaging our
staff and
occupiers
Our staff and
occupiers are key
stakeholders in our
business, and their
wellbeing and
satisfaction is vital to
the long-term success
of our company�
We aim to engage
these groups through
maintaining an
ongoing dialogue to
understand and act
upon their needs�
Supporting
our
communities
Our assets are
located in
communities across
the UK and play an
integral role in the
lives of our
customers� We aim
to enrich lives and
strengthen
communities through
meeting the needs
of all of our customers
and supporting
and championing
local causes�
Leading on
governance
and disclosure
High standards
of corporate
governance and
disclosure are
essential to ensuring
the effective
operation of our
company and
instilling confidence
amongst our
stakeholders� We aim
to continually improve
our levels of
governance and
disclosure to achieve
industry best practice�
NewRiver REIT plc Annual Report and Accounts 2019
59
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Meeting our ESG objectives at every
stage of our business model
1
Disciplined stock
selection
g
Levera g i n
o u r operating pla
t
f
Growing cash
returns
o
r
m
5
Thriving
communities
Active
asset
management
2
Profitable
capital
recycling
C
o
nservative b a l a n c
e s h eet
4
Risk-controlled development
3
1
Disciplined stock selection
2
Active asset management
We invest in assets that are already part
of the fabric of their communities� These
have typically been underinvested and
we aim to revitalise them through
investment and introducing the most
appropriate mix of operators and uses�
We also undertake environmental due
diligence during our stock selection
process, including assessment of energy
efficiency & legislative risk and flood risks�
All acquisition decisions are subject to
a rigorous review process, including
Executive Committee or Board sign-off
where appropriate, and drawing on
expertise from around the business�
We introduce features to our assets that
reduce energy consumption and therefore
occupational costs for our occupiers�
These include the installation of solar
PV panels on the roofs of our centres,
EV charging points in our car parks, new
metering systems and recycling points�
We work closely with occupiers to ensure
fit-outs are carried out sustainably and
with regard to the occupiers’ own ESG
objectives and the latest
recommendations on energy efficiency�
We look at ways that space can be used
to support communities better, for
example through using mall space and
storage units for charities and local causes
through to adding council and healthcare
facilities that can better serve the needs
of the local population�
60
NewRiver REIT plc Annual Report and Accounts 2019
3
Risk-controlled development
pipeline
We only undertake development where
it is viable for the local community, for
example where we can be sure it will not
lead to oversupply of retail or adversely
impact the local population or economy�
We work closely with councils and local
communities in development to ensure
all local needs and concerns are
addressed, and to ensure our schemes
deliver the right balance of residential,
retail, offices and other civic amenities�
We engage closely with the occupiers to
which our assets are pre-let to keep them
updated on development progress and
to understand their needs and timelines�
In construction we aim for high industry
sustainability standards e�g� BREEAM
4
Profitable capital recycling
Having completed our active asset
management and risk-controlled
development initiatives, we will look
to recycle our capital profitably� We leave
behind well-invested assets that are fit
for the future and deploy proceeds
into underinvested community
assets elsewhere
5
Leveraging our operating
platform / maintaining a
conservative balance sheet
In using our platform to manage third party
assets, we help local authorities and other
asset owners to create thriving assets that
benefit their local communities�
Our ESG targets
We have established comprehensive short,
medium and long-term targets to 2050
against our 2017 baseline year, aligned with
the Science-Based Targets Initiative (SBTI)
methodology� Our intention is to commit to
an ambitious programme to provide long-term
resilience for our business� In recognition of
the UK’s Net Zero ambitions, we will be
reviewing these targets during 2019 – 2020
to ensure we are supporting the requirements
to meet a 1�5 degree celcius global warming
limit in line with the IPCC recommendations�
Short-term targets (by 2020)
NewRiver has set ambitious short-term targets
to FY21 as it pursues its ESG objectives�
1� Expand our data collection on waste
management to encompass all multi-let
retail assets
2� Expand the switch to Automatic Meter
Reading (AMR) systems to cover all
NewRiver responsible electricity, gas
and water supplies at all shopping centres
and pubs�
3� Zero to landfill across the entire portfolio
4� Increase the provision of recycling points
at our assets
5� Implement staff wellness monitoring
procedures
6� 5% reduction in NewRiver-procured utilities
7� 5% reduction in NewRiver Greenhouse Gas
(‘GHG’) emissions from 2017 levels
Medium-term targets (by 2030)
1� 75% of waste generated at NewRiver
assets is recycled
2� 75% of energy procured from renewable
sources
3� 20% reduction in NewRiver-procured
utilities
4� 20% reduction in NewRiver GHG emissions
Long-term targets (by 2050)
1� Over 25% of NewRiver energy generated
from renewable sources at our own assets
2� 100% energy procured from renewable
sources
3� 40% reduction in NewRiver procured
utilities
4� 40% reduction in NewRiver GHG emissions
NewRiver REIT plc Annual Report and Accounts 2019
61
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR APPROACH TO ESG
Our ESG activities
Minimising our
environmental impact
Monitoring & reporting improvements
Automatic meter reading (‘AMR’) systems are
essential to the timely monitoring of our energy
consumption, the identification of reduction
opportunities, and ensuring our billing is accurate�
We consider these systems to be so fundamental
to our ESG programme that their further
improvement forms a key part of our short-term
targets for the business�
We continued our rollout of AMRs across our
portfolio during the year, and have now installed
electricity AMRs at over two-thirds of our portfolio
and gas AMRs at three-quarters of our portfolio� For
all remaining assets we are on-track to install AMRs
in the coming year, ahead of internal targets�
Electric vehicle charging
In 2018, we partnered with InstaVolt - one of the
UK’s largest owner-operators of rapid DC charging
stations for electrical vehicles – to install and
maintain charging points to a number of our
shopping centres and retail parks� We now have
18 charging points installed across six retail sites
in Wallsend, Fareham, Dumfries, Middlesbrough,
Market Deeping and Barry, and we have plans
to install them at further sites in the coming year�
Water
Reducing water consumption at our assets saves
money and reduces our overall resource intensity�
We have implemented water saving initiatives at seven
centres including undertaking several toilet
refurbishments� Initiatives included installation of sensor
taps, water saving cisterns and new water heaters�
We also installed water harvesters on service decks
and rooftops, such as on the roof of Broadway
Shopping Centre, Bexleyheath� These installations
substantially reduce the consumption of potable
water by using the roof as a collector of rainwater�
62
NewRiver REIT plc Annual Report and Accounts 2019
Our partnership with InstaVolt
InstaVolt is one of the UK’s leading providers
of electric vehicle charging points and is the
owner and operator of all EV charging points
across the NewRiver portfolio� InstaVolt’s
chargers are available to use on a
subscription-free, pay-as you go basis, and
with rapid DC chargers providing a minimum
50kW of electricity, can charge a vehicle in
the time it takes to have a cup of coffee�
Better still, all the electricity supplied to
InstaVolt comes from 100% renewable
energy sources, and the units are future-proofed
through the ability to upgrade them to
provide up to 350kW as battery technology
develops, without the need to remove them
from the ground�
InstaVolt installs and maintains its chargers
for free and makes its money from the sale of
electricity to drivers� NewRiver receives a rent
for hosting the chargers at its centres�
LED lighting in the entrance to the
Piazza Shopping Centre, Paisley
Solar PV panels on the roof of
Grays Shopping Centre
LED lighting rollout
Lighting is essential to ensuring our centres are safe,
secure and pleasant places to visit� Recognising that
many of our centres are still reliant upon inefficient
light sources, we have recently commenced the
rollout of LED lighting, which uses at least 80% less
electricity than an equivalent conventional halogen
source� LED lighting has become the favoured option
for businesses wishing to reduce energy
consumption, as LEDs have the highest efficacy and
lamp life of all, are cost effective to run, and are easy
to control and maintain�
Over the last 18 months, we have installed LED
lighting at an additional nine shopping centres, and
we are in the process of installing them at a further
two centres, meaning that the majority of our
shopping centres are now running off these
renewable light sources�
Solar PV panel installation
The installation of solar photovoltaic (“PV”) panels on
the roofs of our assets and other open spaces
provides a renewable source of electricity derived
directly from sunlight, which is used to power
lighting and other amenities at our centres, while
also reducing our carbon emissions and energy
procurement costs�
NewRiver now has Solar PV panels at four shopping
centres – in Boscombe, Llanelli, Skegness and
Hastings - each with a 50 kWp system capacity�
Together, these generate almost 400,000 kWh per
year, enough to power 130 UK households�
In addition, Grays Shopping Centre, which NewRiver
acquired in July 2018, already has a system of
almost 200 panels covering 15,000 sq ft on the roof
of the centre� These panels generate approximately
45,000 kWh per year, sufficient to power the
centre’s car park, and saving around 600 tonnes of
CO2 over their life�
Waste and recycling
Minimising our waste production and encouraging
recycling at our centres helps to reduce the pollution
caused by sending rubbish to landfills and the
manufacture of new replacement materials�
A number of our centres have partnered with Don’t
Waste and its industry-leading waste management
platform to devise their own waste management
programmes� These programmes are already
showing results, with the Prospect Centre in Hull
seeing a 43% reduction in waste year on year after
implementing a new waste strategy and The Ridings
in Wakefield seeing a 28% reduction year-on-year� We
are also committed to improving our waste recycling
streams and on-site management practices�
NewRiver REIT plc Annual Report and Accounts 2019
63
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR APPROACH TO ESG
Engaging our staff and
occupiers
Occupier satisfaction survey
We have over 800 unique occupiers across our
retail assets and are committed to continually
improving the service we provide to these key
stakeholders in the business�
As part of our engagement programme, we
conducted an occupier satisfaction survey in
June 2018 across our shopping centre portfolio�
The aim of the exercise was to gain a better
understanding of occupier’s views on topics including:
– Facility and maintenance services;
– Centre manager communication and
responsiveness;
– Cleanliness, safety and security;
– Factors impacting ease of doing business,
and staff retention and morale; and
– Energy, water and waste management�
NewRiver sent out surveys to all of our shopping
centres and received over 650 responses,
equating to a 60% response rate�
Over 80% of occupiers were ‘satisfied’ or ‘very
satisfied’ with the responsiveness of their centre
manager and the majority provided a net promoter
score (‘NPS’) of 8 or above for the shopping
centres they operate in� Over three-quarters of
respondents expressing a view were ‘satisfied’
or ‘very satisfied’ with the provision of security
personnel and over 85% were ‘satisfied’ or ‘very
satisfied’ with the cleaning and management of
rubbish in common areas�
The survey also revealed areas for further
development, and we will look to address in our
centre manager plans for the coming year� These
include improving parking provision for centre staff,
providing more natural light and greenery into our
centres, and raising awareness of initiatives to
promote sustainability at a centre-level�
Staff wellbeing programme
NewRiver’s 120 head office staff are the driving force
behind our success as a company, and their
wellbeing is a top priority for us� In FY18 NewRiver
launched a staff wellbeing programme which
includes aspects such as encouraging physical
activities, supporting flexible working and providing
healthy food options�
64
NewRiver REIT plc Annual Report and Accounts 2019
Our flexible working practices enable our staff to
work in a way that is smart, focused and tailored to
their individual needs� The effect of this is visible
through our low absentee rates of less than 0�5%�
Our aim in FY20 is to implement more activities
which will help to foster a healthier working
environment� We are participating in “Thrive at
Work”, a programme seeking the highest level of
accreditation to demonstrate our commitment to
employee health and wellbeing�
We have also enrolled in a campaign called “This
is Me”, a business-led campaign to support
organisations and their employees, to talk about
mental health� It encourages people with experience
of a mental health problem, whether their own or a
loved one, to share their stories and end the stigma
around mental health issues�
In June 2018, NewRiver conducted its first staff
wellbeing survey, which covered topics including:
– Physical health, levels of exercise and diet;
– Mental health, levels and drivers of stress;
– Work-life balance; and
– Personal and career development�
The survey was sent to all NewRiver and Hawthorn
Leisure staff, and had an almost 80% response rate�
The findings were generally very favourable, with
the majority of staff considering their levels of
physical and mental health to be ‘good’ or ‘very
good’, but it also identified some important areas for
improvement, such as making it easier and cheaper
for staff to exercise, and encouraging more breaks
during the working day�
Following the survey, an internal working group has
been established to review the survey results and
assess how the company’s wellbeing programme
can be further enhanced�
Health and safety
We are committed to ensuring the health and safety
of our staff and clients and to providing a safe
environment for all those attending our premises�
A key part of this is our controls to address health
and safety risks arising from our work activities,
provision and maintenance of safe plant and
equipment and the taking of steps to prevent
accidents and cases of work-related ill health� The
Board has nominated the Company Secretary as
the Principal Health and Safety Officer with day-to-
day responsibility for health and safety measures,
though we encourage all staff to take responsibility
for ensuring healthy and safe working conditions�
We are pleased to report that during the year the
company recorded no injuries and no fatalities
throughout the business�
Total staff sickness days remained at less
than 0�5% of total working days for the second
consecutive year�
Supporting our
communities
As part of our commitment to being good
neighbours and supporting local causes, our
community shopping centres, conveniently-located
retail parks and community pubs made significant
contributions to their communities during the year�
Alongside local fundraising, NewRiver contributes to
a number of charities at a corporate level, including
through our recent partnership with the Trussell Trust
and our annual ‘Way of the Roses’ challenge, raising
thousands of pounds for local causes�
Our first charity partnership with
the Trussell Trust
In May 2019 we announced our first corporate
charity partnership with the Trussell Trust, an
organisation that aims to end hunger and
poverty in the UK� The Trussell Trust supports
more than 1,200 food banks across the UK to
provide a minimum of three days’ nutritionally-
balanced emergency food to people in need,
as well as providing support to help people
resolve the challenges they face� In 2018-19,
food banks in the Trussell Trust’s network
provided 1�6 million emergency food parcels
to people in crisis� More than 550,000 of
these went to children�
Through this partnership, NewRiver will join a
number of leading UK retailers and consumer
goods companies who already support the
Trussell Trust� Our support will entail financial
support at a corporate level and from
fundraising at its community shopping centres
and community pubs, as well as identifying
local opportunities to use our assets for
storage, donation drop-off points, awareness
campaigns and volunteer recruitment�
“We are thrilled to have
NewRiver as our new corporate
partner. We have seen a record
demand in food bank use in the
last year, with more and emore
people struggling to afford the
basics. This isn’t right.
But thanks to the incredibly vital
support from our partners, we’re
committed to working towards a
future where there is no need
for food banks. We’re
continually blown away by
people’s support to provide
emergency help and this kind of
generosity from NewRiver
shows that as a nation we
believe in justice and
compassion to change society
for the better.”
Alex Christian, Head of Corporate
Partnerships at The Trussell Trust
NewRiver REIT plc Annual Report and Accounts 2019
65
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR APPROACH TO ESG
The team at Abbey Centre, Belfast accept
the Autism Impact Award
Making our centres
autism-friendly
There are 700,000 autistic people in the UK, and
trips to the shops can be stressful for autistic
adults and children� Frustration or anxiety can be
caused by not knowing why we need to shop or
what will happen when shopping, and a person
can be overwhelmed by sensory experiences in
retail destinations�
NewRiver is a proud participant in the National
Autistic Society’s Autism Hour initiative,
ensuring centres and their occupiers adapt their
environments to make autistic shoppers more
comfortable and to reduce sensory
overload, including:
– Turning down music, in-store tannoy
announcements and other controllable noise
– Dimming or switching off lights where it is safe
to do so
– Training employees to understand autism and
how they can help
– Raising public awareness of autism and
collecting feedback
Launched in 2017, the Autism Hour campaign
is run every October and the National Autistic
Society encourages businesses to run their own
Autism Hour regularly through the year�
NewRiver had 16 centres participate in the 2018
campaign, and over half of these now run a
regular Autism Hour throughout the year� A
number of our centres have also produced
pre-visit sensory guides, which can make the
shopping experience more comfortable for those
suffering from autism�
In October 2018, the Abbey Centre, Belfast was
recognised with an ‘Autism Impact Award’ from
Autism NI for its efforts to make the centre a more
autism-friendly environment�
Tackling loneliness amongst
the elderly
Most people will feel lonely at some points in
their lives, but for a growing number of people,
particularly those in later life, loneliness can have
a significant impact on their wellbeing� According
to Age UK, the UK has 3�6 million older people living
alone, of whom 2 million are aged 75+�
In association with Age UK and other elderly
charities, a number of our centres – including
The Forum in Wallsend, Priory Meadow Shopping
Centre in Hastings and Hillstreet Shopping Centre
in Middlesbrough - host regular events for old
people promoting friendship and providing activities
The Ridings Centre in Wakefield hosts a monthly
‘Cuppa Club’, a free monthly meet-up, with events
including afternoon tea, live music, dancing, craft
activities and more� In May 2018, the centre won
a prestigious Golden Apple Award for its work on
Cuppa Club, which was commended by the judges
for tackling a national issue with a simple yet
effective campaign�
Showcasing local creative talent
We work with a range of national arts-based
charities, in co-operation with The Arts Council,
Charities Commission and the Local Government
Association, to use empty spaces across our
portfolio as a platform for local artists� This includes
use of units for exhibition and gallery space,
workshops, temporary studios, performance spaces
and even just for storage of artworks�
As part of the agreement, the charities take liability
for the business rates on each unit and NewRiver
covers any shortfall not covered by charity business
rates relief� In addition, NewRiver makes a monthly
charitable donation to the charities�
66
NewRiver REIT plc Annual Report and Accounts 2019
Mandatory Carbon Reporting
Under the Companies Act 2006 (Strategic and
Directors’ Reports) Regulations 2013, we are
required to report on greenhouse gas (‘GHG’)
emissions for which we are responsible�
Our GHG emissions for the financial year ending
31 March 2019 are summarised in the table below�
Emission data from the financial year ending
31 March 2018 has also been included for
comparison purposes�
Sources of greenhouse
gas emissions
Scope 1
Combustion of fuel &
operation of facilities
Scope 2
Electricity, heat, steam
and cooling purchased
for own use
Total footprint
Intensity measure
Emissions per sq m
FY19
(tCO2e)
FY18
(tCO2e)
1,480.18
501�46
4,022.48
4,410�75
5,502.67
4,912�21
FY19
(tCO2e/sq m)
0.035
FY18
(tCO2e/sq m)
0�078
We have used the operational control method to
outline our carbon footprint boundary� Occupiers’
energy usage and emissions are not included as
this is not deemed to be within our operational
control boundary� Following the acquisition of
Hawthorn Leisure during the year, our managed
pub portfolio is now of a sufficient size to warrant
inclusion in our FY19 reporting� This is reflected
in the total emission increase in FY19 compared
to FY18�
For intensity level reporting, we have used the
operationally controlled area of our assets as the
denominator, which we estimate to be 28% of the
total area of our assets� Emissions from vacant units
have been excluded in the intensity measure due to
the variability of emissions and floor area year-on-
year� In any event, vacant units represent a de
minimis percentage of our total GHG emissions�
We have measured emissions based on the GHG
Protocol Corporate Accounting Standard (revised
edition) and guidance provided by the UK’s
Department for Business, Energy & Industrial
Strategy and the Department for Environment,
Food and Rural Affairs (‘Defra’) on mandatory
carbon reporting� The emissions factors and
conversions used for 2018 reporting are from the
Defra greenhouse gas reporting tool 2017 and the
factors and conversions used for 2019 reporting
are from Defra’s 2018 reporting tool�
Electricity
Natural gas
2018
(kgCO2e/kWh)
0�28307
0�20437
2017
(kgCO2e/kWh) % change
-19%
-13%
0�35166
0�20437
The above table outlines the emission factors for
the UK used for the 2018 and 2019 reporting� It
demonstrates that the emission factors have
reduced, which is mainly due to a cleaner energy
supply mix as the UK is moving away from coal and
gas to a greater proportion of renewables�
NewRiver REIT plc Annual Report and Accounts 2019
67
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR APPROACH TO ESG
EPRA sBPR
Relevant environmental data has been reported, where possible, following the European Real Estate
Association Best Practice Recommendations on Sustainability Reporting, September 2017 (EPRA sBPR)�
Environmental
EPRA Code
Elec-Abs
Elec-LfL
Fuels-Abs
Fuels-LfL
Performance
Measure
Total electricity
consumption
Like-for-like
total electricity
consumption
Total fuel
consumption
Like-for-like
total fuel
consumption
Energy-Int2 Building energy
GHG-Dir-
Abs
GHG-Int2
Water-Abs
Water-LfL
intensity
Total direct
greenhouse
gas (GHG)
emissions
Greenhouse
gas (GHG)
emissions
intensity from
building energy
consumption
Total water
consumption
Like-for-like
water
consumption
Water-Int2 Building water
intensity
Waste-Abs
Waste-LfL
Total weight of
waste by
disposal route
Like-for-like
total weight of
waste by
disposal route
Unit(s) of
Measure
Retail
FY19
Pubs1
FY19
Total
FY19
Total
FY18
Total
FY17
annual kWh
11,241,179 2,969,029 14,210,208 12,546,213 13,398,347
annual kWh
9,914,299
– 9,914,299 11,295,402
–
annual kWh
3,894,148 3,348,511 7,242,659 2,450,633
2,413,295
annual kWh
2,116,698
–
2,116,698
2,184,042
–
kWh/ m2
105.83
281.91
130.84
120�38
126�92
annual metric
tonnes CO2e
tonnes CO2e /
m2
annual cubic
metres (m3)
annual cubic
metres (m3)
m3
consumption /
m2
Annual metric
tonne
Annual metric
tonne
3,978
1,525
5,503
4,912
5,204
0.028
0.068
0.035
0�039
0�042
73,940
53,959
0.06
–
–
–
73,940
65,747
53,959
60,627
0.06
0�05
4,112
420
4,534
3,658
3,265
–
3,265
3,341
–
–
–
–
–
1� Following the acquisition of Hawthorn Leisure during the year, our managed pub portfolio is now of a sufficient size to be included in our
consumption data as of FY19
2� Intensity figures have been restated for prior years to allow for comparison with FY19 figures, which are calculated with reference to
controlled floorspace on an asset-by-asset basis, rather than using the previous method of applying a flat percentage across the portfolio
Note: Water data was not reported in 2017 as we were developing our data coverage and processes to build a complete data set�
68
NewRiver REIT plc Annual Report and Accounts 2019
Social
EPRA
Code
Performance
Measure
Unit(s) of
Measure
FY19
FY18
Diversity-
Emp
Employee
gender diversity
Percentage of
employees
• Board Diversity: 29% Female
/ 71% Male
• Board Diversity: 29%
Female / 71% Male
• Employee Gender Diversity:
48% Female / 52% Male
• Employee Gender Diversity:
45% Female / 55% Male
Emp-
Training
Emp-Dev
Employee
training and
development
Employee
performance
appraisals
Average hours
/ employee
30
Percentage of
employees
100%
Emp-
Turnover
New hires and
turnover
Total number
and rate
42
100%
• 9 joiners
• 7 leavers
• 55 total employees
• Turnover rate: 13%
• Sickness Absence Rates: 77
• 14 joiners
• 10 leavers
• 120 total employees
(including Hawthorn Leisure,
acquired in May 2019)
• Turnover rate: 8%
• Sickness Absence Rates: 171
H&S-
Emp
H&S-
Asset
H&S-
Comp
Comty-
Eng
Employee
health and
safety
Asset health
and safety
assessments
Asset health
and safety
compliance
Community
engagement,
impact
assessments
and
development
programmes
Governance
EPRA
Code
Performance
Measure
Composition of
the highest
governance
body
Process for
nominating and
selecting the
highest
governance
body
Process for
managing
conflicts of
interest
Gov-
Board
Gov-
Selec
Gov-Col
Injury rate,
absentee rate
and number of
work related
fatalities
sickness days taken
sickness days taken
• Injury Rate: 0
• Fatalities: 0
• Injury Rate: 0
• Fatalities: 0
Percentage of
assets
100%
Number of
incidents
0
Percentage of
assets
100%
Unit(s) of
Measure
FY19
Total number
7
100%
0
100%
FY18
7
Narrative on
process
See Nomination Committee
report of 2019 Annual Report
See Nomination Committee
report of 2018 Annual Report
Narrative on
process
See Nomination Committee
report of 2019 Annual Report
See Nomination Committee
report of 2018 Annual Report
NewRiver REIT plc Annual Report and Accounts 2019
69
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT OUR APPROACH TO RI SK MANAG EM ENT
Our approach
to risk management
Asset
Manager
Executive
Committee
Audit
Committee
Board
R
i
s
k
o
v
e
r
s
ig
ht
The Board has ultimate responsibility for the risk management
and internal control of the Group� Managing risks is an
essential part of any business and the Board regularly
evaluates the Group’s appetite for risk, ensuring our
exposure to risk is kept at an appropriate level�
The Audit Committee monitors the adequacy and
effectiveness of the Group’s risk management and internal
controls and supports the Board in assessing the risk
mitigation processes and procedures�
The Executive Committee is closely involved with day-to-day
monitoring of risk management and delegation of
accountability for risk management to senior management�
Senior Management manage and report on risk, ensuring that
they are within the risk appetite as established by the Board�
Risk monitoring and assessment
The identification of risks is a continual process which is
reviewed regularly� The Company maintains a risk register
in which a range of categories are considered� These risks are
linked to the strategic priorities of the Group and the appetite
as described above�
The risk register assesses the impact, likelihood and residual
risk of each identified risk specific to the Group�
Where the residual risk is deemed too high by the Board then
actions are taken to further mitigate the risk, and each action
is assigned to an individual or group�
A risk-scoring map is used to determine the potential impact
and probability of each significant risk prior to mitigation and
residual risk after mitigation�
Key features of the risk management policy
Principal risk areas are;
– Ongoing analysis and review of the risk register
– Delegation of accountability for each risk
– Use of external advisors regarding risk impacts
– Quarterly reporting and exposure analysis
– Training of employees and outsourced staff on policies
and regulations
Risk Appetite
There are a number of risks that could impact the ability of
the Group to successfully execute its strategy�
The Board operates a low tolerance for risk, most notably
within regulatory, financial and strategic matters� The Group
is prepared to operate in an external environment which is
inherently risky, and our experienced leadership team
continuously works to mitigate the risks arising from the
external environment�
Significant factors which contribute to the low risk of our
business include;
– We maintain an unsecured balance sheet benefiting the
Group with a more diversified debt structure and gaining
access to a larger pool of capital to help achieve our
strategic goals
– The disciplined stock selection in which we invest
– A diverse tenant base in which there is no single tenant
exposure of more than 2%
– Our experienced Board and senior management
70
NewRiver REIT plc Annual Report and Accounts 2019
– Macroeconomic environment
– People
– Corporate strategy and performance
– Financial
– Asset management
– Development
– Environmental
i
h
g
h
y
r
e
V
t
c
a
p
m
I
w
o
L
7
6
3
4
8
1
2
5
Low
Probability
Very high
The principal risks are set out below and should be reviewed in conjunction with the viability statement on page 73�
Risk category and type
Impact on strategy
Mitigation
Residual risk
1. Market risk
The Group may be
affected via external
economic conditions
such as a recession�
2. Political risk
Adverse changes in
Government policy, the
adverse effects of Brexit
on the Group’s tenants or
the impact of political
uncertainty on the UK’s
retail and leisure spend�
3. People
Loss of key employees�
Inability to attract, retain
and develop our people
to ensure we have the
right skills in place to
reach our strategic goals�
4. Financial risk
Gearing levels higher
than the Group’s risk
appetite�
Breaches in bank
covenants�
Lack of funding for the
business�
Rising interest rates
through macroeconomic
influences�
Economic uncertainty
leading to a reduction in
market activity, demand for
investment assets, or the
flow through impact of a
decline in spending by the
UK population�
We continuously monitor the
strategy of the Group in the context
of the macroeconomy� We consider
updates from external advisors and
economic data subscriptions when
evaluating strategy�
The residual risk is deemed to be
low due to the level of income
produced by the Group’s
portfolio and the nature of the
its tenants which are focused on
non-discretionary and
convenience spend�
Upward cost pressures,
reduced tenant profitability
and a reduction in rental
income�
The Company is a member of
various industry bodies, with
representatives on advisory panels�
The Board has considered the
potential impact of Brexit on the
Group’s operations, on the supply
chain and on the Group’s tenants�
There are remaining inherent risks
which could impact the profitability
of the Group’s operations�
Over-reliance on key
employees may make
the Group vulnerable and
cause failure to maintain
competitiveness�
Insufficient cash resources
prevents the Group from
deploying capital and
actively managing its
development projects�
Insufficient headroom on
banking covenants could
prevent the Group from
pursuing its strategy in
order to address the
covenant�
Succession planning is in place for
all key positions, and the plan is
reviewed by the Nomination
Committee�
The Board have reviewed the
succession plans and mitigating
controls and believe the residual
risk to be low�
The strength of the Group’s
balance sheet has led the Board
to consider the residual financial
risk to the Group to be low�
Notice periods are higher for key
employees�
The Group’s operations are diverse
and do not rely on any one
individual�
Active engagement with key
lenders�
On-going debt covenant analysis
and review presented at each
Board meeting�
The Group has a completely
unsecured balance sheet mitigates
the risk of a covenant breach due
to fluctuations in individual property
valuations�
The Group’s weighted average debt
maturity is 6�4 years, providing
longevity and financial support to
maintain the portfolio�
Weekly working capital and cash
flow analysis is reviewed by the
Executive Committee�
The LTV policy allows for a
significant fall in property valuations�
NewRiver REIT plc Annual Report and Accounts 2019
71
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT RISK MANAGEMENT REPORT
Risk category and type
Impact on strategy
Mitigation
Residual risk
The Board consider NewRiver’s
response to technology changes
to be effectively managed� The
diversification of the Group’s
property and the sectors in which
the Company operates are
deemed by the Board to be
resilient to technology changes�
High-quality retail portfolio which
focuses on convenience where
the threat from the changing retail
environment is low�
Focus on initiatives such as Click
and Collect to drive footfall into
centres�
Tenant covenant appraisals�
Exposure to single retailers is
regularly monitored at Board
meetings, limiting negative impacts
of CVAs or administrations�
KPIs to deliver sustainable rental
income�
5. Technology changes
A perceived reduction in
consumer demand for
physical retail stores�
Certain physical retail
space could become less
appealing to retailers�
Tenant turnover leading
to a loss of revenue�
Market sentiment could
cause valuations to fall�
Failure to address a
changing retail
environment may have
adverse financial
consequences�
Retailers may find physical
retailing a more
challenging environment�
Adverse impact on
property valuations�
6. Asset Management
Performance of assets
may not meet
expectations of their
business plans�
7. Development
Development returns may
be eroded through
inactive cost monitoring�
Underperforming assets
which may not meet
business objectives�
Business plans are regularly
reviewed by asset managers and
updated twice yearly�
NewRiver’s active asset
management approach which has
a proven track record has led the
Board to assess that the residual
risk is low�
The Group may be unable
to meet their strategic goal
of profitable capital
recycling�
The Group applies a risk-controlled
development strategy through
negotiating long-dated pre-lets
(typically at least 70%)�
Exposure to cost overruns
may erode returns on
development�
All development is risk controlled
and does not form more than 10%
of the portfolio�
The Board perceives the
mitigation applied by the Group
regarding its risk-controlled
pipeline to effectively limit the
Group’s exposure to such
development risk�
Capital deployed is actively
monitored at Executive Committee
meetings following detailed due
diligence modelling and research�
An experienced development team
monitors on site development and
cost controls�
The Group has a comprehensive
Environmental, Social and
Governance (‘ESG’) programme that
is regularly reviewed to account for
the latest environmental regulations
and standards, and industry best
practice�
The ESG programme is overseen
by our Head of ESG, who is a
member of Executive Committee,
and significant ESG matters are
addressed at Executive Committee
and Board level�
The Group regularly assesses
assets for environmental risk and
ensures sufficient insurance is in
place to minimise the impact of
environmental incidents�
8. Environmental
Adverse impact from an
environmental incident
such as extreme weather,
flooding or energy supply
issues at our assets�
Changes in environmental
regulations and legislation
that impact our business
operations�
Failure to achieve
environmental targets as
established in our ESG
disclosures, or those
outlined in external
benchmarks�
Performance of our assets
could be impacted by
asset closure or
accessibility issues�
The Group could
face increased costs
in meeting new
environmental standards�
Our financial performance
and reputation could be
impacted by not meeting
targets outlines in our ESG
disclosures or external
benchmarks�
72
NewRiver REIT plc Annual Report and Accounts 2019
The Board considers NewRiver’s
approach to ESG, and its practices
to limit the impact of
environmental incidents on its
assets, are sufficient to ensure
the residual impact is low�
Viability Statement
Going concern
The Directors of NewRiver REIT plc have reviewed the
current and projected financial position of the Group
making reasonable assumptions about future trading
and performance� Further details are provided in the
financial statements�
The Board, as part of its strategy process, has assessed the
viability of the Group over a three-year period to March 2022
as this timeframe gives greater certainty over the forecasting
used and is aligned to the Group’s investment cycle� When
assessing the Group’s long-term viability, the Board considered
the Group’s existing investment commitments, available
financial resources and long-term financing arrangements�
They also considered profits; the three-year cash flow forecast
for the portfolio, the Group’s funding requirements, REIT
compliance and other key financial ratios over the period, as
well as the headroom in the financial covenants contained in
our various loan agreements�
In making their assessment, the Directors assessed the
potential impacts, in severe but plausible scenarios, of the
principal risks together with the likely degree of effectiveness
of mitigating actions reasonably expected to be available to
the Group�
At the time of writing there remains considerable uncertainty
surrounding the final outcome over Brexit and how it will
impact businesses in the UK�
The most relevant, with the highest potential impact, of these
risks on viability were considered to be:
– market/economic changes such as higher interest rates,
reduced availability of credit and increasing investment
yields restricting development and causing valuation falls;
– market factors impacting rental and pub income, leading
to a decline in net property income;
– a decline in property valuations as a result of investment
decisions could result in lower income and capital returns
to shareholders than forecast and expose them to
unforeseen risks and liabilities; and
– poor control of development projects could lead to
inadequate returns on investment and over exposure to
developments could put pressure on cash flow and
debt financing�
The nature of the Group’s business as the owner and asset
manager of a diverse income producing portfolio of shopping
centres, retail warehouses, high street assets, and public
houses located throughout the UK and let to a wide variety
of national tenants reduces the impact of adverse changes
in the general economic environment or market conditions
in any one sector in the Group�
On the basis of this and other matters considered by the Board
during the year, the Board has a reasonable expectation that
the Group will be able to continue in operation and meet its
liabilities as they fall due over the three-year period of their
detailed assessment�
NewRiver REIT plc Annual Report and Accounts 2019
73
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT BOARD OF DIRE CTORS
Leading with integrity
Mark Davies
Allan Lockhart
David Lockhart
Baroness Ford OBE
Non-Executive Chairman
Appointed July 2017
RN
Allan Lockhart
Chief Executive Officer
Relevant skills
Baroness Ford has over 20 years’
experience as a Non-Executive Director
and Chairman of private and Stock
Exchange listed companies and
extensive experience of working with
the Government� Margaret has
extensive knowledge across the real
estate market and is an Honorary
Member of the Royal Institute of
Chartered Surveyors�
Other appointments and previous
experience
Margaret is currently Chairman of STV
Group plc, Chairman of the Tennis
Foundation and National President of
the British Epilepsy Association�
Margaret was appointed to the House
of Lords in 2006 and sits as an
Independent Peer�
Margaret was previously a Non-
Executive Director of Taylor Wimpey plc
and SEGRO plc, and the former
Chairman of Grainger plc, May Gurney
Integrated Services plc, and English
Partnerships� Margaret was a member
of the Olympic Board and Chairman of
the Olympic Park Legacy Company�
Relevant skills
Allan has over 25 years’ experience in
the UK real estate market specialising in
the retail sector� Allan started his career
advising major property companies and
institutions on retail investment and
development, before joining Halladale�
At Halladale Allan was responsible for
co-ordinating the acquisition of, and
implementation of the asset
management strategies in respect of
over 20 shopping centres, as well as
acquiring and completing several
profitable retail developments�
Other appointments and previous
experience
Allan started his career with Strutt &
Parker in 1988 before joining Halladale
as Retail Director� In 2009, he co-
founded NewRiver and served as
Property Director since its IPO until
being appointed Chief Executive Officer
in May 2018�
Mark Davies
Chief Financial Officer
Relevant skills
Mark is a Chartered Accountant with
over 20 years’ experience who joined
the Company at its inception in
2009 and has played an integral part in
growing the business to FTSE
250 company� Mark has a strong track
record in Capital Markets including
raising £2 billion of new capital and as
the steward of the Group balance sheet
moving the Company to an unsecured
debt structure following the issuance of
a £300 million ten-year corporate bond
in 2018�
Mark is also the Executive Chairman of
Hawthorn Leisure, which is a business
of over 650 community pubs and
Convenience Stores� Mark led the
acquisition of Hawthorn in 2018 and
oversaw the successful integration of
the business in early 2019�
Other appointments and previous
experience
Prior to joining NewRiver Mark was CFO
of Omega Land which was a £1 billion
private equity fund owned by Morgan
Stanley and prior to that an Audit and
Corporate Finance Partner at Grant
Thornton and BDO�
David Lockhart
Executive Deputy Chairman
Relevant skills
David Lockhart is a qualified Solicitor
and Chartered Accountant and has over
40 years’ operating experience in the
UK real estate market� David is an
experienced and successful
entrepreneur, having founded several
property businesses across the United
Kingdom�
74
NewRiver REIT plc Annual Report and Accounts 2019
Chair of committee
R
N
A
Member of Remuneration Committee
Member of Nomination Committee
Member of Audit Committee
Finance Director of a company within
the BTR Group� Alastair qualified as a
Chartered Accountant with Deloitte
Haskins and Sells and was a
management consultant at Price
Waterhouse�
Colin Rutherford
Independent Non-Executive Director
Appointed February 2019
A N
R
Relevant skills
Colin is a Chartered Accountant and has
significant, recent and relevant financial
experience� Colin has extensive
experience of listed companies and has
a wide-ranging sector exposure that
includes real estate and public houses�
Colin graduated in Accountancy and
Finance and qualified as a Scottish
Chartered Accountant�
Other appointments and previous
experience
Colin currently serves on the Board and
is Audit Committee Chairman of
Mitchells & Butlers plc and Renaissance
Services SAOG, and on the Board and
Audit Committee of Nasdaq quoted
Evofem Biosciences Inc� He is Chairman
of Brookgate Limited, a property
development business�
Other appointments and previous
experience
David practised law in his family law firm
before starting a career in property,
initially founding a property
development company based in
Scotland� David served as Executive
Chairman of Caltrust Limited until
1987 when the company was acquired
by Sheraton Securities International plc,
following which he served as Managing
Director of newly formed Sheraton
Caltrust plc until 1990� In 1991, David
founded Halladale, a business which he
ran as CEO� Halladale floated on AIM in
2001 and was acquired by Stockland
Corporation in 2007� In 2009, he
co-founded NewRiver and served as its
Chief Executive from its IPO until being
appointed Executive Deputy Chairman
in May 2018�
Kay Chaldecott
Independent Non-Executive Director
Appointed March 2012
A N
R
Relevant skills
Kay has over 25 years’ experience of
developing and managing regional
shopping centres throughout the UK�
Kay is a member of the Royal Institution
of Chartered Surveyors and has a
breadth of industry knowledge covering
the retail development process, retail
mix and leasing and shopping
centre operations�
Other appointments and previous
experience
Kay is a member of the board of
Lichfields planning and development
consultancy, and is a member of the
Advisory Board of Next Leadership�
Kay was Managing Director of the
shopping centre business of Capital
Shopping Centres Group plc (now Intu
Properties plc) and served as a main
Board Director� She was previously a
Non-Executive Director of St� Modwen
Properties PLC�
Alastair Miller
Senior Independent
Non-Executive Director
Appointed January 2016
A N
R
Relevant skills
Alastair is a Chartered Accountant and
has significant, recent and relevant
financial experience� Alastair’s
experience has developed skills over
risk management, property, systems,
company secretariat and investor
relations� Having worked for New Look
Group plc for 14 years, Alastair has an in
depth understanding of retailers and the
factors that impact their trading and
profitability�
Other appointments and previous
experience
Alastair was formerly Chief Financial
Officer of New Look Group plc, Group
Finance Director of the RAC, and
Alastair Miller
Margaret Ford
Colin Rutherford
Kay Chaldecott
NewRiver REIT plc Annual Report and Accounts 2019
75
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CORPORATE GOVE RNANCE REP ORT
Corporate governance report
The Board has continued to evolve the
Group’s governance framework to
enhance the Board’s performance -
addressing its priorities of strategy, risk
management, succession planning and
listening to stakeholders.
