Positioned for
Annual Report and Accounts
2024
GROWTH
Real Retail Moments
Throughout the pages of this Annual Report, we are proud to share snapshots of real moments of real shoppers and
employees of our operators, giving a glimpse of the people who use and rely upon our community assets, day in and day out.
Find out more about our business on our website at www.nrr.co.uk
HIGHLIGHTS
High-quality portfolio
Occupancy
Core Portfolio
98.0%
FY23: 96.7%
FY22: 95.6%
93%
of Total Portfolio
FY23: 88%
FY22: 85%
Total Property Return:
MSCI Outperformance
In-store sales growth
(Lloyds Bank Data)
+4.8%
FY23: +2.3%
FY22: +7.5%
+9.7%
year-on-year
Good leasing performance
Area
785,100
sq ft
FY23: 979,200 sq ft
FY22: 1,039,800 sq ft
Long-term transactions
+3.6%
vs ERV
FY23: +1.1%
FY22: +7.4%
Attractive, affordable space
Tenant retention rate
94%
Average rent
£11.82
per sq ft
FY23: 92%
FY22: 90%
FY23: £11.98
FY22: £11.74
Expanding Capital Partnerships
Underway to secure a new partner for UK retail park joint
venture to enable growth through co-investment, income
generation and asset management fees.
Fee Income:
£2.5m
FY23: £1.5m
FY22: £1.9m
Major regeneration planning application
submitted for Grays in November 2023
Underlying funds
from operations (UFFO)
UFFO per share
£24.4m1
FY23: £25.8m
FY22: £20.5m2
7.8p
FY23: 8.3p
FY22: 6.7p2
IFRS profit / (loss)
Dividend per share
£3.0m
FY23: £(16.8)m
FY22: £(26.6)m
6.6p
FY23: 6.7p
FY22: 7.4p
Portfolio valuation
performance
EPRA NTA
per share
-2.3%
FY23: -5.9%
FY22: -0.9%
115p
FY23: 121p
FY22: 134p
Loan to value
Total accounting
return
30.8%1
FY23: 33.9%
FY22: 34.1%
+0.5%
FY23: -4.6%
FY22: -6.6%
Net-Zero Pathway Progress
Reductions of -31% in Scope 1 and -16% in Scope
2 emissions in FY24 vs FY23
GRESB score improved to 72 from 70
Gold Level maintained for EPRA Sustainability
Best Practice Recommendations
1. UFFO and LTV reduced due to disposals completed in the last 24 months and
Covid related credits recognised in FY23
2. Retail only number, excluding Hawthorn pub business which was sold in
August 2021
Strategic Report
Our business
2
Our market
4
Our business model
6
Our portfolio
8
Our platform
10
Our investment case
12
Chair’s statement
14
Chief Executive’s review
16
Key performance indicators
21
Market review
24
Portfolio review
32
Finance review
46
Stakeholder engagement
54
Our ESG approach
66
Taskforce for Climate-related Financial Disclosures
84
Principal risks and uncertainties
93
Viability statement
102
Non-financial and sustainability information statement
103
Governance Report
104
Financial Statements
150
ESG Data Sets & Appendix
195
Glossary and Company Information
199
1
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
A LEADING SPECIALIST
RETAIL REAL ESTATE
INVESTMENT TRUST
Our business
2
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strongest operational and financial position for 5 years
Our purpose is to own, manage and develop a portfolio of retail assets across the UK that provide
essential goods and services to local people, help support thriving communities and deliver
long-term premium returns for our shareholders.
Our portfolio is full, affordable and in demand
We are well-positioned for growth
Occupancy rate
Cash
Drawn debt cost fixed
at 3.5%
No maturity on drawn
debt until 2028
RCF extended
to Nov 2026+
Unsecured
balance sheet
Retention Rate
Net Debt : EBITDA
Affordable average rent
psqf
Interest Cover
Leasing activity
vs ERV
Loan to value
98%
£133.2m
94%
4.8x
£11.82
6.5x
+3.6%
30.8%
94.8%
95.8%
95.6%
96.7%
98.0%
20
21
22
23
24
£82.1
£154.3
£88.2
£111.3
£133.2
20
21
22
23
24
91%
87%
90%
92%
94%
20
21
22
23
24
7.7
14.6
4.6
4.9
4.8
20
21
22
23
24
£12.66
£11.51
£11.74
£11.98
£11.82
20
21
22
23
24
4.8
2.3
3.5
4.3
6.5
20
21
22
23
24
+0.8%
+0.6%
+7.4%
+1.1%
+3.6%
20
21
22
23
24
47.1
50.6
34.1
33.9
30.8
20
21
22
23
24
3
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
OUR MARKETPLACE
IS IN ITS BEST POSITION
FOR FIVE YEARS
Our market
• Consumers are still spending and
confidence continues to rise
• The retail occupational market is in
its best position for at least five years
• Sentiment towards retail in the capital
markets is improving
Our market place
Consumers
Consumers are increasingly confident across
all metrics especially their view on their own
personal finances over the next 12 months,
resulting in continued spending. This is
underpinned by low unemployment, stable
house prices, excess saving and wage growth
outstripping inflation leading to growth in real
disposable incomes.
Consumer Personal Finance Outlook
GFK Consumer Confidence Index
(12 months to March 2024)
+20 points
Lloyds Bank Data on Customer Spend
(12 months to 31 March 2024)
+2.1%
Y-O-Y Retail Sales
Value Growth
+7.7%
Y-O-Y Supermarket
Sales Value Growth
4
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Occupiers
The retail occupational market is in its best
position for at least five years due to a number
of factors. Retailers are benefitting from robust
spending by the resilient consumer and there
has been limited retailer distress as much of
the corporate restructuring and portfolio
repositioning has already taken place.
Additionally, the true value of the physical
store has been demonstrated with
omnichannel retailers continuing to win online
market share from the pureplay operators.
Capital Markets
Investor demand for retail parks remains
strong given the highly favourable supply/
demand imbalance which will lead to
consistent rental growth. Demand for
shopping centres has also recently improved,
with multiple bids being received for recently
available shopping centres, attracted by the
high income return.
See pages 24 to 31 for more detail
Rental Growth (Savills, Q4 2023)
(12 months to December 2023)
+13.7%
Shopping Centres
+4.5%
Retail Parks
5
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
A DYNAMIC
BUSINESS MODEL
WITH GROWTH AT
ITS CORE
Our business model
People, Portfolio & Partnerships together with
Environment and Data & Systems
Our business model is delivered by an expert team, a resilient portfolio,
strong working relationships, data-driven insight and systems and
a commitment to sustainability.
1
Disciplined capital allocation
We assess the long-term resilience of our
assets, with capital allocation decisions made by
comparing risk adjusted returns on our assets to
those available from other uses of capital. Capital
allocation options include investing into our portfolio,
acquiring assets in the direct real estate market and
share buybacks. Assets can be acquired either on our
balance sheet or in capital partnerships.
Leveraging our platform
We leverage our market leading platform to
enhance and protect income returns through
active asset management across our assets
and on behalf of our capital partnerships; the
latter also provide enhanced returns through
asset management fee income and the
opportunity to receive promote fees.
Flexible Balance Sheet
Our operating platform is underpinned
by a conservative, unsecured balance
sheet. We are focused on maintaining our
prudent covenant headroom position and
have access to significant cash reserves
which provide us with the flexibility to
pursue opportunities which support our
strategy for growth.
2
3
U
n
d
er
pi
n
n
e
d
b
y
a
c
o
m
m
it
te
d
E
S
G
st
r
at
e
g
y
6
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
7
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
OUR FOCUSED RETAIL
PORTFOLIO IS OCCUPIED
BY SUCCESSFUL
OPERATORS WHO
RELY ON A PHYSICAL
STORE NETWORK
Our portfolio
8
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
44%
7%
24%
25%
Shopping centres – Core
Retail parks
Shopping centres – Regeneration
Shopping centres – Work Out & Other
Portfolio segmentation
Our Top 20 Retailers (by rental income)
Our retail portfolio, focused on providing essential goods and services to
local communities, continues to deliver a strong operational performance
reflecting the active occupational demand for affordable space at our assets
and demonstrating the underlying strength of our portfolio and our platform.
£1.3bn*
Assets Under
Management
1,700
Occupiers
28*
Community
Shopping
Centres
29*
Conveniently
located retail
parks
£120m
Annual rent
* Our Assets Under Management includes assets on NewRiver’s balance sheet (100% value) and
those within our three capital partnerships
9
3
%
C
o
r
e
P
o
r
t
f
o
li
o
9
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
OUR PEOPLE,
PARTNERSHIPS AND
PORTFOLIO TOGETHER
WITH OUR DATA &
SYSTEMS PROVIDE
A MARKET-LEADING
PLATFORM UNRIVALLED
IN THE SECTOR
Our platform
10
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
We have an expert team, empowered by data-driven
decision-making and performance-enhancing systems
Our People: Expert and motivated
team, recognised for the second
year running on the Sunday Times
Best Places to Work List 2024,
achieving Excellent in all criteria
Our Portfolio: Well-positioned,
geographically diverse portfolio with
record occupancy, high retention rate
and affordable space for our occupiers
Our Partnerships: We have excellent
working relationships with our key
stakeholders including our occupiers,
capital partners and investors
Our Data: Access to high quality
data provides deep insight and market
intelligence, including powerful customer
spend data, helping our decision-making
across capital deployment, leasing,
tenant mix, marketing, development
and risk assessment
Our Systems: Robust systems,
technology and security allows for
real-time asset and occupier analysis,
helping improve asset business plans
Our Environment: Our committed ESG programme, aligned with industry
best practice, allows us to manage the impact of our assets on the natural
environment, and the impact of environmental changes on our assets,
underpinned by sector-leading Governance
We manage assets on our own balance sheet as well as
leveraging our platform to manage assets on behalf of our
three capital partnerships:
Institutional Sector:
M&G
Private Equity:
BRAVO
Local Authorities:
Canterbury City
Council
11
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
DELIVERING
ATTRACTIVE
LONG-TERM
RETURNS
Our investment case
12
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Our compelling investment case is focused on delivering long-term reliable and recurring returns,
by leveraging our unrivalled knowledge and experience of the consumer, retail and capital
markets. Our key differentiators are:
Our strategy aims to deliver a consistent 10% Total
Accounting Return in the medium term by focusing
exclusively on these activities
Expert
team & extensive
relationships
Sector
specialisation
Well-positioned
portfolio
Consistent
operational track
record
Strong
Balance Sheet
Data-driven
insight informs
decision making
Geographic scale
Leveraging our
market leading
platform
Growth of capital
partnerships &
co-investment
13
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Well positioned with an
exceptional team
I am delighted to share my first statement as Chair of NewRiver having joined the
Board as Chair Designate on 21 March 2024, before succeeding Baroness Ford OBE
as Chair with effect from 30 May 2024.
NewRiver has a very high-quality portfolio and operating platform, a very
strong balance sheet and most importantly an excellent team. All of these factors,
combined with the potential to increase shareholder value over the coming years,
attracted me to the Chair role. The business has shown tremendous resilience over
recent years and, we believe, is now positioned to grow, as evidenced by this year’s
financial results.
Chair’s statement
Lynn Fordham
Chair
14
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
We are pleased to announce a final dividend of 3.2 pence per
share, so confirming a total dividend for the year of 6.6 pence per
share, comfortably covered by Underlying Funds From Operations.
Given that the majority of our cash holdings are on deposit, earning
a blended return in excess of 5%, we have taken the decision to
increase our dividend payout this year, so that our shareholders
receive benefit as we wait to deploy our cash. Therefore, the
dividend for the year includes a total top-up of 0.4 pence per share.
We have made good progress in our aim to improve the overall
quality of our portfolio, predominantly by selling or repositioning the
Work Out portfolio. At the year end, the Work Out portfolio included
five assets, accounting for just 6% of our total portfolio valuation.
We intend to have fully exited our Work Out portfolio during
the next financial year and already have made progress by
completing one further Work Out disposal post the year end.
The inherent value of our platform and the expertise of the team
extends beyond our own balance sheet and ably equips us to
manage assets on behalf of institutional, private equity and public
sector partners who seek to capitalise on our asset management
capabilities. During the year we expanded the Capital Partnership
we established with M&G Real Estate last year so that we now
manage a portfolio of 17 Retail Parks and two Shopping Centres
on its behalf. Capital Partnerships remain a key strategic focus
for NewRiver, and we are currently seeking a new long-term joint
venture partner to co-invest in a portfolio of Retail Parks, from
which NewRiver will receive a share of rental income and
importantly an asset management fee.
NewRiver’s Governance and disclosure has been recognised
as market-leading, retaining 1st place in the GRESB Management
Module and improving our GRESB score to 72/100. Minimising
our environmental impact requires a collegiate effort across
corporate, asset and community operations, and the business
continues to make great headway in this regard, notably reducing
Scope 1 and Scope 2 Emissions year on year. We are committed to
ensuring we are responsible investors in the communities in which
we operate, striving to provide an affordable range of goods and
services for local people, whilst protecting the environment around us.
I have been very impressed with NewRiver’s focus on people,
culture, data and systems, notably the commitment to empowering
the team and investing in data and technology to inform decision
making. The inclusive, professional culture and significant expertise
of the NewRiver team is a clear strength and I am encouraged to
report that many of the team have worked at NewRiver for between
5 and 10 years. This distinctive culture has been lauded for the
second year running by The Sunday Times, who included NewRiver
in their 2024 Best Places to Work list.
On behalf of my Board colleagues, I would like to take this
opportunity to express our heartfelt appreciation to Baroness Ford
OBE for her tremendous contribution to NewRiver since joining the
Board in 2017 and in particular, for her role as Chair since 2018.
Under Margaret’s stewardship and near-seven-year tenure on
the Board, NewRiver has successfully navigated the considerable
headwinds of the pandemic, demonstrated its resilience and emerged
as a focused and specialist retail REIT positioned for growth.
I would like to thank our shareholders for their ongoing support,
and I look forward to meeting key stakeholders in the coming
weeks and months.
Lynn Fordham
Chair
20 June 2024
“I have been very impressed with NewRiver’s focus
on people, culture, data and systems, notably the
commitment to empowering the team and investing
in data and technology to inform decision making.”
15
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
From resilience to Growth
NewRiver is well positioned to deliver future earnings growth, underpinned by the
strongest operational and financial position the business has been in for several years.
This position is supported by the fact that our underlying occupational market has
been steadily improving over the last few years, our portfolio continues to perform well,
and our balance sheet is in excellent shape, providing future optionality for growth.
The implementation of key strategic decisions made over the last four years has allowed us to reshape our
business, progressing from resilience to sustainable growth. We ended our financial year in a strong position
having delivered another solid set of financial results, supported by an excellent operating performance, whilst
continuing to execute our strategy of expanding our Capital Partnerships, delivering on our core business activity
of market leading asset management and improving the quality of our portfolio through selective disposals.
Active demand for space in our portfolio has remained strong, supported by a broadly resilient consumer, and
demonstrating that the physical store network is essential for successful retailers, including those operators with an
omnichannel strategy. This is reflected in another good year of leasing performance both in terms of volume and
pricing, leading to an occupancy rate of 98% (FY23: 97%), the highest level we have recorded since NewRiver was
founded in 2009.
Chief Executive’s review
Allan Lockhart
Chief Executive
16
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Our portfolio is well positioned for a consumer that is increasingly
seeking value and convenience, and that, together with the quality
of our asset management platform, has resulted in Underlying
Funds From Operations (UFFO) of £24.4 million, equating to 7.8
pence on a per share basis. We have declared a final dividend of
3.2 pence per share bringing the total fully covered dividend for
FY24 to 6.6 pence per share, representing a payout of 85%,
compared to our usual payout of 80%. Dividends are an important
contributor to total shareholder returns and for FY24, NewRiver’s
total shareholder return was 11%.
Our strong operational performance resulted in excellent cash
generation as we ended the financial year with £133.2 million of
cash up from £111.3 million in March 2023. Together with our most
modest decline in valuation for several years, this resulted in Loan
to Value (‘LTV’) of 30.8%, an improvement on the March 2023
position of 33.9% and well within our guidance. As a result, our
EPRA Net Tangible Assets (NTA) per share at the full year was 115
pence, compared to 117 pence in September 2023 and 121 pence in
March 2023. We delivered a total accounting return of +0.5% during
FY24, compared to -4.6% in the prior year.
For the second consecutive year, our portfolio delivered a capital
return outperformance relative to both the MSCI All Property and
All Retail indices reflective of the strength of our well-positioned
portfolio focused on essential goods and services. During the year
ended 31 March 2024, our portfolio delivered a capital return of
–3%, the majority of which was incurred in H1 and concentrated in
our regeneration portfolio. Pleasingly, our core shopping centres,
and retail parks delivered positive capital returns in FY24 and whilst
our Regeneration portfolio capital return was impacted in H1, we
saw a marked improvement in H2.
An Improving Market Place
Looking back over the financial year, the UK consumer has been
more resilient than financial markets were expecting and is now
experiencing wage growth in real terms. According to high-quality
customer spending data provided by Lloyds Bank, both retail and
supermarket spending delivered year-on-year sales value growth of
2.1% and 7.7% respectively for the year ended March 2024. This is a
solid result given that retail accounts for 25% of Lloyds Bank’s
26 million customers’ annual spend and supermarkets account for a
further 17%. This growth is despite consumers having to spend more
on mortgages +9.6%, council tax +7.8%, motor insurance +12.3% and
energy +10.8%. Other sectors that recorded strong spending growth
included travel +13.4% and restaurants +7.6%, albeit these
categories only account for 7% and 8% respectively of Lloyds
Bank’s annual customer spend.
UK consumers have so far been able to absorb the increased costs
due to higher inflation and interest rates through increased wages
which are now in excess of the rate of inflation, and seeking out
value when they shop. Additionally, job security, as measured by
low levels of unemployment, and the fact that consumers have
excess savings, have underpinned confidence levels.
The retail sector over the last seven years or so has had to navigate
significant challenges but in our opinion is arguably in its best
position for several years, this is for three reasons.
• Firstly, much of the corporate restructuring in the retail sector
has already taken place, as evidenced by the significant number
of CVAs and tenant administrations occurring between 2020
and 2022. As a result, many of the weaker retailers have been
removed and, with that, the excess competition benefitting the
rest of the market.
• Secondly, most national retailers have applied a laser focus on
margin growth over the last ten years, not just volume growth,
by delivering improved operational efficiency, including portfolio
repositioning. This has led to improved financial results, and a
great example of this is Marks & Spencer.
Our strategy
Our strategy aims to deliver a reliable and recurring
income led 10% Total Accounting Return and create
value for our stakeholders.
Environment
Lenders
Occupiers
Capital
Partners
Shareholders
Team
Local
Authorities
Communities
Our Stakeholders
Underpinned by clear pillars of execution:
• Highly collaborative working relationships
with our key partners and stakeholders
• A clear plan to help create thriving communities
in the towns where we are invested
• A committed sustainability strategy to minimise
our impact on the environment
• An expert team with opportunity to develop their careers
• Operational efficiency and excellence
• High-quality data and systems
• Maintaining a strong balance sheet
• Delivering consistent and attractive risk-adjusted returns
Our business model
U
n
d
e
r
p
i
n
n
e
d
b
y
a
c
o
m
m
i
t
t
e
d
E
S
G
s
t
r
a
t
e
g
y
1. Disciplined
capital allocation
3. Flexible
balance sheet
2. Leveraging
our platform
Our strategic progress this year:
• Maintaining a resilient retail portfolio
• Consistently strong operational performance
• Robust financial position
• Leveraging our platform
• Expanding Capital Partnerships
• Work Out exit progress
• Creating value through Regeneration
• Portfolio valuation outperformance
• Commitment to ESG
17
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Chief Executive’s review continued
• Thirdly, omnichannel retailers are gaining market share from pure
play online retailers. Omnichannel retailers have invested in fully
integrating their physical store network with their online channel,
and their digital capability in communicating and transacting with
their customers. This is positive for our sector as the physical
store is at the centre of omnichannel retailing, reflecting that
physical stores are the genuine last mile fulfilment and a
business critical channel for retail today and into the future.
Last year the capital markets continued to be influenced by the
elevated risk-free rate, increasing debt costs and the de-risking
of defined benefit pension schemes, all of which contributed to a
subdued transactional market and capital raising. This has persisted in
the first half of 2024, as investors wait for more evidence of pricing
adjustment before they deploy more capital. Recent positive news on
inflation and the corresponding impact for the future direction of
interest rates may lead to a pickup in investor sentiment in the
second half of 2024.
In line with the wider real estate market, transactional volumes were
down for both retail parks and shopping centres. That said, we have
recently seen an increase in investor demand for retail parks driven
by the highly favourable supply demand imbalance which will lead
to consistent rental growth. Investor demand for shopping centres
has also recently improved, with multiple bids being received for
recently available shopping centres, attracted by the high cash-on-
cash returns on offer.
Our Core Shopping Centres and Retail Parks
Delivering For Our Stakeholders
Our retail parks and shopping centres are performing well as
evidenced by high occupancy, high tenant retention rate and
another period of good leasing performance. The active demand
for space we have seen for our Core Portfolio, which is broad
based, supports our operating metrics and this is reflective of our
portfolio positioning towards essential based retail and services, which
is the right place to be in a high interest and inflation environment.
This year, we have started working with Lloyds Bank, combining
high-quality consumer spending data with our retail market
expertise. NewRiver's analysis, informed by Lloyds Bank data, has
provided greater insight into the profile of our shoppers and
performance of our assets. To date, we have detailed customer
spending insights on assets representing 67% of our portfolio by
value, with the remaining analysis due to be carried out during the
remainder of 2024. Our analysis shows that for the year ending
31 March 2024, in-store retail sales increased by 10% relative to the
prior year outperforming the wider market, demonstrating that our
portfolio is proving consistently popular with our consumers.
Based on the sales performance of our tenants within our portfolio
over the reporting period, our current occupational cost ratio is
8.8% which is highly affordable and which partly explains our
excellent leasing performance.
The success that our assets have had over the year in attracting
increased customer spend is clearly good for our tenants and
this has translated into another year of strong leasing performance.
Over the year we completed 259,600 sq ft of leasing transactions
within our Core Shopping Centres on average +6.2% above valuers
ERV, which was the fourth consecutive financial year of positive
leasing spreads. We have also seen a steady improvement over
the last three financial years of leasing transactions versus previous
passing rent, and aggregating those total leasing transactions, the
compound annual growth rate over the last three years was -0.5%
on a 10.0 year previous lease length which given the substantial
disruption the market has seen, is an excellent result.
The stability that we have in our Core Shopping Centres is also reflected
in the vacancy rate which at only 1.6% is the lowest level for four years.
Tenant retention at 92% and gross to net ratio at 93% remain high and
have consistently exceeded 90% over the same period.
Our Retail Parks are also delivering excellent operational
performance, whether that is vacancy at only 2.6%, tenant retention
rate at 100% and a gross to net ratio at 98%. Leasing transactions in
FY24 were positive versus valuer ERV and previous passing rent.
The compound annual growth rate for all aggregated leasing
transactions over the last three years versus previous passing
rent was 2.2% on a 11.7 year previous lease length.
Regeneration Set to Deliver Positive Change
Ultimately, we are an investor in communities and through
our Regeneration portfolio, we are able to deliver significant
improvements to ensure the communities that we are invested in
are able to thrive whether that is through new housing, job creation
or providing a great choice and experience. What is good for our
communities is also good for our shareholders as we are able to
deliver attractive returns from our regeneration activities.
In Burgess Hill, we are in discussions to form a joint venture to
deliver our regeneration project. Furthermore, terms have been
agreed with a major food discounter to pre-let the retail anchor
store, with a budget hotel operator for the proposed 89 bedroom
hotel and with a residential developer to sell part of the site. We
are targeting to commence project works at the end of 2024. We
expect to deliver an IRR in excess of 15% and a yield on cost of 10%.
At Grays, we have submitted our planning application for a
comprehensive redevelopment of the 1970s shopping centre,
principally for residential, and we expect to receive a planning
consent by the end of 2024. Our asset management team has
been successfully negotiating with many of our tenants to provide
flexibility to deliver future vacant possession. With a planning
consent and the ability to secure vacant possession, we will be
well-positioned to sell the asset to a specialist residential developer,
and we are aiming to achieve a successful sale in 2025. This will
then allow us to recycle the capital to deliver future earnings, and
given that we currently do not receive material rental income from
our asset in Grays, a successful completion of our project and the
recycling of our capital will deliver strong future earnings growth.
Marks and Spencer, Broadway
Square, Bexleyheath
18
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
At Bexleyheath, which comprises a shopping centre anchored
by Marks & Spencer and an adjacent retail park anchored by
Sainsbury’s, we have decided subsequent to the financial year end,
to defer our plans to deliver new residential homes to beyond
2029. Our decision was principally driven by the strong underlying
performance of the asset, with both the shopping centre and retail
park being fully let and trading exceptionally well. Our analysis,
informed by Lloyds Bank data on customer spend, shows a marked
increase in customer spending year-on-year. This means our
occupational cost ratio is highly favourable at 9.1%, and we believe
deferring our development plans at this time in the cycle will protect
this significant income stream.
Moving forward, and given our updated position on Bexleyheath, we
will move Bexleyheath out of our Regeneration Portfolio and into our
Core Shopping Centre and Retail Park portfolios. On that basis,
Regeneration will represent 5% of our total portfolio moving forward.
Work Out is Reducing
We completed two asset sales from our Work Out portfolio
during the year, with a third asset sale completing post year end.
Regarding the turnaround strategies within our Work Out portfolio,
we also completed two of these during the year, at our shopping
centres in Paisley and Wallsend, both of which have successfully
moved to our Core Shopping Centre portfolio and which we expect
will deliver high and sustainable income returns going forward.
Good progress was made in relation to the remaining two assets
subject to ongoing turnaround strategies. In Wisbech, we have
made progress in agreeing terms to re-anchor the centre which will
be further enhanced by demolishing a two-deck car park to provide
an attractive open surface car park which will offer free car parking
for up to three hours to support the existing retail offer.
In Cardiff, a detailed planning application was submitted post year
end to repurpose this predominately vacant shopping centre for an
80,000 square foot multi-entertainment centre that will include
numerous social competitive offers as well as a range of food and
beverage provisions. Once we have secured planning consent and
finalised the leasing terms to the proposed operator, we expect to
be in a position to commence the project works by the end of 2024,
and upon completion will deliver a significant net operating income
increase and the capital expenditure investment we will be making
is estimated to deliver a long-term IRR of +10%.
Whilst we have made significant progress in working through our
Work Out portfolio, which today accounts for only 6% of our total
portfolio, down from 11% in March 2023, we now anticipate to have
fully exited our work out portfolio in FY25 instead of FY24, and are
planning two further sales with a combined value of £6 million, and
the completion of the projects in Cardiff and Wisbech.
Scaling Up Capital Partnerships
Today, NewRiver owns and/or manages a portfolio of £1.3 billion,
of which 60% is owned by our capital partners. We are collecting
in excess of £120 million per annum of rent from over 1,700 tenants
across 28 shopping centres and 29 retail parks. We believe that our
geographical representation, together with our customer, retailer
and capital market insights, is unrivalled.
Commercial real estate in the UK is becoming more operational
which has been the case for retail real estate for several years.
To ensure that we have been able to deliver the best performance
from our own balance sheet assets over the years, we have
invested in our infrastructure, including people, data and systems.
Our strategy to expand our Capital Partnerships business is no
different to Amazon’s strategy in opening up their logistics network,
which they have built up to ensure the best service to Amazon’s
customers, to third party merchants in return for fee income.
Ultimately, we are a specialist asset backed operating platform,
with limited competition that can credibly match the high-quality asset
management services that we offer and the ability to co-invest. With
this in mind, we believe that today our Capital Partnership business,
with recurring annualised earnings of £2.5 million is scalable, and
are very confident of our long-term growth potential to deliver
significant earnings growth in a capital light way.
We are seeking a new partner to form a long-term joint venture to
build up a high-quality retail park portfolio for which we believe the
investment case is compelling and the scale of the opportunity is
significant. We are targeting a raise of £200 million of private capital
from ‘core plus’ investors, and meetings with potential partners
commenced earlier this year. Initial engagement with investors
has been positive and we are encouraged by the feedback to date,
which endorses NewRiver as a high quality asset manager and
demonstrates that many ‘core plus’ investors recognise that they
are underweight in retail and are increasingly deploying capital
into the commercial real estate markets via specialist asset backed
operating platforms. This is significant given that circa 90% of global
real estate is invested through the private capital markets, and we
are positioning ourselves well to capitalise on this opportunity.
Regeneration is a growing area of the market reflecting that it is a key
priority of the main political parties in the UK, and thus significant public
capital is being made available. In response to this, we are currently
working on creating a public/private partnership model that will have all
the sector-specific experience and expertise to successfully deliver real
estate regeneration projects. We have made good progress, and once in
place, this will be a key delivery vehicle for Local Authorities to joint
venture with to deliver regeneration projects in their own town centres.
NewRiver would provide some modest co-investment and high-quality
asset and development management services.
We are genuinely excited about and confident in our capital
partnership growth prospects, and we believe that in the medium
term we have the potential to double the annualised fee income
that we are currently generating and deliver attractive returns on
the modest capital that we will invest. Beyond the medium term,
we see no reason why we cannot continue to deliver significant
earnings growth from capital partnerships.
Great People, Great Data and Great Systems
Retail is a fast moving and dynamic market and as such has become
highly operational for both owners and occupiers of retail real estate. For
several years now, we have continued to invest in our people, data and
systems which we believe allows us to make better decisions, improves
our operational efficiency and delivers market leading performance.
We have a fantastic culture at NewRiver with a passionate team of
people with considerable experience and expertise in real estate
and finance. We do not take our carefully nurtured culture for
granted as we continuously invest to ensure that we have the most
talented, agile and happy team we possibly can.
We are strong believers that access to high quality data allows us to
make better decisions whether that relates to capital deployment,
leasing, tenant mix, marketing, car parking pricing or overall risk
assessment of assets. We know that many of our occupiers are also
using data to enhance their customer experience and we believe that it
is important that we also have a great insight into the millions of
customers that visit our assets.
19
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
The most important data, in our opinion, is customer spending which is
why we have started working with Lloyds Bank to combine high-quality
consumer spending data with our retail market expertise. So far, we now
have access to quarterly spending data on 67% of our portfolio by value.
This data provides us with a store-by-store sales turnover, including the
online contribution from that store, where customers are coming from
and where they are not, frequency of visits, average transaction values, a
demographic profile of customers and interestingly, on average where
customers tend to make their first purchase, their second purchase and
beyond. The application and analysis of this data touches almost every
asset management decision that we make and therefore will significantly
enhance our capabilities to make the right decisions in the future to
further enhance our asset business plans.
Handling a greater volume of data to inform decision-making
processes requires highly organised and increasingly automated
systems. Several years ago, we invested in a fully integrated property
management and accounting system which is our single source of truth
and we continue to invest in the phased enhancement of this. One
such stage was the creation of an interactive dashboard for our real
estate and finance teams through a system called Data Freedom. Our
teams are able to access a highly user-friendly dashboard that contains
comprehensive asset information including live rent collection and
arrears which is recalibrated every 15 minutes, via both mobile phone
and laptop, allowing our teams to make real-time decisions. We will
continue to invest in our systems to carefully manage the increasing
data volume that we are accessing whilst also ensuring that we
maintain strong cyber security.
ESG – Progress to Net Zero
During the nine years since the inception of our formal ESG journey,
we have seen an unprecedented evolution in what it means to be a
responsible real estate investor. We recognise that this evolution is
ongoing and remain committed to aligning with industry best
practice approaches to managing both the impact of our assets on
the natural environment, and the impact of environmental changes
on our assets. We are pleased to report that our ESG programme
has continued to deliver on this objective in FY24, as evidenced by
our achievements during the year.
We have continued to make headway on our path to net-zero,
progressing against our emissions reduction targets, to achieve a
–31% reduction in scope 1 and –16% reduction in scope 2 emissions
in FY24 vs FY23. We are encouraged that our occupiers share this
ambition, with 60% of our portfolio floor area occupied by retailers
who have set emissions reductions targets; most in alignment with
the ambitious British Retail Consortium commitment to bring the
sector’s emissions to net-zero by 2040.
FY24 marked the fifth year anniversary of our partnership with the
Trussell Trust, during which we surpassed £500,000 of cumulative
donations to their ambitious goal, to end hunger in the UK. Our
support provides time, space and funds, and this year that included
the donation of a fully fitted kitchen to a local Trussell Trust initiative
in Carmarthen, known as “The Table”, which is run from one of the
units at our Merlin’s Walk shopping centre.
The success of our business comes from the people within our
team and our working partnerships, and so we are delighted to
have been recently recognised for the second year running in the
Sunday Times’ Best Places to Work 2024. The Sunday Times survey
questions are designed to gain insights into employee opinion and
identify actions in respect of NewRiver’s policies, procedures and
culture in the areas of: reward & recognition, information sharing,
empowerment, wellbeing, instilling pride, and job satisfaction.
We were rated “excellent” in all six of the survey’s focus areas.
Separately, our occupier satisfaction & sustainability survey also
provided positive insight, with over two thirds of our occupiers
rating their overall satisfaction with NewRiver as 8/10 or higher
and almost one third providing a 10/10 rating.
The quality of the governance of our business was once again
recognised as we retained our first place ranking in the GRESB
“Management” module out of over 1,000 participants across Europe
and increased our score to 72/100, improved from 70/100 in the
previous year. We also retained our ‘B’ CDP rating for our management
of climate-related issues, as well as our Gold Award in EPRA’s
Sustainability Best Practice Recommendations Awards for excellence
in transparency and comparability of annual performance disclosures.
Our achievements across people, place, partnership, environment
and governance testify how our ESG commitment is embedded
throughout our business and contributing to our success and
growth as a responsible real estate investor.
What Next
Whilst we are reassured with our operational and financial
performance, we are acutely aware that our share price is trading at a
material discount to our net asset value. Despite our consistent income,
capital and total return outperformance versus our benchmarks, the
recognition that NewRiver is one of the UK’s leading owners and
managers of retail real estate and that we have one of the strongest
balance sheets in the UK listed real estate sector, the material discount
is, in our opinion, more reflective of our size, share liquidity constraints
and wider equity market conditions for listed REITs and investment
trusts. This is a challenge that we will seek to overcome through
earnings growth and pursuing a number of growth avenues.
For the rest of this decade, we believe that it will be cash earnings that
will drive returns to shareholders rather than just NTA growth which
was largely driven by the secular decline in central bank interest rates
over the last decade. Furthermore, we believe that specialist asset
backed operating platforms like NewRiver will become more important
as the main conduit for private capital investing into the real estate
markets which are increasingly becoming more operational. As such
we believe that leading specialist asset backed operating platforms
will become more valuable.
In respect of those two trends, we are very well positioned given
the earnings growth potential that we have in our portfolio and
from capital deployment and that our Capital Partnership business
is highly scalable. For the year ahead, we will be investing in our
portfolio and Capital Partnerships to deliver future earnings growth
whilst being alert to other opportunities that will deliver earnings
growth, increased scale and share liquidity. Whilst we have
demonstrated our resilience over the last four years, we are
confident that over the next few years we will deliver growth.
Finally, on behalf of our entire team, I would like to express our
deepest gratitude to Baroness Ford OBE who formally stepped down
as NewRiver’s Chair at the end of May. Margaret, in many ways, has
been the perfect Chair for NewRiver during a challenging period, and
today we are in a stronger position with Margaret having played a
critical role in our repositioning. We wish Margaret all the best for the
future and in doing so we also welcome our new Chair Lynn Fordham
who I am sure will be an equally excellent Chair as Margaret was.
Allan Lockhart
Chief Executive Officer
20 June 2024
Chief Executive’s review continued
20
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Key performance indicators
Consistent progress
Underlying Funds From
Operations
Underlying Funds From Operations (‘UFFO’)
measures underlying operational profits and
excludes one-off or non-cash adjustments.
We consider this to be the most appropriate
measure of the underlying performance of
the business, as it reflects our generation
of operating profits.
Loan To Value
Loan to Value (‘LTV’) is the proportion of
our properties that are funded by borrowings.
The measure is presented on a proportionally
consolidated basis. Maintaining an LTV
of less than 50% is one of our five key
Financial Policies and in addition our
medium-term guidance is to maintain
an LTV of less than 40%.
Total UFFO for FY24 was £24.4 million
down from a total UFFO of £25.8 million in
FY23, due to planned disposals and Covid
related credits recognised in FY23.
LTV has reduced further to 30.8% as at
31 March 2024, comfortably below our
guidance of <40%, due to planned asset
disposals completed during the year.
Link to strategy, ESG
and Remuneration
1
2
3
£
Link to strategy, ESG
and Remuneration
1
2
3
£
Our performance
£24.4m
Our performance
30.8%
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.
Key
How our KPIs align with our
business model, strategic
objectives, ESG strategy and
Executive remuneration
1
Disciplined capital
allocation
2
Leveraging our platform
3
Flexible Balance Sheet
£
Remuneration
ESG Environmental, Social and
Governance
Read about our strategy
and business model on
pages 6 and 17
Read about our Executive
remuneration on pages
129 to 145
Read about our ESG
strategy and performance
on pages 68 to 83
52.1
11.5
28.3
25.8
10
20
30
40
50
60
24.4
20
21
22
23
24
47.1
50.6
34.1
33.9
10
20
30
40
50
60
20
21
22
23
24
30.8
21
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Key performance indicators continued
Admin Cost Ratio
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 and associates. It is a measure of
our operational efficiency.
Interest Cover
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 and
associates. Maintaining interest cover of
more than 2.0x is one of our five key
Financial Policies.
Our Admin cost ratio has increased slightly
during the year, from 15.2% to 15.7%,
because although we have achieved a
modest reduction in admin costs, we have
sold assets, thereby reducing income which
is pending redeployment.
Interest cover increased to 6.5x in FY24
from 4.3x in FY23 due to a reduction in
net finance costs due to interest income
generated on surplus cash balances.
Occupancy
Retail occupancy is the estimated rental
value of occupied retail units expressed as
a percentage of the total estimated rental
value of the retail portfolio, excluding
development activities.
We achieved our highest occupancy level
since inception (and in the five years
presented), with a high, stable retail
occupancy of 98.0%, up further from 96.7%
in FY23, demonstrating the resilience of our
essential spend led portfolio and its
continued attraction and suitability to
occupiers.
Link to strategy, ESG
and Remuneration
1
2
3 ESG
Link to strategy, ESG
and Remuneration
1
2
3
£
Link to strategy, ESG
and Remuneration
1
2
3
£
Our performance
98.0%
Our performance
15.7%
Our performance
6.5x
94.8
95.8
95.6
96.7
10
20
60
80
100
98.0
20
21
22
23
24
15
25
17
15
5
10
15
20
25
30
20
21
22
23
24
16
4.8
2.3
3.5
4.3
2
4
6
8
6.5
20
21
22
23
24
22
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Total Property Return
Total Property Return is a measure of the
income and capital growth generated
across our portfolio. It is calculated by MSCI
Real Estate on our behalf, using
independent valuers. We assess our
performance against the market by
comparing our returns to the MSCI All Retail
benchmark.
GRESB score
GRESB is the leading sustainability
benchmark for the global real estate sector.
Assessments are guided by factors that
investors and the industry consider to be
material in the sustainability performance of
real estate asset investments, resulting in
an overall score marked out of 100.
Improvements in our GRESB score can be
used to measure the effectiveness of our
ESG programme.
Total Accounting Return
Total Accounting Return (‘TAR’) is the
change in EPRA Net Tangible Assets
(‘NTA’) per share over the year, plus
dividends paid, as a percentage of the
EPRA NTA 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.
Our portfolio delivered a Total Return of
+4.8% in FY24 outperforming the MSCI
All Retail benchmark of -0.2%.
During the 12 months to 31 March 2024,
our Shopping Centres and Retail Parks
delivered total returns of +4.4% and +7.5%
respectively vs the MSCI Benchmarks of
+1.4% and +1.6%.
We improved our GRESB score further to
72 in FY24 from 70 in FY23, and again
achieved a perfect score in the
Management module (30/30), ranking first
place out of over 1,000 participants across
Europe. We also achieved full marks in the
Social (18/18) and Governance (20/20)
aspects of the GRESB assessment. We
maintained our CDP ‘B’ score, continuing to
be recognised for “taking coordinated
action on climate issues”. We continue to
progress our pathway to net zero, reducing
our emissions to achieve a –31% reduction
in Scope 1 and –16% reduction in Scope 2
emissions in FY24 vs FY23.
We delivered a total accounting return of
+0.5%, compared to -4.6% in the prior year
due to improved valuation performance
versus the prior year.
Link to strategy, ESG
and Remuneration
1
2
3
£ ESG
Link to strategy, ESG
and Remuneration
1
2
3
£
Link to strategy, ESG
and Remuneration
1
2
3 ESG
Our performance
72
Our performance
+4.8%
Our performance
+0.5%
-5.4
-6.9
7.5
2.3
-6
-3
3
6
9
20
21
22
23
24
4.8
70
60
68
70
15
30
45
60
75
90
72
20
21
22
23
24
-14.7
-24.9
-6.6
-4.6
20
-20
-25
-15
-10
-5
0
20
21
22
23
24
0.5
23
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
INCREASED CONSUMER
CONFIDENCE & A ROBUST
OCCUPATIONAL MARKET
UNDERPINNED BY SUCCESSFUL
OMNICHANNEL RETAILERS
Market review
24
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
25
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Consumer Confidence on Upward Trajectory
GFK Consumer Confidence Index – 12 month movement to March 2024
Stability in the housing market
Despite the sharp rise in interest rates since 2022, house prices
have shown resilience in the face of significantly higher borrowing
costs, with an annual growth rate of +1.1% in April 2024 according to
the Halifax House Price Index and minimal change compared to
April 2022. The average UK House Price currently stands at
£288,949, approximately +£50,000 higher than pre-pandemic
levels. However, the affordability of new mortgages means many
potential buyers have delayed their plans, especially for first time
buyers, putting further pressure on rental costs already impacted by
a significant supply/demand imbalance.
Consumers
Market review
Market review
Disposable Income Growing
Asda Disposable Income Tracker
Cost of living turning point
The key indicators that influence consumer spending are heading
in the right direction, with inflationary pressures continuing to ease
albeit slowly, and interest rates having peaked, with the expectation
of rate cuts over the course of the next year. The most recent CPI of
2.3% in the 12 months to April is at its lowest rate since September
2021 and a significant improvement on the most recent peak of
11.1% in October 2022. Inflation is now at levels much more
comfortable for business and households, close to the Bank of
England’s target of 2%, with further disinflation expected as the
impact of lower energy bill comparatives come through.
Tight labour market and rising living standards
The labour market has remained strong, although softening,
and despite the quarter increase to 4.3% in March 2024,
unemployment remains at near historic lows. Wage growth
has persisted robustly, at 6% annual growth in regular pay
to March 2024 and with inflation continuing its downwards
trajectory, we have seen real wage growth since June 2023.
The increased spending power is demonstrated in the Asda
Income Tracker which showed a 10.1% year-on-year increase
in household disposable income in March 2024, marking 12
consecutive months of growth.
-5%
5%
0%
10%
15%
20%
-10%
-15%
-20%
Mar 21
Average Household Spending Power YoY growth
Sep 21
Mar 22
Sep 22
Mar 23
Sep 23
Mar 24
Overall Confidence Index
Economy over
next 12 months
Personal finances
over next 12 months
+10
+26
+20
26
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
NewRiver’s response:
• Retail spending has been upheld, and encouragingly
volumes have recovered as the rate of inflation continued
its downward trajectory and consumer confidence levels
significantly increased. Positive consumer spending has
led to improved sentiment among retailers and this is
reflected within NewRiver’s retention rate of 94% and
increased occupancy of 98%.
• Consumer positivity is also reflected in our analysis of
like-for-like consumer spend within the NewRiver portfolio,
informed by the Lloyds Bank spending data, which shows
in-store spend is up +10% year-on-year. This is an
outperformance relative to the UK average growth in retail
spend of +2.1%.
• The NewRiver portfolio is in part sheltered from the
variability in consumer demand as our occupier base
has limited exposure to discretionary spend with 78%
by rent from within essential sub-sectors.
• Household spending power is expected to see a boost
throughout 2024 due to several factors including real
wage growth and a second cut in National Insurance
Contributions (NIC), uplifts in pensions and benefits by
c. 8.5%, a 10% increase in the National Living Wage, the
fall in the Ofgem energy price cap and cuts in the Bank
of England’s base rate. All will be welcome relief to
household budgets and we expect spending levels and
mix to improve as a result.
0%
-2%
-4%
-6%
2%
4%
6%
8%
Dec 19
Dec 24
Dec 23
Dec 22
Dec 21
Dec 20
Forecast
Real Living Standards Improved Since June 2023
ONS/Shore Capital Real Wage Growth YoY% (CPI Vs Regular Pay)
The result….
Consumers still spending and confidence is rising
Over the past 12 months, the UK consumer has been more resilient
than financial markets were expecting. According to high-quality
customer spending data provided by Lloyds Bank, both retail and
supermarket spending delivered year-on-year sales value growth of
2.1% and 7.7%. This is a solid result given that retail accounts for
25% of Lloyds Bank’s 26 million customers’ annual spend and
supermarkets account for a further 17%. This growth is despite
consumers having to spend more on mortgages +9.6%, council tax
+7.8%, motor insurance +12.3% and energy +10.8%. Other sectors
that recorded strong spending growth included travel +13.4% and
restaurants +7.6%, albeit these categories only account for 7% and
8% respectively of Lloyds Bank’s annual customer spend.
Despite the narrative around the consumer squeeze, this is not
reflected in retailer trading updates or the data with consumers also
still sitting on excess savings built up during the pandemic.
The GfK consumer confidence index shows that confidence is at its
highest level for almost two years with the overall index up 10 points
compared to 12 months ago. Consumers’ view on their personal
finances outlook is up 20 points since this time last year, to show
a positive rating of +2, its highest level since December 2021.
27
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Market review continued
Supermarket
0.3
4.6
3.7
6.3
7.2
9.6
8.3
15.7 16.0
0.5
Retail Park
Industrial Shopping Centres
Office
Mar 2023
Mar 2024
Retailers
The retail occupational market is in its best position for at
least five years for the following reasons:
1. A resilient consumer
Consumers have proven to be resilient, leading to good spending
levels which retailers benefit from.
2. Limited retailer distress
Significant corporate restructuring in retail has already taken place,
removing the weakest retailers and excess competition from the
market place. The Centre for Retail Research reported a -58%
decrease year-on-year in the number of stores affected by
insolvency in 2023 and was at its lowest number since 2015. Almost
half the stores impacted in 2023 were Wilkos, a large proportion of
which were taken by The Range, B&M and Poundland. There are of
course brands leaving the market, but this is inevitable, and the
overall number is limited.
3. Most profitable retailers remain
Over the last 10 years most retailers have focused on profit and
delivering operational efficiencies not just volume growth. The
INCANS Projected Probability of Failure model shows that the
average projected failure rate for the Retail companies over a
five year period is 2.3%, this aligns with both the Industrial and
Logistics sector averages. Weakness within the retail sector remains
primarily with the online pure-players who are struggling to drive
sales, market share and EBITDA in a higher interest rate
environment. The past 10 years have also seen retailers complete
extensive work in portfolio re-positioning and we are now seeing
these retailers again actively seeking space in the market with a
breadth of demand across both Shopping Centre and Retail Parks.
4. The true value of the physical store
has been demonstrated
For the consumer, the omnichannel experience means the
freedom and flexibility to browse online, visit local stores and
place orders when and where they want. For retailers, it is focusing
on a customer-centric supply chain strategy, but there is a trade-off
between agility, service levels and distribution costs. A key
solution to lower costs and improving customer experience includes
leveraging the pre-existing physical store network. Omnichannel
operators account for +50% of online sales and they continue to win
market share year on year, although it is important to note that
c.75% of retail sales still occur in-store. Retailers have achieved this
fully integrating their online channel with their last mile store
network e.g. click and collect which is increasingly popular for
both consumers and retailers.
Limited Retailer Distress
Centre for Retail Research Number of Stores Impacted by Business Failure
3,000
5,000
4,000
6,000
7,000
2,000
1,000
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Retail Vacancy Levels Continue to Decline
MSCI Vacancy Rate March 2023 vs March 2024
28
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
NewRiver’s response:
• The strength and ongoing momentum in retail
occupational market is reflected in our leasing statistics.
We have completed 785,100 sq ft of new lettings and
renewals in FY24 with long-term transactions on average
+3.6% ahead of ERV, 1.8% ahead of previous rent and with
a Weighted Average Lease Expiry of 7.5 years
• Our retail portfolio is deliberately focused on essential
retailers which serve the local community, and has minimal
exposure to the structurally challenged sub-sectors.
To assess the risk associated with our tenant base and
future cashflows, we have worked with Income Analytics
to quantify the probability and impact of tenant failure.
The tenant risk of failure analysis projects a probability
of failure in the next five years of only 2.2%
• The resilience of NewRiver’s rental cashflows is
underpinned by affordable rents and a low occupational
cost ratio of 8.8%
• Retail parks are a key investment area for NewRiver
given their prominent role within omnichannel retail
for both consumers and retailers. They have click-and-
collect-friendly characteristics such as free, surface-
level parking and good access; being conveniently
located on key arterial routes and having large units
suitable for holding stock at low occupational costs
mean retailers can use stores as fulfilment centres
much closer to their consumer than distribution centres.
The result…
Vacancy across shopping centres and retail
warehousing is falling
The importance of the physical store and the positive momentum
within the occupational market is shown in the downward trajectory
within the vacancy rates. Over the past 12 months, Shopping centre
vacancy rates have declined -130bps and Retail Warehouses
-100bps. This compares favourably to other core commercial real
estate sectors such as Industrial and Offices which have seen their
vacancy levels increase by +100bps and +30bps respectively.
Rental growth is coming through
Within Shopping Centres and Retail Warehousing, competitive
tension is building as a number of operators look to expand
strategically. Since late 2021, Savills have reported consistent
year-on-year growth on achieved net effective rents within
Shopping Centres and as at Q4 2023 reported +13.7% growth.
Within Retail Warehouses, 2023 showed net effective growth at
4.5%, and given a vacancy rate across the market of only 3.7%, we
expect this growth rate to accelerate.
Rental Growth in Retail Parks
Savills net effective rents achieved – YoY% growth
0%
-5%
-10%
-15%
20%
5%
10%
15%
20%
Q2 Q3
Q1
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2020
2021
2022
2023
Rental Growth in Shopping Centres
Savills net effective rents achieved – rolling 4-qtr rolling average YoY%
growth
0%
-5%
-10%
-15%
-20%
5%
10%
15%
20%
25%
2013
2014
2012
2015
2016
2017
2018
2019
2020
2021
2022
2023
29
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Market review continued
Capital Markets
Transactional volumes across the commercial real estate
investment market were low throughout 2023 as a 15-year high in
interest rates and persistent inflation led to declining asset values
and increased borrowing costs. The MSCI March 2024 Quarterly
Index shows re-pricing in the 12 months to March 2024 with All
Property recording a decline of -5.5%, Offices at -13.1%,
Supermarkets at -8.3%, Shopping Centres at -5.4% and Retail
Warehouses at -4.4%. Industrial values were flat for the year
although saw a -1.2% decline in the past six months. These declines
are primarily due to outward yield shift as the market adjusts to the
“new normal” of interest rates, however, such movements are
materially smaller when compared to the prior 12 months, and over
the most recent three months to March, we have seen yields
stabilise. With the prospect of rates reductions in the second half of
2024, we expect this will stimulate activity in the investment market
and support values, whilst income returns will continue to be a key
component of driving total returns.
Retail Warehouse Market – breadth of liquidity
Investors remain attracted by the favourable supply/demand
imbalance and increasing recognition that retail parks are highly
compatible with online fulfilment which is driving the prospects of
significant rental growth. This is in addition to the attractive day one
entry yield and high quality income versus other sectors relative
to the risk profile. In 2023, £1.9 billion transacted, down -27% which
aligns with wider real estate market and follows two years of the
highest activity since 2015 with £3.7 billion and £2.6 billion
transacting in 2021 and 2022 respectively. Key buyers throughout
this period have included UK funds and international investors and
at the smaller lot size of sub £20 million, private investors and small
propcos have remained active.
Shopping Centre Market – attractive risk premium
In 2023, transaction volumes were £1.03 billion across 47 deals,
down -33% compared to 2022 and 2021 which saw £1.5 billion traded.
Whilst volumes have been relatively low compared to historical
levels, sentiment has remained positive in the sector due to the
falling vacancy rates, pricing stability and high income returns
compared to other sectors. This has resulted in renewed interest
from both private equity and institutional funds again reviewing
opportunities in the sector. The shopping centre market is highly
segmented ranging from prime assets serving the destinational
shopping journey and locally dominant schemes satisfying
convenience-led trips to challenged retail centres and redevelopment
opportunities. As such there are a range of buyers within each
segment of the market and we expect this to continue into 2024.
In 2023, local authorities remained active buying within their
jurisdiction, focused on income and social returns, accounting for
6% of purchases, and retailers also a significant buyer in the market
accounting for 23% of transactions.
NewRiver
Shopping Centres
Retail Warehouses
Supermarket
Industrial
Office
All Property
(3.3)
(5.4)
(4.4)
(8.3)
0.0
(13.1)
(5.5)
Capital Growth
MSCI UK Sector 12 Months Returns (%)
Total Return
NewRiver
Shopping Centres
Retail Warehouses
Supermarket
Industrial
Office
All Property
4.8
1.4
1.6
(2.6)
4.4
(9.5)
(1.1)
Income Returns
NewRiver
Shopping Centres
Retail Warehouses
Supermarket
Industrial
Office
All Property
8.3
7.2
6.3
6.2
4.3
4.1
4.7
30
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Retail Warehouse Transaction volumes
Savills
Shopping Centre transaction volumes
Savills
NewRiver Response:
• NewRiver’s portfolio like-for-like valuation decline of
-0.4% in the second half of the year represents a
significant outperformance versus the MSCI All Retail
Index which experienced a capital decline of -3.4%. Our
Core Shopping Centres and Retail Parks, which account
for 69% of the total portfolio, recorded a like-for-like
valuation movement of +0.3% and +0.7% respectively,
meaning we have now seen stable or growing
valuations in five of the last six reporting periods within
these segments
• Our Core Shopping Centre portfolio Net Initial Yield at
9.5% and Retail Park portfolio Net Initial Yield at 6.7% is
premium of +220bps and +30bps compared to their
respective MSCI benchmarks, and provides an attractive
risk premium compared to the wider real estate market.
This already high yield, the low and liquid average lot
sizes of £17.9 million and £15.1 million, combined with the
strong operational performance throughout the year, has
in part insulated valuations from the overall market
movements
• The NewRiver portfolio has significantly outperformed
its MSCI Benchmark due to its strong income component
and more stable valuations. This has resulted in a
Total Return outperformance of +500bps, with an
outperformance in Capital Return of +270bps and
Income Return of +220bps
• Both Shopping Centres and Retail Warehouses provide
an attractive risk premium and investor conviction is
being reinforced through the continued resilience of
the consumer, and physical retail locations
demonstrating their true value.
3,000
5,000
4,000
6,000
7,000
2,000
1,000
0
2007
2006
2005
2004
2003
2002
2001
2000
Transaction volumes £m
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
3,000
5,000
4,000
6,000
7,000
2,000
1,000
0
2007
2006
2005
2004
2003
2002
2001
2000
Transaction volumes £m
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
31
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Portfolio review
OUR WELL-POSITIONED
RETAIL PORTFOLIO IS FOCUSED
ON PROVIDING ESSENTIAL
GOODS AND SERVICES TO
LOCAL COMMUNITIES
Our retail-focused portfolio provides
essential goods and services on a daily
basis to local communities across the UK.
We own and manage a retail portfolio
focused on UK retail parks, core shopping
centres and regeneration opportunities
in order to deliver long term attractive
recurring income returns and capital
growth for our shareholders.
We manage a total of
£1.3 billion
of assets across
9 million
sq ft
including
28
Shopping Centres and
29
Retail Parks and
collect in excess of
£120 million
per annum of rent across
1,700
tenants
This is split between the
assets we own on our own
balance sheet as well as
on behalf of our capital
partners by leveraging
our market leading asset
management platform.
The NewRiver owned
portfolio totals
£0.54 billion
across
6 million
sq ft
and comprises
24
community shopping
centres and
12
conveniently located
retail parks
We manage
18
retail parks and
5
shopping centres on
behalf of Capital Partners
32
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
33
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Our portfolio continues to deliver on its strong
operational metrics, supported by positive
momentum in the retail occupational markets and
sustained consumer spending. Occupancy has
improved by 1.3%, now standing at 98.0%, and
overall, we have completed 785,100 sq ft of
leasing transactions securing £7.2 million of
annualised income. Long term leasing
transactions, which account for 73% of total rent
secured, were completed at rents +3.6% above
valuer’s ERV and +1.8% against the previous
passing rent.
Long-term leasing continues to outperform ERV’s across our Core
Portfolio. Activity for the period across the total portfolio was
concentrated within the Core Shopping Centre and Retail Park
Portfolios, accounting for 79% of long-term rent secured, transacting
at +6.2% and +0.4% above valuer’s ERVs respectively. The
Regeneration Portfolio, accounting for 17% of activity, has also
experienced positive leasing especially at Bexleyheath, with deals
completed +1.0% above valuer’s ERV. We continue to experience
excellent occupational demand across these assets given their
convenient locations at the heart of their local communities.
Our long-term leasing transactions had a weighted average lease
expiry (WALE) of 7.5 years, slightly reduced on FY23 at 8.2 years but a
significant improvement over the 6.4 years in FY22. In terms of tenant
incentives, due to the continued competitive tension in the
occupational market, for long-term leasing transactions the average
rent free period is just 2.1 months, reduced levels compared to FY23 at
2.8 months, with many occupiers receiving no rent free period.
For total portfolio lease events in FY24, the rents achieved had a
positive CAGR versus the previous passing rent of +0.2% over the
average previous lease period of 9.4 years. Over the past three
years, this is only -0.3% based on an average previous lease period
of 9.9 years, illustrating the limited annualised rental decline. For
Retail Parks, the CAGR is positive at +2.2% and given our Retail
Parks have limited availability of space, with occupancy at 97.4%,
this should deliver further rental growth going forward.
