SEGRO Annual Report 2020

FY2020 Annual Report · SEGRO
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SEGRO PLC 

Annual Report & Accounts 2020

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Contents

SEGRO is a UK Real Estate Investment Trust (REIT),  
and a leading owner, asset manager and developer  
of modern warehousing and industrial property.

92 – 148

GOVERNANCE

92 Governance at a glance
94 Chair’s introduction
96
98
106 Division of responsibilities
112 Composition, succession 

Board of Directors
Leadership and purpose

and evaluation

118 Audit, risk and internal control
123 Directors’ Remuneration Report
144 Directors’ Remuneration 

Policy Summary
146 Directors’ Report
148 Statement of Directors’ responsibilities

 149 – 212

FINANCIAL STATEMENTS

150 Independent Auditor’s Report  
to the members of SEGRO plc

157 Group Income Statement
157 Group Statement of 

Comprehensive Income

158 Balance Sheets
159 Statements of Changes in Equity
161 Cash Flow Statements
162 Notes to the Financial Statements
212 Five-year Financial Results

213 – 216

FURTHER INFORMATION

213 Financial information
214 Shareholder information
215 Glossary of terms

02 – 13

OVERVIEW

02
12

 100 years of the extraordinary
SEGRO at a glance

 14 – 91

STR ATEGIC REPORT

Relationships & Resources

14
Strategic Report at a glance
16 Chief Executive’s statement
20 Our Covid-19 Response
24 Market overview
28
Responsible SEGRO
30 Our Business Model
32
46 Our Strategy
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62
66
72
83
84 Non-financial Information Statement
85 Additional ESG Disclosures

Key performance indicators
Review of 2020
Regional reviews
Financial Review
Principal risks
Section 172 Statement

The Directors present the Annual Report for the year ended 
31 December 2020 which includes the Strategic Report, 
Governance report and audited Financial Statements for the 
year. References to ‘SEGRO’, the ‘Group’, the ‘Company’, ‘we’ 
or ‘our’ are to SEGRO plc and/or its subsidiaries, or any of them 
as the context may require. Pages 14 to 91 inclusive, comprise 
the Strategic Report, pages 146 to 147 inclusive comprise the 
Directors’ Report and pages 123 to 143 inclusive comprise 
the Directors’ Remuneration Report, each of which have been 
drawn up and presented in accordance with English company 
law and the liabilities of the Directors in connection with these 
sections shall be subject to the limitations and restrictions 
provided by such law.

The Annual Report contains forward-looking statements. 
For further information see inside back cover.

For more information on SEGRO’s activities and performance,  
please visit our website: www.segro.com/investors

For more information within this report

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

Our purpose

We create the space  
that enables extraordinary 
things to happen.

SEGRO is both a creator of exceptional buildings 
and an enabler for our stakeholders, particularly 
our customers, employees and local communities, 
to achieve extraordinary things. 

Understanding the needs of these stakeholder groups 
and anticipating how they might change has been 
at the heart of our business for over 100 years and 
is essential for our continued success.

Alongside a culture of continuous improvement and 
innovation, this ensures that our portfolio remains 
fit for the future and enables us to create maximum 
value for all of our stakeholders.

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OVERVIEW
STR ATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS

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OVERVIEW
 100 years of the extraordinary

100 years 
 of the extraordinary 

THIS YEAR WE CELEBR ATED 
OUR CENTENARY. 

Whilst today we are an established member 
of the FTSE100, headquartered in London 
and managing over £15 billion of assets in 
eight European countries, our roots are in 
Slough, 20 miles west of London. In 1920 
Lord Percival Perry, Sir Noel Mobbs and 
Redmond McGrath purchased land, vehicles 
and a motor repair depot set up by the 
British Government in the aftermath of the 
First World War. In doing so they established 
The Slough Trading Company.

The site at Slough had been chosen by 
the British Government due to its location, 
under an hour’s drive to central London and 
positioned on the main road to Bath and the 
West Country. 

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SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

OVERVIEW
STR ATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS

 1920 

THE ORIGINALS 

The original workforce of The Slough Trading Estate.

Today Slough’s location remains one of its key 
benefits with its proximity to Heathrow Airport 
and the M4 adding to its allure. 

Over 10 decades the business has changed 
its status, its name, its areas of operation 
and its offering. However SEGRO is, and 
always has been, a business that has enabled 
extraordinary things to happen, one that has 
always had an innovative attitude and one 
that has continuously cared greatly about the 
world around it. 