Baroness Ford OBE
Chairman
It is a pleasure to introduce NewRiver’s corporate governance
report for the year ending 31 March 2019. After being
appointed as Chairman during the year, I have continued to
build on the commitment to strong governance and to evolve
the structures that have resulted in compliance with the
requirements of the UK Corporate Governance Code
throughout the year.
As I moved into the Chairman role, Alastair Miller was
appointed Senior Independent Director and we embarked on
an externally managed process to appoint a new Non-
Executive Director. The appointment of Colin Rutherford in
February 2019 brings a new perspective to the Board given
Colin’s extensive experience in the pub industry, but also
bolsters the financial experience of the Non-Executive team.
This report describes how the Board and its committees
worked on behalf of shareholders and other stakeholders,
driving the culture and discipline necessary for the Company to
achieve its goals.
The Board has reviewed the new requirements of the UK
Corporate Governance Code that was published in July 2018
and we have also listened to the feedback from the external
evaluation process to drive continuous improvements in the
governance of the Group.
The year was another period of change for the Board and it
was an honour to be offered the Chairman role that I assumed
in October 2018 following Paul Roy’s decision to retire from
the Board. Paul made a significant contribution to the strong
growth of the Company over nine successful years
as Chairman.
2019 was another active year for the Company from a
governance perspective. Looking forward we will formalise our
engagement processes to hear the views of our stakeholders
and ensure these views are considered when decisions are
being made by the Board.
Baroness Ford OBE
Chairman
22 May 2019
76
NewRiver REIT plc Annual Report and Accounts 2019
Board and Committee Structure:
Board
Responsible for leading & controlling the Group and has overall authority for the management
and conduct of the Group’s business, strategy and development�
Audit Committee
Reviews and monitors the Group’s
risk management processes�
Monitors the integrity of the
half-year and annual financial
statements before submission
to the Board�
Monitors the effectiveness of the
audit process�
Remuneration Committee
Implements the remuneration
policy of the Group which is to
ensure that Directors and senior
management are rewarded in a
way that attracts, retains and
motivates them and aligns the
interests of both shareholders
and management�
Nominations Committee
Reviews the succession planning
requirements of the Group and
operates a formal, rigorous and
transparent procedure for the
appointment of new Directors
to the Board�
Executive Committee
To assist the Chief Executive with the development & implementation of the Group strategy,
the management of the business and the discharge of its responsibilities delegated by the Board�
Board membership
Details of the Directors, including the skills and experience that they bring to the Board, are on pages 74 to 75. During the year,
the Board comprised three independent Non-Executive Directors (excluding the Chairman) and three Executive Directors.
The Nomination Committee is of the opinion that the Non-Executive Directors remain independent, in line with the definition set
out in the 2016 Code, and are free from any relationship or circumstances that could affect, or appear to affect, their independent
judgement. The Chairman was independent on appointment and the Board still consider her to be independent.
Responsibilities of the board
The Board is responsible for leading and controlling the Group and has overall authority for the management and conduct of the
Group’s business, strategy and development. The Board, supported by a company secretary, is also responsible for ensuring the
maintenance of a system of internal controls and risk management (including financial, operational and compliance controls) and
for reviewing the overall effectiveness of systems in place, as well as for the approval of any changes to the capital, corporate or
management structure of the Group.
There is a clear division of responsibility between the Chairman, who is responsible for the leadership of the Board, and the Chief
Executive, who is responsible for managing and leading the business.
NewRiver REIT plc Annual Report and Accounts 2019
77
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
CORPORATE GOVE RNANCE REP ORT
A summary of the Directors’ responsibilities is shown below:
Chairman
Executive Deputy Chairman
Chief Executive Officer
Chief Financial Officer
Senior Independent
Non-Executive Director
Margaret’s role is to lead the Board and ensure that it operates effectively.
Her responsibilities include:
• setting the agenda, style and tone of Board meetings to ensure that all matters are given due
consideration;
• maintaining a culture of openness, debate and constructive challenge in the Board room;
• ensuring the Board’s effectiveness and ensuring it receives timely information;
• ensuring a new Director receives a full, formal and tailored induction on joining the Board;
• reviewing and agreeing training and development for the Board.
David’s responsibilities include:
• providing leadership and acting as an adviser to the Chief Executive Officer and Chief
Financial Officer;
implementing the strategy agreed by the Board;
• assisting the Executive Directors with relationships with shareholders and stakeholders;
• working with the Board to develop the Company’s strategy.
Allan’s responsibilities include:
• managing the business of the Group;
• recommending the Group’s strategy to the Board;
• Environment, Social & Governance strategy;
•
• management of the Group’s property portfolio, including developments.
Mark’s responsibilities include:
•
• overseeing financial reporting and internal controls;
• executive responsibility for the pub portfolio.
Alastair’s responsibilities include:
• acting as a sounding board for the Chairman;
• evaluating the Chairman’s performance as part of the Board’s evaluation process;
• serving as an intermediary for the other Directors when necessary;
• being available to shareholders should the occasion occur when there was a need to convey
implementing the Group’s financial strategy, including balance sheet capitalisation;
Non-Executive Directors
concern to the Board other than through the Chairman or the Chief Executive.
Kay, Alastair and Colin bring independent judgement, knowledge and varied commercial
experience to the meetings and in their oversight of the Group’s strategy. Kay and Alastair chair
the Remuneration and Audit Committees respectively.
Attendance
Each of the Directors has committed to attend all scheduled Board and relevant committee meetings and have committed to make
every effort to attend ad hoc meetings, either in person or by telephone. If a Director cannot attend a meeting, he or she will be
provided with the papers in advance of the meeting as usual and will have the opportunity to discuss them with the Chairman or
Chief Executive and to provide comments. The Non-Executive Directors meet without the Executive Directors and the Chairman
present, at least once a year.
Attendance at committee meetings is shown in the respective committee reports. Attendance at Board meetings is shown below:
Margaret Ford
Allan Lockhart
Mark Davies
David Lockhart
Kay Chaldecott
Alastair Miller
Colin Rutherford1
1. Colin was appointed to the Board during the year
78
NewRiver REIT plc Annual Report and Accounts 2019
6/6
6/6
6/6
6/6
6/6
6/6
2/2
Business of the board during 2019
Group strategy
– Acquisition of Hawthorn Leisure
– Two-day strategy session with one day for corporate/blue sky considerations, and one day for sector research and trends
Routine business
– Review of quarterly finance updates
– Quarterly review of the Group’s portfolio, leasing activity, capital projects, development status and significant operational matters
– Approval of the annual report and interim report, and associated financial statements
– Approval of the annual budget
– Approval of quarterly interim dividends
Additional business
– Appointment of a new Chairman, a new Senior Independent Director and a new Non-Executive Director
– Appointment of a new auditor for the next financial year
– Monitoring the integration of Hawthorn Leisure and the Group’s existing pub portfolio
– Consider feedback from shareholder meetings
– Consideration and approval of dividend policy
– Review of Board effectiveness and implementation of recommendations
– Review of new Corporate Code and implications for the governance processes in the Group
Board evaluation process
The Board appointed Prism Cosec (‘Prism’) to conduct its external Board evaluation in 2017. Each year following the evaluation,
Prism have reviewed the results of the Board’s feedback on the operation of the Board, and reported the conclusions back to
the board. Prism do not undertake any other work for the Company.
The scope of, and methodology for, the evaluation was discussed and agreed between Prism, the Company Secretary and the
Chairman in the context of an agreed three-year evaluation plan. Directors were asked to respond to a number of open questions
about the operation of the Board and its committees before completing detailed questionnaires on the same. Prism reviewed the
responses to the questionnaires, drew out the pertinent themes and discussed these with the Board. The Board believe that it
continues to operate effectively and has addressed the evaluation points raised as follows.
Area
Nomination Committee
Succession plans for Board
and Executive Committee
appointments required.
Plan formal Nomination Committee
meetings as part of annual Board cycle
and set agenda items to cover.
Board process
Balance presentations and blue sky
thinking. Share executive research.
Other governance points
Consideration of diversity in
Nomination Committee’s Board
appointment process.
Actions required
Status
Succession plans created and implemented. New Chairman and
CEO appointed. Succession plans refreshed for new appointments.
Complete.
Create corporate calendar, Board and committee annual planners.
Complete.
Two-day strategy session arranged with one day for corporate/blue
sky considerations, and one day for property research and trends.
Complete.
Diversity integral part of Board appointment process and is regularly
discussed at the Nomination Committee.
No immediate
action required.
Consider Senior Independent Director’s
duties with shareholders.
Alastair is available to shareholders should the occasion occur.
Largest shareholders will be an offered opportunity to meet.
Ongoing.
Review the reporting line of the
Company Secretary.
The Company Secretary had a reporting line to the Chairman on all
board related matters.
Complete.
Consider HR resources.
HR Director and HR manager appointed.
ExCo member attendance at future
Remuneration Committee Meetings.
HR Director attends Remuneration Committee Meetings. CEO
invited to present as required.
Competitive tender for advisors to the
Remuneration Committee.
Competitive tender completed during the year.
Complete.
Complete.
Complete.
NewRiver REIT plc Annual Report and Accounts 2019
79
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Annual General Meeting (“AGM”)
The AGM is the annual opportunity for all shareholders
to meet with the Directors and to discuss with them the
Company’s business and strategy. Directors are available
to meet informally with shareholders before and after the
meeting.
The notice of AGM is posted to all shareholders at least 21
working days before the meeting. Separate resolutions are
proposed on all substantive issues and voting is conducted
by a poll. The Board believes this method of voting is more
democratic than voting via a show of hands since all shares
voted at the meeting, including proxy votes submitted in
advance of the meeting, are counted.
For each resolution, shareholders will have the opportunity
to vote for or against or to withhold their vote. Following the
meeting, the results of votes lodged will be announced to
the London Stock Exchange and displayed on the
Company’s website.
Anti-corruption and anti-bribery
We are committed to the highest legal and ethical standards in
every aspect of our business. It is our policy to conduct
business in a fair, honest and open way, without the use of
bribery or corrupt practices to obtain an unfair advantage. We
provide clear guidance for suppliers and employees, including
policies on anti-bribery and corruption, anti-fraud and code of
conduct. All employees receive training on these issues
appropriate to their roles and responsibilities.
Human Rights
Being mindful of human rights, the Company has a Modern
Slavery policy and published its second annual Modern Slavery
statement during the year, to ensure that all of its suppliers are
acting responsibly and are aware of the risks of slavery and
human trafficking within their own organisation and supply
chain.
CORPORATE GOVE RNANCE REP ORT
Induction of new directors
The Chairman and Company Secretary manage an induction
process to ensure that new Directors are fully briefed about the
Company and its operations. This process included asset visits
and meetings with members of the executive management
team as well as specific briefing with regard to their legal and
regulatory obligations as a Director. Colin Rutherford joined
during the year and has received the induction.
Corporate Governance Code
The Company was compliant with the requirements of the
UK Corporate Governance Code, published in April 2016,
throughout the year.
The Board has reviewed the requirements of the updated
Code announced in July 2018 that will apply to the Company
for the next financial year. A plan was developed to ensure
compliance with the Code and the plan is substantially
complete.
Corporate culture
The Chairman and the Board are aware of the importance
of corporate culture in achieving high standards of corporate
governance. Our culture is discussed in detail in the
Strategic Review.
Shareholder engagement during the year
The Board is committed to providing investors with regular
announcements of significant events affecting the Group.
The Chief Executive, Chief Financial Officer and Head of
Investor Relations and Strategy are the Company’s principal
spokesmen responsible for communication with investors,
fund managers, analysts and the press. The Company
organises a twice-yearly investor roadshow for its institutional
investors after the half-year and full-year results and holds one-
on-one and Group investor meetings throughout the year as
required. In addition, the Chairman met with the largest
shareholder during the year.
The Company regularly announces events that may be of
interest to stakeholders through its news release service.
The Chairman and Senior Independent Non-Executive Director
are available to meet with shareholders to discuss governance
or any other concerns which are not appropriate to discuss
through normal channels of communication, or where normal
channels of communication have failed to allay the concern.
The Board is kept regularly updated of the meetings that the
Executive Directors have with shareholders and analysts.
The Head of Investor Relations and Strategy provides the
Board with an update of the market for the Company’s shares,
what its peers are doing and any reports issued about the
sector generally and the Company specifically.
80
NewRiver REIT plc Annual Report and Accounts 2019
Induction of new directors
Annual General Meeting (“AGM”)
The Chairman and Company Secretary manage an induction
The AGM is the annual opportunity for all shareholders
process to ensure that new Directors are fully briefed about the
to meet with the Directors and to discuss with them the
Company and its operations. This process included asset visits
Company’s business and strategy. Directors are available
and meetings with members of the executive management
to meet informally with shareholders before and after the
team as well as specific briefing with regard to their legal and
meeting.
regulatory obligations as a Director. Colin Rutherford joined
during the year and has received the induction.
The notice of AGM is posted to all shareholders at least 21
working days before the meeting. Separate resolutions are
proposed on all substantive issues and voting is conducted
by a poll. The Board believes this method of voting is more
democratic than voting via a show of hands since all shares
voted at the meeting, including proxy votes submitted in
advance of the meeting, are counted.
For each resolution, shareholders will have the opportunity
to vote for or against or to withhold their vote. Following the
meeting, the results of votes lodged will be announced to
the London Stock Exchange and displayed on the
Company’s website.
Anti-corruption and anti-bribery
We are committed to the highest legal and ethical standards in
every aspect of our business. It is our policy to conduct
business in a fair, honest and open way, without the use of
bribery or corrupt practices to obtain an unfair advantage. We
provide clear guidance for suppliers and employees, including
policies on anti-bribery and corruption, anti-fraud and code of
conduct. All employees receive training on these issues
appropriate to their roles and responsibilities.
Human Rights
Being mindful of human rights, the Company has a Modern
Slavery policy and published its second annual Modern Slavery
statement during the year, to ensure that all of its suppliers are
acting responsibly and are aware of the risks of slavery and
human trafficking within their own organisation and supply
chain.
Corporate Governance Code
The Company was compliant with the requirements of the
UK Corporate Governance Code, published in April 2016,
throughout the year.
The Board has reviewed the requirements of the updated
Code announced in July 2018 that will apply to the Company
for the next financial year. A plan was developed to ensure
compliance with the Code and the plan is substantially
complete.
Corporate culture
The Chairman and the Board are aware of the importance
of corporate culture in achieving high standards of corporate
governance. Our culture is discussed in detail in the
Strategic Review.
Shareholder engagement during the year
The Board is committed to providing investors with regular
announcements of significant events affecting the Group.
The Chief Executive, Chief Financial Officer and Head of
Investor Relations and Strategy are the Company’s principal
spokesmen responsible for communication with investors,
fund managers, analysts and the press. The Company
organises a twice-yearly investor roadshow for its institutional
investors after the half-year and full-year results and holds one-
on-one and Group investor meetings throughout the year as
required. In addition, the Chairman met with the largest
shareholder during the year.
The Company regularly announces events that may be of
interest to stakeholders through its news release service.
The Chairman and Senior Independent Non-Executive Director
are available to meet with shareholders to discuss governance
or any other concerns which are not appropriate to discuss
through normal channels of communication, or where normal
channels of communication have failed to allay the concern.
The Board is kept regularly updated of the meetings that the
Executive Directors have with shareholders and analysts.
The Head of Investor Relations and Strategy provides the
Board with an update of the market for the Company’s shares,
what its peers are doing and any reports issued about the
sector generally and the Company specifically.
Margaret Ford’s view of strategy day
Q&A with Colin Rutherford
Strategy is not a topic that is visited once a year and
the Board is continually discussing the ever-changing
retail and leisure market. A key part of the strategic
agenda for the year is set during the two-day strategy
that the Board attended in March.
Central to the Board strategy is the consideration of
stakeholders’ views� We commissioned a perception
study to collate the views of our shareholders, and an
independent team presented the results to the Board�
We heard investors’ views of the management team,
strategy, diversification of the portfolio and capital
management policies� Investors acknowledge that the
Group is operating in a tough market, but the NewRiver
team have the strategy and skills to outperform their
peers� A specific area of feedback was on the desire for
the group to improve disclosures, an area on which we
have taken further feedback from analysts and other
advisors to continually improve the quality of the
information provided externally�
Specific issues from shareholders were also debated,
with particular focus on the Company’s capital
management strategy� The Board considered a range of
forecasts, strategies and sensitised projections to
consider the appropriateness of the dividend policy� We
also considered the most appropriate capital and
ownership structures to maximise shareholder return�
The Board engaged a third-party study into future retail
market performance drivers to ensure that the Group’s
strategy is set in the context of the factors impacting the
majority of our tenants and to understand the forces
shaping the competitive environment� In that context,
potential mergers and acquisitions were discussed to
ensure that the company was prepared for competition
in its markets and as a way of rebalancing the portfolio
to maintain the income focus� We reviewed operational
geographies and adjacent sectors, considering how the
Group can diversify its income profile and future proof
the company�
The Board spent the second day with the wider senior
management team to hear their views, which complement
the views of the Executive Directors� The Board regularly
meets with the team and considers this an essential part
of understanding the culture of the Group and in
assessing the Board’s succession plan� The team
presented in some detail the operational strategies for the
year ahead, which are built around smarter asset
management, delivering development profits early,
reducing costs and building strategic partnerships�
Q: Colin, you are a very experienced Non-Executive
Director of listed companies. What are your first
impressions of how the Board operates at NewRiver?
A: This is one of the most professional Boards I have
worked with� There is a great diversity of skills and
experience in a board that has a clear purpose and
strategy and considers all aspects of how to deliver for
its stakeholders�
Q: You have an in-depth understanding of the property
and public house industries. How do you feel the
board will benefit from your knowledge?
A: I think with a reasonable grasp of current Retail
Property and Leisure sector challenges, I hope to
be able to add value by helping address the key issues
prevailing in those segments which are germane to the
Board’s strategy� Both sectors are under real pressure
having to adapt to new trading norms, especially the
abundance of consumer choice, but sensible
opportunities for grounded well-run companies, and
those engaged in particularly astute partnerships, will
prevail once again, and create value�
Q: The induction process is a vital journey for any new
Non-Executive Director, even one as familiar with
corporate governance as you. How did NewRiver’s
induction meet your expectations?
A: The recruitment and induction process was handled
with real aplomb, and I was able to hit the ground
running from my very first formal Board meeting� It was
very smooth and met my expectations albeit I expected
no less from such an experienced team�
Q: You were straight into the deep end with
attendance at this year’s strategy day. What were the
highlights of the strategy day for you?
A: I was impressed with the senior team’s depth of
sector experience, their knowledge and assessment of
trend and opportunities, and in consequence
their directional business emphasis� There is a clear ‘can
do’ desire for growth but this is tempered by
assuredness and a more than healthy appreciation
of risk, and how to protect and hopefully enhance total
shareholder returns� The analysis provided to the Board
at the meeting was detailed, thorough and showed the
depth of experience of the management team�
NewRiver REIT plc Annual Report and Accounts 2019
81
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
AUDIT COMMITT EE REPORT
AUDIT COMMITTEE REPORT
Audit Committee report
Dear shareholders,
As Chairman of the Audit Committee I am pleased to present
a summary of the work of the Committee in the last year.
In addition to the Committee’s regular programme of work,
the main focus of the Committee for the year was to conduct
the audit tender and recommend a preferred firm to the Board.
The Board has recommended the appointment of
PricewaterhouseCoopers to replace Deloitte as the Company’s
auditor for the shareholders to vote upon at the Annual
General Meeting in July 2019. The Committee would like to
thank Deloitte for their services as auditor since the Company
was founded in 2009.
With the new Corporate Code announced during the year,
the Committee reviewed its terms of reference to ensure it
was applying best practice in governance. The terms of
reference are available on the Company’s website.
I consider that the regular discussions and meetings that are
held by the Committee, and the robust discussions that the
Committee has with the Company’s management, the auditor
and property valuers, together with the quality of the reports
and information prepared for the Committee meetings, has
enabled the Committee members to discharge their duties
and responsibilities.
Alastair Miller
Audit Committee Chairman
22 May 2019
How the Committee operates
The Committee provides independent review and monitoring
of the risk management and control procedures within the
Company.
Audit Committee composition and attendance
at Meetings:
Alastair Miller: Committee Chairman
Kay Chaldecott
Colin Rutherford1
Margaret Ford2
1. Colin was appointed to the Committee during the year
2. Margaret ceased to be a member of the Audit Committee upon appointment as
4/4
4/4
2/2
2/2
Chairman of the Board during the year
Each Committee member is independent and has broad
commercial experience as a director. Alastair Miller is a
Chartered Accountant and previously the Chief Financial
Officer of New Look Group, and has significant, recent and
relevant financial experience. Colin Rutherford was appointed
to the Committee in February 2019 upon joining the Board.
Colin also has significant, recent and relevant financial
experience and is currently the Chairman of the Audit
Committee of Mitchells & Butlers plc.
The Chief Financial Officer, Financial Controller, and the
Company’s auditors were invited to attend the Committee
meetings. The Company Secretary acts as secretary to
the Committee.
Alastair Miller
Audit Committee Chairman
The Committee has continued to
focus on the risks affecting the Group,
with new risks emerging from the
political and economic environment
the Group operates in.
Principle Roles:
• Oversight of financial reporting and internal controls
• Risk management and review of control processes
• Managing the external audit process
• Maintaining a whistleblowing procedure
• Assessment of management judgements and
external values
Key activities in 2018/19:
• Completion of an audit tendering process
• Developing the reporting and ownership of risk
management and internal control processes
• Review of the risks and controls in the Hawthorn
Leisure business
• Monitoring of the integration of Hawthorn Leisure into
the Group’s processes
Area of focus in 2019/20:
• Ensuring emerging risks are continually assessed
and addressed
• Oversight of introduction of new auditors, managing
the audit process and scope
82
NewRiver REIT plc Annual Report and Accounts 2019
Responsibilities of the Committee during
the year
During the year, the Committee was responsible for:
– overseeing the Group’s relationship with the auditors,
Deloitte, including their remuneration;
– monitoring the integrity of the half-year and annual financial
statements before submission to the Board;
– discussing any issues arising from the half-year review
and year-end audit of the Group;
– reviewing significant financial reporting matters and judgments;
– reviewing the effectiveness of the Group’s system of
internal controls;
– reviewing and monitoring the Group’s risk management
processes;
– conducting an annual review of the need to establish an
internal audit function;
– monitoring and annually reviewing the auditor’s
independence, objectivity and effectiveness of the
audit process; and
– evaluating the Committee’s own performance, which was
undertaken as part of the Board evaluation.
Activities during the year
Relationship with the auditors
The audit of this year’s financial statements is the tenth year
that the current auditors, Deloitte, have audited the Group’s
results therefore the Committee conducted an audit tender
during the year. The Chairman of the Committee met with
five firms initially with the aim of inviting three firms to provide
proposals to the Audit Committee. Three firms were identified
based on the quality of the audits of the firm, the firm’s
capability and expertise, and the mix of experience of the
individuals met.
A thorough process was run that involved the three firms
meeting the management team and gaining an understanding
of the Group’s businesses and structures. Opportunity was
given for the firms to visit the Group’s shopping centres and
pubs. The three firms presented to the Audit Committee,
focusing on how each would conduct a quality audit.
The Committee was impressed by the insights that each
firm presented and the knowledge that had been
accumulated during the tender process. A considerable
amount of time is invested by management and the audit
firms in tender processes.
Following the meetings, the Audit Committee assessed each
firm against a range of criteria and recommended two firms
to the Board, noting PricewaterhouseCoopers as the
preferred firm.
External auditor
The Committee considers the nature, scope and results of the
external auditor’s work and reviews, develops and implements
a policy on the supply of any non-audit services that are to be
provided by the external auditor. It receives and reviews
reports from the Group’s auditors relating to the Group’s
annual report and accounts and the external audit process.
In respect of the audit for the financial year ended 31 March
2019, Deloitte presented their audit plan (prepared in
consultation with management) to the Committee. The audit
plan took into account key changes in the business, materiality
levels, valuation of the portfolio and the acquisition made
during the year.
The Committee approved the implementation of the plan
following discussions with both Deloitte and management.
Audit & non-audit fees
The Company paid £361,000 in audit fees for the financial
year ended 31 March 2019.
The Company has a non-audit services policy in place which
limits Deloitte to working on the audit or such other matters
where their expertise as the Company’s auditor makes them
the logical choice for the work. This is to preserve their
independence and objectivity. The Company paid £35,000
in non-audit fees to Deloitte for the financial year ended
31 March 2019. The non-audit fees relate to Deloitte’s review
of the interim results for the six months to 30 September 2018.
Effectiveness and independence
The Chair of the Committee speaks regularly to the audit
partner to ascertain if there are any concerns, to discuss
the audit reports and to ensure that the auditor has received
support and information requested from management.
The Committee reviewed the effectiveness of the 2018
external audit process by considering the extent to which
the audit plan was met, the degree of challenge involved in
the process, the depth of understanding, the review of key
accounting policies and audit judgements, and the content
of the auditor’s reports to the Committee. It was noted that
the audit had been completed to a high standard.
There were no disagreements with the Group’s current auditor,
Deloitte, and the Committee has been extremely satisfied with
their work.
Key judgements and estimates
The Committee reviewed the external reporting of the Group
including the interim review, quarterly announcements and the
annual report. In assessing the annual report, the Committee
considers the key judgements and estimates.
The valuation of the Group’s properties at 31 March 2019
was £1.3 billion. Changes in the key estimates can have a
significant impact on the valuation of investment properties.
The Committee, independently of management, met with
Colliers International and Knight Frank to discuss the valuation
of the assets, to understand the process that was followed,
the key estimates used, and to ensure that a robust and
independent valuation had taken place. The meetings were
productive and the Committee concluded that the valuations
were independent and an appropriate basis for the year-end
financial accounts.
The Committee considered the accounting for the acquisition
of Hawthorn Leisure, and management’s judgement that it
constituted a business combination. The Committee reviewed
the assumptions surrounding the fair value of the assets and
liabilities acquired.
NewRiver REIT plc Annual Report and Accounts 2019
83
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
AUDIT COMMITT EE REPORT
AUDIT COMMITTEE REPORT CONTINUED
The Group’s assets and revenue and disclosed in two
operating segments. The Committee reviewed the disclosures
and the basis for the conclusion on the segmentation.
The Committee reviewed the integrity of the narrative
statements in the Annual Report and made recommendations
to the Board. The Company received a letter from the
Financial Reporting Council in relation to its annual report
for the year ended 31 March 2018. The Audit Committee
considered the findings of the Financial Reporting Council’s
review, reviewed the Company’s response and agreed with
the Financial Reporting Council to enhance disclosures on
the sensitivity of the Group’s valuations to changes to the
underlying assumptions.
Risk management
Internal control structure
The Board oversees the Group’s risk management and internal
controls and determines the Group’s risk appetite. The Audit
Committee at each of its meetings monitors the effectiveness
of the Group’s risk management and internal controls systems.
The Committee reviewed its assessment of key risks, and the
process of reporting the risks and associated mitigating
controls to the Committee during the year, with particular
consideration of emerging risks. The Committee is satisfied
that the risk management framework is effective and did not
identify any failing in the control systems.
Further details of the Company’s risk management process,
together with the principal risks, can be found in the Risk
Management report.
Internal audit function
The Group employs an internal audit team within the pub
division, responsible for conducting inventory and cash counts
on a rolling basis across the managed pub estate, supported
by external inventory auditors for certain geographic regions.
This allows the business greater comfort over inventory
balances, monitoring wastage and where relevant charging
operators for any losses they have incurred. The Group does
not have an internal audit team across its retail operations.
The need for this is reviewed annually by the Committee.
Due to the relative lack of complexity and the outsourcing of
the majority of the day-to-day functions, it is felt that there is
no requirement for such a team.
BDO, as an independent third party, are engaged to undertake
bespoke reviews of the Group’s internal control system to
ensure that the Company has sufficient controls in place.
During the year BDO reviewed the Group’s controls over cash
and the financial reporting controls in the pub division.