Portfolio segmentation
Key
Retail Parks
Shopping Centres – Core
Shopping Centres – Regeneration
Shopping Centres – Work Out & other
28%
37%
23%
12%
FY23
25%
44%
24%
7%
FY24
Our focused and
well-positioned portfolio
Portfolio review
Portfolio Metrics as at 31 March 2024
Occupancy:
98.0%
(FY23: 96.7%)
Retention Rate:
94%
(FY23: 92%)
Rent Collection:
99%
(FY23: 98%)
Affordable
Average Rent:
£11.82
per sq ft
(FY23: £11.98 per sq ft)
Gross to Net Rent Ratio:
88%
(FY23: 88%)
Leasing Volume:
785,100
sq ft
(FY23: 979,200 sq ft)
Leasing Activity:
+3.6%
ahead of valuer’s ERV
(FY23 +1.1%)
Average CAGR
FY22-FY24:
-0.3%
on 9.9 year average
previous lease period
Total Return of
4.8%
outperforming the MSCI
All Retail by +500bps
over 12 months
Portfolio NIY of
7.6%
+160bps
versus the MSCI All Retail
at 6.0%
Occupational Cost Ratio:
8.8%
In-store sales growth:
9.7%
year-on-year
Expanding Capital Partnerships across public,
private equity and institutional sectors
9
3
%
C
o
r
e
P
o
r
tf
o
li
o
34
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
The demand for space that we saw in our portfolio during the
period was broadly based with 69% of the space leased to
Discount, Value Fashion, Grocery, Home, Books & Stationery,
Health & Beauty, Jewellery and F&B.
The focus on the Regeneration Portfolio is to realise capital
receipts in the short term. In Burgess Hill, we are in discussions to
form a new joint venture to deliver a mixed-use scheme. At Grays,
a planning application has been submitted with the significant
residential opportunity to be marketed for sale on receipt of
the decision later in the year. At Bexleyheath, which comprises
a shopping centre anchored by Marks & Spencer and an adjacent
retail park anchored by Sainsbury’s, we have decided to defer
our plans to deliver new residential homes to beyond 2029.
Our decision was principally driven by the strong underlying
performance of the asset and moving forward, it is appropriate to
move Bexleyheath out of our Regeneration Portfolio and into our
Core Shopping Centre and Retail Park portfolios. This will reduce
the Regeneration Portfolio to 5% of our total portfolio.
The Work Out Portfolio now only accounts for 6% of the total
portfolio, down from 11% as at March 2023, with two assets sold
within the period and turnaround strategies completed at Paisley
and Wallsend, therefore moving into the Core Shopping Centre
Portfolio. Of the five remaining assets within the portfolio, three
are planned sales totalling £9.2 million, one of which completed
post year end. The two remaining turnaround projects are at the
Capitol Centre, Cardiff where we have just submitted planning for
work to transform the asset into a family entertainment centre and at
Wisbech, where we have progressed terms to re-anchor the centre.
Our portfolio valuation at £543.8 million, represents a broadly
stable like-for-like valuation movement of -0.4% for the six months
to March 2024 and capital return outperformance against the MSCI
All Property and All Retail indices which recorded declines of -2.9%
and -3.4% respectively over the same period. Over the 12 months to
March 2024, this is a like-for-like valuation movement of -2.3% and
capital return outperformance against the MSCI All Property and All
Retail indices which recorded declines of -5.5% and -5.9%
respectively over the 12 month period.
We experienced valuation growth within both the Core Shopping
Centre and Retail Park Portfolios meaning we have now seen stable
or growing valuations in five of the last six reporting periods within
these segments. Valuation movement within our Regeneration
Portfolio has now stabilised, showing a valuation movement of
-0.8% in H2, having been the most impacted in the first half of the
year where the movement accounted for c.80% of the total portfolio
full year movement. The majority of assets within the portfolio
experienced minimal movement. Out of the 41 assets within the
portfolio, only one asset had a valuation movement of greater than
£1 million in H2, illustrating the underlying resilience of our portfolio.
We continue to have success in growing our Capital Partnerships
and now NewRiver owns and or manages a portfolio of assets
valued at £1.3 billion. Over the past 12 months, we have expanded our
high calibre mandate with M&G Real Estate which now comprises 17
retail parks and two shopping centres and in Canterbury where we
asset manage two shopping centres, we have also been appointed
as development manager on the Council’s relocation to the
shopping centre. Within our BRAVO joint venture, we have
completed the final disposals within the Napier Joint Venture with
the total sale receipt from Napier 26% higher than the price paid,
crystallising the returns contributing to the financial promote.
Our key partnerships across the public, private equity and
institutional sectors illustrate the importance of specialist retail
partners in a highly operational sector and represent endorsement
of the quality of our asset management platform. We believe that
our geographical representation, together with our customer,
retailer and capital market insights, is unrivalled.
Our specialist asset backed operating platform makes us well
placed to ramp up our Capital Partnerships activities, supported
by our strong cash and liquidity position, and we have launched a
search for a new Capital Partner to target UK retail parks in which
we will co-invest to generate rental income and asset management
fees. We are targeting a minimum raise of £200 million of private
capital from ‘core plus’ investors, meetings with potential partners
commenced in February 2024 and engagement has been positive.
Regeneration is a growing area of the market and, in response to this,
we are currently working on creating a public/private partnership with
the support of a key central Government agency. This will be a key
delivery vehicle with which Local Authorities can form joint ventures to
deliver regeneration projects in their town centres.
As at 31 March 2024
Occupancy
Retention
Rate
Rent
Collection
Affordable Average Rent
Gross to Net
Rent Ratio
Leasing
Volume
Leasing
Activity
Average CAGR FY22-FY24
(%)
(%)
(%)
(£ psf)
(Ave. pa)
(%)
(sq ft)
% vs valuer
ERV
(%)
(Average
Lease Length)
Retail Parks
97.4%
100%
100%
£12.00
£124,000
98%
127,400
+0.4%
+2.2%
11.7
Shopping Centres – Core
98.4%
92%
99%
£12.81
£32,000
93%
259,600
+6.2%
-0.5%
10.0
Shopping Centres– Regen
99.5%
100%
100%
£12.47
£68,000
86%
204,300
+1.0%
-0.5%
8.7
Shopping Centres – Work
Out
95.9%
92%
97%
£7.93
£18,000
40%
167,300
-3.6%
-2.4%
6.8
Total1
98.0%
94%
99%
£11.82
£43,000
88%
785,100
+3.6%
-0.3%
9.9
1. Total includes Other representing 1% of total portfolio by value
35
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Valuation
As at 31 March 2024, our portfolio was valued at £543.8 million
(31 March 2023: £593.6 million). Movements from the previous year
were the disposal of two Work Out assets and two Retail Parks
within the BRAVO JV (£38.3 million) and a like-for-like valuation
movement of -2.3% for the year. The valuations were broadly stable
in the second half of the year at -0.4%, driven by stabilised ERVs
and yield profiles. This shows an outperformance relative to the
MSCI All Retail Index which recorded a -3.4% and -5.9% decrease of
the past 6 and 12 months respectively.
The portfolio Net Initial Yield now stands at 7.6%, and has a Net
Equivalent Yield of 8.6%, providing an attractive risk premium
compared to the wider real estate sector. The yield premium is
c.160bps higher than the MSCI All Retail benchmark at 6.0% and
6.8% respectively and represents significant headroom above the
10 year Government Gilt rate. As a result, valuation performance has
been far more insulated from the impact of rising interest rates over
the past 12 months.
Portfolio review continued
The Core Shopping Centre Portfolio, which accounts for 44% of the
portfolio, delivered capital growth of 0.3% in the 6 months to March
2024 driven by the completion of asset management initiatives
resulting in modest yield compression. Over a like-for-like period
the MSCI Shopping Centres Index recorded negative capital growth
of -3.0%.
The Retail Park Portfolio, which represents 25% of the portfolio, also
saw capital growth at 0.7% in the past 6 months, driven by ERV
growth of +2.2% which totalled +3.9% across the full year with yields
stable. The MSCI Retail Warehouse benchmark recorded a negative
growth of -2.8% over the past 6 months.
The Regeneration Portfolio experienced a modest decline in the
second half of the year at -0.8%, a significant improvement on H1
where the valuation movement accounts for c.80% of the full year
portfolio movements. The stabilisation reflects progress on the
projects throughout this period and continued strong retail
performance within Bexleyheath. Moving forward, it is appropriate
to move Bexleyheath out of our Regeneration Portfolio and into our
Core Shopping Centre and Retail Park portfolios.
The Work Out portfolio, which now only accounts for 6% of the
portfolio experienced a valuation decline of -6.5% over the past
6 months.
As a 31 March 2024
Portfolio
Weighting
Valuation
Movement H1
Valuation
Movement H2
Valuation
Movement FY
Topped-up
NIY
NEY
LFL EY
Movement
LFL ERV
Movement
(£m)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
Shopping Centres - Core
239.6
44%
0.7%
0.3%
1.1%
9.5%
9.6%
-0.1%
-0.7%
Retail Parks
137.7
25%
0.2%
0.7%
0.9%
6.7%
7.0%
0.0%
3.9%
Shopping Centres - Regen
128.9
24%
-7.9%
-0.8%
-8.7%
6.3%
7.4%
0.6%
-0.5%
Total exc Work Out / Other
506.2
93%
-1.9%
0.1%
-1.5%
7.9%
8.4%
0.1%
0.3%
Shopping Centres - Work Out
and Other1
37.6
7%
-2.8%
-7.5%
-10.7%
3.5%
11.9%
0.2%
1.3%
Total1
543.8
100%
-2.0%
-0.4%
-2.3%
7.6%
8.6%
0.1%
0.7%
1. Total includes Other representing a value of £3.2 million
As set out in the table below, our portfolio continues to outperform the MSCI All Retail, Shopping Centre and Retail Warehouse benchmarks
on a Total, Income and Capital Return for the 12 month period. Over 6 month, 12 month, 3 and 5 year periods Shopping Centres and Retail
Parks have continued to outperform their respective MSCI Total Return benchmark.
12 months to 31 March 2024
Total Return
Capital Growth
Income Return
NRR Portfolio
4.8%
-3.3%
8.3%
MSCI All Retail Benchmark
-0.2%
-5.9%
6.0%
Relative performance
+500bps
+270bps
+220bps
36
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Shopping Centres
Retail Parks
Total Return: 6 months to 31 March 2024
NewRiver
2.8%
4.5%
MSCI Benchmark
0.3%
0.3%
Relative Performance
+250bps
+420bps
Total Return: 12 months to 31 March 2024
NewRiver
4.4%
7.5%
MSCI Benchmark
1.4%
1.6%
Relative Performance
+290bps
+590bps
Total Return: Annualised 3 years to 31 March 2024
NewRiver
3.1%
11.2%
MSCI Benchmark
-0.8%
7.2%
Relative Performance
+390bps
+400bps
Total Return: Annualised 5 years to 31 March 2024
NewRiver
-2.2%
6.1%
MSCI Benchmark
-9.4%
0.8%
Relative Performance
+730bps
+530bps
Income Return
+110
+450
+140
+590
+290
+150
Capital Return
Total Return
Retail Parks
Shopping Centres
MSCI outperformance – 12 Months
measured in bps
Income Return
+60
+440
+490
+230
Capital Return
Total Return
Retail Parks
Shopping Centres
MSCI outperformance – 5 Years
measured in bps
+530
+730
Income Return
+120
+260
+160
+400 +390
+230
Capital Return
Total Return
Retail Parks
Shopping Centres
MSCI outperformance – 3 Years
measured in bps
37
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
This year we have started working with Lloyds Bank, combining
high-quality consumer spending data with our retail market
expertise. NewRiver's analysis, informed by Lloyds Bank data, has
provided greater insight into the profile of our shoppers and
performance of our assets. To date, we have detailed customer
spending insights on assets representing 67% of our portfolio by
value, with the remaining analysis due to be carried out during the
remainder of 2024.
The headline Portfolio findings are:
Our assets are local and
accessible to our consumers;
in-store spend is increasing,
like-for-like sales are up and
our space is affordable and
profitable for our occupiers.
NewRiver Analysis and Key Findings
• Overall, the portfolio has an OCR of 8.8%, with the lowest being
within the Retail Parks segmentation at 7.6%
• Total in store like-for-like spend for the NewRiver portfolio grew
by 10% year-on-year. In store and online spend growth (In Store +
Online With Store Visit) also grew by 10%. These represent an
outperformance relative to UK average growth in retail spend of 2.1%
• The NewRiver Average Transaction Value (ATV) has grown by 8%
year-on-year, this is an outperformance relative to the
UK benchmark of -1.0%
• The average OCR for the Top 40 Tenants in the portfolio by
rental income is sub 8%. This suggests that the Top 40 Tenants,
on average, generate a healthy turnover, and the rents and
occupational costs are at sustainable levels.
Occupational Cost Ratio (OCR)
OCR is calculated as: Occupational Costs (Rent + Rates Payable +
Service Charge + Insurance) divided by Store Turnover.
Occupational
Costs
(Rent + Rates
Payable + Service
Charge + Insurance)
÷
Store
Turnover =
Occupational
Cost Ratio
NewRiver Portfolio Demographic Definitions
Average
age
Average net
income
Young & Starting Out
Younger individuals, careful with finances and
modest savings
24
£20K
Young Professionals
Young urban professionals and typically
renters
30
£24K
Ambitious & Motivated
Driven professionals with substantial income
and savings
34
£44K
Comfortable & Successful
Homeowners with established careers and
families
46
£42K
Striving Seniors
Commuters nearing the end of their careers,
careful with finances and typically renters
56
£32K
Affluent & Rooted
High-net-worth individuals preparing for
retirement
63
£69K
Retired
Retirees with ample savings but modest
spending habits
73
£37K
NewRiver Portfolio Demographic Profile
Retired
Affluent & Rooted
Striving Seniors
Comfortable & Successful
Ambitious & Motivated
Young Professionals
Young & Starting Out
15%
11%
5%
30%
12%
19%
8%
10%
20%
30%
40%
Portfolio review continued
Customer Spend Data
(Analysis of Lloyds Bank Data)
38
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
The data analysis has also provided us with
insight into our customer behaviour and the
headline findings are as follows:
• Our assets are local and accessible with 68% of consumers
travelling 0-5 miles to visit our centres
• 79% of spend is from consumers of working age (defined as
being between 25 and 69)
• The top 4 most affluent segments (Affluent & Rooted,
Comfortable & Successful, Ambitious & Motivated and Retired)
account for 62% of spend within the portfolio
Segmentations
The analysis shows that across each of our segments, our tenants
are exhibiting strong trading performance, both reflected in the
OCRs and also in the healthy year-on-year spend growth.
Shopping Centres
Retail Parks
OCR %
9.6%
7.6%
Spend Growth %
(In Store)
+6.1%
+16.2%
Spend Growth %
(In Store + Online
With Store Visit)
+6.7%
+15.6%
ATV growth %
+3.0%
+15.5%
Distance Travelled
68%
of our shoppers travel less than 5 miles
OCR
7.5%
Our Top 40 retailers have a low OCR of 7.5%
In Store Spend Growth %
9.6%
Strong growth in physical stores with our Top 40 retailers
achieving 9.6% in-store sales growth
30+
20-30
10-20
5-10
3-5
1-3
Less
than 1
14%
35%
19%
12%
9%
8%
3%
10%
20%
30%
40%
3%
6%
Top 40
Top 20
Top 10
6.6%
6.9%
7.5%
9%
Top 40
Top 20
Top 10
9.5%
10.7%
9.6%
3%
6%
9%
12%
OCR (%)
In Store Spend Growth (% Like-for-Like)
Distance Travelled (miles)
39
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Selected highlights include:
• Barrow-in-Furness, Hollywood Retail & Leisure Park: is the key
retail and leisure offer to the town opposite Tesco Extra, benefiting
from a line-up including Aldi, TK Maxx, Curry’s, Dunelm, McDonald’s
and KFC. We have strengthened this offer, with new lettings in line
with valuer’s ERV, through the introduction of CVS Vets on a 10 year
term on a former Pizza Hut restaurant and having exercised the
landlord break on a Bingo operator, completed a new letting to
Smyths Toys on a 15 year term.
• Cardiff, Valegate Retail Park: this 94,000 sq ft discount-led park,
adjacent to high performing M&S and Tesco Extra stores, has
shown the continued demand for supermarket anchored retail
parks to a variety of occupiers. The park is 100% let following
long-term lettings to Poundland and Boulders, an indoor climbing
centre in the previous year, and a new letting to Card Factory on
a 5 year term at +3% above valuer’s ERV.
• Dewsbury, Rishworth Centre: at our 99,000 sq ft retail park
anchored by Sainsbury’s and Aldi, we exercised the landlord
break on the Poundstretcher unit and completed a new letting
with Pure Gym on terms substantially above the previous passing
rent following a competitive bid process. The park is now fully let
with Pure Gym joining Aldi, Shoezone, Iceland, Halfords, Matalan
and Pets at Home.
• Dumfries, Cuckoo Bridge Retail Park: demand from new
occupiers at this supermarket, DIY and discount anchored park
remains strong with the last remaining vacancy under offer. In the
past 12 months, we have completed a new letting to Food
Warehouse and renewed the lease with Dunelm on a 20,000 sq
ft store for a term of 10 years.
• Lisburn, Sprucefield Retail Park: we successfully received
planning permission for three new drive-thru/restaurant units on
surplus land adjacent to the retail park and exchanged
agreements for lease with Nando’s, Starbucks and Slim Chickens.
Works have started on site with completion due in Summer 2024.
This park benefits from its accessibility, located just off the M1
connecting Belfast to Dublin, and broad tenant mix with anchors
Sainsbury’s and B&Q situated alongside The Range and B&M.
Portfolio review continued
Retail Parks
As at 31 March 2024, Retail Parks accounted for 25%
of the total portfolio, totalling 12 assets. There were 2
assets sold within the past 12 months being the final
sales within the Napier Joint Venture. At 97.4%
occupancy and a retention rate of 100% the portfolio
continues to outperform it’s MSCI benchmark with
several asset management initiatives completed over
the past 12 months driving a like-for-like valuation
movement of +0.9% and ERV growth of +3.9%.
At a glance
Portfolio weighting:
25%
No. assets:
12
NIY:
6.7%
versus MSCI Retail
Warehouse NIY of 6.4%
Average value:
£15.1 million
Occupancy:
97.4%
Retention rate:
100%
Rent collection:
100%
Affordable average rent:
£12.00
per sq ft/£124,000
per annum
Gross to Net Rent Ratio:
98%
Leasing volume:
127,400 sq ft
Leasing activity:
+0.4%
ahead of valuer’s ERV
Average CAGR
FY22-FY24:
2.2%
11.7 year average previous
lease period
Total Return:
7.5%
outperforming the MSCI Retail Warehouse by +590 basis points
Value-creating asset
management: 3 x new
drive-thru’s/restaurants
on surplus land at
Sprucefield Retail Park,
Lisburn, Northern Ireland
Key occupiers
40
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
As at 31 March 2024, our Core Shopping Centre
portfolio represented 44% of our total portfolio, and
comprised 16 core community shopping centres with
an occupancy of 98.4%. Our Core Shopping Centres
are located in the heart of their local communities,
providing a range of essential goods and services to
local people.
At a glance
Portfolio weighting:
44%
No. assets:
16
NIY:
9.5%
versus MSCI Shopping
Centre NIY of 7.3%
Average value:
£17.9 million
Occupancy:
98.4%
Retention rate:
92%
Rent collection:
99%
Affordable average rent:
£12.81
per sq ft/£32,000 per annum
Gross to Net Rent Ratio:
93%
Leasing volume:
259,600 sq ft
Leasing activity:
+6.2%
ahead of valuer’s ERV
Average CAGR
FY22-FY24:
-0.5%
on 10.0 year average
previous lease period
Total Return:
11.4%
outperforming the MSCI Shopping Centres
by +1,000 basis points
Following the completion of two turnaround strategies within
the Workout Portfolio, the centres in Paisley and Wallsend have
been stabilised, and are now considered long-term sustainable
retail centres and as such, have been transferred into the Core
Shopping Centre portfolio.
Selected highlights include:
• Newtownabbey, Abbey Centre: at our centre in Belfast, totalling
320,000 sq ft and anchored by Primark, Next and Dunnes,
we recently completed the upsize of Danske Bank to a new
flagship store on a 10 year term increasing the rent payable by
+59%. In addition, we completed works to create a new external
unit for Greggs and as part of the works refurbished the entrance
to improve the access from the surface level car park. The new
lettings will produce an additional annualised net income of
+£110,000 with total capex incurred of £820,000. It has been an
active 12 months, securing £730,000 of annualised rent including
renewals with a range of occupiers including Pavers, Card
Factory, Clarks and Ernest Jones.
• Hastings, Priory Meadow: at our south-east Shopping Centre in
the heart of Hastings, anchored by Primark and M&S, Black
Sheep Coffee has taken one of the last remaining vacancies on a
new 20 year lease at £60,000 per annum, aligned with valuer’s
ERV. Occupiers continue to benefit from a strong trading
performance at the scheme as reflected at lease renewal with
H&M renewing on terms +11.4% above valuer’s ERV and +23.1%
above the previous passing rent. Within the period, we have also
completed renewals with EE, F Hinds, HMV, Schuh and Boots at
rents aligned with valuer’s ERV.
• The Avenue, Newton Mearns: our community centre is situated
within an affluent catchment in the suburbs of Glasgow, anchored
by Marks & Spencer and Asda, and provides a range of national
and independent retailers. We have recently re-geared Marks &
Spencer on a new 15 year lease with the retailer investing in their
store fit out and let the former M&Co to Bonmarche on a new 5
year lease +13% above valuer’s ERV.
• Paisley, The Piazza: has been revitalised by active asset
management capitalising on renewed occupier interest. Over
the past 12 months, we have introduced JD Sports to the tenant
line-up and completed a new letting to Bonmarche in the former
M&Co unit. The planned redevelopment of the neighbouring
shopping centre in the catchment has removed surplus retail
supply, reinforcing the long-term sustainability of this retail centre
within its local catchment.
• Wallsend, The Forum: the opening of a new medical centre
on surplus car park space which now sits alongside Aldi and
Burger King, which we developed in 2016, in conjunction with the
improved retail occupancy and rental tension has completed the
turnaround strategy on this asset. In the past 12 months, we have
completed long-term lettings totalling +8% above valuer’s ERV
and +17% above the previous passing rent.
Core Shopping Centres
Key occupiers
41
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Selected highlights include:
• Grays, Grays Shopping Centre: is located just 35 minutes
from central London by train and we have submitted a planning
application to redevelop the shopping centre into a high-density
residential-led redevelopment of up to 850+ homes. A positive
planning decision is anticipated later in the year, at which
point the asset will be sold and capital recycled into income
accretive opportunities.
• Burgess Hill, The Martlets: is located in a prominent and
affluent south-east location and currently benefits from a planning
consent for a mixed-use development. We are in discussions
to form a new joint venture to deliver our regeneration project.
Terms have been agreed with a major food discounter to pre-let the
retail anchor store, with a budget hotel operator for the proposed
89 bedroom hotel and with a residential developer to sell part of
the site. We are targeting to commence project works at the end
of 2024. We expect the project to deliver an IRR in excess of 15%
and a yield on cost of 10%.
• Bexleyheath, Broadway Shopping Centre: this Greater London
asset across 11 acres comprises a shopping centre and retail park,
anchored by M&S and Sainsbury’s. We have completed several
new lettings and lease renewals over the period, securing
£1,270,000 of annualised income +1.3% above the valuer’s ERV,
within the existing dominant retail core. This includes new lettings
and renewals to Greggs, Deichmann and B&M replacing Wilko
on a new 10 year lease. Given the strong underlying retail
performance, moving forward it is appropriate to move
Bexleyheath out of our Regeneration Portfolio and into our
Core Shopping Centre and Retail Park portfolios. This will
reduce the Regeneration Portfolio to 5% of our total portfolio.
Portfolio review continued
Regeneration
We have three regeneration assets, representing 24%
of the total portfolio value where the strategy is to
deliver capital growth through redeveloping surplus
retail space predominantly for residential.
At a glance
Portfolio weighting:
24%
No. assets:
3
NIY:
6.3%
versus MSCI Shopping
Centre NIY of 7.3%
Average value:
£43.0 million
Occupancy:
99.5%
Retention rate:
100%
Rent collection:
100%
Affordable average rent:
£12.47
per sq ft/£68,000 per annum
Gross to Net Rent Ratio:
86%
Leasing volume:
204,300 sq ft
Leasing activity:
+1.0%
ahead of valuer’s ERV
Average CAGR
FY22-FY24:
-0.5%
on 8.7 year average previous
lease period
Total Return:
-3.3%
underperforming the MSCI Shopping Centres by
-470 basis points
Key occupiers
42
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Horsefair Shopping Centre,
Wisbech
Strategic report
Our Work Out portfolio makes up only 6% of our
portfolio and comprises five assets. Within the period,
two sales were completed and two turnaround
strategies finalised, therefore these assets have
moved into the Core Shopping Centre Portfolio. There
are three planned sales remaining totalling
£9.2 million, of which one has completed post year
end.
At a glance
Portfolio weighting:
6%
No. assets:
5
NIY:
4.0%
versus MSCI Shopping
Centre NIY of 7.3%
Average value:
£6.9 million
Occupancy:
95.9%
Retention rate:
92%
Rent collection:
97%
Affordable average rent:
£7.93
per sq ft/£18,000 per annum
Gross to Net Rent Ratio:
40%
Leasing volume
167,300 sq ft
Leasing activity
-3.6%
below valuer ERV
Average CAGR
FY22-FY24:
-2.4%
on 6.8 year average previous
lease period
Total Return
-8.2%
underperforming the MSCI Shopping Centres by
-960 basis points
The final two turnaround strategies are the
following:
• Cardiff, The Capitol: we have made significant progress in
transforming this asset which sits at the gateway to Cardiff City
Council’s new canal quarter and accounts for 56% of the total
Work Out portfolio. Planning has been submitted for the required
works to create an 80,000 sq ft family entertainment centre, with
the new letting set to boost the annualised net income by more
than £1 million per annum and act as the catalyst for Food &
Beverage lettings on the remainder of the centre.
• Wisbech, Horsefair: we are moving forward with our small-scale
repositioning of the asset. A 35,000 sq ft anchor unit is under
offer to a leading discount operator which will front a new surface
level car park and drive-thru, also under offer. On completion,
this will boost footfall across the centre which has seen ongoing
commitments from several existing occupiers with renewals
completed with Vodafone, EE and Boots in line with valuer’s ERV.
Work Out
The Capitol Centre,
Cardiff
Key occupiers
43
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
NewRiver currently manages £1.3 billion of assets
across 28 Shopping Centres and 29 Retail Parks,
collecting in excess of £120 million per annum of
rent across 1,700 tenants. This is split between
the assets we own on our own balance sheet
as well as on behalf of our capital partners by
leveraging our market leading asset
management platform.
Capital Partnerships are an important part of our business, delivering
earnings growth in a capital light way through asset management fees,
a share of rent and the potential to receive financial promotes. We are
now well placed to grow our Capital Partnerships activities further,
supported by our strong cash and liquidity position and have launched
a search for a new Capital Partner to target UK retail parks in which we
will co-invest. We are targeting a minimum raise of £200 million of
private capital from ‘core plus’ investors, meetings with potential
partners commenced in February 2024 and engagement has been
positive. Regeneration is a growing area of the market and in response
to this, we are currently working on creating a public/private
partnership with the support of a key central Government agency. This
will be a key delivery vehicle for Local Authorities to joint venture with
to deliver regeneration projects in their town centres.
The expansion and breadth of our Capital Partnerships is a clear
indication of the need for specialist retail partners to enhance
performance in the highly operational retail sector. We believe that our
geographical representation, together with our customer, retailer and
capital market insights, is unrivalled.
Our three current Capital Partnerships are:
Local Authorities:
With Canterbury City Council across two shopping centres
in Canterbury.
Key highlights include:
• We have completed 21 long-term leasing transactions across
105,000 sq ft, securing £2.1 million of annualised rent
• In our role as development manager, we have started on site with
Canterbury City Council’s new office headquarters. The new
offices are being re-purposed from surplus retail accommodation
within Whitefriars Shopping Centre, and we expect to hand over
the completed offices in July 2024.
2
shopping centres
Capital Partnerships
Portfolio review continued
Our Capital Partnerships by area and number
5 shopping centres
18 retail parks
sq ft
5m
21%
79%
At a glance
Total Assets Under
Management
£1.3 billion
(NewRiver assets and assets
managed on behalf of our
capital partners)
Assets
28
Shopping centres
29
Retail parks
Occupiers
1,700
Total Rent
£120 million
pa
Whitefriars Shopping Centre,
Canterbury
44
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Private Equity Sector:
With BRAVO on one retail park and one shopping centre
in Sheffield.
Key highlights:
• At The Moor, Sheffield, we have grown the net income by 28%
since acquisition, with strong interest on the last remaining
vacancies on the newly furbished leisure deck. We have also
generated £16.2 million of capital receipts on non-core elements
of the retail estate with advanced discussions on the sale of a
further two prime residential sites
• At Sprucefield Retail Park, Northern Ireland we have recently
regeared the Sainsbury’s on a new long term deal and we are
developing three drive-thru units across 9,800 sq ft pre-let to
Nando’s, Slim Chickens and Starbucks.
Institutional Sector:
With M&G Real Estate across 17 retail parks and two shopping
centres.
Key highlights:
• Following our appointment in Q4 FY23, the mandate was
expanded to include an additional South-East shopping centre
and a retail park
• Over the past 12 months, we have completed 24 leasing
transactions across 260,000 sq ft, securing £4.6 million of rent
1
shopping centre
17
retail parks
The Moor,
Sheffield
Two Rivers,
Staines
1
retail park
2
shopping centres
45
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Balance sheet positioned for growth
During the year, we have been successful in further improving our already strong
financial position, and we ended the period with £133.2 million of cash holdings,
Net debt to EBITDA reduced to 4.8x, LTV reduced to 30.8% and Interest Cover
increased to 6.5x. Demonstrating the strong support we have from our key
banking relationships, we were delighted that during the second half of the year
we extended the maturity of our undrawn £100 million Revolving Credit Facility to
November 2026, with two one-year extension options (subject to lender consent)
taking maturity to November 2028 at a lower annual cost.
Given that the majority of our cash holdings are on deposit earning a blended return in excess of 5%, we
took the decision to increase our dividend payout in the first half so that our shareholders received
benefit as we waited to deploy. We did this by distributing 100% of the interest income we received in
the first half as dividend, resulting in a fully covered first half dividend of 3.4 pence per share. This
represented a payout of 85%, compared to our usual payout of 80%, and was comfortably 118% covered
by Underlying Funds From Operations (‘UFFO’). We said at the time that our intention would be to top up
the dividend at the full year too, subject to deployment progress in the second half, and given we have
continued to hold back on deployment we have again topped-up the dividend at the full year, using the
same mechanism. This has resulted in a final dividend of 3.2 pence per share and a total dividend for
FY24 of 6.6 pence, representing a payout of 85% and 118% covered by UFFO.
Chief Financial Officer’s review
Will Hobman
Chief Financial Officer
46
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
UFFO for the year ended 31 March 2024 was £24.4 million, which
compares to £25.8 million for the year ended 31 March 2023, with
the reduction due to £61.3 million of completed disposals over the
last 24 months and one-off Covid related credits received in the
prior year. Importantly, UFFO for the year ended 31 March 2024
includes £2.5 million of asset management fee income, an increase of
£1.0 million when compared to the prior year, reflecting the progress
we have made during the year in our key strategic priority to grow
our Capital Partnerships.
Taking account of £38.3 million of disposals completed during the
year and the modest valuation movement of -2.3%, our portfolio
was valued on a proportionally consolidated basis at £543.8 million as
at 31 March 2024, compared to £593.6 million as at 31 March 2023.
The modest portfolio valuation decline is reflected in the reduction
in EPRA Net Tangible Assets per share from 121 pence at 31 March 2023
to 115 pence at 31 March 2024. We delivered a total accounting
return of +0.5%, compared to -4.6% in the prior year.
Key performance measures
The Group financial statements are prepared under IFRS, where the
Group’s interests in joint ventures and associates 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 and associates 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 that 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, which are
summarised in the ‘Alternative Performance Measures’ section
at the end of this document. We report 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 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.
The APM on which management places most focus, reflecting the
Company’s commitment to driving income returns, is UFFO. UFFO
measures the Company’s operational profits, which includes other
income and excludes one off or non-cash adjustments, such as
portfolio valuation movements, profits or losses on the disposal
of investment properties, fair value movements on derivatives and
share-based payment expense. We consider this metric to be the
most appropriate for measuring the underlying performance of the
business as it is familiar to non-property investors, and better
reflects the Company’s generation of profits. It is for this reason
that UFFO is used to measure dividend cover.
The relevant sections of this Finance Review contain supporting
information, including reconciliations to the financial statements and
IFRS measures. The ‘Alternative Performance Measures’ section
also provides references to where reconciliations can be found
between APMs and IFRS measures.
Our stable underlying financials
and strong balance sheet
position us well for growth
Financial Highlights
Underlying Funds
From Operations
£24.4m1
FY23: £25.8m
LTV
30.8%1
FY23: 33.9%
UFFO Per Share
7.8p
FY23: 8.3p
Ordinary Dividend
Per Share
6.6p
FY23: 6.7p
IFRS Profit / (Loss)
After Tax
£3.0m
FY23: £(16.8)m
Admin cost ratio
15.7%
FY23: 15.2%
Total Accounting
Return
+0.5%
FY23: -4.6%
Net finance costs
£10.6m
FY23: £14.9m
Net debt
£167.3m
FY23: £201.3m
Interest cover
6.5x
FY23: 4.3x
Weighted average
debt maturity2
3.9yrs
FY23: 4.7 yrs
Net debt: EBITDA
4.8x
FY23: 4.9x
1. UFFO and LTV reduced due to disposals completed in the last 24 months and Covid
related credits recognised in FY23
2. Drawn debt only
Strategic report
47
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Chief Financial Officer’s review continued
Underlying Funds From Operations
The following table reconciles IFRS profit / (loss) after taxation to UFFO, which is the Company’s measure of underlying operational profits.
Reconciliation of profit / (loss) after taxation to UFFO
31 March 2024
£m
31 March 2023
£m
Profit / (loss) for the year after taxation
3.0
(16.8)
Adjustments
Revaluation of property
13.9
38.2
Revaluation of joint ventures’ and associates’ investment properties
–
(0.8)
Loss on disposal of investment properties
3.8
3.8
Changes in fair value of financial instruments
(0.1)
(0.2)
Loss on disposal of joint venture
2.3
–
Deferred tax
–
0.2
EPRA Earnings
22.9
24.4
Forward looking element of IFRS 9
–
(0.2)
Head office relocation costs
–
0.5
Share-based payments charge
1.5
1.1
Underlying Funds From Operations
24.4
25.8
Underlying Funds From Operations is presented on a proportionally consolidated basis in the following table.
Underlying Funds From Operations
31 March 2024
31 March 2023
Group
£m
JVs & Associates
£m
Adjustments1
£m
Proportionally consolidated
£m
Proportionally consolidated
£m
Revenue
65.0
1.5
–
66.5
76.2
Property operating expenses
(20.9)
–
–
(20.9)
(25.7)
Net property income
44.1
1.5
–
45.6
50.5
Administrative expenses
(12.4)
(0.1)
1.5
(11.0)
(11.1)
Other income
0.4
–
–
0.4
1.4
Operating profit
32.1
1.4
1.5
35.0
40.8
Net finance costs
(9.9)
(0.6)
(0.1)
(10.6)
(14.9)
Taxation
–
–
–
–
(0.1)
Underlying Funds From Operations
22.2
0.8
1.4
24.4
25.8
UFFO per share (pence)
7.8
8.3
Ordinary dividend per share (pence)
6.6
6.7
Ordinary dividend cover
118%
125%
Admin cost ratio
15.7%
15.2%
Weighted average # shares (m)
311.4
309.7
1. Adjustments to Group and JV & Associates figures to remove non-cash and non-recurring items, principally share-based payment charge £(1.5) million and revaluation of derivatives
£0.1 million
48
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
On a proportionally consolidated basis, net property income
was £45.6 million in FY24, compared to £50.5 million in FY23.
This was predominantly due to the impact of £23.0 million of disposals
completed in FY23, the disposal of the Napier Joint Venture during Q1
FY24 and the disposal of two Work Out assets in the second half of the
year which collectively reduced net property income by £4.3 million.
The benefit received from rent and service charge provisions
reduced by £0.4 million, largely due to the collection of historical
rental arrears during FY23. Over the previous two years, we have
benefitted from the collection of rent arrears from the Covid era
which had been provided for during the pandemic. This benefit has
drawn to a close as these historical collections are now finalised
and rental and service charge provisions have stabilised, with rent
collection for FY24 remaining strong at 99%.
Like-for-like net rental income reduced by £1.4 million during FY24,
the majority of which was attributed to the Work Out portfolio which
contributed £0.9 million of the decline. The Work Out portfolio,
which represented 11% of portfolio valuation at the start of FY24,
contains assets we do not want to hold in their current configuration
in the long-term, and therefore we have a target to either sell or
reposition this portfolio. At the start of FY24 the portfolio contained
nine assets, four of which we earmarked for disposal and five of
which we planned to turnaround by investing capital to reposition.
During FY24 we sold two and repositioned two assets meaning the
Work Out portfolio represented just 6% of total portfolio valuation at
the end of FY24.
Like-for-like net rental income within our Regeneration portfolio
declined slightly by £0.4 million as we continue to prepare assets
for vacant possession but pleasingly, our Core Shopping Centres
and Retail Parks have remained stable contributing only a modest
decline in net rental income of £0.1 million in the year.
Asset management fees generated from our Capital Partnerships
increased by £1.2 million in the year on a like-for-like basis,
predominantly due to the asset management mandate signed with
M&G Real Estate during Q4 FY23. The scope of this mandate has
already expanded twice, with an additional shopping centre added
in April 2023 and an additional retail park in November 2023,
increasing the number of assets managed to 17 retail parks and two
shopping centres. As previously noted, we believe that we have a
significant opportunity to deliver further earnings growth through
our Capital Partnerships activity and we are currently actively
seeking a new long-term partner to operate in the retail park
sector, to enable us to co-invest to generate rental income
and asset management fees.
Administrative expenses
We have continued to focus on cost efficiencies and, despite
inflationary pressures, we have again reduced administrative
expenses, to £11.0 million in FY24 compared to £11.1 million in FY23.
It is also worth noting that in FY21, immediately prior to the launch
of our cost reduction initiatives, administrative expenses were
£12.0 million and so the current year figure of £11.0 million
represents over an 8% reduction versus this baseline.
As we look forward to the financial years ahead, we have identified
further cost saving initiatives that we are looking to implement to
keep our administrative expenses at a stable level and where
possible to unlock further reductions.
Net property income
Analysis of net property income (£m)
Net property income for the year ended 31 March 2023
50.5
Net disposals
(4.3)
Net property income re-based
46.2
Rent and service charge provisions
(0.4)
NRI Core, Retail Parks & Other
(0.1)
NRI Regeneration
(0.4)
NRI Work Out
(0.9)
Like-for-like net rental income (including Work Out)
(1.4)
Asset management fees
1.2
Net property income for the year ended 31 March 2024
45.6
49
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Chief Financial Officer’s review continued
Other income
Other income recognised during FY24 of £0.4 million compared
to £1.4 million recognised during FY23. The income in the prior
year related to the settlement of an income disruption insurance
claim relating to our car park income during the first Covid lockdown
between March and June 2020. We stated in our FY23 results that
a more modest claim relating to our commercialisation and turnover
rent income during the same Covid period remained ongoing,
and during the first half of FY24 we settled the commercialisation
element of the claim, which contributed the entire £0.4 million of
Other income recognised during the year.
Net finance costs
Net finance costs reduced by £4.3 million during FY24, falling
from £14.9 million in FY23 to £10.6 million in FY24, primarily due
to interest income received on our cash reserves. We are currently
holding cash reserves of £133.2 million, the majority of which
are on deposit generating a return of over 5%, which contributed
£5.4 million of income during the year, compared to £1.1 million in
the year ended 31 March 2023 due to an increase in cash holdings
and deposit rates, reflective of our pro-active treasury management.
Taxation
As a REIT we are exempt from UK corporation tax in respect of our
qualifying UK property rental income and gains arising from direct
and indirect disposals of exempt property assets. The majority of
the Group’s income is therefore tax free as a result of its REIT
status, albeit this exemption does not extend to other sources
of income such as interest or asset management fees.
Dividends
Under our dividend policy, we declare dividends equivalent to 80%
of UFFO twice annually at the Company’s half and full year results,
calculated with reference to the most recently completed
six-month period.
The Company 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, including that at least 90% of our
profit from the property rental business must be paid as dividends.
We intend to continue as a REIT for the foreseeable future, and
therefore our policy allows the final dividend to be “topped-up”,
including where required to ensure REIT compliance, such that the
payout in any financial year may be higher than our base policy
position of 80% of UFFO.
When we announced our half year results in November 2023,
we explained that we would top-up our half year dividend pending
deployment of the significant cash holdings available at that time,
by paying out 100% rather than 80% of the interest income earned
on our cash holdings during the first half. This increased the first
half dividend by 0.2 pence per share meaning that the dividend
in respect of the six months ended 30 September 2023 was 3.4
pence per share, which represented an 85% payout / 118% cover
of UFFO of 4.0 pence per share. We also noted that our intention
would be to top-up the full year dividend too, subject to capital
deployment in H2.
The Board has today declared a final dividend, in respect of the
second half of FY24, of 3.2 pence per share. This dividend includes
a 0.2 pence per share top-up consistent with the approach adopted
in the half year and reflecting that we have deployed limited capital
in the second half. This takes the total FY24 dividend declared to
6.6 pence, equivalent to 85% of UFFO per share of 7.8 pence.
The final dividend of 3.2 pence per share in respect of the year
ended 31 March 2024 will, subject to shareholder approval at the
2024 AGM, be paid on 16 August 2024. The ex-dividend date will
be 4 July 2024 with an associated record date of 5 July 2024. The
dividend will be payable as a REIT Property Income
Distribution (PID).
50
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Net assets
As at 31 March 2024, IFRS net assets were £361.1 million, reducing
from £378.6 million at 31 March 2023 primarily due to the 2.3%
like-for-like decrease in our portfolio valuation, the majority of which
(2.0%) occurred in the first half of the year. Encouragingly, in the
second half, valuations were broadly stable reducing by a modest
0.4%, driven by stabilised ERVs and yield profiles. This reflected an
outperformance versus both the MSCI All Property (-2.9%) and All
Retail (-3.4%) indices.
EPRA NTA is calculated by adjusting net assets to reflect the
potential impact of dilutive ordinary shares, and to remove the fair
value of any derivatives, deferred tax and goodwill held on the
balance sheet. These adjustments are made with the aim of
improving comparability with other European real estate companies.
For the same reason noted above when discussing IFRS net assets,
EPRA NTA decreased by 4.5% to £361.8 million from £378.9 million
at 31 March 2023 and EPRA NTA per share decreased by 5.0% to
115 pence from 121 pence at 31 March 2023.
Properties at valuation
Properties at valuation decreased by £49.8 million from £593.6 million
as at 31 March 2023 to £543.8 million as at 31 March 2024. The
principal reason for the decrease was the £31.3 million disposal of
our Napier Joint Venture with BRAVO and £7.0 million of disposals
in our Work Out portfolio. The remainder of the decrease reflects
the modest portfolio valuation decline explained above of 2.3%.
Balance sheet
EPRA net tangible assets (‘EPRA NTA’) 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 2024
As at 31 March 2023
Group
£m
JVs & Associates
£m
Proportionally
consolidated
£m
Proportionally
consolidated
£m
Properties at valuation1
533.8
10.0
543.8
593.6
Right of use asset
75.6
–
75.6
76.7
Investment in JVs & associates
5.7
(5.7)
–
–
Other non-current assets
0.3
–
0.3
1.9
Cash
132.8
0.4
133.2
111.3
Other current assets
11.4
0.4
11.8
15.9
Total assets
759.6
5.1
764.7
799.4
Other current liabilities
(26.3)
(0.4)
(26.7)
(30.6)
Lease liability
(75.6)
–
(75.6)
(76.7)
Borrowings2
(296.6)
(3.9)
(300.5)
(312.6)
Other non-current liabilities
–
(0.8)
(0.8)
(0.9)
Total liabilities
(398.5)
(5.1)
(403.6)
(420.8)
IFRS net assets
361.1
–
361.1
378.6
EPRA adjustments:
Deferred tax
0.8
0.9
Fair value financial instruments
(0.1)
(0.6)
EPRA NTA
361.8
378.9
EPRA NTA per share
115p
121p
IFRS net assets per share
116p
122p
LTV
30.8%
33.9%
1. See Note 14 for a reconciliation between Properties at valuation and categorisation per Consolidated balance sheet
2. Principal value of gross debt, less unamortised fees
51
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Chief Financial Officer’s review continued
Debt & financing
Proportionally consolidated
31 March 2024
30 September 2023
31 March 2023
Weighted average cost of debt – drawn only1
3.5%
3.5%
3.5%
Weighted average debt maturity – drawn only1
3.9 yrs
4.4 yrs
4.7 yrs
Weighted average debt maturity – total2
3.6 yrs
4.1 yrs
3.8 yrs
1. Weighted average cost of debt and weighted average debt maturity on drawn debt only
2. Weighted average debt maturity on total debt. Figure at 31 March 2023 includes £125 million undrawn RCF. Figures at 30 September 2023 and 31 March 2024 include the new £100 million
undrawn RCF which was agreed in the second half of FY24. Average debt maturity excludes two one-year extension options on the RCF. Assuming these options are exercised and bank
approved, weighted average debt maturity on total debt at 31 March 2024 increases to 4.1 years
Proportionally consolidated
31 March 2024
£m
30 September 2023
£m
31 March 2023
£m
Cash
133.2
138.0
111.3
Principal value of gross debt
(304.0)
(304.0)
(316.0)
Net debt1
(167.3)
(163.1)
(201.3)
Drawn RCF
–
–
–
Total liquidity2
233.2
238.0
236.3
Gross debt repaid / (drawn) in the year / period
12.0
12.0
(2.0)
Loan to Value
30.8%
29.5%
33.9%
1. Including unamortised arrangement fees
2. Cash and undrawn RCF. Position at 31 March 2023 includes £125 million undrawn RCF. Position at 30 September 2023 and 31 March 2024 includes the new £100 million undrawn RCF which
was agreed in the second half of FY24
Our weighted average cost of debt has remained stable throughout the financial year at 3.5% and our weighted average debt maturity has
reduced from 4.7 years as at 31 March 2023 to 3.9 years as at 31 March 2024. Both cost of debt and weighted average debt maturity are now
closely aligned to our unsecured corporate bond because this now accounts for £300 million of our £304 million of drawn debt following the
repayment of our share (£12 million) of the secured bilateral facility in the Napier Joint Venture on its disposal during the first half of the year.
In November 2023 we successfully refinanced the Revolving Credit Facility (‘RCF’) with all four banks involved in the previous facility
(Barclays Bank PLC, HSBC UK Bank plc, National Westminster Bank plc and Santander UK plc) demonstrating their continued support for
NewRiver through the refinanced facility. The new facility is for £100 million, with a £50 million accordion available subject to lender approval
(previous facility £125 million with a £50 million accordion), and the maturity has been extended from August 2024 to November 2026 with
options to extend the facility by two additional one-year terms (subject to lender approval) to November 2028. In addition, the annual cost
of holding the RCF has also reduced, as a result of a reduction in both the headline margin and quantum. Although the RCF is currently
undrawn, maintaining the RCF ensures we continue to benefit from access to valuable additional liquidity and at the same time by
reducing the size and margin of the RCF, we have been able to do so at a reduced overall cost.
Financial policies
We have five financial policies in total, including LTV and Interest cover which also appear as debt covenants on our unsecured RCF and our
bond. These form a key component of our financial risk management strategy which remains as important as ever given the macro-economic
climate. For the year ended 31 March 2024, we were in compliance with all of our financial policies.
52
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Measure
Financial policy
Proportionally consolidated
31 March 2024
30 September 2023
31 March 2023
Loan to value
Guidance <40%
30.8%
29.5%
33.9%
Policy <50%
Group
31 March 2024
30 September 2023
31 March 2023
Balance sheet gearing
<100%
45.4%
43.5%
49.7%
Proportionally consolidated
FY24
HY24
FY23
Net debt: EBITDA
<10x
4.8x
4.4x
4.9x
Interest cover1
>2.0x
6.5x
5.2x
4.3x
Ordinary dividend cover2
>100%
118%
118%
125%
1. 12 month look-back calculation, consistent with debt covenant
2. Calculated with reference to UFFO
We have seen improvements across all four of our debt related financial policies during the year ended 31 March 2024.
LTV has reduced over the financial year from 33.9% at 31 March 2023 to 30.8% at 31 March 2024 and continues to be well within our
guidance of <40%, primarily due to the disposal of our Napier Joint Venture with BRAVO and two of our Work Out assets. LTV increased
slightly in the second half of the financial year from 29.5% at 30 September 2023 due to the EBT Share Purchase Programme in Q3 and
the payment of the annual interest on the £300 million unsecured corporate bond in March 2024. Balance sheet gearing followed the same
pattern for the same reasons, reducing from 49.7% at 31 March 2023 to 43.5% at 30 September 2023, before increasing slightly to 45.4% at
31 March 2024, well within our guidance.
Net debt: EBITDA, has improved marginally from the position at 31 March 2023, reducing by 0.1x to 4.8x, with an increase in H2 from the
position at 30 September 2023 due to payment of bond interest.
Our interest cover, which is calculated using the net of cash interest paid and cash interest received, has improved significantly throughout
the year, from 4.3x at 31 March 2023 to 5.2x at 30 September 2023 to 6.5x at 31 March 2024 as we continued to hold significant cash
reserves pending deployment.
The Board has declared a final dividend of 3.2 pence per share, bringing the total dividend declared for the year to 6.6 pence per share,
which represents 85% of UFFO and so is comfortably fully covered, in-line with our financial policy.
Additional guidelines
Alongside our financial policies we have a number of additional guidelines used by management to analyse operational and financial risk,
which we disclose in the following table:
Guideline
31 March 2024
Single retailer concentration
<5% of gross income
3.3% (Poundland)
Development expenditure
<10% of GAV
<1%
Risk-controlled development
>70% pre-let or pre-sold on committed
N/A, no developments on site
Conclusion
We have produced a strong set of financial results, underpinned by the consistency of our portfolio’s underlying cashflows, continued
improvement across all of our key financial metrics and growth from our Capital Partnerships, which we have earmarked for further growth
given we are now in a position to deploy capital selectively and decisively when the right opportunities arise.
Looking forward, we remain confident in our ability to deliver our medium-term target of a consistent 10% total accounting return.
Will Hobman
Chief Financial Officer
20 June 2024
53
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Stakeholder engagement
THE SUCCESS OF OUR
BUSINESS IS UNDERPINNED
BY OUR BEST IN CLASS
TEAM AND STRONG
RELATIONSHIPS WITH
MULTIPLE STAKEHOLDERS
54
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
55
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Our Stakeholders
Our people are what make the success of NewRiver possible.
We are delighted that the culture and expertise of the NewRiver
team were recognised for the second consecutive year by the
Sunday Times Best Places to Work 2024 (post-period end).
We continuously invest in our team and culture, and in turn our
highly committed and experienced team continuously invest in our
relationships and partnerships.
We are proud of our highly motivated, collegiate and well-balanced
team, with a 50:50 gender split. Our team continue to focus on
helping drive the business forward whilst also advancing their
own career development. We foster strong working relationships
with our wider stakeholders who collectively help us deliver on our
strategy, business model and ongoing success. We recognise that
our stakeholders have a range of varying priorities and concerns
and we endeavour to incorporate these into our own strategic
decision-making.
Board engagement
Critical to effective Corporate Governance is how the Board aligns
strategic decisions with the Company’s purpose, values, strategy
and stakeholders. The NewRiver Board has a clear stakeholder
engagement plan, regularly consulting with the NewRiver team, who
in turn manage and foster the relationships with core stakeholders.
Our Stakeholders include:
Stakeholder engagement
Stakeholder engagement
Sunday Times
Best Places to Work 2023 & 2024
During the period (May 2023) we were recognised in the
Sunday Times Best Places to Work 2023 awards for the first
time, and are delighted to be recognised again, post-period,
in the 2024 awards (May 2024). Included in the ‘small
organisation’ category (10-49 employees), the awards
acknowledged our wide-ranging benefits package and
ongoing commitment to supporting our team and their
career development through a collaborative, diverse
and inclusive culture.
In May 2023 we received positive survey results including
strong approval and engagement ratings of 82%, with a
“confidence in management” score of 80% and achieved
“Excellent” across all areas. In the most recent May 2024
survey our average engagement score improved further to
84%, and 87% of NewRiver employees who participated said
they felt empowered, while job satisfaction, happiness and
well-being also scored highly at 86%, 84% and 83%
respectively.
The Sunday Times recognised our flexible working
environment, as well as important policies including full private
medical cover, ‘gender-agnostic’ shared parental leave and a
fully paid six-week sabbatical after 10 years of service.
We were also recognised for our commitment to learning and
career progression, providing practical support for development
and empowerment.
“We are delighted to be recognised by The
Sunday Times as one of the best companies
to work for in the UK for two years running.
We are proud of our excellent culture at
NewRiver which we continuously invest in to
ensure we have the happiest, most talented
and energised team.
The fact that 75% of the NewRiver team have
been at the company for more than five years is
testament to the positive working environment
and
culture that we have established.
We are driven, collaborative
and well-balanced with a
50:50 gender split, and
23% ethnicity. It is the
team themselves who
enhance and protect our
positive culture. I would
like to thank everyone
at NewRiver for their
hard work and dedication
as champions of our culture.”
Edith Monfries
Chief Operating and People Officer at NewRiver REIT
Environment
Lenders
Occupiers
Capital
Partners
Shareholders
Team
Local
Authorities
Communities
56
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
The Directors consider, both individually and collectively, that they have acted in the way they consider, in good faith, would be most likely
to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in
section 172(1)(a-f) of the Companies Act 2006) in the decisions taken during the year ended 31 March 2024.
Details of our key stakeholders and how the Board engages with them can be found here in our Stakeholder Report. Further details of the
Board activities and principal decisions are set out on page 113 providing insight into how the Board makes decisions and their link to
strategy. Other disclosures relating to our consideration of the matters set out in s172(1)(a-f) of Act can be found as follows:
S172 factor
Our approach
the likely consequence
of any decision in the
long term
As a Board of a REIT owning assets which also include a risk-controlled development pipeline, the
Board is always conscious of the long term. Looking to the future the Board and Executive Committee
regularly assess the overall corporate strategy and acquisition, asset management and disposal
decisions in the context of current and future long-term trends and markets. We closely assess the
latest trends reported by our research providers, to ensure we are aligned with evolving trends.
These insights and the Board’s own extensive experience steer the long-term strategic direction.
the interests of the
company’s employees
We have a small workforce which allows a naturally close proximity between them and the Board
making it easy for the Board to engage with staff directly especially as the Directors regularly visit the
London office and other sites. This year Directors have visited assets, spent time in the London office
and attended social events with staff.
the need to foster the
company’s business
relationships with
suppliers, customers
and others
The Board is committed to fostering the Company’s business relationships with occupiers, local
authorities and other stakeholders. These stakeholders are key to our business model and therefore
members of the Exco (including Board members) have direct responsibilities for managing and
developing these relationships. Board site visits during the year have helped in developing these
relationships and understanding the needs of these stakeholders.
the impact of the
company’s operations
on the community and
the environment
The Board is committed to our communities and our assets are integral to the communities they serve.
We aim to enhance the lives of consumers and minimise our impact on the environment. These matters
are therefore considered in all strategic decisions and embedded into the business model.
the desirability of
the company maintaining a
reputation for high
standards of
business conduct
Our values mirror our culture and as a team our values are to be trusted and respected and this is
entrenched into Board decisions. Staff receive regular training on our anti-corruption policies to ensure that
they are entrenched in all staff decisions and conduct. Again the size and proximity of the workforce allows
our values to be communicated, embedded and monitored easily and less formally.
the need to act fairly as
between members of
the company
The Board recognises the importance of treating all members fairly and monitors the views of the
Company’s shareholders through reports on investor and analyst communications so that their views and
opinions can be considered when setting strategy.
Section 172(1) Statement
57
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Stakeholder engagement continued
Our Team
At NewRiver we know that the success of the Company comes from
the people within our team.
Our people strategy ensures a collaborative, inclusive and
flexible working environment. We are proud to say this has been
recognised for the second consecutive year, post period, in May
2024, having been named one of the best places to work in the UK
by The Sunday Times Best Places to Work List 2024, scoring
“Excellent” across all six criteria.
Communication, collaboration and respect continue to sit at the
heart of our people strategy which harnesses the power of the
team to drive our business forward.
We provide support for every member of the team, with a wide range
of well-being initiatives to ensure an effective work/life balance.
Training and Development is key to empowering our loyal team and
ensuring that everyone has a chance to unlock their full potential.
Our flexible working policy fosters a positive working environment to
suit the different lifestyles of our team. As well as flexible working, we
offer an attractive and wide-ranging benefits package including full
private medical cover and ‘gender-agnostic’ shared parental leave
together with training and career development in a collegiate, diverse
and inclusive culture. Long-serving team members are also rewarded
with a fully paid six-week sabbatical following 10 years of service; and
we also offer an opt-in salary sacrifice for electric cars and a policy
enabling staff to take time off to volunteer. Our high staff retention
testifies the team satisfaction with over 75% of our staff having worked
at NewRiver for 5 years’ or more.
Recruitment and talent
This year, our total head count across the Group at the close of the
period was 48. Our approach to recruitment and development is
aligned with both the needs of the business today and our
aspirations for the future, whilst remaining committed to maintaining
the unique corporate culture that is one of NewRiver’s key and
distinguishing strengths.
We are continuously working to develop the skills, capability and
performance of all employees. Our support ranges from funding
professional qualifications including RICS and ACCA to informal
training sessions and a bi-weekly team meeting to empower the team
with research and knowledge to help enhance their day-to-day role.
We continue to support the UK Government’s Apprenticeships
Scheme. During the year 71% of our staff undertook professional
training and employees across the business spent a total of 2,431
hours on training, including Continuing Professional Development.
We appraise our team annually, undertaking a tailored performance
review which includes a professional development plan which allows
our team to set objectives, track progress and fulfil their potential.
Health and Well-being
We recognise that our people are our greatest asset and we are
committed to improving the quality of our employees’ working lives
by providing a safe and healthy working environment. Our aim is to
create a positive working environment by integrating well-being in
all work activities and by empowering our people to make positive
choices regarding their health and well-being.
Gender & Ethnicity
We are proud to say that we have a very even gender balance
across the business with a 50:50 gender split; and a 23% ethnicity
representation across the business.
Read more information about our
Diversity & Inclusion on pages 59, 82 and 121 to 122
Gender & Ethnicity representation across
the business
We are proud to say that we have a very even gender
balance across the business:
Group
50%
50%
Male
Female
23%
Ethnicity
Representation
48
Employees
75%
Of our team have worked at
NewRiver for 5+ years
46
Hours of training per
employee this year
2,431
Total hours of training
this year
71%
Of our team undertook
professional training
during the year
63%
Of our team have
professional qualifications
102
Hours of volunteer support dedicated to the Trussell Trust
58
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Physical Environment and Flexible Working
During the previous financial year, we relocated to our new office
space on Whitfield Street in Fitzrovia. The office is within one of the
greenest office buildings in London, with access to an attractive
communal shared office space and extensive fitness and well-being
facilities including bike lockers and a variety of hosted well-being
classes and branded pop-ups. The London office space is open
plan with hot-desks which has helped our team become more
digitally-centric and print less paper. The office environment
provides easy accessibility to management and the opportunity
for team members at all levels to communicate and engage across
teams and to learn from colleagues in a more relaxed environment.