As we start our second Century, these 
attributes – enabling, innovating and caring – 
remain guiding principles in how we continue 
to operate our business. We have achieved 
100 years of the extraordinary and we intend 
to replicate that over the next 100 years.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

03

OVERVIEW
 100 years of the extraordinary

1920–1945

From our early days as a company we have gone to 
great lengths to build strong customer relationships, 
many of which endure to this day, as well as making 
a contribution to our local communities.

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SLOUGH COMMUNITY CENTRE 

We establish the Slough Community Centre offering 
a very broad range of activities, including 150 groups 
and societies, for the people on the Slough Trading 
Estate – a very early example of how the wellbeing 
of our employees and our customers’ employees 
has always been in our thinking.

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MARS 

Forrest Mars establishes his eponymous chocolate 
company on the Slough Trading Estate after a  
meeting with Sir Noel Mobbs. The same year,  
the Mars Bar is born!

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OVERVIEW
STR ATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS

 1920 

THE SLOUGH TR ADING COMPANY LTD 

Lord Percival Perry, Sir Noel Mobbs and Commander 
Redmond McGrath form the Slough Trading Company 
Ltd, purchasing land, vehicles and a motor repair depot 
from the British Government for £7 million.

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JOHN CR ANE UK LTD 

John Crane UK Ltd first becomes a customer.  
Nearly 100 years later they remain a customer  
through our ability to anticipate their evolving  
needs and requirements.

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SLOUGH ESTATES LTD 

The company changes its name  
to Slough Estates Ltd. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

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OVERVIEW
 100 years of the extraordinary

1946–1970

In our second quarter, we list on the London Stock 
Exchange. By being innovative, we attract a wider 
range of customers whilst retaining our caring 
approach to those who work on our estates.

 1970 

50 YEARS 

We celebrate our 50th anniversary with a visit from 
Prince Philip who drives his own Alvis TD21 from 
nearby Windsor Castle to the Slough Trading Estate.

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 1961 

1ST PRE-TAX PROFIT >£1 MILLION 

We record our first pre-tax profit of over £1 million 
and begin a series of investments to expand the 
business geographically.

 1963 

FORD GT40 

The Ford GT40, based on Eric Broadley’s Lola GT, was 
designed at the Slough Trading Estate. It would go on 
to win Le Mans four times, ending Ferrari’s dominance. 

£1m

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OVERVIEW
STR ATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS

 1947 

INDUSTRIAL HEALTH SERVICE 

We launch our own Industrial Health Service, a year 
before the formation of the NHS, to benefit our 
employees and those of our customers. The service 
included a mobile hospital!

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SLOUGH ESTATES HOUSE 

We open our first London office, Slough 
Estates House in Berkeley Street. The building 
becomes a centre for our customers who 
could use the facilities, including conference 
and board rooms, and showcase their 
products to buyers all over the world. 

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 1960

CENTURY 21 (FORMERLY AP FILMS) 

Century 21, formerly AP Films, becomes a customer, 
enabling classic TV shows such as Thunderbirds, 
Stingray, Joe 90 and many others to be made.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

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OVERVIEW
 100 years of the extraordinary

1971–1995

Our third quarter sees us expand overseas and 
make further acquisitions in the UK, culminating 
in us becoming the largest industrial property 
company in the UK and Europe.

 1994

BUSINESS WATCH 

We launch Business Watch on the Slough 
Trading Estate to provide extra security 
measures for all our estate customers. 

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 1987

BUCKINGHAM CENTRE 

We launch the Buckingham Centre on the 
Slough Trading Estate to provide estate 
workers with amenities to help their working 
days. Today there are 14 retail units at the 
Buckingham Centre.

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6

 1986

BREDERO (HAMMERSMITH) 

We acquire Bredero Properties and develop  
the 654,000 sq ft Hammersmith Broadway site  
Centre West, a retail and office development,  
including a reconstruction of the underground  
and bus interchange. 

08

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

1931

19 32

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1929

1930

OVERVIEW
STR ATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS

 1972 

EXPANDING TO FR ANCE 

We launch our business in France. Today we 
manage £2.0 billion of assets in France.

 1974

LAUNCHING IN GERMANY 

We launch our business in Germany. Today we manage 
£2.1 billion of assets in Germany.

1931

19 32

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6

 1975

234 BATH ROAD, NEW HQ 

We move into our new headquarters in Slough. 
Dubbed “The Inverted Pyramid”, the new building was 
designed to provide the best of modern workspace 
for the 90-strong head office staff. It also elicited 
high praise from the Architectural Review which 
dubbed it “The Modern Movement’s answer to the 
Doric Temple ...it gives an impression which is rightly 
called monumental.”