The external auditors perform a broadly substantive audit
and therefore the absence of a Group-wide internal audit
team does not impact their work as auditors.
Whistleblowing policy
The Committee conducts an annual review of the Group’s
whistleblowing policy to ensure it remains up to date and
relevant. There have never been any concerns raised through
the whistleblowing process or through any other process to
the Committee.
Statement of compliance
The Company confirms that it has complied with terms of
The Statutory Audit Services for Large Companies Market
Investigation (Mandatory User of Competitive Tender
Processes an Audit Committee Responsibilities) Order 2014
(“the Order”) throughout the year. In addition to requiring
mandatory audit re-tendering at least every ten years for
FTSE 350 companies, the Order provides that only the
Audit Committee, acting collectively or through its Chair,
and for and on behalf of the Board is permitted:
– to the extent permissible in law and regulation, to negotiate
and agree the statutory audit fee and the scope of the
statutory audit;
– to initiate and supervise a competitive tender process;
– to make recommendations to the Directors as to the auditor
appointment pursuant to a competitive tender process;
– to influence the appointment of the audit engagement
partner; and
– to authorise an auditor to provide any non-audit services to
the Group, prior to the commencement of those non-audit
services.
Fair, balanced and understandable
The Directors are required to confirm that they consider,
taken as a whole, that the Annual Report is fair, balanced and
understandable and that it provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy.
The Committee has satisfied itself that the controls over the
accuracy and consistency of information presented in the
Annual Report are robust, that the information is presented
fairly (including the calculations and use of alternative
performance measures) and has confirmed to the Board
that the processes and controls around the preparation of the
Annual Report are appropriate allowing the Board to make the
“fair, balanced and understandable statement” in the Directors’
Responsibilities Statement.
Viability statement and going concern
The Committee has reviewed the basis for the Company’s
viability statement that is based on financial forecasts for
the next three years. The Committee is satisfied that the
assumptions used in the forecasts and the basis of the
viability statement are appropriate. The Committee provides
advice to the Board on the Viability Statement.
The Committee ensured sufficient review was undertaken
of the adequacy of the financial arrangements, cash flow
forecasts and lender covenant compliance. Accordingly,
the Committee recommended to the Board that the statement
be approved.
Similarly, the Committee reviewed the basis for the financial
forecasts for the going concern assumption in the financial
statements and satisfied itself that the going concern basis
of presentation of the financial statements is appropriate.
84
NewRiver REIT plc Annual Report and Accounts 2019
NOMINATION COMMI TT EE REP ORT
Nomination Committee report
Baroness Ford OBE
Chairman
Another busy year for the
committee with the appointment
of a new Chairman, a new
Non-Executive Director and the
Senior Independent Director.
Principle Roles:
•
Identifying and nominating for approval candidates to
fill Board vacancies
• Evaluating the Board’s diversity and balance of skills
• Evaluating the performing of the Board
• Consideration of succession planning at Board and
Executive Committee level
Key activities in 2018/19:
• Appointment of a new Chairman, new Senior
Independent Director and a new Non-Executive Director
• Review of succession plans for the Board and for the
Executive Committee
Area of focus in 2019/20:
• Updating succession plans for the Board and
Executive Committee
• Review of training requirements for the Board
Dear Shareholders,
Last year saw the Group appoint a new Chief Executive Officer
and a new Senior Independent Director, and this year I have
moved in to the Chairman’s role and again we have appointed
a Non-Executive Director.
Diversity has been at the forefront of those discussions at the
Committee, encompassing diversity of skills, background, race
and gender. The Committee will ensure that diversity remains
at the top of the agenda in the forthcoming year.
Baroness Ford OBE
Committee Chairman
22 May 2019
Nomination Committee composition and attendance
at Meetings:
Margaret Ford: Committee chairman
Kay Chaldecott
Alastair Miller
Colin Rutherford1
Paul Roy2
1. Colin was appointed to the Nomination Committee during the year
2. Paul resigned from the Board during the year
4/4
4/4
4/4
2/2
2/2
How the Committee operates
The Committee meets four times a year and holds ad-hoc
meetings when required. It met four times during the year.
Only members of the Committee are entitled to attend the
meetings. The Chief Executive Officer is invited to attend so
that the Committee can understand the views of executive
management when making its deliberations, especially on
succession planning.
The Terms of Reference were reviewed during the year and
are available on the Company’s website at www.nrr.co.uk.
Activities of the Committee during the year
Appointment of a Chairman
The Committee considers succession planning a key part
of its remit. It recognises the importance of creating robust
succession plans for both the Board and executive
management so that they can fulfil the Company’s long-
term strategy.
The Committee acknowledges that succession plans should
be regularly reviewed so that employees and Board members
continue to have the skills and experience necessary to ensure
the continuing success and good governance of the Company.
The Committee works with the Executive Directors to nurture
a pipeline of talented employees below Board level who will
be able to serve as the next generation of plc Board directors.
During the year the succession plan was once more put into
active service to identify and appoint a new Chairman.
NewRiver REIT plc Annual Report and Accounts 2019
85
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NO MINATION COMMI TTE E REP ORT
In May 2018 Paul Roy announced that he would not stand
for re-election as Chairman at the 2019 Annual General
Meeting. Paul had served as the Company's Chairman
since its formation in 2009, during which time NewRiver
had grown from a market capitalisation of £25 million into
a FTSE 250 constituent.
The Committee commissioned Spencer Stuart, a leading
independent executive search firm to conduct an external
assessment and a review of possible candidates for the role.
Spencer Stuart do not have any connection with the Company
other than providing executive search services. Spencer Stuart
recommended a number of candidates, one of whom was
Margaret Ford, the Company’s Senior Independent Director.
Margaret has over 20 years’ experience as a Non-Executive
Director and Chairman of private and listed companies and
extensive knowledge of the real estate market.
The Nomination Committee met with the Executive Directors
without Margaret present and concluded that Margaret was
the strongest candidate. Margaret was appointed Chairman
thus ensuring a seamless succession for the Board.
Following Margaret’s appointment, the Board required a
new Senior Independent Non-Executive Director. Margaret
recommended that Alastair Miller, who joined the Company
as a Non-Executive Director in January 2016, was appointed.
The Committee met with the Executive Directors without
Alastair present and agreed that Alastair had the requisite
knowledge of the Company and skills to be an effective
Senior Independent Director.
Recruitment of a new Non-Executive Director
Following Paul Roy’s retirement, the Board required a
new Non-Executive Director. The Committee commissioned
Spencer Stuart to conduct an external assessment and
a produce a long list of possible candidates for the role.
The list was reduced to eight candidates who were
approached to gauge appetite and capacity to be a
Non-Executive Director. Interviews were held with five
candidates following which the Committee recommended
the appointment of Colin Rutherford. Colin brings a wealth of
experience across the pub and real estate sector, and as a
qualified accountant, bolsters the Board’s financial expertise.
Succession planning
Under the UK Corporate Governance Code an appointment
term of longer than nine years from election to the Board is
a factor that may affect whether a Non-Executive Director is
considered independent. Kay Chaldecott was appointed
in 2012 and a succession plan has been discussed at
the Committee.
The committee reviewed the composition of the Executive
Committee during the year and considered the development
needs of the talent pool as a potential succession pool for
the Executive Directors.
Independence
The Nomination Committee is of the opinion that the
Non-Executive Directors and the Chairman remain
independent, in line with the definition set out in the 2016
Code, and are free from any relationship or circumstances that
could affect, or appear to affect, their independent judgement.
86
NewRiver REIT plc Annual Report and Accounts 2019
Diversity policy
The Company has developed a culture which recognises
the benefits of diversity and has been successful at recruiting
key members of its senior management team from a range
of different backgrounds. The Board currently comprises two
female Non-Executive Directors and two male Non-Executive
Directors, and three male Executive Directors.
When recruiting, the Company has always considered all
aspects of diversity during the process. The Company ensures
there is a selection of candidates who have a good balance
of skills, knowledge and experience. The Committee places
particular value on experience of operating in a listed
company, experience of the real estate, retail and leisure
sectors, with financial or real estate training.
The Company aims to recruit the best candidates on the
basis of their merit and ability.
Composition of the Board during the year
Independent Directors: 3
Executive Directors: 3
Non-Executive Chairman
(Independent): 1
Length of Directors’ tenure
Less than three years: 2
Three to six years: 2
Seven to ten years: 3
Director’s core area of expertise
Real Estate: 4
Finance: 3
Diversity policy
The Company has developed a culture which recognises
the benefits of diversity and has been successful at recruiting
key members of its senior management team from a range
of different backgrounds. The Board currently comprises two
female Non-Executive Directors and two male Non-Executive
Directors, and three male Executive Directors.
When recruiting, the Company has always considered all
aspects of diversity during the process. The Company ensures
there is a selection of candidates who have a good balance
of skills, knowledge and experience. The Committee places
particular value on experience of operating in a listed
company, experience of the real estate, retail and leisure
sectors, with financial or real estate training.
The Company aims to recruit the best candidates on the
basis of their merit and ability.
In May 2018 Paul Roy announced that he would not stand
for re-election as Chairman at the 2019 Annual General
Meeting. Paul had served as the Company's Chairman
since its formation in 2009, during which time NewRiver
had grown from a market capitalisation of £25 million into
a FTSE 250 constituent.
The Committee commissioned Spencer Stuart, a leading
independent executive search firm to conduct an external
assessment and a review of possible candidates for the role.
Spencer Stuart do not have any connection with the Company
other than providing executive search services. Spencer Stuart
recommended a number of candidates, one of whom was
Margaret Ford, the Company’s Senior Independent Director.
Margaret has over 20 years’ experience as a Non-Executive
Director and Chairman of private and listed companies and
extensive knowledge of the real estate market.
The Nomination Committee met with the Executive Directors
without Margaret present and concluded that Margaret was
the strongest candidate. Margaret was appointed Chairman
thus ensuring a seamless succession for the Board.
Following Margaret’s appointment, the Board required a
new Senior Independent Non-Executive Director. Margaret
recommended that Alastair Miller, who joined the Company
as a Non-Executive Director in January 2016, was appointed.
The Committee met with the Executive Directors without
Alastair present and agreed that Alastair had the requisite
knowledge of the Company and skills to be an effective
Senior Independent Director.
Recruitment of a new Non-Executive Director
Following Paul Roy’s retirement, the Board required a
new Non-Executive Director. The Committee commissioned
Spencer Stuart to conduct an external assessment and
a produce a long list of possible candidates for the role.
The list was reduced to eight candidates who were
approached to gauge appetite and capacity to be a
Non-Executive Director. Interviews were held with five
candidates following which the Committee recommended
the appointment of Colin Rutherford. Colin brings a wealth of
experience across the pub and real estate sector, and as a
qualified accountant, bolsters the Board’s financial expertise.
Succession planning
Under the UK Corporate Governance Code an appointment
term of longer than nine years from election to the Board is
a factor that may affect whether a Non-Executive Director is
considered independent. Kay Chaldecott was appointed
in 2012 and a succession plan has been discussed at
the Committee.
The committee reviewed the composition of the Executive
Committee during the year and considered the development
needs of the talent pool as a potential succession pool for
the Executive Directors.
Independence
The Nomination Committee is of the opinion that the
Non-Executive Directors and the Chairman remain
independent, in line with the definition set out in the 2016
Code, and are free from any relationship or circumstances that
could affect, or appear to affect, their independent judgement.
REMUNERATION CO MMI TT EE REP ORT
Remuneration Committee report
Kay Chaldecott
Committee Chairman
The Committee has carefully
considered the performance of the
directors to ensure that there is a
strong link between reward and
performance.
Dear shareholders,
This is the second year of the application of the remuneration
policy approved by shareholders at the 2017 AGM and there
have not been any significant changes to the operation of
the policy.
Performance in FY19 and incentive plan payments
The management team has delivered a robust performance in
a challenging market, with resilient cash returns underpinned
by solid operational performance. Funds from Operations was
£56.4 million (FY18: £60.3 million) with the decrease mainly due
to the absence of one-off receipts seen in the prior year and
the impact of disposals completed during the prior year. The
dividend per share increased by 3% to 21.6 pence (FY18: 21.0
pence). The dividend was not fully covered, but the Company
is committed to re-establishing cover, and has identified a
series of strategies to leverage its operating platform in order
to grow income while maintaining a conservative balance
sheet position. EPRA NAV per share was 261 pence (FY18: 292
pence), reflecting the 6.4% reduction in portfolio valuation in
the year.
The committee reviewed the results against the performance
targets set for the annual bonus and Performance Share Plan,
which were set to align the Directors’ remuneration with
strategy and shareholders’ interests.
For the annual bonus the Committee set two growth-based
targets, which rewarded outperformance in terms of total
return against the market (50% of salary) and earnings yield
against the Company’s peers (30%). Other performance
conditions related to maintaining the Group’s financial
discipline (20%), and personal performance (25%) resulting
in a total potential bonus of 125% of salary.
In relation to the targets that were set, our Total Return
outperformed the IPD Index by 3.9% which resulted in a full pay
out of 50% of salary. Our earnings yield was similarly positive,
placing us 10th out of the peer group of 34, resulting in 17% out
of 30% of salary being payable. Our financial discipline was
strong, although as noted above our level of dividend cover
did not achieve the threshold level of performance, resulting in
13.7% out of 20% of salary being payable. Finally, personal
performance was similarly strong, with Allan Lockhart and Mark
Davies receiving a payment of 18.75% out of 25% of salary.
Based on their individual performance and achievement of the
targets, bonuses of just under 100% of salary were due to be
awarded to Allan Lockhart and Mark Davies.
The Committee considered that there was a strong link between
reward and performance based on the out-performance of the
KPIs against the Company’s peers. However, given the fact
that financial performance and share price fell, in absolute
terms, discretion was applied by the Committee and the
bonuses awarded to Allan Lockhart and Mark Davies were
reduced to 80% of salary (64% of the maximum opportunity).
30% of the bonus will be deferred in shares in line with the
approved policy and past practice.
Performance for the 2015 and 2016 PSP awards were
assessed against the performance conditions measured over
the four and three year periods respectively ending in FY19.
The performance has failed (or looks likely to fail) to meet the
minimum thresholds for each of the performance measures
and so both awards will lapse resulting in a nil pay-out.
Operation of the policy in FY20
Salaries were reviewed with effect from 1 April 2019. Executive
Directors will not receive an increase and pension and benefits
will be unchanged.
The annual bonus plan and LTIP will remain subject to the
same mix and weightings of performance measures as
FY19 with the incentive opportunity unchanged. A two year
holding period will apply to vested awards granted under the
FY20 PSP.
NewRiver REIT plc Annual Report and Accounts 2019
87
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
The Committee’s responsibilities
The Committee’s responsibilities during the year were:
– to consider the objectives, annual pay and targets for the
Executive Directors
– review and agree changes to the remuneration policy as
applied to the wider workforce
– review the operation of the Group’s share incentive
schemes and the granting and vesting of options
The Terms of Reference were reviewed during the year and
are available on the Company’s website at www.nrr.co.uk
REMUNERATION COMMITT EE REP ORT
Focus for FY20
The Committee’s focus for the coming year will be to review the
remuneration policy to ensure it is effective in supporting our
strategy while also ensuring smooth management of the changes
required by the new Corporate Governance Code, including a
review of pension provision and share ownership guidelines
(including post-cessation of employment). A fundamental part
of this is the oversight of a broader executive management
population and workforce pay policies and practices, which will
be considered as part of the policy review.
If you have any questions I am contactable through our
Company Secretary. I very much hope that you will support the
shareholder resolution on the Annual Report on Remuneration
at our forthcoming meeting.
Kay Chaldecott
Committee Chairman
22 May 2019
Remuneration Committee operation,
composition and attendance at meetings
The Committee meets at least four times a year, together with
ad-hoc meetings when required. It met four times during the
year and attendance was as follows:
Kay Chaldecott: Committee Chairman
Alastair Miller
Margaret Ford
Colin Rutherford1
Paul Roy2
1. Colin Rutherford was appointed to the Committee during the year
2. Paul Roy retired from the Company during the year
The Chief Executive Officer, Head of HR and representatives of
the Company’s remuneration adviser were invited to attend all
or part of the meetings as relevant. The Company Secretary
acts as secretary to the Committee.
4/4
4/4
4/4
2/2
2/2
88
NewRiver REIT plc Annual Report and Accounts 2019
Focus for FY20
The Committee’s focus for the coming year will be to review the
remuneration policy to ensure it is effective in supporting our
strategy while also ensuring smooth management of the changes
required by the new Corporate Governance Code, including a
review of pension provision and share ownership guidelines
(including post-cessation of employment). A fundamental part
of this is the oversight of a broader executive management
population and workforce pay policies and practices, which will
be considered as part of the policy review.
If you have any questions I am contactable through our
Company Secretary. I very much hope that you will support the
shareholder resolution on the Annual Report on Remuneration
The Committee’s responsibilities
The Committee’s responsibilities during the year were:
– to consider the objectives, annual pay and targets for the
Executive Directors
– review and agree changes to the remuneration policy as
applied to the wider workforce
– review the operation of the Group’s share incentive
schemes and the granting and vesting of options
The Terms of Reference were reviewed during the year and
are available on the Company’s website at www.nrr.co.uk
at our forthcoming meeting.
Kay Chaldecott
Committee Chairman
22 May 2019
Remuneration Committee operation,
composition and attendance at meetings
The Committee meets at least four times a year, together with
ad-hoc meetings when required. It met four times during the
year and attendance was as follows:
Kay Chaldecott: Committee Chairman
Alastair Miller
Margaret Ford
Colin Rutherford1
Paul Roy2
4/4
4/4
4/4
2/2
2/2
1. Colin Rutherford was appointed to the Committee during the year
2. Paul Roy retired from the Company during the year
The Chief Executive Officer, Head of HR and representatives of
the Company’s remuneration adviser were invited to attend all
or part of the meetings as relevant. The Company Secretary
acts as secretary to the Committee.
Remuneration Policy
This section of the report summarises the Group’s Remuneration Policy, which was approved by shareholders at the 2017 Annual
General Meeting. The full Remuneration Policy can be found in the 2017 Annual Report which is available at www.nrr.co.uk
Remuneration Policy Summary Table
Element
Purpose & Link to
Strategy
Operation
Maximum
Performance Target
Executive Directors
Fixed
Salary
Pension
Benefits
Market
competitive
remuneration
base reflecting
role,
responsibilities,
skills and
experience.
Normally reviewed annually,
effective 1 April although salaries
may be reviewed more frequently
or at different times of the year if
the Committee determines this
is appropriate.
Paid in cash monthly.
Reviewed in context of the salary
increases across the Group.
Reviewed periodically against
peer companies.
To provide
competitive
post-retirement
benefits
To assist with
recruitment
and retention.
To provide a
competitive
and cost-
effective
benefits
package.
To assist with
recruitment
and retention.
There is no Group pension scheme.
The Group has set up a Group
personal pension plan.
The Company currently
contributes 15% of base salary for
all Executive Directors.
The Company reserves the right to
pay a non-pensionable cash
supplement in lieu of pension
contributions.
The Company provides a range of
non-pensionable benefits to
Executive Directors which may
include medical insurance, life
assurance, permanent health
insurance, holiday and sick pay.
Other benefits such as relocation
allowances may be offered if
considered appropriate and
reasonable by the Committee.
Not applicable
Not applicable
Not applicable
There is no prescribed
maximum.
Increases will typically be
dependent on the results of an
annual review in the context of
the average increase for the
wider work force, inflation and
market data.
Increases will not normally be
above the level implemented
across the wider workforce.
Increases may be above this
level, for example if there is an
increase in the scale, scope or
responsibility of the role.
The maximum Company
contribution is 15% of
base salary.
Benefits are set at a level which
the Committee considers
appropriate when compared to
the Company’s listed real estate
investment trust peers.
There is no prescribed
maximum.
For David Lockhart, the
Company will reimburse him on
a tax grossed-up basis for the
cost of his personal private
medical insurance policy not
exceeding £12,000 per annum,
subject to upward adjustments
to reflect only any future
increases in premium which are
in line with general increases in
market rates.
NewRiver REIT plc Annual Report and Accounts 2019
89
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITT EE REP ORT
Element
Variable
Bonus
Purpose & Link to
Strategy
Operation
Maximum
Performance Target
The maximum bonus is 125%
of salary.
On target performance would
result in a bonus payment of
60% of maximum bonus.
Threshold performance would
result in bonus payment of 20%
of maximum bonus.
There is no maximum or
minimum percentage of the
bonus which is deferred into
shares. The Committee has
discretion to vary this
percentage from year to year
based on its assessment of
circumstances at the time.
All measures and
targets relate to a
financial year of the
Company and are
reviewed on an annual
basis.
For FY20, 80% of
bonus will be paid on
the basis of corporate
targets and 20% of
bonus on the basis of
personal performance
targets. Corporate
targets include relative
property performance,
relative earnings yield
and meeting the
Group’s financing
policies in respect of
loan to value, balance
sheet gearing, interest
cover and dividend
cover.
To incentivise
performance
in the
reporting year
through the
setting of
targets at the
beginning of
the year.
These annual
targets are
intended to be
consistent
with the
Group’s long
term strategy.
The deferral of
a proportion
of the bonus
in shares
seeks to align
Directors’
interests with
those of
shareholders
and to
discourage
short term
decision
making.
Awards of annual bonus are made
pursuant to the Annual Bonus Plan.
All measures and targets will be
reviewed and set annually by the
Committee at the beginning of the
financial year and levels of award
determined by the Committee
after the year end are determined
based on achievement of
performance against the stipulated
measures and targets.
The Committee retains an
overriding discretion to reduce
pay-outs from formulaic outcomes
to ensure that overall bonus
payments reflect its view of
corporate performance during the
year and are fair to both
shareholders and participants.
Paid in cash and in shares. The
cash element is paid shortly
following the completion of the
audit for the year. Currently 30% of
bonus is deferred into shares but
this percentage is at the discretion
of the Committee.
The share element is deferred for
a period which is currently two
years (but this may be increased at
the discretion of the Committee).
Deferral of bonuses is achieved by
means of awards of nil-cost
options over shares pursuant to
the Deferred Bonus Plan.
Vesting of the deferred shares will
normally be subject to continued
employment.
Non-pensionable.
Clawback and malus
provisions apply.
90
NewRiver REIT plc Annual Report and Accounts 2019
Element
Strategy
Operation
Maximum
Performance Target
Variable
Bonus
Awards of annual bonus are made
The maximum bonus is 125%
pursuant to the Annual Bonus Plan.
of salary.
All measures and targets will be
On target performance would
reviewed and set annually by the
result in a bonus payment of
Committee at the beginning of the
60% of maximum bonus.
financial year and levels of award
Threshold performance would
All measures and
targets relate to a
financial year of the
Company and are
reviewed on an annual
basis.
determined by the Committee
result in bonus payment of 20%
For FY20, 80% of
after the year end are determined
of maximum bonus.
based on achievement of
performance against the stipulated
measures and targets.
The Committee retains an
There is no maximum or
minimum percentage of the
bonus which is deferred into
shares. The Committee has
overriding discretion to reduce
discretion to vary this
pay-outs from formulaic outcomes
percentage from year to year
based on its assessment of
circumstances at the time.
bonus will be paid on
the basis of corporate
targets and 20% of
bonus on the basis of
personal performance
targets. Corporate
targets include relative
property performance,
relative earnings yield
and meeting the
Group’s financing
policies in respect of
loan to value, balance
sheet gearing, interest
cover and dividend
cover.
Purpose & Link to
To incentivise
performance
in the
reporting year
through the
setting of
targets at the
beginning of
the year.
These annual
targets are
intended to be
consistent
with the
Group’s long
term strategy.
The deferral of
a proportion
of the bonus
in shares
seeks to align
Directors’
interests with
those of
shareholders
and to
discourage
short term
decision
making.
to ensure that overall bonus
payments reflect its view of
corporate performance during the
year and are fair to both
shareholders and participants.
Paid in cash and in shares. The
cash element is paid shortly
following the completion of the
audit for the year. Currently 30% of
bonus is deferred into shares but
this percentage is at the discretion
of the Committee.
The share element is deferred for
a period which is currently two
years (but this may be increased at
the discretion of the Committee).
Deferral of bonuses is achieved by
means of awards of nil-cost
options over shares pursuant to
the Deferred Bonus Plan.
Vesting of the deferred shares will
normally be subject to continued
employment.
Non-pensionable.
Clawback and malus
provisions apply.
Element
Variable
Share Option
plans
Performance
Share Plan
Purpose & Link to
Strategy
Operation
Maximum
Performance Target
Aligns the
Executive
Directors’
interests with
those of
shareholders.
To incentivise
and reward
the delivery of
returns to
shareholders
and sustained
long-term
performance.
Aligns the
Executive
Directors’
interests with
those of
shareholders.
Rewards and
helps
retain/recruit
executives.
The Executive Directors may
participate in all-employee share
incentive plans established by the
Company from time to time such
as a tax-advantaged Sharesave
Plan or Share Incentive Plan.
The Executive Directors may also
be granted options under the
Company Share Option Plan and
the Unapproved Share Option
Plan. However, it is the Company’s
current intention not to make any
further awards under this type
of plan.
Discretionary grant of nil-cost
options under the 2016 PSP and
historically the 2009 PSP.
Currently awards normally vest
three years from the date of
award. The vesting period may be
increased at the discretion of
the Committee.
Vesting of awards is subject to
satisfaction of performance
targets. Targets are currently
measured over a three-year
period but this may be increased
at the discretion of the Committee.
In relation to each grant of awards,
the Committee has discretion to
determine the applicable
performance targets and their
weightings to ensure they
are appropriate.
Unless the Committee determines
otherwise, following the
conclusion of the vesting period, a
holding period of two years will
apply before participants are
entitled to receive their shares.
Clawback and malus
provisions apply.
Not applicable
Participation in a tax-
advantaged Sharesave Plan or
Share Incentive Plan and/or in
the Company Share Option
Plan will be limited by reference
to limits imposed by the
applicable legislation from time
to time.
The maximum award level
permitted under the 2016 PSP
plan rules is 200% of salary.
The normal annual award is
100% of salary for all Executive
Directors.
Awards currently vest on the
following basis:
• threshold performance
delivers 25% of the shares
awarded; and
• maximum performance
delivers 100% of the shares
awarded.
Performance targets will
apply in respect of a
performance period
which will not be less
than three years.
Currently, awards are
subject to the following
targets:
• the target applicable
to 50% of the shares
which are subject to
an award is based on
Total Accounting
Return relative to
certain UK-REITs that
report on an EPRA
accounting basis; and
• the target applicable
to 50% of the shares
which are subject to
an award is based on
Total Shareholder
Return relative to the
FTSE All Share index.
Notwithstanding the
extent to which the
performance targets are
met, awards shall only
vest if the Committee (in
its absolute discretion) is
satisfied that
performance against the
conditions is a fair
reflection of underlying
performance.
NewRiver REIT plc Annual Report and Accounts 2019
91
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITT EE REP ORT
Element
Variable
Shareholding
Requirement
Purpose & Link to
Strategy
Operation
Maximum
Performance Target
The Company operates a
shareholding requirement which is
subject to periodic review.
To encourage
long term
share
ownership
and support
alignment of
interests with
shareholders.
Not applicable
Executive Directors are
expected to build up a
shareholding within five years
of appointment worth 200% of
base salary for the CEO and
100% of base salary for other
Executive Directors.
Unvested share options and
shares which are subject to
performance do not count for
the purposes of the
shareholding requirement.
Chairman and Non-Executive Directors
Fee increases are applied in
line with outcome of the review.
Not applicable
Fees
To provide
market-
competitive
Director fees.
Annual fee for the Chairman.
Annual base fee for the Non-
Executive Directors. Additional
fees are paid to Non-Executive
Directors for additional
responsibilities such as being
the Senior Independent
Non-Executive Director or
chairing a Board Committee.
Fees are reviewed from time to
time taking into account time
commitment, responsibilities and
fees paid by companies of a
similar size and complexity.
Payable in cash.
Expenses incurred by Non-
Executive Directors fulfilling
their roles are reimbursed.
92
NewRiver REIT plc Annual Report and Accounts 2019
Element
Strategy
Operation
Maximum
Performance Target
Variable
Shareholding
To encourage
The Company operates a
Executive Directors are
Not applicable
Requirement
long term
shareholding requirement which is
expected to build up a
subject to periodic review.
shareholding within five years
of appointment worth 200% of
base salary for the CEO and
100% of base salary for other
Executive Directors.
Unvested share options and
shares which are subject to
performance do not count for
the purposes of the
shareholding requirement.
Fees
Annual fee for the Chairman.
Fee increases are applied in
Not applicable
line with outcome of the review.
Chairman and Non-Executive Directors
Purpose & Link to
share
ownership
and support
alignment of
interests with
shareholders.
To provide
market-
competitive
Director fees.
Annual base fee for the Non-
Executive Directors. Additional
fees are paid to Non-Executive
Directors for additional
responsibilities such as being
the Senior Independent
Non-Executive Director or
chairing a Board Committee.
Fees are reviewed from time to
time taking into account time
commitment, responsibilities and
fees paid by companies of a
similar size and complexity.
Payable in cash.
Expenses incurred by Non-
Executive Directors fulfilling
their roles are reimbursed.
1. Minimum performance: comprising the minimum
remuneration receivable
(being base salary and pension
allowances for FY20 and benefits
calculated using FY19 figures as
set out in the table on page 95);
2. On target performance: comprising fixed pay, an
annual bonus payment at 60%
of the maximum opportunity
(75% of salary) and long-term
incentive awards vesting at
25% of maximum opportunity
(25% of salary); and
3. Maximum performance: comprising fixed pay, 100% of
annual bonus (125% of salary)
and 100% vesting of long-term
incentive awards (100% of salary).
comprising fixed pay, 100% of
annual bonus (125% of salary) and
100% vesting of long-term
incentive awards (100% of salary),
adjusted for share price
appreciation of 50%.
4. Maximum performance
with share price increase:
External Directorships and Memberships
Executive Directors’ are encouraged to take up one external
directorship, subject to the prior approval of the Board. In
considering the appointment, the Board will consider whether
the appointment will have an adverse impact on the Director’s
role within the Company and whether it will be a conflict of
interest. Fees earned may be retained by the Director. At
present, no Executive Director has an external directorship.
Executive Directors’ are encouraged to join, when invited,
advisory committees of industries and professional bodies
directly related to the Company’s business. This helps to keep
the Company informed of any future regulations or trends
which may affect it in the future, as well as providing the
opportunity to influence future decision making.
Recruitment Arrangements
The Committee will apply the same remuneration policy and
principles when setting the remuneration package for a new
Executive Director. The Committee will take into consideration
all relevant factors to ensure that pay arrangements are in the
best interests of the Company and its shareholders.
Illustration of Remuneration Policy
The table below illustrates the remuneration opportunity
provided to each Executive Director in line with the policy at
different levels of performance for FY20. Three scenarios have
been illustrated for each Executive Director:
Allan Lockhart
2,000k
1,500k
1,000k
500k
£543k
100%
£1,601k
29.4%
£1,924k
16.9%
24.4%
36.7%
30.5%
£1,013k
11.6%
34.8%
53.6%
33.9%
28.2%
0
Minimum
On Target
Maximum
Maximum with
Share Increase
Mark Davies
2,000k
1,500k
1,000k
500k
0
£879k
11.6%
34.8%
53.6%
£471k
100%
£1,389k
29.4%
£1,670k
16.9%
24.4%
36.7%
30.5%
33.9%
28.2%
Minimum
On Target
Maximum
Maximum with
Share Increase
David Lockhart
1,000k
750k
500k
250k
0
£466k
100%
£466k
100%
29.4%
£466k
100%
29.4%
£466k
100%
Minimum
On Target
Maximum
Maximum with
Share Increase
Fixed
Bonus
PSP
Share price appreciation
NewRiver REIT plc Annual Report and Accounts 2019
93
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITT EE REP ORT
REMUNERATION COMMITTEE REPORT CONTINUED
Ongoing benefits, pension provisions, annual bonus
participation and awards under both the deferred bonus plan
and the performance share plan will be in line with those stated
in the policy. The pension contribution of a new director will be
in line with the majority of the workforce. Different performance
measures may be set for any initial awards under the annual
bonus plan and performance share plan taking into account
the responsibilities of the individual and the point in the year
that they joined and the rules of the applicable plan. The
rationale will be clearly explained in the annual report following
such recruitment. The level of bonus which may be paid will be
pro-rated to reflect the time in the year when the Executive
Director joins.
In addition, the Committee will have discretion to make
payments or awards to buy out incentive arrangements
forfeited on leaving a previous employer, i.e. over and above
the approach outlined in the table above and may exercise the
discretion available under the listing rules if necessary to do so.
In doing so, the Committee will seek, to the best possible
extent, to do no more than match the fair value of the awards
forfeited, taking account of the applicable performance
conditions, the likelihood of those conditions being met and
the proportion of the applicable vesting period remaining.
Where an Executive Director appointment is an internal
candidate, the Committee will honour any pre-existing
remuneration obligations or outstanding variable pay
arrangements that relate to the individual’s previous role.
The Committee retains the discretion to offer appropriate
remuneration outside the standard policy where an interim
appointment is made to fill an executive role on a short-
term basis or where exceptional circumstances require that
the Chairman or a Non-Executive Director takes on an
executive function.
Other contractual matters
Further details on service contracts, Non-Executive Director’s
letter of appointment, Termination of employment and change
of control and arrangement for the founding executive
directors are detailed in the annual report for the year ended
31 March 2017.
94
NewRiver REIT plc Annual Report and Accounts 2019
Remuneration Committee report
This section is subject to an advisory vote at the AGM.
Total remuneration payable to Directors for FY19 (audited)
The following tables show a single figure total of remuneration for the year ended 31 March 2019 for each of the Directors and
compares this figure to the prior year.
Executive Directors
Financial
year
Salary £
2019 466,250
20183 425,000
2019 408,000
20183 400,000
2019 399,583
20183 450,000
Benefits1 £
2,784
2,536
2,000
1,856
12,000
12,000
Pension £
69,938
63,750
61,200
60,000
59,938
67,500
Subtotal for
fixed pay £ Cash bonus £
261,100
538,972
346,959
491,286
228,480
471,200
340,550
461,856
471,521
–
304,369
529,500
Allan
Lockhart
Mark
Davies
David
Lockhart
Value of
bonus
deferred into
shares £
111,900
148,697
97,920
145,950
–
130,444
Long-term
incentive
plans2 £
–
42,554
–
36,475
–
48,633
Subtotal for
Total £
variable £
373,000
911,972
538,210 1,029,496
326,400 797,600
984,831
522,975
471,521
–
483,446 1,012,946
1. Benefits are the Director’s private medical cover
2. For details of the awards and their performance conditions, see pages 96 to 97
3. The comparative figures have been restated to present the value of the long-term incentive plans relative to the year in which the performance conditions were
largely met. Previously, the value of the long-term incentive plans was calculated with reference to the year in which the performance condition was fully met.