We offer all staff the ability to work from home two days a week,
with three days in the office or at assets, and we work around core
hours to enable staff to travel and organise their days to best suit
them, be it time with family or to undertake fitness or hobbies.
We believe our working policies are effective in how it translates
through to our low absentee rates of less than 2%.
Our dedicated Diversity and Representation Committee meet regularly
and implement initiatives to engage and motivate the wider team.
Mental Health
We have continued our partnership with mental health charity,
Chasing The Stigma, to ensure that mental health is normalised in
both the workplace and our wider communities. During the previous
financial year we provided important mental health training via Chasing
The Stigma’s dedicated mental health programme called
‘Ambassadors of Hope’. Training was delivered for the NewRiver
shopping centre on-site teams as well as to the NewRiver Head
Office team including members of our Executive Committee. We
continued the training this year and we now have a total of 156
‘Ambassadors of Hope’ across our business since our partnership
began in March 2023. This training enables the team to support the
work of the charity and signpost to mental health support resources
available locally and nationally. This year we have also worked with
the charity at an asset level to help locate mental health services for
our local community to access. We also have trained mental health
first aiders at Head Office.
Find out more here: www.chasingthestigma.co.uk
Diversity
As a Company, we are committed to a culture of diversity and inclusion
in which everyone is given equal opportunities to progress regardless of
gender, race, ethnic origin, nationality, age, religion, sexual orientation or
disability. Our ethnicity representation is 23%. We also have a Diversity
and Representation committee who meet regularly to promote inclusion
across the business. We believe there is a broad composition of diversity
across the business, and this was once again recognised post period by
the Sunday Times Best Places to Work 2024 survey where we
scored “Excellent” in our Diversity and Inclusion measures.
Details of Board and Executive Committee composition can be
found in the Nomination Committee Report on pages 121 and 122.
Reward and Recognition
We have an expert and passionate team who are dedicated to
achieving the results that we deliver year on year and the Board is
committed to rewarding this hard work through our remuneration
policies; this includes bonus entitlements to reward excellent
performance, and also through our Long Term Incentive Plan to
help secure retention of our talented team.
The Company offers a range of benefits to our team, some
particular highlights include:
• flexible hybrid working with 3:2 days split in the office/on site:
at home
• full private medical cover for all staff
• ‘gender-agnostic’ shared parental leave
• training and career development
• an electric car scheme
• six week paid sabbatical to employees who have been with the
business for 10+ years
• mental and physical health resources and training
• staff volunteering policy enabling staff to take time off to
volunteer for our charitable partner The Trussell Trust or a charity
of their choice
The team also have the opportunity to discuss the benefits available
with specialist advisers to ensure that they suit their needs. We
review the benefits each year to ensure they meet employee
expectations and industry benchmarks.
59
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Stakeholder engagement continued
Board Engagement during the year
Our Board have a comprehensive engagement
strategy working to engage the wider team,
including an active outreach programme with
Board Directors visiting assets to meet the
centre management teams, our occupiers
and local authorities.
A regular staff forum ensures that there is effective communication and
interaction between the Board, Senior Management and the wider
Team. We regularly provide the opportunity for our Non-Executive
Directors to meet the team both formally and informally, both in
confidence or in wider forum.
Alastair Miller, our designated Non-Executive Director responsible
for engaging with the NewRiver team, holds an annual team
engagement session in person and online to listen to perspectives
from across the team as well as allowing staff the opportunity to
hear from Alastair around the work of the Remuneration Committee.
This year’s themes also included the succession planning and
recruitment process for our new Chair, as well as macro-economic
themes, strategic growth priorities for the business and flexible
working patterns.
We also participated in the Sunday Times Best Places to Work 2023
survey, which showed engagement scores (82%) above industry
averages of 72% and we scored 80% for ”confidence in
management” versus the benchmark of 68%. We were also
recognised for the second consecutive year, post period end in May
2024, in the UK Sunday Times Best Places to Work 2024. More
information can be found on page 56.
We hold regular staff meetings which cover a range of topics to
keep the team updated about the business and promote wider
sector knowledge, with external speakers and team-driven
agendas. Our Senior Leadership Team meet quarterly to discuss
strategy, processes and culture to help drive business efficiencies
and growth, reporting into ExCo.
Read more information on our Section 172(1) Statement on
page 57
How did we engage?
• Staff Forum and bi-weekly all staff briefing meetings
• Sunday Times Best Places to Work Survey 2023; and post-period
Sunday Times Best Places to Work Survey 2024
• Regular Non-Executive Director office visits to allow the Board to
interact with and listen to the wider team
• Our comprehensive appraisal process with individual
performance reviews and development discussions
• Continued Chasing The Stigma “Ambassador of Hope”
mental health partnership
• Alastair Miller, our designated Non-Executive Director
responsible for engaging with employees, held team
engagement session
• Board Directors visited assets across the portfolio to better
understand the assets and spend time with the property team
and local on-site teams
Topics raised
• Leadership and Strategy
• Opportunities for personal and career development
• Knowledge-sharing across the Company
• Well-being and flexible working
• Rewards and benefits
• Fostering a diverse and inclusive culture
• Succession and recruitment for the Company’s new Chair
• Our ESG strategy
How did we respond?
• Findings from the employee survey 2023 demonstrated that our
team are fulfilled and happy, but we continue to invest in culture,
knowledge-sharing, well-being and training to ensure we manage
and address Company level engagement priorities
• Continued to provide a range of physical and mental well-being
services
• Continued to encourage employee shared ownership in the
Company’s success through the award of all-employee
share schemes
• Training and information sessions conducted on key topics raised
• Expanded our Diversity Policies
• Leadership Skills Training
60
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Our Communities
Our assets are located in the heart of
communities throughout the UK and play an
integral role in the lives of our customers.
In many locations we are one of the largest real estate owners and
we take this responsibility very seriously and Board Directors visit
assets regularly with the asset teams to see the assets in action
and understand how they provide for the local community and
wider town. We aim to strengthen the communities we operate
in providing for the everyday needs of locals through our shops
and services and supporting the causes that matter to them.
Read more about our community engagement initiatives
on pages 69, 70, 77, 79, and 81
Board Engagement during the year
How did we engage?
• Regular reporting to the Board through the quarterly CEO report
and quarterly ESG reporting
• Received presentations from Asset and Development team
on Community Investment Plans and Asset Business Plans
• Directors volunteered at Trussell Trust food banks
• Board Directors visited assets across the portfolio meeting with
local teams alongside the asset and development managers
• The Board considers potential impacts to local residential areas
where Regeneration and broader developments are under
discussion, including during the planning process relating to key
developments across our portfolio
• Requests for capital expenditure approval require consideration of
how the projects could benefit the local community including
improvement of the retail and services offer, creation of new jobs
and homes, public realm enhancement and environmental impact.
• Regular consultation with local community groups, through our
regeneration work, to enable us to understand their requirements
and establish our priorities as a result – resulting in the planning
application submission for Grays and progress of our existing
planning consent in Burgess Hill
• NewRiver representatives sit on the Board of several Town Funds
to help steer the direction of local economic and social growth
• Our Shopping Centre Managers organise regular events and
fundraising activities which bring people together, encourage
dialogue and support the development of thriving communities
• TARA: We continue our partnership with The Academy of Real
Assets, a charity whose mission is to engage students from
under-served UK state schools and introduce them to a career in the
world of real estate by providing them with insight into, and
contacts within, the industry. This year one of our centre
managers, for Bexleyheath, helped facilitate training for students
seeking to undertake work experience via TARA.
Topics raised
• Town centre regeneration
• Creating long-term social and economic prosperity Training for
students seeking to gain work experience
• Responsible planning, development and design
• Community well-being and social value
• Environmental protection
How did we respond?
• This year marked out fifth year of partnership with The Trussell
Trust, and we have now raised over £500,000 during that time,
as well as continuing to provide time and space by providing
physical space at our assets and volunteering time from our team
• Our centre teams undertake regular training to equip them with
appropriate skills and qualifications to help ensure the smooth
running of on-site teams, our occupiers and the centre in general
• Enhanced social media use for community engagement.
£500,000+
Raised since June 2019
Stopping UK Hunger: Our 5-year
partnership with the Trussell Trust
Since the inception of our partnership with the Trussell
Trust in June 2019, we have raised over £500,000 in
support of their mission to stop UK hunger. This year,
non-monetary support included 3.2 tonnes of food
donations; digital advertising; over 102 volunteering hours;
and support for their Essentials Guarantee campaign.
61
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Stakeholder engagement continued
Our Occupiers
When our occupiers are successful, so too are we.
We continuously nurture our working relationships with our
occupiers, so we can better understand their needs and potential
challenges or opportunities. We have hand-picked our portfolio to
focus on occupiers that provide essential goods and services and to
support the development of thriving communities across the UK,
while deliberately avoiding structurally challenged sub-sectors such
as department stores and mid-market fashion.
We are proud that our portfolio offers excellent affordability of rents
with low occupational costs, demonstrated through our consistently
strong retailer retention rate of 94% this year and an affordable
average rent of £11.82. Our on-site teams work hard to ensure that
our assets are clean, safe and welcoming environments for all ages.
Board Engagement during the year
How did we engage?
• Regular retailer engagement underpins our asset management
strategy including regular meetings between Board Directors,
Executive Directors and our asset teams with our key occupiers,
listening to challenges and opportunities arising from the shop
floor to retailer head offices which is fed into our planning and
informs our strategy
• Part of these conversations with our retailers include our
environmental and sustainability strategies, including green
leases, enhanced data collection and on-site energy consumption
• The Board receives regular reports on occupier activity through
Exco reports and ESG reporting to inform future strategy
• The asset management team attend the annual Completely Retail
Marketplace in London where the retail real estate industry come
together to discuss new opportunities as well as expand and
consolidate existing leasing plans and asset management initiatives
• Non-Executive Directors have attended industry conferences
alongside Executive Directors
Topics raised
• Topics raised via retailer and occupier meetings include
understanding the future needs of occupiers including sentiment,
performance, growth/contraction plans, sustainability initiatives
and potential opportunities and risks within our occupier base,
green leases and MEES compliance.
How did we respond?
• Continuing to collect energy data from our occupiers and assets
• Engagement with our occupiers regarding our Pathway to Net
Zero to help align with the occupiers’ net zero ambitions
• Assisting with Business Rate reductions for our occupiers
• Board Directors sit on various industry committees helping shape
policy and strategy. NewRiver team members sit on The British
Property Federation’s (BPF) various committees including the Finance
Committee where our CFO sits, the Development and Sustainability
committees, and our CEO chairs the BPF Retail Committee, recently
helping shape the BPF Retail Election Manifesto for the Government,
designed to help campaign for the key issues facing the retail
sector and unlock investment into the sector
• One of our Asset Directors is Vice Chair of the Leisure Property
Forum, actively participating in engaging with retail and leisure
operators and sharing this industry insight with the wider team
through presentations and events
• This year we have begun working with Lloyds Bank to access
high-quality consumer spending data that will provide detailed
insight into the performance and profile of our assets and
occupiers.
62
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
• The respective Committee Chairs engage with shareholders on
significant matters related to their specific areas of responsibility
• The Board receives regular updates on market sentiment,
investor relations activity and share price performance
Topics raised
• Continued delivery of the Company’s strategy
• Financial performance
• Operational performance
• Capital allocation
• Portfolio valuation performance
• Progress on the disposal of our Work Out portfolio
• Progress across our Regeneration portfolio
• Growth of Capital Partnerships
• Sustainability
• Retailer challenges and opportunities
• Macro-economic themes including how inflation and rising
energy costs impact our retailer
How did we respond?
• Ongoing Investor engagement programme, including virtual
meetings, allowing management to engage with international
and regionally based investors, and helping reduce associated
carbon emissions
• Ongoing investor feedback helps enhance our disclosures and
the supplementary information provided in results materials.
Our Shareholders
Our shareholders are the ultimate owners
of our business. In order to deliver on all our
ambitions for the communities we are invested
in, it is critical that our shareholders continue to
understand and support the Company’s strategy,
business model, investment case and progress.
We have an active engagement strategy, supported by our
corporate brokers, providing our shareholders with frequent
business updates, regular meetings, both in person and online,
and on-site visits.
Where appropriate, our Board and members of the Executive
Committee will engage with shareholders.
The comprehensive calendar of investor engagement includes the
AGM, regulatory announcements and non-regulatory news flow,
conference calls and shareholders roadshows, as well as regular
contact with financial analysts, financial media, investors, private
client fund managers, retail investors and equity sales teams.
Regular and targeted engagement ensures that our strategy,
business model and investment case are well understood by
shareholders and the wider market.
Board Engagement during the year
How did we engage?
• Programme of virtual and face-to-face investor meetings with the
CEO and CFO
• Engagement includes the AGM, regulatory announcements,
conference calls and investor roadshows, as well as regular
contact with financial analysts, financial media, investors, private
client fund managers, retail investors and equity sales teams
• As well as institutional investors, we engage with retail investors
via direct communications, our website, media, Annual General
Meetings (AGM) and platforms including Investor Meet, hosting a
dedicated retail investor presentation at our half year results
• Our relaunched corporate website contains comprehensive
information about our business, regulatory news and press
releases alongside information about our approach to
Environmental, Social and Governance (ESG) issues
• Management engaged with 84 investors during the year,
including shareholders and non-holders, and institutional
and retail investors
• We hosted an in-person results presentation to analysts in
November 2023 for our HY24 Results – a live audio webcast
was also available our website with a replay function
• The 2023 AGM was again held as a physical meeting and was
attended by all of the Board. Recognising that some shareholders
may not have been comfortable attending in person, we provided
opportunities for shareholders to submit questions via email and
to attend via conference call
• This year we undertook a Shareholder Perception Audit to better
understand the views of investors and sell side analysts in
relation to our business, strategy and management team
• The Board reviews and approves material and communications
with investors, namely trading updates, results announcements,
the Annual Report and Accounts, and significant business events
and transactions.
63
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Stakeholder engagement continued
Our Lenders
We have strong working relationships with our
bank lenders, bondholders and rating agency who
in turn help provide funding to facilitate our
strategy.
As part of this, we are in regular dialogue to ensure our banks and
bondholders understand the Company’s strategy and targets.
These relationships have helped ensure that the business remains
in a strong and flexible financial position with a fully unsecured
balance sheet. This structure is highly efficient and covenant-light,
affording us significant operational flexibility.
Board Engagement during the year
How did we engage?
• The CFO and finance team held regular meetings with our relationship
banks, bondholders and rating agency to ensure that they are kept up
to date with business strategy, developments and performance
• Held meetings with our bondholders as part of our FY23 and
HY24 results roadshow
• Debt structure and current and future debt requirements are
considered by the Board on a regular basis as part of the
CFO’s review
Topics raised
• Performance of retail operations including occupier trading,
rent collection, leasing, and occupancy
• Retail property valuations
• Progress of the disposal of our Work Out portfolio
• Progress of our Regeneration projects
• Broader activity within the retail investment market
• Interest rate environment
How did we respond?
• In November 2023 we successfully refinanced the Revolving
Credit Facility (‘RCF’) with all four banks involved in the previous
facility, demonstrating the continued support from existing bank
lenders for NewRiver through the refinanced facility. The new
facility is for £100 million, with a £50 million accordion available
(subject to lender approval), and the maturity has been extended
from August 2024 to November 2026 with options to extend the
facility by two additional one-year terms (subject to lender
approval) to November 2028
• No maturity on drawn debt until March 2028 and no exposure to
interest rate rises on our drawn Group debt facility
• In December 2023 Fitch Ratings once again affirmed NewRiver’s
Long-Term Issuer Default Rating (IDR) at ‘BBB’ with Stable Outlook,
our senior unsecured rating at ‘BBB+’ and Short-Term IDR at ‘F2’
Fitch Affirmed NewRiver’s
Investment Grade Credit Ratings
In December 2023 Fitch Ratings affirmed our Long-Term
Issuer Default Rating (IDR) at ‘BBB’ with a Stable Outlook,
senior unsecured rating at ‘BBB+’ and Short-Term IDR at ‘F2’.
The senior unsecured rating applies to NewRiver’s £300 million
unsecured bond dated 2028.
“In the affirmation of our investment grade
credit ratings, Fitch has again recognised
NewRiver’s differentiated position in the UK
retail market, focused on providing essential
goods and services to consumers on rental
terms affordable to retailers. This focus on
retail, alongside our best in class
operating platform and the
strength of our balance
sheet, means we feel well
positioned despite the
challenging backdrop.”
Will Hobman
Chief Financial Officer
64
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Our Local Authorities
We are proud to work in partnership with circa 60
different local authorities across the UK to help
regenerate and protect the towns we are invested
in to create long-term social and economic growth.
Board Engagement during the year
How did we engage?
• Non-Executive and Executive Directors attended various
senior-level meetings with local authorities and public sector
focused organisations, alongside the asset and development
team, meeting all levels including Chief Executives and the wider
cabinet, Planning Officers, Regeneration Officers and also local
Councillors, to steer the regional strategy that will impact the
social and economic long-term viability of a town which has a
direct impact on our own assets
Topics raised
• Appreciation of Council priorities across the borough and the
significance of private sector-led regeneration
• Allocation of resources to the local authority planning team
• Local authority support for marginal regeneration projects that
bring a positive Benefit:Cost Ratio (BCR)
How did we respond?
• Our ongoing engagement with local authorities also extends to
our Capital Partnerships for which we manage two assets in
Canterbury on behalf of Canterbury City Council. We are pleased
to report the ongoing success of this partnership with the renewal
of the contract to manage the Council’s new leisure development,
Riverside. This is in addition to our existing mandate to manage
Whitefriars Shopping Centre for the Council, which also includes
a development management mandate to relocate the Council
offices to a central location within the shopping centre and
re-activate formerly dormant space; this relocation is due to
complete in FY25.
Our Capital Partnerships
Capital Partnerships are an important part of our
business and future growth, with the objective of
delivering increased earnings in a capital light way
through asset management fees, a share of rent
and the potential to receive financial promotes.
Our Capital Partnerships include:
1. Institutional: M&G
2. Private Equity: BRAVO II
3. Local Authorities: Canterbury City Council
Board Engagement during the year
How did we engage?
• Executive Directors, ExCo Directors and the respective asset
managers for each asset within our capital partnerships provide
weekly, monthly and quarterly reports to the senior teams of our
capital partners to share updates on the strategic progress of
each asset managed within the partnership through in-person
and online meetings.
Topics raised
• Business plan setting and progress tracking
• Budget and Capex planning together with project delivery
• Trends within the capital markets and occupational markets
• Valuation performance
• ESG
• Marketing
• Resourcing and IT
How did we respond?
• The Board receives regular reports on the progress, opportunities and
challenges within our capital partnerships to consider the performance
and longer-term growth potential for our capital partnerships.
Our Environment
Please read our comprehensive ESG Strategic
Report to find out about our about commitment
and progress.
Please refer to pages 66 to 83
65
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
ESG Report
66
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG report
67
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
ESG report
Minimising our Environmental Impact
Minimising our environmental impact requires action at corporate,
portfolio, and asset level. We have policies in place to guide
corporate-level activity which engage our staff on principles of
collective environmental responsibility that can be applied across our
business. Our net-zero pathway and interim targets guide our
initiatives, supported by our asset-level Environmental & Social
Implementation Plans, which allow us to monitor our progress and
accelerate action where required.
Top 3 achievements in FY24
1. 31% reduction in absolute Scope 1 emissions vs FY23
2. 16% reduction in absolute Scope 2 emissions vs FY23
3. Significant energy efficiency initiatives achieved 48% reduction in
electricity consumption at assets where they were implemented
Supporting our Communities
We are committed to ensuring that we are responsible partners in our
communities, supporting and championing local causes and providing
an affordable choice of goods and services to address the needs of
local people, whilst minimising our impact on the environment.
Top 3 achievements in FY24
1. During FY24 our cumulative donations to the Trussell Trust
surpassed £500,000 since our partnership began in June 2019
2. Supported 176 community initiatives at our centres
3. NewRiver and Centre Teams volunteered 716 hours to support
local causes
Engaging our Team and Occupiers
We are committed to engaging with and listening to our team,
occupiers and communities, working together to bring about positive
progress for each and address issues that are important to them.
Top 3 achievements in FY24
1. Named one of Sunday Times’ Best Places to Work
2. Over 80% of our team cited that they feel encouraged that
NewRiver treats environmental responsibility as a priority and
backs this with action
3. Over two thirds of our occupiers rate their overall satisfaction as
8/10 or higher, with almost one third providing a 10/10 rating
Leading in Governance and Disclosure
Being a leader in governance and disclosure means surpassing
industry minimum standards and demonstrating our commitment to
providing transparent, informative and accurate accounts of our ESG
performance and risk management processes. We use various
disclosure frameworks to ensure we align our reports with the best
available guidance on the ESG issues that our stakeholders value.
Top 3 achievements in FY24
1. Improved our GRESB score to 72/100 and retained 1st place in
Management Module
2. Maintained our ‘B’ rating in the CDP
3. 10 of our Core Shopping Centres undergoing certification to WELL
Health-Safety Rating standard
Growing Sustainably
Our ESG achievements this year
We have had another successful year in delivering our
ESG strategy, which continues to evolve with industry
priorities whilst remaining focused on our core objectives
and the unique potential we have at NewRiver to make a
positive impact in our communities. Aligned with our
corporate strategy, our objectives are built around four
focus areas which reflect the issues that are important to
our stakeholders and our business:
1. minimising our environmental impact;
2. engaging our team and occupiers;
3. supporting our communities; and
4. leading in governance and disclosure.
Progress towards our objectives is measured annually
against our ESG targets and external benchmarks, and the
outcomes are used to inform our ESG activities for the
following year. Along with our ambition, this approach
generates a feedback loop whereby our ESG programme
adapts to the findings and evolution of best practice. I am
delighted to report the following achievements of this year’s
ESG programme, alongside our ambitions for making further
progress against our objectives over the coming year.
Our Ambitions for FY25
In FY25 our primary focus will be on our net-zero strategy,
utilising the findings of the net-zero audits we commissioned
to identify the best decarbonisation opportunities across our
portfolio. The Science Based Targets initiative (SBTi) has
recently released its draft target setting framework for the
Buildings Sector and we will be applying the guidance to
our existing pathway and considering relevant revisions to
our targets to align with this new sector-specific best
practice guidance, including re-baselining.
We have a duty to protect, enhance and minimise the impact
of our physical assets whilst generating social value for our
communities and I am immensely proud of the progress our
team continues to make in delivering sustainable growth. I
look forward with optimism and confidence to continuing to
deliver our ESG strategy and drive positive change for our
communities, stakeholders and the environment. This would
not be possible without the unwavering enthusiasm and
support from our wider ESG team and Board for which I
sincerely thank them.
Emma Mackenzie
Head of Asset Management and ESG
68
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
We use industry-recognised indices to track our sustainability performance:
Accreditation or
commitment
Score or equivalent
Observations
Score:
72/100
We have improved our score from 70/100 to 72/100 and in FY24 once again
achieved a perfect score in the Management module (30/30), ranking first place out
of over 1,000 participants across Europe. We also achieved full marks in the Social
(18/18) and Governance (20/20) aspects of the GRESB assessment this year.
We continue to work on improving our performance in the Environmental aspect
of the assessment, which our Environmental Implementation Plans, occupier
engagement initiatives, and green building certifications programme will support.
Score:
B
We are pleased to have maintained our ‘B’ score in FY24, continuing to be
recognised by the CDP for “taking coordinated action on climate issues”.
Although our overall rating remained the same, we achieved rating
improvements in the sub-sections of Business Strategy, Financial Planning &
Scenario Analysis, Scope 1 & 2 emissions, and Scope 3 emissions. A key
opportunity area in FY25 is Emissions Reductions Initiatives, which we have
already taken steps to support. Find out more on pages 73 to 75.
We are committed to
11 SDGs addressing
issues we can
meaningfully impact
The SDGs to which we are committed are:
Various case studies are provided throughout this report, demonstrating actions we
have taken this year to deliver on these goals.
6th
consecutive
year reporting
NewRiver publicly supports the TCFD Recommendations and is in its 6th
consecutive year of reporting in alignment with them. We recently undertook a
portfolio-wide MEES Risk Materiality Assessment to provide greater insight on
the potential financial impact of this transition risk as identified by our climate
risk assessment.
Score:
3.0
In our most recent assessment, we received an overall ESG Rating of 3.0 out of
5, above the ‘Retail REIT’ average of 2.7 and ‘Financials’ industry average of 2.5,
and an improvement on our score of 2.7 from last year. Our key strengths
identified by FTSE’s assessment include Corporate Governance (5/5), Risk
Management (4/5), Anti-Corruption (4/5), and Human Rights & Community (4/5).
We have identified the following areas as opportunities for improvement:
Pollution & Resources, Social Supply Chain, and Water Security.
Award:
GOLD
Awards are given to listed real estate companies in recognition of excellence in
the transparency and comparability of their ESG disclosures and we are proud
to have maintained the top award status.
67%
Rated ‘C’ and above
The EPC profile of our portfolio continues to improve with re-assessment upon
expiry of previous certificates, with 67% of registered ratings already consistent
with the proposed 2027 MEES milestone in England & Wales.
10
assets undergoing
certification
The rating is designed to empower workplace leaders, owners and operators
across large and small businesses alike to prioritise the health and safety of
their employees, staff, visitors and other stakeholders. The WELL Health-Safety
seal is a visible mark of our organisation’s commitment to ensuring health and
safety best practice at our centres. We selected 10 assets from our Core
portfolio for assessment based on the facilities they provide. Maximising
building certification coverage within our portfolio has also been a priority
for ESG benchmarks which seek for such standards to be demonstrated.
Sustainability Accreditations and Commitments
69
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Each year, our ESG reporting continues to evolve as our ESG
programme matures. Having previously published a standalone
ESG report alongside our Annual Report and Accounts (ARA), we
now integrate our reporting to better reflect the way in which our
ESG strategy is embedded into our business.
We stay abreast of emerging market and ESG disclosure trends and
proactively manage our data collection processes to ensure our
stakeholders are provided with valuable insight into our ESG
performance. It is important to NewRiver that key ESG information
on our business is accessible, and so whilst we adopt an integrated
annual reporting approach, we also make the ESG content of this
report and our TCFD disclosures available in standalone documents
on our website to provide greater accessibility.
Ahead of our 2025 commitment to bring our corporate emissions
to net-zero, we introduced the external verification1 of our GHG
Emission Inventory in accordance with the ISO 14064-3:2019
Standard. We consider this an important step on our net-zero
journey to enhance the transparency and integrity of our
progress disclosures.
Scope and Boundaries
In order to facilitate the ISO 14064-3:2019 data assurance process,
we altered our ESG reporting period to the calendar year in FY23.
We previously reported in direct alignment with our financial
reporting year, however the resource requirements of the ISO
14064-3:2019 standard necessitated that we make this change
in order to continue with our integrated reporting approach.
This report therefore relates to our ESG performance during the
calendar year of 1 January 2023 – 31 December 2023 which
includes Q4 FY23 and Q1, Q2 and Q3 in FY24. Throughout this
report, this reporting period is referred to as FY24. The preceding
calendar year is utilised for year-on-year performance comparisons,
and is referred to throughout as FY23.
In disclosing our ESG performance, we adopt the Operational Control
boundary, in recognition of this boundary being reflective of our ability
to implement our operating policies and influence ESG performance.
Structure and Materiality
Our disclosures are structured to provide stakeholders with an
overview of our ESG programme, our approach to realising our ESG
objectives, and details of our activities within, and performance
against, these objectives.
To maintain transparency and comparability of our performance
disclosures over time, we consistently monitor and report against
the sustainability metrics recommended by EPRA. Refer to page 83
and the ESG Data Sets Appendix on pages 195 to 198 for our full
EPRA disclosures. The contents of these data sets are analysed and
presented in alternative formats throughout our ESG report.
We assess the materiality of ESG issues relevant to our business by
considering their potential impact on our portfolio, our stakeholders,
and our communities. The UN Sustainable Development Goals to which
we have committed support guided action on issues that we have
the opportunity to meaningfully contribute to, by nature of our business
model, purpose, and mission. Embedding the recommendations of the
Task Force on Climate-Related Financial Disclosures allows us to identify
risks and opportunities associated with external factors, and develop
an informed and strategic approach to their management.
Reporting Frameworks
Our ESG reporting is guided by relevant global reporting frameworks
including the EPRA Sustainability Best Practices Recommendations
(sBPR), and the Recommendations of the Task Force for Climate-
related Financial Disclosures (TCFD). Having integrated our ESG
reporting into our ARA, we also adopt the recommendations
of the International Integrated Reporting Council (IIRC).
About our ESG Performance Reporting
1. Limited assurance based on a data sample of 60% of each emissions category
Our ESG Objectives
1. Minimising our Environmental Impact
1 2 3
Our net-zero strategy is embedded in every stage of our asset
management approach and collaboration with our capital partners.
We seek to provide future-proofed developments which minimise
lifecycle carbon.
2. Engaging our Team and Occupiers
1 2
We raise awareness of evolving ESG issues and create
opportunities for positive impact. We engage our existing occupiers
in our sustainability strategy and work with new occupiers to deliver
on mutual sustainability goals.
3. Supporting our Communities
1 2
Our assets play a critical role in communities and our on-site teams
support local charities and community groups. We work closely with
councils and local stakeholders to ensure developments address
community needs.
4. Leading in Governance and Disclosure
1 2 3
We recognise our responsibility to ensure long-term resilience
against societal, regulatory and climate change. We adopt industry-
leading frameworks, performance benchmarks and certifications to
align our governance and disclosure processes with best practice.
1
Disciplined capital
allocation
Leveraging our platform
Flexible balance sheet
2
3
U
n
d
e
r
pi
n
n
e
d
by
a
co
m
m
it
te
d
E
S
G
s
tr
at
e
g
y
Read more within the business model on page 6
The NewRiver Business Model
70
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG report continued
Strategic report
N
Receive target validation from the
Science-Based Targets Initiative
(SBTi) for aligning our net-zero
pathway with a 1.5-degree global
warming trajectory
E
100% of waste generated at our
managed properties is diverted
from landfill
100% of landlord electricity is
procured from renewable sources.
S
Support a minimum of 5 industry/
career engagement activities for
young people per year and;
Achieve a 90% response rate to our
annual staff survey, with at least 80%
confirming that they feel NewRiver
cares about their wellbeing
All enclosed shopping centres to
participate in our Quiet Hour
initiative and have a community
engagement in place.
50% of NewRiver staff to participate
in our volunteering programme.
N
Achieve net-zero for all corporate-
related carbon emissions (Scope 1-3)
85% recycling rate at our
managed properties.
E
Electric vehicle charging points
installed across all retail properties
with a surface level car park.
50% improvement (from 2020
baseline) in landlord on-site
renewable energy generation
Building certifications targeted,
and lifecycle carbon assessments
undertaken, for 100% of our new
construction and major
renovation projects.
S
Achieve a 75% response rate to
our occupier satisfaction survey.
Biodiversity plans to be in place
for at least 15% of our assets.
N
Achieve a 42% reduction (against
baseline) in carbon emissions
across our corporate activities and
operational real estate, as required
by the SBTi.
E
75% of occupiers transitioned to
renewable energy suppliers.
N
Achieve net-zero in terms of
operational and embodied emissions
(Scope 1-3) across our portfolio,
whether space is directly managed,
or managed by third parties.
E
Over 25% of landlord energy is
generated on-site from
renewable sources.
N
Formalised our four ESG objectives
and established an official programme
of engagement and improvement
N
Achieve net-zero for all operational
emissions from the directly
managed areas of our portfolio
(Scope 1-3)
N
Publicly commit to net-zero and set
FY20 carbon emissions baseline.
Targets
2022
2015
2023
2024
2025
2030
2040
2050
Key
N
Net-zero targets
E
UN SDG aligned
Environmental targets
S
UN SDG aligned Social targets
71
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Target
Target year
% complete
FY24 Progress Report
Environmental
100% of waste generated at our
managed properties is diverted
from landfill
2022
100%
We are pleased to have achieved our target of zero waste to landfill in FY22 and
maintained this policy throughout FY24.
100% of landlord electricity is
procured from renewable sources
2022
100%
We transitioned all landlord electricity supplies across our portfolio to Renewable Energy
Guarantees of Origin (REGO) backed tariffs in 2020.
85% recycling rate at our
managed properties
2025
66%
Considering only non-organic waste, our FY24 recycling rate was 56%. This represents a
decrease against our target vs FY23, despite an 11% decrease in total waste volume and
the introduction of new waste segregation/ recycling opportunities at 3 of our centres this
year. Please see page 77 for more information.
Electric vehicle charging points
installed across all retail properties
with a surface-level car park
2025
87%
We have EV charging installations or contracts in motion to deliver installations at 13/15 of our
surface-level car parks, bringing our progress rate to 87%. Progress made this year includes
the installation of 8 new charging bays at Three Horseshoes Walk in Warminster. Whilst there
has been an increase in installations, as a result of the recent sales of two of our retail parks
which also benefitted from EV charging infrastructure, the % progress against our target
appears to have decreased slightly from 88% last year. We will progress our own feasibility
assessments of the remaining two car parks as part of our net-zero pathway action to review
and create comprehensive green travel plans for all assets in FY25.
50% improvement (from a 2020
baseline) in landlord on-site
renewable energy generation
2025
0%
Renewable energy generation at the assets within our operational control boundary
has decreased by 36% between FY20 and FY24. This is because existing installations
are aging, and because we have not commissioned any new installations in recent years.
We have recently commissioned net-zero carbon audits for a sample of our assets and
have established a working group tasked with allocating new installations over the coming
year, which we see as an integral part of our broader decarbonisation strategy.
Building certifications targeted, and
lifecycle carbon assessments undertaken,
for 100% of our new construction
and major renovation projects
2025
N/A
There were no relevant projects in relation to this target during FY24.
Social
Support a minimum of 5 industry/
career engagement activities for
young people per year
Annual
100%
1. Through our relationship with The Academy of Real Assets (TARA), we have
representation on their youth board which meets regularly throughout the year, and
have hosted the Board at our offices.
2. We attended the Academy’s book launch event in the summer to answer any
questions that students had regarding careers in real estate.
3. We also submitted a story to TARA’s book, written by Steve Andrews, our centre
manager of The Hildreds, Skegness, which was featured in the final print version.
4. In August 2023, we hosted an Oxford Brookes University student for a week’s work
experience with our Development team.
5. We are also extremely pleased to have welcomed an apprentice analyst to NewRiver
this year via Multiverse’s apprenticeship programme.
Achieve a 90% response rate to our
annual staff survey, with at least 80%
confirming that they feel NewRiver
cares about their wellbeing
Annual
50%
During the period we received a 73% response rate to our staff survey. Of the
respondents, 85% affirmed that they feel NewRiver cares about their wellbeing. As we
have not upheld the response rate target - having previously achieved it - but have
fulfilled our wellbeing target, we have reported a 50% completion rate.
All enclosed shopping centres to
participate in our Quiet Hour
Initiative and have a community
engagement plan in place
Ongoing
100%
The introduction of asset-level Environmental & Social Implementation Plans across our
portfolio means that all centres have an action plan in place for ongoing community
engagement activities, with the Quiet Hour initiative forming a key component of these plans.
50% of NewRiver staff to participate
in our volunteering programme
Annual
100%
In FY24, NewRiver staff provided 76 hours of volunteer support to the Trussell Trust, with
volunteering sessions typically lasting around five hours each. Staff also provided a
further 394 hours of volunteering time to their own chosen causes, such as providing
money management advice to individuals and families, and supporting childhood reading
programmes. This equates to a total of 94 volunteering sessions for 48 staff members,
meaning we have more than fulfilled our target.
Achieve a 75% response rate to our
occupier satisfaction survey
2025
100%
We are pleased to have achieved this target with our FY24 Occupier Satisfaction & Sustainability
survey, which achieved a response rate of 78%. Our centre teams played a pivotal role in the
achievement of this target, aided by our introduction of a £10 charity donation incentive for each
response given. Insights from the survey are provided on pages 79 to 80.
Biodiversity plans to be in place
for at least 15% of our assets
2025
23%
We commissioned a specialist ecology survey of one of our centres to assess both biodiversity
enhancement opportunities and landscaping improvements. Pre-defined biodiversity initiatives are
also reviewed on a quarterly basis across all centres as part of our Environmental & Social
Implementation plans. To supplement this approach, we have commissioned a portfolio-wide
biodiversity risk assessment to be undertaken this year, to allow the biodiversity initiatives within our
Environmental & Social Implementation plans to be tailored to the specific biodiversity risks relevant
to each centre’s location. We therefore anticipate achievement of this target by the target date.
Progress Towards Our Near-Term Targets
72
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG report continued
Energy and GHG Emissions Performance
On Earth Day, 22nd April 2022, we became a signatory to the
Better Buildings Partnership’s Climate Commitment, joining other
responsible organisations across the industry in pursuing a 1.5°C
future for our planet. In becoming a signatory, we have committed
to publishing our net-zero carbon pathway and delivery plan,
disclosing the energy performance of our assets, and developing
a comprehensive climate resilience strategy. The initiative has an
overreaching objective of delivering net-zero buildings by 2050,
incorporating both operational and embodied carbon. The scope
of the commitment makes it one of the most ambitious
commitments that property owners can adopt.
The key milestones on our journey to becoming
a net-zero business are:
• 2025: all corporate emissions (Scopes 1-3) will be brought
to net-zero
• 2030: we will achieve a 42% reduction in absolute emissions
from our 2020 baseline
• 2040: all emissions arising from the landlord-controlled areas
of our portfolio (Scopes 1-3) will be brought to net-zero
• 2050: all emissions arising from the tenant-controlled areas
of our portfolio, and from our development activities, will be
brought to net-zero, making us a fully net-zero business.
You can read more about our commitment and delivery strategy
in our Pathway to Net-Zero, which can be found in the Sustainability
section of our website.
In-line with the Companies Act 2006 (Strategic & Directors’ Reports)
Regulations 2013, we disclose our annual global GHG emissions in
terms of our total energy use, intensity ratio, and a narrative on the
energy management and efficiency measures we implement.
Objective 1: Minimising Our Environmental Impact
Our FY24 SECR disclosures
FY23
FY24
% Change
Greenhouse Gas Emissions by Scope (tCO2e)
Scope 1 Emissions from combustion of gas & other fuels
718.4
495.4
-31%
Scope 2 Location-based emissions from electricity purchased for own use
2,029.2
1,701.5
-16%
Scope 2 Market-based emissions from electricity purchased for own use
0
0
0%
Scope 3 Emissions from purchased goods & services, capital goods, fuel &
energy-related activities, waste, business travel & employee commuting,
and downstream leased assets
24,903.2
22,059.5
-11%
Total Scope 1, 2 & 3 location-based emissions
27,650.8
24,256.4
-12%
Total Scope 1, 2 & 3 market-based emissions
25,136.3
22,177.7
-12%
Intensity Scope 1 & 2 (location-based) tCO2e/m2
0.016
0.013
-15%
Energy Consumption (kWh)
Energy use from the combustion of gas and other fuels
3,935,818
2,708,120
-31%
Energy use from consumption of electricity purchased for own use
10,493,433
8,217,064
-22%
Energy use from business travel
11,069
31,963
189%
73
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Data Notes
Reporting Period
Our GHG emissions performance disclosures relate to the calendar year of 2023 (referred to as FY24).
Emission data from the calendar year of 2022 (referred to as FY23) has also been included.
Boundary
We have used the Operational Control method to outline our carbon footprint boundary. Emissions
arising from occupiers’ energy usage are not included in our Scope 1 and 2 reporting boundaries, but
are reported in Scope 3 as downstream leased assets. Our Operational Control boundary excludes
assets owned by JV partnerships, as well as assets where we act only in an advisory capacity.
Reporting Method
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 Streamlined Energy and Carbon
Reporting and greenhouse gas reporting.
Emissions Factor
The emissions factors and conversions used for 2023 (FY24) reporting are from the Department for
Energy Security and Net Zero’s greenhouse gas reporting tool 2023 and the factors and conversions
used for 2022 (FY23) reporting are from Defra’s 2022 reporting tool.
Scope 3 emissions
We used the GHG Protocol Scope 3 Standard to collate and report on all material Scope 3 categories
which include emissions from purchased goods and services, capital goods, fuel and energy-related
activities, waste and water, business travel, employee commuting and downstream leased assets.
Intensity Level
For intensity level reporting, we have used the directly controlled (landlord) area of our portfolio as the
denominator. Vacant units have been excluded in the intensity measure due to the year-on-year
variability.
Data Restatement
We have restated our FY23 Scope 1 emissions from 786.3 tCO2e in last year’s Annual Report, to 718.4
tCO2e. This is due to establishing a discrepancy in the gas invoicing at Broadway Shopping Centre in
Bexleyheath. We recalculated gas consumption at this asset based on meter readings, and restated
the associated emissions accordingly. Similarly, we have restated our ”Total Scope 1, 2 & 3 emissions”
disclosure to take account of this, as well as new water consumption data becoming available after the
end of the reporting year, and an amendment to an asset’s tenanted floor area. The Total figure has
been restated from 27,600.3 tCO2e to 27,650.8 tCO2e which represents an immaterial 0.2% change.
Performance Highlights
• 31% reduction in absolute Scope 1 emissions from the combustion
of gas & other fuels
• 16% reduction in absolute Scope 2 emissions from the
consumption of electricity
• Like-for-like gas and electricity consumption reduced by -9%
and -6% respectively
• 190,500 kWh of renewable electricity generated on-site at our assets
• -31% reduction in total location-based Scope 1 & 2 emissions from
our baseline year of FY20, bringing us 74% of the way to our
SBTi-approved 2030 target to reduce absolute emissions by 42%
• Our Scope 3 emissions also saw an 11% reduction despite a 65%
increase in business travel emissions, owing to a continuing
return to normal attendance at site meetings including regular
visits to the 18 M&G mandate assets from Jan 2023 onward.
Energy Management and Efficiency Measures
Environmental & Social Implementation Plans are in place across
100% of our managed shopping centres. The plans specify four
mandatory energy management and efficiency measures which
must be reviewed, on a quarterly basis, for implementation at all
centres where relevant and feasible. These measures are:
• Routine reviews of the installation of smart meters (AMR) for
all relevant utility types
• Installation of LEDs in all landlord-controlled areas
• Implementing a Building Management System
optimisation programme
• Reviewing plant equipment run times and controls at least
quarterly and ensuring optimum settings are in place for day/
night, seasons and occupancy levels
A key driver of our reduced energy consumption this year includes
five core LED lighting replacement projects at The Hildreds,
Skegness; Abbey Centre, Newtownabbey; Sovereign Centre,
Boscombe; Arndale Centre, Morecambe and Newkirkgate Centre,
Leith. Together, these assets have seen a 48% reduction in
electricity consumption in FY24 vs FY23. We also upgraded the
solar power inverters at The Hildreds, Skegness, which has
contributed to the reduction in consumption at this centre, as the PV
panels are now running at maximum efficiency.
We undertake ongoing reviews of plant equipment run times and
controls and have an active programme of meter automation via our
energy suppliers. AMR coverage (electricity and gas) across our
portfolio currently stands at 85%. This is slightly lower than we
reported in FY23 (86%) due to property sales. Our programme
of meter upgrades continues, and we anticipate this % coverage
to continue to increase as a result.
74
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG report continued
Drivers of our
Improved Energy & GHG
Emissions Performance
In FY24, we saw a 12% decrease in
like-for-like1 common area gas consumption
across our portfolio, equating to a CO2e
saving of 63 tonnes. These savings can
partly be attributed to the implementation
of our initiative to review plant equipment
run times and controls at least quarterly,
ensuring optimum settings are in place to
reflect space usage, which we saw achieve
a 24% reduction in gas consumption at our
Piazza Centre in Paisley. The biggest impact
on our consumption was, however, at our
Broadway Shopping Centre in Bexleyheath,
where we installed an IBOS building
management system. The success of this
system is reflected in the >250,000 kWh
saving at this centre.
We have switched our gas supplies to a
carbon offset tariff2, to support with further
reducing our environmental impact ahead
of our target to bring these emissions to
net-zero. We have also begun evaluating
opportunities to replace gas-powered
equipment in the common areas of
our centres via a series of audits we
1. Like-for-like disclosures represent the energy and emissions from our like-for-like portfolio over the two-year period in order to remove the impact of property sales and acquisitions from
performance comparisons.
2. For the avoidance of doubt, these offsets are not reflected in our emissions disclosures
3. In construction
4. Scope 3 emissions relate to the emissions included in our 2040 net-zero target, which are those arising from the directly controlled areas of our assets (i.e., waste, water, and upstream
emissions and transmission & distribution losses from energy consumption). We have chosen to include these categories only to provide a clear performance comparison, as all other Scope
3 categories are otherwise difficult to distinguish when collated with “downstream leased assets”.
Portfolio Electricity Consumption
(Absolute and like-for-like)
MWh
Portfolio Gas Consumption
(Absolute and like-for-like)
MWh
Portfolio Scope 1&2 GHG Emissions
(Absolute and like-for-like)
tCO2e
Portfolio Scope 3 GHG Emissions
(Absolute and like-for-like)4
tCO2e
commissioned pursuant to ESOS Phase 3.
The findings of these audits are currently
undergoing further investigation with the
centre teams and asset managers, to
confirm assumptions and feasibility of
recommended measures. Once our
investigations are complete, we will be
able to establish an overall implementation
strategy to achieve optimum savings
across our portfolio.
Over the course of FY24, we achieved a
-14% reduction in like-for-like common area
electricity consumption. This was primarily
driven by the LED lighting replacement
projects implemented during the year.
Overall, our absolute electricity
consumption was down by -29%, driven by
asset disposals which took place during
the year. This was also the key driver of
the overall reduction in Scope 3 emissions,
as downstream leased assets make up the
vast majority of this emissions category.
In terms of our Corporate emissions,
we saw a 42% decrease in emissions
arising from our consumption of energy
and water, and waste generation, as a
result of our move to our new BREEAM
Excellent3 head office location in FY23.
500
1000
1500
2000
2500
3000
0
2,071
24
24
2,086
2,190
2,737
23
23
Like-for-like
Absolute
100
200
300
400
500
600
700
800
0
541
24
24
688
581
745
23
23
Like-for-like
Absolute
500
1000
1500
2000
2500
3000
3500
4000
0
2,563
24
24
2,758
2,708
3,911
23
23
Like-for-like
Absolute
1,750
3,500
5,250
7,000
8,750
10,500
0
7,738
24
24
8,183
8,188
10,462
23
23
Like-for-like
Absolute
75
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Certifications & Energy Performance Certificates
Since October 2008, an Energy Performance Certificate (EPC)
has been a legal requirement when a building is sold, rented, or
constructed. A certificate is valid for a period of 10 years; on expiry
there is no legal requirement to replace an EPC unless the property is
to be sold or let. In England & Wales, the Minimum Energy Efficiency
Standards (MEES) now require that all properties, where valid EPCs
exist, must have an asset rating of “E” or above to be lawfully let.
Previously this requirement only applied to new tenancies,
however it was extended to cover existing (non-domestic)
tenancies on 1 April 2023.
The below chart shows NewRiver EPCs for the England &
Wales retail portfolio in comparison to the national EPC register,
comparing against other non-domestic certificates. Our data shows
that the NewRiver portfolio out-performs the EPC profile of the
national database as shown in the chart below, having a higher
proportion of certificates providing a minimum rating of “C”, and
no “F” or “G” ratings. Our programme of EPC assessments and
Minimum Energy Efficiency Standards (MEES) risk reduction has
helped to ensure we can continue to let properties lawfully.
Through continued management of non-compliant and expiring
EPCs in accordance with the MEES, the NewRiver portfolio is well
defended against potential compliance-related risks to value.
EPC Performance in England & Wales
G
F
E
D
C
B
A
0
5
10
15
20
25
30
35
40
G
F
E
D
C
B
A
EPC Rating
NewRiver Portfolio FY24
NewRiver Portfolio FY23
National Database*
percentage of properties
*
National database figures are correct as of December 2023 and take into account only
those certificates registered between 2013-2023
For a full breakdown of our portfolio EPC profile including Northern Ireland & Scotland,
please see page 197 (Appendix).
Certifications
Working with our centre teams, we identified that the
high standards of health & safety governance upheld
across our centres presented an excellent opportunity
to gain external certification via the International WELL Building
Institute (IWBI), under the WELL Health-Safety Rating standard.
We have submitted 10 of our shopping centre assets for certification
by enhancing procedures in a few focus areas. This allows us to
display a WELL seal which communicates to customers entering our
spaces that evidence-based measures and best practices for safety
have been adopted and third-party verified, providing them with
peace of mind. The certification evaluates performance across 5
action areas: cleaning & sanitisation; emergency preparedness;
health service resources; air & water quality management; and
stakeholder engagement & communication.
Water Performance Summary
Placeholder FY24 Performance Highlights
• -6% reduction in like-for-like water consumption
• Focus on data availability and quality, with our energy broker,
who managers our meters, working to upgrade both their water
data validation system and our meters
Narrative on FY24 Performance
In FY24, we saw a -6% decrease in like-for-like water
consumption across our portfolio, which is mainly driven by the
remediation of the underground leak identified at the Abbey Centre,
Newtownabbey. Excluding this isolated incident, water consumption
across the remainder of our portfolio increased 3% on a like-for-like
basis. This is primarily driven by data quality improvements, which
continues to be a focus area for our brokers.
Our Environmental & Social Implementation Plans require that
opportunities to install leak detection systems, reuse stormwater
and/or grey water, and to install low-flow fixtures, are reviewed on
a quarterly basis. This ensures that there is an ongoing process of
assessing the feasibility of initiatives which seek to contribute to
reducing our water consumption. Whilst the leak we experienced
at the Abbey Centre was unfortunate, this is a lesson that will be
drawn upon in our evaluation of leak detection systems as part of
these plans going forward.
76
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG report continued
Waste Performance Summary
FY24 Performance Highlights
• We maintained our policy to divert 100% of our waste from landfill
• We saw an 11% reduction in total waste volume; 4% on a
like-for-like basis
• 60% of total waste generated avoided incineration. Waste that
was incinerated benefitted from energy recovery.
0
20
40
60
80
100
FY24
FY23
FY24
FY23
Disposal Route
Disposal Route
Waste Type
Waste Type
Waste to incineration with energy recovery
Waste to dedicated recycling facility
Waste to mixed recycling facility
Waste to composter
Waste to anaerobic digestion
35%
29%
29%
3%
4%
61%
12%
1%
2%
16%
8%
General waste
Dry mixed recycling
Cans & Plastics
Glass
Paper/Cardboard
Food waste
FY23
41%
26%
26%
0%
7%
66%
10%
1%
1%
15%
7%
FY24
1. Calendar year of 2023
Narrative on FY24 Performance
In FY241, the volume of waste generated across our like-for-like
portfolio reduced by 4%, consistent with our ambition to prioritise
waste minimisation in accordance with the waste hierarchy.
Considering only non-organic waste, the percentage split of
waste recycled (56%) and incinerated (44%) shifted in favour
of incineration compared to the previous year.
Our centre teams have been very focused on our target to achieve an
85% recycling rate, so this is a disappointing result given we have
introduced new waste segregation and recycling opportunities this
year at the Forum in Wallsend, Three Horseshoes Walk in Warminster,
and the Sovereign Centre in Boscombe. Our occupier survey returned
a number of suggestions for additional glass and food waste
segregation opportunities, which we will support the centre teams
to explore in FY25.
Turning to waste type, we saw reductions in total waste volume
across all waste streams, though this was less prominent for general
waste, hence the reduced recycling rate. On a like-for-like basis,
general waste volume increased by 7%, whilst volumes across
recyclable waste streams decreased. We saw a 10% reduction
in plastics, cans & packaging waste volume, which we hope is
indicative of retailers’ minimisation of the packaging of their goods,
however further monitoring of this waste stream would be required
to confirm that these items are not being disposed of in general
waste bins instead.
Boscombe Bees
The Sovereign Centre is currently working with a local
food growing charity, producing jars of honey from the
hives on the roof of the centre. The centre also works
with the local community to plant wildflowers, helping
their local bees to thrive.
77
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Listening is at the core of our approach to engaging our team.
We strive to understand and respond to the diverse needs of our
team at all levels, enabling us to develop our policies and process
to better support needs and goals. We work hard to engender a
positive culture which provides the support and flexibility to ensure
staff wellbeing. Our retention record and our approval ratings in
staff surveys is testament to the effectiveness of this approach.
Objective 2: Engaging our Team and Occupiers
Monitoring
Needs
Assessment
Action
Planning
Policy
Development
Staff
Training
Implementation
How we listen to
& engage our team
Monitoring and needs assessment take place both through the
employee appraisal process and anonymously via our annual staff
survey. Our 2023 staff survey was independently managed and
analysed by The Sunday Times, and as a result, we were recognised
as one of the “Sunday Times Best Places to Work 2023”.
The survey questions are designed to gain insights into staff
opinion and identify beneficial actions in respect of NewRiver’s
policies, procedures and cultural norms in the areas of: reward &
recognition, information sharing, empowerment, wellbeing, instilling
pride, and job satisfaction. We were rated “excellent” in all six of the
survey’s focus areas.
The 2023 survey returned an overall engagement
score of 82%, with over 80% of staff identifying they:
• Have confidence in our management and a good working
relationship with their direct manager
• Are recognised when they do something well and are treated
with respect
• Are happy with their working hours and work/life balance
• Feel that their views are heard, and they are trusted to
make decisions
• Feel happy at work and safe in their working environment
• Know that NewRiver cares about their wellbeing
• Are proud of the organisation and feel that their work
is worthwhile
• Are encouraged that NewRiver treats environmental
responsibility as a priority and backs this with action
Sunday times Best Place to Work 2024
In FY24 we were recognised in the Sunday Times Best
Places to Work 2023, in the ‘small organisation’ category
(10-49 employees) for the first time.
Post-period, in May 2024 we are honoured to have been
recognised for the second consecutive year in the 2024
list, achieving ‘Excellent’ in all criteria.
The 2024 survey results cited that 87% of NewRiver
employees who participated said they felt empowered,
while job satisfaction, happiness and wellbeing also
scored highly at 86%, 84% and 83% respectively.
Our average engagement score of 84% was significantly
higher than the category average of 73%.
The survey results also recognised that NewRiver’s
executive team meets the FTSE Women Leaders Review
2025 target of 40% female representation.
78
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG report continued
ESG training is delivered to our team by our external consultants on
an annual basis. Training sessions cover a range of topics including
industry initiatives and trends, updates on our performance, and
support for implementing any newly introduced policies and
processes. Annual training sessions extend to our on-site teams,
who receive training specific to the nature of their roles.
We continue to include personal ESG targets in employee goal setting
and performance appraisals. We encourage employees to include
targets which support our corporate objectives, but also provide the
flexibility to set personal targets that address issues which are
important to them or their role. Achievement of the ESG targets feeds
directly into the rewards process with all other employee objectives.
Members of senior management have specific ESG performance goals
connected to a pre-defined bonus potential (see page 139).
Employee Commuting Survey
A key new process introduced this year was a
comprehensive employee commuting survey which
enabled us to fully understand our team’s travel
behaviours and commuting distances.
The introduction of this process has allowed us to greatly
improve our corporate carbon accounting for the category of
Employee Commuting, which now leverages actual data as
opposed to relying on national averages. In using actual
data, we were able to identify a 65% reduction in emissions
per employee, reflective of the sustainable travel choices
made by our team. 88% of the distance travelled by
NewRiver employees is by rail, with only 8% of employees
using a car for any part of their commute. Of those that do
rely on a personal car, half utilise all-electric vehicles.
Hub of Hope
In partnership with mental health charity, Chasing the
Stigma, NewRiver has rolled out the Hub of Hope training
which supports staff to normalise conversations around
mental health. 28 NewRiver staff and 128 centre staff have
been trained and have become Ambassadors of Hope.
An additional 4 members of NewRiver staff have been
trained as mental health first aiders.
DEI and Bias Learning Experience
17 people from the NewRiver team, including members
of the Executive Committee and the Senior Leadership
Team, participated in a diversity, inclusion, and bias
learning experience, which covered topics including
power, access, and inclusive collaboration.
Engaging our Occupiers
Occupier satisfaction is a core priority of our business; as such, we
undertake routine surveys to gain insight into occupier opinions on
material topics such as the effectiveness of our centre management
teams and our sustainability programme.
The opportunity to respond to our 2023 survey was offered to 100%
of our occupiers, and we received a response rate of 78%
exceeding our 75% target. Key insights from the shopping centre
survey include:
• 68% of respondents rated their general satisfaction as 8/10 or
higher, with 30% providing a rating of 10/10, up by 4% since 2022.
• 91% of respondents are satisfied with the management of cleaning
and waste in common areas, up 2% since our last survey.
• Over half (52%) of our occupiers are satisfied with the
sustainability initiatives we implement at our centres, but there is
a clear need to increase awareness of initiatives at certain
centres, and we will support the centre teams to ensure this is the
case.
• Over half of respondents expressed awareness of their business’
ambition to achieve net-zero, or confirmed their business was in
the process of establishing their pathway/ determining what it
would mean for their business. This finding is very similar to that
of our previous survey, up 3% excluding “don’t know” and “n/a”
responses. This is consistent with our own research on net-zero
commitments, presented below.
79
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Carving a collective pathway to Net-Zero
with our occupiers
Building on the research we undertook last year to inform our
occupier engagement strategy, we have updated our review of our
occupiers’ sustainability commitments and emissions reduction
ambitions, to understand current levels of alignment and identify
key areas in which to focus our engagement efforts.
In reviewing these commitments, we were encouraged to see an
increase in the percentage of our portfolio by floor area which is
occupied by retailers who’ve already set emissions reduction
targets, up from 57% to 60%, with a further 2% having disclosed that
they are in the process of developing targets1. Of the 60% occupied
by retailers with existing commitments, 66% is occupied by BRC
Net-Zero Roadmap signatories. This is a slightly lower proportion
than our previous analysis showed, which means that more
organisations have made independent commitments.
Upon initial review, we were very pleased to learn that the majority
of our occupiers share our sustainability vision, and are even more
pleased to see this proportion gradually increasing. This exercise is
also helpful to us in understanding key areas in which we might be
able to offer insight and learnings to our occupiers as we work to
achieve our own net-zero targets.
In particular, we hope to be able to support our SME occupier base
on this journey. Hence, we will continue to update this research to
ensure our strategy reflects movements in occupier ambitions.