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OVERVIEW
 100 years of the extraordinary

1996–2020

Further expansion in our fourth quarter sees us become 
the largest listed property company in the UK, whilst 
we continue to invest in our communities and take our 
environmental responsibilities seriously.

 2020 

THE SEGRO CENTENARY FUND 

We celebrate our Centenary by launching the SEGRO 
Centenary Fund: a £10 million fund which will be 
invested over ten years to make a positive impact within 
communities across the UK and in Continental Europe. 

 2017 

CAMDEN TOWN BREWERY 

We build the biggest brewery in London for 
over 50 years for our customer, Camden 
Town Brewery. The brewery in Enfield, 
North London, is carbon neutral. 

6

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 2015

BEES

Our first bee hives are introduced to our Vailog Logistics 
Park Castel San Giovanni development in Milan. Today, 
we now boast approximately 293 hives across all eight 
countries in which we operate, helping the biodiversity 
of each location and producing approximately 11,700 
jars of SEGRO honey every year! 

10

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OVERVIEW
STR ATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS

 2005 

POLAND AND CZECH REPUBLIC 

We launch our businesses in Poland and the Czech 
Republic. Today we manage assets valued at £1.2 billion 
in these markets. 

 2007 

SEGRO 

We change our name to SEGRO plc and become a UK 
Real Estate Investment Trust (REIT).

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 2007 

DATA CENTRES 

In anticipation of an increasingly digital 
world, we build our first Data Centre on 
the Slough Trading Estate. Today the Estate 
houses 29 data centres with a further 3 
under construction.

19

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 2009

BRIXTON ACQUISITION 

We acquire Brixton, a constituent of the FTSE250, for 
£1.1bn. This acquisition consolidated our position as the 
largest UK industrial owner and developer. 

 2015 

ITALY AND SPAIN 

We acquire Vailog in Italy and also establish our 
presence in the Spanish market. Combined we 
manage assets valued at £1.7 billion in these countries. 

5

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7

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OVERVIEW
SEGRO at a glance

2020

Our business today

KEY FACTS:

EMPLOYEES

355

CUSTOMERS

1,383

TOTAL SPACE

8.8m sq m

TOTAL AUM

£15.3bn

3

2

OUR PORTFOLIO: WE CREATE THE SPACE...

BIG BOX WAREHOUSES 
LOCATED IN NATIONAL/REGIONAL 
DISTRIBUTION HUBS

Big box warehouses are typically used for storage 
and processing of goods for regional, national and 
international distribution by larger trucks or by rail. 
The requirement for large land plots means that they 
tend to be located some distance from the ultimate 
customer but on major transport routes (mainly 
motorways, ports, rail freight terminals and airports) 
to allow rapid transit.

EXAMPLES OF USERS OF OUR BIG BOX SPACE:

1

	Retailers (online and traditional)

	Third party logistics and transport companies

	Manufacturers

	Distributors and wholesalers

ASSET TYPE BY VALUE 
(SEGRO SHARE)

1. Urban warehousing

2. Big box warehousing

3. Other uses

66%

32%

2%

WHERE WE OPER ATE:

URBAN WAREHOUSES 
LOCATED IN OR CLOSE TO MA JOR CITIES

Urban warehouses are located in, or close to population 
centres and business districts. They are used by a wide 
variety of customers who need rapid access to their 
own customers for last mile delivery, and to labour and 
are therefore close to main roads and public transport.
Urban warehouses tend to be smaller and they are 
often clustered in estates which can comprise terraces 
of smaller units (typically <3,500 sq m), larger detached 
single-let warehouses (typically larger than 3,500 sq m) 
or a mixture of the two.

EXAMPLES OF USERS OF OUR URBAN SPACE:

	Retailers and supermarkets (online and traditional)

	Parcel delivery companies

	Food preparation companies

	Data centre operators

	Air cargo handling companies

	Wholesalers

		Other uses inc. car showrooms, self storage facilities 
and trade counters

12

 
 
 
...THAT ENABLES EXTR AORDINARY THINGS TO HAPPEN

OUR CUSTOMERS

8

7

1

2

6

5

4

BIG BOX WAREHOUSES

3

CUSTOMER TYPE BY HEADLINE RENT 
(SEGRO SHARE)

1. Transport and logistics

2. Retail (physical and online)

3. Food and general manufacturing

4. Post and parcel delivery

5. Wholesale and retail distribution

6. Technology, media and telecoms 

7. Services and utilities 

8. Other 

23%

18%

17%

10%

10%

8%

7%

7%

OUR TOP 20 CUSTOMERS:

Our top 20 customers represent headline 
rent of £157 million in aggregate, 31% 
of the Group’s total headline rent at 
31 December 2020.