For example, if an award has a performance condition relating to TSR for a period to June, then the value of the award will be included in the financial year ended in
March based on an estimate of the outcome. Where the actual level of vesting is different from the estimated level then the comparative figures will be restated and an
explanation provided
Non-Executive Directors
Margaret Ford1
Kay Chaldecott
Alastair Miller2
Colin Rutherford3
Paul Roy4
Chris Taylor5
Financial
year
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Base Fee £
105,000
29,167
50,000
50,000
50,000
50,000
7,628
–
50,000
100,000
–
962
Audit Committee
Chairman £
–
–
–
–
7,500
4,872
–
–
–
–
–
96
Remuneration
Committee
Chairman £
–
–
7,500
5,000
–
–
–
–
–
–
–
–
Senior Independent
Non-Executive
Director £
3,750
2,916
–
–
3,750
–
–
–
–
–
–
96
Total £
108,750
32,083
57,500
55,000
61,250
54,872
7,628
–
50,000
100,000
–
1,154
1. Margaret Ford was appointed as a Director and as Senior Independent Non-Executive Director on 1 September 2017 and was appointed as Chairman on
1 October 2018
2. Alastair Miller was appointed as Audit Committee Chairman on 10 April 2017 and as Senior Independent Non-Executive Director on 1 October 2018
3. Colin Rutherford was appointed on 5 February 2019
4. Paul Roy retired as Chairman on 30 September 2018
5. Chris Taylor retired as a Director on 9 April 2017
Salaries
The salaries of the Executive Directors were changed as follows during FY19 as disclosed in the Remuneration Committee report
for FY18.
Allan Lockhart – Chief Executive Officer – salary upon appointment from 1 May 2018
Mark Davies – Chief Financial Officer – increased with effect from 1 April 2018
David Lockhart – Executive Deputy Chairman – salary upon appointment from 1 May 2018
£470,000
£408,000
£395,000
NewRiver REIT plc Annual Report and Accounts 2019
95
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITT EE REP ORT
REMUNERATION COMMITTEE REPORT CONTINUED
Fees
Non-Executive fees were changed effective 1 April 2018. The Chairman’s fee changed upon appointment of a new Chairman on
1 October 2018. The Chairman and Non-Executive Directors fees during the year were as follows:
Chairman – from 1 October 2018
Basic fee for a Non-Executive Director
Additional fee for serving as Chairman of the Audit and Remuneration Committees
Additional fee for serving as the Senior Independent Non-Executive Director
£160,000
£50,000
£7,500
£7,500
Annual bonus for the year ended 31 March 2019
The annual bonus for the year ended 31 March 2019 operated as laid out in the policy section of this report. Executive Directors had
the opportunity to earn a bonus up to a maximum of 125% of salary on the basis of the achievement of the following measures.
Corporate
Threshold
Potential
% salary
On
target
Potential
% salary
Stretch
Potential
% salary
Actual
result
Allan
Lockhart
Mark
Davies
Actual % awarded
36.9%
60%
4.0x
86%
3.7%
5.0%
5.0%
–
13.7%
3.7%
5.0%
5.0%
–
13.7%
18.75% 18.75%
12.5%
At index
Growth based
Total return vs IPD
All Retail
Earnings yield (FFO) –
comparative*
Financial discipline (each element equally weighted)
LTV
Gearing
Interest cover
Dividend cover
<50%
<100%
+2x
100%
At index
7.5%
<40%
<85%
>2.25x
105%
<35%
<75%
>2.5x
110%
10% ahead
31.25%
20%
ahead
50%
1.3% vs
(2.6)%
50.0% 50.0%
Top quartile
18.75
Top 5
30%
10 / 34
17.0%
17.0%
Personal
Personal objectives
Discretionary Discretionary
Good
performance
5%
12.5%
20%
99.45% 99.45%
Total: % of salary
80.0% 80.0%
Amount awarded by Committee after applying downward discretion (% of salary)
* The comparative group for earnings yield was the same as for the TAR comparator group disclosed below excluding Real Estate Investors and Schroder European Real
Estate and adding Custodian REIT, Edison Property Investment, Capital & Regional, F&C UK Real Estate Investment, Unite Group, Town Centre Securities and Ground
Rents Income Fund
125%
25%
75%
96
NewRiver REIT plc Annual Report and Accounts 2019
The objectives of the CEO and CFO for the year were:
Objective
Allan Lockhart
Performance
• To focus on delivering a growing and sustainable
• The Company has been impacted by the headwinds in the retail
income stream and to grow the business to maximise
the benefits of economies of scale
• To lead the formulation and regular review of the vision
and strategy of the business
• To ensure that the Company proactively engage with
its stakeholders at all levels of the business
• To develop the strength and depth of leadership
qualities within the Senior Management Team
Mark Davies
• Ensure the NewRiver balance sheet is adequately
capitalised
market that led to a decline in net income due to disposals and the
Company’s cautious approach to investment in current conditions.
• Built the programme for the strategy sessions and set a clear strategy
for the Group to navigate a difficult market backdrop, as detailed in the
annual report.
• An extensive roadshow of meetings with investors, lenders, bond
holders, employees and key suppliers was held during the year.
As well as regulatory reporting the Company has added a news
release channel to keep stakeholders informed.
• Four new appointments were made to the Executive Committee during
the year. Mentoring and personal guidance was provided to develop
their executive skill set.
Amount
awarded
–
6.25%
6.25%
6.25%
• NewRiver has maintained strong financial discipline in the year,
–
with an LTV of less than 40%, and undrawn bank facilities and cash
of £197.5 million. However, no new capital or facilities were raised
during the year.
• Successfully manage the debt financing of the Group,
including the extension of the NewRiver bank facilities
and the annual review of the investment grade
credit rating
• The Group’s weighted average debt expiry stood at 6.4 years at March
2019, with a low weighted interest cost of 3.6%. The Group’s bank
facilities were extended to 2023 and the listed bonds’ investment
grade credit rating of BBB+ was reiterated during the year.
• Pro-active engagement with shareholders and working
alongside the CEO and Executive Deputy Chairman
to extend the investor relations reach into Europe
and the USA
• Lead and successfully integrate the Hawthorn
Leisure business into the Group, delivering income
and cost synergies
• Mark has proactively engaged with existing and potential shareholders
in England, Scotland, South Africa, the USA, and the Netherlands,
with new holders in South Africa and the USA as a result.
• Mark has had executive responsibility for the Group’s pub business
during the year. The Group’s existing pub portfolio was successfully
integrated into Hawthorn Leisure in January 2019, unlocking £2.1 million
of income and cost synergies.
6.25%
6.25%
6.25%
70% of the annual bonus was paid in cash and 30% in nil-cost share options, deferred for two years.
NewRiver REIT plc Annual Report and Accounts 2019
97
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITT EE REP ORT
REMUNERATION COMMITTEE REPORT CONTINUED
Long-term Incentive Plans
Vesting of Performance Share Plan awards
The performance conditions for the 2015 Performance Share Plan award that vest in September 2019 are:
Total Shareholder Return
Earnings Per Share growth
NAV growth
Performance
period start
Sept 2015
April 2015
April 2015
Performance
period end
Sept 2019
March 2019
March 2019
Minimum
hurdle
9%
5.0%
9%
Maximum
hurdle
16%
12.0%
16%
Achieved /
estimated
-1.9%
-1.6%
7.1%
It is currently estimated that the awards will not meet the minimum hurdle and will lapse.
The performance conditions for the 2016 Performance Share Plan award that vest in July 2019 are:
Total Shareholder Return
July 2016
July 2019
100% of index 150% of index
Total Accounting Return
July 2016
July 2019
100% of index 150% of index
Performance
period start
Performance
period end
Minimum
hurdle
Maximum
hurdle
Achieved /
estimated
Less than
100% of index
Less than
100% of index
It is currently estimated that the awards will not meet the minimum hurdle and will lapse.
The performance conditions for the 2015 Performance Share Plan award that vested in September 2018 were:
Total Shareholder Return
Earnings Per Share growth
NAV growth
Performance
period start
Sept 2015
April 2015
April 2015
Performance
period end
Sept 2018
March 2018
March 2018
Minimum
hurdle
9%
5.0%
9%
Maximum
hurdle
16%
12.0%
16%
Achieved /
estimated
5.6%
2.3%
10.3%
The Total Shareholder Return and Earnings per Share growth targets failed to achieve the threshold level of vesting. The NAV
growth condition achieved the threshold and 39.2% of this part of the award vested. Overall, 13.1% of the award vested and the
value is set out in the total remuneration for FY18.
The table below shows the impact of share price movement on the value of the Performance Share Plan award that vested in
September 2018.
Allan Lockhart
Mark Davies
David Lockhart
Share price
at vesting
2.60
2.60
2.60
Value
vested
42,554
36,475
48,633
Share price
at grant
3.40
3.40
3.40
Historical value
at grant
55,648
47,699
63,597
98
NewRiver REIT plc Annual Report and Accounts 2019
PSP awards granted in the year ended 31 March 2019
The following Performance Share Plan awards were granted to Executive Directors as nil cost options:
Executive
Allan Lockhart
Mark Davies
David Lockhart
* The closing price on the day before the grant date has been used to determine the value of the awards at grant date. This was £2.735 and £2.975
Value of awards at
grant date
(% salary)*
£425,000 (100%)
£400,000 (100%)
£450,000 (100%)
Number of
shares comprising
award
142,857
134,454
160,142
% of award
vesting at
threshold
25%
25%
25%
Vesting period
end date
May 2021
May 2021
July 2021
Each award is subject to clawback and malus provisions in line with the Company’s policy. Each award is subject to two
performance conditions which will be tested over a three-year period. Following the conclusion of the vesting period, a holding
period of two years will apply before participants are entitled to receive their shares (normally subject to continued employment).
50% of each award may vest based on the Company's TSR compared to that of the FTSE All Share index (the TSR Benchmark).
50% of each award may vest based on the Company's Total Accounting Return (“TAR”) compared to a group of UK REITs that
report their NAV on an EPRA basis. TAR is defined as the annualised return over the performance period based on the change in
EPRA NAV per share and the level of dividends paid per share.
The range of targets, for both performance conditions, is as follows:
Range
Less than 100% of the index
Equal to 100% of the index
More than 100% but less than 125% of the index
More than 125% but less than 150% of the index
Equal to 150% of the index or more
% award vesting
0
25
between 25 and 75 on a straight-line basis
between 75 and 100 on a straight-line basis
100
For the assessment of performance against the index, the TSR of NewRiver and the index value will be re-based to 100 at the start
of the period, thus ensuring that the maximum out-performance requirement equates broadly to upper quartile performance, based
on back-testing analysis.
For the assessment of performance against the index for the TAR growth of NewRiver will be compared to the growth of the index,
in all cases requiring that there is minimum absolute growth above the index of 10%, where performance of the index is close to
zero or negative. Similarly, this ensures that the maximum out-performance requirement equates broadly to upper quartile
performance, based on back-testing analysis.
The TAR comparator group was composed of the companies set out in the list below.
Land Securities Group plc
British Land Company plc
Hammerson plc
Intu Properties plc
Segro plc
Derwent London plc
Shaftesbury plc
Great Portland Estates plc
Big Yellow Group plc
Workspace Group plc
Tritax Big Box REIT plc
Londonmetric Property plc
Assura plc
Hansteen Holdings plc
Redefine International plc
Real Estate Investors plc
Safestore Holdings plc
Primary Health Properties plc
Empiric Student Property plc
Secure Income REIT plc
GCP Student Living plc
Standard Life Investments Property Income Trust Limited
Regional REIT Limited
Target Healthcare REIT Limited
A&J Mucklow Group plc
McKay Securities plc
Schroder European Real Estate Investment Trust Limited
NewRiver REIT plc Annual Report and Accounts 2019
99
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITT EE REP ORT
REMUNERATION COMMITTEE REPORT CONTINUED
Summary of Directors Interests (audited)
The beneficial interests of the Executive Directors in share awards and share options as at 31 March 2019 are shown in the
following tables.
Allan
Lockhart
Mark
Davies
Plan
Grant Date
Sept 2009 USOP
Sept 2011 USOP
PSP
Jan 2013
PSP
July 2014
PSP
Sept 15
Sept 15
PSP
March 2016 DBP
June 2016 DBP
PSP
July 2016
June 2017 PSP
July 2017 DBP
May 2018 DBP
May 2018
PSP
Total
Plan
Grant Date
PSP
Sept 15
Sept 15
PSP
March 2016 DBP
June 2016 DBP
PSP
July 2016
Jan 2017
PSP
June 2017 PSP
July 2017 DBP
May 2018 DBP
May 2018
PSP
Total
Exercise /
share price
at date of
award £
2.50
2.35
2.04
3.06
3.40
3.40
3.26
3.16
2.98
3.46
3.42
2.86
2.98
Vesting by
Vested
Vested
Vested
Vested
Vested
Sept 19
Vested
Vested
July 2019
June 2020
July 2019
May 2020
May 2021
At 31 March
2018
192,686
338,000
71,937
104,480
120,851
120,851
148,377
56,158
151,199
127,007
38,064
Granted
–
–
–
–
–
–
–
–
–
–
–
–
–
52,028
142,857
Dividend
equivalent
shares
added
–
–
–
–
4,544
10,738
–
1,011
13,435
11,285
3,380
3,620
9,943
Lapsed
–
–
–
–
(109,028)
–
–
–
–
–
–
–
–
At 31 March
Exercised
2019
192,686
–
– 338,000
–
–
–
131,589
–
–
164,634
138,292
41,444
(71,937)
(104,480)
(16,367)
–
(148,377)
(57,169)
–
–
–
–
–
55,648
152,800
1,469,610
194,885
57,956 (109,028) (398,330) 1,215,093
Exercise /
share price
at date of
award £
3.40
3.40
3.26
3.16
2.98
3.34
3.46
3.42
2.86
2.98
Vesting by
Vested
Sept 19
Vested
Vested
July 2019
Jan 2022
June 2020
July 2019
May 2020
May 2021
At 31 March
2018
103,586
103,586
93,574
48,136
132,300
130,776
119,536
35,825
–
–
767,319
Granted
–
–
–
–
–
–
–
–
51,067
134,454
185,521
Dividend
equivalent
shares
added
3,895
9,204
–
866
11,755
11,620
10,620
3,183
3,553
9,357
64,053
Lapsed
(93,452)
–
–
–
–
–
–
–
–
–
At 31 March
2019
–
112,790
–
–
144,055
142,396
130,156
39,008
54,620
143,811
(93,452) (156,605) 766,836
Exercised
(14,029)
–
(93,574)
(49,002)
–
–
–
–
–
–
100
NewRiver REIT plc Annual Report and Accounts 2019
Vesting by
Vested
Sept 19
Vested
Vested
July 2019
June 2020
July 2019
May 2020
July 2021
Exercise /
share price
at date of
award £
3.40
3.40
3.26
3.16
2.98
3.46
3.42
2.86
2.74
At 31 March
2018
138,116
138,116
174,323
64,182
160,650
134,479
40,303
–
–
850,169
Granted
–
–
–
–
–
–
–
45,642
160,142
205,784
Dividend
equivalent
shares
added
5,193
12,272
–
1,155
14,274
11,949
3,579
3,175
7,910
59,507
Lapsed
(124,604)
–
–
–
–
–
–
–
–
Exercised
(18,705)
–
(174,323)
(65,337)
–
–
–
–
–
(124,604) (258,365)
At 31 March
2019
–
150,388
–
–
174,924
146,428
43,882
48,817
168,052
732,491
David
Lockhart
Plan
Grant Date
PSP
Sept 15
Sept 15
PSP
March 2016 DBP
June 2016 DBP
PSP
July 2016
June 2017 PSP
July 2017 DBP
May 2018 DBP
PSP
July 2018
Total
DBP = Deferred Bonus Plan
PSP = Performance Share Plan
USOP = Unapproved Share Option Plan
Unapproved Share Option Plan
Awards made under the Unapproved Share Option Plan have vested and the participants have until the tenth anniversary from the
date of grant for each award in which to exercise the options. The exercise price per share to be paid upon exercise is shown
against each award.
Details of the Directors’ shareholdings and rights to shares (audited)
It is the Board’s policy that Executive Directors build up and retain a minimum shareholding in the Company. Under these
guidelines the Chief Executive Officer and other Executive Directors are expected to hold Company shares equal in value to 200%
and 100% of their base salary respectively.
The beneficial interests of Directors who served during the year, together with those of their families, in the shares of the Company
are as follows:
Unvested PSP
awards held
Total held as
at 31 March
at 31 March
2019**
2019
1,673,288
587,315
Allan Lockhart
989,304
673,208
Mark Davies
128,175 2,653,866
639,792
David Lockhart
25,000
–
Margaret Ford
39,445
–
Kay Chaldecott
35,956
–
Alastair Miller
* based on the closing share price of £2.385 as at 31 March 2019 and salary for FY20. Shareholding guidelines are for the CEO to hold a minimum number of shares with
a value in excess of 200% of his base salary and for the other Executive Directors to hold a minimum number of shares with a value in excess of 100% of their base
salary. Includes nil price share options with no performance conditions
Unvested DBP
awards held
at 31 March
2019**
97,092
93,628
92,699
–
–
–
Shareholding
as % of
salary*
259%
159%
1112%
–
–
–
Vested DBP
awards held
at 31 March
2019**
–
–
–
–
–
–
Shares held
at 31 March
2019
458,195
222,468
1,793,200
25,000
39,445
35,956
Unconverted
warrants held
at 31 March
2019
–
–
Vested but
unexercised
USOP awards
held at 31
March 2019
530,686
–
–
–
–
–
Vested but
unexercised
PSP awards
held at 31
March 2019
–
–
–
–
–
–
–
–
–
** includes dividend equivalent shares added to that date
DBP = Deferred Bonus Plan
PSP = Performance Share Plan
USOP = Unapproved Share Option Plan
There have been no changes in the number of shares held from 31 March 2019 to 21 May 2019, being the latest practicable date
before the publication of this Annual Report.
NewRiver REIT plc Annual Report and Accounts 2019
101
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITT EE REP ORT
REMUNERATION COMMITTEE REPORT CONTINUED
Historic performance and chief executive remuneration
The following information allows comparison of the Company’s TSR (based on share price growth and dividends reinvested) with
the remuneration of the CEO over the last nine years.
250
200
150
100
50
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
NewRiver
UK IPD Retail
FTSE 250
FTSE 350 Retail
The chart shows the TSR of the Company, the FTSE250 and the FTSE350 REIT Indices, and the UK IPD Retail Index, based on an initial investment of £100 on 1 April 2010
and values at intervening financial year ends over a nine-year period to 31 March 2019. These are considered to be appropriate benchmarks for the graph as the Company
was a constituent of these indices during the financial year.
Chief Executive Officer remuneration for year ended 31 March
Single figure table
Total remuneration (£)
Annual bonus (% of max)
Total LTIP vesting (% of max)
2013
2011
2012
2019
337,500 467,500 504,000 642,000 850,000 1,792,205 1,341,958 1,012,946 911,972
64.0
–
100.0
50.0
42.0
–
36.5
–
66.7
76.3
77.3
13.1
69.0
–
70.0
–
32.6
–
2018
2017
2016
2015
2014
CEO pay ratio
The ratio of the CEO’s total pay to the total pay of the 25th, 50th and 75th percentile paid employee is shown below. The Group
employs the majority of its staff in managed pubs which tend to offer hourly pay based on market rates, without any performance
related bonuses.
The CEO’s pay is set in accordance with the remuneration policy, i.e. it is a market competitive remuneration reflecting the role, and
the CEO’s responsibilities, skills and experience.
Year
2019
Method
Option A
25th percentile pay ratio
15:1
Median pay ratio
35:1
25th percentile
50th percentile
75th percentile
75th percentile pay ratio
52:1
Total remuneration
£58,000
£24,000
£16,286
102
NewRiver REIT plc Annual Report and Accounts 2019
Chief Executive Officer pay compared to employees
The table below shows the percentage change in salary benefits and bonus for FY19 for both the Chief Executive Officer and for all
permanent employees of the Group, excluding joiners and leavers.
Chief Executive
All employees
1. The 10% increase in benefits relates to the increased cost of private medical insurance and represents an increase of £248 for the CEO
Salary
4.4%
8.8%
Benefits1
10%
10%
Annual Bonus
-24.1%
-24.2%
Relative importance of spend on pay
The table below shows employee pay and distributions to shareholders for FY19 and FY18.
Total spend on employee pay1
Total distributions to shareholders
1. Includes salaries, bonuses, social security costs and pension costs as shown in the notes to the Financial Statements. The increase is due to the acquisition of
2019
£’000
14,235
64,325
2018
£’000
9,853
62,734
% difference
from prior year
+50%
+3%
Hawthorn Leisure
Other Directorships
The Executive Directors do not serve on any other Boards in a Non-Executive Director capacity
Payments to past Directors and payments for loss of office
There are no payments to past directors
External advice to the Committee
During the year the Committee received advice on executive remuneration from Korn Ferry. h2glenfern has previously provided
advice to the Committee and Korn Ferry were appointed following a competitive process. Fees charged by Korn Ferry were on a
time and materials basis and totalled £12,900 in the year ended 31 March 2019.
Another division within h2glenfern provides corporate advice to the Company and it has confirmed that it has operated in
accordance with the Code of Conduct of the Remuneration Consultants’ Group in relation to executive remuneration consulting in
the United Kingdom. Korn Ferry does not provide any other services to the Group. The Committee is satisfied that all advice
provided by h2glenfern and Korn Ferry was objective and independent.
What the Directors can earn in FY20
Salaries for Executive Directors
The base salaries are unchanged from FY19 and are as follows:
Allan Lockhart – Chief Executive Officer
Mark Davies – Chief Financial Officer
David Lockhart – Executive Deputy Chairman
The average increase for the workforce was 1.5%.
£470,000
£408,000
£395,000
Fees for Non-Executive Directors
The Board considered the remuneration of the non-executive directors during the year. The Committee (without the Chairman of
the Board) determines the Chairman of the Board’s fee and recommends it to the Board. The Chairman of the Board and Executive
Directors determine the Non-Executive Directors’ fees. The Non-Executive Directors’ fees were last increased in April 2018 and will
remain unchanged for FY20.
Fees payable to the Chairman and Non-Executive Directors are as follows:
Chairman
Basic fee for a Non-Executive Director
Additional fee for serving as Chairman of the Audit and Remuneration Committees
Additional fee for serving as the Senior Independent Non-Executive Director
£160,000
£50,000
£7,500
£7,500
NewRiver REIT plc Annual Report and Accounts 2019
103
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITT EE REP ORT
Annual bonus
The annual bonus arrangements for the financial year ending 31 March 2020 will operate as laid out in the remuneration policy.
The Chief Executive Officer and the Chief Financial Officer will have the opportunity to earn a bonus up to a normal maximum of
125% of salary on the basis of the achievement on achievement of the following measures.
Measure
Corporate
Performance
Personal
Total Accounting Return v IPD All Retail
Earnings (FFO) yield v comparative peer group
Targets for financial discipline
Achievement against a number of business, strategic,
organisational, stakeholder and financial targets tailored
to the role of each Executive Director
Proportion of salary payable
For on target performance: 62.5%
For stretch performance: 100%
For on target performance: 12.5%
For stretch performance: 25%
The measures have been selected to reflect a range of key financial and operational goals which support the Company’s strategic
objectives. The respective targets have not been disclosed as they are commercially sensitive. However, retrospective disclosure
of the targets and performance against them will be set out in the Remuneration Committee Report for the year ending 31 March
2020.
The Executive Deputy Chairman will not participate in the bonus plan.
Long-term incentives – Performance Share Plan
Performance Share Plan awards granted to The Chief Executive Officer and the Chief Financial Officer in the financial year ended
31 March 2020 will be over shares worth 100% of salary and will be consistent with the long-term incentives policy detailed on
page 99.
The targets and weightings will be the same as those described on page 99, albeit the performance measurement periods will be
aligned to the financial year in all cases. The basis for calculating the TSR and TAR performance will however be changed from
being compared to an index, to being calculated based on the ranking in a comparator group. 25% of the award will vest for
performance at a median rank, rising incrementally so that there is full vesting for upper quartile performance or above, with an
intervening step for 75% to vest at a ranking of 62.5%.
Awards will be subject to a two year holding period after the vesting date, i.e. for a period of five years from the grant date. In line
with market practice the shares subject to the holding period would not be at risk of forfeiture in the event an executive ceases
employment (but will remain subject to clawback).
The Executive Deputy Chairman will not participate in Performance Share Plan.
2018 Annual General Meeting shareholder vote
At the Annual General Meeting held on 4 July 2018, votes cast by proxy and at the meeting in respect of the Remuneration
Committee report were as set out below:
That the Directors’ Remuneration
Committee report, be received and
approved
Votes for
%
Votes against
%
Total shares for
& against
% of total
voting rights Votes withheld
255,001,767
99.38
1,596,918 0.62 256,598,685
84.65%
108,893
The remuneration policy was approved at the Annual General Meeting held on 14 July 2017.
Votes for
%
Votes against
%
Total shares for
& against
% of total
voting rights Votes withheld
243,604,524
96.3
9,414,395
3.7
253,018,919
84.0
71,795
That the Directors’ remuneration policy
be received and approved
Signed on behalf of the Board:
Kay Chaldecott
Committee Chairman
22 May 2019
104
NewRiver REIT plc Annual Report and Accounts 2019
DIRECTORS’ REPORT
Directors’ report
The Directors present their report and Group financial
statements for the year ended 31 March 2019.
Principal activities and status
NewRiver REIT plc (“the Company”) is a premium listed REIT on
the London Stock Exchange and a constituent of the FTSE250
and EPRA Indices. The Company is a specialist real estate
investor, asset manager and developer focused solely on the
UK retail and leisure sector.
Strategic Report
The Strategic Report for the year ended 31 March 2019 is
set out on pages 1 to 73 and contains a fair review of the
business of the Group during the year including a description
of the principal risks and uncertainties, an indication of likely
future developments in the business on page 40 and
disclosures concerning Greenhouse Gas Emissions on
page 58.
Results and dividend
The results for the year are set out in the financial statements.
During the year the Group paid quarterly interim dividends
totalling £64.9 million (2018: £62.7 million). Further details
on the dividend payments are set out in note 11 to the
financial statements.
The Board
The Directors, who served throughout the year unless stated
otherwise, are detailed below:
Margaret Ford
Allan Lockhart
Mark Davies
David Lockhart
Kay Chaldecott
Alastair Miller
Colin Rutherford
Paul Roy
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Executive Deputy Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director– appointed
5 February 2019
Non-Executive Chairman – retired
30 September 2018
The Board recognises the requirement of the UK Corporate
Governance Code regarding the segregation of roles and
division of responsibilities between the Chairman and Chief
Executive and has complied with this requirement during
the year.
The Board has determined that a major part of its role is the
overall strategy of the Group and to consider the following
matters which are key to the performance of the Group:
– implementation of the agreed business strategy to focus on
value creating retail and leisure property opportunities;
– ensuring adequate funding is in place to implement the
Group’s business model;
– monitoring of cash management policies and cash
flow forecasts;
– responsibility for the financial reporting procedures
and safeguarding the Group’s assets and those held in
joint ventures;
– approval of the annual and interim financial statements and
annual budget;
– review of quarterly management accounts including
forecasts;
– dividend policy and approval of all dividend payments;
– the performance of and relationships with key service
providers including corporate brokers and advisers;
– monitoring key performance indicators; and
– establishing and maintaining appropriate delegated
authorities, internal controls and risk management policies
and procedures.
Articles of Association
The rules governing the appointment and replacement
of Directors are contained in the Company’s Articles of
Association. Changes to the Articles of Association must
be approved by shareholders in accordance with legislation
in force from time to time. A copy of the Company’s Articles
of Association can be found on the Company’s website,
www.nrr.co.uk.
Substantial shareholdings
As at 7 June 2019, the Company has been advised under
DTR5 by shareholders with holdings of more than 3% of the
total voting rights of the Company as follows:
Shareholder
Invesco Perpetual Asset
Management
Woodford Investment
Management
St James Place plc
BlackRock Investment
Management
Number of
ordinary shares
% of Issued
Share Capital
79,470,823
26.00
45,492,833
15,236,757
13,789,054
14.88
4.99
4.54
NewRiver REIT plc Annual Report and Accounts 2019
105
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
DIRECTORS’ REPORT
Directors’ interests
Details of the Directors’ share interests can be found in the
Remuneration Committee report and are applicable as at 30
April 2019.
All related party transactions are disclosed in note 27 to the
financial statements.
Financial instruments
The Group’s exposure to and management of capital risk,
market risk and liquidity risk is set out in note 25 to the Group’s
financial statements.
Directors’ indemnification and insurance
The Company’s articles of association provide for the Directors’
and officers’ of the Company to be appropriately indemnified,
subject to the provisions of the Companies Act 2006. The
Company purchases and maintains insurance for the Directors’
and officers’ of the Company in performing their duties, as
permitted by section 233 Companies Act 2006.
Share capital
The Company has one class of share capital, being ordinary
shares with a nominal value of one penny each. Details of the
share capital, including the rights and obligations attached to
the ordinary shares issued during the year ended 31 March
2019, are summarised in note 22 of the financial statements.
At the Annual General Meeting held in 2018, shareholders
authorised market purchases of the Company’s ordinary
shares, limited to 14.99% of the issued share capital at that
time, as well as the allotment of new shares within certain limits
approved by shareholders. These authorities expire are the
AGM in 2019 and appropriate renewals will be sought.
The Company has 333,401 warrants to subscribe for ordinary
shares in issue. These warrants were issued when NewRiver
Retail Limited listed in 2009 and were converted across on the
same terms and conditions to warrants in NewRiver REIT plc
when the Company listed on the Main Market in August 2016.
Each warrant can be surrendered for one ordinary share at a
current subscription price of 121p per share. The warrants in
issue have to be exercised by 1 September 2019 otherwise
they will lapse.
There are no securities of the Company carrying special rights
with regards to the control of the Company in issue.
106
NewRiver REIT plc Annual Report and Accounts 2019
Disclosure of information to Auditors
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
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.
Auditor
Following a competitive tender process,
PricewaterhouseCoopers will be nominated as the Group’s
auditor at the AGM.
Political Donations
No political donations were made by the Company or its
subsidiaries during the year (2018: Nil).
Pubs Code Regulations
In accordance with the Pubs Code Regulations 2016 the
Company has produced an annual compliance report to be
submitted the Pubs Code Adjudicator (PCA). The report details
the Company’s compliance with the Pubs Code where
applicable; instances of breaches and alleged breaches; and
additional steps taken to ensure compliance. The Company
has complied with the regulations and there have been no
breaches or alleged breaches during the period. The Company
has conducted additional staff training to ensure continued
compliance. The Company’s annual compliance report will be
submitted to the PCA on 31 July 2019.
Annual General Meeting
The Annual General Meeting will be held at 2:00p.m
on 25 July 2019. At the meeting, resolutions will be proposed
to receive the Annual Report and financial statements,
approve the Directors’ remuneration report, re-elect
Directors and appoint and determine the remuneration of
PricewaterhouseCoopers. In addition, it will be proposed that
expiring authorities to allot shares and to repurchase shares
are extended.
Internal controls review
Taking into account the principal risks and the ongoing work
of the Audit Committee in monitoring the risk management and
internal control systems on behalf of the Board, the Directors:
– are satisfied that they have carried out a robust assessment
of the principal risks facing the Group, including those that
would threaten its business model, future performance,
solvency or liquidity; and
– have reviewed the effectiveness of the risk management
and internal control systems and no significant failings
were identified.
Directors’ responsibilities
statement
Responsibility statement
We confirm that to the best of our knowledge:
– the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by
the European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
and the undertakings included in the consolidation taken as
a whole; and
– the Chairman's Statement and the Chief Executives' review
include a fair review of the development and performance
of the business and the position of the Company and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board:
Allan Lockhart
Chief Executive Officer
Mark Davies
Chief Financial Officer
22 May 2019
The Directors are responsible for preparing the Annual Report,
the Directors’ Remuneration Committee report and the
Financial Statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group’s financial statements in accordance
with International Financial Reporting Standards as adopted by
the European Union. Under company law the Directors must
not approve the accounts unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and
of the profit or loss of the Group for that period.
– In preparing these financial statements, the Directors are
required by International Accounting Standard 1 to:
– properly select and apply accounting policies;
– present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
– provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity’s financial position
and financial performance; and
– make an assessment of the Company’s ability to continue
as a going concern.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and
enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies
Act 2006 and, as regards the Group Financial Statements,
Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
NewRiver REIT plc Annual Report and Accounts 2019
107
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPEN DENT AUDITOR’S REP ORT
INDEPENDENT AUDITOR’S REPORT
Report on the audit of the
financial statements
Opinion
In our opinion:
– the financial statements of NewRiver REIT plc (the ‘parent company’) and its subsidiaries (the ‘group’) give a true and fair view
of the state of the Group’s and of the parent company’s affairs as at 31 March 2019 and of its loss for the year then ended;
– the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
– the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards
the Group financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements which comprise:
– the consolidated statement of comprehensive income;
– the consolidated and company balance sheets;
– the consolidated cash flow statement;
– the consolidated and company statement of changes in equity; and
– the related notes 1 to 27 and A to E.
The financial reporting framework that has been applied in their preparation of the Group financial statements is applicable law and
IFRSs as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements
section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that the non-
audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
– Key judgements within the valuation of the shopping centre, high street and retail warehouse
in the audit.
portfolio, including development properties;
Conclusions relating to going concern, principal risks and viability statement
Going concern
We have reviewed the directors’ statement in note 1 to the financial statements about whether they
We confirm that we have
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 parent 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.
nothing material to
report, add or draw
attention to in respect
of these matters.