We incorporate green lease clauses into all our standard form
leases, which engage our occupiers in key areas of our net-zero
strategy, such as the procurement of renewable energy. Of the new
leases we agreed in FY24, 16% included an agreement with our
occupiers to this effect.
1. Correct as of November 2023
We also received some helpful, constructive feedback which we would like to take this opportunity to respond to:
Feedback Item
NewRiver Response
Over half of retailers would be
interested to hear more from us on
the overall sustainability performance
of their individual centre
We had plans to work with our energy brokers to create a platform capable of storing
and presenting sustainability performance data for both the landlord and occupier
areas of our portfolio. This solution relies on collaboration with our occupiers, however,
our outreach efforts have unfortunately had limited success to date. We will support the
centre teams to effectively communicate details of broader sustainability initiatives
while we consider options for improving data visibility.
Our retailers advised us that they
would welcome additional waste
segregation/ recycling opportunities
We hosted an ESG training session for our Centre Managers in autumn this year, in which
we provided feedback on the half year position with waste management performance and
made suggestions as to how to bring management practices further in-line with our targets.
As a result, 3 centres have already introduced new recycling options and we identified
glass and food waste as key opportunities for further improvement.
A top suggestion for environmental/
social initiatives to introduce was
“more greenery/ plants”
We thank you for your suggestions and have fed this idea back to our centre teams
who will consider the best opportunities to fulfil this request. We have recently certified
10 core centres to the WELL Health-Safety Rating standard and will continue to review
how we can build on the wellness benefits offered by our assets.
60%
38%
2%
66%
Occupier carbon emission reduction targets
Commitment in development
No Commitment
Commitment Made
Occupiers committed to BRC
80
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG report continued
Supporting impactful local causes through the
position we hold in our communities has always been
central to our culture and strategy of creating shared
value for our stakeholders. As such, we provide
NewRiver funded time for our staff to support the
causes which matter most to them, and to share
team bonding opportunities in doing so.
The Trussell Trust
Staff are able to participate in monthly volunteering opportunities
with our corporate charity partner, the Trussell Trust, or elect to
utilise their gifted volunteering time to support any cause that’s
particularly close to their hearts.
In FY24, our support for the Trussell Trust
provided:
A seat at The Table
At our Merlin’s Walk centre in Carmarthen, a local Trussell
Trust initiative known as “The Table” is run from one of
our units. We are donating a fully fitted kitchen to the
operator to support the important work they do in the
local community. This includes key free-to-access services
including nutrition and food preparation; debt and money
advice; budget coaching; form filling support; an after
school drop-in centre where children and young people
have access to wi-fi for homework; and direct access to
a range of support agencies.
Life Saving Skills for Schools
The Abbey Centre has joined forces with Staff Training NI
and Stryker to create this nurse-led programme. Fourteen
students and two teachers from twenty post-primary
schools were taught the importance of life saving skills
covering CPR, AED Defib, Choking and EpiPens.
Objective 3: Supporting our Communities
Scan this QR
code to view
3.16 tonnes
of food donations,
equating to approximately
42,175
portions or
£6,326
worth of pasta, enough
dinners for
29 families
of 4 for a whole year
PODCAST
This year we furthered our support in driving awareness
of the Trussell Trust through a podcast with the charity’s
CEO Emma Revie, as part of our digital communications.
1. Based on the national TOMs Framework proxy value for voluntary hours donated to support VCSEs (excluding expert business advice) of £16.09 per hour
£500,000+
of cumulative direct
monetary donations raised
since beginning our
partnership in June 2019
£56,306
of direct monetary donations
during the year
102 Hours
of volunteered support,
with a total value of
£1,6411
The podcast can be found on our website:
https://www.nrr.co.uk/media/resilient-retail-podcast/Podcast
At our Centres
322
hours spent by
on-site staff supporting
community initiatives
£119,057
Monetary donations raised
by aggregate charity
fundraising activities
176
social, community or charitable
initiatives supported
81
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Our Commitment to Diversity,
Equity & Inclusion (DEI)
As a company, we are committed to a culture of
diversity and inclusion in which everyone is given
equal opportunities to progress regardless of gender,
race, ethnic origin, nationality, age, religion, sexual
orientation or disability. We continue to strive to
provide the most flexible employment policies to
enable all of our employees to combine a fulfilling
career with an active home life.
Diversity at a Glance
23%
Ethnic diversity
50:50
Company Male : Female ratio
60:40
Exco Male : Female ratio
71:29
Board Male : Female ratio
Equal Opportunities
We have recently updated our Equal Opportunities policy to
provide a comprehensive standalone policy statement which
clearly communicates:
• What we regard as acceptable and unacceptable behaviour
at work;
• The rights and responsibilities of those to whom the
policy applies;
• The procedure for dealing with concerns or complaints;
• How we will deal with any breach of our policy;
• Who is responsible for the policy; and
• How it will be implemented, monitored, and reviewed.
All staff have received externally delivered training to ensure full
understanding of this policy, including types of discrimination and
unconscious biases, to support its effective implementation.
Objective 4: Leading in Governance and Disclosure
Board Diversity
The Board Diversity Policy includes the following objectives:
• At least two members of the Board are female, with a long-term
aspiration to achieve no less than 40% female representation on
the Board; and
• In the longer-term, at least one director will be from a non-white
ethnic minority background.
Whilst recognising that:
• This balance may not be achieved until further Directors are
replaced at the end of their tenure;
• On an ongoing basis, periods of change in Board composition may
result in temporary periods when this balance is not achieved;
• All appointments must continue be made on merit;
• And new appointees embody the core values of the Group.
Gender Pay Gap
In FY22, we took the decision to begin publishing our gender pay
gap information. As we have fewer than 250 employees, we are not
obliged by The Equality Act 2010 (Gender Pay Gap Information
Regulations 2017) to disclose our gender pay gap, however we are
pleased to provide our disclosure below in support of our
commitment to DEI.
39%
Mean gender pay gap
37%
Median gender pay gap
This represents a 5% increase in our mean gender pay gap since
FY23, and an 8% increase in our median gender pay gap. These
fluctuations are driven by differences in the roles and seniority
levels of male and female leavers and joiners to NewRiver over this
period. There has been a net increase in female employees which
supports our DEI ambitions, with some of these new joiners filling
junior and development positions, such as apprenticeships.
In interpreting this gender pay gap disclosure, it is important to note
that this is not a calculation of equal pay for equal work. The gender
pay gap is the difference between the average annual salaries of
men and women across all levels of the company, excluding any
bonuses or other benefits received. The comparison is drawn
across all departments of the business, spanning all levels of
seniority. We adopt a strict equal pay for equal work policy,
ensuring that all remuneration is managed in compliance with
equality legislation.
82
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG report continued
Our Governance of Sustainability and Climate-Related Matters
Our purpose is to buy, manage and develop retail assets across the UK which provide essential goods and services, supporting the
development of thriving communities. Our Board recognises our responsibility to ensure our portfolio can weather the physical and
transitional risks created by a changing climate to ensure the long-term resilience of our business and the returns we achieve for our
investors, as well as the all-important communities we serve.
Governance Performance Measures
EPRA
Code
Performance
Measure
Unit(s) of
Measure
FY23
FY24
Gov-
Board
Composition of the highest
governance body
Number of executive
board members
2
2
Number of
independent/
non-executive
board members
4
4
Average tenure on the
governance body
3.6
4.6
Number of
independent/
non-executive
board members with
competencies relating
to environmental and
social impacts
3
3
Gov-
Selec
Process for nominating and
selecting the highest
governance body
Narrative on process
As a Stock-Exchange-Listed business, NewRiver is required under the UK
Corporate Governance code to have a Nomination Committee which is responsible
for identifying and nominating candidates to the Board. Please refer to pages 119 to
122 for the latest report from the NewRiver Nomination Committee.
Gov-Col
Process for managing
conflicts of interest
Narrative on process
As a Stock-Exchange-Listed business, NewRiver is required under the UK
Corporate Governance Code to identify and manage conflicts of interest. Directors
also have duties under the Companies Act 2006. To manage this process, the
Company Secretary keeps a register of all Directors’ interests. The register sets out
details of situations in which each Director’s interest may conflict with those of the
Company (situational conflicts). The register is reviewed at each Board meeting so
that the Board may consider and authorise any new situational conflicts identified.
At the beginning of each Board meeting, the Chairman reminds the Directors of
their duties under sections 175, 177 and 182 of the Companies Act 2006, which
relate to the disclosure of any conflicts of interest prior to any matter that may be
discussed by the Board.
There is also a staff conflicts of interest policy in place which requires any potential
conflicts to be kept on a register and regularly updated. This is reviewed by the
Audit Committee on a six-monthly basis.
-
Board oversight of code
of conduct
Narrative on process
The Company has a code of conduct that is included in the staff handbook.
Non-compliance would be a staff disciplinary matter. The Board, through its
Audit Committee has oversight of non-compliance. The Company also has a
whistleblowing policy and process which is regularly reviewed by the audit
committee. There have been no instances of non-compliance.
-
Due diligence of partner
organisations
Narrative on process
The Company has implemented and Enhanced Supplier vetting process for
suppliers and has a supplier’s code of conduct. The Company also has a Modern
Slavery policy. Suppliers are required to confirm that they agree to this Modern
Slavery policy amongst other policies as part of the on-boarding process.
-
Anti-corruption measures
Narrative on process
The Company has an Anti-bribery and anti-corruption policy. As part of this
policy there is a gifts and hospitality approval process and register. The Gifts
and Hospitality register is reviewed by the Audit Committee on a regular basis.
A conflicts of Interest policy is also in place as well as a whistle-blowing policy
and process.
-
Fines and settlements
in connection with
non-compliance with
environmental, anti-bribery/
corruption, or other
ESG-related regulation
Total GBP of fines in
past three years, type
of non-compliance
£0, no incidences of non-compliance.
83
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Taskforce for Climate-related Financial Disclosures
84
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
85
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
NewRiver is committed to embedding the recommendations of the
Financial Stability Board’s Task Force on Climate-related Financial
Disclosures (TCFD) within our approach to climate-related risk
management. This disclosure aims to present a transparent
account of our processes designed to support our journey towards
a low-carbon business model, structured around the TCFD’s four
recommendation pillars: Governance, Strategy, Risk Management,
and Metrics and Targets.
As part of our membership of the Better Buildings Partnership (BBP)
Climate Commitment, we adopt the BBP’s definition of a climate
resilient business in formulating our strategy. This definition
considers that a climate resilience business: has a plan to
mitigate the worst impacts of climate change by reducing its
carbon emissions impact to net-zero; can adapt to operating in
a world in which climate-driven disruption is more frequent and
severe; and provides climate-related information to investors,
regulators, and other stakeholders in a useful and timely way.
Our 2024 disclosures represent our sixth consecutive TCFD report.
We consider that the following report is consistent with the TCFD’s
Recommendations and supporting disclosures; these being the four
pillars referenced above, and the eleven disclosures within, which
are signposted throughout this report. The TCFD’s Guidance for All
Sectors has been considered in order to achieve consistency with
the recommendations.
Governance
TCFD Governance Recommendation ‘a’:
Describe the board’s oversight of climate-related
risks and opportunities
Our Board takes ultimate responsibility for our business’
resilience against climate issues and the transition of our portfolio to a
low-carbon operating model. Material climate issues are considered
by the Board when reviewing NewRiver’s strategic approach to
managing associated impacts on the day-to-day operation of our
assets, to preserve our ability to create value for our investors and
communities. Allan Lockhart, our Chief Executive and senior Board
Director, retains overall accountability for our ESG programme and
approach to climate matters.
The Board’s oversight is supported by the ESG Committee, led
by our Head of Asset Management and ESG, Emma Mackenzie.
The Committee meets quarterly to oversee NewRiver’s approach,
which is guided by our Pathway to Net-Zero, whilst reviewing
and ensuring that appropriate resources are mobilised to enable
proactivity; for example, each asset receives an annual ESG budget
to implement selected items from the Environmental & Social Plans.
The Committee provides quarterly briefings to the Board, updating
its members on key milestones achieved by the ESG programme.
The Board monitors progress against our Net-Zero Pathway targets,
which it receives a comprehensive progress update on twice yearly;
at half year and full year. This includes explanatory context on
performance changes and identifies measures that have been
successful or, conversely, makes recommendations to remedy
any shortfall against the targets. This enables the Board to make
informed decisions as to actions required.
The Board and the Audit Committee adopts an integrated risk
management approach, in which ESG and climate issues are
embedded. The Committee regularly evaluates NewRiver’s risk
appetite, together with emerging and principal risks which are
captured in the risk register maintained by the Company. The
Committee considers a range of risks across six risk categories,
linked to our business model, strategic priorities, and external
environment. Climate-related risk represents one of the principal
risk categories. The Committee regularly evaluates changes to
identified risks and ensures that appropriate controls are applied
in alignment with the Board’s risk appetite.
NewRiver’s Board benefits from the climate-related expertise of
Dr Karen Miller, appointed in Q1 FY23. Karen supports the Board’s
consideration of all climate-related issues escalated to the Board by
the ESG Committee. The Board’s training requirements in respect
of climate-related issues are reviewed annually. In FY24, the Board
received a externally delivered session on the findings of the recent
net-zero audits we undertook across a sample of our assets, and
how these findings relate to our broader strategy.
TCFD Governance Recommendation ‘b’:
Describe management’s role in assessing and
managing climate-related risks and opportunities.
Senior management is closely involved in our day-to-day
approach to climate issues. Through her dual role as Head of
Asset Management and ESG, Executive Committee member Emma
Mackenzie regularly engages with asset and property management
teams to ensure appropriate energy and carbon management
processes and policies are integrated within all management
activities. In addition, asset and property management teams
interact with centre management to ensure that policies are
implemented across the portfolio and that performance is
tracked through our ESG programme.
Our internal teams and centre managers have all received ESG
training during the year, delivered by our external consultants.
We invest in these sessions to ensure that management personnel are
kept abreast of the latest developments in sustainability best
practice and evolving climate-related issues.
The Remuneration Committee includes ESG objectives as part of the
bonus objectives for both the Board and Executive Management.
This is a pre-defined percentage of bonus with a high degree of
measurability, and forms part of the overall performance assessment.
TCFD: our Journey to Climate Resilience
86
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
TCFD report
Strategy
TCFD Strategy Recommendations ‘a’ and ‘c’: Describe the climate-
related risks and opportunities the organisation has identified over
the short, medium, and long term; and describe the resilience of the
organisation’s strategy, taking into consideration different climate-
related scenarios, including a 2ºC or lower scenario.
Risk Identification
NewRiver considers climate-related risks, as well as opportunities,
that may arise from both the physical impacts of climate change
and the transition of our managed assets across the UK to a
low-carbon operating model. We identify climate-related issues
across short (to 2030), medium (to 2040), and long-term (to 2050
and beyond) horizons, appropriately defined to inform our ESG
and corporate strategies.
Short term:
2030
Medium term:
2040
Long term:
2050
The Relevance Assessment below outlines the principal risks and
opportunities we have identified and the ways in which they have
the potential to impact our business, alongside definitions of low,
medium, and high impacts in the context of each of the risks.
Our assessment considers transitional risks and opportunities
associated with keeping warming to within 1.5-degrees above
pre-industrial levels - as our strategy is based on this objective –
and therefore assumes that the end date for achieving net-zero is
2050. Our analysis of physical risk exposure, undertaken by an
external consultant, modelled three climate scenarios in total:
SSP1-2.6, a low carbon scenario corresponding to approximately
2°C of warming at the end of the century, SSP2-4.5, an in-between
scenario available for some specific climate hazards, and SSP5-8.5,
a high carbon scenario corresponding to approximately 4 to 5°C
warming at the end of the century. It considered 11 key climate
hazards including temperature-related, wind-related, water-related,
and solid mass-related hazards. Through the analysis, 6 key hazards
have been identified as relevant to our portfolio (see Relevance
Assessment). Consistent with our transitional risk analysis, we have
presented the potential impacts based on a low carbon scenario.
The Impact Assessment that follows provides our analysis of the
relevant level of potential impact of each risk, and the time horizon
during which these impacts could manifest.
Resilience of Our Strategy
Our strategy is designed to enable us to build resilience
considerations into the acquisition and operation of our assets
as an integral part of our overall approach to asset management.
As our portfolio consists of assets located in the UK only, there is
little variation in exposure levels to both transitional and physical
risks and opportunities across our assets. Our net-zero pathway
and the interim targets we have set ourselves guide our approach
to remaining resilient to principal transition risks. The findings of
our physical risk assessment and sensitivity analysis using low and
high carbon scenarios show that there is minimal change to the
exposure of our portfolio to physical climate risks in the best-
and worst-case scenarios.
Should collective efforts to keep warming to within 1.5-degrees
prove insufficient, all transitional risks have the potential to have
a further heightened impact, as regulatory targets may need to
increase to keep the UK economy on the required decarbonisation
pathway, which may also increase the costs associated with
aligning buildings’ performance to such targets. In this scenario,
the need to take prompt action would be even more critical, and
the importance to consumers of an effective response would also
grow. As our strategy is aligned to the best available scientific
recommendations (SBTi) and our approach to the sustainable
management of our assets strives for continuous environmental
performance improvements, whilst physical risk analysis showed
no material movements in risk exposure under higher carbon
scenarios, we do not envisage that we need to amend our risk
management strategy based on different warming scenarios.
87
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Relevance Assessment
Climate Change Strategy (Risk 4a1): A failure to implement appropriate climate risk management measures, comply with evolving
regulations and meet our ESG targets could impact the operation and value of our assets, leading to a risk of asset obsolescence,
reputational damage, and erosion of investor value.
Category &
Indicator
Risk Type
Risk Description
Relevance to NewRiver
Low Impact
Definition
Medium Impact
Definition
High Impact
Definition
Policy
& Legal
PL1
Energy
efficiency
and carbon
regulations
relating to
managed
assets
Evolving policy designed to
support the UK’s 2050 net-zero
commitment requires CapEx to
achieve compliance but also
highlights opportunities to
reduce operational costs,
support occupier demand,
improve resilience, and implement
measures that ultimately support
our own net-zero ambitions.
We have mitigated the short-term MEES risk
associated with our portfolio, however there
are proposals to increase the minimum
thresholds in future. 67% of our EPCs are
currently compliant with proposed 2027
requirements, and 33% already compliant with
2030 proposals. We have undertaken a cost
assessment of achieving compliance with the
2030 minimum threshold, assuming that
current feasibility tests will remain relevant.
Costs of
<£2million to
improve asset
performance
in accordance
with regulations
Costs of
£2-10million to
improve asset
performance
in accordance
with regulations
Costs of
>£10million to
improve asset
performance
in accordance
with regulations
Technology
T1
Costs to
transition
managed
assets to
low-carbon
model
Opportunities exist to implement a
range of technologies and system
improvements designed to reduce
environmental impact and
transition our assets to a
decarbonised operational model.
These systems will come at a cost,
and require lifecycle carbon
considerations to be factored in.
We will engage our occupiers to
ensure our ambitions are aligned
and make sensible system
replacements at the time that
current systems reach a point in
their useful lives that the lifecycle
carbon and operational cost
implications are beneficial to our
occupiers as well as our net-zero
journey, which will support usual
service charge processes.
We are in the assessment phase of most
solutions at this stage on our net-zero
pathway, with implementation being
focused on key strategic opportunities such
as the IBOS system we installed in
Bexleyheath and the various LED projects
we rolled out this year. We have begun
assessing the potential costs of removing
gas supplies from our assets and driving
energy usage intensities down in-line with
industry targets, alongside solar PV
installations. Our initial assessments are
under review by our centre and asset
management teams as we work to refine
costings and reduce assumptions.
Costs of
<£2million to
improve asset
performance
in accordance
with regulations
Costs of
£2-10million to
improve asset
performance
in accordance
with regulations
Costs of
>£10million to
improve asset
performance
in accordance
with regulations
Reputation
R1
Reputational
damage
based on
ineffective
response
to climate
change
Societal environmental
consciousness is continually on
the rise and there is a widespread
consensus that we must keep
warming to within 1.5 degrees.
Businesses that fail to keep
pace with this moral shift risk
reputational damage. We must
continuously work towards, and
monitor our progress against,
our SBTi-approved emissions
reduction targets. We must ensure
that our initial targets are reviewed
as and when new scientific
recommendations or sector-
specific methodologies emerge.
We have committed to becoming a net-zero
business and developed our pathway to
achieving this commitment. We have
committed to the SBTI's recommendations
of reducing absolute emissions by 42% by
2030 and achieving net-zero by 2050 in
pursuit of a 1.5-degree future. We are
currently reviewing the SBTI's new Buildings
Sector guidance and considering relevant
revisions to our targets to align with this
latest sector-specific best practice guidance,
including re-baselining.
Limited
reputational
impact if
response to
climate change
is ineffective
Temporary
reputational
impact if
response to
climate change
is ineffective,
with sufficient
time to remedy
Significant
reputational
impact if
response to
climate change
is ineffective or
not operational
by required date
Market
M1
Increased
costs to offset
unabated
emissions
as part of
our net-zero
strategy
There has been a significant,
recent, increase in corporate
net-zero commitments which may
drive demand for credible carbon
offsets, resulting in cost increases.
Potential future regulation may
also contribute to this risk.
We have committed to ensuring that any
offsets purchased as part of our net-zero
strategy are additional, not overestimated,
lead to permanent removals, do not support
double counting, and do not cause wider
social or environmental harm. We will begin
purchasing offsets in connection with our
corporate target in 2025. The scope of this
purchasing requirement will increase in
2040 when we bring the landlord-controlled
areas of our portfolio to net-zero, and then
increase again in 2050 when we become
fully net-zero.
Minimal cost
increase of no
more than 25%
Considerable
cost increase
of 50-100%
Significant cost
increase of
over 100%
88
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
TCFD report continued
Climate Change Impacts on our Assets (Risk 4b): Changes in the way consumers live, work, shop and use technology could have an
adverse impact on demand for our assets, whilst the physical impacts of a changing climate could cause damage or disruption to the
operation of our assets.
Category &
Indicator
Risk Type
Risk Description
Relevance to NewRiver
Low Impact
Definition
Medium Impact
Definition
High Impact
Definition
Market
M2
Changing
customer
behaviour
The nature of this risk is two-fold in
that it has potential impacts from
both an occupier and consumer
perspective. Changes in consumer
shopping preferences present an
opportunity to leverage our ESG
strategy to demonstrate the ways
in which we actively cater to the
evolving needs of our occupiers’
customers, but also present a
potential risk if the perception is
that our ESG strategy does not
fulfil their expectations.
We must be able to demonstrate that our
centres are environmentally and socially
conscious places for retailers and end
customers. Failure to do so could have a
negative impact on demand for our assets.
Changes in
customer
behaviour are
well accounted
for by our
existing strategy
& offering, with
impact being
only resource
requirements
to achieve this
There is room
for our strategy
to improve its
alignment with
changing
customer
behaviour,
leading to
some reduction
in demand
Our strategy
falls short of
customer
expectations
and demand
for our assets
is hampered
Physical
PH1
PH6
Acute Physical
Hazards and
Chronic
Stressors
caused by
a Changing
Climate
As average global temperatures
rise, so too does the exposure of
real assets to acute climate
hazards and chronic stressors.
This risk category has been
assessed under both a high
(SSP-8.5 representing 4-5
degrees of warming) and low
(SSP1-2.6 representing within
2 degrees of warming) carbon
scenario up to the year 2100,
considering 11 key climate risks
including temperature-related,
wind-related, water-related,
and solid mass-related hazards.
Through this assessment, some
risks were discounted as relevant
to our portfolio. Our risk disclosure
includes only those identified as
highly relevant.
6 relevant risks to our portfolio have been
identified to include: heat stress; water
stress; storm and wind damage; subsidence;
and flooding. Potential impacts of exposure
to these risks include higher cooling/energy
demand and associated costs; damage to
external building elements; and increased
insurance premiums. Through our
assessment of these risks under both a high
and low emissions scenario, we were able
to establish that there is no material
variation in exposure levels across our
portfolio over time and under each scenario.
Our impact assessment represents the
within 2-degrees scenario.
0-40% of our
assets could
be impacted
by the relevant
climate hazard
40-80% of our
assets could
be impacted
by the relevant
climate hazard
80-100% of our
assets could
be impacted
by the relevant
climate hazard
89
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
TCFD Strategy Recommendation ‘b’: Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning.
The Board has a low risk tolerance for principal risks affecting our business, including climate-related issues. Consistent with this appetite,
our robust ESG programme guides our actions on our pathway to net-zero and supports our response to climate-related issues through the
implementation of asset-level initiatives designed to improve efficiency, reduce environmental impact, and enhance resilience. We have
embedded ESG and climate considerations throughout our business processes, departments, and functions. Environmental considerations
are embedded into capital allocations and are considered for all future acquisitions. The following diagram depicts the actions and processes
we have identified as part of our strategy to deliver on our climate ambitions in the context of our business model and financial planning.
*
NB: No data for future subsidence risk is available so this risk can only be considered under current climate conditions.
Impact Assessment
Indicator, and risk types
Category,
Energy/Carbon Regulations
PL1
Costs to transition assets
T1
Reputational damage
R1
Increased costs to offset
M1
Increased costs to offset
M1
Changing customer behaviour
M2
Heat Stress
PH1
Water Stress
PH2
Storm Damage
PH3
Wind Damage
PH4
Subsidence
PH5
Coastal Flooding
PH6
Timeframe
Impact
Short – to 2030
Medium – to 2040
Medium
Low
High
Long – to 2050 and beyond
PL1
R1
R1
R1
PH5
PH4
PH6
M2
PH2
T1
M1
PH3
PH1
90
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
TCFD report continued
Risk Management
TCFD Risk Management Recommendation ‘a’:
Describe the organisation’s processes for identifying
and assessing climate-related risks
Climate-related risks are identified through NewRiver’s integrated
risk management framework. Our risk management framework
considers both emerging and principal risks with the potential to
impact our business. We maintain a risk register that considers a
range of categories, including environmental and climate change
risks. The risk register assesses the impact and likelihood of each
identified risk, which is translated into a risk heat map. Where the
residual risk does not align with the Board’s risk appetite,
management actions are recommended with a view to
mitigating the relevant risk.
TCFD Risk Management Recommendation ‘b’:
Describe the organisation’s processes for managing
climate-related risks
Accountability for mitigating actions is assigned to a senior asset
and property manager. This approach allows NewRiver to ensure
there is a top-down understanding of principal risks across the
business, backed by bottom-up mechanisms to support monitoring by
management and their ability to address principal risks in a timely
manner. With the support of our centre managers, we implement a
host of initiatives designed to manage environmental impact and
promote the efficient and resilient operation of our assets. This also
includes, for example, building safety assessments which review
the risk of loose roof/ facade features, which support mitigation of
physical risks such as wind and storm damage.
TCFD Risk Management Recommendation ‘c’:
Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Please see pages 84 to 92 for a detailed presentation of how the
identification, assessment, and management of climate-related risks
are integrated into NewRiver’s overall risk management processes.
1. Disciplined capital allocation
Embed Net-Zero Carbon and climate resilience in due diligence and
analysis of stock selection from 2022
2. Leveraging our platform
• Prepare costed asset management plans to net-zero for all
managed assets by 2024
• Actively engage with our top 30 occupiers to align our level
of commitment
• Actively apply green lease commitments across all
occupier transactions
• Actively engage NewRiver’s top tier suppliers to align
commitment for products and services purchased to mitigate
supply chain emissions
• Actively pursue procurement of renewable energy across all
landlord and occupier space
• Adopt NewRiver’s re-development & major refurbishment ESG
framework across all relevant projects
• Measure the embodied carbon emissions of all re-developments
& major refurbishments by undertaking ‘Life Cycle Assessments’
(LCA), from 2023
• Embed minimum fit-out requirements for occupier licenced
fit-outs from 2021
• Design out fossil fuels from all major refurbishment projects and
re-development projects with immediacy
• Leverage our strong relationships with UK high street retail
brands, local councils, and our joint venture partners, to ensure
efforts are collaborative and long-term
• When managing assets owned by third parties, leverage our
scale, expertise, and learnings on our journey to net-zero, to
promote environmental best practice beyond our own portfolio
3. Flexible balance sheet
Leverage the flexibility of our balance sheet to ensure investment
in energy efficiency over the next 20 years is well accounted for in
financial planning and that the value of our investments is protected
from current and future market & legislative risks
1
Disciplined capital
allocation
Leveraging our platform
Flexible balance sheet
2
3
U
n
d
e
r
pi
n
n
e
d
by
a
co
m
m
it
te
d
E
S
G
s
tr
at
e
g
y
91
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Metrics and Targets
TCFD Metrics and Targets Recommendation ‘a’: Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its strategy and risk management process.
Annually, we disclose a suite of climate-related metrics which track our performance towards realising our core objective of minimising
our environmental impact. These metrics are aligned with EPRA’s best practice recommendations for transparently disclosing sustainability
performance. The EPRA performance tables on pages 195 to 198 present our FY24 performance across these metrics, alongside historical
performance.
We also monitor the following metrics associated with each of the principal climate-related risks identified:
Risk Type
Management Objective
Metrics
Monitoring Frequency
Policy & Legal
Maintain compliance with energy/
carbon regulations
Portfolio EPC profile
Continuous
Technology
Identify and implement
opportunities to improve energy
efficiency and manage costs to
transition/ decarbonise assets
Energy usage intensity
Monthly by centre teams
via our energy broker’s
management platform
Reputation
Avoid reputational damage based
on ineffective response to climate
change by progressing against
our net-zero pathway
Scope 1, 2 & 3 GHG emissions
Annual quantification with
monthly monitoring through
energy management
Market
Minimise our exposure to
increasing costs of carbon offset
credits by reducing our emissions,
whilst monitoring market changes
Scope 1, 2 & 3 GHG emissions;
Cost projections from market
sources.
Our ESG consultants keep us
informed, whom we communicate
with on a weekly basis
Keep pace with changing
customer behaviour and sentiment
towards sustainability matters
Customer engagement via asset
management and centre
management teams, alongside
wider consumer / market research
Continuous
Physical Risk Exposure
Monitor changes in exposure to
physical climate risks to enable
early identification of potential
adaptation and mitigation measures
% of assets exposed to heat
stress; water stress; storm and
wind damage; subsidence;
and flooding
Initial assessment will be updated
as and when significant changes
to our portfolio occur in terms of
acquisitions and disposals
TCFD Metrics and Targets Recommendation ‘b’: Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and the related risks.
In accordance with our reporting obligations under the UK’s Streamlined Energy and Carbon Reporting regulations, we disclose our annual
carbon emissions performance. Please refer to pages 73 to 75, where we provide further information on our FY24 emissions performance,
together with a comparison against our historical performance and the methodologies used to prepare these disclosures.
TCFD Metrics and Targets Recommendation ‘c’: Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance against targets.
Following the release of the Science Based Targets initiative’s (SBTi) Corporate Net-Zero Standard in October 2021 – the world’s first
framework for corporate net-zero targets consistent with a 1.5°C future – we have published our Pathway to Net-Zero and have received
validation from the SBTi for our Scope 1 and 2 emissions reduction targets. Science-based targets (SBTs) provide companies with a clearly
defined pathway to future-proof growth by specifying how much and how quickly they need to reduce their GHG emissions to achieve a
net-zero world by no later than 2050. Pragmatic net-zero strategies place the corporate SBT methodology at their heart, prioritising rapid
decarbonisation before the use of carbon offsets. This is the approach that we will take in pursuing the following targets:
1. Our corporate emissions will be brought to net-zero by 2025. In FY24, we eliminated our Scope 1 emissions through our office move.
2. We will achieve a 42% reduction in total absolute emissions by 2030. As of year end FY24, we are 74% of the way to achieving this.
3. Our landlord-controlled portfolio emissions will be brought to net-zero by 20401. We reduced these emissions by 20% in FY24 vs FY23.
4. Our tenant-controlled portfolio emissions, and emissions associated with our development activities, will be brought to net-zero by 2050.
For more information on the actions we will take to achieve these targets, please see our Pathway to Net-Zero which provides our detailed
delivery plan. Our Pathway to Net-Zero is presented separately on our website for ease of ongoing access for our stakeholders.
1. Against a 2020 baseline
92
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
TCFD report continued
Managing our risks
and opportunities
Risk monitoring and assessment including
emerging risks
The identification of risks and their management is a continual and
evolving process. This has been underscored more so over recent
years in which global macroeconomic and geopolitical events have
created uncertainty across all sectors, both economically and socially.
Geopolitical events have also impacted supply chains and sentiment.
The Company maintains a risk register in which a range of
categories are considered. These risks are linked to the business
model and strategic priorities of the Company. The risk register
assesses the impact and probability of each identified risk.
By identifying all risks on a register and continuously updating
this register, principal risks can be identified as those that might
threaten the Company’s business model, future performance,
solvency or liquidity and reputation. Their potential impact and
probability will also be a factor in whether they are classed as
principal. The risk register also records actions that can be taken
to further mitigate the risk and each action is assigned to an
individual or group. Mitigation factors and actions are assigned
to all risks whether they are principal, non-principal or emerging.
The continuous updating of this risk register allows us to assess how
risks are evolving, assists in identifying emerging risks as they develop
and ensures that the impact of each identified risk is continually
monitored as it emerges and progresses. During FY23 we identified
an emerging depositor risk as our cash holdings continued to build up.
This risk was not a principal risk but by identifying the emerging risk
as it has developed, we were able to update our treasury policies to
ensure that they were fit for purpose and that cash is spread across
various banking institutions. We continue to monitor this in FY24 and a
Board-approved counterparty list is continuously monitored using S&P
and Fitch credit ratings. The treasury policy dictates the maximum
exposure to a counterparty based on their rating. The operation of
the treasury policy is reported to the Board on a quarterly basis.
This emerging risk also created an opportunity as the Group has been
able to take advantage of favourable deposit opportunities. We have
not identified any further emerging risks during FY24.
Risk appetite and mitigation
The Board has a low-risk appetite for compliance (legal and
regulation) related risk. The Board however recognises that
the external environment in which it operates is inherently risky.
Mitigating actions are therefore agreed for all risks that exceed
the Group’s risk appetite. Our experienced leadership team
continuously works to mitigate the risks arising from the external
environment in some of the following ways:
• Maintaining an unsecured balance sheet, with the Company
benefitting from a more diversified debt structure and gaining
access to a larger pool of capital to help achieve our strategic goals
• A disciplined approach to asset selection with probability
risk-adjusted returns
• Deploying capital in joint ventures and associates, thereby
diversifying risk
• A diverse tenant base in which there is no single tenant exposure
of more than 4%
• An experienced Board and senior management team
All risks on the register are ‘scored’ in terms of impact and
probability. A risk heat map can be a useful visual aid to
understand the potential impact and probability of each
significant risk on a gross basis prior to mitigation. Our heat
risk map is set out overleaf.
Risk is inherent in all businesses and
effective risk management enables us
to manage both the threats and the
opportunities associated with our strategy
and the operation of our business model.
Our small workforce encourages flexibility and
collaboration across the business in all areas including
risk management. The accessibility and flexibility of the
Board and senior staff are particularly pertinent when
adapting to evolving risks, emerging risks and external
risks such as the aftereffects of a global pandemic and
geopolitical instability. This flexibility enables the business
to adjust and respond to fast-changing situations and
prove its resilience and adaptability.
The Board has ultimate responsibility for the risk
management and internal controls framework of the
Company and regularly evaluates appetite for risk,
ensuring our exposure to risk is managed effectively.
The Audit Committee monitors the adequacy and
effectiveness of the Company’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
risk management, ensuring that it is embedded within the
Company’s culture and values and that there is a delegation
of accountability for each risk to senior management.
93
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Risk matrix
Macroeconomic
Political and regulatory
Catastrophic external event
Climate change strategy
Climate change impacts
on our assets
Changes in technology
and consumer habits and
demographics
Cyber security
People
Financing
Asset management
Development
Acquisitions
Disposals
a
a
b
b
External risks
Principal risks
Operational risks
Risk and governance and responsibility
Board
Collectively responsible for managing risk, overseeing the internal controls framework and determining risk appetite
• Regularly review risks within strategy discussions, the impact of risk on
strategy and levers within the business model that can be adjusted to
manage these risks.
• Conducts formal reviews of principal risks (including emerging risks) at
least twice a year - one of which is in connection with consideration of the
viability statement.
• Monitors KPIs which link to risk and strategy through Board reports.
Audit Committee
Oversees the risk management process
• Conducts formal reviews of the risk management process twice a year –
one of which is in connection with consideration of the viability statement.
• Monitors the internal controls framework.
• Considers the use of external advisers for specific specialist risk impacts
and deep-dive reviews.
• Monitors the need for an internal audit function/team and appoints third
parties to test internal controls.
• Receives reports on the risk management process twice annually.
Executive Committee
Regularly reviews the entire risk register - members are responsible for managing risk within their area of accountability
• Conducts reviews of the entire risk register (which includes emerging risks)
at least quarterly.
• Delegates line responsibility for managing risks within their area of
accountability.
• Reviews risk topics through regular timetabled presentations or papers.
• Uses external advisers for specific specialist risk impacts.
• Monitors KPIs which link to risk and strategy.
Asset Managers
Members are responsible for managing risk within their assets and highlighting risks as they emerge
Company Secretary
Conducts individual risk reviews with ExCo members and individual business areas. Maintains the risk register and presents an update
to the ExCo, the Audit Committee and the Board at least twice a year. Has responsibility for training staff on policies and regulations.
Movement from FY23
The risk matrix sets out gross risk (i.e. our assessment of the
impact and probability of risks prior to any mitigating factors).
All risks have mitigating actions associated with them.
94
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Principal risks and uncertainties continued
External risks
External risks
Operational risks
1. Macroeconomic
2. Political and regulatory
3. Catastrophic external event
4a. Climate change strategy
4b. Climate change impacts on our assets
5. Changes in technology and consumer habits and demographics
6. Cyber security
7. People
8. Financing
9. Asset management
10. Development
11. Acquisitions
12. Disposals
Risk and impact
Monitoring and management
Change in risk assessment
during the period
1. Macroeconomic
Economic conditions in the
UK and changes to fiscal and
monetary policy may impact
market activity, demand for
investment assets, the
operations of our occupiers
or the spending habits of
the UK population.
Responsibility
Board & ExCo
Strategic alignment
1
2 3
Impact
Probability
Movement
• The Board regularly assesses the Company’s
strategy in the context of the wider
macroeconomic environment. This continued
review of strategy focuses on positioning our
portfolio for the evolving economic situation.
• The Board and management team consider
updates from external advisers, reviewing key
indicators such as forecast GDP growth,
employment rates, interest rates and Bank
of England guidance and consumer
confidence indices.
• Our portfolio is focused on resilient market
sub-sectors such as essential retailers.
• Through regular stress testing of our
portfolio we ensure our financial position
is sufficiently resilient.
• Closely monitoring rent collection and
cash flow.
• Macroeconomic risk has remained the same
during the year and is considered a medium
to high impact risk with a high probability.
• Sentiment has been impacted by interest
rates, geopolitical issues and inflation.
• Overall portfolio valuations slightly decreased
in the second half of the year, however our
debt covenant and financial policy headroom
remains high.
• Continued inflation could fuel wage growth
and costs leading to rate increases above
current forecasts.
• Inflation has fallen during 2023 and 2024 and
the Bank of England is working with interest
rate adjustments to reduce inflation to fall to
its 2% target.
2. Political and regulatory
Changes in UK Government
policy, the adverse effects of
Brexit on our tenants, or the
impact of political uncertainty
on consumers’ retail and
leisure spend.
Responsibility
Board & ExCo
Strategic alignment
1
2 3
Impact
Probability
Movement
• The Board regularly considers political and
regulatory developments and the impact they
could have on the Company’s strategy and
operating environment.
• External advisers, including legal advisers,
provide updates on emerging regulatory
changes to ensure the business is prepared
and is compliant.
• We regularly assess market research to
gauge the impact of regulatory change on
consumer habits.
• We carry out stress testing on our portfolio
in relation to regulatory changes which may
impact our operations or financial position.
• Where appropriate, we participate in industry
and other representative bodies to contribute
to policy and regulatory debate. Individual
ExCo constituents are members of the BPF
and the High Street Task Force.
• Political and regulatory risk has remained the
same during the year. This is considered a
medium to high impact risk with a high probability.
• There has been political uncertainty within the
UK due to changes in leadership over recent
years and a decline in market confidence.
This is likely to continue with a general
election in July and a potential change of
Government. There have also been political
changes at a local authority level.
• There still remains some uncertainty around
the longer-term impacts of Brexit and also
uncertainties relating to the possibility of
Scottish devolution.
Strategic pillars
1
Disciplined capital allocation
2
Leveraging our platform
3
Flexible Balance Sheet
ESG Environmental, Social and Governance
Impact and probability
Low
Medium
High
Risk change during FY24
Increased
Decreased
No change
95
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Risk and impact
Monitoring and management
Change in risk assessment
during the period
3. Catastrophic external event
An external event such as
civil unrest, a civil emergency
including a large-scale terrorist
attack or pandemic, could
severely disrupt global
markets and cause damage
and disruption to our assets.
Responsibility
Board & ExCo
Strategic alignment
1
2 3
Impact
Probability
Movement
• The Board has developed a comprehensive
crisis response plan which details actions to
be taken at a head office and asset level.
• The Board regularly monitors the Home
Office terrorism threat level and other
security guidance.
• The Board regularly monitors advice from
the UK Government regarding pandemic
responses and emergency procedures at our
assets are regularly tested and enhanced in
line with the latest UK Government guidance.
• We have robust IT security systems which
cover data security, disaster recovery and
business continuity plans.
• The business has comprehensive insurance
in place to minimise the cost of damage and
disruption to assets.
• Catastrophic external event risk has
remained the same during the year and is
considered a high impact risk with a medium
to high probability.
• The after effects of a global pandemic
caused unprecedented economic and
operational disruption and the continuing
global developments create uncertainty.
We mitigated the impact of these events
through our portfolio positioning focusing
on essential goods and services, our cash
position and liquidity and our active approach
to asset management.
• The cost-of-living crisis, continued inflation
and mortgage rate increases have impacted
UK households. Our operational performance
has however demonstrated the resilience of
our portfolio.
• The National Terrorism Threat Level is
substantial and the full long-term impact from
the wars in Ukraine and the Middle East and
other geopolitical events remains unclear.
4a. Climate change strategy
A failure to implement
appropriate climate risk
management measures,
comply with evolving
regulations or meet our
ESG targets could impact the
operation and value of our
assets, leading to a risk of
asset obsolescence,
reputational damage and
erosion of investor value.
Responsibility
Board & ExCo, CEO
and ESG Committee,
Head of ESG
Strategic alignment
1
2 3 ESG
Impact
Probability
Movement
• We have a comprehensive ESG programme
which is regularly reviewed by the Board and
Executive Committee.
• One of the key objectives of the programme
is to minimise our impact on the environment
through reducing energy consumption,
sourcing from renewable sources and
increased recycling.
• We have developed our Pathway to Net Zero
Carbon and set medium and long-term targets
in line with the latest science-based targets.
• ESG performance is independently reviewed
by our external environmental consultants
and is measured against applicable targets
and benchmarks.
• We continue to report in line with
TCFD requirements.
• Climate change strategy risk remained the
same during the period and is considered a
medium to high impact risk with a medium to
high probability.
• ESG has risen up the agenda of many
stakeholders and expectations of compliance
with best practice have increased.
• Regulatory requirements have also increased
during the period, in addition to the scoring
criteria for certain ESG benchmarks such
as GRESB.
• Our ESG Committee pre-empted these
changes and our initiatives and disclosure
continue to evolve in line with best practice.
• ESG is embedded into capital allocation decisions
and is considered for all future acquisitions.
96
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Principal risks and uncertainties continued
Risk and impact
Monitoring and management
Change in risk assessment
during the period
4b. Climate change impacts on our assets
Adverse impacts from
environmental incidents
such as extreme weather
or flooding could impact
the operation of our assets.
A failure to implement
appropriate climate risk
management measures
at our assets could lead
to erosion of investor
value and increases in
insurance premiums.
Responsibility
Board & ExCo, CEO
and ESG Committee,
Head of ESG
Strategic alignment
1
2 3 ESG
Impact
Probability
Movement
• We regularly assess assets for environmental
risk and ensure sufficient insurance is in place to
minimise the impact of environmental incidents.
• In conjunction with insurers, flood risk
assessments have been carried out at all of
our assets and the risk is considered low.
• Climate change impacts on our assets risk has
increased during the period and is considered
a medium to high impact risk with a medium
probability. The probability of this risk has
increased as governments globally, including
the UK Government, continue to take insufficient
action and temperatures continue to rise, with
2023 being the hottest year on record.
• Although exposure to extreme weather
events is a near-term risk, other climate
impacts such as heat stress and sea level rises
are medium-term or long-term time horizons.
Whilst their impact is high, their probability is
medium in the short to medium term.
• Climate impacts are embedded into capital
allocation decisions and considered for all
future acquisitions of both equipment installed
at our assets and for the assets themselves.
5. Changes in technology and consumer habits and demographics
Changes in the way
consumers live, work, shop
and use technology could
have an adverse impact on
demand for our assets.
Responsibility
Board & ExCo
Strategic alignment
1
2 3
Impact
Probability
Movement
• The Board and Executive Committee regularly
assess our overall corporate strategy and
acquisition, asset management and disposal
decisions in the context of current and future
consumer demand. Our strategy is designed
to focus on resilient assets that take into
account these future changes.
• We closely assess the latest trends reported
by research providers, including cash spent at
our assets, to ensure we are aligned with
evolving consumer trends.
• Our retail portfolio is focused on essential
spending on goods and services which are
resilient to the growth of online retail.
• Our retail parks are ideally positioned to help
retailers with their multi-channel retail strategies.
• Changes in technology and consumer habits
risk has remained the same during the year
and is considered a low to medium impact
risk with a high probability.
• Although the global pandemic lockdown
restrictions significantly increased home
working and online shopping we have seen
evidence that this is unwinding in recent
years. This provides opportunities for our
portfolio, particularly retail parks and local
community shopping centres.
• Our portfolio is focused on providing
essential retail to local communities, which
continues to mitigate the impact of online
retail on our portfolio.
• Our portfolio is positioned to ensure that
over the longer term we have the most
resilient retail portfolio in the UK.
Strategic pillars
1
Disciplined capital allocation
2
Leveraging our platform
3
Flexible Balance Sheet
ESG Environmental, Social and Governance
Impact and probability
Low
Medium
High
Risk change during FY24
Increased
Decreased
No change
97
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Risk and impact
Monitoring and management
Change in risk assessment
during the period
6. Cyber security
A cyber attack could result in
the Group being unable to
use its IT systems and/or
losing data. This could
delay reporting and divert
management time. This risk
could be increased due to
employees continuing to work
from home following the
pandemic and due to
geopolitical events.
Responsibility
Board & ExCo, Head of IT
Strategic alignment
1
2 3
Impact
Probability
Movement
• There are limited IT servers on sites.
• Multiple third-party supplier programmes are
used which have their own security systems
and are independently audited by Deloitte
and ISO2000 accredited.
• ExCo receives quarterly reporting on IT matters.
• Security protocols are in place to ensure swift
changes to data access following staff
changes and authority limit access.
• We have reviewed our IT systems and have
enhanced a number of areas during the year.
• Cyber insurance cover is in place.
• We have recently carried out an external
review of the Group’s IT security and systems
as part of our internal audit process.
• Cyber security has increased during the year
and is considered a medium to high impact
risk with a high probability. Global developments
have increased cyber security risks with many
high-profile organisations being targeted by
cyber attacks. We continue to carry out further
enhancements to our IT systems and procedures
and update, monitor and review our internal
control procedures.
98
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Principal risks and uncertainties continued
Operational Risks
Risk and impact
Monitoring and management
Change in risk assessment
during the period
7. People
The inability to attract, retain
and develop our people and
ensure we have the right skills
in place could prevent us from
implementing our strategy.
Responsibility
Remco, ExCo, Senior
Independent Director
(as employee engagement
director), Head of HR
Strategic alignment
1
2 3
Impact
Probability
Movement
• Attracting, retaining and developing talent is core
to our HR strategy, which is regularly reviewed by
the Board and Executive Committee.
• We undertake an extensive Employee
Engagement Survey once a year to gauge
employee views on leadership, company
culture, health and wellbeing, personal growth
and benefits and recognition. This informs any
changes to HR policy.
• We regularly benchmark our pay and benefits
against those of peers and the wider market.
• We regularly review the Group’s resourcing
requirements, performance management,
talent and succession planning.
• Longer notice periods are in place for
key employees.
• Our recruitment policies consider the needs of
the business today and our aspirations for the
future, whilst ensuring our unique corporate
culture is maintained.
• The probability of the People risk has reduced
during the year. It is considered a medium
impact risk with a medium probability.
• Although inflation puts pressure on salary
costs and demands, this impact is mitigated
by an active employee engagement
programme and the alignment of reward
with both individual and Company-level
performance. The vesting of the LTIP award in
August 2023 has improved staff perceptions
of these long-term awards and improved their
motivational impact.
• We continue to focus on staff wellbeing and
actively seek regular feedback from staff.
The recent Sunday Times Best Places to
Work 2024 survey was strongly positive with
NewRiver scoring “excellent’ in all criteria.
• We also offer many forms of flexible working
including job share, annualised hours,
variation of hours and working from home.
Since the pandemic we have implemented a
policy of working enabling staff to work from
home a number of days a week should they
choose to do so.
8. Financing
If gearing levels become
higher than our risk appetite
or lead to breaches in bank
covenants, this would impact
our ability to implement our
strategy. The business could
also struggle to obtain funding
or face increased interest
rates as a result of
macroeconomic factors.
Responsibility
ExCo & CFO
Strategic alignment
1
3 ESG
Impact
Probability
Movement
• The Board regularly assesses Company
financial performance and scenario testing,
covering levels of gearing and headroom to
financial covenants and assessments by
external rating agencies.
• The Company has a programme of active
engagement with key lenders and shareholders.
• The Company has a wholly unsecured
balance sheet, which mitigates the risk of a
covenant breach caused by fluctuations in
individual property valuations.
• The Company has long-dated maturity on its
debt, providing sufficient flexibility for refinancing.
• Working capital and cashflow analysis and
detailed forward assessments of cashflows are
regularly reviewed by the Executive Committee.
• Our credit rating is independently assessed by
Fitch Ratings at least annually.
• Financing risk remained the same during the
year and is considered a low to medium
impact risk with a medium probability.
• Macroeconomic developments, particularly the
increase in inflation, have impacted financial
markets. The strength of the Company’s
unsecured balance sheet means we have
significantly mitigated the risk of not being
able to secure sufficient financing. Increased
cash levels have also mitigated these risks
and provide deposit opportunities.
• The Company extended the maturity on its
undrawn Revolving Credit Facility to
November 2026 during the year.
• There is no exposure to interest rate rises
on drawn debt.
Strategic pillars
1
Disciplined capital allocation
2
Leveraging our platform
3
Flexible Balance Sheet
ESG Environmental, Social and Governance
Impact and probability
Low
Medium
High
Risk change during FY24
Increased
Decreased
No change
99
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Risk and impact
Monitoring and management
Change in risk assessment
during the period
9. Asset management
The performance of our
assets may not meet with the
expectations outlined in their
business plans, impacting
financial performance and
the ability to implement
our strategies.
Responsibility
ExCo, Head of Asset
Management and the
Asset Managers
Strategic alignment
1
2 3 ESG
Impact
Probability
Movement
• Asset-level business plans are regularly
reviewed by the asset management team
and the Executive Committee and detailed
forecasts are updated frequently.
• The Executive Committee reviews whole
portfolio performance on a quarterly basis
to identify any trends that require action.
• Our asset managers are in contact with centre
managers and occupiers on a daily basis to
identify potential risks and improvement areas.
• Revenue collection is reviewed regularly by
the Executive Committee.
• Retailer concentration risk is monitored, with a
guideline that no retailer will account for more
than 5% of gross income (currently our largest
retailer is Poundland accounting for 3.3% of
gross income).
• Asset management risk has remained the same
during the year and is considered a medium to
high impact risk with a medium probability.
• The global pandemic placed restrictions on
the operations of our occupiers and impacted
performance and rent collection at our assets.
These have improved greatly and are now
back to pre-pandemic levels.
• Our diverse tenant portfolio focuses on
essential retail which reduces the impact of
individual tenant defaults.
• Although we have a low probability of default,
the continued cost-of-living crisis may impact
the financial health of our occupiers.
• Our operational performance continues
to prove the resilience of our assets.
10. Development
Delays, increased costs and
other challenges could impact
our ability to pursue our
development pipeline
and therefore our ability
to profitably recycle
development sites
and achieve returns
on development.
Responsibility
Board & ExCo,
Development
team leaders
Strategic alignment
3 ESG
Impact
Probability
Movement
• We apply a risk-controlled development
strategy through negotiating long-dated
pre-lets for the majority of assets.
• All development is risk-controlled and forms
only a small element of the portfolio by value.
• Capital deployed is actively monitored by the
Executive Committee, following detailed due
diligence modelling and research.
• An experienced development team monitors
on-site development and cost controls.
• On large-scale developments where
construction is more than 12 months, we look
to carry out the project in partnership and/or
forward sell.
• Development risk probability decreased
during the period as the business currently
has less development projects. It is
considered a medium impact risk with a
medium probability.
• Supply issues and increases in the cost of
building supplies will impact developments,
however, as they remain a small part of our
portfolio the overall impact is low.
• A number of our Regeneration assets were
sold in prior years which has decreased the
proportion of assets focused on development
which inherently reduces risk exposure.
100
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Principal risks and uncertainties continued
Risk and impact
Monitoring and management
Change in risk assessment
during the period
11. Acquisitions
The performance of asset and
corporate acquisitions might not
meet with our expectations and
assumptions, impacting our
revenue and profitability.
Responsibility
Board & ExCo, Head
of Capital Markets
Strategic alignment
1
2 3
Impact
Probability
Movement
• We carry out thorough due diligence on all
new acquisitions, using data from external
advisers and our own rigorous in-house
modelling before committing to any
transaction. Probability-weighted analysis
takes account of these risks.
• Acquisitions are subject to approval by the
Board and Executive Committee, who are
highly experienced in the retail sector.
• We have the ability to acquire in joint
ventures, thereby sharing risk.
• Acquisition risk has remained the same
through the year and is considered a medium
impact risk with a medium probability.
• The lack of supply and relative price of some
assets may reduce opportunities for acquisition.
• We are now in a position to deploy capital in line
with our returns-focused approach to capital
allocation and subject to our LTV guidance.
12. Disposals
We may face difficulty in
disposing of assets or
realising their fair value, thereby
impacting profitability and our
ability to reduce debt levels or
make further acquisitions.
Responsibility
Board & ExCo, Head
of Capital Markets
Strategic alignment
1
Impact
Probability
Movement
• Our portfolio is focused on high-quality assets
with low lot sizes, making them attractive to a
wide pool of buyers.
• Assets are valued every six months by
external valuers, enabling informed disposal
pricing decisions.
• Disposals are subject to approval by the
Board and Executive Committee, who are
highly experienced in the retail sector.
• Our portfolio is large and our average asset lot
size is small, meaning that each asset
represents only a small proportion of revenues
and profits, thereby mitigating the impact of a
sale not proceeding.
• Disposal risk has remained the same during
the year and is considered a medium impact
risk with a medium to high probability.
• National and geopolitical uncertainty, interest
rate rises, inflation and the cost-of-living crisis
mean that markets remain uncertain and are
causing some purchasers to reconsider or
delay acquisition decisions.
• We have an active and successful disposal
programme where we have executed
disposals in the year, with the volume of
transactions being completed increasing
disposal risk. The average lot size however
is lower than most in the market so our
assets tend to be more liquid.
Strategic pillars
1
Disciplined capital allocation
2
Leveraging our platform
3
Flexible Balance Sheet
ESG Environmental, Social and Governance
Impact and probability
Low
Medium
High
Risk change during FY24
Increased
Decreased
No change
101
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Viability statement
Period of assessment
The UK Corporate Governance Code requires the Directors to appraise
the viability of the Group over what they consider to be an appropriate
period of assessment taking into account the Group’s current position,
its business model (page 6), strategy (page 17) and principal risks and
uncertainties (pages 93 to 101).
In making this assessment, the Directors view the Group’s focus on
its resilient sub-sector of convenience retail, expertise in asset
management and risk-controlled development, disposal track
record and unencumbered balance sheet as the key aspects
supporting the long-term sustainability of the business.
The Directors consider the appropriate period of assessment to be
three years from the current financial year end to 31 March 2027.
This period of assessment is aligned to performance measurement
and management remuneration, and in the opinion of the Directors,
this period of assessment strikes the optimal balance of allowing
the impact of strategic decisions to be modelled while maintaining
the accuracy of underlying forecast inputs.
Principal risks
In making their viability assessment, the Directors assessed
the potential impacts, in reasonable worst case scenarios, of the
principal risks as set out on pages 93 to 101, together with the likely
degree of effectiveness of mitigating actions reasonably expected to
be available to the Group. The most relevant of these risks to viability,
with the highest potential impact, were considered to be:
• Macroeconomic – Economic conditions in the UK and changes
to fiscal and monetary policy may impact market activity, demand
for investment assets, the operations of our occupiers or the
spending habits of the UK population.
• Political and regulatory – Changes in UK Government and UK
Government policy, the currently elevated level of global conflict
and its impact on the UK and on the consumers’ retail and
leisure spend.
• Catastrophic external event – An external event such as civil
unrest, a civil emergency including a large-scale terrorist attack
or pandemic, could severely disrupt global markets and cause
damage and disruption to our assets.
The Board is encouraged by the consistently strong operational
performance of the portfolio during FY23 and FY24. However,
there remains significant uncertainty around the prospects for the
UK economy due to the mix of high inflation, low expected growth,
the associated cost-of-living crisis and the currently elevated level
of interest rates, notwithstanding the Group’s own position of
strength in navigating these uncertain times through its superior
yields, unencumbered balance sheet, low and fixed cost of debt
and no maturity on drawn debt until 2028.
Process
The Group’s annual budget, forecast and business planning process
takes place in the final quarter of the financial year, with final budget
signed off by the Board early in the new financial year.
The exercise is completed at a granular level, on a lease-by-lease
basis and considers the Group’s profitability, capital values, loan to
value, cash flows and other key financial metrics over the forecast
period. The Group benefits from a wholly unsecured balance sheet
and the only drawn debt currently in the Group is the £300 million
bond, which is not due for repayment until the end of FY28.
Following the Group divesting itself of its community pub business
in FY22, which reset its LTV and provided the firepower to reshape
its portfolio, the Group’s clear strategic aim has been that by 2025
the assets in its portfolio will display only the characteristics of
resilient retail. It is considered that resilient retail assets in the future
will be those located in catchments with long-term growth potential
and the right balance between the supply of physical retail space
and demand for that space; they will have an offering that meets the
everyday needs of customers while playing a distinct role within
their communities.