1. Amazon

2. Deutsche Post DHL

3.

4.

Fedex

Royal Mail

5. Worldwide Flight Services

URBAN WAREHOUSES

13

11

12

14

1

10

9

8

7

6

5

4

2

3

GEOGRAPHICAL SPLIT BY VALUE   
(SEGRO SHARE) 

 GREATER LONDON 
1 Park Royal

2 London Airports

37%

15%

15%

 SOUTHERN EUROPE 
8 France

9 Italy

3 Rest of London

7%

10 Spain

 THAMES VALLEY 
4 Slough Trading Estate

15%

14%

 NORTHERN EUROPE 
11 Germany

5 Rest of Thames Valley

1%

12 Netherlands

 NATIONAL LOGISTICS  9%
8%
6 Midlands

 CENTRAL EUROPE 
13 Poland

7 South East

1%

14 Czech Republic

21%

12%

7%

2%

12%

11%

1%

6%

5%

1%

6.

7.

8.

La Poste (DPD)

British Airways

Equinix

9. Virtus

10. Geodis

11. XPO

12. Leroy Merlin

13. Tesco

14. Ocado

15. Menzies

16. Kuehne & Nagel

17.

ID Logistics

18. CyrusOne

19. Mars

20. DSV

Read more about our geographies in our regional reviews
see pages 62-64

13

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
 
 
 
 
STR ATEGIC REPORT

Strategic Report at a glance

Chief Executive’s Statement 
2020 was our Centenary year and although the Covid-19 
pandemic meant that it turned out rather differently than we 
had envisaged, we still delivered strong financial results and were 
able to continue to grow our business. We were also able to 
support our people, our customers, our communities and other 
stakeholders through very challenging times and made great 
progress with our sustainability agenda. As we look to the future, 
we have confidence in the outlook for our business and believe 
that we are well positioned for another 100 years of success. 

p16-19

Strategy and Business Model 
Our Business Model describes what we do and our Strategy 
describes how we do it. Both are driven by our Purpose and 
underpinned by our strong culture, ensuring that we create  
long-term value for all of our stakeholders.

p24-51

Our market drivers
What we do (Our Business Model)
What we need (Relationships & Resources)
How we do it (Our Strategy)
How we measure our performance (our KPIs)

24-25
30-31
32-45
46-47
50-51

O

E SE G R

L
SIB
N
O
P
S
E
R

OUR  
GOAL

OPERATIONAL  
EXCELLENCE

DISCIPLINED  
CAPITAL ALLOCATION

EFFICIENT CAPITAL AND  
CORPORATE STRUCTURE

OUR CULT U R E

O

U

R

P

U

R

P

O

S

E

ACQUISITIONS

MARKET 
ANALYSIS

DEVELOPMENT

OUR  
CUSTOMERS

ASSET 
RECYCLING

CUSTOMER 
RELATIONSHIPS

PORTFOLIO 
REVIEW

ACTIVE ASSET  
MANAGEMENT

14
14

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
Our Covid-19 Response 
The onset of Covid-19 had wide reaching implications 
for our stakeholders and we acted quickly to respond 
to these, prioritising our people, our customers and 
our communities.

p20-23

Responsible SEGRO
Our Responsible SEGRO framework helps us to 
articulate our ESG goals. In recognition of the fact 
that understanding the needs and priorities of our 
stakeholders is embedded in the way we do business, 
we have for the first time this year integrated this 
information into the Strategic Report.

We have also this year identified three new long-term 
priorities and challenging targets for each of them, 
against which we will report annually. 

p28-29

Health & Safety
Our People
Our Suppliers
Our Customers
Our Communities
Our Investors
Our Environment

45
20, 34-36, 90-91
22, 39, 90
21, 32-33
23, 41-43
23, 40
57-59, 86-89

Review of 2020
Our well-established operating platform ensures that 
we optimise performance through dedicated customer 
service and expert asset management as well as 
development and operational efficiency.

p48-65

Delivering on our Strategy in 2020
Portfolio valuation 
Asset management
Development
Investment
Regional updates
SELP update

48-49
52
53-54
55-59
60-61
62-64
65

Financing & Risk Management
Having an efficient capital and corporate structure is 
one of the three pillars of our Strategy and as a result 
2020 was a busy year of financing to support our active 
development pipeline. In addition, our robust approach 
to risk management ensured we were well placed to 
navigate the challenges presented by the pandemic. 

p66-81

Financial Review
Risk Management

66-71
72-81

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

1515

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT

Chief Executive’s statement 
SEGRO delivered another strong  
set of results in 2020 and we are  
confident about the future

The pandemic has reinforced the 
importance of efficient and resilient 
supply chains to facilitate the provision  
of a wide variety of goods and services.