We considered as part of our risk assessment the nature of the Group, its business model and
related risks including where relevant the impact of Brexit, the requirements of the applicable
financial reporting framework and the system of internal control. We evaluated the directors’
assessment of the Group’s ability to continue as a going concern, including challenging the
underlying data and key assumptions used to make the assessment, and evaluated the
directors’ plans for future actions in relation to their going concern assessment.
We are required to state whether we have anything material to add or draw attention to in relation to
that statement required by Listing Rule 9.8.6R(3) and report if the statement is materially inconsistent
with our knowledge obtained in the audit.
Principal risks and viability statement
Based solely on reading the directors’ statements and considering whether they were consistent
We confirm that we have
with the knowledge we obtained in the course of the audit, including the knowledge obtained in
the evaluation of the directors’ assessment of the Group’s and parent company’s ability to continue
nothing material to
report, add or draw
as a going concern, we are required to state whether we have anything material to add or draw
attention to in respect
of these matters.
– the disclosures on pages 70-72 that describe the principal risks and explain how they are being
attention to in relation to:
managed or mitigated;
– the directors' confirmation on page 106 that they have carried out a robust assessment of the
principal risks facing the Group, including those that would threaten its business model, future
performance, solvency or liquidity; or
– the directors’ explanation on page 120 as to how they have assessed the prospects of the
Group, over what period they have done so and why they consider that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
We are also required to report whether the directors’ statement relating to the prospects of the
Group required by Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained
– Key judgements within the valuation of the pub portfolio; and
– The accounting treatment for the acquisition of the Hawthorn portfolio.
Within this report, any new key audit matters are identified with
the same as the prior year identified with
.
and any key audit matters which are
Materiality
Scoping
Key audit matters with increased or lower levels of risk compared to the prior year are identified with
and
.
The materiality that we used for the Group financial statements was £13.4 million which was determined
on the basis of approximately 1% of total assets.
We performed a full scope audit to respond to the risks of material misstatement for the Group and
performed an audit of specified account balances for the joint venture entity.
Significant changes in
our approach
There have been no significant changes to our audit approach in 2019. We have continued to focus
on the key judgements within the investment property valuations. The key audit matter relating to
accounting for investment property acquisitions focuses specifically on the Hawthorn acquisition.
108
108
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
109
Conclusions relating to going concern, principal risks and viability statement
Going concern
We have reviewed the directors’ statement in note 1 to 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 parent 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.
We confirm that we have
nothing material to
report, add or draw
attention to in respect
of these matters.
We considered as part of our risk assessment the nature of the Group, its business model and
related risks including where relevant the impact of Brexit, the requirements of the applicable
financial reporting framework and the system of internal control. We evaluated the directors’
assessment of the Group’s ability to continue as a going concern, including challenging the
underlying data and key assumptions used to make the assessment, and evaluated the
directors’ plans for future actions in relation to their going concern assessment.
We are required to state whether we have anything material to add or draw attention to in relation to
that statement required by Listing Rule 9.8.6R(3) and report if the statement is materially inconsistent
with our knowledge obtained in the audit.
Principal risks and viability statement
Based solely on reading the directors’ statements and considering whether they were consistent
with the knowledge we obtained in the course of the audit, including the knowledge obtained in
the evaluation of the directors’ assessment of the Group’s and parent company’s ability to continue
as a going concern, we are required to state whether we have anything material to add or draw
attention to in relation to:
We confirm that we have
nothing material to
report, add or draw
attention to in respect
of these matters.
– the disclosures on pages 70-72 that describe the principal risks and explain how they are being
managed or mitigated;
– the directors' confirmation on page 106 that they have carried out a robust assessment of the
principal risks facing the Group, including those that would threaten its business model, future
performance, solvency or liquidity; or
– the directors’ explanation on page 120 as to how they have assessed the prospects of the
Group, over what period they have done so and why they consider that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
We are also required to report whether the directors’ statement relating to the prospects of the
Group required by Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained
in the audit.
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
109
109
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPEN DENT AUDITOR’S REP ORT TO THE M EM BER S O F NE W R IVE R R EIT PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NEWRIVER REIT PLC
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key judgements within the valuation of the shopping centre, high street and retail warehouse portfolio, including
development properties
Key audit matter
description
NewRiver REIT plc owns and manages a portfolio of commercial assets. The valuation of the shopping
centres, high street assets and retail warehouse portfolio (including a number of development properties)
is a significant judgement area and is underpinned by a number of assumptions.
The portfolio (excluding development properties) is valued by external valuers using the ‘investment
method’ of valuation, in which the principal assumptions include estimated rental values and
capitalisation yields. Development properties are valued by applying the same methodology, but with
a deduction for the future costs necessary to complete the development together with an allowance
for remaining risk, developers’ profit and purchasers’ costs (‘the residual method’).
We have therefore pinpointed the significant risk to these principal assumptions made in the valuation,
as described above. Focus was given to the estimated rental values and yields used in the valuations
in the current year given the challenges faced by the retail industry.
There has been an increase in the level of judgement in the valuations, particularly around estimated
rental values and yields used in the valuation, given the challenges faced by the retail industry.
The Group's share of property assets are valued at £987.0 million (2018: £1,059.7 million) of which
£979.6 million are held by subsidiaries (2018: £1,047.3 million) and £7.4 million by joint ventures
(2018: £12.4 million).
Please see note 1 and 12 to the financial statements and discussion in the report of the Audit Committee
on page 83.
We assessed, in consultation with our property valuation specialists, management’s process for
reviewing and challenging the work of the external valuer. We also assessed the competence,
independence and integrity of the external valuer.
In consultation with our property valuation specialists, we performed detailed analysis of the valuations
for a sample of properties in the portfolio. We performed audit procedures to assess the integrity of
information provided to the independent valuer including agreement on a sample basis back to
underlying lease agreements.
Alongside our property valuation specialists, we held discussions with the external valuers of the
portfolio to understand the valuation process, performance of the portfolio and significant assumptions
and critical judgement areas, including estimated rental values with consideration of Compulsory
Voluntary Arrangements (‘CVAs’) and administrations during the year, and yields. We benchmarked
these assumptions to relevant external industry data and comparable property transactions, in particular
the yield.
For development properties we assessed the classification of development properties and whether the
methodology applied (i.e. investment or residual method) was appropriate.
How the scope of
our audit responded
to the key audit
matter
Key observations
We have concluded that the assumptions applied in arriving at the fair value of the Group's shopping
centre, high street and retail warehouse portfolios were appropriate.
110
110
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
Key judgements within the valuation of the pub portfolio
Key audit matter
description
NewRiver owns a pub portfolio comprising of 665 pubs (2018: 331 pubs). The extent and variety of
judgements involved in the valuation of the pub portfolio is different to the rest of the investment
property portfolio due to the specific operational nature of the properties, as well as the contractual
arrangements in place.
How the scope of
our audit responded
to the key audit
matter
The majority of the pubs are valued by external valuers using the ‘investment method’ of valuation, whereby
the principal assumptions include income from fair maintainable trade and capitalisation multiples.
We have therefore pinpointed the significant risk to the judgements made in the valuation,
as described above.
The Group's assets are valued at £294 million (2018: £179.9 million).
Please see note 1 and 12 to the financial statements and discussion in the report of the Audit Committee
on page 83.
We assessed, in consultation with our property valuation specialists, management’s process for
reviewing and challenging the work of the external valuer. We also assessed the competence,
independence and integrity of the external valuer.
We performed analytical procedures over the pubs on a portfolio-by-portfolio basis, with in depth reviews
for a sample of pubs with movements of + / - 10% compared to the portfolio average. We performed audit
procedures to assess the integrity of information provided to the independent valuer including
agreement on a sample basis back to underlying tenant leases and wet sales volumes.
Alongside our property valuation specialists, we held discussions with the external valuers of the portfolio
to understand key trends in the market and challenged the material assumptions.
Furthermore, we reconciled the audited EBITDA to the EBITDA used in the valuation by Colliers.
Key observations
We have concluded that the assumptions applied in arriving at the fair value of the Group's pub portfolio
were appropriate,
The accounting treatment of the acquisition of the Hawthorn portfolio
Key audit matter
description
The Group completed the acquisition of Hawthorn Leisure Holdings Limited (Hawthorn Leisure) in May 2018
for a consideration of £55.1m. Judgement is required to determine whether the transaction was an
acquisition of a group of assets, or a business combination within the scope of IFRS 3. If identified as a
business combination there is judgement in determining the FV of the assets and liabilities acquired.
The transaction involved the acquisition of all shares in Hawthorn Leisure. This included acquiring
298 pubs under 3 operating models – Lease & Tenanted, Operator managed and Fully managed.
Further to this the Group acquired the management platform and supplier agreements that manage
these pub assets. There is evidence that the transaction involved the acquisition of inputs, processes
and outputs and therefore we agree with management’s assessment that this should be treated as a
business combination. Our focus has therefore been on the determination of the fair value of the assets
and liabilities acquired.
Please see note 1 and 14 to the financial statements and discussion in the report of the Audit Committee
on page 83.
How the scope of
our audit responded
to the key audit
matter
We reviewed and challenged management’s paper on the transaction, which detailed their rationale
for assessing that it represented a business combination. This included assessing whether Hawthorn
represented the acquisition of outputs, inputs and processes as described by IFRS 3 Business
Combinations.
We have reviewed the acquisition balance sheet against the audited balance sheet of Hawthorn at
31 December 2017 and have challenged the fair value adjustments made by management.
We have recalculated and challenged management on the recognition of the gain on bargain purchase.
Key observations
We concur with management’s conclusion to account for the acquisition of Hawthorn as a business
combination and that this is consistent with the principles of IFRS 3 and that the gain on bargain
purchase was appropriately recognised.
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
111
111
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPEN DENT AUDITOR’S REP ORT TO THE M EM BER S O F NE W R IVE R R EIT PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NEWRIVER REIT PLC
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Materiality
£13.4 million (2018: £14.05 million) and a lower
materiality of £2.6 million (2018: £2.6 million) for
balances affecting EPRA earnings.
Basis for determining
materiality
We determined materiality for the Group based
on approximately 1% of total assets (2018: 1% of
total assets).
Rationale for the
benchmark applied
The lower level materiality used for balances
impacting EPRA earnings was determined based
on approximately 5% (2018: 5%) of EPRA earnings.
We determined that total assets would be the
most appropriate basis for determining the overall
materiality given that key users of the Group’s
financial statements are primarily focussed on the
valuation of the Group’s assets; principally the
investment properly portfolio (whether held directly
or through joint ventures).
£13.2 million (2018: £13.91 million)
We determined materiality for the company based
on approximately 1% of total assets (2018: 1%).
Materiality however was capped at 99% of Group
materiality (2018: 99%).
The parent company is primarily a holding company
for investments in subsidiaries of the Group and has
limited trading.
Materiality £13.4m
Audit Committee reporting threshold £0.267m
Total assets £1,337m
Total assets
Group materiality
Materiality £2.6m
EPRA earnings £51m
EPRA earnings
Group materiality
112
112
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £267,000
(2018: £281,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of
the financial statements.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including group-wide controls,
and assessing the risks of material misstatement at the Group level.
We performed a full scope audit to respond to the risks of material misstatement for the Group and performed an audit of specified
account balances for the joint venture entity. Together these elements account for 100% (2018: 100%) of the Group's net assets
and 100% (2018: 100%) of Group’s profit before tax. Our audit work was executed at levels of Group or EPRA earnings materiality
applicable to each account balance.
At the parent entity level we also tested the consolidation process. We have obtained an understanding of the Group’s system
of internal controls and undertaken a combination of procedures, all of which are designed to target the Group’s identified risks
of material misstatement in the most effective manner possible.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
We have nothing to
report in respect of
these matters.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact.
In this context, matters that we are specifically required to report to you as uncorrected material
misstatements of the other information include where we conclude that:
– Fair, balanced and understandable – the statement given by the directors that they consider
the annual report and financial statements taken as a whole is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s position and
performance, business model and strategy, is materially inconsistent with our knowledge obtained
in the audit; or
– Audit committee reporting – the section describing the work of the audit committee does not
appropriately address matters communicated by us to the audit committee; or
– Directors’ statement of compliance with the UK Corporate Governance Code – the parts of the
directors’ statement required under the Listing Rules relating to the Group’s compliance with the
UK Corporate Governance Code containing provisions specified for review by the auditor in
accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant
provision of the UK Corporate Governance Code.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and parent company’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or the parent company or to cease operations, or have no
realistic alternative but to do so.
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
113
113
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPEN DENT AUDITOR’S REP ORT TO THE M EM BER S O F NE W R IVE R R EIT PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NEWRIVER REIT PLC
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Details of the extent to which the audit was considered capable of detecting irregularities, including fraud are set out below.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then
design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate
to provide a basis for our opinion.
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws
and regulations, our procedures included the following:
– enquiring of management and the audit committee, including obtaining and reviewing supporting documentation, concerning
the Group’s policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
– the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulation.
– discussing among the engagement team and involving relevant internal specialists, including tax and property valuation
specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. As part
of this discussion, we identified potential for fraud in the following areas: judgemental areas including the valuation of the
shopping centre, high street, retail warehouse and pub portfolios, the acquisition of the Hawthorn portfolio and through earnings
manipulations including the calculation of KPIs and manipulating results to meet performance targets; and
– obtaining an understanding of the legal and regulatory frameworks that the Group operates in, focusing on those laws and
regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations of the Group.
The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules and tax legislation in
respect of REIT compliance.
Audit response to risks identified
As a result of performing the above, we identified key judgements within the valuation of the shopping centre, high street and retail
warehouse portfolio, including development properties; key judgements within the valuation of the pub portfolio and the
accounting treatment for the acquisition of Hawthorn as key audit matters. The key audit matters section of our report explains the
matters in more detail and also describes the specific procedures we performed in response to those key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws
and regulations discussed above;
– enquiring of management and the audit committee concerning actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
– reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias;
and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws, regulations, and potential fraud risks to all engagement team members including internal
specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
114
114
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course
of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the parent company, or returns adequate
for our audit have not been received from branches not visited by us; or
– the parent company financial statements are not in agreement with the accounting records
and returns.
We have nothing to
report in respect of
these matters.
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
directors’ remuneration have not been made or the part of the directors’ remuneration report to be
audited is not in agreement with the accounting records and returns.
We have nothing to
report in respect of
these matters.
Other matters
Auditor tenure
Following the recommendation of the audit committee, we were appointed by the Board of Directors on 25 May 2010 to audit
the financial statements of NewRiver Retail Limited (the previous parent company of the Group) for the period from incorporation
ending 31 March 2010 and subsequent financial periods. The period of total uninterrupted engagement including previous
renewals and reappointments of the firm is 10 years, covering the period/years ending 31 March 2010 to 31 March 2019.
Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance
with ISAs (UK).
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
David Becker ACA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
St Peter Port, Guernsey
22 May 2019
NewRiver REIT plc Annual Report and Accounts 2019
NewRiver REIT plc Annual Report and Accounts 2019
115
115
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Consolidated Statement of
Comprehensive Income
For the year ended 31 March 2019
Revenue
Property operating expenses
Net property income
Administrative expenses
Acquisition and integration costs
Share of income from joint ventures
Net valuation movement
Profit on disposal of investment properties
Operating (loss) / profit
Gain on bargain purchase
Finance income
Finance costs
Revaluation of derivatives
(Loss) / profit for the year before taxation
Taxation
(Loss) / profit for the year after taxation
(Loss) / earnings per share
Basic (pence)
Diluted (pence)
Operating
and
financing
2019
£m
125.4
(36.4)
89.0
(19.4)
(3.3)
(22.7)
0.8
–
0.9
68.0
–
–
(18.7)
–
49.3
(0.5)
48.8
Fair value
adjustments
2019
£m
–
–
–
–
–
(1.3)
(88.2)
–
(89.5)
7.0
–
–
(3.2)
(85.7)
–
(85.7)
Notes
4
5
6
13
12
7
14
8
8
8
9
10
10
(Loss) / profit for the year after taxation
Other comprehensive income
Revaluation of property, plant and equipment
Total comprehensive (loss) / income for the year
All activities derive from continuing operations of the Group.
The notes on pages 120 to 143 form an integral part of these financial statements.
Operating
and
financing
2018
£m
106.3
(19.2)
87.1
(17.5)
–
(17.5)
2.0
–
4.9
76.5
–
0.1
(16.9)
–
59.7
(1.2)
58.5
Fair value
adjustments
2018
£m
–
–
–
–
–
(0.5)
(12.9)
–
(13.4)
–
–
(3.1)
3.7
(12.8)
–
(12.8)
Total
2019
£m
125.4
(36.4)
89.0
(19.4)
(3.3)
(22.7)
(0.5)
(88.2)
0.9
(21.5)
7.0
–
(18.7)
(3.2)
(36.4)
(0.5)
(36.9)
(12.1)
(12.1)
2019
£m
(36.9)
1.2
(35.7)
Total
2018
£m
106.3
(19.2)
87.1
(17.5)
–
(17.5)
1.5
(12.9)
4.9
63.1
–
0.1
(20.0)
3.7
46.9
(1.2)
45.7
16.0
16.0
2018
£m
45.7
–
45.7
116
NewRiver REIT plc Annual Report and Accounts 2019
Consolidated Balance Sheet
As at 31 March 2019
Non-current assets
Investment properties
Investments in joint ventures
Property, plant and equipment
Derivative financial instruments
Total non-current assets
Current assets
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Current liabilities
Trade and other payables
Current taxation liabilities
Total current liabilities
Non-current liabilities
Derivative financial instruments
Deferred tax liability
Borrowings
Total non-current liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Retained earnings
Total equity
Net Asset Value (NAV) per share (pence)
EPRA
Basic
Diluted
Notes
2019
£m
2018
£m
12
13
15
17
16
17
18
19
17
20
22
22
22
22
10
10
10
1,254.1
7.6
28.1
0.7
1,290.5
19.1
–
27.1
46.2
1,336.7
35.4
0.3
35.7
0.6
1.6
502.7
504.9
796.1
3.1
225.0
(2.3)
570.3
796.1
1,227.2
8.5
1.0
3.3
1,240.0
34.4
0.1
115.8
150.3
1,390.3
38.7
2.1
40.8
0.1
–
457.0
457.1
892.4
3.0
223.3
(2.3)
668.4
892.4
261p
261p
261p
292p
294p
293p
The notes on pages 120 to 143 form an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 22 May 2019 and were signed on its behalf by:
Allan Lockhart
Chief Executive
NewRiver REIT plc
Mark Davies
Chief Financial Officer
Registered number: 10221027
NewRiver REIT plc Annual Report and Accounts 2019
117
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Consolidated Cash Flow
Consolidated Cash Flow
Statement
Statement
For the year ended 31 March 2019
For the year ended 31 March 2019
Cash flows from operating activities
Cash flows from operating activities
(Loss) / profit for the year before taxation
(Loss) / profit for the year before taxation
Adjustments for:
Adjustments for:
Profit on disposal of investment property
Profit on disposal of investment property
Gain on bargain purchase
Gain on bargain purchase
Net valuation movement
Net valuation movement
Net valuation movement in joint ventures
Net valuation movement in joint ventures
Share of income from joint ventures
Share of income from joint ventures
Net interest expense
Net interest expense
Rent free lease incentives
Rent free lease incentives
Movement in provision for bad debts
Movement in provision for bad debts
Amortisation of legal and letting fees
Amortisation of legal and letting fees
Depreciation on property plant and equipment
Depreciation on property plant and equipment
Share based-payment expense
Share based-payment expense
Net movement from fair value of derivatives
Net movement from fair value of derivatives
Cash generated from operations before changes in working capital
Cash generated from operations before changes in working capital
Changes in working capital
Changes in working capital
Increase in receivables and other financial assets
Increase in receivables and other financial assets
Decrease in payables and other financial liabilities
Decrease in payables and other financial liabilities
Cash generated from operations
Cash generated from operations
Interest paid
Interest paid
Corporation tax paid
Corporation tax paid
Dividends received from joint ventures
Dividends received from joint ventures
Net cash inflow from operating activities
Net cash inflow from operating activities
Cash flows from investing activities
Cash flows from investing activities
Interest income
Interest income
Purchase of investment properties
Purchase of investment properties
Business combinations
Business combinations
Disposal of investment properties
Disposal of investment properties
Development and other capital expenditure
Development and other capital expenditure
Purchase of plant and equipment
Purchase of plant and equipment
Net cash used in investing activities
Net cash used in investing activities
Cash flows from financing activities
Cash flows from financing activities
Proceeds from issuance of new shares
Proceeds from issuance of new shares
Repayment of bank loans
Repayment of bank loans
New borrowings
New borrowings
Purchase of derivatives
Purchase of derivatives
Dividends paid – ordinary
Dividends paid – ordinary
Net cash (used in)/generated from financing activities
Net cash (used in)/generated from financing activities
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at beginning of the year
Net (decrease)/increase in cash and cash equivalents
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 31 March
Cash and cash equivalents at 31 March
The notes on pages 120 to 143 form an integral part of these financial statements.
The notes on pages 120 to 143 form an integral part of these financial statements.
118
NewRiver REIT plc Annual Report and Accounts 2019
2019
2019
£m
£m
2018
2018
£m
£m
(36.4)
(36.4)
46.9
46.9
(0.9)
(0.9)
(7.0)
(7.0)
88.2
88.2
1.3
1.3
(0.8)
(0.8)
18.7
18.7
(2.1)
(2.1)
0.6
0.6
0.3
0.3
1.0
1.0
2.5
2.5
3.2
3.2
68.6
68.6
(4.7)
(4.7)
(10.3)
(10.3)
53.6
53.6
(16.3)
(16.3)
(2.1)
(2.1)
0.4
0.4
35.6
35.6
–
–
(51.5)
(51.5)
(46.7)
(46.7)
78.7
78.7
(24.6)
(24.6)
(0.7)
(0.7)
(44.8)
(44.8)
–
–
(78.6)
(78.6)
62.4
62.4
(0.2)
(0.2)
(63.1)
(63.1)
(79.5)
(79.5)
115.8
115.8
(88.7)
(88.7)
27.1
27.1
(4.9)
(4.9)
(3.0)
(3.0)
12.9
12.9
0.5
0.5
(2.0)
(2.0)
19.9
19.9
(3.4)
(3.4)
0.1
0.1
0.3
0.3
0.3
0.3
2.6
2.6
(3.7)
(3.7)
66.5
66.5
(10.6)
(10.6)
(1.2)
(1.2)
54.7
54.7
(15.1)
(15.1)
(0.3)
(0.3)
2.3
2.3
41.6
41.6
0.1
0.1
(31.2)
(31.2)
(53.6)
(53.6)
44.2
44.2
(17.3)
(17.3)
(1.0)
(1.0)
(58.8)
(58.8)
222.3
222.3
(577.5)
(577.5)
506.2
506.2
(1.9)
(1.9)
(62.1)
(62.1)
87.0
87.0
46.0
46.0
69.8
69.8
115.8
115.8
Consolidated Statement of
Changes in Equity
As at 31 March 2019
As at 31 March 2017
Profit for the year after taxation
Total comprehensive income for the year
Transactions with equity holders
Net proceeds of issue from new shares
Cost of issue of new shares
Share-based payments
Dividends paid
As at 31 March 2018
Loss for the year after taxation
Revaluation of property, plant and equipment
Total comprehensive loss for the period
Transactions with equity holders
Net proceeds from issue of shares
Share-based payments
Dividends paid
As at 31 March 2019
Notes
22
23
11
15
22
11
Share
capital
£m
2.3
–
–
Share
premium
£m
1.7
–
–
Merger
reserve
£m
(2.3)
–
–
Retained
earnings
£m
682.8
45.7
45.7
0.7
–
–
–
3.0
–
–
–
0.1
–
–
3.1
227.2
(5.6)
–
–
223.3
–
–
–
1.7
–
–
225.0
–
–
–
–
(2.3)
–
–
–
–
–
–
(2.3)
–
–
2.6
(62.7)
668.4
(36.9)
1.2
(35.7)
–
2.5
(64.9)
570.3
Total
£m
684.5
45.7
45.7
227.9
(5.6)
2.6
(62.7)
892.4
(36.9)
1.2
(35.7)
1.8
2.5
(64.9)
796.1
The notes on pages 120 to 143 form an integral part of these financial statements.
NewRiver REIT plc Annual Report and Accounts 2019
119
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Notes to the Financial
Statements
1. Accounting policies
General information
NewRiver REIT plc (the ‘Company’) and its subsidiaries (together the ‘Group’) is a property investment Group specialising in
commercial real estate in the UK.
These consolidated financial statements have been approved for issue by the Board of Directors on 22 May 2019.
Going concern
The Directors of NewRiver REIT plc have reviewed the current and projected financial position of the Group making reasonable
assumptions about future trading and performance. The key areas reviewed were:
– Value of investment property
– Timing of property transactions
– Capital expenditure and tenant incentives
– Rental income
– Loan covenants
– Capital and debt funding
The Group has cash and short-term deposits, significant undrawn borrowing facilities, as well as profitable rental income streams
and as a consequence the Directors believe the Group is well placed to manage its business risks. The Group is currently well
within the prescribed financial covenants on its borrowing facilities.
After making enquiries and examining major areas which could give rise to significant financial exposure and assessing possible
sensitivities, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue its
operations for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparation of these
consolidated financial statements.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented.
Basis of preparation
Statement of compliance
These financial statements have been prepared on a going concern basis and in accordance with International Financial Reporting
Standards, as adopted by the European Union (‘IFRS’), therefore the Group financial statements comply with Article 4 of the EU IAS
Regulation. The financial statements are presented in pounds Sterling. 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
and derivatives which are stated at fair value.
Cash flow statement
The Group has reported the cash flows from operating activities using the indirect method. Interest received is presented within
investing cash flows; interest paid is presented within operating cash flows. The acquisitions of investment properties are disclosed
as cash flows from investing activities because this most appropriately reflects the Group’s business activities.
Preparation of the consolidated financial statements
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries controlled by the
Company, made up to 31 March each year. Control is achieved when the Company is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the investee.
Changes in accounting policy and disclosures
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Standards
that have been issued but are not yet effective and, in some cases, have not yet been adopted by the EU:
– IFRS 16 Leases
– IFRS 17 Insurance contracts
– Amendments to IFRS 9 Prepayment Features with Negative Compensation
– Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
– Annual Improvements to IFRS Standards 2015 – 2017 Cycle Amendments to IFRS 3 Business Combinations, IFRS 11 Joint
Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs
– Amendments to IAS 19 Employee benefits
– IFRS 10 Consolidated Financial Statements and IAS 28 Sale or Contribution of Assets between an investor and its Associate or
Joint Venture
– IFRIC 23 Uncertainty over Income Tax Treatments
120
NewRiver REIT plc Annual Report and Accounts 2019
IFRS 9 Financial Instruments (became effective 1 January 2018)
IFRS 9 replaces IAS 39 Financial Instrument: Recognition and Measurement and introduces a single model that has initially only two
classification categories rather than the multiple classification and measurement models in the previous standard. The new models
are amortised at cost and fair value.
Due to the nature of the Group’s financial instruments, the adoption of IFRS 9 does not have a material impact on the Group’s
consolidated results or financial position and does not require there to be a restatement of comparative figures.
The fair value of each category of the Group’s financial instruments approximates to their carrying value other than the Group’s
debt instruments, the fair value of which are disclosed in the accounts. Where financial assets and liabilities are measured at fair
value the measurement hierarchy, valuation techniques and inputs used are consistent with those used at 31 March 2018.
Having considered the requirements of IFRS 9, under section 5.5.15(b), the Directors have chosen to apply the simplified approach
when considering the Expected Credit Loss (“ECL”) model when determining the expectations of impairment. Under the simplified
approach the Company is always required to measure lifetime expected losses.
Given the nature of the Group’s receivables and counterparties, the Directors do not consider any to be impaired. The Directors
believe that the majority of receivables are fully recoverable and therefore there is no material ECL to recognise. The probability of
credit loss is immeasurably small.
IFRS 15 Revenue from Contracts with Customers (became effective 1 January 2018)
The new revenue recognition model under which IFRS 15 operates recognises revenue either at a point in time or over time.
The new standard combines a number of previous standards, setting out a five step model for the recognition of revenue and
establishing principles for reporting useful information to users of financial statements about the nature, timing and uncertainty of
revenue and cash flows arising from an entity’s contracts with customers. The new standard does not apply to rental income, which
is in the scope of IAS 17, but does apply to service charge income, asset management and promote fees and wet and dry income
from pubs. The changes introduced by IFRS 15 will result in minimal qualitative changes to revenue disclosure and will not have a
quantitative impact on the consolidated financial statements of the Group.
IFRS 16 Leases (effective 1 January 2019)
This standard requires lessees to recognise a right-of-use asset and related lease liability representing the obligation to make lease
payments. Interest expense on the lease liability and depreciation on the right-of-use asset will be recognised in the statement of
comprehensive income. The Group is undertaking detailed analysis of the impact of IFRS 16 and expects there to be an impact of a
c£80million right of use asset and resultant liability, particularly in respect of ground rent obligations payable by the Group.
Judgement is required to determine the discount rate applicable to the Group to discount the cash flows of the right-of-use asset.
3.2% was used to estimate the potential impact which is the Group’s weighted average cost of debt.
There are no other standards or Interpretations yet to be effective that would be expected to have a material impact on the
financial statements of the Group.
Business combinations
The Group applies the acquisition method to account for business combinations. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of completion, of assets given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquired. The acquiree’s identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS are recognised at their fair value at the acquisition. Where the fair value of the
consideration is less than the fair value of the identifiable assets and liabilities then the difference is recognised as a bargain
purchase in the statement of comprehensive income.
Where properties are acquired through corporate acquisitions, each transaction is considered by management in light of the
substance of the acquisition to determine whether the acquisition is a business combination or an asset acquisition.
Joint ventures
Interests in joint ventures are accounted for using the equity method of accounting. The Group’s joint ventures are entities over
which the Group has joint control with a partner. Investments in joint ventures are carried in the balance sheet at cost as adjusted
by post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment or share of income
adjusted for dividends. In assessing whether a particular entity is controlled, the Group considers all of the contractual terms of the
arrangement, whether it has the power to govern the financial and operating policies of the joint venture so as to obtain benefits
from its activities, and the existence of any legal disputes or challenges to this control in order to conclude whether the Group
controls the joint venture.
Investment property
Property held to earn rentals or for capital appreciation, or both, is classified as investment property. Investment property comprises
both freehold and leasehold land and buildings.
Investment property is recognised as an asset when:
– It is probable that the future economic benefits that are associated with the investment property will flow to the Company;
– There are no material conditions precedent which could prevent completion; and
– The cost of the investment property can be measured reliably.
NewRiver REIT plc Annual Report and Accounts 2019
121
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies continued
Investment property is measured initially at its cost, including transaction costs. After initial recognition, investment property is
carried at fair value. Additions to properties include costs of capital nature only. Expenditure is classified as capital when it results in
future economic benefits which are expected to accrue to the Group. All other property expenditure is written-off in the Statement
of Comprehensive Income as it is incurred. Premiums payable to tenants in connection with the surrender of their lease obligations
are capitalised if they arise in connection with a value-enhancing project, otherwise they are recognised immediately in the
Statement of Comprehensive Income.
Gains or losses arising from changes in the fair value of investment property are included in the Statement of Comprehensive
Income in the period in which they arise.
When the Group begins to redevelop an investment property for continued future use as an investment property, the property
remains an investment property.
Investment property is derecognised when the risk and rewards of the property is transferred to the purchaser. Gains or losses on
the sale of properties are calculated by reference to the carrying value at the end of the previous year, adjusted for subsequent
capital expenditure.
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. The costs of properties in
the course of development includes attributable interest and other associated outgoings including attributable development
personnel costs.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is
recognised over the useful lives of the equipment, using the straight-line method at a rate of between 10% to 25% depending on
the useful life.
Public houses are initially measured at cost and subsequently measured at valuation, net of depreciation and any impairment
losses. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives
on the following bases:
– Buildings 4% on a straight line-basis or the lease term if shorter
– Fixtures and fittings 20% on a straight line-basis depending on the useful life
– IT 33% on a straight line-basis
– Freehold land and assets in the course of construction are not depreciated.
Residual value is reviewed at least at each financial year and there is no depreciable amount if residual value is the same as, or
exceeds, book value.
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying
amount of the asset.
Operating leases
As lessor
The cost of securing an operating lease are capitalised within the carrying amount of the related investment property and
amortised over the lease term. Revenue from operating leases is recognised as per the revenue recognition policy.
As lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified
as operating leases. Payments including prepayments, made under operating leases (net of any incentives received from the
lessor) are charged to statement of comprehensive income on a straight-line basis over the period of the lease.
Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less which are
readily accessible.
Financial instruments
Financial assets
Financial assets are classified as financial assets at fair value through profit or loss or loans and receivables as appropriate. The
Group determines the classification of its financial assets at initial recognition. Financial assets are recognised upon becoming party
to the contractual terms and are initially measured at fair value plus, in the case of investments not at fair value through profit or
loss, directly attributable transaction costs. The fair value of a non-interest bearing asset is its discounted receivable amount. If the
due date of the asset is less than one year, discounting is omitted.
The Group’s financial assets consist of cash, loans and receivables and derivative instruments.
The financial instruments classified as financial assets at fair value through profit or loss include interest rate swap and cap
arrangements. Recognition of the derivative financial instruments takes place when the hedging contracts are entered into.
They are recognised at fair value and transaction costs are included directly in finance costs.
122
NewRiver REIT plc Annual Report and Accounts 2019
The fair values of derivative financial assets and financial liabilities are determined as follows:
Interest rate swaps and caps are measured using the midpoint of the yield curve prevailing on the reporting date. The valuations do
not include accrued interest from the previous settlement date to the reporting date. The fair value represents the net present
value of the difference 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.
Financial assets are derecognised only when the contractual rights to the cash flows from the financial asset expire or the Group
transfers substantially all risks and rewards of ownership.
The Group assesses at each financial position date whether there is objective evidence that a financial asset or group of financial
assets is impaired. If there is objective evidence (such as significant financial difficulty of the obligor, breach of contract, or it
becomes probable that the debtor will enter bankruptcy), the asset is tested for impairment. The amount of the loss is measured as
the difference between the asset’s carrying amount and the present value of the estimated future cash flows (that is the effective
interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account.
The amount of the loss is recognised in the Statement of Comprehensive Income.