The Directors believe that the Group will deliver this through
remaining committed to the following strategic priorities:
• Selling its non-core, including Work Out assets, and recycling
the resultant capital into resilient retail. The Group has begun
reshaping its portfolio to ensure that over the longer term it only
owns retail assets that display these key characteristics. To this
end the Group completed £77 million of retail disposals in FY22,
completed £23 million in FY23 and £38 million in FY24 in line
with the strategy.
• Transforming its Regeneration and remaining Work Out assets to
create long-term value by jointly working with sector specialists
and appropriate capital partners.
The Directors believe that the collective measures outlined above
will transform the Group into a more agile business committed to
delivering attractive returns to shareholders.
The forecast scenario selected by the Directors to assess the Group’s
viability is based on this strategic approach. This assumes exiting the
Work Out portfolio during FY25 along with other retail strategic
acquisitions and disposals. Under this scenario, the Group is forecast
to maintain sufficient cash and liquidity resources and remain compliant
with its financial covenants with significant headroom.
Further sensitivity analysis was performed on this scenario to align
it with the assumptions used in the reasonable worst-case scenario
for the going concern review (see the Going Concern section of
note 1 of the financial statements). This includes removing all
uncommitted acquisitions and disposals, assuming further
valuation decline and a lower income collection rate. Even applying
this sensitivity, the Group maintains sufficient cash and liquidity
reserves to continue in operation throughout the assessment period
and the drawn debt covenants could absorb a further valuation
decline of 46% and a further 57% reduction in annual net rental
income before breaching covenant levels.
Viability statement
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.
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. Reasonable
worst case scenarios were applied to the assumptions and the
Directors are satisfied that the going concern basis of presentation
of the financial statements is appropriate.
The Strategic Report was approved by the Board on 20 June 2024
By order of the Board
Allan Lockhart
Chief Executive Officer
102
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Non-financial and sustainability
information statement
As NewRiver has fewer than 500 employees, it is not required to comply with the Non-Financial Reporting requirements contained
within the Companies Act 2006. However, due to our commitment to promoting transparency in reporting and business practices,
further information is provided in the table below on a voluntary basis, to help stakeholders understand our position on key non-financial
and sustainability matters.
Topics
Key policies and standards1,2
Additional information
Environmental
matters
• Environmental Social Governance Policy
• Net Zero Carbon Commitment
• Climate Change Position Statement
• Social Value Policy
• Green Procurement Policy
• Sustainability Brief for Development
For more on sustainability and environmental
matters see pages 66 to 92 and the
Sustainability section of our website:
www.nrr.com
Climate-related
financial disclosures
• Task Force on Climate-related Financial
Disclosures (“TCFD”)
For more on action on climate change see
pages 84 and 92 and the Sustainability section
of our website: www.nrr.com
Employees
• Code of Conduct containing:
• Workplace behaviour
• Equal opportunities
• Working with NewRiver
• Speaking up
• Health and Safety
• Wellbeing
• Electronic communications
For more on people and culture see pages
56 to 60 and 111
For more on diversity and inclusion see pages
59, 82, 121 and 122 and the People & Culture
section of our website: www.nrr.com
Human rights
• Code of Conduct
• Modern Slavery and Human Trafficking Statement
For more on modern slavery see page 117 and
the Modern Slavery Statement on our website:
www.nrr.com
Social matters
• Social Value Policy
• Charity partnership with the Trussell Trust
For more on our stakeholder engagement
see pages 56 to 65
For more on the local community see page
61 and the Sustainability section of
our website: www.nrr.com
Anti-bribery and
corruption
• Whistleblowing Policy
• Code of Conduct
• Anti-money Laundering Policy
• Gifts and Hospitality Policy
• Supply Chain Policy and Supplier Code of Conduct
• Share Dealing Policy
For our Audit Committee report see pages
123 to 128
People & Culture section of our website:
www.nrr.com
Modern Slavery Statement on our website:
www.nrr.com
Business model
For more on our strategy and business model
see pages 6 and 17
Principal risks and
uncertainties
For more on our principal risks and
uncertainties see pages 93 to 101
For our viability statement see page 102
Non-financial key
performance
indicators
For more on non-financial key performance
indicators see pages 21 to 23
1. Policies and further information can be found on the website: www.nrr.com.
2. Certain policies and internal guidelines are not published externally.
103
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Strategic report
Governance Report
STRONG GOVERNANCE
IS A STRATEGIC
ENABLER FOR
FUTURE GROWTH
104
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance Report
The Chair’s letter on governance
107
Our leadership team
108
Board leadership and Company purpose
111
Nomination Committee Report
119
Audit Committee Report
123
Remuneration Committee Report
129
Directors’ Report
146
Statement of Directors’ responsibilities
149
105
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Corporate Governance
Board leadership and
Company purpose
108 A. An effective Board
111
B. Purpose, values and culture
116
C. Governance framework
and Board resources
56
D. Stakeholder engagement
56
E. Workforce policies and practices
The Governance section provides details of the Board’s corporate governance structures and work for
the financial year to 31 March 2024. Together with the Directors’ Remuneration Report on pages 129
to 145, it includes information about how the Company has applied the principles and complied with
the provisions of the 2018 UK Corporate Governance Code. The Governance section has been
organised to follow the structure and principles (A to R) of the 2018 Code.
Compliance with the 2018 UK Corporate
Governance Code
As a Company with a premium listing on the London Stock
Exchange, NewRiver is required under the Financial Reporting
Council (FRC) Listing Rules to comply with the Code Provisions of
the 2018 UK Corporate Governance Code issued in July 2018 (the
‘2018 Code’) which is available on the FRC website (www.frc.org.uk).
The principles and provisions of the 2018 Code have applied
throughout the year to 31 March 2024 and the Company has
fully complied with all the provisions of the Code, except Provision
38 which was not complied with for part of the year as explained
more fully on this page.
Code Provision 38
Requires, among other things, that the pension contribution rates
for executive directors should be aligned with those available to
the workforce. As outlined in the Remuneration Policy adopted at
the AGM in 2020, any new Executive Directors received Company
contributions in line with the UK workforce which is currently 4%.
The incumbent Executive Director, Allan Lockhart, continued to
receive Company contributions of 15% of base salary until the
2023 AGM. All Executive Directors now receive the rate applicable
to the workforce so the Company now complies with this provision
but did not comply for the full year.
Division of responsibilities
115
F. Board roles
120 G. Independence
114
H. External appointments and
conflicts of interest
113
I. Key activities of
the Board in FY24
120 J. Appointments to the Board
108
K. Board skills, experience and
knowledge
117
L. Annual Board and
Committee evaluation
Audit, risk and internal control
123
M. Financial reporting, external
auditor and internal audit
128
N. Review of the 2024 Report
and Accounts
126
O. Internal financial controls and
risk management
Remuneration
129
P. Linking remuneration with
purpose and strategy
132 Q. Remuneration Policy review
139
R. Performance outcomes in
FY24 and strategic targets
106 NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Chair’s letter on governance
Succession planning and Board appointment
Succession planning has been a particular focus for the Board
and the Nomination Committee this year. As announced, Margaret
Ford advised the Board that, subject to completion of a search to
appoint a successor and a handover period, she would not seek
re-election at the 2024 AGM. The Nomination Committee initiated
a search for a new Non-Executive Chair under the leadership of
Alastair Miller, the Senior Independent Director. This search,
aided by an international executive search agency, led to my
appointment in March 2024. Following a handover period,
Margaret stepped down from the Board on the 30 May 2024.
The process followed for my appointment is more fully detailed
in the Nomination Committee Report.
ESG
Our Annual Report in 2021 set out our net zero commitment and
details of the Company’s responses to climate change through
our Task Force on Climate Related Financial Disclosures (TCFD)
reporting. The Board has continued to develop its arrangements
for the oversight of climate-related risk and mitigation. In December
2023 the Board had an entire Board meeting dedicated to updating
the Board on ESG matters including a performance update, MEES
Risk Management and the net zero audit update. ESG is key to our
strategy so it was important to dedicate specific time to this part of
our strategy.
Annual General Meeting
At our AGM in 2023 we asked shareholders to renew our Directors’
Remuneration Policy for another three years and were pleased that
over 99% of the shares that voted at the AGM did so in favour
of the revised policy. We look forward to the AGM in 2024 and
I am particularly looking forward to welcoming and engaging with
shareholders at this meeting as this will be my first AGM since
becoming Chair.
Yours sincerely
Lynn Fordham
Chair
20 June 2024
Dear Shareholders
I have pleasure in introducing NewRiver’s Corporate
Governance report for the year ended 31 March 2024.
The Board has overall responsibility for the leadership
of the Company, setting the Company’s values
and standards and monitoring culture. Part of this
oversight responsibility is to ensure that there is sound
management and internal controls. This report outlines
our governance structure and processes and the work
of the Board and its Committees to ensure the Board
responsibilities are fulfilled.
107
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Lynn Fordham
Non-Executive Chair |
Appointed March 2024
Key Skills and Experience
Lynn joined the Board in March
2024 and is an experienced
non-executive director. She
was most recently Managing
Partner of private investment
firm Larchpoint Capital LLP,
a position she held from
2017 to 2021. Prior to joining
Larchpoint, Lynn was CEO of
SVG Capital for eight years
having previously served as
CFO. Before that she held
senior roles at Barratt
Developments, BAA, Boots,
ED&F Man, BAT and Mobil
Oil. She also served as a
non-executive director on the
board of Fuller, Smith & Turner
for seven years until 2018,
chairing its Audit Committee.
Lynn brings to the Board wide-
ranging listed company,
private equity and finance
and transaction experience
across a range of sectors.
External Appointments
Listed Companies
NCC Group plc (Non-Executive
Director and Audit Committee
Chair); Caledonia Investments
plc (Non-Executive Director
and Audit Committee Chair);
Domino’s Pizza Group plc
(Non-Executive Director
and Audit Committee Chair)
Other
Chair of RMA – The Royal
Marines Charity; Enfinium
Group Ltd (Non-Executive
Director)
Experienced leadership
Board of Directors
Allan Lockhart
Chief Executive Officer |
Appointed February 2019
Key Skills and Experience
Allan has over 30 years’
experience in the UK retail real
estate market. He started his
career with Strutt & Parker in
1988 advising major property
companies and institutions
on retail leasing, investment
and development.
In 2002, Allan was appointed
as Retail Director to Halladale
Plc with a remit to acquire value
add opportunities in the UK
retail real estate market
and ensure the successful
implementation of asset
management strategies.
Following the successful sale
of Halladale Plc in early 2007,
Allan co-founded NewRiver
and served as Property
Director since its IPO
until being appointed Chief
Executive Officer in May 2018.
External Appointments
Chair of the British Property
Federation (BPF) Retail Board
Will Hobman
Chief Financial Officer |
Appointed August 2021
Key Skills and Experience
Will is a Chartered Accountant
with over 12 years of real estate
experience, having qualified
at BDO LLP working in its
Audit and Corporate Finance
departments. Before joining
NewRiver in June 2016, Will
worked at British Land for five
years in a variety of finance
roles, latterly in Investor
Relations, and formerly within
the Financial Reporting and
Financial Planning & Analysis
teams. Will obtained a
BArch (Hons) in Architecture
from Nottingham University
before obtaining his ACA
qualification, becoming an
FCA in March 2020.
External Appointments
British Property Federation
Finance Committee Member
Alastair Miller
Senior Independent Director |
Appointed January 2016
Key Skills and Experience
Alastair is a Chartered
Accountant and has significant,
recent and relevant financial
experience. Throughout his
career Alastair has developed
skills in risk management,
property, systems, company
secretariat and investor
relations. Having worked for
New Look Group for 14 years,
Alastair has an in-depth
understanding of retailers
and the factors that impact
their trading and profitability.
Alastair was formerly Chief
Financial Officer of New Look
Group, Group Finance Director
of the RAC and Finance
Director of a company within
the BTR Group. In addition to
being the Senior Independent
Director, Alastair has
responsibility for ensuring
that the Board successfully
engages with our workforce.
External Appointments
Listed Companies
Superdry Plc (Director
and Auditco Chair)
Other
RNLI (Risk and Audit
Committee member &
Council Member)
A
N
N
R
108
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Dr Karen Miller
Independent Non-Executive
Director | Appointed May 2022
Key Skills and Experience
Dr Karen Miller is affiliated to
the Department of Engineering,
Cambridge University and is
Co-Founder of the Cambridge
Net Positive Lab. Karen is a
sustainability expert with a
proven track record of leading
transformation through a
collaborative applied
approach in large national
and international companies.
Karen has over 25 years’
experience of growing
businesses in the retail
sector through innovation.
External Appointments
Buckingham Palace
Reservicing Programme
Challenge Board; Co Founder,
Cambridge Net Positive Lab
Charlie Parker
Independent Non-Executive
Director | Appointed
September 2020
Key Skills and Experience
Charlie Parker was previously
Chief Executive and Head of
the Public Service for the
Government of Jersey from
January 2018 until his
retirement in March 2021.
Prior to working in Jersey,
Charlie was Chief Executive of
Westminster City Council from
December 2013 to December
2017 and Chief Executive of
Oldham Metropolitan Borough
Council from October 2008 to
December 2013. During his
various roles as a Chief
Executive, Charlie oversaw the
significant transformation and
modernisation of a large
number of public services often
resulting in reduced costs and
improved performance. He
was also responsible for a
range of large-scale capital
infrastructure and regeneration
projects in Jersey, Westminster
and Oldham. Prior to 2008 he
held a number of investment,
development and regeneration
roles across national and local
government bodies for over
20 years.
External Appointments
Buckingham Palace
Reservicing Programme
Challenge Board; Griffin
Investors Ltd
Colin Rutherford
Independent Non-Executive
Director | Appointed
February 2019
Key Skills and Experience
Colin is an experienced public
and private company chairman
and independent director, with
relevant sector experience
including asset management,
bioscience, leisure and real
estate. Colin graduated in
accountancy and finance
and qualified with Touche
Ross(now Deloitte) in 1984
and is a member of the
Institute of Chartered
Accountants of Scotland.
External Appointments
Listed Companies
Evofem Biosciences Inc
(Independent Director and
Audit Committee Chairman)
Other
Allstone Sand Gravels &
Aggregates Limited (Chairman);
Brookgate Limited (Chairman);
James Donaldson Group Limited
(Independent Director and Audit
Committee Chairman); Rothley
Group Limited (Chairman)
Kerin Williams
Company Secretary |
Appointed October 2020
Key Skills and Experience
Kerin is a Chartered Secretary
with over 30 years’ experience.
Kerin has worked in-house
in senior positions within
company secretarial
departments for a number of
FTSE 100 and FTSE 250
companies in real estate,
chemicals, banking and
printing. Kerin has also worked
in professional services as a
company secretarial consultant;
her most recent role was as
Managing Director of Prism
Cosec. Kerin graduated in Law,
qualified as a Chartered
Secretary in 1997 and is a
Fellow of the Chartered
Governance Institute.
A
A
A
N
N
N
R
R
R
Committee membership
Committee Chair
A
Audit Committee
N
Nomination Committee
R
Remuneration Committee
109
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Executive Committee
Corporate Governance
Charles Spooner
Head of Capital Markets
Key Skills and Experience
Charles is responsible for
Capital Markets and Retail
Parks throughout the UK and
has over 20 years’ experience
in the real estate investment
and asset management sector.
Charles has benefitted from the
broad experience as an asset
manager at F&C REIT and
RREEF, on an advisory capacity
at Cushman Wakefield and as
a retailer advising Specsavers
on its investment agency and
development activity. Charles
is responsible for acquisitions,
disposals, development and
implementation of asset
management strategies,
with particular focus on the
retail warehouse sector.
Edith Monfries
Chief Operating
and People Officer
Key Skills and Experience
Edith is a Chartered Accountant
having trained with Deloitte,
Haskins and Sells.
She has over 30 years’
experience in the retail
and leisure property sector,
combining Finance, Operational
and HR roles, specialising in
advising on strategic and
operational matters.
Edith was appointed Head
of HR at NewRiver in October
2018 and now in her role as
COO brings her expertise in
talent development within the
sector to the business. She
served as COO of Hawthorn
when the pub company was
under NewRiver’s ownership
and oversaw the smooth
transition following the sale.
Will Hobman
Chief Financial Officer
See page 108 for key skills
and experience.
Allan Lockhart
Chief Executive Officer
See page 108 for key skills
and experience.
Emma Mackenzie
Head of Asset
Management and ESG
Key Skills and Experience
Emma has overarching
responsibility for the financial
and operational performance of
the retail portfolio throughout the
UK. Emma’s responsibilities
also include oversight
of NewRiver’s property
management, rent
collection and the Company’s
Environmental, Social and
Governance programme.
Emma is a qualified chartered
surveyor with over 20 years’
experience in the retail
property market.
Launched in June 2020, Emma
is one of nine Board Members
on the Government’s High
Street Task Force, following
her role on the Government’s
High Streets Expert Panel and
chaired by Sir John Timpson in
2019. The HSTF provides
access to experts, case studies
and practical solutions to local
town leaders and Government,
to help support and revitalise UK
high streets and town centres.
Emma also sits on the
Commercial Committee of the
British Property Federation.
110
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Board leadership and
company purpose
Purpose, Values and Strategy
Our purpose is to own, manage and develop the most resilient
retail portfolio in the UK focused on Retail Parks, Core Shopping
Centres and Regeneration opportunities in order to deliver long-
term attractive recurring income returns and capital growth for
our shareholders.
Generation and preservation of value over
the long term
The Board’s role is to lead the Group and ensure that it delivers
sustainable and growing returns for our shareholders over the
longer term. NewRiver’s business model and strategy is set out on
pages 6 and 17 of the Strategic Report and describes the basis
upon which the Company generates and preserves value over the
long term.
Our Culture
NewRiver’s collaborative and supportive culture underpins our
purpose and drives business practices. With a small workforce
of around 50 employees, our culture is able to provide individuals
who work for us a sense of purpose and an opportunity to thrive
and develop as individuals. The proximity between Board and
employees makes it easier for the Board to engage with
employees and the Directors can monitor the culture in a way
not possible for larger companies. The small size of our team also
allows for flexibility and adaptability so that we can respond to
fast-changing situations.
Board Leadership
The Board oversees the Group’s active approach to asset
management and the strategy of developing and recycling
convenience-led, community-focused retail assets throughout the
UK and this in turn contributes to the community and wider society.
The Board has overall authority for the management and conduct of
the Group’s business, strategy and development and is responsible
for ensuring that this aligns with the Group’s culture.
The Board, supported by the Company Secretary, ensures the
maintenance of a system of internal controls and risk management
(including financial, operational and compliance controls) and
reviews the overall effectiveness of the systems in place. The
Board delegates the day-to-day management of the business to
the Executive Committee (“ExCo”). There is a Schedule of Matters
reserved for the Board’s decision which forms part of a delegated
authority framework to ensure that unusual or material transactions
are brought to the Board for approval. This Schedule of Matters
is reviewed regularly to ensure that it is kept up to date with any
regulatory changes and is fit for purpose. The last review was
undertaken in May 2024. The Executive Committee also has its
own Terms of Reference that fit within the governance framework
and are approved by the Board.
1
Disciplined capital allocation
2
Leveraging our platform
3
Flexible balance sheet
Underpinned by a committed ESG strategy
Read more about our business model on page 6
111
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Board activities
Staff engagement
Workforce engagement
mechanism – the role of our
designated Non-Executive Director
Alastair Miller, our Senior Independent Director, has
responsibility for ensuring that the Board successfully
engages with our workforce.
As Chair of the Remuneration Committee Alastair, has
direct engagement with shareholders on remuneration
policy and is therefore best placed to answer questions
from the workforce on Director remuneration and its
alignment to Group-wide remuneration and strategy.
We have a small workforce which allows a natural
proximity between the Board and the workforce making it
easy for the Board to engage with staff directly, especially
as the Directors regularly visit the London office and also
the assets. Staff are invited on a regular basis to attend a
group meeting with Alastair in the London office, or online
if preferred. The most recent meeting was held in April
2024. Questions are invited ahead of the session as well
as taken live on the day. The majority of staff attended
this meeting either in person or online. Alastair took the
opportunity to explain the recruitment process for the new
Chair and took questions from staff on this. Looking back
on previous discussions with staff, Alastair quizzed them
on their opinions of the office and flexible working. There
was overwhelming agreement that they found the flexible
working arrangements on offer both efficient and suited to
their lifestyles. The performance of the LTIP (a share
scheme that all staff participate in) was discussed.
The fact that the 2020 award had reached 50% of its
performance target was felt to be encouraging and had
highlighted the benefit of the share scheme to employees.
Staff also talked candidly to Alastair about their views on
the strategy of the Company, the market in general and
their worries around personal mortgage rates and the
cost of living.
Board
Executive Committee (“ExCo”)
Our Staff
(Led by Alastair Miller, our Senior Independent
Non-Executive Director and Non-Executive Director,
responsible for workforce engagement)
• NED/Staff engagement sessions
• Staff survey results
• NED visits to assets and London office
• Social events with staff
• Direct report engagement and staff appraisals
and feedback
• Monthly all-staff sessions
• Staff survey results
• Social events with staff
• Fundraising events with staff
• Monthly all-staff sessions
• Staff survey results
• Various social events
112
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Corporate Governance continued
Board activity during the year
Link to strategy
Strategy
• The Board discusses progress against strategy at most meetings and receives
updates on strategy in the CEO’s report
• Additional strategic papers have been considered by the Board at Board
meetings during the year
1
2
3 ESG
Finance and
Financing
• The Chief Financial Officer has presented a financial report at each Board meeting
• Approval of the Annual Report and interim report and associated financial statements
• Presentation and discussion on the draft budget and business plan
• Approval of the annual budget
• The CFO provided quarterly reporting against the Treasury policy and the
Board considered updates to the Treasury policy to take advantage of better
returns on excess cash
1
2
3 ESG
Audit and Risk
• The Chair of the Audit Committee reported to the Board on the proceedings
of each Audit Committee meeting and meetings with valuers
• The Board considers the risk register and internal controls at least twice a year
• Update to the Board on the whistleblowing procedures
• Update to the Board on the Audit tender process
• Recommendation to the Board on the appointment of the External Auditor
1
2
3 ESG
Operational and
Investor Relations
• The CEO presented a report at each Board meeting which also included
updates on investor relations
• Members of the ExCo were regularly invited to attend the Board meetings to
present on various projects
• The Board received IR strategy and quarterly communication progress reports
• Members of the senior leadership team have been invited to Board meetings
to report on specific assets
1
2
3 ESG
Stakeholders
• Stakeholders including employees, occupiers, councils and communities, lenders
and shareholders are regularly considered as part of the CEO report to the Board
• The Non-Executive Directors visited a number of the Group’s assets during last
year and this year, and were provided with guided tours from the asset
management teams responsible for the assets
• HR reports are either tabled separately or included the CEO’s report
• The Board received updates from Alastair Miller’s attendance at staff sessions
1
2
3 ESG
Environmental
• The Board receives regular updates on ESG progress in the CEO’s report
and a quarterly ESG update from the Head of Asset Management and ESG
• The Audit Committee reviewed progress against ESG targets and reported
to the Board
• The Board was provided with an update on ESG performance and progress
and a net zero audit process update at a separate Board session in December
1
2
3 ESG
Governance
• The Committee Chairs reported on key matters discussed at the Board Committees
• The Company Secretary reported on key governance developments and on work
carried out to update and review the Group’s governance policies and procedures
• The Board updated the Board’s Schedule of Matters and reviewed and
updated the terms of reference of the Board Committees where necessary
1
2
3 ESG
Key
Link to business model and strategic objectives
Strategic pillars
1
Disciplined capital allocation
2
Leveraging our platform
3
Flexible Balance Sheet
ESG
Environmental, Social and Governance
113
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Conflicts of interest
The Company Secretary keeps a register of all Directors’ interests.
The register sets out details of situations where each Director’s
interest may conflict with those of the Company (situational
conflicts). The register is considered and reviewed at each Board
meeting so that the Board may consider and authorise any new
situational conflicts identified. At the beginning of each Board
meeting, the Chair reminds the Directors of their duties under
sections 175, 177 and 182 of the Companies Act 2006 which relate
to the disclosure of any conflicts of interest prior to any matter
that may be discussed by the Board.
Director concerns
Directors have the right to raise concerns at Board meetings and
can ask for those concerns to be recorded in the Board minutes.
The Group has also established a procedure which enables
Directors, in relevant circumstances, to obtain independent
professional advice at the Company’s expense.
Board time commitments
All Directors pre-clear any proposed appointments to listed
company boards with the Board prior to committing to them.
The Non-Executive Directors are required, by their letters of
appointment, to devote as much of their time, attention, ability and
skills as are reasonably required for the performance of their duties.
This is anticipated as a minimum of one day a month, and for the
Chair, a minimum of two to three days. The Nomination Committee
annually reviews the time commitments to ensure that all Board
members continue to be able to devote sufficient time and attention to
the Company’s business. Whilst a number of the Board have other
non-executive directorships and commitments, the Nomination
Committee remains satisfied that all of the Directors spend
considerably more than this amount of time on Board and
Committee activity.
The other listed company directorships of the NewRiver REIT
plc Directors are set out on pages 108 to 109. The Board and
Committee attendance record of each of the Directors during
FY24 is set out on page 116 of this report.
114
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Corporate Governance continued
Division of responsibilities
There is a clear division of responsibilities between the Chair, CEO and other members of the Board, as follows:
Role
Responsibilities
Chair
Lynn Fordham
Lynn’s role is to lead the Board and ensure that it operates effectively.
Her responsibilities include:
• chairing the Board and general meetings of the Company and the Nomination Committee;
• setting clear expectations concerning the Company’s culture, values and behaviour;
• ensuring effective engagement with shareholders, the workforce, customers and other key
stakeholders and ensuring that the Board listens to their views;
• setting the agenda, style and tone of Board meetings to ensure that all matters are given
due consideration;
• maintaining a culture of mutual respect, openness, debate and constructive challenge in the
Board room;
• ensuring the Board’s effectiveness and that it receives timely, accurate and clear information;
• ensuring each new Director receives a full, formal and tailored induction on joining the Board;
• reviewing and agreeing training and development for the Board; and
• ensuring that the performances of the Board, its Committees and individual Directors are evaluated
once a year and act on the results of the evaluation.
Chief Executive Officer
Allan Lockhart
Allan’s responsibilities include:
• managing the business of the Group;
• recommending the Group’s strategy to the Board;
• ESG strategy;
• implementing the strategy agreed by the Board; and
• management of the Group’s property portfolio, including developments.
Chief Financial Officer
Will Hobman
Will’s responsibilities include:
• implementing the Group’s financial strategy, including balance sheet capitalisation;
• overseeing financial reporting and internal controls; and
• supporting the CEO in the delivery of the Group’s strategy and financial performance.
Senior Independent
Non-Executive Director
and Non-Executive
Director Responsible
for Staff Engagement
Alastair Miller
Alastair’s responsibilities include:
• acting as a sounding board for the Chair;
• evaluating the Chair’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 an occasion occur when there was a need to convey concern
to the Board other than through the Chair or the Chief Executive; and
• ensuring that the Board successfully engages with our workforce.
Independent Non-
Executive Directors
Non-Executive Directors Alastair Miller, Charlie Parker, Colin Rutherford and Karen Miller bring independent
judgement, knowledge and varied commercial experience to the meetings and in their oversight of the
Group’s strategy. Alastair and Colin chair the Remuneration and Audit Committees respectively.
Balance between Independent Non-Executive
and Executive Directors
The Board comprises four independent Non-Executive Directors
(excluding the Chair) and two 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 Code and are
free from any relationship or circumstances that could affect, or appear
to affect, their independent judgement. The Chair was independent
on appointment and the Board still considers her to be independent.
All Directors are subject to re-election at the AGM each year.
Company Secretary
All Directors have access to the advice and services of the
Company Secretary. The appointment of the Company Secretary
is a matter for the Board.
Executive Committee (ExCo)
The purpose of ExCo is to assist the CEO in the performance of his
duties within the bands of the Committee’s authority, including:
• the development and implementation of strategy, operational
plans, policies, procedures and budgets;
• the monitoring of operating and financial performance;
• the assessment and control of risk;
• development and implementation of the ESG strategy;
• the prioritisation and allocation of resources; and
• monitoring competitive forces in each area of competition.
115
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Attendance
Each of the Directors has committed to attend all scheduled Board and relevant Committee meetings and has also committed to make every
effort to attend ad hoc meetings, either in person or by telephone/video call. Board papers are circulated to Directors in advance of the
meetings via an electronic board portal. This allows for an efficient and secure circulation of Board papers; if a Director cannot attend a
meeting, he or she is able to consider the papers in advance of the meeting as usual and will have the opportunity to discuss them with the
Chair or Chief Executive and to provide comments. The Non-Executive Directors meet without the Executive Directors and the Chair present
at least once a year.
Attendance at regular scheduled Board meetings and the Board Committees is shown below:
Board Members
Board Attendance
Audit Committee
Attendance
Remuneration
Committee Attendance
Nomination Committee
Attendance
Margaret Ford1: Chair
8/8
–
3/4
4/4
Lynn Fordham2: Chair
1/1
–
–
0/0
Executive Directors
Allan Lockhart
8/8
–
–
–
Will Hobman
8/8
–
–
–
Non-Executive Directors
Alastair Miller
8/8
6/6
4/4
4/4
Charlie Parker
8/8
6/6
4/4
3/4
Colin Rutherford
8/8
6/6
3/4
3/4
Dr Karen Miller
8/8
6/6
4/4
4/4
1. Margaret Ford stepped down from the Board on 30 May 2024
2. Lynn Fordham was appointed to the Board on 21 March 2024
Board
Audit Committee
Senior Leadership Team (SLT)
ESG Committee
Wellbeing Committee
Nomination Committee
Remuneration Committee
Responsible for leading the Group, establishing the Company purpose and values and setting the strategy and monitoring
its progress. It sets policies and monitors performance.
Executive Committee (“ExCo”)
Assists the Chief Executive with the development and implementation of the Group Strategy, the management of the
business and the discharge of its responsibilities delegated by the Board.
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.
Senior members of the business
below ExCo level tasked with
assisting ExCo with the progress of
the Group strategy.
Led by Emma Mackenzie, Head of
Asset Management and ESG, the
ESG Committee ensures the
appropriate resources are mobilised
so the key ESG programme
milestones are achieved.
Originally set up during lockdown
restrictions to focus on staff
wellbeing, the committee has
evolved its brief to provide a
collective employee voice and to
focus on diversity and inclusion.
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.
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.
Supporting Committees
116
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Corporate Governance continued
Composition, succession and evaluation
Induction of new Directors
The Chair, Company Secretary and Chief Operating and People Officer
manage an induction process to ensure that new Directors are fully
briefed about the Company and its operations. The process usually
includes asset visits and meetings with members of the senior
management team and other staff, as well as specific briefings with
regard to their legal and regulatory obligations as a Director. A full
induction programme has commenced for Lynn Fordham and further
details will be provided in our next Annual Report.
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. Shareholders are therefore welcome to attend in person at
the 2024 AGM and, recognising that some shareholders may still
not feel comfortable attending in person, we provide a facility for
shareholders to submit questions ahead of the AGM via email.
The 2024 AGM is planned to be held on 5 August 2024.
The notice of AGM is posted to all shareholders at least 20 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.
In line with our sustainability commitment, we do not issue hard
copy forms of proxy in the post. Instead, we ask shareholders to
appoint a proxy online via the Registrar’s portal.
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 are 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-corruption
and anti-bribery, anti-fraud and a code of conduct. All employees
have received updates and training on these issues during the year.
Human rights and Modern Slavery
Being mindful of human rights, the Company has a Modern Slavery
policy to ensure that all of its suppliers are acting responsibly and
are aware of the risks of slavery, human trafficking and child labour
within their own organisation and supply chain. The Modern Slavery
statement is updated and published each year. All suppliers are
required to agree to our Modern Slavery policy requirements
before being accepted as suppliers to the business.
Board effectiveness review
In order to evaluate its own effectiveness, the Board undertakes
annual effectiveness reviews using a combination of externally
facilitated and internally run evaluations usually over a three-year
cycle. The cycle of the Board evaluations is summarised as follows:
Year 1 (FY21)
Externally facilitated Board evaluation using interviews
facilitated by Ceradas Limited, a board effectiveness
consultancy with no other connections to the Company.
Year 2 (FY22)
Follow up on actions prepared in response to the Year 1
evaluation, using internally facilitated questionnaires
reviewed by the external board evaluator, Ceradas Limited.
Year 3 (FY23)
Continued follow up on actions arising from the previous
two years using internally facilitated questionnaires.
Year 4 (FY24)
Although the Company is not part of the FTSE 350 and
therefore not required to carry out external evaluations
every three years, the Company generally does use an
external evaluator at least once every three years. This
year, however, due to the search for a new Chair, it was
agreed that internal questionnaires would be used again
with a view to carrying out a full external Board
effectiveness assessment in FY25 when the new
Chair was onboarded and had been in post for a
number of months.
117
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
During FY23, internally facilitated questionnaires were distributed and
completed by the Directors on an anonymous basis. All Directors
completed the questionnaires and there were high levels
of satisfaction in most of the key areas of Board activity.
The following recommendations were made:
Recommendations
• There was scope for engaging further with the
senior management and inviting them to some
further Board meetings
• There was scope for improving the Board’s
understanding of the succession plans for the senior
management team and the talent pipeline below
senior management
• The Board and senior management succession
planning remains a key focus and a potential
opportunity to address diversity
Progress
• The Board has initiated a practice whereby the asset
manager involved on specific assets presents to the
Board, rather than just hearing the report on the asset
from the CEO. This gives the Board the opportunity to
hear from the asset managers directly and for the asset
managers to have exposure to the Board
• Senior management are also invited to the Board to
present more frequently
• The Board and Nomination Committee have focused
heavily on succession planning this year with the
changes in Chair
FY24 process
For FY24, a follow-up questionnaire based on the actions identified
in FY23 and the development of the strategy in FY24, was internally
distributed and completed by the Directors. We will report on the
outcomes of this review in next year’s Annual Report and on the
progress made during the year.
118
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Corporate Governance continued
Ensuring balanced skills
Nomination Committee report
Dear Shareholders
I am pleased to present the Nomination Committee Report
for 2024. Monitoring the balance of skills on the Board to
match our strategy and succession planning has
continued to be the key focus for the Committee this year.
During the year, Margaret Ford informed the Board of her
intention to step down from the Board by the 2024 AGM.
Since then the focus of the Committee was to seek a
replacement Chair. This process was led by the
Company’s Senior Independent Director, Alastair Miller,
and further details of the process are contained within
this report.
The Committee’s focus for FY25 will be the continued
succession planning and diversity priorities.
Lynn Fordham
Chair
20 June 2024
Nomination Committee membership
Our Committee consists of four Independent Non-Executive
Directors and the Chair of the Board.
(biographies are available on pages 108 and 109).
• Lynn Fordham: Committee Chair (Appointed 21 March 2024)
• Alastair Miller
• Colin Rutherford
• Charlie Parker
• Karen Miller
Nomination Committee responsibilities
• Regularly review the structure, size and composition of the Board
and its Committees
• Review the leadership and succession needs at Board and
Executive Committee level
• Identify and nominate for approval candidates to fill Board vacancies
• Evaluate the Board’s diversity and balance of skills
• Evaluate the performance of the Board
• Review the time needed to fulfil the roles of Chair, Senior
Independent Director and Non-Executive Directors
How the Committee operates
• The Committee meets at least twice a year. During the year the full
Committee met four times. A Sub-Committee of the Nomination
Committee, which excluded the incumbent Chair, led the search
for a new Chair and met 15 times during the process
• Only Committee members attend meetings but we also invite
the Chief Executive Officer and the Chief Operating and People
Officer to assist with succession discussions and to brief the
Committee on the views of the executive management
• The Committee has formal Terms of Reference and reviews these
annually. Copies can be found on our website at www.nrr.co.uk
FY24 Nomination Committee activity
June
2023
• Succession planning discussions
• Approval of Nomination Committee Report in
Annual Report
Nov
2023
• Succession planning
• Board evaluation review – report actions
and outcome
Feb
2024
• Annual review of external directorships and time
• commitments required from Non-Executive
Directors prior to re-election
• Terms of Reference review
• Update on Chair succession process
March
2024
• Consider the Sub-Committee recommendations
for appointment of Chair and recommendations
to the Board
119
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
The Committee regularly reviews the balance of skills on the Board to ensure that they match the Company’s strategy.
Board skills matrix
Executive Directors
Non-Executive Directors
Allan Lockhart
Will Hobman
Lynn Fordham
Alastair Miller
Dr Karen Miller
Charlie Parker Colin Rutherford
Property asset management
✓
✓
✓
✓
Regeneration and development
✓
✓
✓
✓
✓
Financial and banking
✓
✓
✓
✓
✓
Environmental
✓
✓
✓
✓
Social and Governance
✓
✓
✓
✓
✓
✓
✓
Capital allocation and cost efficiency
✓
✓
✓
✓
✓
✓
Capital partnerships
✓
✓
✓
✓
Commercial leadership
✓
✓
✓
✓
✓
✓
Mergers and acquisitions
✓
✓
✓
✓
Public sector partnerships
✓
✓
✓
Workforce well-being
✓
✓
✓
✓
✓
✓
Succession planning and recruitment process
for a new Chair
The Committee considers succession planning a key element 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 to enable employees and Board members
to maintain the skills and experience necessary to ensure the
continuing success and good governance of the Company.
The need to focus on succession planning continued in FY24
with the requirement to seek a replacement Chair for FY25.
A Sub-Committee of the Nomination Committee, excluding the
incumbent Chair, was formed to embark on the search for a new
Chair. A number of executive search agencies were contacted to
present their terms and approach to the search. Various meetings
were then held with the chosen firm to establish the skill balance
already present on the Board and the skills required for a new
Chair. A long list of potential candidates was considered and this
was eventually reduced to a short list. The short list was initially
interviewed by the Nomination Sub-Committee and then shortened
further. The CEO met the potential candidates on the shorter list.
Following further meetings with the candidates, the Nomination
Committee made recommendations on their preferred candidate
to the Board. Lynn Fordham was appointed by the Board as
Non-Executive Director and Chair-Designate on 21 March 2024.
Composition of the
Board at the date of
the Annual Report
Chair
Executive Directors
Non-Executive Directors
(Independent)
1
2
4
Length of Directors’
tenure at the date of
the Annual Report
Less than three years
Three to six years
Six to ten years
3
2
2
Independence and time commitment
The Nomination Committee is of the opinion that the Non-Executive
Directors remain independent, in line with the definition set out in
the 2018 Code, and are free from any relationship or circumstances
that could affect, or appear to affect, their independent judgement.
The new Chair was independent on appointment. The balance of
Directors (excluding the Chair) is two Executive Directors and four
independent Non-Executive Directors. The Committee regularly
reviews the time commitments of the Non-Executive Directors
and none are considered overboarded.
120
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Nomination Committee report continued
Board and Company diversity
Company policy
As a Company, we are committed to a culture of diversity
and inclusion in which everyone is given equal opportunities
to progress regardless of gender, race, ethnic origin, nationality,
age, religion, sexual orientation or disability. When recruiting,
the Company has always considered all aspects of diversity during
the process. The Company is very mindful of the need to strive to
create as diverse a Company as possible, and to create as many
opportunities as possible for nurturing emerging female talent.
The Company always 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 and retail sectors,
and financial or real estate training. The Company aims to recruit
the best candidates on the basis of their merit and ability.
Board policy
The Board Diversity Policy is set out below and sets out the
approach to diversity on the Board. Its purpose is to ensure an
inclusive and diverse membership of the Board and its Committees,
resulting in optimal decision-making and assisting in the development
of a strategy which promotes the success of the Company for the
benefit of its members as a whole, having regard to the interests
of other stakeholders. The Policy applies to the Board and Board
Committees, but sits alongside the Group’s Equal Opportunities
Policy, and other associated Group policies that set out our broader
commitment to diversity and inclusion.
The Board acknowledges the benefits of greater diversity,
including gender diversity and remains committed to ensuring
that the Company’s Directors bring a wide range of skills,
knowledge, experience, backgrounds and perspectives. The Board
supports the recommendations of the Davies Review (Women on
Boards), the Hampton-Alexander Review and the Parker Review and
intends to consider the recommendations when contemplating future
appointments to the Board.
Policy objectives:
The Board aspires to maintain a balance such that:
• At least two members of the Board are female, with a long-term
aspiration to achieve no less than 40% female representation
on the Board; and
• In the longer term, at least one Director will be from a non-white
ethnic minority background
while recognising that:
• This balance may not be achieved until further Directors are
replaced at the end of their tenure;
• On an ongoing basis, periods of change in Board composition may
result in temporary periods when this balance is not achieved;
• All appointments must continue to be made on merit; and
• New appointees embody the culture and values of the Group.
Diversity (including gender and ethnicity) will be taken into
consideration when evaluating the skills, knowledge and
experience desirable to strengthen the Board and when making
appointments. The Board supports and monitors management’s
actions to increase the proportion of senior leadership roles held
by women, people from ethnic minority backgrounds and other
under-represented groups across the Company in support of the
Hampton-Alexander Review and Parker Review recommendations.
Female
Male
Gender balance at the year end
Board*
71%
29%
Executive Committee
60%
40%
Direct Reports of
Executive Committee
55%
45%
*
As at 31 March 2024 the Board consisted of a Board Chair and a Chair Designate (both female). Given this is a temporary arrangement with the Chair Designate replacing the Chair in due
course, we have eliminated one of these from the numbers.
Female
Male
Board
2
29%
5
71%
Executive Committee
2
40%
3
60%
Direct Reports of Executive Committee
11
55%
9
45%
Group
24
50%
24
50%
121
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Board Diversity Data
As at 31 March 2024 the Company had not met all of targets of the listing rules diversity and inclusion guidelines as follows:
Listing rule requirement
Detail
At least 40% of the board are women
The Board comprises two female Directors and five male Directors, equivalent
to 29% female representation. The Board’s policy is to ensure that at least two
members of the Board are female and that the Board has a long-term aspiration
to achieve no less than 40% female representation on the Board. As the Board
has only seven Directors, Board vacancies are not frequent. The most recent
Board appointment was female but this has not increased the female
representation as the incoming female replaced an exiting female.
At least one of the senior board positions (Chair, Chief
Executive Officer (CEO), Senior Independent Director
(SID) or Chief Financial Officer (CFO)) is a woman.
The Chair of the Board is female.
At least one member of the board is from a minority
ethnic background (which is defined by reference to
categories recommended by the Office for National
Statistics (ONS)) excluding those listed, by the ONS,
as coming from a white ethnic background.
There are currently no Board members that are from a non-white ethnic
background. As is the case with female representation, with a small Board
with a low turnover of Directors, the targets set by the listing rules will take
time to achieve. The Board aspires that in longer term, at least one Director
will be from a non-white ethnic minority background.
Number of
Board members
Percentage of
the Board
Number of senior
positions on the Board
(CEO, CFO, SID, Chair)
Number in
executive
management
Percentage of
executive
management
Men
5
71%
3
3
60%
Women
2
29%
1
2
40%
Not specified/prefer not to say
–
–
–
–
–
Number of
Board members
Percentage of
the Board
Number of senior
positions on the Board
(CEO, CFO, SID, Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White
(including minority/ white groups)
7
100%
4
5
100%
Mixed/Multiple ethnic groups
–
–
–
–
–
Asian/Asian British
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group, including Arab
Not specified/prefer not to say
–
–
–
–
–
*
As at 31 March 2024 the Board consisted of a Board Chair and a Chair Designate (both female). Given this is a temporary arrangement with the Chair Designate replacing the Chair in due
course, we have eliminated one of these from the numbers.
122
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Nomination Committee report continued
Audit, risk and internal control
Audit Committee membership
Our Committee consists of four Independent Non-Executive Directors:
(biographies are available on pages 108 and 109)
• Colin Rutherford: Committee Chair
• Alastair Miller
• Charlie Parker
• Karen Miller
Audit Committee responsibilities
• Oversight of the Group’s relationship with its external auditors,
including their remuneration
• Oversee the tender process for the external auditor
• 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 judgements
• Reviewing the effectiveness of the Group’s system of internal controls
• Reviewing the Group’s whistleblowing procedures and reports
to the Board
• Reviewing and monitoring the Group’s risk management processes
• Conducting an annual review of the need to establish an internal
audit function
• Oversight of third-party internal audit workstreams
• Monitoring and annually reviewing the auditor’s independence,
objectivity and effectiveness of the audit process
• Reviewing the Company’s ESG progress
How the Committee operates
• Each Committee member is independent and has broad
commercial experience
• Colin Rutherford is a CA with significant, recent and relevant
financial experience and was previously the Chairman of the
Audit Committee of Mitchells & Butlers plc
• Alastair Miller is a CA and was previously the Chief Financial
Officer of New Look Group and has significant, recent and
relevant financial experience
• The Committee as a whole has competence relevant to the sector
• During the year the Audit Committee held six meetings
• Attendance at the meetings is set out in the Corporate
Governance Report on page 116
• The Chief Financial Officer and the Group’s external auditors
are invited to attend the Committee meetings
Dear Shareholders
I am pleased to present the Audit Committee Report
for 2024. The Report provides an outline of the activities
carried out by the Committee in accordance with its
Terms of Reference as it supports the Board and the
Company’s governance structure and activities.
During the year, the Committee has continued to
invite certain third parties to carry out further reviews
of our systems and procedures as part of our continued
programme of internal audit reviews. BDO carried out
a review of the design and effectiveness of the key
controls to manage cash collection and bank accounts
within the Group in FY22. They were then invited back
in FY23 to assess the systems put in place to address
the four low-to-medium risk recommendations for
improvement made at their previous review. In FY24
BDO were invited to test the key controls in place for
managing cash and cash-related month-end close
processes of the property managers. Further details
of these reviews are contained within the report.
In addition to the Committee’s regular programme of
work, the main focus of the Committee for the year was to
conduct an audit tender and recommend a preferred firm to
the Board. The Board has recommended the appointment of
Mazars to replace PricewaterhouseCoopers LLP as the
Company’s auditor for the shareholders to vote upon at
the Annual General Meeting in August 2024. The
Committee would like to thank PricewaterhouseCoopers
LLP for their services as auditors since 2019.
Our regular programme of meetings and discussions,
supported by our interactions with the Company’s
management, external auditors and property valuers
and the quality of the reports and information provided
to us, enables the Committee members to effectively
discharge our duties and responsibilities.
Colin Rutherford
Audit Committee Chair
20 June 2024
123
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Relationship with the auditors
The Committee has primary responsibility for managing the
relationship with the external auditors, including assessing their
performance, effectiveness and independence annually and
recommending to the Board their reappointment or removal.
PricewaterhouseCoopers LLP (PwC) were appointed as the
Group’s external auditors in 2019. The Committee keeps under
review the need for future tenders in accordance with current
regulations and subject to the annual assessment of the auditor’s
effectiveness and independence. During the year, mindful of the
Company’s size and fee requirements, the Committee commenced
an audit tender process. Further details of this process are set out
later in this report.
Chris Burns was the PwC lead audit partner and rotated off the audit
during FY24. Robert Wilkinson replaced him as lead audit partner
during FY24 having spent time shadowing Chris Burns during the
half-year review.
During the year, the members of the Committee met twice with
representatives from PwC without management present, to ensure
that there are no issues in the relationship between management
and the external auditors which it should address. There were none.
External auditor
The Committee considers the nature, scope and results of the
external auditors’ work and reviews, develops and implements
a policy on the supply of any non-audit services that are to be
provided by the external auditors. It receives and reviews reports
from the Group’s external 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 2024,
PwC presented their Audit plan (prepared in consultation with
management) to the Committee. The Audit plan included an
assessment of audit risks, audit scope, independence, the terms
of engagement, fees and robust testing procedures. The Committee
approved the implementation of the plan following discussions
with both PwC and management.
Audit and non-audit fees
Audit fees for the financial year ended 31 March 2024 were £534k.
The Company has a non-audit services policy in place which limits
PwC 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 £97k in non-audit fees to PwC for the financial
year ended 31 March 2024. The non-audit fees relate solely to
PwC’s review of the interim results for the six months to
30 September 2023.
Effectiveness and independence
The Chair of the Committee speaks regularly to the external audit
partner to ascertain if there are any concerns, to discuss the audit
reports and to ensure that the external auditors have received the
support and information requested from management.
In accordance with the guidance set out in the Financial Reporting
Council’s ‘Practice aid for audit committees’, the assessment of the
external audit has not been a separate compliance exercise, or an
annual one-off exercise, but rather it has formed an integral part of
the Committee’s activities. This has allowed the Audit Committee to
form its own view on audit quality and on the effectiveness of the
external audit process, based on the evidence it has obtained
throughout the year.
FY24 Audit Committee activity
May
2023
• External Auditors’ Report to the Committee
• Internal Controls Review
• Review BDO FY24 internal controls audit proposal
• Gifts and Hospitality register
• Going Concern assessment
• Viability statement assessment
• Risk Review and Principal Risks
• Preliminary results
• Fair, Balanced and Understandable review
• Review Annual Report for recommendation to
the Board
• Draft Audit Committee Report in Annual Report
• Meeting with External Auditors without
management present
• Re-appointment of External Auditors
recommendation.
Sept
2023
• External Auditor’s half year review plan
• BDO internal Audit Report on Bank and Cash Controls
• Review Committee Programme
Nov
2023
• Meeting with the Property Valuers
Nov
2023
• Going Concern Review - report actions and outcome
• External Auditor’s Plan
• External Auditor HY Report to the Committee
• Review of Principal Risks
• Half-year results
• Gifts and Hospitality Register
• Meeting with External Auditors without
management present
Feb
2024
• External Auditor Audit Plan update
• Risk Review
• Consider requirement for an internal audit function
• Review Whistleblowing
• Consider Audit tender process and update
• Annual Review of Terms of Reference
• Gifts and Hospitality Register
May
2024
• Meeting with the Property Valuers
124
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Audit Committee report continued
Sources of evidence obtained and observations during the year:
By referring to the FRC’s Practice
aid on audit quality.
The Committee has looked to this practice aid for guidance and has ensured that assessment
of the external audit is a continuing and integral part of the Committee’s activities.
Observations of, and interactions
with, the external auditors.
The Committee has met with the external audit partner without management at least twice during
the year and has noted that PwC were performing well and the working relationship was good.
The audit plan, the audit findings
and the external auditors’ report.
The Committee scrutinises these documents and reviews them carefully at meetings and
by doing so has been able to assess the external auditors’ ability to explain in clear terms
what work they performed in key areas and also assess whether the description used is
consistent with what they communicated to the Committee at the audit planning stage.
The Committee has also regularly challenged these reports in the meetings.
Input from those subject
to the external audit.
The Committee has requested the insights from the Chief Financial Officer and the Finance
team during the external audit process.
Having regard to these matters the Committee has considered the effectiveness of the external audit process and feels that the external
auditors demonstrated professional scepticism and challenged management’s assumptions where necessary.
External audit tender
PwC were first appointed as external auditors in 2019 for the
financial year ended 31 March 2020. As the five-year anniversary of
their appointment approached, planning for a competitive tender
process was put in place, led by the Audit Committee Chair.
The Committee’s objective was to ensure a fair and transparent
tender process and to appoint the audit firm that would provide the
highest-quality audit in the most effective and cost-efficient manner.
Timing wise, to ensure that there would be a shadowing opportunity
through the External Audit for the FY24 year end, the Committee
aimed to make a recommendation to the Board in early 2024.
Planning and preparation
As part of the planning of the tender process, the Committee
followed the current FRC guidance on audit tenders and considered
the relevant sections of the draft ‘Minimum Standards for Audit
Committees’ published by the FRC in November 2022. In selecting
a long list of firms to be considered to invite to tender the Committee’s
selection considerations included:
1. Independence criteria
2. Audit capability and competence
3. Audit Quality Review performance
4. Real estate experience and breadth of subject matter experts
5. Capacity to provide a robust Audit Tender process
Tender process
Commencement
• Selected firms to involve in the tender
(high-quality mid-tier)
• Considered audit team resourcing and
structure and biographies of team.
Process
• Proposals received
• Meetings with firms
• Follow up meetings
• Formal pitches.
Decision making
• The Committee considered the pitches from
firms and the representations from the
finance team
• Decision making and recommendations
to the Board.
125
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Risk management and internal controls
Internal control structure
The Board oversees the Group’s risk management and internal
controls and determines the Group’s risk appetite. The Board
has, however, delegated responsibility for review of the risk
management methodology and the effectiveness of internal
controls to the Audit Committee.
The Group’s system of internal controls includes financial,
operational and compliance controls and risk management.
Policies and procedures, including clearly defined levels of
delegated authority, have been communicated throughout the
Group. Internal controls have been implemented in respect of the
key operational and financial processes of the business. These
policies are designed to ensure the accuracy and reliability of
financial reporting and govern the preparation of the Financial
Statements. During the year, a number of follow-up internal audit
reviews have been commissioned to provide the Committee with
additional comfort that the Group’s system of internal controls
remains fit for purpose and robust.
The Board is ultimately responsible for the Group’s system of internal
controls and risk management and discharges its duties in this area by:
• holding regular Board meetings to consider the matters reserved
for its consideration;
• receiving regular management reports which provide an
assessment of key risks and controls;
• scheduling regular Board reviews of strategy including reviews
of the material risks and uncertainties (including emerging risks)
facing the business;
• having access to all ExCo meeting materials on the Board portal
including minutes of the ExCo;
• ensuring there is a clear organisational structure with defined
responsibilities and levels of authority;
• ensuring there are documented policies and procedures in place
and reviewing these policies and procedures regularly;
• reviewing regular reports containing detailed information
regarding financial performance, rolling forecasts, actual and
forecast covenant compliance, cashflows and financial and
non-financial KPIs; and
• visiting the assets to provide context to the reports received.
The process by which the Audit Committee has monitored and
reviewed the effectiveness of the system of internal controls and
risk management during the year has included:
• ongoing analysis and review of the Group’s risk register;
• overseeing further ‘deep-dive’ discussions of the Group’s risk
register to reassess each risk on the register and its risk scoring;
• further ‘deep-dive’ audits on specific risks; this year it was
cyber-security and cash and banking controls;
• reviewing the assessment of key risks, the process of reporting
these risks and associated mitigating controls, with particular
emphasis on emerging risks; and
• updates from the ExCo’s quarterly detailed assessment of the
risk register.
The effectiveness of the Company’s risk management and internal
control systems is reviewed annually and was last reviewed by the
Committee in May 2024. The review concluded that:
• the systems established by management to identify, assess
and manage risks, including emerging risks are effective; and
• the assurance on risk management and internal control is
sufficient to enable the Committee and Board to satisfy
themselves that they are operating effectively.
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 Principal
Risks and Uncertainties section.
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 considered the key judgements and estimates. The significant issue considered by the Committee
in respect of the year ended 31 March 2024, which contained a significant degree of estimation uncertainty, is set out in the table below.
Significant issue
How the issue was addressed
Valuation of properties
Changes in key estimates can have a
significant impact on the valuation of
properties. The Group has a property
portfolio recognised on its Consolidated
Balance Sheet valued by external valuers
at £533.8 million at 31 March 2024
(excluding RoU assets).
The Committee and management met with Colliers, Knight Frank and Kroll (the Group’s
external valuers) on several occasions to discuss the valuation of the assets and understand the
process that was followed, the key estimates used and to ensure a robust and independent
valuation had taken place.
The meetings were productive and management and the Committee have confirmed that
they continue to adopt the valuations as being the fair valuation of the properties as at the
reporting date.
In addition, the external auditors have performed additional audit procedures over the
valuer judgements and estimates, and presented challenges to the valuers, which were
reported to and discussed with the Committee.
126
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Audit Committee report continued
Internal audit function
The Group does not have an internal audit team. 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
operational functions, the Committee continues to be satisfied that
there is no requirement for such an in-house team. The Committee
does however look to third parties to provide an internal audit
review function. This year the Committee commissioned the
following follow-up internal audit reviews:
Cash Controls of Property Agents
As part of an internal audit plan BDO have, over the past two
years, been requested to review the design and effectiveness
of key controls to manage cash collection and bank accounts.
Having previously reviewed the key controls within the Group
for management of cash and bank accounts, during 2024 BDO
tested the key controls in place for managing cash and cash-related
month-end close processes of the property managers. BDO did not
note any issues within the operation of the managing agents’
controls. There were however different levels of materiality and
performance expected by the NRR team to those performed by
the managing agents, so going forward monthly procedure reports
setting out NRR’s expectations of the managing agents have been
agreed and are being followed.
Whistleblowing Policy
The Committee conducts an annual review of the Group’s
Whistleblowing Policy to ensure it remains up to date and relevant
and reports its findings to the Board. Training on whistleblowing
is provided to staff annually to capture new staff and to remind
existing staff of the procedures. The Committee provides feedback
to the Board on the Whistleblowing Policy and procedures and
effectiveness of the policy at least every six months. There have
never been any concerns raised through the whistleblowing
process or through any other process to the Committee.
Other compliance policies
The Committee receives a copy and reviews in detail the Gifts and
Hospitality register quarterly.
Statement of compliance
The Company is not a constituent of the FTSE 350, however the
Company confirms on a voluntary basis that it has complied with
terms of The Statutory Audit Services for Large Companies Market
Investigation (Mandatory User of Competitive Tender Processes
and Audit Committee Responsibilities) Order 2014 (the “Order”)
throughout the year. In addition to requiring mandatory audit
re-tendering at least every 10 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.
Viability statement and going concern
The Committee has reviewed the basis for the Company’s viability
statement that is drafted with reference to the financial forecasts
for the next three years. This period of assessment is aligned to
performance measurement and management remuneration and,
in the opinion of the Committee, this period of assessment strikes
the optimal balance of allowing the impact of strategic decisions
to be modelled while maintaining the accuracy of underlying
forecast inputs. The Committee places additional scrutiny on the
assumptions used in the forecasts to ensure they 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. The Committee further tested the
Group’s performance against its stated strategy and its future plans.
Accordingly, the Committee recommended to the Board that the
statement be approved.
The Committee further focused on the appropriateness of adopting
the going concern basis in preparing the Group’s financial statements
for the year ended 31 March 2024 and satisfied itself that the going
concern basis of presentation of the financial statements and the
related disclosure is appropriate.
127
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Fair, balanced and
understandable assessment
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 Group’s
position and performance, business model
and strategy.
To ensure this is the case the following
process is in place:
Experienced team
A core experienced team is responsible for the co-ordination
of submissions, verification, review and consistency.
The narrative sections are drafted by the members of the team with specific
responsibility for each area, such as the Chair, the CEO, the CFO,
Sustainability Manager, Director of Communications and the Company Secretary.
Senior review
As narrative sections are prepared, they are circulated to
Board and ExCo members to review and comment.
Staff review
The draft Annual Report is given to other staff members not involved in the drafting
process to read and provide feedback on its fairness, balance and understandability.
Audit Committee oversight and review
The Committee reviews the Annual Report on behalf of the Board,
taking into account the comments made by the Board, reports from
management and reports issued by the external auditor and makes
recommendations to the Board.