Trade receivables are carried at amortised cost less a loss allowance where there is objective evidence (such as the probability of
insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the
original terms. Impaired debts are derecognised when they are assessed as uncollectible. A loss allowance is measured at an
amount equal to the lifetime ECL at initial recognition and throughout its life.
If in a subsequent period the amount of the impairment loss decreased and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the
carrying value of the asset does not exceed its amortised costs at the reversal date.
Financial liabilities
Financial liabilities are classified at fair value through profit or loss or as other liabilities. A financial liability is derecognised when the
obligation under the liability is discharged or cancelled or expires.
All loans and borrowings are classified as other liabilities. Initial recognition is at fair value less directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised costs using the effective
interest method.
Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost.
The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date of the liability is less than one
year, discounting is omitted.
Share capital
Shares are classified as equity when there is no obligation to transfer cash or other assets. The cost of issuing share capital is
recognised directly in equity against the proceeds from the share capital.
Taxation
Income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the
balance sheet. Tax is recognised in the Statement of Comprehensive Income.
Deferred tax
Any deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates that are expected to apply in the period when the liability is settled or the asset is realised. A deferred
tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can
be utilised.
Value added tax
Revenues, expenses and assets are recognised net of the amount of value added tax except:
– Where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority,
in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item
as applicable; and
– Receivables and payables that are stated with the amount of value added tax included. The net amount of value added tax
recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Share-based payments
The cost of equity settled transactions is measured with reference to the fair value at the date at which they were granted.
Where vesting performance conditions are non-market based, the fair value excludes the effect of these vesting conditions and
an estimate is made at each balance sheet date of the number of instruments expected to vest. The fair value is recognised over
the vesting period in the Statement of Comprehensive Income, with a corresponding increase in equity. Any change to the number
of instruments with non-market vesting conditions expected to vest is recognised in the Statement of Comprehensive Income for
that period.
NewRiver REIT plc Annual Report and Accounts 2019
123
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies continued
Employee Benefit Trust
The Group operates an Employee Benefit Trust for the exclusive benefit of the Group’s employees. The investment in the
Company’s shares held by the trust is recognised at cost and deducted from equity. No gain or loss is recognised in the statement
of comprehensive income on the purchase, sale, issue or cancellation of the shares held by the trust.
Revenue recognition
Rental income
Rental income from fixed and minimum guaranteed rent reviews is recognised on a straight-line basis over the entire lease term.
Where such rental income is recognised ahead of the related cash flow, an adjustment is made to ensure the carrying value of the
related property including the accrued rent does not exceed the external valuation. Initial direct costs incurred in negotiating and
arranging a new lease are amortised on a straight-line basis over the period from the date of lease commencement to the expiry
date of the lease.
Where a rent-free period is included in a lease, the rental income foregone is allocated evenly over the period from the date of
lease commencement to the expiry date of the lease.
Where a lease incentive payment, or surrender premiums are paid to enhance the value of a property, it is amortised on a straight-
line basis over the period from the date of lease commencement to the expiry date of the lease. It is management’s policy to
recognise all material lease incentives and lease incentives greater than six months. Upon receipt of a surrender premium for the
early determination of a lease, the profit, net of dilapidations and non-recoverable outgoings relating to the lease concerned, is
immediately reflected in income.
In the Group’s pub business, revenue is measured at the fair value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-
related taxes.
Asset management fees
Management fees are recognised in the Statement of Comprehensive Income as the services are delivered.
Promote payments
The Group is contractually entitled to receive a promote payment should the returns from a joint venture to the joint venture partner
exceed a certain internal rate of return. This payment is only receivable by the Group on disposal of underlying properties held by
the joint venture or other termination events. Any entitlements under these arrangements are only accrued for in the financial
statements once the Group believes that crystallisation of the fee is virtually certain.
Dividends
Dividends to the Company’s shareholders are recognised when they become legally payable. In the case of interim dividends, this
is when paid. In the case of final dividends, this is when approved by equity holders.
Finance income and costs
Finance income and costs are recognised using the effective interest rate method. The effective interest method is a method of
calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the
financial asset or financial liability.
Service charge income and expense
Service charge income is recognised in the accounting period in which the services are rendered and the related property
expenses are recognised in the period in which they are incurred.
124
NewRiver REIT plc Annual Report and Accounts 2019
2. Critical accounting judgements and estimates
The preparation of financial statements requires management to make estimates affecting the reported amounts of assets and
liabilities, of revenues and expenses, and of gains and losses. The key assumptions concerning the future, and other key sources
of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year, are discussed below. Estimates and judgements are
continually evaluated and are based on historical experience as adjusted for current market conditions and other factors.
Critical accounting judgements
Business Combinations
Management must assess whether the acquisition of property through the purchase of a corporate vehicle should be accounted
for as an asset purchase or a business combination. Management exercise judgement to determine whether the assets and
liabilities acquired contains processes and inputs in addition to property. On 25 May 2018, the Group acquired Hawthorn Leisure
Holdings Limited (‘Hawthorn Leisure’) (see note 14). It was determined that a business had been acquired and as such the
transaction would be accounted for as a business combination under IFRS 3.
Business combinations are accounted for using the acquisition method and any excess of the purchase consideration over the fair
value of the net assets acquired is recognised as goodwill and if the fair value of the net asset assets is deemed to be higher than
the purchase consideration then this is recognised as a bargain purchase.
Operating segments
Following the acquisition of Hawthorn Leisure in May 2018, the Group’s operations are organised into two operating segments,
being investment in retail property and in pubs. The retail investments comprise shopping centres, retail warehouses and high
street stores. The pub investments consist of over 650 community public houses. The Board reviews the results of the pub and
retail businesses separately and discrete financial information is provided to the Board. The Group’s assets and revenue have been
shown as two separate operating segments in note 3.
Pub classification
The Group’s strategic aim is to hold all of its property for capital appreciation and income, regardless of the asset type and
operating model. The Group operates pubs under three operating models; leased, operator managed and fully managed.
Management have concluded that the most appropriate classification is investment property for the leased model as the Group
earns rental income from these properties and, whilst it may in some cases earn a margin on beverage sales to the pub, it does not
retain the risks and rewards associated with operating these pubs. The fully managed and operator managed pubs have been
classified as property, plant and equipment as the Group directly and indirectly manages those pubs and retains all the risks and
rewards from trading.
Sources of estimation uncertainty
As noted above, the Group’s investment properties are stated at fair value. The assumptions and estimates used to value the
properties are detailed in note 12. Small changes in the key estimates, such as the estimated future rental income, can have a
significant impact on the valuation of the investment properties, and therefore a significant impact on the balance sheet and key
performances measures such as Net Asset Value per share. Certain estimates require an assessment of factors not within
management’s control, such as overall market conditions.
Rents, ERVs, EBITDA multiples and maintainable earnings have a direct relationship to valuation, while yield has an inverse
relationship. Estimated costs of a development project will inversely affect the valuation of development properties. There are
interrelationships between all these unobservable inputs as they are determined by market conditions. The existence of an increase in
more than one unobservable input could be to magnify the impact on the valuation. The impact on the valuation will be mitigated by
the interrelationship of two unobservable inputs moving in directions which have an opposite impact on value e.g. an increase in rent
may be offset by an increase in yield, resulting in no net impact on the valuation, see note 12 for sensitivity analysis.
The estimated fair value may differ from the price at which the Group’s assets could be sold. Actual realisation of net assets could
differ from the valuation used in these financial statements, and the difference could be significant.
NewRiver REIT plc Annual Report and Accounts 2019
125
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
3. Segmental reporting
Following the acquisition of Hawthorn Leisure in May 2018, the Group’s operations are organised into two operating segments,
being investment in retail property and in pubs. The retail investments comprise shopping centres, retail warehouses and high
street stores. The pub investments consist of over 650 community public houses. All of the Group’s operations are in the UK and
therefore no geographical segments have been identified.
The relevant revenue, net rental income and property and other assets, being the measures of segment revenue, segment result
and segment assets used by the management of the business, are set out below. The results include the Group’s share of assets
and results from properties held in joint ventures.
2019
2018
Segment revenues and result
Property rental and related income
Asset management fees
Realised gain received from joint venture
Surrender premiums and commissions
Segment revenue
Service charge expense
Amortisation of tenant incentives and letting costs
Ground rent
Rates
Pub operating expenses
Other property operating expenses
Property operating expenses
Net property income (segment result)
Administrative expenses
Unallocated property rental provision
Net valuation movement
Profit on disposal of investment properties
Finance income
Finance costs
Gain on bargain purchase
Revaluation of derivatives
Taxation
(Loss) / profit for the year after taxation
Retail
£m
81.0
0.3
–
3.3
84.6
(4.4)
(1.3)
(2.9)
(2.3)
–
(5.1)
(16.0)
68.6
Pubs
£m
42.0
–
–
0.5
42.5
–
(0.5)
–
(0.7)
(15.3)
(4.1)
(20.6)
21.9
Group
£m
123.0
0.3
–
3.8
127.1
(4.4)
(1.8)
(2.9)
(3.0)
(15.3)
(9.2)
(36.6)
90.5
(22.9)
(0.9)
(89.5)
1.3
–
(18.7)
7.0
(3.2)
(0.5)
(36.9)
Retail
£m
81.0
0.4
2.2
6.4
90.0
(4.9)
(1.1)
(3.0)
(2.6)
–
(4.0)
(15.6)
74.4
Pubs
£m
15.3
–
–
1.7
17.0
–
(0.4)
–
–
(1.4)
(2.5)
(4.3)
12.7
Group
£m
96.3
0.4
2.2
8.1
107.0
(4.9)
(1.5)
(3.0)
(2.6)
(1.4)
(6.5)
(19.9)
87.1
(17.8)
–
(13.4)
4.8
0.1
(20.6)
3.0
3.7
(1.2)
45.7
Segment assets
Non-current assets
Investment properties
Investments in joint ventures
Public houses
Property, plant and equipment
Other non-current assets
Total non-current assets
Current assets
Trade and other receivables
Other current assets and cash
Total current assets
Segment assets
2019
2018
Retail
£m
Pubs
£m
Unallocated
£m
Total
£m
Retail
£m
Pubs
£m
Unallocated
£m
Total
£m
987.0
7.6
–
–
–
267.1
–
26.9
0.4
–
12.7
–
6.4
–
–
–
–
0.8
0.7
–
27.1
1,007.3
300.8
28.6
1,254.1
7.6
26.9
1.2
0.7
1,290.5
19.1
27.1
46.2
1,336.7
1,047.9
8.5
–
–
–
179.3
–
–
–
–
–
–
–
1.0
3.3
29.6
–
4.9
–
–
115.8
1,086.0
184.2
120.1
1,227.2
8.5
–
1.0
3.3
1,240.0
34.5
115.8
150.3
1,390.3
126
NewRiver REIT plc Annual Report and Accounts 2019
4. Revenue
Retail property rental and related income
Pub property rental and related income
Asset management fees
Realised gain received from joint venture
Surrender premiums and commissions
5. Property operating expenses
Service charge expense
Amortisation of tenant incentives and letting costs
Ground rent
Rates
Pub operating expenses
Other property operating expenses
2019
£m
79.3
42.0
0.3
–
3.8
125.4
2019
£m
4.4
1.8
2.9
2.9
15.3
9.1
36.4
Property and pub operating expenses have increased year on year principally due to the acquisition of Hawthorn Leisure.
6. Administrative expenses
Wages and salaries
Social security costs
Other pension costs
Staff costs
Depreciation
Share-based payments
Operating lease payments
Other administrative expenses
Professional fees in relation to the acquisition of Hawthorn Leisure
Administrative expenses
2019
£m
7.8
1.9
0.3
10.0
1.0
2.5
0.3
5.6
19.4
3.3
22.7
2018
£m
77.3
15.3
0.4
5.2
8.1
106.3
2018
£m
4.9
1.4
2.8
2.5
1.4
6.2
19.2
2018
£m
7.6
1.9
0.1
9.6
0.3
2.6
0.1
4.9
17.5
–
17.5
NewRiver REIT plc Annual Report and Accounts 2019
127
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
6. Administrative expenses continued
Net administrative expenses ratio is calculated as follows:
Administrative expenses
Asset management fees
Share of joint ventures’ administrative expenses
Less share-based payments
Less depreciation of public houses
Less acquisition and integration costs
Group’s share of net administrative expenses
Retail property rental and related income
Pub property rental and related income
Realised gain received from joint ventures
Less gain on bargain purchase
Share of joint ventures’ property income
Net administrative expenses as a % of property income (including share of joint ventures)
Number of staff
Directors
Operations and asset managers
Pubs
Support functions
Auditor’s remuneration
Audit of the Company’s financial statements
Audit of subsidiaries, pursuant to legislation
Audit related assurance services
Non-audit fees
Total fees
2019
£m
22.7
(0.3)
0.1
(2.5)
(0.8)
(3.3)
15.9
79.3
42.0
–
–
0.9
122.2
13.1%
7
34
53
55
149
2019
£’000
126
235
35
396
–
396
2018
£m
17.5
(0.4)
0.3
(2.6)
–
–
14.8
77.3
15.3
5.2
(3.0)
3.7
98.5
15.0%
7
23
–
26
56
2018
£’000
155
138
35
328
188
516
Non-audit fees payable to the Company’s auditor in the prior year are for reporting accountant services in relation to the corporate
bond and the prospectus required for the equity raise.
7. Profit on disposal of investment properties
Gross disposal proceeds
Legal fees in relation to disposals
Fair value of investment property at disposal
Profit on disposal of investment properties
2019
£m
62.5
(0.9)
(60.7)
0.9
2018
£m
57.8
(1.0)
(51.9)
4.9
128
NewRiver REIT plc Annual Report and Accounts 2019
2019
£m
–
(18.7)
–
–
(18.7)
2018
£m
0.1
(14.7)
(2.2)
(3.1)
(20.0)
(3.2)
(21.9)
3.7
(16.3)
2019
£m
1.2
(0.7)
0.5
2018
£m
1.2
–
1.2
2018
£m
46.9
8.9
2.6
0.1
(10.4)
–
–
1.2
8. Finance income and expense
Finance income
Income from cash and short-term deposits
Finance expense
Interest on borrowings
Early redemption fees and associated costs
Write off of unamortised fees
Revaluation of derivatives
Revaluation of derivatives
Net finance expense
9. Taxation
UK Corporation Tax at 19% (2018: 19%)
Current year
Prior year
Taxation
The charge for the year can be reconciled to the loss per the consolidated statement of comprehensive income follows:
(Loss) / profit before tax
Tax at the current rate of 19% (2018: 19%)
Revaluation of property
Other timing differences
Non-taxable profit due to REIT regime
Other
Prior year adjustment
Taxation
2019
£m
(36.4)
(6.9)
16.7
2.8
(10.5)
(0.9)
(0.7)
0.5
As at 31 March 2019, the Group has unrecognised tax losses of £9.0 million (March 2018: £1.0 million). The losses have not been
recognised as an asset due to uncertainty over the availability of taxable income to utilise the losses. The losses do not expire but
are reliant on continuity of ownership and source of trade.
Real Estate Investment Trust regime (REIT regime)
The Group is a member of the REIT regime whereby profits from its UK property rental business are tax exempt. The REIT regime
only applies to certain property-related profits and has several criteria which have to be met. The main criteria are:
– the assets of the property rental business must be at least 75% of the Group’s assets;
– the profit from the tax-exempt property rental business must exceed 75% of the Group’s total profit;
– at least 90% of the Group’s profit from the property rental business must be paid as dividends.
The Group continues to meet these conditions and management intends that the Group should continue as a REIT for the
foreseeable future.
10. Performance measures
The Group’s key performance measure is ‘Funds from Operations’ or ‘FFO’. This performance measure is intended to measure the
underlying profitability of the Group and as such includes realised cash gains on disposals and adds back expense recognised for
non-cash share-based payment, unrealised gains/losses and the one-off cost in respect of the costs to refinance debt and in the
prior year cost of the move to the main market. The measure is not intended to replace the cash measures disclosed in the cash
flow statement. ‘Underling Funds From Operations’ or ‘UFFO’ removes the volatility caused the inclusion in profits or losses on the
sale of properties.
NewRiver REIT plc Annual Report and Accounts 2019
129
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
10. Performance measures continued
The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in 2014 and additional
guidance in 2016, which gives recommendations for performance measures. The EPRA earnings measure excludes investment
property revaluations and gains on disposals, intangible asset movements and their related taxation.
A reconciliation of the performance measures to the nearest IFRS measure is below:
(Loss) / profit for the year after taxation
Adjustments
Revaluation of investment properties
Profit on disposal of investment properties
Revaluation of derivatives
Gain on bargain purchase
Refinance costs – write off of unamortised fees1
Refinance costs – early redemption and associated fees1
Acquisition costs2
2019
£m
(36.9)
88.2
(0.9)
3.2
(7.0)
–
–
3.0
2018
£m
45.7
12.9
(4.9)
(3.7)
(3.0)
3.1
2.2
–
Group’s share of joint ventures’ adjustments
Revaluation of investment properties
(Profit) / loss on disposal of investment properties
EPRA earnings
Share-based payment charge
Depreciation on public houses3
Integration costs2
Underlying Funds From Operations (FFO)
Profit on disposal of investment properties
Share of joint ventures’ profit on disposal
Funds From Operations (FFO)
1. The Group recognised an expense of £3.1 million in relation to writing off unamortised fees and £2.2 million of early redemption and associated fees following early
1.3
(0.4)
50.5
2.5
0.8
1.3
55.1
0.9
0.4
56.4
0.5
0.1
52.9
2.6
–
–
55.5
4.9
(0.1)
60.3
repayment of certain borrowings. See note 20
2. Acquisition and integration costs relate to the acquisition of Hawthorn Leisure. See note 14
3. Depreciation of the Group’s public houses of £0.8 million has been recognised in the Consolidated Statement of Comprehensive Income. See note 15
Number of shares
Number of shares
Weighted average number of ordinary shares for the purposes of Basic EPS, FFO, UFFO and EPRA
Effect of dilutive potential ordinary shares:
Share options
Deferred bonus shares
Performance share plan
Warrants
Weighted average number of ordinary shares for the purposes of diluted EPS, FFO, UFFO and EPRA
Performance measures (pence)
IFRS
Basic EPS
Diluted EPS
FFO
FFO per share
Diluted FFO per share
UFFO
UFFO per share
Diluted UFFO per share
EPRA
EPRA EPS
Diluted EPRA EPS
130
NewRiver REIT plc Annual Report and Accounts 2019
2019
No. m
304.0
–
0.3
–
0.2
304.5
(12.1)
(12.1)
18.5
18.5
18.1
18.1
16.6
16.6
2018
No. m
285.0
0.1
0.3
0.5
0.2
286.1
16.0
16.0
21.2
21.1
19.5
19.4
18.6
18.5
EPRA NAV per share and Basic NAV per share:
Net assets
Warrants in issue
Unexercised employee awards
Diluted net assets
Fair value derivatives
Deferred tax
EPRA net assets
11. Dividends
2019
Ordinary dividends payment date
25 May 2018
27 July 2018
16 November 2018
24 January 2019
2018
Special dividends payment date
4 August 2017
Ordinary dividends payment date
11 May 2017
4 August 2017
1 November 2017
9 February 2018
Dividend per statement of changes in equity
Timing on withholding tax
Less scrip dividends
Dividends paid per the cash flow statement
2019
Shares
m
304.8
0.3
0.9
306.0
–
–
306.0
Pence per
share
261p
261p
261p
£m
796.1
0.4
1.3
797.8
(0.1)
1.6
799.3
2018
Shares
m
303.7
0.3
1.2
305.2
–
–
305.2
£m
892.4
0.5
1.3
894.2
(3.3)
–
890.9
PID
Non-PID
Pence per
share
Pence per
share
294p
293p
292p
£m
15.8
16.4
16.4
16.3
64.9
5.25
5.40
5.40
5.40
21.45
3.00
7.0
5.00
5.25
5.25
5.25
23.75
2019
£m
64.9
(0.1)
(1.7)
63.1
11.7
12.3
15.9
15.8
62.7
2018
£m
62.7
(0.3)
(0.3)
62.1
5.25
5.40
5.40
5.40
21.45
3.00
5.00
5.25
5.25
5.25
23.75
–
–
–
–
–
–
–
–
–
–
–
A fourth interim of 5.4 pence per share (£16.5m) was approved by the Board on 19 March 2019 and will be paid on 24 May 2019 to
the shareholders on the register on 23 April.
NewRiver REIT plc Annual Report and Accounts 2019
131
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
12. Investment properties
Fair value brought forward
Acquisitions
Capital expenditure
Properties acquired in business combinations
Lease incentives, letting and legal costs
Reclassification to plant property and equipment
Disposals
Net valuation movement
Fair value carried forward
2019
£m
1,227.2
49.9
23.7
100.2
2.7
(1.3)
(60.7)
(87.6)
1,254.1
2018
£m
995.9
31.2
16.4
244.7
3.7
–
(51.8)
(12.9)
1,227.2
The Group’s investment properties have been valued at fair value on 31 March 2019 by independent valuers, Colliers International
Valuation UK LLP and Knight Frank LLP, on the basis of fair value in accordance with the Current Practice Statements contained in
The Royal Institution of Chartered Surveyors Valuation – Professional Standards, (the ‘Red Book’). The valuations are performed by
appropriately qualified valuers who have relevant and recent experience in the sector.
Reconciliation of net valuation movement in consolidated statement of comprehensive income:
Net valuation movement in investment properties
Net valuation movement in property, plant and equipment
Net valuation movement in consolidated statement of comprehensive income
The fair value at 2019 represents the highest and best use.
2019
£m
(87.6)
(0.6)
(88.2)
2018
£m
(12.9)
–
(12.9)
The properties are categorised as Level 3 in the IFRS 13 fair value hierarchy. There were no transfers of property between Levels 1,
2 and 3. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
Information about fair value measurements for the investment property and public houses using significant unobservable inputs
(Level 3)
Shopping centres
High street
Retail warehouse
Development sites
Fair value
(£m)
734.8
16.7
164.8
70.7
987.0
Property ERV
Property rent
Min
£ per sq ft
7.7
4.0
8.0
6.0
Max
£ per sq ft
37.9
11.5
21.9
16.4
Average
£ per sq ft
14.1
9.0
13.6
10.0
Min
£ per sq ft
4.2
2.7
6.1
2.0
Max
£ per sq ft
31.5
16.9
21.4
8.7
Average
£ per sq ft
11.2
7.6
9.4
3.1
Property
equivalent
yield
EPRA topped
up net initial
yield
Average
%
7.6%
8.2%
6.9%
–
Average
%
7.1%
9.0%
6.2%
–
Fair value
Property Rent (£ per sq ft)
EBITDA multiples (x) /
Net Initial Yield (%)
Pub portfolio
Convenience store
development portfolio
Total
(£m)
275.0
19.0
294.0
1,281.0
Min
–
Max
–
Average
–
Min
2.0x
Max
12.0x
Average
8.0x
15.0
17.5
17.1
5.0%
5.3%
5.0%
EBITDA (£ per sq ft)
Min
2.3
-
Max
101.0
Average
22.1
–
–
132
NewRiver REIT plc Annual Report and Accounts 2019
The investments are several retail, leisure assets, convenience stores and public houses in the UK with a total carrying amount of
£1,281.0 million (£1,254.1 million: investment property. £26.9 million: property plant and equipment). The valuation was determined
using an income capitalisation method, which involves applying a yield to rental income streams. Inputs include yield, current rent,
ERV and EBITDA multiples and maintainable earnings. There have been no changes to valuation techniques in the year.
Development properties are valued using a residual method, which involves valuing the completed investment property using an
investment method and deducting estimated costs to complete, then applying an appropriate discount rate. The relationship of
unobservable inputs to fair value are the higher the rental values and the lower the yield, the higher the fair value. In respect of the
pub portfolio the valuer makes judgements on whether to use residual value or a higher value to include development potential
where appropriate. Where no conversion opportunity has been identified at present, the valuer has not specifically considered an
alternative use valuation.
These inputs include:
Retail portfolio
– Rental value – total rental value per annum
– Equivalent yield – the discount rate of the perpetual cash flow to produce a net present value of zero assuming a purchase at
the valuation
– Estimated development costs
Pub portfolio
– EBITDA multiples and maintainable earnings from each pub
– Estimated development costs
There were no changes to valuation techniques during the year.
Valuation reports are based on both information provided by the Group, e.g. current rents and lease terms which is derived from
the Company’s financial and property management systems and is subject to the Group’s overall control environment, and
assumptions applied by the valuer, e.g. ERVs and yields. These assumptions are based on market observation and the valuer’s
professional judgement.
Revenues are derived from a large number of tenants with no single tenant or group under common control contributing more than
2% of the Group’s revenue.
During the year two public houses in the Trent portfolio were reclassified as from investment property to property, plant and
equipment as these operate under the fully managed model.
Sensitivities of measurement of significant inputs
There are interrelationships between all these unobservable inputs as they are determined by market conditions. The effect of an
increase in more than one unobservable input would be to magnify the impact on the valuation. The impact on the valuation will be
mitigated by the interrelationship of two unobservable inputs moving in opposite directions, e.g. an increase in rent may be offset
by an increase in yield, resulting in no net impact on the valuation. Expected vacancy rates may impact the yield with higher
vacancy rates resulting in higher yields.
As set out within significant accounting estimates and judgments above, the Group’s property portfolio valuation is open to
judgments and is inherently subjective by nature.
As a result, the following sensitivity analysis has been prepared.
Sensitivity impact on valuations of a 5% change in estimated rental value and absolute yield of 50 bps.
Impact on valuations of a 5% change in ERV
Impact on valuations of 0.5% change in yield
£m
Retail asset valuation
987.0
£m
Increase 5%
30.1
£m
Decrease 5%
(27.8)
£m
Increase 0.5%
(41.6)
£m
Decrease 0.5%
47.7
Sensitivity impact on valuations of a 5% change in EBITDA and multiplier of 0.5x.
Impact on valuations of a 5% change in EBITDA
Impact on valuations of a 0.5x change in multiplier
£m
Pub asset valuation
294.0
£m
Increase 5%
14.4
£m
Decrease 5%
(14.4)
£m
Increase 0.5x
16.6
£m
Decrease 0.5x
(16.6)
NewRiver REIT plc Annual Report and Accounts 2019
133
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
13. Investments in joint ventures
As at 31 March 2019 the Group has one joint venture. There were five joint ventures which were equity accounted for prior to the
acquisition of the joint venture partner’s holding in July 2017.
Opening balance
Effective disposal of investments
Group’s share of profit after taxation excluding valuation movement
Net valuation movement
Distributions and dividends
Investment in joint venture
2019
£m
8.5
–
0.8
(1.3)
(0.4)
7.6
2018
£m
71.8
(62.4)
2.0
(0.5)
(2.4)
8.5
Name
NewRiver Retail Investments LP
Country of incorporation
Guernsey
2019
% Holding
50
2018
% Holding
50
The Group is the appointed asset manager on behalf of these joint ventures and receives asset management fees, development
management fees and potentially performance-related bonuses.
NewRiver Retail Investments LP has a 31 December year end. The aggregate amounts recognised in the Consolidated Balance
Sheet and Statement of Comprehensive Income are as follows:
Balance sheet
Non-current assets
Current assets
Current liabilities
Borrowings due in less than one year
Net assets
Statement of Comprehensive Income
Net property income
Administration expenses
Net finance costs
Net valuation movement
Profit on disposal
Profit after taxation
Add back net valuation movement
Group’s share of associates’ FFO
The Group’s share of contingent liabilities in the joint ventures is £nil (March 2018: £nil).
2019
2018
Total
£m
14.8
1.0
(0.6)
–
15.2
Group’s
share
£m
7.4
0.5
(0.3)
–
7.6
Total
£m
24.8
0.8
(0.6)
(8.0)
17.0
2019
2018
Total
£m
1.2
(0.2)
(0.2)
0.8
(2.6)
0.8
(1.0)
2.6
1.6
Group’s
share
£m
0.6
(0.1)
(0.1)
0.4
(1.3)
0.4
(0.5)
1.3
0.8
Total
£m
6.1
(0.6)
(1.3)
4.2
(1.1)
(0.2)
2.9
1.1
4.0
Group’s
share
£m
12.4
0.4
(0.3)
(4.0)
8.5
Group’s
share
£m
3.0
(0.3)
(0.6)
2.1
(0.5)
(0.1)
1.5
0.5
2.0
134
NewRiver REIT plc Annual Report and Accounts 2019
14. Business combinations
On 24 May 2018, the Group acquired Hawthorn Leisure Holdings Limited (‘Hawthorn Leisure’) for a cash consideration of
£55.1 million. Hawthorn Leisure owned 298 public houses situated across England and Scotland. From the date of acquisition,
Hawthorn Leisure contributed net revenue of £12 million and profit before tax from continuing operations of the Group of
£4.6 million If the acquisition had taken place at the beginning of the year, net revenue from continuing operations would have
been £14.1 million and profit before tax from continuing operations for the Group would have been £8.1 million.
Details of the fair value of the assets and liabilities acquired and the resultant gain on bargain purchase are as follows:
Investment property
Property, plant and equipment
Goodwill
Current assets
Cash and cash equivalents
Other net current liabilities
Fair value of acquired interest in net assets on subsidiaries
Gain on bargain purchase
Total purchase consideration
Acquired
£m
100.6
24.1
16.5
2.3
7.7
(80.9)
Adjustments
£m
(0.4)
0.9
(16.5)
(0.1)
–
7.9
Fair value
£m
100.2
25.0
–
2.2
7.7
(73.0)
62.1
(7.0)
55.1
The bargain purchase is a result of the fair value determined for the assets purchased exceeding the gross asset value determined.
The gain on bargain purchase has been recognised in the Statement of Comprehensive Income. A loan of £60.6 million was repaid
as part of the acquisition.
15. Property plant and equipment
Cost or valuation
At 1 April 2018
Additions
Business combinations
Revaluation:
Recognised in the statement of comprehensive income
Recognised in the income statement
Net transfers from investment property
Disposals
At 31 March 2019
Accumulated depreciation
At 1 April 2018
Charge for the year
Disposals
At 31 March 2019
Net book value at 31 March 2019
Net book value at 31 March 2018
Refer to note 12 for fair value disclosures relating to public houses.
Office
equipment
£m
Fixtures
and fittings
£m
Public
houses
£m
0.9
0.4
0.1
–
–
–
–
1.4
0.1
0.2
–
0.3
1.1
0.8
0.7
–
–
–
–
–
(0.1)
0.6
0.5
0.1
(0.1)
0.5
0.1
0.2
–
25.0
0.8
1.2
(0.6)
1.3
–
27.7
–
0.8
–
0.8
26.9
–
Total
£m
1.6
25.4
0.9
–
1.2
(0.6)
1.3
(0.1)
29.7
0.6
1.1
(0.1)
1.6
28.1
1.0
NewRiver REIT plc Annual Report and Accounts 2019
135
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
16. Trade and other receivables
Trade receivables
Receivable from the sale of investment property
Other receivables
Prepayments
Accrued income
2019
£m
7.7
3.3
4.5
1.4
2.2
19.1
2018
£m
8.6
16.2
4.7
3.0
1.9
34.4
The loss allowance was £0.3 million at 31 March 2019 (31 March 2018: £0.9 million).
17. Derivatives
The Group enters into derivative financial instruments to provide an economic hedge to its interest rate exchange risks. These
financial instruments are classified as Level 2 fair value measurements, being those derived from inputs other than quoted prices.
There were no transfers between levels in the current year.
Interest rate caps
Non-current assets
Current assets
Interest rate swaps
Non-current assets
Non-current liabilities
2019
£m
2018
£m
–
–
0.7
(0.6)
0.1
0.3
0.1
3.0
(0.1)
3.3
Interest rate swaps – receive floating pay fixed
In less than one year
In more than one year but less than two
In more than two years but less than five
Interest rate caps – receive floating pay fixed
In less than one year
In more than one year but less than two
In more than two years but less than five
Average contract interest rate Notional principal amount
Fair value
2019
%
0.8%
1.0%
–
2.9%
1.6%
–
2018
%
–
0.8%
0.8%
2.0%
2.9%
1.6%
2019
£m
13.9
151.1
–
148.7
80.2
–
393.9
2018
£m
–
13.9
151.1
107.2
148.7
80.2
501.1
2019
£m
2018
£m
–
0.1
–
–
–
–
0.1
–
–
2.9
–
–
0.4
3.3
136
NewRiver REIT plc Annual Report and Accounts 2019
18. Cash and cash equivalents
There are no restrictions in place over cash. In the prior year a number of the Group’s borrowing arrangements placed certain
restrictions on the rent received each quarter. These did not prevent access to or use of this funding within the borrowing entities,
however they did place certain restrictions on moving those funds around the wider group, typically requiring debt servicing costs
to be paid before restrictions are lifted.
19. Trade and other payables
Trade payables
Other payables
Accruals
Rent received in advance
20. Borrowings
Maturity of bank facilities:
Between four and five years
After five years
Less unamortised fees / discount
2019
£m
6.1
7.5
12.6
9.2
35.4
2019
£m
210.0
300.0
510.0
(7.3)
502.7
2018
£m
3.3
7.7
15.6
12.1
38.7
2018
£m
165.0
300.0
465.0
(8.0)
457.0
During the prior year the Company secured £680 million of new unsecured borrowing facilities to replace its secured borrowings.
The refinancing exercise provided the Company with a reduced cost of debt, increased flexibility and an increased borrowings maturity.
The facilities include a £165 million term loan and a £215 million revolving credit facility, with an initial maturity of five years which
can be extended to a maximum of seven years, subject to lender consent. The facility agreement contains financial covenants
based on loan to value ratio, interest cover and the level of secured borrowings. The floating rate interest on the loan must be
substantially hedged and the Group has entered into interest rate swaps to fix the interest on the five-year term loan.
In February 2018, the Group issued a £300 million publicly listed corporate bond with a maturity of 10 years to March 2028 and a
coupon of 3.5%. The unsecured corporate bond was rated BBB+ by Fitch.
Unsecured borrowings:
Term loan
Revolving credit facility
Corporate bond
Maturity date
August 2023
August 2023
March 2028
Facility
£m
165.0
215.0
300.0
680.0
Facility drawn
£m
165.0
45.0
300.0
510.0
Unamortised facility
fees / discount
£m
(1.3)
(1.6)
(4.4)
(7.3)
£m
163.7
43.4
295.6
502.7
NewRiver REIT plc Annual Report and Accounts 2019
137
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
21. Operating lease arrangements
The Group earns rental income by leasing its investment properties to tenants under non-cancellable operating leases.