Controls and confirmation
The Committee satisfies itself that the controls over the accuracy and
consistency of information presented in the Annual Report are robust and that
the information is presented fairly (including the calculations and use of
alternative performance measures).
The Committee confirms 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.
128
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Audit Committee report continued
Remuneration Committee Report
Dear Shareholders
On behalf of the Board, I am pleased to present the
Remuneration Committee Report for the financial year ended
31 March 2024. In this statement I have summarised the link
between remuneration and performance and our decisions
on remuneration for FY24.
FY24 has been a successful year for NewRiver: whilst UK
real estate capital markets continue to be disrupted by
increased interest rates, we continue to outperform our
MSCI benchmark. Our consistently strong operational
performance is reflective of our portfolio positioning
and our balance sheet remains in great shape with
cash increasing during the period. Our key focus is to deliver
attractive shareholder returns and we are well positioned to
deliver future earnings growth.
Implementation of the Policy in FY24
Our Remuneration Policy was approved by shareholders in July
2023 and implementation of this Policy during FY24 was as follows:
Base salary
As reported in the FY23 Remuneration Report, base salaries for
both the Executive Directors were increased by 3% for FY24.
The wider workforce received an average increase of 5%.
Annual bonus
The FY24 annual bonus was based on Total Return vs the IPD Index
(25%), Earnings yield (25%), LTV (5%), Total Accounting Return
(‘TAR’) (20%) and strategic objectives including ESG targets (25%).
Operational performance over the year was excellent, which was
reflected in the Total Return, Earnings Yield and LTV measures all
exceeding the stretch performance targets. There was also good
performance against the non-financial strategic targets. The only
aspect where we failed to achieve the target range was in relation
to TAR, where our performance, alongside that of the entire sector,
continued to be impacted by property devaluations. The resultant
bonus out-turn was 68% of maximum for Allan Lockhart and Will
Hobman. The Committee is comfortable that the formulaic bonus
outcome appropriately reflects the wider business performance of
the Company. 30% of the bonus will be deferred in shares for two
years.
Long-Term Incentive Plan
The FY21 LTIP Award vested in August 2023 with performance
assessed against relative TAR (50%) and relative Total Shareholder
Return (‘TSR’) (50%). The relative TAR target was assessed against
performance to 31 March 2023 and lapsed as the threshold hurdle
was not met. The relative TSR performance period ended in August
2023 and, as a result, the 2023 Remuneration Report provided an
indicative level of vesting based on performance to date. The TSR
element was tested again following the end of the performance
period and vested in full. As a result the final overall vesting of the
award was 50% of maximum.
The FY22 LTIP Awards are based on performance from 1 April 2021 to
31 March 2024. Performance was based on relative TAR (50%) and
Total Shareholder Return (50%). The TSR performance condition was
achieved in full and, accordingly, the 50% element based on TSR will
vest in full. Notwithstanding the strong performance over the period,
the relative TAR element did not meet the minimum hurdle and so
will lapse. As a result, the total vesting overall for this award is 50%
of maximum. The Committee considered wider business
performance over the three-year performance period and is
comfortable that the formulaic vesting outcome is appropriate.
The Committee is comfortable that actions taken on pay during
the year across the Company were appropriate and balanced the
interests of all stakeholders, and that the Remuneration Policy
operated as intended.
129
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Other considerations during the year
Wider workforce engagement
During the year, the Committee had oversight of the reward
and compensation packages that operate across the Company,
which are considered competitive. I am the appointed designated
Non-Executive Director who has the responsibility of ensuring that
the Board successfully engages with the workforce. As a result of
being a small team there is naturally proximity between the Board
and the workforce which makes it easier for the Board to engage
with staff directly. I attend staff forums to ensure that there is an
opportunity for staff to raise questions or concerns directly with
myself. An element of staff targets mirrors Executive Director
targets. We also use our appraisal process to explain and discuss
with employees how the policy for Executive Directors aligns with
the pay and conditions of the workforce. The operation of the
Remuneration Policy was not raised as a material issue during
the year. Therefore, no amendments were required to the
Remuneration Policy or its proposed implementation as a
result of this engagement.
Shareholder engagement
Ahead of the 2023 AGM, we engaged with our largest investors
to understand their views on our proposed new Policy and the
proposed implementation in FY24. Shareholders voted 99.11%
in favour for the Remuneration Policy and Remuneration Report
at the 2023 AGM.
Change in Company Chair
As previously announced, Baroness Ford advised the Board that,
subject to completion of a search to appoint her successor and a
handover period, she would not seek re-election at this year’s AGM.
Lynn Fordham was appointed as Chair designate on 21 March 2024.
As Chair Designate, Lynn received a pro-rata fee based on the
annualised Chair rate of £164,800. Lynn became Board Chair on
30 May 2024, when Baroness Ford stepped down from the Board.
Implementation of the Policy in FY25
The implementation of the Remuneration Policy for FY25 is
outlined on page 145. The Committee considered how remuneration
should be implemented for FY25. Part of this process was reviewing
current practice against both market and best practice, wider
workforce remuneration and pay ratios. The outcome of the review
was that our current approach remains appropriate. The key
decisions made by the Committee in relation to FY25 include:
Base salary:
During the year the Committee has reviewed the salary increases
for the wider workforce and the Executive Directors and determined
that both the wider workforce and the base salary levels for
Executive Directors should be increased by 3%.
Pensions:
The Company contributes 4% of base salary for both Executive
Directors which is the rate applying to the workforce.
Annual Bonus:
Executive Directors will have the opportunity to earn a bonus up to
a normal maximum of 125% of salary. In line with FY24, the bonus
will be based on financial and corporate measures (75%) as well as
personal strategic objectives (25%). 30% of any bonus paid will be
deferred into shares for two years.
Long-term incentives:
Grant levels will be 100% of base salary. In line with FY24 grants,
performance will be assessed against relative TSR and relative
TAR vs a peer group of UK REITs. During the year, the Committee
reviewed the weightings of the measures to ensure they align with
the strategic priorities of the business over the longer term. As a
result, the Committee increased the weighting on TSR from 50% to
60%. Awards must be held by Executive Directors for a further two
years after vesting.
Closing remarks
We believe that the operation of our Remuneration Policy
recognises the experience of shareholders, employees and other
stakeholders. Bonuses have been awarded to the wider team to
ensure alignment with the level of bonuses awarded to the
Executive Directors.
We welcome feedback and if shareholders have any
questions about remuneration generally, or the contents of the
report, I can be contacted through our investor relations email
at info@nrr.co.uk.
My fellow Directors and I intend to attend the AGM and we would
be pleased to answer any questions you may have about the
Committee’s work.
Alastair Miller
Committee Chair
20 June 2024
130
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration Committee report continued
Remuneration at a glance
Implementation of Policy in FY25
Base Salaries
Allan Lockhart: £498,623
Will Hobman: £344,792
Benefits
No change
Pension
Allan Lockhart: 4% of salary
Will Hobman: 4% of salary
Annual Bonus
Maximum opportunity
is 125% of salary
Performance conditions:
75% Corporate Targets
25% individual strategic objectives
30% deferred into shares for two years
Long-Term
Incentive Plan
Grant levels
at 100% of salary
Performance conditions:
Relative TSR (60%)
Relative TAR (40%)
Two-year post-vesting
holding period applies
Shareholding
requirements
200%
of salary
FY23
FY24
FY23
FY24
Allan Lockhart
Will Hobman
Salary
Benefits
Pension
Annual Bonus
Long-term Incentive
Executive Pay in FY23/24
£0k
£300k
£600k
£900k
£1,200k
£1,500k
£1,238k
£1,276k
£764k
£754k
FY24 Annual Bonus Performance
100%
100%
Corporate and financial measures (75% weighting)
Measure
Total return vs
IPD All Retail
LTV
Earnings yield
(FFO)
TAR Return
Corporate
Financial
Achievement (% of max)
0%
100%
Director
Allan Lockhart
Will Hobman
Strategic
Achievement (% of max)
52%
52%
Strategic measures (25% weighting)
FY22-24 Performance Share Plan
100%
50%
0%
Measure
Relative TSR vs
Peer Group
Outcome
Relative Total
Accounting Return
vs Peer Group
PSP
Achievement (% of max)
Total bonus payout
68%
68%
Director
Allan Lockhart
Will Hobman
Achievement (% of max)
131
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Summary Remuneration Policy
The Remuneration Policy was approved by shareholders at the 2023 Annual General Meeting on 26 July 2023. The full Remuneration Policy
can be found in the 2023 Annual Report which is available at www.nrr.co.uk.
Executive Directors
Element
Purpose and
Link to Strategy
Operation
Maximum
Performance
Target
Fixed
Salary
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.
Salaries are set taking into account
the performance of the individual, the
responsibilities and size of the role, salary
increases across the Group and market
data for peer companies.
Paid in cash monthly.
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.
Not applicable.
Pension
To provide competitive
post-retirement benefits.
To assist with recruitment
and retention.
The Executive Directors may participate
in the Company’s defined contribution
plan or receive a cash supplement in lieu
of pension contributions.
A pension contribution is payable in
line with the pension available to the
workforce, currently 4% of salary.
Not applicable.
Benefits
To provide a
competitive and
cost-effective
benefits package.
To assist with
recruitment
and retention.
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.
Benefits are set at a level
which the Committee considers
appropriate when compared to
the Company’s listed real estate
investment trusts peers.
There is no prescribed maximum.
Not applicable.
Variable
Bonus
To incentivise
performance in
the reporting year.
Targets are consistent
with the Group’s
long-term strategy.
The deferral of a
proportion of the
bonus in shares
aligns Directors’
interests with those
of shareholders and to
discourage short-term
decision making.
All measures and targets will be
reviewed and set annually by the
Committee at the beginning of the
financial year and levels of award are
determined by the Committee after the
year end based on achievement of
performance against the stipulated
measures and targets.
The Committee retains an overriding
discretion to adjust pay-outs from
formulaic performance condition
outcomes to ensure that overall bonus
payments reflect its view of corporate
performance during the year and are fair
to both shareholders and participants.
30% of the bonus must be deferred into
shares for two years. Vesting of the
deferred shares will be subject to
continued employment.
The value of the bonus does not
contribute to the pensionable salary.
Clawback and malus provisions apply.
The maximum bonus is 125%
of salary.
On-target performance would
result in a bonus payment of 50%
of maximum bonus. Threshold
performance would result in
bonus payment of up to 25%
of maximum bonus.
All measures and
targets normally relate
to a financial year of
the Company and
are reviewed on an
annual basis.
At least 50% of
the bonus will be
subject to financial
performance conditions.
132
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration Committee report continued
Executive Directors continued
Element
Purpose and
Link to Strategy
Operation
Maximum
Performance
Target
Variable
Performance
Share Plan
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.
Discretionary grant of nil-cost options or
conditional awards of shares. Awards
normally vest three years from the date
of award.
Vesting of awards is subject to satisfaction
of performance targets normally measured
over a three-year period.
The Committee retains an overriding
discretion to adjust the vesting level
from formulaic performance condition
outcomes to ensure that the overall level
of vesting reflects its view of corporate
performance over the performance
period and is fair to both shareholders
and participants.
A holding period of two years will apply
following vesting before participants are
entitled to sell their shares. Clawback and
malus provisions apply as described in the
notes to this table.
The maximum award level permitted
under the 2016 PSP plan rules and
this Policy is 200% of salary. The
normal annual award is 100% of
salary for Executive Directors.
Awards would not be increased
above 100% of base salary without
prior consultation with
shareholders.
25% of the award is payable at
threshold performance.
Performance targets
will apply over the
performance period.
The Committee will
determine the applicable
performance targets and
their weightings to ensure
they are appropriate.
Performance conditions
may be based on
financial, stock
market- based and/or
non-financial measures
(including strategic
and ESG measures).
A majority of the
award will be based
on financial and stock
market-based measures.
Shareholding
Requirement
To encourage
long-term share
ownership and support
alignment of interests
with shareholders.
At least half of the net shares vested
under the deferred annual bonus and the
LTIP must be retained until the
shareholding requirement is met.
During employment, Executive
Directors must build up a
shareholding worth 200% of salary.
After employment, Executive
Directors will be required to retain
the lower of the shareholding
requirement during employment or
actual shareholding at cessation for
two years. The Committee has the
discretion to relax this requirement
in exceptional circumstances (e.g.
serious ill-health). Shares that have
been purchased voluntarily may be
excluded from the post-cessation
shareholding requirement.
Not applicable.
Chair and Non-Executive Directors
Element
Purpose and
Link to Strategy
Operation
Maximum
Performance
Target
Fixed
Fees
To provide market-
competitive director fees.
Annual fee for the Chair.
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 in connection with the fulfilment
of their roles are reimbursed (including
any personal tax due on such expenses).
Fee increases are applied in line
with outcome of the review.
Not applicable.
133
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Considerations in relation to the Policy review
When reviewing the Remuneration Policy, the Committee considered a wide range of factors, including:
• Where practicable, improving the consistency of the Executive Directors’ Remuneration Policy with that of the workforce, for example
in relation to the pension provision.
• Taking into account the latest guidance from our institutional shareholders, investor representative bodies, regulators and statutory requirements.
• The overall market competitiveness of the senior executives’ packages.
The Committee also addressed the following factors when determining the Remuneration Policy and practices, as recommended by the
UK Corporate Governance Code:
Principle
Committee approach
Clarity
Remuneration arrangements should
be transparent and promote effective
engagement with shareholders and
the workforce.
As noted above there is a consistent approach taken, where possible, in relation to
the application of the Remuneration Policy throughout the Company. For instance,
all employees participate in an annual bonus plan and the PSP.
We consult with employees to explain how the Policy for Executive Directors aligns with the
pay and conditions of the workforce other than, for instance, where there are more stringent
requirements in the Executive Directors’ Policy for corporate governance reasons.
Simplicity
Remuneration structures should avoid
complexity and their rationale and operation
should be easy to understand.
The components of our Remuneration Policy are consistent throughout the Company so
they are simple to operate and communicate.
Risk
Remuneration arrangements should ensure
reputational and other risks from excessive
rewards and behavioural risks that can arise
from target-based incentive plans are
identified and mitigated.
We look carefully at the range of likely performance outcomes when setting performance
target ranges and use discretion where this leads to an inappropriate pay outcome.
Bonus deferral, holding periods on LTIP awards, shareholding requirement and clawback
and malus provisions all help to mitigate risk.
Predictability
The range of possible values of rewards to
individual directors and any other limits or
discretions should be identified and explained
at the time of approving the policy.
Incentive plans are determined based on a proportion of base salary so there is a sensible
balance between fixed pay and performance-linked elements.
There are provisions to override the formula driven outcome of incentive plans and deferral
and clawbacks to minimise the likelihood of a poor link between reward and performance.
Proportionality
The link between individual awards,
the delivery of strategy and the long-term
performance of the company should be clear.
Outcomes should not reward
poor performance.
Incentive plans are determined based on a proportion of base salary so there is a sensible
balance between fixed pay and performance-linked elements.
There are provisions to override the formula driven outcome of incentive plans and deferral
and clawbacks to ensure that poor performance is not rewarded.
Alignment to culture
Incentive schemes should drive behaviours
consistent with company purpose, values
and strategy.
All staff are eligible for bonus plans which are approved by the Committee to ensure
consistency with Company purpose, values and the performance measures are linked to the
business strategy.
134
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration Committee report continued
Service contracts and payments for loss of office
Executive Directors’ service contracts are terminable by either party
giving the other 12 months’ written notice. If notice is served by either
party, the Executive Director may continue to receive base salary,
benefits and pension for the duration of their notice period during
which time the Company may require the individual to fulfil their current
role or may place the individual on garden leave. The Committee
will seek to minimise the level of payments to a departing Director,
having regard to all circumstances, including the Company’s
contractual obligations to the Director, the reason for departure,
and the Company’s policy on mitigation.
The Company may elect to make a monthly payment of base salary,
plus an amount in lieu of benefits/pension contribution/equivalent or
just base salary, in lieu of notice. Any payments in lieu of notice would
be phased monthly and subject to offset against earnings elsewhere.
Reasonable outplacement and legal costs may be payable.
Where a Director may be entitled to pursue a claim against the
Company in respect of his/her statutory employment rights or
any other claim arising from the employment or its termination,
the Committee will be entitled to negotiate settlement terms with
the Director that the Committee considers to be reasonable in the
circumstances and is in the best interests of the Company, and to
enter into a settlement agreement with the Director.
In addition to the contractual provisions regarding payment on
termination set out above, the Group’s incentive plans and share
plans contain provisions relating to termination of employment.
Good leaver provisions relate to termination of office or
employment by reason of death, ill-health, injury, incapacity
or disability of the award holder, redundancy or sale or transfer
out of the Group or the Company or undertaking employing that
employee, or any other circumstances stipulated by the Committee
at the date of award.
For any good leaver the approach in relation to the incentive plans
will be as follows:
Annual bonus: bonus may be payable at the normal time pro-rata
for the portion of the year worked. Outstanding deferred bonus
awards would be retained and would vest at the usual time.
PSP awards: awards would vest at the usual time subject to the
achievement of the performance conditions and would normally be
scaled back pro-rata for the extent of the vesting period completed
at cessation of employment (unless in exceptional circumstances
the Committee determines that the award should not be scaled
back). The two-year post-vesting holding period would usually
continue to apply.
If an Executive Director is not deemed to be a good leaver,
all bonus entitlements and LTIP awards would normally lapse.
Non-Executive Directors’ letters of appointment incorporate a notice
period of three months.
No payment for compensation for loss of office will be made to
the Chair or any Non-Executive Director other than where the
Company determines that fees for the notice period should be
paid. The details of the service contracts for Executive Directors
and Letters of Appointment for the Non-Executive Directors are
summarised as follows:
Director
Date of Appointment
Expiry date of service agreement
of letter of appointment
Allan Lockhart
18 August 2016
12-month rolling contracts
Will Hobman
20 August 2021
Margaret Ford
1 September 2017
3-month rolling contracts
Lynn Fordham
21 March 2024
Colin Rutherford
5 February 2019
Dr Karen Miller
30 May 2022
Charlie Parker
10 September 2020
Alastair Miller
18 August 2016
The service agreements are available for shareholders to view at
the Company’s Registered Office on request from the Company
Secretary and at the Annual General Meeting.
External directorships and memberships
Executive Directors may 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.
Ongoing benefits, pension provisions, annual bonus participation
and awards under both the DBP and the PSP will be in line with those
stated in the Policy. In exceptional circumstances, the maximum level
of variable pay which may be awarded to a new Executive Director in
the first year of appointment under the Policy will be 325% of salary
(i.e. 125% annual bonus plus 200% PSP award).
Different performance measures may be set for any initial awards
under the DBP and PSP after considering the responsibilities of the
individual, 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.
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 Listing Rule 9.4.2R if
necessary to do so. In doing so, the Committee will match the fair value
of the awards forfeited, taking account of the form, any applicable
performance conditions and 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. Non-Executive Directors will be recruited on the basis
of a Letter of Appointment with a three-month notice period.
135
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Illustrations of the operation of the Remuneration Policy in FY25
Minimum performance:
• comprising the minimum remuneration receivable (being base salary, pension and
benefits received in FY24);
On target performance:
• comprising fixed pay, annual bonus payment at 50% of the maximum opportunity and
long-term incentive awards vesting at 25% of maximum opportunity;
Maximum performance:
• comprising fixed pay, 100% of annual bonus and 100% vesting of long-term incentive awards;
Maximum performance with
share price increase:
• comprising fixed pay, 100% of annual bonus and 100% vesting of long-term incentive
awards with the value increased for share price appreciation of 50%.
£0k
£400k
£800k
£1,200k
£1,600k
£2,000k
Maximum
with Share
Price Increase
Maximum
On target
Minimum
£0k
£400k
£800k
£1,200k
£1,600k
£2,000k
Maximum
with Share
Price Increase
Maximum
On target
Minimum
Allan Lockhart
Will Hobman
Fixed Pay
Annual Bonus
LTIP
LTIP value with 50% share price growth
£524k
100.0%
54.6%
31.8%
27.6%
100.0%
54.5%
31.8%
27.6%
32.4%
37.9%
32.9%
32.5%
37.9%
32.9%
13.0%
30.3%
26.3%
13.2%
13.0%
30.3%
26.3%
13.2%
£961k
£1,646k
£1,895k
£361k
£663k
£1,137k
£1,309k
136
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration Committee report continued
Remuneration Report
This section sets out how the Directors’ Remuneration Policy
was implemented during the financial year ended 31 March 2024.
Where stated, disclosures regarding Director’s remuneration have
been audited by the Company’s external auditors, PwC. This
section, together with the Chair’s Statement, is subject to an
advisory vote at the 2024 AGM.
Remuneration Committee
The Remuneration Committee is comprised of all the Non-Executive
Directors. The Remuneration Committee meets regularly throughout
the year. It met four times during the year. A Board and Committee
attendance chart is contained in the Governance report on page
116.
Role of the Remuneration Committee
The role of the Remuneration Committee is to establish a formal
and transparent procedure for developing and implementing the
Remuneration Policy. The Policy should have regard to the risk
appetite of the Company and Executive remuneration should be
aligned to the Company’s purpose and values and be clearly linked
to the successful delivery of the Company’s long-term strategy.
The Committee also reviews the remuneration of the Chair and
senior executives below Board level. Terms of reference for the
Remuneration Committee can be found on the Company’s website.
Other main responsibilities of the Committee are to:
• ensure that the Directors and executive management are
provided with appropriate incentives to encourage enhanced
performance and are, in a fair and responsible manner, rewarded for
their individual contributions to the success of the Company and
to align their interests with those of shareholders;
• attract, retain and motivate Directors and executive management
of the quality required to run the Company successfully without
paying more than is necessary, having regard to views of
shareholders and other stakeholders;
• review and have regard to workforce remuneration and related
policies and the alignment of incentives and rewards with culture,
taking these into account when setting remuneration policy for
Directors and especially when determining annual salary increases;
• consider and set the objectives, annual pay and targets for the
Directors and executive management; and
• review the operation of the Group’s share incentive schemes and
the granting and vesting of the schemes.
Any potential conflicts of interest are managed carefully. No Director
is present when their own remuneration is being discussed and
Committee papers are redacted where appropriate to avoid
individuals seeing proposals before they are discussed by the
Committee. Each meeting minutes whether there are any potential
conflicts for any members or attendees.
Committee members
• Alastair Miller: Committee Chair
• Margaret Ford (until 30 May 2024)
• Colin Rutherford
• Charlie Parker
• Dr Karen Miller
The Chief Executive Officer and Chief Operating and People Officer
were invited to attend all or part of the meetings as and when
relevant. These individuals were not present when their own
remuneration was discussed. The Company Secretary acts as
secretary to the Committee.
FY24 Remuneration Committee activity
May
2023
• Review outcome of Corporate and personal
targets for Executive Director bonuses
• Review and approve ExCo bonuses
• Consider DBS and PSP awards and targets
• Review Remuneration Report and
Remuneration Policy
Sept
2023
• Approve FY24 bonus targets
• Note share awards
• Review PSP performance and confirm final vesting
Feb
2024
• Report from Korn Ferry on developments
in market practice in remuneration
• Review wider workforce arrangements
and pay policy
• FY25 targets and objectives
• Preliminary discussions on performance
against targets
• Preliminary performance update for
outstanding awards.
Mar
2024
• Agree New Chair’s fee
137
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Statement of voting at the Annual General Meeting
The following table summarises the details of votes cast for and against the Directors’ Remuneration Policy and the Directors’ Remuneration
Report at the 2023 AGM, along with the number of votes withheld.
Votes for
%
Votes against
%
Total shares for
and against
Votes withheld
That the Directors’ Remuneration Report be received and
approved (2023 AGM)
165,694,587
99.11
1,492 712
0.89
167,187,299
52,466
That the Directors’ Remuneration Policy be received and
approved (2023 AGM)
165,701,655
99.11
1,481,211
0.89
167,182,866
56,899
Remuneration Committee adviser
The Committee keeps itself fully informed on developments and best practice in the field of remuneration and it seeks advice from external advisers
when appropriate. The Committee appoints its own independent remuneration advisers and appointed Korn Ferry in 2018 following a competitive
process. During the year the Committee continued to retain the services of Korn Ferry. Korn Ferry is a member of the Remuneration Consultants
Group and signatory to its Code of Conduct which can be found at www.remunerationconsultantsgroup.com. During FY24 Korn Ferry did not
provide any other services to the Company. Fees charged by Korn Ferry were on a time and materials basis and totalled £26,299 in the year
ended 31 March 2024. The Committee reviews the performance and independence of its advisers on an annual basis and is satisfied that the
advice provided is objective and independent.
Total remuneration payable to Directors for FY24 (audited)
The following tables show a single figure total of remuneration for the year ended 31 March 2024 for each of the Directors and compares this
figure to the prior year.
Executive Directors
Financial
Year
Salary £
Benefits1£
Pension2£
Subtotal for
fixed pay £
Cash bonus £
Value of bonus
deferred into
shares £
Long-Term
Incentive
Plans £
Subtotal for
variable pay £
Total £
Allan Lockhart
2024
484,100
5,660
41,552
531,312
288,040
123,445
295,145
706,630
1,237,942
2023
470,000
5,001
70,500
545,501
338,870
145,230
246,783
730,883
1,276,384
Will Hobman
2024
334,750
2,551
13,390
350,691
199,176
85,361
128,732
413,269
763,960
2023
325,000
2,168
13,000
340,168
234,325
100,425
78,760
413,510
753,678
1. Benefits are the Directors’ private medical cover.
2. Allan Lockhart received a pension contribution of 15% of salary until July 2023 after which his pension contribution reduced to 4%. Will Hobman received a pension contribution
of 4% of salary throughout 2024.
Non-Executive Directors
Financial Year
Base fee £
Audit Committee
Chairman £
Remuneration
Committee
Chairman £
Senior
Independent
Non-Executive
Director £
Total £
Margaret Ford
2024
164,800
–
–
–
164,800
2023
160,000
–
–
–
160,000
Alastair Miller
2024
51,500
–
7,725
7,725
66,950
2023
50,000
–
7,500
7,500
65,000
Lynn Fordham1
2024
4,437
–
–
–
4,437
2023
–
–
–
–
–
Charlie Parker
2024
51,500
–
–
–
51,500
2023
50,000
–
–
–
50,000
Colin Rutherford
2024
51,500
7,725
–
–
59,225
2023
50,000
7,500
–
–
57,500
Dr Karen Miller2
2024
51,500
–
–
–
51,500
2023
42,051
–
–
–
42,051
1. Lynn Fordham was appointed to the Board on 21 March 2024 as Chair Designate. Lynn received a pro-rate fee based on the annualised rate of £164,800
2. Dr Karen Miller was appointed to the Board on 30 May 2022
138
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration Committee report continued
Annual bonus for the year to 31 March 2024 (Audited)
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.
The performance against measures to 31 March 2024 are set out in the tables below.
Weighting
Threshold
Target
Stretch
Actual result
Achievement % of maximum
available under that element
Pay-out as a percentage
of total bonus
Measure
25% of
maximum
50% of
maximum
100% of
maximum
Allan Lockhart
Will Hobman
Allan Lockhart
Will Hobman
Corporate
Total Return vs IPD All Retail
25%
At index 10% ahead
20%
ahead
over 20%
ahead
100%
100%
25%
25%
Earnings yield (UFFO)
25%
£20m
£22m
£24m
£24.4m
100%
100%
25%
25%
Financial
LTV
5%
<38%
<34%
<32%
30.8%
100%
100%
5%
5%
TAR Return
20%
2.80%
3.70%
4.50%
0.5%
0%
0%
0%
0%
Strategic
Strategic objectives
25%
See below
52%
52%
13%
13%
A summary of the strategic objectives are shown below:
Strategic objectives
Weighting
Assessment of performance by the Committee
Achievement
Allan Lockhart
Will Hobman
Allan Lockhart
Will Hobman
Securing an extension to the RCF facility
5%
RCF extended to November 2026
5%
5%
Achieve completion of disposals or reclassification of the
assets in the Work out portfolio
7.5%
2 sales achieved, 1 sale post period
0%
0%
Capital Partnerships: secure additional Capital Partnerships
5%
M&G, Canterbury mandates have
been expanded
2%
2%
ESG
7.5%
6%
6%
Implementation of Enhanced Supplier Vetting
Enhanced Supplier vetting applied to all new
suppliers and rolled out to existing suppliers
Improve access to tenants’ energy consumption data
and embed ESG performance monitoring across the portfolio
Not achieved
Measured reduction in Journey to Net Zero
Scope 1 Emissions down 31%, Scope 2
emissions down 16%
Maintenance / improvement of Sustainability Accreditations
GRESB: 72/100 (70/100), CDP: maintained
as B, EPRA: maintained as GOLD
Total
25%
13%
13%
Based on performance to 31 March 2024, the annual bonus outcome for the Executive Directors during the year is shown below.
The Committee is satisfied that no adjustments to the pay-outs is required, and the outcome is reflective of underlying performance.
Executive
Assessment of performance by the Committee
% of maximum
% of salary
Bonus outcome
Allan Lockhart
68%
85%
£411,485
Will Hobman
68%
85%
£284,537
30% of the bonus will be deferred into shares for two years. Deferred shares are subject to continued employment.
139
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Long-Term Incentive Plans (audited)
Vesting of Performance Share Plan awards
FY21 LTIP Awards
Performance Share Plan Awards were granted to Allan Lockhart and Will Hobman on 21 August 2020. As disclosed in last year’s report, the
performance period for the TSR element of the FY21 LTIP award ended in August 2023. The table below sets out the performance targets
and final level of vesting.
Measure
Weighting Threshold (25% of max)
Target (75% of max)
Stretch (100% of max)
Actual
Vesting (% of max)
Total Shareholder Return vs UK REITs1
50%
Median
62.5 percentile
Upper Quartile
Above upper quartile
100%
Total Accounting Return vs UK REITs1
50%
Median
62.5 percentile
Upper Quartile
Below median
0%
Total
50%
1. The UK REIT peer group listed on page 141.
The Committee is comfortable that the formulaic outcome of the LTIP reflects wider business performance and so no discretion has been
applied. The final vesting levels for the FY21 LTIP awards are shown below:
Executive
Grant date
Vest date
Number of
shares granted
Number of
shares vested
Value of shares
vesting
Dividend
equivalents in
shares
Total value
Allan Lockhart
21 Aug 20
21 Aug 23
497,354
248,677
£203,169
53,383
£246,783
Will Hobman
21 Aug 20
21 Aug 23
158,730
79,365
£64,841
17,037
£78,760
• The value is based on the share price on the date of vesting (81.7p).
• The share price at grant was 63p, therefore the share price has increased by 18.7p. As a result, the value attributable to share price
appreciation is £46,503 for Allan Lockhart and £14,841 for Will Hobman.
• Allan Lockhart’s FY21 award remains subject to a two-year post-vesting holding period. Will Hobman was the Finance Director (below
Board level) when the FY21 awards were granted and so no holding period applies.
FY22 LTIP Awards
Performance Share Plan Awards were granted to Allan Lockhart and Will Hobman on 7 September 2021.
The performance targets for these awards are shown below:
Weighting
Threshold
Target
Stretch
Actual result
Actual result
Measure
25% of
maximum
75% of
maximum
100% of
maximum
Total Shareholder Return vs UK REITs1
50%
Median
62.5
percentile
Upper
quartile
Above
upper
quartile
100%
Total Accounting Return vs UK REITs1
50%
Median
62.5
percentile
Upper
quartile
Below
median
0%
Total
50%
1. The UK REIT peer group listed on page 141
140
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration Committee report continued
The Committee is comfortable that the formulaic outcome of the LTIP reflects wider business performance and so no discretion has been
applied. The vesting levels for the FY22 LTIP awards are shown below:
Executive
Grant date
Vest date
Number of
shares granted
Number of
shares vesting
Value of share
to vest
Dividend
equivalents in
shares
Total value
Allan Lockhart
7 Sep 21
7 Sep 24
597,964
298,982
£232,309
80,871
£295,145
Will Hobman
7 Sep 21
7 Sep 24
260,814
130,407
£101,326
35,272
£128,732
• Both Allan Lockhart’s and Will Hobman’s FY22 awards remain subject to a two-year post-vesting holding period.
• The value of the shares to vest are based on a three-month average share price of 77.7p to 31 March 2024. This value will be restated
in the single figure table next year based on the actual share price on the date of vesting.
• Dividend equivalents include the final dividend declared for FY24 to be paid in August 2024 prior to vesting.
• The share price at grant was 78.6p. Therefore, none of the value of the award is due to share price appreciation.
PSP awards granted in the year to 31 March 2024 (audited)
The following Performance Share Plan awards were granted to Executive Directors as nil cost options on 29 June 2023:
Executive
Value of awards at grant date1
(% salary)
Number of shares
comprising award
% of award vesting at
threshold
Vesting Period End Date
Holding Period End Date
Allan Lockhart
£470,000 (100%)
525,140
25%
29 June 2026
29 June 2028
Will Hobman
£325,000 (100%)
363,128
25%
29 June 2026
29 June 2028
1. The closing price on the day before the grant date has been used to determine the number of shares comprising the award. This was 89.5p.
Performance will be assessed from 1 April 2023 to 31 March 2026. The targets for both performance conditions are as follows:
TSR ranking vs. UK REITs (50% of award)
Total Accounting Return ranking vs. UK REITs
(50% of award)
Vesting
(% of award)
Below threshold
Less than Median (50th percentile)
Less than Median (50th percentile)
0%
Threshold
Equal to Median (50th percentile)
Equal to Median (50th percentile)
25%
Equal to 62.5th percentile
Equal to 62.5th percentile
75%
Maximum
Equal to Upper Quartile (75th percentile) and above
Equal to Upper Quartile (75th percentile) and above
100%
• 50% of each award may vest based on the Company’s TSR compared to a group of UK REITs.
• 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
NTA on an EPRA basis.
• TAR is defined as the annualised return over the performance period based on the change in EPRA NTA per share and the level of
dividends paid per share.
The TSR and TAR comparator group was composed of the companies set out in the list below.
• SEGRO
• GREAT PORTLAND ESTATES
• UNITE GROUP
• LONDONMETRIC PROPERTY
• LAND SECURITIES GROUP
• WORKSPACE GROUP
• TRITAX BIG BOX REIT
• SAFESTORE HOLDINGS
• BRITISH LAND
• BIG YELLOW GROUP
• GRAINGER
• UK COMMERCIAL PROPERTY REIT
• DERWENT LONDON
• ASSURA
• CLS HOLDINGS
• PRIMARY HEALTH PROPERTIES
• HAMMERSON
• SHAFTESBURY CAPITAL
141
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Deferred Shares granted in the year to 31 March 2024 (audited)
Awards of Deferred Bonus Shares over the Company’s shares were granted to Executive Directors as nil cost options in FY24 as shown
below. The deferred share awards are based on 30% of the bonus awarded for the year to 31 March 2023. Vesting of the awards is normally
subject to continued employment at the date of vesting in two years’ time.
Executive
Number of shares granted1,2
Face value of the award
at grant date
Grant date
Vest date3
Allan Lockhart
165,222
£145,230
29 June 2023
29 June 2025
Will Hobman
114,249
£100,425
29 June 2023
29 June 2025
1. The 5 day average close price on the day before the grant date has been used to determine the number of shares comprising the award. This was 87.9p.
2. Awards are not subject to performance conditions.
3. Vesting of awards is normally subject to continued employment unless an employee leaver is deemed a ‘Good Leaver’.
Summary of Directors’ Interests (audited)
The beneficial interests of the Executive Directors in share awards and share options as at 31 March 2024 are shown in the following tables.
Allan Lockhart
Grant Date
Plan
Vesting by1
Share price at
date of award £
Exercise price
£
At 31 March 2023
Granted
Dividend equivalent
shares added2
Lapsed
Exercised3
At 31 March 2024
May 2018
DBP
May 2020
2.86
nil
62,194
–
–
–
(62,194)
–
Jun 2019
DBP
Jun 2021
1.79
nil
66,952
–
–
–
(66,952)
–
Aug 2020
PSP
Aug 2023
0.63
nil
581,721
–
48,204
(314,963)
_
314,962
Sept 2021
DBP
Sept 2023
0.78
nil
40,429
–
1,556
–
(41,985)
–
Sept 2021
PSP
Sept 2024
0.78
nil
673,842
–
55,838
–
_
729,680
July 2022
DBP
July 2024
0.88
nil
161,250
–
13,361
–
–
174,611
July 2022
PSP
July 2025
0.88
nil
576,848
–
47,801
–
–
624,649
June 2023
DBP
June 2025
0.89
nil
–
165,222
13,690
–
–
178,912
June 2023
PSP
June 2026
0.89
nil
–
525,140
43,515
–
–
568,655
Total
2,163,236
690,362
223,965
(314,963)
(171,131)
2,591,469
Will Hobman
Grant Date
Plan
Vesting by1
Share price at
date of award £
Exercise price
£
At 31 March 2023
Granted
Dividend equivalent
shares added2
Lapsed
Exercised4
At 31 March 2024
Aug 2020
PSP
Aug 2023
0.63
nil
185,655
–
7,149
(96,402)
(96,402)
–
Sept 2021
DBP
Sept 2023
0.78
nil
23,654
–
910
–
(24,564)
–
Sept 2021
PSP
Sept 2024
0.78
nil
293,909
–
24,354
–
_
318,263
July 2022
DBP
July 2024
0.88
nil
118,269
–
9,800
–
–
128,069
July 2022
PSP
July 2025
0.88
nil
398,885
–
33,053
–
–
431,938
June 2023
DBP
June 2025
0.89
nil
–
114,249
9,466
–
–
123,715
June 2023
PSP
June 2026
0.89
nil
–
363,128
30,090
–
–
393,218
Total
1,020,372
477,377
114,822
(96,402)
(120,966)
1,395,203
1. A holding period of two years is applied following vesting for the PSP awards.
2. The right to dividends is accrued and is only payable if and to the extent that the awards vest. The FY24 final dividend declared is not included in this figure.
3. Allan Lockhart’s awards were exercised on 4 December 2023, some of the shares were sold to cover tax at a share price of 85.9p. The aggregate gain from exercising the awards was £148,720.
4. Will Hobman’s awards were exercised on 8 September 2023. Will paid the tax from personal funds and kept all the shares from the exercise. The aggregate gain from exercising these
awards was £97,378.
DBP = Deferred Bonus Plan PSP = Performance Share Plan
142
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration Committee report continued
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 of 200% of base salary. Beneficially owned
shares, vested and unvested DBP awards plus vested but unexercised PSP awards may be counted towards the value of the executives’
shareholdings for the purposes of the 200% holding guideline.
The beneficial interests of Directors who served during the year, in the shares of the Company are as follows:
Beneficially
owned shares
held at
31 March 2024
Value of
beneficially
owned shares
as % of salary1
Vested but
unexercised
DBP awards
held at
31 March 2024
Vested but
unexercised
PSP awards
held at
31 March 2024
Unvested DBP
awards held at
31 March 2024
Value of
holdings
including
vested PSP and
unvested DBP 2
Unvested PSP
awards held at
31 March 2024
Total held as at
31 March 2024
Shareholding %
of salary
Allan Lockhart
520,856
87%
-
314,962
353,523
199%
1,922,984
3,112,325
199%
Will Hobman
354,955
86%
–
–
251,784
147%
1,143,419
1,750,158
147%
Margaret Ford
106,440
–
–
–
–
–
–
106,440
N/A
Lynn Fordham
–
–
–
–
–
–
–
–
N/A
Alastair Miller
99,806
–
–
–
–
–
–
99,806
N/A
Colin Rutherford
–
–
–
–
–
–
–
–
N/A
Charlie Parker
11,454
–
–
–
–
–
–
11,454
N/A
Dr Karen Miller
–
–
–
–
–
–
–
–
N/A
1. Based on the closing share price of 80.90p as at 31 March 2024 and salary for FY24.
2. Includes dividend equivalent shares added to that date. Although vested these awards have not yet been exercised.
3. All awards are nil cost awards.
4. Vested but unexercised PSPs are not subject to performance conditions. Unvested PSPs are subject to performance conditions. Outstanding DBP awards are not subject to performance
conditions. The details of outstanding scheme interests are included in the table on page 142.
5. At least half of the net shares vested under the deferred annual bonus and the PSP must be retained until the shareholding requirement is met.
DBP = Deferred Bonus Plan.
PSP = Performance Share Plan.
There have been no changes in the number of shares held from 31 March 2024 to 20 June 2024, being the latest practicable date before the
publication of this Annual Report.
Payments for loss of office and to past Directors (audited)
No Directors have left office in the year. No payments were made to past Directors.
Historic Total Shareholder Return performance and Chief Executive Officer 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 ten years, together with bonus and LTIP pay-outs (as a percentage of the maximum).
TSR Chart
0
50
100
150
200
FY24
FY23
FY22
FY21
FY20
FY19
FY18
FY17
FY16
FY15
FY14
NewRiver
FTSE 250
FTSE 350 REIT
FY24
FY23
FY22
FY21
FY20
FY19
FY18
FY17
FY16
FY15
FY14
The chart shows the Company’s TSR and that of the FTSE 250 and the FTSE 350 REIT Indices based on an initial
investment of £100 on 1 April 2014 and values at intervening financial year ends over a ten-year period to 31 March
2024. These are considered to be appropriate benchmarks for the graph as the Company was a constituent of
these indices during the financial years shown and is in line with the approach used historically.
143
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
2015
2016
2017
2018
2019
20201
2021
2022
2023
2024
David
Lockhart
David
Lockhart
David
Lockhart
David
Lockhart
Allan
Lockhart
Allan
Lockhart
Allan
Lockhart
Allan
Lockhart
Allan
Lockhart
Allan
Lockhart
Total
remuneration (£)
850,000
1,792,205
1,341,958
1,012,946
911,972
543,239
637,339
984,462
1,276,384
1,237,942
Annual bonus
(% of max)
70.0
100.0
66.7
77.3
64.0
–
20.0
75.0
82.5
68.0
Total LTIP vesting
(% of max)
–
50.0
76.3
13.1
–
–
–
–
50.0
50.0
1. Allan Lockhart received no bonus in 2020.
CEO pay ratio
As the Company has less than 250 employees, we are not required to disclose the CEO pay ratio. However, we consider it appropriate to
disclose our pay ratios on a voluntary basis as we are committed to supporting strong governance and transparency. The ratio of the CEO’s
pay to the 25th, 50th and 75th percentile is shown, along with the total pay for the employees at the three quartiles.
We have based the calculation on the methodology outlined in Option A under the regulations, although, we have chosen not to disclose the
three salary levels for the relevant employees to allow a simpler comparison with the total pay of the CEO. This method is, in the Committee’s
view, the most comprehensive and accurate reflection of the remuneration picture across our employee population.
The ratio calculated by reference to actual pay rates on 31 March 2024 and based on the CEO’s full salary.
The CEO pay ratio is broadly in line with the ratio last year. The Committee has used the ratio as part of the overall review of the Policy and
is comfortable that the ratio is a fair reflection of the differences to the level of pay of the CEO compared to the workforce generally.
Year
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
FY24
Option A
7.6:1
13.2:1
17.7:1
FY23
Option A
6.6:1
12.6:1
19.2:1
FY22
Option A
7:1
12.7:1
17.2:1
FY21
Option A
7:1
9:1
19:1
FY20
Option A
8:1
17:1
34:1
The total pay for the individuals identified at the Lower quartile, Median and Upper quartile positions are set out below:
FY24
Total Pay
Upper quartile
£162,687
Median
£93,572
Lower quartile
£70,014
Annual percentage change in remuneration of Directors and employees
The table below sets out the percentage change in base salary, value of taxable benefits and bonus for all the Directors compared with the
average percentage change for employees.
FY23/FY24 FY22/FY23
FY21/FY22
FY20/FY21
Directors
Salary/fee
Benefits
Annual
Bonus
Salary/fee
Benefits
Annual Bonus
Salary/fee
Benefits
Annual Bonus
Salary/fee
Benefits
Annual Bonus
Executive Directors
Allan Lockhart
3%
13%
-15%
0%
50%
10%
0%
18%
369%
0%
0%
100%
Will Hobman1
3%
18%
-15%
0%
33%
9%
N/A
N/A
N/A
N/A
N/A
N/A
Non-Executive Directors
Margaret Ford
3%
N/A
N/A
0%
N/A
N/A
0%
N/A
N/A
0%
N/A
N/A
Alastair Miller
3%
N/A
N/A
0%
N/A
N/A
0%
N/A
N/A
0%
N/A
N/A
Charlie Parker
3%
N/A
N/A
0%
N/A
N/A
0%
N/A
N/A
0%
N/A
N/A
Colin Rutherford
3%
N/A
N/A
0%
N/A
N/A
6%
N/A
N/A
0%
N/A
N/A
Dr Karen Miller2
3%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
All Employees3
6%
12%
-8%
5%
37%
6%
5%
20%
96%
0%
0%
100%
1. Will Hobman was appointed to the Board on 20 August 2021 for ease of comparison, we have compared his pay on a pro-rated basis.
2. Dr Karen Miller was appointed to the Board on 30 May 2022. For ease of comparison, we have compared her pay on a pro-rated basis
3. All employees are used as there are no employees of the listed parent company.
4. Lynn Fordham was appointed to the Board on 21 March 2024. As a result, she has been excluded form the table above.
144
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration Committee report continued
Relative importance of spend on pay
The table below shows employee pay and distributions to shareholders for FY24 and FY23.
FY24 £’000
FY23 £’000
% difference from prior year
Total spend on employee pay1
6,645
6,292
5.3%
Total distributions to shareholders
20,272
20,863
(2.8%)
Share Buy Backs
–
–
0%
1. Includes salaries, bonuses, social security costs and pension costs as shown in the notes to the Financial Statements.
Implementation of the Policy in FY25
The section below sets out the implementation of the Remuneration Policy in FY25. There are no significant changes in the implementation
of the Policy.
Salaries and fees
The base salaries for FY25 are set out below:
Executive
Salary for FY24
Salary for FY25
% increase
Allan Lockhart - Chief Executive Officer
£484,100
£498,623
3%
Will Hobman - Chief Financial Officer
£334,750
£344,792
3%
The Committee also reviewed the Chair fees and the Board (minus the Non-Executive Directors) reviewed the Non-Executive Director fees
and concluded that there should be a 3% increase to base fees and Committee Chair Fees. There was no change to the Chair fees due to
the change in Chair. The fees for the Chair and Non-Executive Directors in FY25 are set out below:
Director
Fees for FY24
Fees for FY25
% increase
Chair
£164,800
£164,800
0%
Basic fee for a Non-Executive Director
£51,500
£53,045
3%
Additional fee for serving as Chairman of the Audit
and Remuneration Committees
£7,725
£7,957
3%
Additional fee for serving as the Senior Independent
Non-Executive Director
£7,725
£7,957
3%
Annual bonus
The annual bonus will operate as laid out in the Remuneration Policy. Executive Directors will have the opportunity to earn a bonus up to a
normal maximum of 125% of salary.
In line with FY24, the bonus will be based on financial and corporate measures (75%) as well as personal strategic objectives (25%). At the
time of writing the measures and weightings have not been finalised, but will be disclosed in full in next year’s report, along with the targets,
performance against them and resultant payouts.
Long-term incentives - Performance Share Plan
The Committee intends to grant LTIP awards to Executive Directors of 100% of salary. The extent to which the LTIP awards will vest will be
determined by the performance measures listed below.
Threshold
Target
Stretch
Measure
Weighting
25% of maximum
75% of maximum
100% of maximum
Relative TSR vs UK REIT peer group
60%
Median
62.5 percentile
Upper Quartile
Relative TAR vs UK REIT peer group
40%
Median
62.5 percentile
Upper Quartile
Awards must be held by Executive Directors for a further two years after vesting.
Signed on behalf of the Board
Alastair Miller
Committee Chair
20 June 2024
145
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Directors’ Report
Principal activities and status
NewRiver REIT plc (the “Company”) is a premium listed REIT on the
London Stock Exchange. The Company is a specialist real estate
investor, asset manager and developer focused solely on the UK
retail sector. Details of the Group’s principal subsidiary
undertakings are set out on pages 186 to 187.
Governance
The Financial Reporting Council published a revised UK Corporate
Governance Code in July 2018 (the Code). Further information on
the Code can be found on the Financial Reporting Council’s website
at: www.frc.org.uk. The Company’s Statement on Governance can
be found on page 106.
Results and dividend
The Directors have proposed a final dividend of 3.2 pence per
share. Together with the interim dividend of 3.4 pence, the total
dividend for FY24 is 6.6 pence. The final dividend is payable on
16 August 2024 to shareholders on the register as at 5 July 2024.
3.2 pence will be paid as a PID net of withholding tax where
appropriate. The Company will be offering a scrip dividend
alternative. A dividend of 6.7 pence per share was paid in FY23.
The Board
The Directors, who served throughout the year unless stated
otherwise, are detailed below:
Service in the year 31 March 2024
Margaret Ford
Served throughout the year
Lynn Fordham
Appointed 21 March 2024
Allan Lockhart
Served throughout the year
Will Hobman
Served throughout the year
Alastair Miller
Served throughout the year
Karen Miller
Served throughout the year
Charlie Parker
Served throughout the year
Colin Rutherford
Served throughout the year
Margaret Ford stepped down from the Board on 30 May 2024. Unless stated otherwise the
rest of the Directors were in office during the year and up to the date of signing the financial
statements. The roles and biographies of the Directors in office as at the date of this report
are set out on pages 108 to 109.
The Directors present their
report together with the audited
consolidated financial statements
and the report of the auditor for
the year ended 31 March 2024.
Kerin Williams
Company Secretary
20 June 2024
146
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
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. Qualifying third-party
indemnity provisions (as defined by section 234 of the Companies
Act 2006) were in force during the year ended 31 March 2024 and
remain in force at the date of signing this report. 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. This insurance has been in place during
the year and remains in place at the date of signing this report.
Articles of Association
The Company’s latest Articles of Association were adopted at the
2021 AGM. 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.
Significant interests
The table below shows the interests in shares notified to the
Company in accordance with Chapter 5 of the Disclosure Guidance
and Transparency Rules issued by the Financial Conduct Authority.
As at 31 March 2024 and as at 18 June 2024 (being the latest
practicable date prior to publication of the Annual Report):
As at 31 March 2024
Shareholder
Number of shares
% of issued Share Capital
FIL Limited
31,286,771
10.11%
Premier Miton
15,803,355
5.07%
BlackRock Inc
15,553,726
5.00%
IntegraFin Holdings
15,623,426
4.99%
M&G Plc
15,404,761
4.99%
Farringdon Capital
Management
11,909,919
3.83%
As at 18 June 2024
Shareholder
Number of shares
% of issued Share Capital
FIL Limited
38,096,001
12.27%
Premier Miton
15,803,355
5.07%
M&G Plc
15,404,761
4.99%
IntegraFin Holdings
15,623,426
4.99%
Farringdon Capital
Management
11,909,919
3.83%
Internal controls review
Taking into account the principal risks, emerging 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 and emerging 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.
Additional Information
The Strategic Report is set out on pages 2 to 103 and is
incorporated into the Directors’ Report by reference. Additional
information which is incorporated by reference into this Directors’
Report, including information required in accordance with the
Companies Act 2006 and the Listing Rule 9.8.4R of the UK Financial
Conduct Authority’s Listing Rules, can be located as follows:
Page numbers
s.172 statement
Page 57
Staff, culture and
employee involvement
Staff - pages 56 to 58 and 111
Directors’ interests
Pages 140 to 143 of the Directors’
Remuneration Report
Stakeholder engagement
Strategic Report - pages 56 to 65,
Governance Report - page 112,113 and
117
Environmental policy
ESG Report - pages 66 to 92
Greenhouse gas emissions
ESG Report - page 73
Future business
developments
Strategic Report - pages 2 to 101
Financial risk management
objectives and policies
Pages 93 to 101 and pages 178 to 181
Going concern
Page 102 and 160
Viability statement
Page 102
Governance report
Pages 104 to 149
Diversity
Pages 59, 82, 121 and 122
Listing rule:
9.8.4R (1)(2) (5-14)(B)
Not applicable
9.8.4R (4)
Long-Term Incentive Plans - pages
140 to 142
9.8.6R (9) & LR 14.3.33R(1)
Page 122
Powers of Directors
Subject to the Company’s Articles of Association, UK legislation
and any directions given by special resolution, the business of the
Company is managed by the Board, which may exercise all the
powers of the Company.
The Board’s role is to provide entrepreneurial leadership of the
Company within a framework of prudent and effective controls
which enables risk to be assessed and managed. It also sets
the Group’s strategic aims, ensuring that the necessary financial
and human resources are in place for the Group to meet its
objectives and review management performance. The Board also
sets the Group’s values, standards and culture. Further details
on the Board’s role can be found in the Corporate Governance
Report on pages 104 to 145.
Directors’ interests
Details of the Directors’ share interests can be found in the Directors’
Remuneration Report on pages 140 to 143. All related party
transactions are disclosed in note 26 to the financial statements.
147
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Branches outside the UK
The Company has no branches outside the UK.
Financial instruments
The Group’s exposure to, and management of, capital risk,
market risk and liquidity risk is set out in note 24 to the Group’s
financial statements.
Share capital structure
As at 31 March 2024, the Company’s issued share capital consisted
of 313,686,292 ordinary shares of one penny each. No shares are
held in treasury. During FY23 Computershare Trustees (Jersey)
Limited, as Trustee of the NewRiver REIT plc Employee Benefit Trust
(the EBT), completed an EBT Share Purchase Programme to satisfy
existing, planned and anticipated exercises under the NewRiver
employee share schemes. The EBT purchased 3,411,259 shares in total.
As at 31 March 2024 the EBT held 3,317,219 ordinary shares. Therefore,
the total number of voting rights in the Company is 310,369,073. Further
details of the share capital, including changes throughout the year are
summarised in note 22 of the financial statements.
Ordinary shareholders are entitled to receive notice of, and
to attend and speak at, any general meeting of the Company.
On a show of hands, every shareholder present in person or by
proxy (or being a corporation represented by a duly authorised
representative) shall have one vote, and on a poll every shareholder
who is present in person or by proxy shall have one vote for every
share of which he or she is the holder. The Notice of Annual General
Meeting specifies deadlines for exercising voting rights and
appointing a proxy or proxies.
There are no restrictions on the transfer of shares except the UK
Real Estate Investment Trust restrictions. The Directors are not
aware of any agreements between holders of the Company’s
shares that may result in the restriction of the transfer of
securities or on voting rights.
Authority for the Company to purchase its
own shares
Subject to authorisation by shareholder resolution, the Company
may purchase its own shares in accordance with the Companies
Act 2006. Any shares which have been bought back may be held
as treasury shares or cancelled immediately upon completion of the
purchase. At the Annual General Meeting held in 2023, shareholders
authorised the Company to make purchases (within the meaning of
section 693 of the Companies Act 2006) of the Company’s ordinary
shares, up to a maximum of 10% of the issued share capital at that
time, as well as the allotment of new shares within certain limits
approved by shareholders. The Company has not repurchased any
of its ordinary shares under this authority, which is due to expire at
the AGM in 2024 and appropriate renewals will be sought.There
are no securities of the Company carrying special rights with
regards to the control of the Company in issue.
Change of control - significant agreements
The Company was not party to any significant contracts that are
subject to change of control permissions in the event of a change
of control, but other agreements may alter or terminate upon such
an event.
Compensation for loss of office in the event of
a takeover
The Company does not have any agreements with any Executive
Director or employee that would provide compensation for loss of
office or employment resulting from a takeover except that the
Group’s incentive plans and share plans contain provisions relating
to termination of employment. Further information is provided in the
Summary of the Directors’ Remuneration Policy set out on pages
132 to 133.
Auditor
Following a formal audit tender process PricewaterhouseCoopers
LLP will be stepping down as auditor in June 2024. The Board
has recommended the appointment of Mazars to replace
PricewaterhouseCoopers LLP as the Company’s auditor for the
shareholders to vote upon at the Annual General Meeting in August
2024.
Annual General Meeting
The Annual General Meeting will be held on 5 August 2024. 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 an auditor and authorise the
Audit Committee to determine the remuneration of the auditor.
In addition, it will be proposed that expiring authorities to allot
shares and to repurchase shares are extended. An explanation of
the resolutions to be put to the shareholders at the 2024 AGM and
the recommendations in relation to them will be set out in the 2024
AGM Notice.
Political donations
No political donations were made by the Company or its
subsidiaries during the year (2023: Nil).
The Directors’ Report was approved by the Board of Directors on
20 June 2024.
By Order of the Board
Kerin Williams
Company Secretary
20 June 2024
148
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Directors’ report continued
The Directors are responsible for preparing the Annual Report
and Accounts and the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared
the Group financial statements in accordance with UK-adopted
international accounting standards and the Company financial
statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure Framework”,
and applicable law).
Under company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted international accounting
standards have been followed for the Group financial statements
and United Kingdom Accounting Standards comprising FRS 101
have been followed for the Company financial statements,
subject to any material departures disclosed and explained
in the financial statements;
• make judgements and accounting estimates that are reasonable
and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.
The Directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
Group’s and Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and
Company and enable them to ensure that the financial statements
and the Directors’ Remuneration Report comply with the Companies
Act 2006.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ confirmations
Each of the Directors, whose names and functions are listed in the
Governance Report confirm that, to the best of their knowledge:
• the Group financial statements, which have been prepared in
accordance with UK-adopted international accounting standards,
give a true and fair view of the assets, liabilities, financial position
and profit of the Group;
• the Company financial statements, which have been prepared
in accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets,
liabilities and financial position of the Company; and
• the Strategic Report includes a fair review of the development
and performance of the business and the position of the Group
and Company, together with a description of the principal risks
and uncertainties that it faces.
In the case of each Director in office at the date the Directors’
report is approved:
• so far as the Director is aware, there is no relevant audit
information of which the Group’s and Company’s auditors are
unaware; and
• they have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit
information and to establish that the Group’s and Company’s
auditors are aware of that information.
The confirmation is given and should be interpreted in accordance
with the provisions of section 418 of the Companies Act 2006.
By Order of the Board
Lynn Fordham
Non-Executive Chair
20 June 2024
Statement of Directors’ responsibilities
in respect of the financial statements
149
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Governance
Independent auditors’ report to the
members of NewRiver REIT plc
Our audit approach
Overview
Audit scope
• We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the Group financial
statements as a whole and the Company stand alone financial
statements, taking into account the structure of the Group, the
accounting processes and controls and the industry in which the
Group operates.
Key audit matters
• Valuation of investment properties (Group)
• Valuation of investment in subsidiaries (Company)
Materiality
• Overall Group materiality: £7.6m (2023: £7.8m) based on 1% of
Group total assets.
• Specific Group materiality: £1.1m (2023: £1.2m), based on 5% of
Group EPRA earnings
• Overall Company materiality: £8.2m (2023: £8.1m) based on 1% of
Company total assets.
• Performance materiality: £5.7m (2023: £5.8m) (Group), specific
Group performance materiality £0.9m (2023: £0.9m) and
Company performance materiality £6.2m (2023: £6.1m)
(Company).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of
our procedures thereon, were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Report on the audit of the
financial statements
Opinion
In our opinion:
• NewRiver REIT plc’s Group financial statements and Company
financial statements (the “financial statements”) give a true and
fair view of the state of the Group’s and of the Company’s affairs
as at 31 March 2024 and of the Group’s profit and the Group’s
cash flows for the year then ended;
• the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards
as applied in accordance with the provisions of the Companies
Act 2006;
• the Company financial statements have been properly prepared
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements, included within the
Annual Report and Accounts (the “Annual Report”), which comprise:
the Consolidated and Company Balance Sheets as at 31 March
2024; the Consolidated Statement of Comprehensive Income, the
Consolidated Cash Flow Statement and the Consolidated and
Company Statements of Changes in Equity for the year then ended;
and the notes to the financial statements, comprising material
accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We remained independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as
applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not
provided.
Other than those disclosed in Note 6, we have provided no
non-audit services to the Company or its controlled undertakings in
the period under audit.
150
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Auditors’ report
Key audit matter
How our audit addressed the key audit matter
Valuation of investment properties (Group)
Refer to Audit Committee Report, Note 1 – Accounting
policies, Note 2 – Critical accounting judgements and
estimates, Note 14 – Investment properties and Note 16
– Investment in associates.
The Group owns and manages a portfolio of commercial
assets within the UK with a focus on shopping centres
and retail parks. The total value of the portfolio as at 31
March 2024, excluding right of use investment property
assets but including assets held on a proportionally
consolidated basis within associates (2023: joint ven-
tures and associates), was £543.8 million (2023: £593.6
million), of which £533.8m is held within subsidiaries and
£10.0m is held within associates.
This was identified as a key audit matter given the valua-
tion of the portfolio is inherently subjective and complex
due to, among other factors, the individual nature of
each property, its location, and the expected future
rental streams for that particular property, together with
considerations around the impact of climate change.
The wider challenges facing the retail real estate
market, including changing consumer habits and the
impact of macroeconomic factors, further contributed
to the subjectivity for the year ended 31 March 2024.
The valuations were carried out by external valuers,
Colliers, Knight Frank and Kroll, in accordance with RICS
Valuation – Professional Standards and the Group’s
accounting policies which incorporate the requirements
of International Accounting Standard 40 ‘Investment
Property’ and IFRS 13 ‘Fair value measurement’.
The properties’ fair value is primarily determined by their
investment value reflecting the fact that the properties
are largely existing operational properties currently
generating rental income.
In determining the valuation of investment property,
the valuers consider property specific information
such as the current tenancy agreements and rental
income. They then apply judgemental assumptions
such as estimated rental value (‘ERV’) and yield, which
are influenced by prevailing market yields and, where
appropriate, comparable market transactions to arrive
at the final valuation. Due to the unique nature of each
property, the judgemental assumptions to be applied
are determined having regard to the individual property
characteristics at a detailed tenant by tenant level, as
well as considering the qualities of the property.
Given the material size of the investment property as-
sets and the level of estimation involved, we considered
this to be a key audit matter for the Group.
Given the inherent subjectivity in the valuation of investment properties, the need for deep mar-
ket knowledge when determining the most appropriate assumptions and the technicalities of the
valuation methodology, we engaged our internal valuation experts, who are qualified chartered
surveyors, to assist us in our audit of this matter.
Assessing the valuers’ expertise and objectivity
We assessed the external valuers’ qualifications and expertise and read their terms of engage-
ment with the Group to determine whether there were any matters that might have affected their
objectivity, such as the length of their relationship with the Group, or that may have imposed
scope limitations on their work. We also considered fee arrangements between the external
valuers and the Group, and other engagements which might exist between the Group and the
valuers. We found no evidence to suggest that the objectivity of the external valuers in their
performance of the valuations was compromised.
Data provided to the valuers
We checked the accuracy of the underlying lease data and capital expenditure used by the exter-
nal valuers in their valuation of the portfolio by tracing the data back to the relevant accounting
records and signed leases on a sample basis. No exceptions were identified from this work.
Assumptions and estimates used by the valuers
We read the external valuation reports and confirmed that the valuation approach for each was
in accordance with RICS standards and suitable for use in determining the final value for the
purpose of the financial statements. We held discussions with the external valuers to discuss and
challenge the valuation process, the key assumptions, including any special assumptions and
the rationale behind the more significant valuation movements during the year. It was evident
from our interaction with the external valuers and from our review of the valuation reports, that
close attention had been paid to the individual characteristics of each property, such as the
overall quality of the tenant base, latest leasing activity and geographic location, depending on
the type of asset being valued. We also challenged the external valuers on the extent to which
recent market transactions and expected rental values took into account the potential impact of
climate change and related ESG considerations. We obtained details of each property and set
an expected range for yield and capital value movement, determined by reference to published
benchmarks and using our experience and knowledge of the market. We compared the yield
and capital value movement of each property with our expected range. We also considered the
reasonableness of other assumptions that are not so readily comparable with published bench-
marks, such as ERV. When assumptions were outside of the expected range, or where the capital
value for an asset was above a set monetary threshold, we undertook further investigations and,
when necessary, obtained corroborating evidence to support the explanations received. This
enabled us to assess the property specific factors that had an impact on the value, including
recent comparable transactions where appropriate, to conclude on the reasonableness of the
assumptions utilised.
Overall findings
We found that the key valuation assumptions and movements in the valuations were predom-
inantly consistent with comparable benchmarking information for the asset type. Assumptions
were applied appropriately, reflected comparable market transactions, where available, and
included consideration of the impact of climate change and a range of other external factors.
Where assumptions did not fall within our expected range, we were satisfied that the variances
were due to property specific factors. We concluded that the valuations were supportable in light
of these factors. We have no matters to report in respect of this work.
Valuation of investment in subsidiaries (Company)
Refer to Note A – Accounting policies and Note B –
Investment in subsidiaries.
The Company holds investment in subsidiaries amount-
ing to £321.9 million as at 31 March 2024 (2023: £323.9
million). The Company’s accounting policy is to hold
its investment in subsidiaries at cost less provision for
cumulative impairments. The Company has recognised
a net impairment of £2.0 million (2023: impairment of
£6.0 million).
Given the material size of the investment, the net invest-
ment impairment and the level of estimation involved,
we considered this to be a key audit matter for the
Company.
We obtained the Company’s assessment of the valuation of investment in subsidiaries as at 31
March 2024 and performed the following:
• Assessed the accounting policy for investment in subsidiaries and verified that the
methodology used by the Directors in arriving at the valuation of each subsidiary was
compliant with FRS 101 “Reduced Disclosure Framework”;
• Identified the key judgement within the valuation of investment in subsidiaries to be the
valuation of investment properties. For details on our work on property valuations, refer to the
key audit matter above;
• Verified that the carrying values of investment properties had been appropriately included in
the assessment of the valuation of investment in subsidiaries; and
• Verified that the net impairment recognised had been appropriately calculated with reference
to the initial carrying value of the investment in subsidiaries and the recoverable amount.
Based on the work performed, we concur with the valuation of the investment in subsidiaries. We
evaluated the disclosures in the financial statements and found these to be appropriate.
151
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls,
and the industry in which they operate.
The Group owns and manages a portfolio of commercial assets
within the UK with a focus on shopping centres and retail parks
across the United Kingdom. These are held within a variety of
subsidiaries and associates. We have identified a single component
that makes up the Group. The single component was subject to a
full scope audit using our adopted materiality thresholds and all of
the work was performed by the Group team. These procedures,
together with additional procedures performed at the Group level
(including audit procedures over the consolidation and
consolidation adjustments), gave us the evidence we needed for
our opinion on the Group financial statements as a whole. In respect
of the audit of the Company, the Group audit team performed a full
scope statutory audit.
The impact of climate risk on our audit
As part of our audit we also made enquiries of management and its
valuation experts to understand the process they have adopted to
assess the potential impact of climate change on the business.
Management considers that climate change does not give rise to a
material financial statement impact in the current year. We used our
knowledge of the Group to evaluate management’s assessment
and concluded this was reasonable. We particularly considered how
climate change risks could impact the assumptions made in the
valuation of investment property. We also considered the
consistency of the climate change disclosures included in the
Annual Report, drawing on our knowledge of the business gained
through the audit process.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement line
items and disclosures and in evaluating the effect of misstatements,
both individually and in aggregate on the financial statements
as a whole.
Based on our professional judgement, we determined materiality for
the financial statements as a whole as follows:
Financial statements – Group
Financial statements – Company
Overall materiality
£7.6m (2023: £7.8m).
£8.2m (2023: £8.1m).
How we determined it
1% of Group total assets
1% of Company total assets
Rationale for
benchmark applied
We determined materiality based on total assets
given the valuation of investment properties,
whether held directly or through associates, is the
key determinant of the Group's value. This
materiality was used in the audit of investing and
financing activities
Given the NewRiver REIT plc entity is primarily a
holding Company we determined total assets of
the Company to be the appropriate benchmark.
Specific materiality
£1.1m (2023: £1.2m)
Not applicable
How we determined it
5% of the Group's 2024 EPRA earnings (2023: 5%
of the Group's 2023 EPRA earnings)
Not applicable
Rationale for
benchmark applied
In arriving at this materiality, we had regard to the
fact that EPRA earnings are a secondary financial
indicator of the Group (refer to note 12 of the
financial statements which includes a reconciliation
between IFRS and EPRA earnings). This materiality
was used in the audit of operating activities
Not applicable
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature
and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our
performance materiality was 75% (2023: 75%) of overall materiality, amounting to £5.7m (2023: £5.8m) for the Group financial statements and
Company performance materiality £6.2m (2023: £6.1m) for the Company financial statements. Our performance materiality for operating
activities was 75% of specific materiality, amounting to £0.9m (2023: £0.9m) for the Group financial statements
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.4m (Group audit)
(2023: £0.4m) for investing and financing activities, £0.1m (Group audit) (2023: £0.1m) for operating activities and £0.8m (Company audit)
(2023: £0.8m) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
152
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Auditors’ report continued
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the
Company’s ability to continue to adopt the going concern basis of
accounting included:
• We agreed the underlying cash flow projections to Board
approved forecasts and assessed how these forecasts were
compiled. We compared the prior year forecasts to actual
performance to assess management’s ability to forecast
accurately;
• We evaluated the key assumptions within the projections, namely
forecast property valuations and the levels of forecast net
income, under both a base scenario and reasonable worst case
scenario. We considered whether the reasonable worst case
scenario included appropriate sensitivities to factor in severe but
plausible variances from the base scenario in respect of both
forecast property valuations and net income;
• We examined the minimum committed facility headroom under
the base and reasonable worst case scenarios, and evaluated
whether the Directors’ conclusion, that sufficient liquidity
headroom existed to continue trading operationally throughout a
period of at least 12 months from the date of approval of these
financial statements, was appropriate;
• We reviewed the terms of financing agreements to determine
whether forecast covenant calculations were in line with those
agreements and to determine whether the maturity profile of the
debt included within the projections was accurate;
• We obtained and reperformed the Group’s forecast covenant
compliance calculations, under both the base and reasonable
worst case scenarios to assess the Directors’ conclusions on
covenant compliance; and
• We reviewed the disclosures relating to the going concern basis
of preparation and we found that these provided an explanation
of the Directors’ assessment that was consistent with the
evidence we obtained.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s
and the Company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements
are authorised for issue.
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the Group’s and
the Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
Reporting on other information
The other information comprises all of the information in the Annual
Report other than the financial statements and our auditors’ report
thereon. The Directors are responsible for the other information.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we identify
an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also
considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic Report and Directors’
Report for the year ended 31 March 2024 is consistent with the
financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and
Company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic
Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Remuneration Committee Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
153
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Corporate governance statement
The Listing Rules require us to review the Directors’ statements in
relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with
respect to the corporate governance statement as other information
are described in the Reporting on other information section of this
report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement, included within the Governance Report is
materially consistent with the financial statements and our
knowledge obtained during the audit, and we have nothing material
to add or draw attention to in relation to:
• The Directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or
mitigated;
• The Directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the Group’s and
Company’s ability to continue to do so over a period of at least
twelve months from the date of approval of the financial
statements;
• The Directors’ explanation as to their assessment of the Group’s
and Company’s prospects, the period this assessment covers and
why the period is appropriate; and
• The Directors’ statement as to whether they have a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period
of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term
viability of the Group and Company was substantially less in scope
than an audit and only consisted of making inquiries and
considering the Directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements
and our knowledge and understanding of the Group and Company
and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
corporate governance statement is materially consistent with the
financial statements and our knowledge obtained during the audit:
• The Directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess
the Group’s and Company’s position, performance, business
model and strategy;
• The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems;
and
• The section of the Annual Report describing the work of the Audit
Committee.
We have nothing to report in respect of our responsibility to report
when the Directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the Directors for the
financial statements
As explained more fully in the Statement of Directors’
responsibilities in respect of the financial statements, the Directors
are responsible for the preparation of the financial statements in
accordance with the applicable framework and for being satisfied
that they give a true and fair view. The Directors are also
responsible for such internal control as they determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Group’s and the Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Group or the Company or
to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
154
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Auditors’ report continued
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud,
is detailed below.
Based on our understanding of the Group and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to the UK FCA Listing Rules, and we considered
the extent to which non-compliance might have a material effect on
the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements
such as tax legislation including the Real Estate Investment Trust
(REIT) requirements and the UK Companies Act 2006 requirements.
We evaluated management’s incentives and opportunities for
fraudulent manipulation of the financial statements (including the
risk of override of controls), and determined that the principal risks
were related to posting inappropriate journal entries and
management bias in accounting estimates and judgemental areas
of the financial statements such as the valuation of investment
properties. Audit procedures performed by the engagement team
included:
• Discussions with management and those charged with
governance, including consideration of known or suspected
instances of non-compliance with laws and regulation and fraud;
• Reviewing minutes of meetings of those charged with
governance;
• Evaluation of management’s controls designed to prevent and
detect irregularities;
• Designing audit procedures to incorporate unpredictability into
our testing;
• Evaluation of the Group’s compliance with the REIT requirements;
• Challenging assumptions and judgements made by management
in their significant accounting estimates, in particular in relation to
the valuation of investment property (see related key audit matter
above);
• Identifying and testing journal entries, in particular any journal
entries posted with unusual account combinations; and
• Reviewing financial statement disclosures and testing to
supporting documentation to assess compliance with applicable
laws and regulations.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number
of items for testing, rather than testing complete populations. We
will often seek to target particular items for testing based on their
size or risk characteristics. In other cases, we will use audit sampling
to enable us to draw a conclusion about the population from which
the sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at: www.frc.org.
uk/auditorsresponsibilities. This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only
for the Company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
• we have not obtained all the information and explanations we
require for our audit; or
• adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• the Company financial statements and the part of the
Remuneration Committee Report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were
appointed by the members on 4 July 2019 to audit the financial
statements for the year ended 31 March 2020 and subsequent
financial periods. The period of total uninterrupted engagement is
five years, covering the years ended 31 March 2020 to 31 March
2024.
Other matter
The Company is required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rules to include these
financial statements in an annual financial report prepared under
the structured digital format required by DTR 4.1.15R – 4.1.18R and
filed on the National Storage Mechanism of the Financial Conduct
Authority. This auditors’ report provides no assurance over whether
the structured digital format annual financial report has been
prepared in accordance with those requirements.
Robert Wilkinson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20 June 2024
155
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2024
Financial statements
Year ended 31 March 2024
Year ended 31 March 2023
Notes
Operating
and financing
2024
£m
Fair value
adjustments
2024
£m
Total
2024
£m
Operating
and financing
2023
£m
Fair value
adjustments
2023
£m
Total
2023
£m
Revenue
4
65.0
–
65.0
72.2
–
72.2
Property operating expenses*
5
(20.9)
–
(20.9)
(25.1)
–
(25.1)
Net property income
44.1
–
44.1
47.1
–
47.1
Administrative expenses
6
(12.4)
–
(12.4)
(12.6)
–
(12.6)
Other income
7
0.4
–
0.4
1.4
–
1.4
Share of profit from joint ventures
15
0.5
–
0.5
2.4
0.6
3.0
Share of profit from associates
16
0.3
–
0.3
0.1
0.2
0.3
Net property valuation movement
14
–
(13.9)
(13.9)
–
(38.2)
(38.2)
Loss on disposal of joint venture
8
(2.3)
–
(2.3)
–
–
–
Loss on disposal of investment properties
9
(3.8)
–
(3.8)
(3.8)
–
(3.8)
Operating profit/(loss)
26.8
(13.9)
12.9
34.6
(37.4)
(2.8)
Finance income
10
5.4
–
5.4
1.4
–
1.4
Finance costs
10
(15.3)
–
(15.3)
(15.4)
–
(15.4)
Profit/(loss) for the year before taxation
16.9
(13.9)
3.0
20.6
(37.4)
(16.8)
Taxation
11
–
–
–
–
–
–
Profit/(loss) for the year
16.9
(13.9)
3.0
20.6
(37.4)
(16.8)
Total comprehensive profit/(loss) for the year
3.0
(16.8)
There are no items of other comprehensive income for the current or prior year
Earnings/(loss) per share
Basic (pence)
12
1.0
(5.4)
Diluted (pence)
12
1.0
(5.4)
*
Included in property operating expenses is an expected credit loss reversal of £nil (2023: £0.1 million) relating to debtors.
The notes on pages 160 to 182 form an integral part of these financial statements.
156
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Consolidated Balance Sheet
As at 31 March 2024
Notes
2024
£m
2023
£m
Non-current assets
Investment properties
14
608.7
627.3
Right of use asset
21
0.7
0.9
Investments in joint ventures
15
0.1
23.8
Investments in associates
16
5.6
5.5
Property, plant and equipment
0.3
0.4
Total non-current assets
615.4
657.9
Current assets
Trade and other receivables
17
11.4
15.0
Cash and cash equivalents
18
132.8
108.6
Total current assets
144.2
123.6
Total assets
759.6
781.5
Equity and liabilities
Current liabilities
Trade and other payables
19
26.3
29.5
Lease liability
21
0.4
0.4
Total current liabilities
26.7
29.9
Non-current liabilities
Lease liability
21
75.2
76.3
Borrowings
20
296.6
296.7
Total non-current liabilities
371.8
373.0
Net assets
361.1
378.6
Equity
Share capital
22
3.1
3.1
Share premium
22
4.0
2.4
Merger reserve
22
(2.3)
(2.3)
Investment in own shares
22
(3.0)
–
Retained earnings
22
359.3
375.4
Total equity
361.1
378.6
Net Asset Value (NAV) per share (pence)
Basic
12
116p
122p
Diluted
12
115p
121p
EPRA NTA
12
115p
121p
The notes on pages 160 to 182 form an integral part of these financial statements.
The financial statements on pages 156 to 182 were approved by the Board of Directors on 20 June 2024 and were signed on its behalf by:
Allan Lockhart
Chief Executive Officer
Will Hobman
Chief Financial Officer
Registered number: 10221027
157
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Consolidated Cash Flow Statement
For the year ended 31 March 2024
2024
£m
2023
£m
Cash flows from operating activities
Profit / (loss) for the year before taxation
3.0
(16.8)
Adjustments for:
Loss on disposal of investment property
3.8
3.8
Net valuation movement
13.9
38.2
Net valuation movement in joint ventures
–
(0.6)
Net valuation movement in associates
–
(0.2)
Share of profit from joint ventures
(0.5)
(2.4)
Share of profit from associates
(0.3)
(0.1)
Loss on disposal of joint venture
2.3
–
Net interest expense
9.9
14.0
Rent free lease incentives
0.1
0.2
Movement in expected credit loss
–
(0.1)
Capitalisation of legal and letting fees
(0.3)
(0.1)
Depreciation on property plant and equipment
0.3
0.8
Share-based payment expense
1.5
0.9
Cash generated from operations before changes in working capital
33.7
37.6
Changes in working capital
Decrease in trade and other receivables
1.1
3.0
Decrease in payables and other financial liabilities
(3.1)
(4.3)
Cash generated from operations
31.7
36.3
Interest paid
(15.1)
(14.1)
Interest income*
5.0
1.2
Dividends received from joint ventures
0.9
3.2
Dividends received from associates
0.2
0.4
Net cash generated from operating activities
22.7
27.0
Cash flows from investing activities
Return of investment from associate
–
2.3
Disposal proceeds from joint venture
21.0
–
Disposal of investment properties
8.7
19.5
Development and other capital expenditure
(6.1)
(2.9)
Purchase of plant and equipment
–
(0.1)
Net cash generated from investing activities
23.6
18.8
Cash flows from financing activities
Repayment of principal portion of lease liability
(0.4)
(0.4)
Purchase of own shares
(3.0)
–
Dividends paid – ordinary
(18.7)
(19.6)
Net cash used in financing activities
(22.1)
(20.0)
Cash and cash equivalents at beginning of the year
108.6
82.8
Net increase in cash and cash equivalents
24.2
25.8
Cash and cash equivalents at 31 March
132.8
108.6
*
Interest income has been reclassified from investing activities to operating activities in both the current and prior year as a result of a change in accounting policies, see note 1 to the accounts
The notes on pages 160 to 182 form an integral part of these financial statements.
158
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Consolidated Statement Of Changes In Equity
For the year ended 31 March 2024
Notes
Share capital
£m
Share premium
£m
Merger reserve
£m
Investment in
own shares
£m
Retained
earnings
£m
Total £m
As at 1 April 2022
3.1
1.1
(2.3)
–
412.2
414.1
Loss for the year after taxation
–
–
–
–
(16.8)
(16.8)
Total comprehensive loss for the year
after taxation
–
–
–
–
(16.8)
(16.8)
Transactions with equity holders
Issue of new shares
–
1.3
–
–
–
1.3
Share-based payments
–
–
–
–
0.9
0.9
Dividends paid
13
–
–
–
–
(20.9)
(20.9)
As at 31 March 2023
3.1
2.4
(2.3)
–
375.4
378.6
Profit for the year after taxation
–
–
–
–
3.0
3.0
Total comprehensive profit for the year
after taxation
–
–
–
–
3.0
3.0
Transactions with equity holders
Issue of new shares
–
1.6
–
–
–
1.6
Purchase of own shares
22
–
–
–
(3.0)
–
(3.0)
Share-based payments
–
–
–
–
1.2
1.2
Dividends paid
13
–
–
–
–
(20.3)
(20.3)
As at 31 March 2024
3.1
4.0
(2.3)
(3.0)
359.3
361.1
The notes on pages 160 to 182 form an integral part of these financial statements.
159
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the Consolidated 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. The Company is registered and domiciled in
the UK and the registered office of the Company is 89 Whitfield
Street, London, W1T 4DE.
Summary of material 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
These consolidated financial statements have been prepared on
the going concern basis, in accordance with UK-adopted
International Accounting Standards and within the requirements of
the Companies Act 2006.
Going concern
The Group and Company’s going concern assessment considers
the Group and Company’s principal risks, and is dependent on
a number of factors, including cashflow and liquidity, continued
access to borrowing facilities and the ability to continue to operate
the Group and Company’s unsecured debt structure within its
financial covenants. The Group and Company’s balance sheet is
unsecured, which means that none of its debt is secured against
any of its property assets. This type of financing affords significant
operational flexibility and the only debt currently drawn by the
Group is the £300 million unsecured corporate bond which matures
in March 2028. This bond has financial covenants that the Group
is required to comply with including an LTV covenant of less than
65% and a 12 month historical interest cover ratio of more than 1.5x.
The going concern assessment is based on a 12 month outlook
from the date of the approval of these financial statements, using
the Group and Company’s Board approved budget, flexed to
create a reasonable worst case scenario, which includes the
key assumptions listed below.
• Capital values to decrease a further 5.0% during FY25 and
remain flat throughout the remainder of the forecast horizon,
in contrast to the decline of (2.3)% across the portfolio in FY24,
the majority of which related to the impact of cost inflation
on valuations for the regeneration portfolio or out Work Out
portfolio, which we are committed to exit or turnaround, with
modest growth recorded across our Core Shopping Centres
and Retail Parks;
• A 15% reduction in net income. This reflects a significant
downside given rent collection rates have now stabilised at 99%
for FY24 and FY23 rental billings, back to pre-Covid levels, and
occupancy rates have reached their highest ever levels at 98%;
• No disposal proceeds are assumed throughout the forecast
period which have not yet completed at the time of reporting,
despite the completion of £23 million of disposals during FY23
and £38 million during FY24 and £3 million of retail disposals
completed post year end. Similarly no assumption is made for the
deployment of any surplus capital available as at 31 March 2024
and the growth and returns that would generate;
Under this scenario, the Group and Company is forecast to maintain
sufficient cash and liquidity resources and remain compliant with its
financial covenants over the going concern period. Further stress
testing was performed on this scenario which demonstrated that the
Group and Company’s drawn debt covenants could absorb a further
valuation decline of 46% or a further 57% reduction in annual net
rental income before breaching covenant levels. The Group and
Company maintains sufficient cash and liquidity reserves to continue
in operation and pay its liabilities as they fall due throughout the
going concern assessment period and as such the Directors
conclude a going concern basis of preparation is appropriate
Cash flow statement
The Group has reported the cash flows from operating activities using
the indirect method. The acquisition of properties are presented
within investing cash flows and interest paid is presented within
operating cash flows because this most appropriately reflects the
Group’s business activities. Interest received had previously been
presented within investing cash flows but have been re-classified
as operating cash flows as this better reflects the operations of
the Group.
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.
The consolidated financial statements account for interest in joint
ventures and associates using the equity method of accounting per
IFRS 11 and IAS 28 respectively. The financial statements for the
year ended 31 March 2024 have been prepared on the historical
cost basis, except for the revaluation of investment properties.
New accounting policies
The Group has adopted the following amendments for the first time
in the year ended 31 March 2024:
• Classification of Liabilities as Current or Non-current
(Amendments to IAS 1)
• Definition of Accounting Estimates (Amendments to IAS 8)
• Deferred Tax – Related to assets and liabilities arising from
a single transactions (Amendments to IAS 12)
• Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2)
• Insurance contracts – (Amendments to IFRS 17)
Adopting these amendments has not impacted amounts recognised
in prior periods or are expected to have a material impact on the
current period or future periods based on the Group’s current
strategy. The accounting policies used are otherwise consistent
with those contained in the Group’s previous Annual Report and
Accounts for the year ended 31 March 2023, unless otherwise stated.
160
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Standards and amendments issued but
not yet effective
A number of new amendments have been issued but are not yet
effective for the current accounting period.
Effective for the year ended 31 March 2025;
• Leases on sale and leaseback (Amendment to IFRS 16)
• Non-current liabilities with covenants (Amendment to IAS 1)
• Supplier finance (Amendment to IAS 7 and IFRS 7)
No material impact is expected upon the adoption of these standards.
IFRIC Agenda Decision
In October 2022, the IFRS Interpretations Committee (‘IFRIC’)
released its decision on the application of IFRS 9 and IFRS 16
in relation to how a lessor should account for the forgiveness
of amounts due under leases. This concluded that for any rent
receivables that are past their due dates and subsequently forgiven,
the lessor should apply the expected credit loss (ECL) model in IFRS
9. Therefore, the forgiveness will be subject to the derecognition
and impairment requirements in IFRS 9, and the impact of relevant
receivable amounts written off reflected in the statement of
comprehensive income on the date that the legal rights are
conceded. Historically the Group has treated this as a lease
modification spread over the remaining lease term. The Group
is not materially impacted by this decision and therefore no
restatement of the prior year comparative is required.
In March 2022, IFRIC finalised its decision with respect to
the treatment of demand deposits with restriction on use, which
includes tenant rent deposits and service charge amounts collected
on behalf of tenants. It was concluded that such deposits which are
subject to contractual restrictions, meet the definition of ‘cash and
cash equivalents’ within the financial statements. In light of this
the Group performed a review of amounts disclosed as ‘restricted
monetary assets’ and tenant deposits and the conclusion was that
the presentation of these as ‘restricted monetary assets’ as adopted
previously was appropriate.
Revenue recognition
Property, rental and related income
Property, rental and related 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, this is recognised
over the lease term, on a straight-line basis, as a reduction of rental
income.
Where a lease incentive payment or surrender premiums are paid
to enhance the value of a property, these are amortised on a
straight- line basis over the period from the date of lease
commencement to the expiry date of the lease as a reduction of
rental income. 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 accounted for from the effective
date of the modification, being the date at which both parties agree
to the modification, considering any prepaid or accrued lease
payments relating to the original lease as part of the lease
payments for the new lease.
Letting costs are recognised over the lease term on a straight line
basis as a reduction of rental income.
Service charge income
Service charge income is recognised in accordance with IFRS 15.
This income stream is recognised in the period which it is earnt
and when performance obligations are satisfied.
IFRS 15 is based on the principle that revenue is recognised when
control passes to a customer. The majority of the Group’s income is
from tenant leases and is therefore outside of the scope of IFRS 15.
However, the standard applies to service charge income. Under
IFRS 15, the Group needs to consider the agent versus principal
guidance. The Group is principal in the transaction if they control
the specified goods or services before they are transferred to the
customer. In the provision of service charge, the Group has deemed
itself to be principal and therefore the consolidated statement of
comprehensive income and the consolidated balance sheet reflect
service charge income, expenses, trade and other receivables and
trade and other payables.
Asset management fees
Management fees are recognised in the consolidated statement
of comprehensive income as the services are delivered and
performance obligations met. The Group assesses whether the
individual elements of service in the agreement are separate
performance obligations. Where the agreements include multiple
performance obligations, the transaction price will be allocated to
each performance obligation.
Car park income
Car park income is recognised in accordance with IFRS 15.
This income stream is recognised in the period in which it is
earnt and when performance obligations are satisfied.
Other income
Other income is recognised in accordance with IFRS 15. This income
stream is recognised in the period in which it is earnt and when
performance obligations are made. In the case of insurance other
income, this is recognised upon agreement with the insurer.
161
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
Promote payments
The Group is contractually entitled to receive a promote payment
should the returns from a joint venture or associate to the joint
venture or associate 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 associate or other
termination events. Any entitlements under these arrangements are
only accrued for in the financial statements once the Group believes
the above performance conditions have been met and there is no
risk of the revenue reversing.
IFRS 15
All revenue streams under IFRS 15 allocate transaction price against
performance obligations as they are satisfied. With the exception
of asset management fees, IFRS 15 revenue streams do not carry
variable consideration. There are no significant judgements in
applying IFRS 15. There are no significant payment terms on
any of the IFRS 15 revenue streams.
Service charge expense
Service charge expenses are recognised in the period in which they
are incurred.
Finance income and costs
Finance income and costs excluding fair value derivative
movements, are recognised using the effective interest rate
method. The effective interest rate 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
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.
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 consolidated 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.
Investment properties
These properties include completed properties that are generating
rent or are available for rent, and development properties that
are under development or available for development. Investment
properties comprise freehold and leasehold properties and are
first measured at cost (including transaction costs), then revalued
to market value at each reporting date by independent professional
valuers. Leasehold properties are shown gross of the leasehold
payables (and accounted for as right-of-use asset under IFRS 16,
see Leases accounting policy). Valuation gains and losses in a
period are taken to the consolidated statement of comprehensive
income. As the Group uses the fair value model, as per IAS 40
Investment Properties, no depreciation is provided. An asset will
be classified as held for sale within investment properties, in line
with IFRS 5 Non-Current Assets Held for Sale and Discontinued
Operations, where the asset is available for immediate sale in
its present condition and the sale is highly probable.
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.
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:
• Fixtures and fittings 20% on a straight line basis depending on
the useful life
• Office equipment 33% on a straight line basis
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 consolidated 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 joint control in order to conclude whether
the Group jointly controls the joint venture.
Associates
Interests in associates are accounted for using the equity method
of accounting. The Group’s associates are entities over which
the Group has significant influence with a partner. Investments in
associates are carried in the consolidated balance sheet at cost
as adjusted by post-acquisition changes in the Group’s share of the
net assets of the associates, less any impairment or share of income
adjusted for dividends. In assessing whether a particular entity is
controlled or has significant influence, 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 associate so as
to obtain benefits from its activities.
162
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Leases
At inception, the Group assesses whether a contract is or contains a
lease. This assessment involves the exercise of judgement about
whether the Group obtains substantially all the economic benefits
from the use of that asset, and whether the Group has the right to
direct the use of the asset.
The Group recognises a right-of-use (“ROU”) asset and the lease
liability at the commencement date of the lease. The ROU asset is
initially measured based on the present value of lease payments,
plus initial direct costs and the cost of obligations to restore the
asset, less any incentives received.
Lease payments generally include fixed payments and variable
payments that depend on an index (such as an inflation index).
Each lease payment is allocated between the liability and finance
cost. The lease payments are discounted using the interest rate
implicit in the lease if that rate can be readily determined or if not,
the incremental borrowing rate is used. The finance cost is charged
to profit or loss over the lease period so as to produce a constant
rate of interest on the remaining balance of the liability for each
period.
The ROU asset is depreciated over the shorter of the lease term or
the useful life of the underlying asset. The ROU asset is subject to
testing for impairment if there is an indicator of impairment. ROU
assets that are not classified as investment properties are disclosed
on the face of the consolidated balance sheet on their own line, and
the lease liability included in the headings current and non-current
liabilities on the consolidated balance sheet.
Where the ROU asset relates to leases of land or property that
meets the definition of investment property under IAS 40 it has
been disclosed within the investment property balance. After initial
recognition, IAS 40 requires the amount of the recognised lease
liability, calculated in accordance with IFRS 16, to be added back to
the amount determined under the net valuation model, to arrive at
the carrying amount of the investment property under the fair value
model. Differences between the ROU asset and associated lease
liability are taken to the consolidated statement of comprehensive
income.
The Group has elected not to recognise ROU assets and liabilities
for leases where the total lease term is less than or equal to
12 months, or for low value leases of less than £3,000. The
payments for such leases are recognised in the consolidated
statement of comprehensive income on a straight-line basis over
the lease term.
Financial instruments
Financial assets
The Group classifies its financial assets as fair value through profit
or loss or amortised cost, depending on the purpose for which the
asset was acquired and based on the business model test. Financial
assets carried at amortised cost include tenant receivables which
arise from the provision of goods and services to customers. These
are initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue and are
subsequently carried at amortised cost, less provision for
impairment. Impairment provisions for receivables are recognised
based on the simplified approach within IFRS 9 using a provision
matrix in the determination of the lifetime expected credit losses.
The probability of tenant default and subsequent non-payment of
the receivable is assessed. If it is determined that the receivable will
not be collectable, the gross carrying value of the asset is written off
against the associated provision. If in a subsequent year 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. The Group’s financial assets
measured at amortised cost comprise trade and other receivables
and cash and cash equivalents.
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.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash in transit,
deposits held on call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or
less that are readily convertible into known amounts of cash and
which are subject to an insignificant risk of change in value, and
bank overdrafts. Bank overdrafts are shown within borrowings
in current liabilities in the consolidated balance sheet.
Financial liabilities
The Group classifies its financial liabilities at amortised cost. 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 financial instruments classified as financial liabilities at fair value
through profit or loss include interest rate swap and cap
arrangements. Recognition of the derivative financial instruments
takes place when the contracts are entered into. They are
recognised at fair value and transaction costs are included directly
in finance costs.
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.
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 consolidated balance sheet.
163
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
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 issuing
the shares.
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 year end date of the number
of instruments expected to vest. The fair value is recognised over
the vesting period in the consolidated 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 consolidated statement
of comprehensive income for that period.
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 consolidated statement of
comprehensive income on the purchase, sale, issue or cancellation
of the shares held by the trust.
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.
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 consolidated 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. If a transaction is determined to
be an asset acquisition then it is accounted for at cost.
2. Critical accounting judgements and
estimates
The preparation of financial statements requires management to
make estimates and judgements 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.
Significant judgements
REIT Status
NewRiver is a Real Estate Investment Trust (REIT) and does not
pay tax on its property income or gains on property sales, provided
that at least 90% of the Group’s property income is distributed as a
dividend to shareholders, which becomes taxable in their hands. In
addition, the Group has to meet certain conditions such as ensuring
the property rental business represents more than 75% of total
profits and assets. Any potential or proposed changes to the
REIT legislation are monitored and discussed with HMRC. It is the
Directors judgement that the Group has met the REIT conditions
in the year.
Sources of estimation uncertainty
Investment property
The Group’s investment properties are stated at fair value.
The assumptions and estimates used to value the properties
are detailed in note 14. Small changes in the key estimates, such
as yield and the estimated rental value, can have a significant
impact on the valuation of the investment properties, and therefore
a significant impact on the consolidated balance sheet and key
performance measures such as Net Tangible Assets per share.
Rents and ERVs 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, see note 14 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.
3. Segmental reporting
The Group operates as one segment, the retail business. The retail
investments comprise predominantly shopping centres and retail
parks. The Group’s Executive Committee examines the Group’s
performance, and has identified retail as the only operating
segment. The performance and position of the retail business is
set out in the condensed consolidated statement of comprehensive
income and condensed consolidated balance sheet. All the Group’s
operations are in the UK and therefore no geographical segments
have been identified.
164
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
4. Revenue
2024
£m
2023
£m
Property rental and related income*
52.2
58.2
Amortisation of tenant incentives and letting costs
(1.5)
(1.5)
Surrender premiums and commissions
0.7
0.6
Rental related income
51.4
57.3
Asset management fees
2.5
1.5
Service charge income
11.1
13.4
Revenue
65.0
72.2
*
Included within property rental and related income is car park income of £5.4 million (2023: £5.3 million) which falls under the scope of IFRS 15. The remainder of the income is recognised by IFRS 16.
Asset management fees and service charge income which represents the flow through costs of the day-to-day maintenance of shopping
centres fall under the scope of IFRS 15.
5. Property operating expenses
2024
£m
2023
£m
Service charge expense
15.1
19.0
Rates on vacant units
1.7
2.7
Expected credit loss reversal
–
(0.1)
Other property operating expenses
4.1
3.5
Property operating expenses
20.9
25.1
6. Administrative expenses
2024
£m
2023
£m
Wages and salaries
5.6
5.2
Social security costs
0.9
0.9
Other pension costs
0.1
0.1
Staff costs
6.6
6.2
Depreciation*
0.3
0.8
Share-based payments
1.5
1.1
Other administrative expenses
4.0
4.0
Head office relocation costs**
–
0.5
Administrative expenses
12.4
12.6
*
Depreciation is inclusive of £0.2 million (2023: £0.2 million) of right of use asset depreciation and £nil (2023: £0.2 million) impairment of the right of use asset.
** Head office relocation costs mainly relate to an impairment charge relating to property, plant and equipment.
Net administrative expenses ratio is calculated as follows:
2024
£m
2023
£m
Administrative expenses
12.4
12.6
Adjust for:
Asset management fees
(2.5)
(1.5)
Share of joint ventures’ and associates administrative expenses
0.1
0.1
Share based payments
(1.5)
(1.1)
Head office relocation costs
–
(0.5)
Group’s share of net administrative expenses
8.5
9.6
Property rental and related income*
52.3
58.0
Other income – Covid-19 income disruption insurance
0.4
1.4
Share of joint ventures’ and associates’ property income
1.5
3.6
Property rental, other income and related income
54.2
63.0
Net administrative expenses as a % of property income (including share of joint ventures and associates)
15.7%
15.2%
*
This balance is made up of property rental and related income £52.2 million (2023: £58.2 million) which includes an expected credit loss of £nil (2023: £0.1 million) and excludes the
expected credit loss of £0.1 million on insurance (2023: £0.1 million reversal).
165
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
Average monthly number of staff
2024
2023
Directors
7
7
Operations and asset managers
18
17
Support functions
27
27
Total
52
51
Auditors’ remuneration
2024
£m
2023
£m
Audit of the Company and consolidated financial statements
0.3
0.3
Audit of subsidiaries, pursuant to legislation
0.2
0.2
0.5
0.5
Non-audit fees – interim review
0.1
0.1
Total fees
0.6
0.6
In addition to this the joint ventures and associates paid £0.1 million (2023: £0.1 million) in audit fees.
7. Other income
2024
£m
2023
£m
Insurance proceeds
0.4
1.4
Other income
0.4
1.4
The Group recognised £0.4 million (2023: £1.4 million) of Covid income disruption insurance proceeds following agreement with the insurer.
8. Loss on disposal of a joint venture
Year ended 31 March 2024
On 27 June 2023, the Group disposed its 50% share in the ‘Napier’ joint venture which owned Kittybrewster Retail Park in Aberdeen and
Glendoe and Telford Retail Parks in Inverness.
Included in the carrying value on disposal were investment properties of £32.2 million, cash of £1.3 million and third party debt of £(12.0) million.
£m
Carrying value at 31 March 2023
23.6
Movement in the period 31 March 2023 to 27 June 2023
(0.3)
Carrying value at 27 June 2023
23.3
Net cash proceeds
21.0
Loss on disposal of a joint venture
(2.3)
The total cash consideration for the sale was £64.0 million which included £62.6 million (NewRiver share: £31.3 million) consideration for the
value of the JV properties.
The total cash consideration was distributed as follows:
• £24.0 million used to repay the Napier Joint Venture bank loans;
• £3.0 million used to repay the shareholder loan owed to NewRiver (recognised as part of the Investment in Joint Venture carrying amount)
After the deduction of the above amounts and the settlement of various costs associated with the disposal, £18.0 million was received by
NewRiver. Net proceeds of £21.0 million recognised by NewRiver include the £3.0 million repayment of the shareholder loan.
166
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
9. Loss on disposal of investment properties
2024
£m
2023
£m
Gross disposal proceeds
6.8
20.0
Carrying value
(10.2)
(22.3)
Cost of disposal
(0.4)
(1.5)
Loss on disposal of investment properties
(3.8)
(3.8)
10. Finance income and finance costs
2024
£m
2023
£m
Income from loans with joint ventures and associates
(0.2)
(0.3)
Income from treasury deposits
(5.2)
(1.1)
Finance income
(5.4)
(1.4)
Interest on borrowings
12.7
12.7
Finance cost on lease liabilities
2.6
2.7
Finance costs
15.3
15.4
11. Taxation
2024
£m
2023
£m
Taxation charge
–
–
Profit/(loss) before tax
3.0
(16.8)
Tax at the current rate of 25% (2023: 19%)
0.8
(3.2)
Revaluation of property
3.5
7.3
Movement in unrecognised deferred tax
1.1
(0.2)
Non-taxable profit due to REIT regime
(5.4)
(4.4)
Non-taxable income
–
(0.4)
Transfer pricing adjustment
–
0.9
Taxation charge
–
–
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 and;
• 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.
Deferred tax
31 March 2023
£m
Charge
£m
Disposals
£m
31 March 2024
£m
Net deferred tax
–
–
–
–
31 March 2022
£m
Charge
£m
Disposals
£m
31 March 2023
£m
Net deferred tax
–
–
–
–
The deferred tax assets and liabilities have been calculated at the tax rate effective in the period in which the tax is expected to crystallise.
The Group has not recognised a deferred tax liability or deferred tax asset. As at 31 March 2024 the Group has unrecognised tax losses of
£9.4 million (2023: £13.1 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.
167
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
12. Performance measures
A reconciliation of the performance measures to the nearest IFRS measure is below:
2024
£m
2023
£m
Profit/(loss) for the year after taxation
3.0
(16.8)
Adjustments
Net valuation movement
13.9
38.2
Loss on disposal of investment properties
3.8
3.8
Loss on disposal of joint venture
2.3
–
Group’s share of joint ventures’ and associates’ adjustments
Revaluation of investment properties
–
(0.8)
Revaluation of derivatives
(0.1)
(0.2)
Deferred tax
–
0.2
EPRA earnings
22.9
24.4
Share-based payment charge
1.5
1.1
Forward looking element of IFRS 9*
–
(0.2)
Head office relocation costs
–
0.5
Underlying Funds From Operations (UFFO)
24.4
25.8
*
Forward looking element of IFRS 9 relates to a provision against debtor balances in relation to invoices relating to future rental income. These balances are not due in the current year and
therefore no income has been recognised in relation to these debtors.
Number of shares
Number of shares
2024
No. m
2023
No. m
Weighted average number of ordinary shares for the purposes of Basic EPS, UFFO and EPRA
311.4
309.7
Effect of dilutive potential ordinary shares:
Performance share plan
1.6
1.2
Deferred bonus shares
0.9
0.8
Weighted average number of ordinary shares for the purposes of Diluted EPS
313.9
311.7
2024
2023
IFRS Basic EPS
1.0
(5.4)
IFRS Diluted EPS
1.0
(5.4)
EPRA EPS
7.4
7.9
UFFO PS
7.8
8.3
The below table reconciles the differences between the calculation of basic and EPRA NTA.
EPRA NTA per share and basic NTA per share:
2024
2023
£m
Shares
m
Pence per share
£m
Shares
m
Pence per share
Net assets
361.1
310.8*
116p
378.6
310.7
122p
Unexercised employee awards
–
2.5
–
2.0
Diluted net assets
361.1
313.3
115p
378.6
312.7
121p
Group’s share of associates deferred tax liability
0.8
–
0.9
–
Group’s share of joint venture/associates fair
value derivatives
(0.1)
–
(0.6)
–
EPRA Net Tangible Assets
361.8
313.3
115p
378.9
312.7
121p
*
Shares include 0.4 million of employee awards which have vested but remain unexercised.
168
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
13. Dividends
The dividends paid in the year are set out below:
Payment date
PID
Non-PID
Pence per share
£m
Year to March 2023
Ordinary dividends
3 September 2022
3.3
–
3.3
10.1
17 January 2023
3.5
–
3.5
10.8
20.9
Year to March 2024
Ordinary dividends
4 August 2023
3.2
–
3.2
9.8
16 January 2024
3.4
–
3.4
10.5
20.3
The final dividend of 3.2 pence per share in respect of the year ended 31 March 2024 will, subject to shareholder approval at the 2024 AGM, be paid on 16 August 2024 to shareholders on the
register as at 5 July 2024. The dividend will be payable as a REIT Property Income Distribution (PID).
Reconciliation to dividends paid in the consolidated cash flow statement
2024
£m
2023
£m
Dividends paid
(20.3)
(20.9)
Scrip dividend
1.6
1.3
Dividends paid in the consolidated cash flow statement
(18.7)
(19.6)
Property Income Distribution (PID) dividends
Profits distributed out of tax-exempt profits are PID dividends. PID dividends are paid after deduction of withholding tax (currently at 20%),
which NewRiver pays directly to HMRC on behalf of the shareholder.
Non-PID dividends
Any non-PID element of dividends will be treated in exactly the same way as dividends from other UK, non-REIT companies.
14. Investment properties
2024
£m
2023
£m
Fair value brought forward
551.5
609.1
Capital expenditure*
5.3
2.9
Lease incentives, letting and legal costs
0.9
(0.1)
Disposals
(10.2)
(22.3)
Net valuation movement
(13.7)
(38.1)
Fair value carried forward
533.8
551.5
Right of use asset (investment property)
74.9
75.8
Fair value carried forward
608.7
627.3
*
Capital expenditure of £5.3 million (2023: £2.9 million) is comprised of £3.4 million (2023: £1.9 million) of expenditure in the creation of incremental lettable space and £1.9 million
(2023: £1.0 million) of expenditure on non-incremental lettable space
The Group’s investment properties have been valued at fair value on 31 March 2024 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.
169
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
The Group is exposed to changes in the residual value of properties at the end of current lease agreements. The residual value risk born by
the Group is mitigated by active management of its property portfolio with the objective of optimising tenant mix in order to:
• achieve the longest weighted average lease term possible;
• minimise vacancy rates across all properties; and
• minimise the turnover of tenants with high quality credit ratings.
The Group also grants lease incentives to encourage high quality tenants to remain in properties for longer lease terms. In the case of anchor
tenants, this also attracts other tenants to the property thereby contributing to overall occupancy levels.
The fair value at 31 March represents the highest and best use.
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.
As at 31 March 2024
Property ERV
Property rent
Property
equivalent
yield
Average
%
EPRA
topped up
net initial
yield
Average
%
Fair value
£m
Min
£ per sq ft
Max
£ per sq ft
Average
£ per sq ft
Min
£ per sq ft
Max
£ per sq ft
Average
£ per sq ft
Retail parks
132.8
10.6
14.2
11.8
8.3
14.7
10.8
7.0
6.7
Shopping Centres – Core
234.5
4.2
32.0
12.4
4.1
32.3
10.5
9.6
9.5
Shopping Centres – Regeneration
128.9
5.0
18.6
16.0
3.0
13.7
10.5
7.4
6.3
Shopping Centres – Work Out
34.4
5.9
17.5
6.3
1.3
3.3
1.5
12.0
4.0
High street and other
3.2
4.0
6.2
5.7
3.9
6.2
4.9
9.2
18.1
533.8
As at 31 March 2023
Property
equivalent
yield
Average
%
EPRA
topped up
net initial
yield
Average
%
Property ERV
Property rent
Fair value
£m
Min
£ per sq ft
Max
£ per sq ft
Average
£ per sq ft
Min
£ per sq ft
Max
£ per sq ft
Average
£ per sq ft
Retail parks
128.6
9.6
14.2
11.4
7.9
14.7
10.9
7.0
7.0
Shopping Centres – Core
214.8
8.8
30.1
14.0
8.0
30.8
12.9
9.3
9.7
Shopping Centres – Regeneration
140.1
5.2
18.8
16.1
4.0
13.4
10.6
6.8
5.9
Shopping Centres – Work Out
63.3
6.5
15.3
8.8
1.5
6.3
4.4
14.0
9.4
High street and other
4.7
4.2
8.6
6.6
3.7
8.7
4.1
9.5
10.0
551.5
Sensitivities of measurement of significant inputs
As set out within significant accounting estimates and judgements in note 2, the Group’s property portfolio valuation is open to judgements
and is inherently subjective by nature. As a result, the sensitivity analysis below illustrates the impact of changes in key unobservable inputs
on the fair value of the Group’s properties.
We consider +/-10% for ERV and +/-100bps for NEY to capture the uncertainty in these key valuation assumptions and deem it to be a
reasonably possible scenario.
The investments are a portfolio of retail assets in the UK. The valuation was determined using an income capitalisation method, which
involves applying a yield to rental income streams. Inputs include yield, current rent and ERV. 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 inputs to the valuation include:
• Rental value – total rental value per annum
• Equivalent yield – the net weighted average income return a property will produce based upon the timing of the income received
There were no changes to valuation techniques during the year. Valuation reports are based on both information provided by the Group, for
example, current rents and lease terms which is derived from the Group’s financial and property management systems and is subject to the
Group’s overall control environment, and assumptions applied by the valuers, e.g. ERVs and yields. These assumptions are based on market
observation and the valuers’ professional judgement, which includes a consideration of climate change and a range of other external factors.
170
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
2024: Sensitivity impact on valuations of a 10% change in estimated rental value and absolute yield
of 100 bps.
Impact on valuations of a
10% change in ERV
Impact on valuations of
100 bps change in yield
Asset Type
Retail asset
valuation
£m
Increase 10%
£m
Decrease 10%
£m
Increase 1.0%
£m
Decrease 1.0%
£m
Retail parks
132.8
10.2
(10.1)
(14.6)
19.5
Shopping Centres – Core
234.5
17.7
(16.2)
(20.7)
26.2
Shopping Centres – Regeneration
128.9
12.6
(12.3)
(15.9)
21.0
Shopping Centres – Work Out
34.4
4.3
(4.3)
(4.4)
5.4
High street and other
3.2
0.5
(0.5)
(0.4)
0.5
533.8
45.3
(43.4)
(56.0)
72.6
2023: Sensitivity impact on valuations of a 10% change in estimated rental value and absolute yield
of 100 bps.
Impact on valuations of a
10% change in ERV
Impact on valuations of
100 bps change in yield
Asset Type
Retail asset
valuation
£m
Increase 10%
£m
Decrease 10%
£m
Increase 1.0%
£m
Decrease 1.0%
£m
Retail parks
128.6
9.7
(9.6)
(14.2)
18.9
Shopping Centres – Core
214.8
18.2
(16.7)
(21.7)
27.6
Shopping Centres – Regeneration
140.1
13.5
(13.0)
(18.9)
26.0
Shopping Centres – Work Out
63.3
6.5
(5.8)
(5.8)
7.4
High street and other
4.7
0.6
(0.6)
(0.6)
0.7
551.5
48.5
(45.7)
(61.2)
80.6
Reconciliation to net valuation movement in consolidated statement of comprehensive income
Net valuation movement in investment properties
2024
£m
2023
£m
Net valuation movement in investment properties
(13.7)
(38.1)
Net valuation movement in right of use asset
(0.2)
(0.1)
Net valuation movement in consolidated statement of comprehensive income
(13.9)
(38.2)
Reconciliation to properties at valuation in the portfolio
Note
2024
£m
2023
£m
Investment property
14
533.8
551.5
Properties held in joint ventures
15
–
32.2
Properties held in associates
16
10.0
9.9
Properties at valuation
543.8
593.6
15. Investments in joint ventures
As at 31 March 2024 the Group has one joint venture
2024
£m
2023
£m
Opening balance
23.8
24.0
Disposals
(23.3)
–
Group’s share of profit after taxation excluding valuation movement
0.5
2.4
Net valuation movement
–
0.6
Dividends
(0.9)
(3.2)
Investment in joint venture
0.1
23.8
Name
Country of
incorporation
2024
% Holding
2023
% Holding
NewRiver Retail Investments LP (NRI LP)
Guernsey
50
50
NewRiver Retail (Napier) Limited (Napier)
UK
–
50
171
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
The Group is the appointed asset manager on behalf of these joint ventures and receives asset management fees, development
management fees and performance-related bonuses.
NewRiver Retail Investments LP has a 31 December year end. The aggregate amounts recognised in the consolidated balance sheet and
consolidated statement of comprehensive income at 31 March are as follows:
2024
2023
Consolidated balance sheet
Total
£m
Group’s share
£m
Total
£m
Group’s share
£m
Non-current assets
–
–
64.4
32.2
Current assets
0.3
0.1
5.5
2.8
Current liabilities
–
–
(1.4)
(0.7)
Liabilities due in more than one year
–
–
(26.9)
(13.5)
Net assets
0.3
0.1
41.6
20.8
Loan to joint venture
–
–
–
3.0
Net assets adjusted for loan to joint venture
0.3
0.1
41.6
23.8
The table above provides summarised financial information for the joint ventures. The information disclosed reflects the amounts presented
in the financial statements of the joint ventures. To arrive at the Group’s share of these amounts under equity accounting, certain minor
adjustments are required to be made.
2024
2023
Consolidated statement of comprehensive income
Total
£m
Group’s share
£m
Total
£m
Group’s share
£m
Revenue
1.4
0.7
5.9
3.0
Property operating expenses
–
–
(0.4)
(0.2)
Net property income
1.4
0.7
5.5
2.8
Administration expenses
(0.1)
(0.1)
(0.2)
(0.1)
Net finance costs
(0.1)
(0.1)
(0.6)
(0.3)
Group’s share of joint ventures’ profit before valuation movements
1.2
0.5
4.7
2.4
Net valuation movement
–
–
1.2
0.6
Profit on disposal of investment property
–
–
0.1
–
Profit after taxation
1.2
0.5
6.0
3.0
Add back net valuation movement
–
–
(1.2)
(0.6)
Group’s share of joint ventures’ profit before valuation movements
1.2
0.5
4.8
2.4
The Group’s share of contingent liabilities in the joint ventures is £nil (2023: £nil).
16. Investments in associates
The Group has one direct investment in an associate entity in which it has a 10% stake, Sealand S.à.r.l, which owns 100% of NewRiver Retail
(Hamilton) Limited and NewRiver (Sprucefield) Limited at 31 March 2024.
2024
£m
2023
£m
Opening balance
5.5
7.9
Return of investment in associates*
–
(2.3)
Dividends
(0.2)
(0.4)
Group’s share of profit after taxation excluding valuation movement
0.3
0.1
Net valuation movement
–
0.2
Investment in associates
5.6
5.5
*
During the year, the Group received £nil (2023: £2.3 million) back from associates in the form of shareholder loan repayments and repayment of initial capital invested.
Name
Country of
incorporation
2024 % Holding
2023 % Holding
NewRiver Retail (Hamilton) Limited (Hamilton)
UK
10
10
NewRiver (Sprucefield) Limited (Sprucefield)
UK
10
10
172
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
The Group is the appointed asset manager on behalf of Sealand S.à.r.l and receives asset management fees, development management
fees and performance-related bonuses.
The aggregate amounts recognised in the consolidated balance sheet and consolidated statement of comprehensive income are as follows:
31 March 2024
31 March 2023
Consolidated balance sheet
Total
£m
Group’s share
£m
Total
£m
Group’s share
£m
Non-current assets
100.0
10.0
99.3
9.9
Current assets
6.6
0.7
8.2
0.8
Current liabilities
(36.1)
(3.6)
(16.1)
(1.6)
Liabilities due in more than one year
(47.4)
(4.7)
(67.8)
(6.8)
Net assets
23.1
2.4
23.6
2.3
Loans to associates
–
3.2
–
3.2
Net assets adjusted for loans to associates
23.1
5.6
23.6
5.5
Consolidated statement of comprehensive income
2024
Total
£m
2024
Group’s share
£m
2023
Total
£m
2023
Group’s share
£m
Revenue
8.4
0.8
9.9
1.0
Property operating expenses
(0.4)
–
(2.4)
(0.2)
Net property income
8.0
0.8
7.5
0.8
Administration expenses
(0.1)
–
(0.1)
–
Net finance costs
(4.9)
(0.5)
(3.5)
(0.4)
3.0
0.3
3.9
0.4
Net valuation movement
(0.4)
–
1.7
0.2
Profit on disposal of investment property
–
–
0.6
–
Taxation
(0.4)
–
(3.4)
(0.3)
Profit after taxation
2.2
0.3
2.8
0.3
Add back net valuation movement
0.4
–
(1.7)
(0.2)
Group’s share of associates’ profit before valuation movements
2.6
0.3
1.1
0.1
17. Trade and other receivables
2024
£m
2023
£m
Trade receivables
1.4
2.6
Restricted monetary assets
4.6
4.8
Service charge receivables*
0.7
1.2
Other receivables
1.0
3.8
Prepayments
1.2
0.7
Accrued income
2.5
1.9
11.4
15.0
*
Included in service charge receivables is £nil of Value Added Taxation (2023: £nil), £1.5 million of service charge debtors (2023: £1.2 million) and £0.8 million of bad debt provision.
Trade receivables are shown net of a loss allowance of £1.9 million (2023: £3.0 million). Other receivables are shown net of a loss allowance of
£0.1 million (2023: £0.3 million). The provision for doubtful debts is calculated as an expected credit loss on trade receivables in accordance
with IFRS 9. The charge to the consolidated statement of comprehensive income in relation to doubtful debts made against tenant debtors
was £0.1 million (2023: £0.2 million release). The Group has calculated the expected credit loss by applying a forward-looking outlook to
historical default rates.