At the balance sheet date the Group had contracted with tenants for the following future minimum lease payments on its
investment properties:
Within one year
Between one and two years
In the second to fifth year inclusive
After five years
2019
£m
77.9
78.5
209.4
230.0
595.8
The Group’s weighted average lease length of operating leases at 31 March 2019 was 5.5 years (March 2018: 6.0 years).
Operating lease payments payable by the Group were as follows:
Within one year
One to two years
Two to five years
After five years
2019
£m
3.2
3.2
9.7
233.9
250.0
2018
£m
79.8
73.3
151.6
214.3
519.0
2018
£m
2.7
2.7
7.9
227.4
240.7
Operating lease obligations exist over the Group’s offices, head leases on the Group’s retail portfolio and ground rent leases in the
Group’s pub portfolio. The expense for the year was £2.9 million (March 2018: £2.9 million).
22. Share capital and reserves
Share capital
Ordinary shares
31 March 2017
Issue of shares in firm placing and open offer
Exercise of share options
Scrip dividends issued
Shares issued under employee share schemes
31 March 2018
Scrip dividends issued
Shares issued under employee share schemes
Exercise of warrants
31 March 2019
31 March 2017
Issue of shares in firm placing and open offer
Exercise of share options
Shares issued under employee share schemes
31 March 2018
Exercise of warrants
Exercise of share options
Scrip dividends issued
31 March 2019
138
NewRiver REIT plc Annual Report and Accounts 2019
Number
of shares
issued
m’s
Price per
share
pence
67.2
1.1
0.1
0.7
0.7
0.9
0.1
335.0
242.0
335.0
–
252.5
–
124.0
Total
m’s
238.6
305.8
306.9
307.0
307.0
307.0
307.7
307.7
307.8
307.8
Held by EBT
m’s
4.6
4.6
4.6
4.6
4.0
4.0
4.0
3.1
3.0
3.0
Shares in
issue
m’s
234.0
301.2
302.3
302.4
303.0
303.0
303.7
304.6
304.8
304.8
Share
capital
£’000
2,340
672
10
7
3,029
1
11
9
Share
Total
premium
£’000
£’000
4,031
1,691
219,700
219,028
2,578
2,568
7
–
226,316
223,287
58
57
11
–
1,658
1,649
3,050 224,993 228,043
23. Share-based payments
Warrants
Shareholders who subscribed for placing shares in the original share listing of NewRiver Retail Limited’s shares received warrants,
in aggregate, to subscribe for 3% of the fully diluted share capital. The subscription price is adjusted following the payment of
dividends or share issuance and was 121p as at 31 March 2019 333,401 remain outstanding (31 March 2018: 380,000).
Merger reserve
The merger reserve arose as a result of the scheme of arrangement and represents the nominal amount of share capital that was
issued to shareholders of NewRiver Retail Limited.
Retained earnings
Retained earnings consist of the accumulated net profit of the Group, less dividends paid from distributable reserves, and transfers
from equity issues where those equity issues generated distributable reserves. Dividends are paid from the Company’s
distributable reserves which were approximately £159 million at 31 March 2019 (2018: £26 million).
Shares held in Employee Benefit Trust (EBT)
As part of the scheme of arrangement and group reorganisation, the Company established an EBT which is registered in Jersey.
The EBT, at its discretion, may transfer shares held by it to directors and employees of the Company and its subsidiaries. The
maximum number of ordinary shares that may be held by the EBT may not exceed 10% of the Company’s issued share capital.
It is intended that the EBT will not hold more ordinary shares than are required in order to satisfy share options granted under
employee share incentive plans.
There are currently 2,984,650 ordinary shares held by the EBT.
24. Share-based payments
The Group has three share schemes for employees:
– Share option scheme
– Performance Share Scheme
– Deferred bonus scheme
Share option scheme
Options were granted between 2009 and 2011. The options were priced at the share price at date of issue. No options were
granted in 2018 or 2019. The charge for the year recognised in the Statement of Comprehensive Income was nil (March 2018: nil).
Year issued
2010
2012
Average
exercise
price
2.54
2.35
Outstanding
at start
of the year
192,686
338,000
530,686
Granted
–
–
–
Exercised
–
–
–
Outstanding
at end
of year
192,686
338,000
530,686
Number
exercisable
192,686
338,000
530,686
Lapsed
–
–
–
Average
remaining
life (years)
0.4
2.5
Performance Share Scheme
Zero priced share options have been issued to senior management and Executive Directors under the Performance Share Scheme
since 2013. The options vest to the extent that performance conditions are met over a three or four-year period. At the end of the
period there may be a further vesting condition that the employee or Director remains an employee of the Group. Further details on
the scheme and the performance conditions is provided in the Remuneration Committee report. The charge for the year
recognised in the Statement of Comprehensive Income was £1.6 million (March 2018: £1.1 million).
Year issued
2013
2015
2016
2017
2018
2019
Average
exercise
price
–
–
–
–
–
–
Outstanding
at start
of the year
71,937
104,480
1,180,565
1,182,902
866,238
–
3,406,122
Granted
–
–
67,643
104,440
76,437
1,549,587
1,798,107
Exercised
(71,937)
(104,480)
(61,493)
–
–
–
(237,910)
Lapsed
–
–
(692,317)
(23,900)
(23,118)
(12,581)
(751,916)
Outstanding
at end
of year
–
–
494,398
1,263,442
919,557
1,537,006
4,214,403
Number
exercisable
–
–
–
–
–
–
–
Average
remaining
life (years)
–
–
6.5
7.3
8.2
9.3
NewRiver REIT plc Annual Report and Accounts 2019
139
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
24. Share-based payments continued
Deferred Bonus Scheme
Zero priced share options have been issued to senior management and Executive Directors under the Deferred Bonus Scheme
since 2016. The options vest based on the employee or Director remaining in the employment of the Group for a defined period
(usually two years). The charge for the year recognised in the Statement of Comprehensive Income for this scheme was £1.2m
(March 2018: £1.5m).
Year issued
2016
2017
2018
2019
Average
exercise price
–
–
–
–
Outstanding at
start of year
539,967
205,524
233,737
–
979,228
Granted
–
3,697
20,735
314,375
338,807
Exercised
(539,967)
(195,045)
–
–
(735,012)
Lapsed
–
–
–
–
–
Outstanding at
end of year
–
14,176
254,472
314,375
583,023
Number
exercisable
–
14,176
–
–
14,176
Average remaining
life (years)
–
0.2
1.3
2.2
Fair value
The fair value of the share options has been calculated based on a Monte Carlo Pricing Model using the following inputs:
Share price
Exercise price
Expected volatility
Risk free rate
Expected dividends*
* based on quoted property sector average.
2019
2.885 – 2.715
Nil
18%
0.628% – 0.826%
7.27% – 7.72%
2018
3.4870
Nil
17%
0.2410%
6.35% – 7.07%
25. Financial instruments and risk management
The Group’s activities expose it to a variety of financial risks in relation to the financial instruments it uses: market risk including cash
flow interest rate risk, credit risk and liquidity risk. The financial risks relate to the following financial instruments: trade receivables,
cash and cash equivalents, trade and other payables, borrowings and derivative financial instruments.
Risk management parameters are established by the Board on a project-by-project basis. Reports are provided to the Board
quarterly and also when authorised changes are required.
Financial instruments
Financial assets
Fair value through profit or loss
Interest rate caps
Interest rate swaps
Loans and receivables
Trade and other receivables
Cash and cash deposits
Financial liabilities
Fair value through profit or loss
Interest rate swaps
At amortised cost
Borrowings
Payables and accruals
Valuation
level
2019
£m
2018
£m
2
–
0.7
15.5
27.1
43.3
0.5
3.0
29.4
115.8
148.7
2
(0.6)
(0.1)
(502.7)
(26.2)
(529.5)
(486.2)
(457.0)
(26.6)
(483.7)
(335.0)
Market risk
Currency risk
The Group is not subject to any foreign currency risk as nearly all transactions are in Pounds Sterling.
140
NewRiver REIT plc Annual Report and Accounts 2019
Interest rate risk
The Group’s interest rate risk arises from borrowings issued at floating interest rates (see note 20). The Group’s interest rate risk is
reviewed quarterly by the Board. The Group manages its exposure to interest rate risk on borrowings through the use of interest
rate derivatives (see note 17). Interest rate caps and interest rate swaps are used to both mitigate the risk of an increase in interest
rates but also to allow the Group to benefit from a fall in interest rates. The Group has employed an external adviser when
contracting hedging to advise on the structure of the hedging.
Sensitivity analysis is carried out to assess the impact of an increase in interest rates on finance costs to the Group. Management
consider that a significant movement in interest rates would be 200 bps and have therefore carried out sensitivity analysis of the
impact of such a movement. The impact of a 200 bps increase in interest rates for the year would reduce net interest payable in
the Statement of Comprehensive Income by £5.9 million (March 2018: nil). The impact of a 200 bps decrease in interest rates for
the year would reduce the net interest payable in the Statement of Comprehensive Income by £2.5 million (March 2018: £0.4
million). The directors consider this to be a reasonable sensitivity given historic interest rates and the possibility for short term
swings in rates.
Credit risk
The Group’s principal financial assets are cash, trade receivables and other receivables.
The Group manages its credit risk through policies to ensure that rental contracts are made with tenants meeting appropriate
balance sheet covenants, supplemented by rental deposits or bank guarantees from international banks. The amounts presented
in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is objective
evidence that the Group will not be able to collect all amounts due according to the terms of the receivables concerned.
The Group monitors its counterparty exposures on cash and short-term deposits weekly. The Group monitors the counterparty
credit rating of the institutions that hold its cash and deposits and spread the exposure across several banks.
The Group’s maximum exposure to credit risk as at 31 March 2019 was £43 million (31 March 2018: £149 million).
Liquidity risk
The Group manages its liquidity risk by maintaining sufficient cash balances and committed credit facilities. The Board reviews
the credit facilities in place on a project-by-project basis. Cash flow reports are issued weekly to management and are reviewed
quarterly by the Board. A summary table with maturity of financial liabilities is presented below:
2019
Borrowings
Interest on borrowings
Interest rate swaps
Payables and accruals
2018
Borrowings
Interest on borrowings
Interest rate swaps
Payables and accruals
Reconciliation of movement in the Group’s share of net debt in the year
Group’s share of net debt at beginning of year
Cash flow
Net decrease/(increase) in cash and cash equivalents
New bank loans (net of expenses)
Bank loans acquired in business combinations
Bank loans repaid
Amortisation of bank loan fees
Group’s share of joint ventures’ cash flow
Net (increase)/decrease in cash and cash equivalents
Bank loans repaid
Borrowings disposed of
Amortisation of bank loan fees
Group’s share of net debt
Less than
one year
–
(15.8)
(0.1)
(26.2)
(42.1)
One to two
years
–
(15.8)
(0.1)
–
(15.9)
Two to five
years
(210.0)
(46.0)
–
–
(256.0)
More than
five years
(300.0)
(41.2)
–
–
(341.2)
–
(14.0)
(1.0)
(26.6)
(41.6)
–
(14.0)
(1.0)
–
(15.0)
(165.0)
(40.0)
(1.0)
–
(206.0)
(300.0)
(52.0)
–
–
(352.0)
2019
£m
344.7
88.7
62.4
60.6
(78.6)
1.4
(0.1)
(4.0)
–
–
475.1
Total
(510.0)
(118.8)
(0.2)
(26.2)
(655.2)
(465.0)
(120.0)
(3.0)
(26.6)
(614.6)
2018
£m
417.9
(69.8)
506.2
120.7
(577.5)
–
3.1
–
(60.3)
4.4
344.7
NewRiver REIT plc Annual Report and Accounts 2019
141
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
NOTES TO THE FINANCIAL STATEMENTS
25. Financial instruments and risk management continued
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to provide
returns to shareholders and to maintain an optimal capital structure to reduce the cost of capital. The Group is not subject to any
external capital requirements. As detailed in note 9, the Group is a REIT and to qualify as a REIT the Group must distribute 90% of
its taxable income from its property business.
To maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on
the basis of its gearing ratio. This ratio is calculated as net debt divided by equity. Net debt is calculated as total borrowings, less
cash and cash equivalents.
Net debt to equity ratio
Borrowings
Cash and cash equivalents
Net debt
Equity attributable to equity holders of the parent
Net debt to equity ratio (‘Balance sheet gearing’)
Share of joint ventures’ borrowings
Share of joint ventures’ cash and cash equivalents
Group’s share of net debt
Carrying value of investment property and public houses
Share of joint ventures’ carrying value of investment properties
Group’s share of carrying value of investment properties
Net debt to property value ratio (‘Loan to value’)
Reconciliation of financial liabilities
As at 1 April 2018
Increase / (decrease) through financing cash flows
Repayment of bank loans and other costs
New borrowings
Increase / (decrease) through changes in fair value
Change in fair value of derivative
Increase / (decrease) through business combinations
Acquisition of Hawthorn Leisure
Other changes
Loan amortisation
As at 31 March 2019
2019
£m
502.7
(27.1)
475.6
796.1
60%
–
(0.5)
475.1
1,281.0
7.4
1,288.4
37%
Borrowings
£m
457.0
Derivatives
£m
3.3
(78.6)
62.4
–
–
2018
£m
456.9
(115.8)
341.1
892.4
38%
4.0
(0.4)
344.7
1,227.2
12.4
1,239.6
28%
Total
£m
460.3
(78.6)
62.4
–
(3.2)
(3.2)
60.6
–
60.6
1.3
502.7
–
0.1
1.3
502.8
26. Contingencies and commitments
The Group has no material contingent liabilities (2018: None). The Group was contractually committed to £4.0 million of capital
expenditure to construct or develop investment property as at 31 March 2019 (31 March 2018: £14.9 million).
142
NewRiver REIT plc Annual Report and Accounts 2019
27. Related party transactions
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.
Management fees are charged to joint ventures for asset management, investment advisory, project management and accounting
services. Total fees charged were:
NewRiver Retail Investments LP
NewRiver Retail Property Unit Trust No.2*
NewRiver Retail Property Unit Trust No.5*
NewRiver Retail Property Unit Trust No.6*
NewRiver Retail Property Unit Trust No.7*
* The above entities are no longer related parties for the year ended 31 March 2019
There were no amounts outstanding at each year end.
2019
£’000
101
–
–
–
–
2018
£’000
113
42
44
185
38
Total emoluments of key management during the year are disclosed in the Remuneration Committee report.
28. Post balance sheet events
The first quarter dividend in relation to the year ended 31 March 2020 will be 5.4 pence per share (March 2019: 5.4 pence per
share) and will be paid in July 2019 to shareholders on the register on 21 June 2019. The ex-dividend date will be 20 June 2019.
On 22 May 2019, the Group exchanged contracts on the acquisition of a portfolio of four retail parks for total consideration of £60.5
million reflecting a net initial yield of 9.8%. It is intended that the acquisition of the portfolio will be completed by a joint venture,
once established, in which the Group will hold a 50% interest.
NewRiver REIT plc Annual Report and Accounts 2019
143
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Company Balance Sheet
As at 31 March 2019
Non-current assets
Investment in subsidiaries
Total non-current assets
Current assets
Amounts owed from subsidiary undertakings
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Current liabilities
Trade creditors
Accruals
Other creditors
Amounts owed to subsidiary undertakings
Total current liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Retained earnings
Total equity
Notes
B
2019
£m
2018
£m
664.9
664.9
693.5
693.5
655.6
1.3
3.3
660.2
1,325.1
748.1
3.4
1.7
753.2
1,446.7
1.3
2.7
0.2
18.3
22.5
502.7
502.7
799.9
3.1
225.0
413.1
158.7
799.9
0.3
3.1
0.4
320.6
324.4
457.0
457.0
665.3
3.0
223.3
413.1
25.9
665.3
The notes on pages 146 to 150 form an integral part of the Company financial statements. The Company has applied the exemption
in s408 of the Companies Act for omitting the income statement of the parent company. The profit for the period after taxation was
£198 million.
The financial statements were approved by the Board of Directors on 22 May 2019 and were signed on its behalf by:
Allan Lockhart
Chief Executive
Mark Davies
Chief Financial Officer
144
NewRiver REIT plc Annual Report and Accounts 2019
Statement of Changes in Equity
As at 31 March 2019
As at 31 March 2017
Profit after taxation
Net proceeds of issue from new shares
Cost of issue of new shares
Dividends paid
As at 31 March 2018
Profit after taxation
Equity issue
Dividends paid
As at 31 March 2019
Share
capital
£m
2.3
–
0.7
–
–
3.0
–
0.1
–
3.1
Share
premium
£m
1.7
–
227.1
(5.5)
–
223.3
–
1.7
–
225.0
Merger
reserve
£m
413.1
–
–
–
–
413.1
–
–
–
413.1
Retained
earnings
£m
87.9
0.7
–
–
(62.7)
25.9
197.7
–
(64.9)
158.7
Total
£m
505.0
0.7
227.8
(5.5)
(62.7)
665.3
197.7
1.8
(64.9)
799.9
The notes on pages 146 to 150 form an integral part of these financial statements. There was no other income in the period
therefore the profit after taxation is the Company’s total comprehensive income for the period.
Retained earnings reflects the Company’s distributable reserves.
NewRiver REIT plc Annual Report and Accounts 2019
145
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Notes to the financial
statements
A. Accounting policies
Basis of accounting
The Company’s separate financial statements for the year ended 31 March 2019 are prepared in accordance with Financial
Reporting Standard 101 (FRS 101) “Reduced Disclosure Framework” as issued by the Financial Reporting Council. The financial
statements are presented in pounds Sterling. These financial statements have been prepared under the historical cost convention.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires the Directors to
exercise judgement in the process of applying the Company’s accounting policies. Changes in assumptions may have a significant
impact on the financial statements in the period the assumptions changed. The Directors believe that the underlying assumptions
are appropriate. The most critical estimates, assumptions and judgements relate to the determination of carrying value of the
investment in the Company’s subsidiary undertaking. The nature, facts and circumstance of the investment are taken into account
on assessing whether there are any indications of impairment.
Disclosure exemptions
The Company has taken advantage of all disclosure exemptions allowed by FRS 101. These financial statements do not include:
– certain disclosures regarding the Company’s capital;
– a statement of cash flows;
– certain disclosures in respect of financial instruments;
– the effect of future accounting standards not yet adopted; and
– disclosure of related party transactions with wholly-owned members of the Group.
The above disclosure exemptions have been adopted because equivalent disclosures are included in the consolidated Group
accounts into which the Company is consolidated.
Dividends
Dividend information is provided in note 11 to the consolidated accounts.
Investment in subsidiaries
Investments in subsidiary undertakings are stated at cost less provision for impairment.
Financial instruments
Financial assets
Financial assets consist of loans and receivables. The Group determines the classification of its financial assets at initial recognition.
Financial assets are initially measured at fair value plus directly attributable transaction costs. The Group’s financial assets consist
of cash, and loans and receivables.
Financial assets are derecognised only when the contractual rights to the cash flows from the financial asset expire or the
Company transfers substantially all risks and rewards of ownership.
The Company assesses at each financial position date whether there is objective evidence that a financial asset or group of
financial assets is impaired. If there is objective evidence (such as significant financial difficulty of the obligor, breach of contract,
or it becomes probable that the debtor will enter bankruptcy), the asset is tested for impairment. The amount of the loss is measured
as the difference between the asset’s carrying amount and the present value of the estimated future cash flows (that is the effective
interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account.
The amount of the loss is recognised in profit and loss.
If in a subsequent period the amount of the impairment loss decreased and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the
carrying value of the asset does not exceed its amortised costs at the reversal date.
Financial liabilities
Financial liabilities are classified as other liabilities. A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires.
All loans and borrowings are classified as other liabilities. Initial recognition is at fair value less directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method.
Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost.
The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date of the liability is less than one
year, discounting is omitted.
146
NewRiver REIT plc Annual Report and Accounts 2019
Share-based payments
The cost of equity settled transactions is measured with reference to the fair value at the date at which they were granted. Where
vesting performance conditions are non-market based, the fair value excludes the effect of these vesting conditions and an
estimate is made at each balance sheet date of the number of instruments expected to vest. The fair value is recognised over the
vesting period in the Statement of Comprehensive Income of the company that employs the recipient of the share-based payment,
with a corresponding increase in equity. The Company increases the carrying value of the subsidiary by the value of the share-
based payment.
Share capital
Shares are classified as equity when there is no obligation to transfer cash or other assets.
Dividends
Dividends to the Company’s shareholders are recognised when they become legally payable. In the case of interim dividends, this
is when paid. In the case of final dividends, this is when approved by equity holders at a general meeting.
Merger reserve
The merger reserve resulted from the acquisition of NewRiver Retail Limited and represents the difference between the value of
the net assets acquired of £526 million and the nominal value of the shares issued, less the impairment in NewRiver Retail Limited
following the payment of a dividend to the Company of £111 million.
NewRiver REIT plc Annual Report and Accounts 2019
147
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
B. Investment in subsidiaries
All subsidiaries are held indirectly except NewRiver Retail Limited, the former ultimate parent of the Group.
Country of
incorporation
Name
UK
C-store REIT Limited
UK
Convenience Store REIT Limited
UK
NewRiver Capital Limited
UK
NewRiver Retail (Burgess Hill) Limited
UK
NewRiver Community Pubs Limited
UK
NewRiver (Darnall) Limited
UK
NewRiver Finance Company Limited
UK
NewRiver REIT (UK) Limited
UK
NewRiver Leisure Limited
UK
NewRiver Public Houses Limited
UK
NewRiver Retail (Bexleyheath) Holdings Limited
Jersey
NewRiver Retail (Bexleyheath) Limited
UK
NewRiver Retail (Boscombe No. 1) Limited
Jersey
NewRiver Retail (Broadway Square) Limited
UK
NewRiver Retail (Cardiff) Limited
UK
NewRiver Retail (Carmarthen) Limited
UK
NewRiver Retail (Colchester) Limited
UK
NewRiver Retail (Darlington) Limited
Luxembourg
NewRiver Grays S.a.r.l
UK
NewRiver Retail (GP3) Limited
UK
NewRiver Retail (Leylands Road) Limited
UK
NewRiver Retail (Mantle) Limited
Guernsey
NewRiver Retail (Market Deeping No. 1) Limited
UK
NewRiver Retail (Morecambe) Limited
Guernsey
NewRiver Retail (Newcastle No. 1) Limited
UK
NewRiver Retail (Nominee No.3) Limited
UK
NewRiver Retail (Paisley) Limited
UK
NewRiver Retail (Penge) Limited
Guernsey
NewRiver Retail (Portfolio No. 1) Limited
Guernsey
NewRiver Retail (Portfolio No. 2) Limited
NewRiver Retail (Portfolio No. 3) Limited
UK
NewRiver Retail (Portfolio No. 3) Limited Partnership UK
UK
NewRiver Retail (Portfolio No. 5) Limited
UK
NewRiver Retail (Portfolio No. 6) Limited
UK
NewRiver Retail (Portfolio No. 4) Limited
UK
NewRiver Retail (Portfolio No. 8) Limited
UK
NewRiver Retail (Ramsay Development) Limited
NewRiver Retail (Ramsay Investment) Limited
UK
NewRiver Retail (Skegness Developments) Limited UK
UK
NewRiver Retail (Skegness) Limited
UK
NewRiver Retail (Wakefield) Limited
UK
NewRiver Retail (Warminster) Limited
UK
NewRiver Retail (Wisbech) Limited
UK
NewRiver Retail (Witham No. 1) Limited
Guernsey
NewRiver Retail (Wrexham) Limited
UK
NewRiver Retail Academy Limited
Guernsey
NewRiver Retail Holdings Limited
Activity
Dormant company
Dormant company
Real estate investments
Dormant company
Real estate investments
Real estate investments
Real estate investments
Asset management
Real estate investments
Real estate investments
Group holding company
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
General partner
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Dormant company
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Holding company
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Dormant company
Group holding company
148
NewRiver REIT plc Annual Report and Accounts 2019
Proportion
of ownership
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Class of share
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Partnership
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Name
NewRiver Retail Holdings No. 1 Limited
NewRiver Retail Holdings No. 2 Limited
NewRiver Retail Holdings No. 3 Limited
NewRiver Retail Holdings No. 4 Limited
NewRiver Retail Holdings No. 5 Limited
NewRiver Retail Holdings No. 6 Limited
NewRiver Retail Holdings No. 7 Limited
NewRiver Retail Limited
NewRiver Retail Property Unit Trust
NewRiver Retail Property Unit Trust No. 2
NewRiver Retail Property Unit Trust No. 3
NewRiver Retail Property Unit Trust No. 4
NewRiver Retail Property Unit Trust No. 5
NewRiver Retail Property Unit Trust No. 6
NewRiver Retail Property Unit Trust No. 7
Pub REIT Limited
Shopping Centre REIT Limited
Hawthorn Leisure Holdings Limited
Hawthorn Leisure Limited
Hawthorn Leisure Finco Limited
Hawthorn Leisure Scotco Limited
Hawthorn Leisure Management Limited
Hawthorn Leisure Honey Limited
Hawthorn Leisure Acquisitions Limited
Country of
incorporation
Guernsey
Guernsey
Guernsey
Guernsey
Guernsey
Guernsey
Guernsey
Guernsey
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
UK
UK
UK
UK
UK
UK
UK
UK
UK
Activity
Group holding company
Group holding company
Group holding company
Group holding company
Group holding company
Group holding company
Group holding company
Group holding company
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Dormant company
Dormant company
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Real estate investments
Proportion
of ownership
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Class of share
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary units
Ordinary units
Ordinary units
Ordinary units
Ordinary units
Ordinary units
Ordinary units
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
The Company’s investment in joint venture entities are detailed in note 13. The registered offices of the company is:
Guernsey – NewRiver Retail (GP1) Ltd, Floor 2 Trafalgar Court, Les Banques, St Peter Port, GY1 4LY
Reconciliation of the movement in investment in subsidiaries:
Opening balance
Investment in subsidiaries
Impairment in subsidiaries
Investment in subsidiaries
2019
£m
693.5
121.4
(150.0)
664.9
2018
£m
415.5
278.0
–
693.5
NewRiver REIT plc Annual Report and Accounts 2019
149
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCI AL STAT EM ENTS
C. Auditors remuneration
The auditors’ remuneration in respect of the Company is disclosed in note 6.
D. Average staff numbers
The average number of staff employed by the Company’s subsidiaries was:
Directors
Operations and asset managers
Pubs
Support functions
The staff costs of the staff employed by the Company’s subsidiaries were:
Wages and salaries
Social security costs
Other pension costs
Staff costs
2019
£m
7
34
53
55
149
2019
£m
7.8
1.9
0.3
10.0
2018
£m
7
23
–
26
56
2018
£m
7.6
1.9
0.1
9.6
The Company itself has no direct employees. The Directors emoluments are disclosed in the Remuneration Committee report.
E. Borrowings
All borrowings issued by the Group at 31 March 2019 were issued by the Company. See note 20 of the consolidated financial
statements for details.
150
NewRiver REIT plc Annual Report and Accounts 2019
EPRA performance measures
The information in this section is unaudited and does not form part of the consolidated primary statements of the company or the
notes thereto�
Introduction
The Group discloses financial performance measures in accordance with the European Public Real Estate Association (‘EPRA’) Best
Practice Recommendations which are aimed at improving the transparency, consistency and relevance of reporting across
European Real Estate companies�
This section sets out the rationale for each performance measure as well as how it is measured� A summary of the performance
measures is included in following table�
Performance Measure
EPRA Earnings per Share (EPS)
EPRA NAV per share
EPRA NNNAV per share
EPRA NIY
EPRA ‘topped-up’ NIY
EPRA Vacancy Rate
EPRA Cost Ratio
A. EPRA Earnings per Share: 16.6p
Definition
Earnings from operational activities
March
2019
16.6p
261p
260p
7.5%
7.9%
4.8%
22.1%
March
2018
18�6p
292p
293p
6�8%
7�2%
3�5%
19�7%
Purpose
A key measure of a company’s underlying operating results and an indication of the extent to which current dividend payments are
supported by earnings
Calculation of EPRA Earnings
Earnings per IFRS income statement
Adjustments to calculate EPRA Earnings, exclude:
Changes in value of investment properties, development properties held for investment and other
interests
Profits or losses on disposal of investment properties, development properties held for investment and
other interests
Negative goodwill / goodwill impairment
Changes in fair value of financial instruments and associated close-out costs
Acquisition costs on share deals and non-controlling joint venture interests
Exceptional costs in respect of refinancing
Adjustments to above in respect of joint ventures (unless already included under proportional
consolidation)
EPRA Earnings
Basic number of shares
EPRA Earnings per Share (EPS)
March
2019
£m
(36.9)
March
2018
£m
45�7
88.2
12�9
(1.3)
(7.0)
3.2
3.0
(4�8)
(3�0)
(3�7)
5�3
1.3
50.5
304.0m
16.6p
0�5
52.9
285�0m
18.6p
NewRiver REIT plc Annual Report and Accounts 2019
151
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS EP RA PERFORMANCE MEASUR ES
B. EPRA NAV per share: 261p
Definition
Net Asset Value adjusted to include properties and other investment interests at fair value and to exclude certain items not
expected to crystallise in a long-term investment property business model�
Purpose
Makes adjustments to IFRS NAV to provide stakeholders with the most relevant information on the fair value of the assets and
liabilities within a true real estate investment company with a long-term investment strategy�
Calculation of EPRA Net Asset Value
NAV per the financial statements
Effect of exercise of options, convertibles and other equity interests (diluted basis)
Diluted NAV, after the exercise of options, convertibles and other equity interests
Exclude:
Fair value of financial instruments
Deferred tax
EPRA NAV
Fully diluted number of shares
EPRA NAV per share
March
2019
£m
796.1
1.7
797.8
(0.1)
1.6
799.3
306.0
261p
March
2018
£m
892�4
1�8
894�2
(3�3)
890�9
305�3
292p
C. EPRA NNNAV per share: 260p
Definition
EPRA NAV adjusted to include the fair values of (i) financial instruments, (ii) debt and (iii) deferred taxes�
Purpose
Makes adjustments to EPRA NAV to provide stakeholders with the most relevant information on the current fair value of all the
assets and liabilities within a real estate company�
Calculation of EPRA Triple Net Asset Value (NNNAV)
EPRA NAV
Include:
Fair value of financial instruments
Fair value of debt
Deferred tax
EPRA NNNAV
Fully diluted number of shares
EPRA NNNAV per share
March
2019
£m
799.3
0.1
(3.8)
(1.6)
794.0
306.0
260p
March
2018
£m
890�9
3�3
(0�3)
–
893�9
305�3
293p
152
NewRiver REIT plc Annual Report and Accounts 2019
D. EPRA NIY: 7.5%, EPRA ‘topped-up’ NIY: 7.9%
Definition
The basic EPRA NIY calculates the annualised rental income based on the cash rents passing at the balance sheet date, less
non-recoverable property operating expenses, divided by the market value of the property, increased with (estimated)
purchasers’ costs�
In respect of the ‘topped-up’ NIY, 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 step rents)�
Purpose
A comparable measure for portfolio valuations to assist investors in comparing portfolios�
Calculation of EPRA NIY and ‘topped-up’ NIY
Investment property – wholly owned
Investment property – share of JVs/Funds
Trading property (including share of JVs)
Less: developments
Completed property portfolio
Allowance for estimated purchasers’ costs and capital expenditure allowed for
Gross up completed property portfolio valuation
Annualised cash passing rental income
Property outgoings
Annualised net rents
Add: notional rent expiration of rent free periods or other lease incentives1
Topped-up net annualised rent
EPRA NIY
EPRA ‘topped-up’ NIY
March
2019
£m
1,279.0
7.4
–
(75.4)
1,211.0
83.9
1,294.9
107.5
(10.0)
97.4
4.8
102.2
7.5%
7.9%
March
2018
£m
1,226�3
12�4
–
(78�7)
1,159�9
76�3
1,236�3
95�4
(11�1)
84�3
4�5
88�8
6�8%
7�2%
B
A
C
A/B
C/B
1� The weighted outstanding rent-free period was less than one year in respect of March 2019 and less than one year in respect of March 2018
E. EPRA Vacancy rate: 4.8%
Definition
Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio, excluding pub and
development assets�
Purpose
A ‘pure’ (%) measure of investment property space that is vacant, based on ERV�
Calculation of EPRA Vacancy Rate
Estimated Rental Value of vacant retail space
Estimated rental value of the retail portfolio
EPRA Vacancy Rate
March
2019
£m
3.8
80.0
4.8%
March
2018
£m
2�8
80�1
3�5%
A
B
A/B
NewRiver REIT plc Annual Report and Accounts 2019
153
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
EP RA PERFORMANCE MEASUR ES
F. EPRA Cost Ratio: 22.1%
Definition
Administrative & operating costs (including & excluding costs of direct vacancy) divided by gross rental income�
Purpose
A key measure to enable meaningful measurement of the changes in a company’s operating costs�
Calculation of EPRA Administrative costs
Administrative/operating expense line per IFRS income statement
Net service charge costs/fees
Management fees less actual/estimated profit element
Other operating income/recharges intended to cover overhead expenses less any related profits
Share of Joint Ventures expenses
Exclude (if part of the above):
Investment property depreciation
Ground rent costs
Service charge costs recovered through rents but not separately invoiced
EPRA Costs (including direct vacancy costs)
Direct vacancy costs
EPRA Costs (excluding direct vacancy costs)
Gross Rental Income less ground rents – per IFRS
Less: service fee and service charge costs components of Gross Rental Income (if relevant)
Add: share of Joint Ventures (Gross Rental Income less ground rents)
Gross Rental Income
EPRA Cost Ratio (including direct vacancy costs)
EPRA Cost Ratio (excluding direct vacancy costs)
A
B
C
A/C
B/C
March
2019
£m
19.4
4.4
(0.3)
–
(0.4)
–
(2.9)
–
26.60
7.7
18.90
119.3
–
0.8
120.1
22.1%
15.7%
March
2018
£m
17�4
6�3
(0�4)
–
(0�2)
–
2�8
–
21�10
3�8
17�30
103�3
–
3�7
107�0
19�7%
16�2%
154
NewRiver REIT plc Annual Report and Accounts 2019
Alternative Performance
Measures (APMs)
In addition to information contained in the Group financial statements, Alternative Performance Measures (‘APMs’), being financial
measures which are not specified under IFRS, are also used by management to assess the Group’s performance� These APMs
include a number of European Public Real Estate Association (‘EPRA’) measures, prepared in accordance with the EPRA Best
Practice Recommendations reporting framework� We report these because management considers them to improve the
transparency and relevance of our published results as well as the comparability with other listed European real estate companies�
The table below identifies the APMs used in this statement and provides the nearest IFRS measure where applicable, and where
in this statement an explanation and reconciliation can be found�
APM
Funds From Operations (‘FFO’), Underlying
Funds From Operations (‘UFFO’), FFO per share
and UFFO per share
EPRA Net Asset Value (‘NAV’) and EPRA NAV
per share
Ordinary dividend cover
Admin cost ratio
Interest cover
EPRA EPS
EPRA NNNAV
EPRA NIY
EPRA ‘topped-up’ NIY
EPRA Vacancy Rate
EPRA Cost Ratio
Total Accounting Return
Cost of debt
Average debt maturity
Loan to Value
Nearest IFRS measure
Profit for the year after taxation Note 10 of the Financial Statements and
Explanation and reconciliation
page 49 of this document
Net Assets
N/A
N/A
N/A
IFRS Basic EPS
Net Assets
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Note 10 of the Financial Statements and
pages 52 and 152 of this document
Page 52 of this document and Glossary
Note 6 of the Financial Statements and
Glossary
Glossary
Note 10 of the Financial Statements
Page 152 of this document
Page 153 of this document
Page 153 of this document
Page 153 of this document
Page 154 of this document
Glossary
Page 54 of this document
Glossary
Note 25 of the Financial Statements
NewRiver REIT plc Annual Report and Accounts 2019
155
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Glossary
Admin cost ratio: Is the Group’s share of net
administrative expenses (including its share of
JV administrative expenses) divided by the Group’s
share of property income (including its share of
JV property income)�
Estimated rental value (ERV): 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�
Average debt maturity: Is measured in years, when
each tranche of Group debt is multiplied by the
remaining period to its maturity and the result is
divided by total Group debt in issue at the year end�
Balance sheet gearing: Is the balance sheet net
debt divided by IFRS net assets�
Book value: Is the amount at which assets and
liabilities are reported in the financial statements�
Cost of debt: Is the Group loan interest and
derivative costs at the year end, divided by total
Group debt in issue at the year end�
CVA: is a Company Voluntary Arrangement, a legally
binding agreement that allows a company to settle
debts by paying only a proportion of the amount that
it owes to creditors (such as contracted rent) or to
come to some other arrangement with its creditors
over the payment of its debts�
EPRA: Is the European Public Real
Estate Association�
EPRA earnings: Is the IFRS profit after taxation
excluding investment property revaluations, fair
value adjustments on derivatives and gains/losses
on disposals�
EPRA net assets (EPRA NAV): Are the balance sheet
net assets excluding the mark to market on effective
cash flow hedges and related debt adjustments,
deferred taxation on revaluations and diluting for the
effect of those shares potentially issuable under
employee share schemes�
EPRA NAV per share: Is EPRA NAV divided by the
diluted number of shares at the year end�
ERV growth: Is the change in ERV over a year on our
investment portfolio expressed as a percentage of
the ERV at the start of the year� ERV growth is
calculated monthly and compounded for the period
subject to measurement, as calculated by MSCI Real
Estate (formerly named IPD)�
Footfall: Is the annualised number of visitors
entering our shopping centre assets�
Funds From Operations: Is a measure of cash profits
which includes realised recurring cash profits,
realised cash profits or losses on the sale of
properties and excludes other one off or non-
cash adjustments�
Group: Is NewRiver REIT plc, the Company and its
subsidiaries and its share of joint ventures (accounted
for on an equity basis)�
Head lease: Is a lease under which the Group holds
an investment property�
IFRS: Is the International Financial Reporting
Standards issued by the International Accounting
Standards Board and adopted by the EU�
Income return: Is the income derived from a
property as a percentage of the property value�
Interest cover: Is the number of times net interest
payable is covered by underlying profit before net
interest payable and taxation�
Interest-rate swap: Is a financial instrument where
two parties agree to exchange an interest rate
obligation for a predetermined amount of time�
These are used by the Group to convert floating-rate
debt obligation or investments to fixed rates�
MSCI Real Estate: MSCI Real Estate (formerly
Investment Property Databank Ltd or ‘IPD’) produces
independent benchmarks of property returns and
NewRiver portfolio returns�
Joint venture: Is an entity in which the Group holds
an interest on a long-term basis and is jointly
controlled by the Group and one or more ventures
under a contractual arrangement whereby decisions
on financial and operating policies essential to the
operation, performance and financial position of the
venture require each joint venture partner’s consent�
156
NewRiver REIT plc Annual Report and Accounts 2019
Leasing events: Long-term and temporary new
lettings, lease renewals and lease variations within
investment and joint venture properties�
LIBOR: Is the London Interbank Offered Rate,
the interest rate charged by one bank to another
for lending money�
Like-for-like ERV growth: Is the change in ERV over
a year on the standing investment properties
expressed as a percentage of the ERV at the start
of the year�
Like-for-like footfall: Is the movement in footfall
against the same period in the prior year, on
properties owned throughout both comparable
periods, aggregated at 100% share�
Like-for-like net income: Is the change in net
income on properties owned throughout the current
and previous periods under review� This growth rate
includes revenue recognition and lease accounting
adjustments but excludes properties held for
development in either period, properties with
guaranteed rent reviews, asset management
determinations and surrender premiums�
Loan to Value (LTV): Is the ratio of gross debt less
cash, short-term deposits and liquid investments to
the aggregate value of properties and investments�
LTV is expressed on a proportionally
consolidated basis�
Mark to market: Is the difference between the book
value of an asset or liability and its market value�
Net equivalent yield (NEY): Is the net weighted
average income return a property will produce
based upon the timing of the income received�
In accordance with usual practice, the equivalent
yields (as determined by the external valuers)
assume rent received annually in arrears and
on values before deducting prospective
purchaser’s costs�
Net initial yield (NIY): Is the current annualised rent,
net of costs, expressed as a percentage of capital
value, after adding notional purchaser’s costs�
Net rental income: Is the rental income receivable
in the year after payment of ground rents and net
property outgoings� Net rental income will differ
fromannualised net rents and passing rent due to
the effects of income from rent reviews, net property
outgoings and accounting adjustments for fixed and
minimum contracted rent reviews and
lease incentives�
NRR share: Represents the Group’s ownership
on aproportionally consolidated basis�
Ordinary dividend cover: Underlying Funds From
Operations per share divided by dividend per share
declared in the year�
Ordinary Passing rent: Is the gross rent, less any
ground rent payable under head leases�
Pre-let: A lease signed with an occupier prior to
the completion of a development�
Pre-sale: A sale exchanged with a purchaser prior
to completion of a development�
Promote: An incentive return based on the financial
performance of a joint venture�
Property Income Distribution (PID): As a REIT the
Group is obliged to distribute 90% of the tax-exempt
profits� These dividends, which are referred to as
PIDs, are subject to withholding tax at the basic rate
of income tax� Certain classes of shareholders may
qualify to receive the dividend gross� See our
website (www�nrr�co�uk) for details� The Group can
also make other normal (non-PID) dividend
payments which are taxed in the usual way�
Real Estate Investment Trust (REIT): Is a listed
property company which qualifies for and has
elected into a tax regime, which exempts qualifying
UK property rental income and gains on investment
property disposals from corporation tax�
Rental value growth: Is the increase in the current
rental value, as determined by the Company’s
valuers, over the 12-month period on a like-for-
like basis�
Retail occupancy rate: Is the estimated rental value
of let units expressed as a percentage of the total
estimated rental value of the portfolio, excluding
development properties�
Reversion: Is the increase in rent estimated by the
external valuers, where the passing rent is below
the estimated rental value� The increases to rent
arise on rent reviews, letting of vacant space and
expiry of rent-free periods�
Reversionary yield: Is the anticipated yield, which
the initial yield will rise to once the rent reaches
the estimated rental value�
NewRiver REIT plc Annual Report and Accounts 2019
157
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Yield on cost: Passing rents expressed as a
percentage of the total development cost of
a property�
Yield shift: Is a movement (usually expressed
in basis points) in the equivalent yield of a
property asset�
GLO SSARY
Risk-controlled development pipeline: Is the
combination of all development projects that the
Company is currently pursuing or assessing for
feasibility� Our risk-controlled approach means that
we will not commit to a new development unless
we have pre-let or pre-sold at least 70% by area�
Tenant (or lease) incentives: Are any incentives
offered to occupiers to enter into a lease� Typically
the incentive will be an initial rent-free period, or a
cash contribution to fit-out or similar costs� Under
accounting rules the value of lease incentives given
to tenants is amortised through the Income
Statement on a straight-line basis to the lease expiry�
Total Accounting Return (TAR): Is the increase or
decrease in EPRA NAV per share plus dividends
paid in the year, expressed as a percentage of EPRA
NAV per share at the beginning of the year�
Total Property Return (TPR): Is calculated as the
change in capital value, less any capital expenditure
incurred, plus net income, expressed as a
percentage of capital employed over the period,
as calculated by MSCI Real Estate (formerly IPD)�
Total property returns are calculated monthly and
indexed to provide a return over the relevant period�
Total Shareholder Return (TSR): Is calculated by
the growth in capital from purchasing a share in
the Company assuming that the dividends are
reinvested each time they are paid�
Underlying FFO (UFFO): is a measure of cash profits
which includes realised recurring cash profits and
excludes other one off or non-cash adjustments�
Underlying FFO is used by the Company as the
basis for ordinary dividend policy and cover�
Voids: Are expressed as a percentage of ERV and
represent all unlet space, including voids where
refurbishment work is being carried out and voids
in respect of pre-development properties�
Temporary lettings of up to 12 months are also
treated as voids�
Weighted average lease expiry (WALE): Is the
average lease term remaining to first break, or
expiry, across the portfolio weighted by rental
income� This is also disclosed assuming all break
clauses are exercised at the earliest date, as stated�
Excludes short-term licences and residential leases�
158
NewRiver REIT plc Annual Report and Accounts 2019
Company information
Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St� Peter Port
Guernsey
GY1 3HW
Legal advisers
Eversheds Sutherland
(International) LLP
One Wood Street
London
EC2V 7WS
CMS Cameron McKenna
Nabarro Olswang LLP
78 Cannon Street
London
EC4N 6AF
Tax advisers
BDO LLP
55 Baker Street
London
W1U 7EU
Registrar
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Directors
Margaret Ford
(Non-Executive Chairman)
Allan Lockhart
(Chief Executive Officer)
Mark Davies
(Chief Financial Officer)
David Lockhart
(Executive Deputy Chairman)
Kay Chaldecott
(Non-Executive Director)
Alastair Miller
(Non-Executive Director)
Colin Rutherford
(Non-Executive Director)
Company Secretary
Rob Marcus
Registered office
16 New Burlington Place
London
W1S 2HX
Company Number
10221027
Brokers
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Peel Hunt LLP
Moore House
120 London Wall
London
EC27 5ET
Financial adviser
Kinmont
5 Clifford Street
London
W1S 2LG
NewRiver REIT plc Annual Report and Accounts 2019
159
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS DUMFRIES NEWBURGH WANTAGE BRISTOL KIRKDALE TEWKESBURY NECHELLS THETFORD FARNHAM DONCASTER ROCHFORD ALSTON CLOWNE EVESHAM GLEMSFORD SUDBURY SOUTHSEA LOCHGILPHEAD WIRRAL ASHMORE BOURNEMOUTH MENAI
BRIDGE DARLINGTON ABBOTS BROMLEY ELLAND BUTTERSHAW BURTON UPON TRENT IPSWICH BARROW-IN-FURNESS CUDDESDON OTLEY THAME DUNDEE BEDFORD HINDLEY STRETTON GREAT WALTHAM SOUTH SHIELDS BLOXWICH KERESLEY TAYPORT
BOTTISHAM CAWSTON TONBRIDGE STANDON ROUGHAM DURSLEY WORDLEY KINGS LYNN MONTROSE HALTWHISTLE WALSALL WOOD SKIPTON CHESTERTON CHELMSFORD MARKET HARBOROUGH ELLESMERE DUNMOW HORNCASTLE KIRBYMOORSIDE
OXFORD DARLEY STOCKTON-ON-TEES BLAXTON BRIERLEY HILL DOVER BARNSLEY STANHOPE CHIPPING SODBURY POULTON LE FYLDE GOITSIDE IPSWICH TIBBERTON TELFORD ADLINGTON ABERDARE ODSAL HEREFORD GREAT YARMOUTH GLOSSOP
GATEACRE LEIGHTON BUZZARD BURROUGH GREEN SWINTON STALYBRIDGE BUCKHAVEN YEOVIL LEEDS HUDDERSFIELD NEW ELGIN HOLYHEAD WELLINGBOROUGH LISKEARD KELVINBRIDGE BURFORD YORK BANFF NEWTOWN BIRKENHEAD CARDIFF
INVERKEITHING SUTTON WIGSTON FELSTED COLCHESTER LUTTERWORTH NEWPORT PAGNELL BARNSLEY INGOLDMELLS CREWE STOWMARKET MATLOCK CLYDEBANK KENDAL LANARK SHAW DUKINFIELD ABERTILLERY DUNFERMLINE ROTHERHAM BLACKPOOL
COALVILLE SALTNEY CAMBORNE SOMERCOTES READING UDDINGSTON SMALL HEATH OWSTON FERRY EPPERSTONE PORTSMOUTH GREAT HORTON ST GERMANS RISBY IRVINE KEITH NETHERTON FAKENHAM ELY ROYSTON LITTLEHAMPTON REEPHAM
STADHAMPTON GANSTEAD BEIGHTON BRIDGE OF EARN WATH UPON DEARNE ALEXANDRIA TORQUAY HATHERN DRINGHOUSES GREAT LEIGHS WALKINGTON NORTH SHIELDS SNAITH INVERNESS MOLD BURTON UPON TRENT STRATHAVEN PORTSWOOD
BEWDLEY ST LEONARDS-ON-SEA FINNIESTON BARDWELL PATRICROFT MILTON KEYNES BRAINTREE GALLEYWOOD CRABBS CROSS GRANGEMOUTH 665 PUBS SHEFFIELD ABBOTSLEY DUDLEY LOWER GORNAL PELSALL CAMBUSLANG GOSPORT COPLE
GREAT CORNARD MINERA BRAIDFAULD MOUNT FLORIDA MACCLESFIELD BARNSTAPLE LISS GIRVAN ANNESLEY WOODHOUSE CHASETOWN STROUD RAVENSCLIFFE FOUR ASHES WISHAW BLYTH GODSTONE GLOUCESTER WILBARSTON BUNTINGFORD
FREEMANTLE HALIFAX LAUGHERTON FROSTERELY NEWCASTLE-UNDER-LYME DORCHESTER BURY ALDERSHOT BIGGLESWADE CHEDDAR HADDINGTON NORTHAMPTON TOSTOCK LUTON KINCARDINE BRANSTON SAFFRON WALDEN HAGWORTHINGHAM
LICHFIELD TUDELEY UPTON HAMILTON DENTON WHITHAM COVENTRY BATHGATE DUMBARTON LOCHSIDE CANNINGTON BRIDGWATER ANDOVER GUISBOROUGH LITTLEMORE REDDITCH KNOTTINGLEY HARLOW ABERDEEN WORCESTER EAST CALDER
MELKSHAM GREAT WYMONDLEY SOUTHAM LONDON LYDNEY CHESTER CROMFORD HAVERSHAM ORMSKIRK CUSWORTH JOHNSTONE EXETER CHINDER THORTON COLEHAM WOLLESCOTE WARSOP NEWBURY HARLESCOTT BOLTON HINCKLEY STOCKINGFORD
BALDOCK LINWOOD WARE MUSSELBURGH LEAMINGTON SPA HINCKLEY KILWINNING GRIMSBY CONSETT ROTHERHAM MILNSBRIDGE DIDCOT HEYWOOD NORMANTON DARLASTON ROSS-ON-WYE MOTHERWELL AIRDRIE BAMPTON BOURNE ST. NEOTS
GOOLE STONEYCROFT WHITEHAVEN CHATHAM STOCKPORT FALKIRK NEWTON HALL WINSHILL ANDERSTON SANDY WHEATLEY BLACKENHALL FEN DITTON WEST HEATH WIDNES PERTH OLDSWINFORD WHITWICK OTTERY ST. MARY STAFFORD CHORLEY
BALLACHULISH BOLTON FEATHERSTONE WHITCHURCH COALVILLE ISHAM BURBAGE BULLWELL GREENOCK HEATHHALL KINGSBRIDGE CALNE CHOPPINGTON GORTON NELSON DERBY LARGS WARE STAPLEFORD BRADFIELD COMBUST PAISLEY BRACKLEY
DRIFFIELD LIVERPOOL FARNWORTH WARRINGTON LINCOLN FORT WILLIAM DINNINGTON DONCASTER THAXTED EDINBURGH ST NEOTS SEVENOAKS LEITH HITCHIN MABLETHORPE HONITON SHAWLANDS MUIRHEAD POLBETH SHILLINGTON BRAINTREE
BUCKINGHAM LITTLE SHELFORD STUDLEY NOTTINGHAM HULL TOTTERDOWN WIGAN WARLEY BUCKINGHAM CLAY CROSS ILKESTON BELPER BRISTOL WRENTHORPE DUNBAR CWMBRAN ALNWICK SUTTON IN ASHFIELD BRIDGEND SMALLSHAW RHOSTYLLEN
WORDSLEY KINGSWINFORD SPON END WOODBRIDGE MACCLESFIELD STOKE-ON-TRENT KEIGHLEY EASTWOOD WHITBURN MERCHANT CITY LONGFORD WOOD HAYES HYDE CHADDERTON HOLYWELL BRADFORD WEYMOUTH CARDONALD TENBURY WELLS
NORWICH PENRITH ENFIELD GORBALS DAVENTRY WYBURTON ABINGDON CAMBRIDGE KINGS WALDEN LITTLE WYMONDLEY BISHOP AUCKLAND ARBROATH STAPLE HILL LEEK GLASGOW FORFAR HARSTON MAIDSTONE BLAENAU FFESTINIOG CROSSHILL
YEOVIL HATTON HUDDERSFIELD WEST CALDER SCROPTON HOCKLEY STEPPS HOLT STOURBRIDGE BROOMFIELDS BREACHWOOD GREEN WITNEY GREAT BRICETT HEANOR PENZANCE PRESWICK SANDIACRE WALSALL WREXHAM YARNTON ARMADALE
MOUNT PLEASANT MANSFIELD PRESTON BEWDLEY CALLANDER BASFORD BUGLAWTON EDWINSTOWE OVERSEAL ROPEWALKS BANBURY NETHER STOWEY SLOUGH HADDENHAM CALDICOT WILLINGTON HALESOWEN SHILDON BARNINGHAM CASTOR HUNTLY
KEMPSTON KINGS BROMLEY LONG BENNINGTON LOUGHBOROUGH PLATTS COMMON RUDGE HEATH SWADLINCOTE WOBURN SANDS FOLKESTONE HILLHEAD CANTERBURY YORK LIVERPOOL FISHLEY SHREWSBURY SOUTHAMPTON KINROSS STIRLING
BRAMHALL SCARBOROUGH STANDISH SPRING HILL MALTBY HORNCASTLE SKEGNESS MARCH ST. COLUMB BARROW-UPON-HUMBER FELSHAM KIDLINGTON RHYL WALSHAM LE WILLOWS ECCLESHILL AYLESBURY HIGH WYCOMBE RYDE PARTICK NR
PENRITH PENKETH CRADLEY HEATH HULL GATESHEAD BRIDGNORTH RUGBY GARSWOOD ROCHESTER CARNOUSTIE WOLVERHAMPTON DURHAM PICKERING CHESTERFIELD MEPPERSHALL CUMNOCK TUNBRIDGE WELLS HAVANT CLARE KIDDERMINSTER
ANGLESEY CHEADLE KETTERING CWMBRAN PONTEFRACT WAKEFIELD STOCKPORT LOCHWINNOCH BURY ST EDMUNDS HINXWORTH MEDEN VALE POWICK TAMWORTH NEWCASTLE UPON TYNE KINGUSSIE STRATHBUNGO 34 SHOPPING CENTRES COLWYN
BAY LIVERSEDGE STEVENAGE SHEPSHED TRANENT LIVINGSTON OLDHAM ALDERSHOT HARWICH TICKHILL BROCKHOLES STANLEY TONYPANDY RHOS-DDU TROWBRIDGE LONG EATON NANTWICH WILLENHALL BLACKBURN LANGSIDE RUTHERGLEN SHEPTON
MALLET SHAVINGTON ST HELENS WESTHOUGHTON CHELMSFORD PETERBOROUGH WALTON-ON-THE-NAZE SCARBOROUGH BRENTFORD ATHERTON CUMBERNAULD BRIGHTON DROITWICH BOSTON BISHOPS STORTFORD HALSTEAD NEWMARKET HATFIELD
PEVEREL KIRKCALDY MANCHESTER NEW MILTON NEWARK COATBRIDGE DUNS CONINGSBY MUIREND HOPE VALLEY NEWNHAM SHEFFORD MARSDEN CRANBROOK DROXFORD FAREHAM CHESLYN HAY WITHAM BRINKLOW DENBIGH DOWNEND ESSINGTON
HALESOWEN KEYNSHAM OLDBURY WELLINGTON TELFORD GAINSBOROUGH STOURPORT-ON-SEVERN DERBY BEXLEYHEATH NEWTOWNABBEY WIDNES MORECAMBE PENGE KILMARNOCK CARDIFF ERDINGTON DARLINGTON 19 RETAIL PARKS MARKET DEEPING
WALLSEND OXFORD GRAYS SKEGNESS MIDDLESBROUGH WISBECH FAREHAM CARMARTHEN WORTHING LEITH WITHAM HASTINGS BRIDLINGTON HULL BOSCOMBE LLANELLI COWLEY NEWTON MEARNS NORTH SHIELDS BURGESS HILL HUDDERSFIELD
PAISLEY WAKEFIELD WARMINSTER GATESHEAD BLACKBURN CANVEY ISLAND CHESTER YORK DAVENTRY WIRRAL BRADFORD FELIXSTOWE BARROW-IN-FURNESS LEEDS DEWSBURY SHEFFIELD KENDAL LIVERPOOL STAMFORD CARDIFF BEVERLEY BARRY
Pureprint Ltd aims to reduce at source the effect
its operations have on the environment and is
committed to continual improvement, prevention
of pollution and compliance with any legislation
or industry standards�
Pureprint Ltd is FSC certified and ISO
14001 certified showing that it is committed to all
round excellence and improving environmental
performance is an important part of this strategy�
This report is printed on paper certified in
accordance with the FSC® (Forest Stewardship
Council®) and is recyclable and acid-free�
Designed and produced by Black Sun Plc
www�blacksunplc�com
Pureprint Ltd is a Carbon / Neutral®
Printing Company�
DUMFRIES NEWBURGH WANTAGE BRISTOL KIRKDALE TEWKESBURY NECHELLS THETFORD FARNHAM DONCASTER ROCHFORD ALSTON CLOWNE EVESHAM GLEMSFORD SUDBURY SOUTHSEA LOCHGILPHEAD WIRRAL ASHMORE BOURNEMOUTH MENAI
BRIDGE DARLINGTON ABBOTS BROMLEY ELLAND BUTTERSHAW BURTON UPON TRENT IPSWICH BARROW-IN-FURNESS CUDDESDON OTLEY THAME DUNDEE BEDFORD HINDLEY STRETTON GREAT WALTHAM SOUTH SHIELDS BLOXWICH KERESLEY TAYPORT
BOTTISHAM CAWSTON TONBRIDGE STANDON ROUGHAM DURSLEY WORDLEY KINGS LYNN MONTROSE HALTWHISTLE WALSALL WOOD SKIPTON CHESTERTON CHELMSFORD MARKET HARBOROUGH ELLESMERE DUNMOW HORNCASTLE KIRBYMOORSIDE
OXFORD DARLEY STOCKTON-ON-TEES BLAXTON BRIERLEY HILL DOVER BARNSLEY STANHOPE CHIPPING SODBURY POULTON LE FYLDE GOITSIDE IPSWICH TIBBERTON TELFORD ADLINGTON ABERDARE ODSAL HEREFORD GREAT YARMOUTH GLOSSOP
GATEACRE LEIGHTON BUZZARD BURROUGH GREEN SWINTON STALYBRIDGE BUCKHAVEN YEOVIL LEEDS HUDDERSFIELD NEW ELGIN HOLYHEAD WELLINGBOROUGH LISKEARD KELVINBRIDGE BURFORD YORK BANFF NEWTOWN BIRKENHEAD CARDIFF
INVERKEITHING SUTTON WIGSTON FELSTED COLCHESTER LUTTERWORTH NEWPORT PAGNELL BARNSLEY INGOLDMELLS CREWE STOWMARKET MATLOCK CLYDEBANK KENDAL LANARK SHAW DUKINFIELD ABERTILLERY DUNFERMLINE ROTHERHAM BLACKPOOL
COALVILLE SALTNEY CAMBORNE SOMERCOTES READING UDDINGSTON SMALL HEATH OWSTON FERRY EPPERSTONE PORTSMOUTH GREAT HORTON ST GERMANS RISBY IRVINE KEITH NETHERTON FAKENHAM ELY ROYSTON LITTLEHAMPTON REEPHAM
STADHAMPTON GANSTEAD BEIGHTON BRIDGE OF EARN WATH UPON DEARNE ALEXANDRIA TORQUAY HATHERN DRINGHOUSES GREAT LEIGHS WALKINGTON NORTH SHIELDS SNAITH INVERNESS MOLD BURTON UPON TRENT STRATHAVEN PORTSWOOD
BEWDLEY ST LEONARDS-ON-SEA FINNIESTON BARDWELL PATRICROFT MILTON KEYNES BRAINTREE GALLEYWOOD CRABBS CROSS GRANGEMOUTH 665 PUBS SHEFFIELD ABBOTSLEY DUDLEY LOWER GORNAL PELSALL CAMBUSLANG GOSPORT COPLE
GREAT CORNARD MINERA BRAIDFAULD MOUNT FLORIDA MACCLESFIELD BARNSTAPLE LISS GIRVAN ANNESLEY WOODHOUSE CHASETOWN STROUD RAVENSCLIFFE FOUR ASHES WISHAW BLYTH GODSTONE GLOUCESTER WILBARSTON BUNTINGFORD
FREEMANTLE HALIFAX LAUGHERTON FROSTERELY NEWCASTLE-UNDER-LYME DORCHESTER BURY ALDERSHOT BIGGLESWADE CHEDDAR HADDINGTON NORTHAMPTON TOSTOCK LUTON KINCARDINE BRANSTON SAFFRON WALDEN HAGWORTHINGHAM
LICHFIELD TUDELEY UPTON HAMILTON DENTON WHITHAM COVENTRY BATHGATE DUMBARTON LOCHSIDE CANNINGTON BRIDGWATER ANDOVER GUISBOROUGH LITTLEMORE REDDITCH KNOTTINGLEY HARLOW ABERDEEN WORCESTER EAST CALDER
MELKSHAM GREAT WYMONDLEY SOUTHAM LONDON LYDNEY CHESTER CROMFORD HAVERSHAM ORMSKIRK CUSWORTH JOHNSTONE EXETER CHINDER THORTON COLEHAM WOLLESCOTE WARSOP NEWBURY HARLESCOTT BOLTON HINCKLEY STOCKINGFORD
BALDOCK LINWOOD WARE MUSSELBURGH LEAMINGTON SPA HINCKLEY KILWINNING GRIMSBY CONSETT ROTHERHAM MILNSBRIDGE DIDCOT HEYWOOD NORMANTON DARLASTON ROSS-ON-WYE MOTHERWELL AIRDRIE BAMPTON BOURNE ST. NEOTS
GOOLE STONEYCROFT WHITEHAVEN CHATHAM STOCKPORT FALKIRK NEWTON HALL WINSHILL ANDERSTON SANDY WHEATLEY BLACKENHALL FEN DITTON WEST HEATH WIDNES PERTH OLDSWINFORD WHITWICK OTTERY ST. MARY STAFFORD CHORLEY
BALLACHULISH BOLTON FEATHERSTONE WHITCHURCH COALVILLE ISHAM BURBAGE BULLWELL GREENOCK HEATHHALL KINGSBRIDGE CALNE CHOPPINGTON GORTON NELSON DERBY LARGS WARE STAPLEFORD BRADFIELD COMBUST PAISLEY BRACKLEY
DRIFFIELD LIVERPOOL FARNWORTH WARRINGTON LINCOLN FORT WILLIAM DINNINGTON DONCASTER THAXTED EDINBURGH ST NEOTS SEVENOAKS LEITH HITCHIN MABLETHORPE HONITON SHAWLANDS MUIRHEAD POLBETH SHILLINGTON BRAINTREE
BUCKINGHAM LITTLE SHELFORD STUDLEY NOTTINGHAM HULL TOTTERDOWN WIGAN WARLEY BUCKINGHAM CLAY CROSS ILKESTON BELPER BRISTOL WRENTHORPE DUNBAR CWMBRAN ALNWICK SUTTON IN ASHFIELD BRIDGEND SMALLSHAW RHOSTYLLEN
WORDSLEY KINGSWINFORD SPON END WOODBRIDGE MACCLESFIELD STOKE-ON-TRENT KEIGHLEY EASTWOOD WHITBURN MERCHANT CITY LONGFORD WOOD HAYES HYDE CHADDERTON HOLYWELL BRADFORD WEYMOUTH CARDONALD TENBURY WELLS
NORWICH PENRITH ENFIELD GORBALS DAVENTRY WYBURTON ABINGDON CAMBRIDGE KINGS WALDEN LITTLE WYMONDLEY BISHOP AUCKLAND ARBROATH STAPLE HILL LEEK GLASGOW FORFAR HARSTON MAIDSTONE BLAENAU FFESTINIOG CROSSHILL
YEOVIL HATTON HUDDERSFIELD WEST CALDER SCROPTON HOCKLEY STEPPS HOLT STOURBRIDGE BROOMFIELDS BREACHWOOD GREEN WITNEY GREAT BRICETT HEANOR PENZANCE PRESWICK SANDIACRE WALSALL WREXHAM YARNTON ARMADALE
MOUNT PLEASANT MANSFIELD PRESTON BEWDLEY CALLANDER BASFORD BUGLAWTON EDWINSTOWE OVERSEAL ROPEWALKS BANBURY NETHER STOWEY SLOUGH HADDENHAM CALDICOT WILLINGTON HALESOWEN SHILDON BARNINGHAM CASTOR HUNTLY
KEMPSTON KINGS BROMLEY LONG BENNINGTON LOUGHBOROUGH PLATTS COMMON RUDGE HEATH SWADLINCOTE WOBURN SANDS FOLKESTONE HILLHEAD CANTERBURY YORK LIVERPOOL FISHLEY SHREWSBURY SOUTHAMPTON KINROSS STIRLING
BRAMHALL SCARBOROUGH STANDISH SPRING HILL MALTBY HORNCASTLE SKEGNESS MARCH ST. COLUMB BARROW-UPON-HUMBER FELSHAM KIDLINGTON RHYL WALSHAM LE WILLOWS ECCLESHILL AYLESBURY HIGH WYCOMBE RYDE PARTICK NR
PENRITH PENKETH CRADLEY HEATH HULL GATESHEAD BRIDGNORTH RUGBY GARSWOOD ROCHESTER CARNOUSTIE WOLVERHAMPTON DURHAM PICKERING CHESTERFIELD MEPPERSHALL CUMNOCK TUNBRIDGE WELLS HAVANT CLARE KIDDERMINSTER
ANGLESEY CHEADLE KETTERING CWMBRAN PONTEFRACT WAKEFIELD STOCKPORT LOCHWINNOCH BURY ST EDMUNDS HINXWORTH MEDEN VALE POWICK TAMWORTH NEWCASTLE UPON TYNE KINGUSSIE STRATHBUNGO 34 SHOPPING CENTRES COLWYN
BAY LIVERSEDGE STEVENAGE SHEPSHED TRANENT LIVINGSTON OLDHAM ALDERSHOT HARWICH TICKHILL BROCKHOLES STANLEY TONYPANDY RHOS-DDU TROWBRIDGE LONG EATON NANTWICH WILLENHALL BLACKBURN LANGSIDE RUTHERGLEN SHEPTON
MALLET SHAVINGTON ST HELENS WESTHOUGHTON CHELMSFORD PETERBOROUGH WALTON-ON-THE-NAZE SCARBOROUGH BRENTFORD ATHERTON CUMBERNAULD BRIGHTON DROITWICH BOSTON BISHOPS STORTFORD HALSTEAD NEWMARKET HATFIELD
PEVEREL KIRKCALDY MANCHESTER NEW MILTON NEWARK COATBRIDGE DUNS CONINGSBY MUIREND HOPE VALLEY NEWNHAM SHEFFORD MARSDEN CRANBROOK DROXFORD FAREHAM CHESLYN HAY WITHAM BRINKLOW DENBIGH DOWNEND ESSINGTON
HALESOWEN KEYNSHAM OLDBURY WELLINGTON TELFORD GAINSBOROUGH STOURPORT-ON-SEVERN DERBY BEXLEYHEATH NEWTOWNABBEY WIDNES MORECAMBE PENGE KILMARNOCK CARDIFF ERDINGTON DARLINGTON 19 RETAIL PARKS MARKET DEEPING
WALLSEND OXFORD GRAYS SKEGNESS MIDDLESBROUGH WISBECH FAREHAM CARMARTHEN WORTHING LEITH WITHAM HASTINGS BRIDLINGTON HULL BOSCOMBE LLANELLI COWLEY NEWTON MEARNS NORTH SHIELDS BURGESS HILL HUDDERSFIELD
PAISLEY WAKEFIELD WARMINSTER GATESHEAD BLACKBURN CANVEY ISLAND CHESTER YORK DAVENTRY WIRRAL BRADFORD FELIXSTOWE BARROW-IN-FURNESS LEEDS DEWSBURY SHEFFIELD KENDAL LIVERPOOL STAMFORD CARDIFF BEVERLEY BARRY
www.nrr.co.uk
NewRiver REIT plc
16 New Burlington Place
London W1S 2HX
+44 (0) 20 3328 5800