173
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
The Group monitors rent collection and the ability of tenants to pay rent receivables in order to anticipate and minimise the impact of default
by tenants. All outstanding rent receivables are regularly monitored. In order to measure the expected credit losses, trade receivables
from tenants have been grouped on a basis of shared credit risk characteristics and an assumption around the tenants ability to pay their
receivable, based on conversations held and our knowledge of their credit history. The expected credit loss rates are based on historical
payment profiles of tenant debtors and corresponding historical credit losses.
2024
£m
2023
£m
Opening loss allowance at 1 April
3.0
5.2
Increase/(decrease) in loss allowance recognised in the consolidated statement of comprehensive income
during the year in relation to tenant debtors
0.1
(0.2)
Loss allowance utilisation
(1.2)
(2.0)
Closing loss allowance at 31 March
1.9
3.0
The restricted monetary assets relates to cash balances which the Group cannot readily access. They do not meet the definition of cash and
cash equivalents and consequently are presented separately from cash in the consolidated balance sheet.
18. Cash and cash equivalents
As at 31 March 2024 and 31 March 2023 cash and cash equivalents comprised of cash held in bank accounts and treasury deposits. There
were no restrictions on cash in either the current or prior year.
19. Trade and other payables
2024
£m
2023
£m
Trade payables
1.3
2.6
Service charge liabilities*
7.2
9.8
Other payables
3.1
1.8
Accruals
9.5
9.0
Value Added Taxation
0.3
0.3
Rent received in advance
4.9
6.0
26.3
29.5
*
Service charge liabilities include accruals of £0.6 million (2023: £1.9 million), service charge creditors and other creditors of £3.8 million (2023: £4.8 million), Value added taxation of
£0.9 million (2023: £1.0 million) and deferred income of £1.9 million (2023: £2.1 million).
20. Borrowings
Maturity of drawn borrowings:
2024
£m
2023
£m
Between three and four years
300.0
–
Between four and five years
–
300.0
Less unamortised fees/discount
(3.4)
(3.3)
296.6
296.7
The fair value of the Group’s corporate bond has been estimated on the basis of quoted market prices, representing Level 1 fair value
measurement as defined by IFRS 13 Fair Value Measurement. At 31 March 2024 the fair value was £275.5 million (31 March 2023: £256.8 million).
Unsecured borrowings:
Maturity date
Facility
£m
Facility drawn
£m
Unamortised
facility fees/
discount
£m
£m
Revolving credit facility
November 2026
100.0
–
(1.2)
(1.2)
Corporate bond
March 2028
300.0
300.0
(2.2)
297.8
400.0
300.0
(3.4)
296.6
In the year the Group drew down £nil (31 March 2023: £nil) of the revolving credit facility.
174
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
21. Lease commitment arrangements
The Group earns rental income by leasing its investment properties to tenants under non-cancellable lease commitments.
The Group holds two types of leases.
• Head leases: A number of the investment properties owned by the Group are situated on land held through leasehold arrangements, as
opposed to the Group owning the freehold.
• Office leases: Office space occupied by the Group’s head office.
The lease liability and associated ROU asset recognised in the consolidated balance sheet are set out below.
2024
£m
2023
£m
Right of use asset (Investment property)
74.9
75.8
Right of use asset (Property, plant and equipment)
0.7
0.9
Current lease liability
0.4
0.4
Non-current lease liability
75.2
76.3
The expense relating to low value assets which have not been recognised under IFRS 16 was £nil (March 2023: £nil) and the expense relating
to variable lease payments not included in the measurement of lease liabilities was £nil (March 2023: £nil). The total cash outflow in relation
to lease commitments for the year was £2.4 million (March 2023: £3.0 million), £0.4 million (2023: £0.3 million) relates to the repayment of
principle lease liabilities and £2.0 million (2023: £2.7 million) relates to the repayment of interest on lease liabilities. Depreciation recognised
on ROU assets during the year was £0.2 million (2023: £0.2 million).
Lease liability maturity table
2024
£m
2023
£m
Within one year
0.4
0.4
Between one and two years
0.8
0.8
In the second to fifth year inclusive
0.6
0.5
After five years
73.8
75.0
75.6
76.7
Lease commitments payable by the Group are as follows:
2024
£m
2023
£m
Within one year
2.9
3.0
One to two years
2.9
3.0
Two to five years
8.8
8.9
After five years
247.8
253.6
262.4
268.5
Effect of discounting
(186.8)
(191.8)
Lease liability
75.6
76.7
At the balance sheet date the Group had contracted with tenants for the following future minimum lease payments on its investment properties:
2024
£m
2023
£m
Within one year
47.3
45.6
Between one and two years
41.2
39.5
In the second to fifth year inclusive
88.3
79.7
After five years
147.3
123.3
324.1
288.1
The Group’s weighted average lease length of lease commitments at 31 March 2024 was 5.2 years (March 2023: 5.2 years).
Operating lease obligations exist over the Group’s offices, head leases on the Group’s retail portfolio and ground rent leases. Investment
properties are leased to tenants under operating leases with rentals payable monthly and quarterly. Where considered necessary to reduce
credit risk, the Group may obtain bank guarantees for the term of the lease.
175
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
22. Share capital and reserves
Share capital
Ordinary shares
Number of
shares issued
m’s
Price per share
pence
Total
No of shares
(m)
Held by EBT
No of shares
(m)
Shares in issue
No of shares
(m)
1 April 2022
310.3
2.1
308.2
Scrip dividends issued
1.0
0.86
311.3
2.1
309.2
Shares issued under employee share schemes
0.6
–
311.3
1.5
309.8
Scrip dividends issued
0.6
0.78
311.9
1.5
310.4
Shares issued under employee share schemes
0.1
–
311.9
1.4
310.5
31 March 2023
311.9
1.4
310.5
Scrip dividends issued
1.0
0.89
312.9
1.4
311.5
Shares issued under employee share schemes
1.2
–
312.9
0.2
312.7
Purchase of own shares
(3.4)
–
312.9
3.6
309.3
Shares issued under employee share schemes
0.3
–
312.9
3.3
309.6
Scrip dividends issued
0.8
0.82
313.7
3.3
310.4
31 March 2024
313.7
3.3
310.4
All shares issued and authorised are fully paid up.
Merger reserve
The merger reserve arose as a result of a group reorganisation in 2016 and represents the nominal amount of share capital that was issued
to shareholders of NewRiver Retail Limited.
Share premium
Share premium represents amounts subscribed for a share in excess of nominal value less directly attributable issue costs.
Retained earnings
Retained earnings consist of the accumulated net comprehensive profit of the Group, less dividends paid from distributable reserves, and
transfers from equity issues where those equity issues generated distributable reserves.
Scrip dividend shares
Shares issued in respect of elections to participate in the Scrip Dividend scheme in respect of dividends declared in the year, the value of
these was £1.6 million (2023: £1.3 million). The Scrip Dividend Scheme was re-approved on 26 July 2023. The scheme provides shareholders
of NewRiver Ordinary shares with the opportunity, at the shareholders election and where offered by the Company, to elect to receive
dividends as New Ordinary shares in the Company instead of their cash dividend, with no dealing charges or stamp duty incurred.
Shares held in Employee Benefit Trust (EBT)
As part of the group reorganisation in 2016, 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 5% 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.
Over the course of a few days in November and December 2023, the Employee Benefit Trust purchased £3.0 million of shares to satisfy
employee share awards, which amounted to 3,411,259 shares.
There are currently 3,317,218 ordinary shares held by EBT (2023: 1,466,712).
176
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
23. Share-based payments
The Group has two share schemes for employees:
• Performance Share Scheme
• Deferred bonus scheme
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 are provided in the Remuneration Report. The charge for the year recognised in the consolidated statement
of comprehensive income was £0.7 million (March 2023: £0.7 million).
Financial year issued
Average
exercise price
Outstanding
at start of year
Granted
Number
Exercised
Lapsed
Outstanding
at end of year
Number
exercisable
Average
remaining life
(years)
2021
–
2,713,864
130,292
(1,064,551)
(1,422,078)
357,527
–
–
2022
–
3,082,562
255,400
–
(108,674)
3,229,288
–
0.4
2023
–
2,755,100
228,271
–
(55,819)
2,927,552
–
1.3
2024
–
–
2,865,365
–
(50,815)
2,814,550
–
2.2
8,551,526
3,479,328
(1,064,551)
(1,637,386)
9,328,917
–
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 consolidated statement of comprehensive income for this scheme was £0.5 million (March
2023: £0.4 million).
Financial year issued
Average
exercise price
Outstanding
at start of year
Granted
Exercised
Cancelled
Outstanding
at end of year
Number
exercisable
Average
remaining life
(years)
2018
–
44,968
–
–
–
44,968
–
–
2019
–
116,751
–
(62,194)
–
54,557
–
–
2020
–
82,245
–
(72,288)
–
9,957
–
–
2021
–
15,891
–
(10,594)
–
5,297
–
–
2022
–
338,118
13,010
(351,128)
–
–
–
–
2023
–
640,463
53,050
–
(11,094)
682,419
–
0.3
2024
–
–
699,996
–
–
699,996
–
1.2
1,238,436
766,056
(496,204)
(11,094)
1,497,194
–
Fair value
The fair value of the share options has been calculated based on a Monte Carlo Pricing Model using the following inputs:
2024
2023
Share price
0.89
0.87
Exercise price
Nil
Nil
Expected volatility
34%
43%
Risk free rate
4.980%
1.675%
Expected dividends*
0%
0%
*
based on quoted property sector average.
177
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
24. 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
2024
£m
2023
£m
Financial assets
Financial assets at amortised cost
Trade and other receivables
7.7
13.4
Cash and cash equivalents
132.8
108.6
Total financial assets and maximum exposure to credit risk
140.5
122.0
Financial liabilities
At amortised cost
Borrowings
(296.6)
(296.7)
Lease liabilities
(75.6)
(76.7)
Payables and accruals
(18.1)
(20.0)
(390.3)
(393.4)
(249.8)
(271.4)
The fair value of the financial assets and liabilities at amortised cost are considered to be the same as their carrying value, with the exception
of certain fixed rate borrowings, see note 20 for further details. None of the financial instruments above are held at fair value.
Market risk
Currency risk
The Group is not subject to any foreign currency risk as nearly all transactions are in Pounds Sterling.
Interest rate risk
At 31 March 2024 the Group has no interest rate risk as it has no drawn debt that is subject to variable interest rates and no open derivatives
in controlled entities.
There would be no impact on finance costs to the Group, in the year or in the prior year, if interest rates increase or decrease as the Group
has no drawn variable rate debt.
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 Group may suffer a void period where no
rents are received. The quality of the tenant is assessed based on an extensive tenant covenant review scorecard prior to acquisition of the
property. The assessment of the tenant credit worthiness is also monitored on an ongoing basis. Credit risk is assisted by the vast majority of
occupational leases requiring that tenants pay rentals in advance. The Group monitors rent collection in order to anticipate and minimise the
impact of default by tenants. All outstanding rent receivables are regularly monitored. In order to measure the expected credit losses, trade
receivables from tenants have been grouped by shared credit risk characteristics and an assumption around the tenants ability to pay their
receivable, based on conversations held and our knowledge of their credit history. The expected loss rates are based on historical payment
profiles of tenant debtors and corresponding historical credit losses. These historical loss rates are then adjusted to reflect the likelihood that
tenants will pay.
178
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Ageing of past due gross trade receivables and the carrying amount net of loss allowances is set out below:
2024
Gross
amount
£m
2024
Loss
allowance
£m
2024
% applied
2024
Carrying
amount
£m
2023
Gross
amount
£m
2023
Loss
allowance
£m
2023
% applied
2023
Carrying
amount
£m
0-30 days
1.2
0.4
36%
0.8
2.4
0.6
25%
1.8
30-60 days
0.3
0.1
33%
0.2
0.1
0.1
100%
–
60-90 days
0.1
0.1
100%
–
0.3
0.1
33%
0.2
90-120 days
0.3
0.1
33%
0.2
0.3
0.1
33%
0.2
Over 120 days
1.4
1.2
86%
0.2
2.5
2.1
84%
0.4
3.3
1.9
1.4
5.6
3.0
2.6
The Group’s total expected credit loss in relation to trade receivables, other receivables and accrued income is £2.3 million (2023: £3.5 million).
The Group recognises an expected credit loss allowance on trade receivables of £1.9 million (2023: £3.0 million) as noted in the above table.
The Group categorises trade debtors in varying degrees of risk, as detailed below:
2024
£m
2023
£m
Risk level
Very high
1.4
2.5
High
0.3
0.3
Medium
0.4
0.4
Low
1.2
2.4
Gross carrying amount before loss allowance
3.3
5.6
Loss allowance
(1.9)
(3.0)
Carrying amount
1.4
2.6
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.
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 regular 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:
2024 £m
Less than
one year
One to
two years
Two to
five years
More than
five years
Total
Borrowings
–
–
(300.0)
–
(300.0)
Interest on borrowings
(10.5)
(10.5)
(20.2)
–
(41.2)
Lease liabilities
(2.9)
(2.9)
(8.8)
(247.8)
(262.4)
Payables and accruals
(18.1)
–
–
–
(18.1)
(31.5)
(13.4)
(329.0)
(247.8)
(621.7)
2023 £m
Borrowings
–
–
(300.0)
–
(300.0)
Interest on borrowings
(10.5)
(10.5)
(30.7)
–
(51.7)
Lease liabilities
(3.0)
(3.0)
(8.9)
(253.6)
(268.5)
Payables and accruals
(20.0)
–
–
–
(20.0)
(33.5)
(13.5)
(339.6)
(253.6)
(640.2)
179
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
Reconciliation of movement in the Group’s share of net debt in the year
2024
£m
2023
£m
Group’s share of net debt at beginning of year
201.3
221.5
Cash flow
Net increase in cash and cash equivalents
(24.2)
(25.8)
Change in bank loan fees to be amortised
(0.1)
0.9
Group’s share of joint ventures’ and associates’ cash flow
Net decrease in cash and cash equivalents
2.2
2.7
Bank loans repaid
(11.9)
–
New bank loans
–
1.9
Change in bank loan fees to be amortised
–
0.1
Group’s share of net debt
167.3
201.3
Being:
Group borrowings
296.6
296.7
Group’s share of joint ventures’ and associates’ borrowings
3.9
15.9
Group cash
(132.8)
(108.6)
Group’s share of joint venture and associate cash
(0.4)
(2.7)
Group’s share of net debt
167.3
201.3
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 11, 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. 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 on a proportionately
consolidated basis.
Between 31 March 2023 and 31 March 2024, the Group’s proportionally consolidated LTV decreased by 3.1% from 33.9% to 30.8% and the
gearing ratio from 49.7% to 45.4% mainly as a result of retail disposals. The Group continually monitors LTV and will continue to monitor LTV
closely, factoring in disposal activity and possible further valuation declines as disclosed in Note 1. The Group has remained compliant with all
of its banking covenants during the year as discussed in Note 1.
Net debt to equity ratio
2024
£m
2023
£m
Borrowings
296.6
296.7
Cash and cash equivalents
(132.8)
(108.6)
Net debt
163.8
188.1
Equity attributable to equity holders of the parent
361.1
378.6
Net debt to equity ratio (‘Balance sheet gearing’)
45.4%
49.7%
Share of joint ventures’ and associates’ borrowings
3.9
15.9
Share of joint ventures’ and associates’ cash and cash equivalents
(0.4)
(2.7)
Group’s share of net debt
167.3
201.3
Carrying value of investment property
533.8
551.5
Share of joint ventures’ and associates carrying value of investment properties
10.0
42.1
Group’s share of carrying value of investment properties
543.8
593.6
Net debt to property value ratio (‘Loan to value’)
30.8%
33.9%
180
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Reconciliation of financial liabilities
Reconciliation of financial liabilities
Lease liabilities
£m
Borrowings
£m
Total
£m
As at 1 April 2023
76.7
296.7
373.4
Decrease through financing cash flows
Repayment of principal portion of lease liability
(0.4)
–
(0.4)
Disposal
(0.7)
–
(0.7)
Loan amortisation
–
(0.1)
(0.1)
As at 31 March 2024
75.6
296.6
372.2
Reconciliation of financial liabilities
Lease liabilities
£m
Borrowings
£m
Total
£m
As at 1 April 2022
75.7
295.8
371.5
(Decrease)/Increase through financing cash flows
Head office lease
1.1
–
1.1
Repayment of principal portion of lease liability
(0.4)
–
(0.4)
Lease modification
0.3
–
0.3
Loan amortisation
–
0.9
0.9
As at 31 March 2023
76.7
296.7
373.4
25. Contingencies and commitments
The Group has no material contingent liabilities (2023: None). The Group was contractually committed to £0.7 million of capital expenditure
to construct or develop investment property as at 31 March 2024 (31 March 2023: £1.8 million).
Under the terms of the sale agreement to dispose of Hawthorn dated 20 August 2021, the Group gave certain warranties, including tax,
relating to Hawthorn. A breach of warranty will only give rise to a successful claim in damages if the buyer can show that the warranty was
breached and that the effect of the breach is to reduce the value of Hawthorn at the date of disposal. Claims must be received, in the case of
a Warranty Claim, within a year of Completion and, in the case of a Tax Claim, within 6 years of Completion. No such claims have been received.
26. Related party transactions
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.
During the year the Company paid £0.8 million (2023: £1.1 million) in professional legal fees to CMS Cameron McKenna Nabarro Olswang LLP
for property services at commercial market rates. Allan Lockhart, CEO of NewRiver, has a personal relationship with one of the Partners at
CMS who along with other Partners provides these legal services.
The Group has loans with a joint venture of £nil (2023: £3.0 million) and loans with associates of £3.2 million (March 2023: £3.2 million)
During the year, the Group received £nil (2023: £2.3 million) back from associates in the form of shareholder loan repayments and repayment
of initial capital invested.
Management fees are charged to joint ventures and associates for asset management, investment advisory, project management and
accounting services.
Total fees charged were:
2024
£m
2023
£m
NewRiver Retail (Napier) Limited
–
0.2
NewRiver Retail (Hamilton) Limited
0.2
0.2
NewRiver (Sprucefield) Limited
0.2
0.1
As at 31 March 2024, an amount of £0.3 million (2023: £0.3 million) was due to the Group relating to management fees.
During the year, the Group recognised £0.2 million of interest from joint ventures and associates (2023: £0.3 million) and as at 31 March 2024
the amount owing to the Group was £0.2 million (2023: £0.2 million).
181
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the consolidated financial statements continued
Key management personnel
The remuneration of key management personnel (comprising of the Executive Directors, Non-Executive Directors and Executive Committee) of
the Group is set out below in aggregate for each of the categories specified in IAS 24 ‘Related Party Disclosures.’ Further information about
the remuneration of the individual Directors is provided in the audited part of the Remuneration Committee report on pages 129 to 145.
2024
£m
2023
£m
Short-term employee benefits
2.9
3.1
Other benefits
0.1
0.1
3.0
3.2
All transfer of resources, services or obligations between the Company and these parties have been disclosed, regardless of whether a price
is charged. We are unaware of any other related party transactions between related parties.
Related party relationships and transactions have been accounted for and disclosed in accordance with the requirements of IFRSs or other
requirements, for example, the Companies Act 2006.
27. Post balance sheet events
There were no significant events occurring after the reporting period, but before the financial statements were authorised for issue.
182
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Notes
2024
£m
2023
£m
Non-current assets
Investment in subsidiaries
B
321.9
323.9
Amounts owed from subsidiary undertakings
D
211.9
213.7
Total non-current assets
533.8
537.6
Current assets
Amounts owed from subsidiary undertakings
D
171.0
196.5
Other receivables
1.4
0.7
Cash and cash equivalents
115.9
84.7
Total current assets
288.3
281.9
Total assets
822.1
819.5
Equity and liabilities
Current liabilities
Trade creditors
0.1
–
Accruals
2.1
2.3
Amounts owed to subsidiary undertakings
159.1
154.9
Total current liabilities
E
161.3
157.2
Non-current liabilities
Borrowings
F
296.6
296.7
Total non-current liabilities
296.6
296.7
Net assets
364.2
365.6
Equity
Share capital
3.1
3.1
Share premium
4.0
2.4
Merger reserve
35.6
27.6
Purchase of own shares
(3.0)
–
Retained earnings
324.5
332.5
Total equity
364.2
365.6
The notes on pages 185 to 188 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 year after taxation was £20.3 million
(31 March 2023: loss of £10.4 million).
The financial statements were approved by the Board of Directors on 20 June 2024 and were signed on its behalf by:
Allan Lockhart
Chief Executive Officer
Will Hobman
Chief Financial Officer
Registered number: 10221027
Company Balance Sheet
As at 31 March 2024
183
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes
Share capital
£m
Share premium
£m
Merger reserve
£m
Purchase of
own shares
£m
Retained
earnings
£m
Total
£m
As at 1 April 2022
3.1
1.1
33.6
–
357.8
395.6
Loss after taxation
–
–
–
–
(10.4)
(10.4)
Transfer to merger reserve
–
–
(6.0)
–
6.0
–
Equity issue
–
1.3
–
–
–
1.3
Dividends paid
–
–
–
–
(20.9)
(20.9)
As at 31 March 2023
3.1
2.4
27.6
–
332.5
365.6
Profit after taxation
–
–
–
–
20.3
20.3
Transfer to merger reserve
–
–
8.0
–
(8.0)
–
Equity issue
–
1.6
–
–
–
1.6
Purchase of own shares
–
–
–
(3.0)
–
(3.0)
Dividends paid
–
–
–
–
(20.3)
(20.3)
As at 31 March 2024
3.1
4.0
35.6
(3.0)
324.5
364.2
The notes on pages 185 to 188 form an integral part of these financial statements. There was no other income in the year therefore the profit
after taxation is the Company’s total comprehensive profit for the year.
Company Statement of Changes in Equity
For the year ended 31 March 2024
184
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
A. Accounting policies
Basis of accounting
The Company’s separate financial statements for the year ended 31 March 2024 are prepared in accordance with Financial Reporting
Standard 101 (FRS 101) “Reduced Disclosure Framework” as issued by the Financial Reporting Council and within the requirements of the
Companies Act 2006. The financial statements are presented in pounds Sterling. These financial statements have been prepared under the
historical cost convention.
For the Company’s going concern assessment, refer to note 1 of the consolidated financial statements.
Changes to accounting policies
The Company has adopted the new accounting standards as set out in the accounting policies section of the Group financial statements.
Adopting these new standards and amendments has not had a material impact on the Company in the current or prior years. Refer to note 1.
Disclosure exemptions
The Company has taken advantage of all disclosure exemptions allowed by FRS 101. These financial statements do not include:
• The requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134 to 136 of IAS 1.
• the requirements of IAS 7 Statement of Cash Flows;
• the requirements of IFRS 7 Financial Instruments: disclosures;
• the requirements in IAS 24 Related Party Disclosures to disclose related party transactions between two or more 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.
Investment in subsidiaries
Investments in subsidiary undertakings are stated at cost less provision for cumulative impairments. Where an impairment has been
recognised in previous periods, and the conditions that caused the impairment are no longer present, the impairment charge previously
recognised will be reversed, up to the cost of the original investment value.
Financial instruments
Financial assets
The Company classifies its financial assets as fair value through profit or loss or amortised cost, depending on the purpose for which the
asset was acquired and based on the business model test. Financial assets carried amortised cost are initially recognised at fair value plus
transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost, less provision for
impairment. Impairment provisions for receivables are recognised based on IFRS 9 in the determination of the expected credit losses. If it is
determined that a receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. If in a
subsequent year 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 assets at amortised cost consist of loans and receivables. The Company determines
the classification of its financial assets at initial recognition. The Company’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 Group transfers
substantially all risks and rewards of ownership.
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 financial instruments classified as financial liabilities at fair value through profit or loss include interest rate swap and cap arrangements.
Recognition of the derivative financial instruments takes place when the contracts are entered into. They are recognised at fair value and
transaction costs are included directly in finance costs.
The fair values of derivative 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.
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.
Notes to the Company Financial Statements
185
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the company financial statements continued
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. Dividend information is provided in note 13
to the consolidated financial statements.
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 £524 million and the nominal value of the shares issued, adjusted for subsequent impairments and impairment reversals in
NewRiver Retail Limited following the creation of the merger reserve in 2016.
Critical estimates
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 only
critical estimates, assumptions and judgements relate to the determination of the carrying value of the investment in the Company’s
subsidiary undertakings. The nature, facts and circumstance of the investment are taken into account on assessing whether there are any
indications of impairment.
Impairment of investment in subsidiaries
The carrying value of the Company’s investment in subsidiaries are disclosed in note B. The Company tests its investment in subsidiary
balances annually for impairment. An impairment is recognised where the recoverable amount of the investment is below its carrying amount.
The value in use of investments are mainly driven by changes in the value of investment properties held on the balance sheets of those
investments and any distributions made to the Company. If valuations of investment properties declined by 10%, the impairment in investment
in subsidiaries would be £52.9 million (2023: £53.7 million).
B. Investment in subsidiaries
All subsidiaries are held indirectly except the companies marked* in the below listing.
Name
Country of
incorporation
Activity
Proportion of
ownership interest
Class of share
C-store REIT Limited
UK
Dormant company
100%
Ordinary Shares
Convenience Store REIT Limited
UK
Dormant company
100%
Ordinary Shares
NewRiver Capital Limited*
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Burgess Hill) Limited
UK
Dormant company
100%
Ordinary Shares
NewRiver (Darnall) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Finance Company Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver REIT (UK) Limited
UK
Asset management
100%
Ordinary Shares
NewRiver Leisure Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Bexleyheath) Holdings Limited
UK
Group holding company
100%
Ordinary Shares
NewRiver Retail (Bexleyheath) Limited
Jersey
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Broadway Square) UK Limited
UK
Dormant
100%
Ordinary Shares
NewRiver Retail (Bexleyheath) UK Limited
UK
Dormant
100%
Ordinary Shares
NewRiver Retail (Boscombe No. 1) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Broadway Square) Limited
Jersey
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Cardiff) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Carmarthen) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Darlington) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Grays S.a.r.l*
Luxembourg
Real estate investments
100%
Ordinary Shares
NewRiver (Grays) UK Limited*
UK
Dormant
100%
Ordinary Shares
NewRiver Retail (GP3) Limited
UK
General partner
100%
Ordinary Shares
NewRiver Retail (Leylands Road) Limited
UK
Dormant
100%
Ordinary Shares
NewRiver Retail (Market Deeping No. 1) Limited
Guernsey
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Morecambe) Limited
UK
Real estate investments
100%
Ordinary Shares
186
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Name
Country of
incorporation
Activity
Proportion of
ownership interest
Class of share
NewRiver Retail (Nominee No.3) Limited
UK
Dormant company
100%
Ordinary Shares
NewRiver Retail (Paisley) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Penge) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Portfolio No. 1) Limited
Guernsey
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Portfolio No. 2) Limited
Guernsey
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Portfolio No. 3) Limited
UK
Holding company
100%
Ordinary Shares
NewRiver Retail (Portfolio No. 3) Limited Partnership
UK
Real estate investments
100%
Partnership
NewRiver Retail (Portfolio No. 4) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Portfolio No. 5) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Portfolio No. 6) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Portfolio No. 8) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Ramsay Development) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Ramsay Investment) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Skegness) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Wakefield) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Warminster) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Wisbech) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Witham) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Wrexham No.1) Limited
Guernsey
Real estate investments
100%
Ordinary Shares
NewRiver Retail (Portfolio No. 10) Limited
UK
Real estate investments
100%
Ordinary Shares
NewRiver Retail Holdings Limited
Guernsey
Group holding company
100%
Ordinary Shares
NewRiver Retail Holdings No. 1 Limited
Guernsey
Group holding company
100%
Ordinary Shares
NewRiver Retail Holdings No. 2 Limited
Guernsey
Group holding company
100%
Ordinary Shares
NewRiver Retail Holdings No. 3 Limited
Guernsey
Group holding company
100%
Ordinary Shares
NewRiver Retail Holdings No. 5 Limited
Guernsey
Group holding company
100%
Ordinary Shares
NewRiver Retail Holdings No. 6 Limited
Guernsey
Group holding company
100%
Ordinary Shares
NewRiver Retail Limited*
Guernsey
Group holding company
100%
Ordinary Shares
NewRiver Retail Limited
UK
Real estate investments
100%
Ordinary units
NewRiver Retail Property Unit Trust
Jersey
Real estate investments
100%
Ordinary units
NewRiver Retail Property Unit Trust No. 2
Jersey
Real estate investments
100%
Ordinary units
NewRiver Retail Property Unit Trust No. 3
Jersey
Real estate investments
100%
Ordinary units
NewRiver Retail Property Unit Trust No. 5
Jersey
Real estate investments
100%
Ordinary units
NewRiver Retail Property Unit Trust No. 6
Jersey
Real estate investments
100%
Ordinary units
NewRiver Retail Property Unit Trust No. 7
Jersey
Real estate investments
100%
Ordinary units
Shopping Centre REIT Limited
UK
Dormant company
100%
Ordinary Shares
All UK incorporated companies have their registered offices at 89 Whitfield street, London, W1T 4DE. All Jersey incorporated companies have
their registered offices at 13 Castle Street, St Helier, Jersey, Channel Islands, JE4 5UT. All Guernsey incorporated companies have their
registered offices at Floor 2 Trafalgar Court, Les Banques, St Peter Port, GY1 4LY. All Luxembourg incorporated companies have their
registered offices at 5, Heienhaff L-1736 Senningerberg.
The Company’s investments in joint ventures and associates are detailed in notes 15/16. The registered offices of the companies are:
Guernsey – NewRiver Retail (GP1) Ltd, Floor 2 Trafalgar Court, Les Banques, St Peter Port, GY1 4LY
UK – NewRiver Retail (Sprucefield) Limited, 89 Whitfield street, London, W1T 4DE
UK – NewRiver Retail (Hamilton) Limited, 89 Whitfield street, London, W1T 4DE
Reconciliation of the movement in investment in subsidiaries:
187
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
Notes to the company financial statements continued
Reconciliation of the movement in investment in subsidiaries:
2024
£m
2023
£m
Opening balance
323.9
329.9
Impairment in subsidiaries
(2.0)
(6.0)
Investment in subsidiaries
321.9
323.9
The Company has recognised a net impairment of £2.0 million which relates to an impairment of £10.0 million in relation to the disposal the
Group’s joint venture, NewRiver (Napier) Limited, offset by a reversal in the impairment of other investments of £8.0 million (2023: £6.0 million
impairment) to reflect the increase in the recoverable amount of the Company’s investment.
C. Auditors remuneration
The auditors’ remuneration in respect of the Company is disclosed in note 6 of the consolidated financial statements.
D. Amounts owed from subsidiary undertakings
2024
£m
2023
£m
Non-current - Amounts owed from subsidiary undertakings *
211.9
213.7
Current - Amounts owed from subsidiary undertakings
171.0
196.5
382.9
410.2
*
Includes an expected credit loss impairment provision of £0.3 million (2023: £0.6 million)
Non-current amounts owed by subsidiary undertakings have repayment dates beyond 12 months, are unsecured and bear interest that
reflects market rates.
Current amounts owed by subsidiaries undertakings are unsecured, interest free and repayable on demand.
E. Current liabilities
2024
£m
2023
£m
Trade creditors
0.1
–
Accruals
2.1
2.3
Amounts owed to subsidiary undertakings
159.1
154.9
161.3
157.2
Amounts owed to subsidiary undertakings are unsecured, interest free and repayable on demand.
F. Borrowings
All borrowings issued by the Group at 31 March 2024 were issued by the Company. See note 20 of the consolidated financial statements for
details.
188
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
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
Nearest IFRS measure
Explanation and reconciliation
Underlying Funds From Operations
(‘UFFO’) and UFFO per share
Profit/(Loss) for the year after taxation
Note 12 of the Financial Statements
EPRA Net Tangible Assets (‘NTA’)
and EPRA NTA per share
Net Assets
Note 12 of the Financial Statements
Dividend cover
N/A
‘Financial Policies’ section of the ‘Finance Review’
Admin cost ratio
N/A
Note 6 of the Financial Statements
Interest cover
N/A
Glossary
EPRA EPS
IFRS Basic EPS
Note 12 of the Financial Statements
EPRA NIY
N/A
‘EPRA performance measures’ section of this document
EPRA ‘topped-up’ NIY
N/A
‘EPRA performance measures’ section of this document
EPRA Vacancy Rate
N/A
‘EPRA performance measures’ section of this document
Total Accounting Return
N/A
Glossary
Weighted average cost of debt
N/A
‘Financial Policies’ section of the “Finance review”
Weighted average debt maturity
N/A
‘Financial Policies’ section of the “Finance review”
Loan to Value
N/A
Note 24 of the Financial Statements
Alternative Performance Measures (APMs) (Unaudited)
189
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
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
Below we disclose 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 the following tables
FY24
FY23
EPRA Earnings Per Share (EPS)
7.4p
7.9p
EPRA Cost Ratio (including direct vacancy costs)
36.9%
38.6%
EPRA Cost Ratio (excluding direct vacancy costs)
33.8%
34.3%
March 2024
March 2023
EPRA NRV per share
127p
134p
EPRA NTA per share
115p
121p
EPRA NDV per share
123p
135p
EPRA LTV
34.1%
37.0%
EPRA NIY
7.1%
7.6%
EPRA ‘topped-up’ NIY
7.5%
8.0%
EPRA Vacancy Rate
2.1%
3.4%
EPRA Earnings Per Share: 7.4p
Definition
Earnings from operational activities
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
FY24
(£m)
FY23
(£m)
Earnings/(loss) per IFRS income statement
3.0
(16.8)
Adjustments to calculate EPRA Earnings, exclude:
Changes in value of investment properties, development properties held for investment and other interests
13.9
38.2
Profits or losses on disposal of investment properties, development properties held for investment
and other interests
6.1
3.8
Changes in fair value of financial instruments and associated close-out costs
–
–
Acquisition costs on share deals and non-controlling joint venture interests
–
–
Deferred tax in respect of EPRA adjustments
–
–
Adjustments to above in respect of joint ventures (unless already included under proportional consolidation)
(0.1)
(0.8)
EPRA Earnings
22.9
24.4
Basic number of shares
311.4m
309.7m
EPRA Earnings per Share (EPS)
7.4p
7.9p
EPRA PERFORMANCE MEASURES (Unaudited)
190
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Reconciliation of EPRA Earnings to Underlying Funds From Operations (UFFO)
FY24
(£m)
FY23
(£m)
EPRA Earnings
22.9
24.4
Share-based payment charge
1.5
1.1
Depreciation on property
–
–
Forward-looking element of IFRS 9
–
(0.2)
Head office relocation costs
–
0.5
Underlying Funds From Operations (UFFO)
24.4
25.8
Basic number of shares
311.4m
309.7m
UFFO per share
7.8p
8.3p
EPRA NRV per share: 127p; EPRA NTA per share: 115p; EPRA NDV per share: 123p
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.
31 March 2024
EPRA NRV
(£m)
EPRA NTA
(£m)
EPRA NDV
(£m)
IFRS Equity attributable to shareholders
361.1
361.1
361.1
Fair value of financial instruments
(0.1)
(0.1)
–
Deferred tax in relation to fair value gains of Investment Property
0.8
0.8
–
Fair value of debt
–
–
24.5
Purchasers’ costs
36.8
–
–
EPRA NRV/NTA/NDV
398.6
361.8
385.6
Fully diluted number of shares
313.3m
313.3m
313.3m
EPRA NRV/NTA/NDV per share
127p
115p
123p
31 March 2023
EPRA NRV
(£m)
EPRA NTA
(£m)
EPRA NDV
(£m)
IFRS Equity attributable to shareholders
378.6
378.6
378.6
Fair value of financial instruments
(0.6)
(0.6)
–
Deferred tax in relation to fair value gains of Investment Property
0.9
0.9
–
Fair value of debt
–
–
43.2
Purchasers’ costs
40.2
–
–
EPRA NRV/NTA/NDV
419.1
378.9
421.8
Fully diluted number of shares
312.7m
312.7m
312.7m
EPRA NRV/NTA/NDV per share
134p
121p
135p
191
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
EPRA performance measures (unaudited) continued
EPRA LTV: 34.1%
Definition
EPRA LTV is the ratio of gross debt, net payables less cash and cash equivalents to the aggregate value of properties. LTV is expressed on a
proportionally condensed consolidated basis.
Purpose
EPRA LTV introduces a consistent and comparable metric for the real estate sector, with the aim to assess the gearing of the shareholder
equity within a real estate investment company.
31 March 2024
Group
(£m)
Share of Joint
Ventures
(£m)
Share of
Associates
(£m)
Total
(£m)
Borrowings from financial institutions
–
–
(4.0)
(4.0)
Corporate bond
(300.0)
–
–
(300.0)
Net (payables)/receivables
(14.9)
0.1
(0.1)
(14.9)
Cash and cash equivalents
132.8
–
0.4
133.2
Net Debt (A)
(182.1)
0.1
(3.7)
(185.7)
Investment property at fair value
533.8
–
10.0
543.8
Total Property Value (B)
533.8
–
10.0
543.8
LTV (A/B)
34.1%
34.1%
31 March 2023
Group
(£m)
Share of Joint
Ventures
(£m)
Share of
Associates
(£m)
Total
(£m)
Borrowings from financial institutions
–
(12.0)
(4.0)
(16.0)
Corporate bond
(300.0)
–
–
(300.0)
Net payables
(14.5)
(0.2)
(0.3)
(15.0)
Cash and cash equivalents
108.6
2.1
0.6
111.3
Net Debt (A)
(205.9)
(10.1)
(3.7)
(219.7)
Investment property at fair value
551.5
32.2
9.9
593.6
Total Property Value (B)
551.5
32.2
9.9
593.6
LTV (A/B)
37.3%
37.0%
EPRA NIY: 7.1%, EPRA ‘topped-up’ NIY: 7.5%
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.
March 2024
(£m)
March 2023
(£m)
Properties at valuation – wholly owned
533.8
551.5
Properties at valuation – share of Joint Ventures & Associates
10.0
42.1
Trading property (including share of Joint Ventures & Associates)
–
–
Less: Developments
(10.0)
(10.2)
Completed property portfolio
533.8
583.4
Allowance for estimated purchasers’ costs and capital expenditure
40.5
44.9
Grossed up completed property portfolio valuation
B
574.3
628.3
Annualised cash passing rental income
50.9
59.6
Property outgoings
(10.0)
(11.9)
Annualised net rents
A
40.9
47.7
Add: Notional rent expiration of rent free periods or other lease incentives
2.4
2.4
Topped-up net annualised rent
C
43.3
50.1
EPRA NIY
A/B
7.1%
7.6%
EPRA ‘topped-up’ NIY
C/B
7.5%
8.0%
192
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
EPRA Vacancy rate: 2.1%
Definition
Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio, excluding development assets.
Purpose
A ‘pure’ (%) measure of investment property space that is vacant, based on ERV.
March 2024
(£m)
March 2023
(£m)
Estimated Rental Value of vacant retail space
A
1.0
1.8
Estimated rental value of the retail portfolio
B
47.8
53.0
EPRA Vacancy Rate
A/B
2.1%
3.4%
EPRA Cost Ratio (including direct vacancy costs): 36.9%; EPRA Cost Ratio (excluding direct
vacancy costs): 33.8%
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.
FY24
(£m)
FY23
(£m)
Administrative/operating expenses per IFRS
18.2
19.2
Net service charge costs/fees
4.0
5.6
Management fees less actual/estimated profit element
(2.5)
(1.5)
Other operating income/recharges intended to cover overhead expenses less any related profits
–
–
Share of Joint Ventures and associates expenses (net of other income)
0.1
0.4
Exclude (if part of the above):
Investment property depreciation
–
–
Ground rent costs
0.4
0.6
Service charge costs recovered through rents but not separately invoiced
–
–
EPRA Costs (including direct vacancy costs)
A
20.2
24.3
Direct vacancy costs
(1.7)
(2.7)
EPRA Costs (excluding direct vacancy costs)
B
18.5
21.6
Gross Rental Income less ground rents – per IFRS
53.3
59.4
Less: service fee and service charge costs components of Gross Rental Income (if relevant)
–
–
Add: share of Joint Ventures and associates (Gross Rental Income less ground rents)
1.5
3.6
Gross Rental Income
C
54.8
63.0
EPRA Cost Ratio (including direct vacancy costs)
A/C
36.9%
38.6%
EPRA Cost Ratio (excluding direct vacancy costs)
B/C
33.8%
34.3%
193
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Financial Statements
EPRA performance measures (unaudited) continued
Reconciliation of EPRA Costs (including direct vacancy costs) to Net Administrative expenses per IFRS
FY24
(£m)
FY23
(£m)
EPRA Costs (including direct vacancy costs)
A
20.2
24.3
Exclude
Ground rent costs
(0.4)
(0.6)
Share of Joint Ventures and associates property expenses (net of other income)
–
(0.4)
Other operating income/recharges intended to cover overhead expenses less any related
profits
–
–
Net service charge costs/fees
(4.0)
(5.6)
Operating expenses (excluding service charge cost)
(5.8)
(6.6)
Tenant incentives (included within income)
(0.2)
(0.2)
Letting & legal costs (included within income)
(1.3)
(1.3)
Group’s share of net administrative expenses as per IFRS
D
8.5
9.6
EPRA Gross Rental Income
C
54.8
63.0
Ground rent costs
(0.4)
(0.6)
Expected credit reversal/(loss)
0.1
(0.2)
Surrender premiums and commissions
(0.7)
(0.6)
Other income
0.4
1.4
Property rental, other income and related income as per IFRS
E
54.2
63.0
Administrative cost ratio as per IFRS
D/E
15.7%
15.2%
Property related capital expenditure and tenant incentives (additional disclosure)
Year ended
31 March 2024
Year ended
31 March 2023
Group
£m
JVs & Associates
£m
Group’s share
£m
Group
£m
JVs & Associates
£m
Group’s share
£m
Acquisitions
–
–
–
–
–
–
Development
0.2
–
0.2
0.3
–
0.3
Investment properties
Incremental lettable space
4.0
–
4.0
1.9
–
1.9
Non incremental lettable space
1.9
–
1.9
0.8
0.8
1.6
Other material non-allocated types of expenditure
–
–
–
–
–
–
Capitalised interest
–
–
–
–
–
–
Total property related capital expenditure and tenant
incentives
6.1
–
6.1
3.0
0.8
3.8
Conversion from accrual to cash basis
–
–
–
(0.1)
(0.3)
(0.4)
Total property related capital expenditure and tenant
incentives on cash basis
6.1
–
6.1
2.9
0.5
3.4
Refurbishment expenditure in respect of major works is capitalised whilst renovation and refurbishment expenditure of a revenue nature is
expensed as incurred. Our business model for major works and developments is to use a combination of in-house staff and external advisers.
The cost of external advisers is capitalised to the cost of developments and employee costs in relation to in-house staff time on development
projects are capitalised into the base cost of relevant assets subject to meeting certain criteria related to the degree of time spent on and the
nature of specific projects. Staff costs amounting to £0.5 million (2023: £0.5 million) have been capitalised as such during the year. Capital
tenant incentives of £0.8 million (2023: £0.4 million) were paid during the year, with associated amortisation of £0.2 million (2023: £0.2 million)
recognised in the consolidated statement of comprehensive income.
194
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Our Corporate Environmental Performance Measures
NewRiver occupied 16 New Burlington Place as our head office until mid-July 2022. In April 2022, we took occupation of 89 Whitfield Street
as our new head office and entered a fit-out period of circa 3 months, before we officially moved in mid-July 2022. There was therefore a
3-month period during which we were responsible for utilities at both 16 New Burlington Place and 89 Whitfield Street, which is included in
our FY23 disclosures. FY23 intensity disclosures are based on the average floor area across the two office spaces. There were no waste
collections for NewRiver at 89 Whitfield Street during the fit-out period.
All data presented in this disclosure has been checked and collated by Cushman & Wakefield, and verified under ISO 14064-3:2019 by AESG.
Absolute Performance (Abs)
EPRA Code
Performance Measure
Unit(s) of
measure
% of data
estimation
FY23
FY24
% Change
Elec-Abs
Electricity consumption1
Annual kWh
31,932
29,446
-8%
DH&C-Abs
District heating & cooling Annual kWh
Our corporate offices are not connected to district heating & cooling
Fuels-Abs
Fuel consumption1
Annual kWh
See footnotes
24,832
0
-100%
Energy-Int
Energy intensity4
kWhelec-eq/m2/yr
82
77
-5%
GHG-Dir-Abs
Scope 1 emissions
Kg CO2e
4,568
0
-100%
GHG-Indir-Abs
Scope 2 emissions
(location-based)
Kg CO2e
6,175
6,097
-1%
Scope 2 emissions
(market-based)
Kg CO2e
0
0
0%
Scope 3 emissions3
Tonnes CO2e
See footnotes
2,476
1,540
-38%
GHG-Int
Scope 1 and 2 emissions Kg CO2e/ m2/ year
17.63
16.05
-9%
Water-Abs
Water consumption1
Annual m3
166
38
-77%
Water-Int
Water intensity
M3 consumption/ m2
0.27
0.10
-64%
Waste
Kg total waste2
Kg
1,072
2,964
176%
Recycling rate
% total waste recycled
51%
60%
17%
1. Carbonxgen prepared precise apportionment of electricity charges for 16 New Burlington Place, whilst gas and water were apportioned based on whole building data.
We have apportioned gas and water consumption based on the percentage of direct NewRiver usage of the total electricity consumed on site, which over the relevant months was 4%.
2. Waste data for 16 New Burlington Place is prepared on a whole building basis. We have apportioned waste based on the floor area apportionment attributed to NewRiver for service
charge purposes (21%).
3. Scope 3 emissions as presented above include the emissions associated with our occupation of our corporate offices, and so include water consumption, waste generation, and indirect
emissions from our consumption of energy.
4. kWh elec-eq/m2/yr is calculated using the REEB Benchmark 2020
5. We occupied 89 Whitfield Street for the full duration of the FY24 period. All data for this premises is available per occupier/meter and therefore no apportionment has been required.
We did however experience issues with the recording of our waste data, as well as issues with non NewRiver personnel utilising our waste bins. This has contributed to an increase in total
waste volume, which we are monitoring with our landlord.
6. All of the above indicators have been checked by Cushman & Wakefield and verified by AESG as part of our GHG Inventory.
ESG Data Sets Appendix
(Unaudited)
195
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG Data Sets Appendix
Our Portfolio Environmental Performance Measures
Absolute Performance
(Abs)
Like-for-like Performance
(LfL)
EPRA Code
Performance
Measure
Unit(s) of measure
% of data
estimation
FY23
FY24
FY23
FY24
% Change
Elec-Abs,
Elec-LfL
Electricity
consumption
Annual MWh
1.1%
10,462
8,188
8,183
7,738
-5%
DH&C-Abs & LfL District heating
& cooling
Annual MWh
None of our properties were connected to or benefitted from district
heating & cooling
Fuels-Abs,
Fuels-LfL
Fuel consumption
Annual MWh
1%
3,911
2,708
2,758
2,563
-7%
Energy-Int
Energy intensity
kWhelec-eq/m2/yr
-
76
61
76
72
-6%
GHG-Dir-Abs
Scope 1 emissions
Tonnes CO2e
714
495
503
469
-7%
GHG-Indir-Abs
Scope 2 emissions
(location-based)
Tonnes CO2e
2,023
1,695
1,583
1,602
1%
Scope 2 emissions
(market-based)
Tonnes CO2e
0
0
0
0
0%
Scope 3 emissions
Tonnes CO2e
745
581
688
541
-21%
GHG-Int
Scope 1 and
2 emissions
Tonnes CO2e/ m2/ year
0.016
0.013
0.016
0.016
-1%
Water-Abs,
Water-LfL
Water consumption
Annual m3
6.3%
68,607
65,602
59,735
55,798
-7%
Water-Int
Water intensity
m3 consumption/ m2
0.39
0.40
0.45
0.42
-7%
Waste-Abs,
Waste-LfL
Tonnes total waste
Tonnes
3.6%
3,253
2,887
2,896
2,783
-4%
Tonnes diverted
from landfill
3,253
2,887
2,896
2,783
-4%
Tonnes waste
to energy
4.6%
1,124
1,173
992
1,121
13%
Tonnes recycling
2.5%
1,882
1,505
1,684
1,458
-13%
Cert-ToT
Type and number
of sustainably
certified assets
Total number by
certification/ rating/
labelling scheme
Please see the following page 197 for a detailed breakdown of this
performance measure. We are also in the process of certifying 10 no.
assets to the WELL Health-Safety Rating standard.
1. Data coverage: the figures reported against each performance measure represent 100% of the assets within our Operational Control reporting boundary.
2. Normalisation: Intensity indicators for energy, water and waste are based on relevant floor area.
3. Scope 3 emissions relate to the emissions included in our 2040 net-zero target, which are those arising from the directly controlled areas of our assets (i.e., waste, water, and upstream emissions
and transmission & distribution losses from energy consumption). We have chosen to include these categories only to provide a clear performance comparison, as all other Scope 3 categories are
otherwise difficult to distinguish when collated with “downstream leased assets”.
4. Absolute and like-for-like asset-level performance measures include only landlord-procured energy/water. This does not include sub-metered energy procured on behalf of occupiers on inclusive
leases, which amounted to 57,985 kWh in 2023 (electricity only) , and which is accounted for in the Scope 3 emissions category of “downstream leased assets” reported within our Streamlined
Energy and Carbon Reporting (SECR) disclosure on page 73.
5. “Estimation” refers to filling invoice gaps, not to whether invoices are based on “estimated” or “actual” readings. Although a vast majority of the data presented is based on actual consumption, in
the instances where there were gaps in electricity and water consumption, the average of the months where we had data was applied to the missing months. Where data covered only part of a
month, a pro-rata method using known consumption was applied. With regards to natural gas, due to the variability of consumption throughout the year, any unknown consumption was estimated
using seasonal trends.
6. As our portfolio is comprised of entirely retail properties within the UK only, we do not undertake segmental analysis.
7. Our environmental and social performance data has been collated and checked by Cushman & Wakefield, and verified by AESG as part of our GHG inventory. GHG Inventory verification includes
all indicators above, other than Cert-ToT which is instead audited by PwC as part of the Annual Report & Accounts.
8. In our FY23 report, the Energy-Int indicator was erronously reported in MWhelec-eq/m2/yr. This has been corrected above.
9. This disclosure includes restatements of FY23 data in connection with the data restatement notes on page 74.
196
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG data sets appendix (unaudited) continued
EPC certificates by Region and Asset Rating
In the below table, the number of certificates is presented within each legislative region (England & Wales, Ireland, and Scotland) by asset
rating, A+ through to G. We have also disclosed the number of units with no/expired EPCs to provide clarity on certification coverage across
the portfolio. We are pleased to have increased EPC coverage to 77%, up from 64% last year. This excludes recently sold assets for which we
acquired new EPCs for the purposes of sale.
Region
A+
A
B
C
D
E
F
G
No/ Expired EPC
England
& Wales
0
11
211
234
155
68
0
0
93
Northern
Ireland
0
0
2
15
8
3
0
4
37
Scotland
0
1
3
14
8
17
6
3
95
Total
0
12
216
263
171
88
6
7
225
Asset Social Performance Measures
EPRA Code
Performance Measure
Unit(s) of Measure
Boundary
FY23
FY24
H&S-Asset
Asset health and safety assessments
Percentage of assets
Managed Assets
100%
100%
H&S-Comp
Asset health and safety compliance
Number of incidents
in reporting year
0
0
Development and major refurbishment project
health and safety compliance
Number of incidents
over past 3 years
0
–
Comty-Eng
Community engagement, impact assessments and
development programmes
Percentage of assets
100%
100%
197
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG Data Sets Appendix
Employee Social Performance Measures
EPRA Code
Performance Measure
Unit(s) of Measure
Boundary
FY23
FY24
Diversity-Emp
Employee gender diversity Percentage of employees,
Board diversity
NewRiver Board
29% female/
71% male
29% Female/
71% male
Percentage of employees, All
employee gender diversity
NewRiver direct
employees
47 % Female/
53% Male
50% Female/
50% male
—
Employee racial diversity
Percentage of employees,
All employee racial diversity
84% White/9%
Asian/1%
Caribbean/ 5%
Mixed/1 % Moth
77% White/
13% Asian/4%
Caribbean/ 4%
Mixed/ 2% Moth
Diversity-Pay1
Gender pay ratio
Ratio of gender pay,
mean/median
34% Mean/29%
Median
39% Mean,
37% Median
Emp-Training
Employee training and
development
Average hours/employee
26
46
Employee training,
subscriptions, surveys,
and online platforms
Total £s invested
£142,492
£ 179,096
Employee health &
safety training
Average hours/ employee
2
7
Emp-Dev
Employee performance
appraisals
Percentage of employees
100%
100%
Emp-Turnover
Total number of new hires Total number
2
8
Total number of leavers
Total number
9
5
Rate of new hires
Percentage
4%
17%
Rate of employee turnover Percentage
15%
11%
—
Temporary staff
Percentage of employees
who are contractors or
temporary staff
0%
0%
H&S-Emp
Injury rate
Per 100,000 hours worked
0
0
Lost day rate
Per 100,000 hours worked
0
0
Absentee rate
Days per employee
0
0
Fatalities
Total number
0
0
—
Instances of non-
compliance with
labour standards
Total number
0
0
1. As we have fewer than 250 employees, we are not obliged by The Equality Act 2010 (Gender Pay Gap Information Regulations 2017) to disclose our gender pay information. We calculate
gender pay gap based on the difference between the average annual salaries of men and women, excluding bonuses and other benefits.
198
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
ESG data sets appendix (unaudited) continued
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).
Associates: Is an entity in which the Group holds an interest and is
significantly influenced by the Group.
Average debt maturity: Is measured in years when each tranche of
gross debt is multiplied by the remaining period to its maturity and
the result is divided by total gross debt in issue at the period end.
Average debt maturity is expressed on a proportionally
consolidated basis.
Balance sheet gearing: Is the balance sheet net debt divided by
IFRS net assets.
BRAVO: Is BRAVO Strategies III LLC, with which NewRiver formed a
capital partnership in May 2019 to acquire and manage a portfolio
of retail assets in the UK.
Book value: Is the amount at which assets and liabilities are
reported in the financial statements.
Cost of debt: Is the loan interest and derivative costs at the period
end, divided by total debt in issue at the period end. Cost of debt is
expressed on a proportionally consolidated basis.
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.
Dividend cover: Underlying Funds From Operations per share
divided by dividend per share declared in the period.
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, gains/losses on disposals and deferred tax.
EPRA earnings per share: Is EPRA earnings divided by the weighted
average basic number of shares in issue during the period.
EPRA Net Tangible Assets (EPRA NTA): Are the balance sheet net
assets excluding the mark to market on effective cash flow hedges
and related debt adjustments, deferred taxation on revaluations,
goodwill, and diluting for the effect of those shares potentially
issuable under employee share schemes.
EPRA NTA per share: Is EPRA NTA divided by the diluted number
of shares at the period end.
EPRA LTV: EPRA LTV is the ratio of gross debt, net payables less
cash and cash equivalents to the aggregate value of properties.
LTV is expressed on a proportionally consolidated basis.
ERV growth: Is the change in ERV over a period on our investment
portfolio expressed as a percentage of the ERV at the start of the
period. ERV growth is calculated monthly and compounded for the
period subject to measurement, as calculated by MSCI Real Estate.
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.
Footfall: Is the annualised number of visitors entering our shopping
centre assets.
Gross Asset Value (GAV): Is the total value of all real estate
investments owned by the Company
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: UK-adopted International Accounting Standards.
Income return: Is the income derived from a property as a
percentage of the property value.
Interest cover: Interest cover is tested at corporate level and is
calculated by comparing actual net property income received
versus cash interest payable on a 12 month look-back basis.
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.
Leasing events: Long-term and temporary new lettings,
lease renewals and lease variations within investment and joint
venture properties.
Like-for-like ERV growth: Is the change in ERV over a period on the
standing investment properties expressed as a percentage of the
ERV at the start of the period.
Like-for-like footfall: Is the movement in footfall against the same
period in the prior period, 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 and asset
management determinations.
Long-term leasing deals: Are leasing deals with a fixed term certain
of at least one year.
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.
MSCI: MSCI Inc produces independent benchmarks of property
returns and NewRiver portfolio returns. 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 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.
Glossary
199
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Glossary and Company Information
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 period
payment of net property outgoings. Net rental income will differ
from annualised 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.
NewRiver share: Represents the Group’s ownership on a
proportionally consolidated basis.
Passing rent: Is the gross rent payable under leases terms.
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.
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.
Proportionally consolidated: The aggregation of the financial
results of the Reported Group and the Group’s Share of net
assets within its joint venture and associates.
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.
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 presold 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
NTA per share plus dividends paid in the period, expressed as a
percentage of EPRA NTA per share at the beginning of the period.
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.
Topped-Up Net Initial Yield: Net initial yield adjusted to include
notional rent in respect of let properties which are subject to a rent
free period at the valuation date.
Underlying Funds From Operations (UFFO): Is a measure of the
Company’s operational profits, which includes other income and
excludes one off or non-cash adjustments, such as portfolio valuation
movements, profits or losses on the disposal of investment properties,
fair value movements on derivatives and share-based payment expense.
Weighted average lease expiry (WALE): Is the average lease
term remaining to first tenant break, or expiry, across the portfolio
weighted by rental income. This is also disclosed assuming all
tenant break clauses are exercised at the earliest date, as stated.
Excludes short-term licences and residential leases.
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.
200 NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Glossary continued
Company Information
Directors
Lynn Fordham
(Non-Executive Chair)
Allan Lockhart
(Chief Executive Officer)
Will Hobman
(Chief Financial Officer)
Alastair Miller
(Non-Executive Director)
Dr Karen Miller
(Non-Executive Director)
Charlie Parker
(Non-Executive Director)
Colin Rutherford
(Non-Executive Director)
Kerin Williams
(Company Secretary)
Registered office
89 Whitfield Street
London
W1T 4DE
Company Number
10221027
Brokers
Panmure Liberum Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
Shore Capital Limited
Cassini House
57 St James’s Street
London
SW1A 1LD
Financial adviser
Kinmont
5 Clifford Street
London
W1S 2LG
Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Legal Advisers
CMS Cameron McKenna Nabarro Olswang LLP
Cannon Place
78 Cannon Street
London
EC4N 6AF
Tax Advisers
BDO LLP
55 Baker Street
London
W1U 7EU
Registrars
Link Group
10th floor
Central Square Wellington Street
Leeds
LS1 4DL
201
NEWRIVER REIT PLC | ANNUAL REPORT AND ACCOUNTS 2024
Glossary and Company Information
This report is printed on paper certified in accordance with the FSC®
(Forest Stewardship Council®) and is recyclable and acid-free.
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.
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 a Carbon / Neutral® Printing Company.
Designed and produced by Black Sun Global
www.blacksun-global.com
www.nrr.co.uk
NewRiver REIT plc
89 Whitfield Street
London
W1T 4DE
Tel: +44(0) 20 3328 5800