DAVID SLEATH
CHIEF EXECUTIVE

David Sleath reports on SEGRO’s 
performance during the past year 
and looks to the future. 

Our business is driven by a clear purpose ‘to 
create the space that enables extraordinary 
things to happen’ and 2020 has certainly been 
a year of the extraordinary. We started the 
year confident in the outlook for our business, 
believing that our prime portfolio of modern 
industrial properties in key strategic markets 
and our pan-European platform would 
continue to perform well. At the same time 
we were looking forward to celebrating our 
Centenary year. 

The onset of the Covid-19 pandemic caused 
widespread disruption and brought with it 
much uncertainty in the early months of 
2020 but, despite all of this, our business has 
proved to be strong and resilient. We have 
been pleased to be able to use this relative 
strength to support those stakeholders who 
needed it most, from the customers to whom 
we have been able to offer targeted support, 
to our local communities who we were able 
to help through the launch of our £10 million 
Centenary Fund.

The pandemic has highlighted the importance 
of modern, efficient, resilient logistics 
supply chains and has also accelerated the 
digitalisation of our economies, most notably 
through e-commerce. This has resulted in 
increased occupier and investor demand for 
our asset class and has helped to drive another 
year of strong financial and operational 
performance by SEGRO. 

Looking back on 2020, the main 
highlights included:

 } The professionalism shown by all of our 

people in keeping the business running as 
everyone at SEGRO adapted to the new 
working from home environment. 

 } Being able to offer additional support to our 
customers and other stakeholders through 
these challenging times and particularly 
bringing forward the launch of our 
£10 million Centenary Fund. We dedicated 
the first year of funding to support those 
in our local communities most negatively 
impacted by the pandemic. 

 } A record performance in securing new 
rents, aided by the strength of our 
customer relationships. £77.9 million 
(2019: £65.8 million) was signed in the year, 
including £41.1 million (2019: £33.2 million) 
of rent from new pre-lets.

 } Continued growth of our portfolio with the 
addition of prime, sustainable warehouses 
through our development programme. 
Despite the disruption caused by the 
pandemic, we completed 835,900 sq m 
of space, just short of our 2019 record 
(2019: 871,800 sq m). When fully occupied 
this space will generate £47 million of 
new income and was 84 per cent let at 
31 December 2020. We are targeting 
BREEAM ‘Very Good’ or ‘Excellent’ (or local 
equivalent) for 93 per cent of the eligible 
development completions. 

 } Acquisitions of urban warehouse parks in 
prime locations such as London and Paris, 
adding further space with the potential to 
generate attractive returns through our 
platform’s active asset management and 
development capabilities. 

 } Successful pilots of Smart technology 

and photo-voltaic panels on assets across 
Europe, helping us to develop our strategy 
in these areas to help with our aim of being 
net carbon zero by 2030.

 } Securing over £1 billion of new funding 

which has given us the capacity to 
continue to add to our development 
pipeline and help us to grow our rental 
income organically.

16

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020This activity has been reflected in significant 
growth across the board in all of our key 
operating metrics and our balance sheet 
remains in good shape and is positioned to 
support further growth. 

The combination of a strong set of financial 
results in 2020 and our confident outlook 
for 2021 and beyond means that we are 
recommending a 5.6 per cent increase in final 
dividend to 15.2 pence per share, resulting in 
a total distribution of 22.1 pence for 2020 as a 
whole (2019: 20.7 pence).

I will now turn to focus on some of the key 
themes that have emerged in 2020, to provide 
you with a deeper understanding of how 
we think about our business today, what it 
might look like tomorrow and how we intend 
to continue to ‘create the space that enables 
extraordinary things to happen’.

DELIVERING INCREASED DIVIDENDS

22.1 pence

.

p
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p
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2

Read more on our strategy
see pages 46-47

LONGER TERM IMPACTS OF COVID-19

FINANCIAL HIGHLIGHTS

The Covid-19 pandemic has had a profound 
impact on all of our lives and it will likely 
change the way that our world functions. 
We’ve detailed at length (see pages 20-23 and 
109) how we responded to the pandemic and 
the impact it had on our business. The Board 
and I would first like to again thank all of our 
colleagues at SEGRO for the dedication and 
commitment that they have shown throughout 
this very difficult period. The fact that our 
business has come through such an event so 
well is a real testament to all of the hard work 
that has been done this year and over the 
past decade to anticipate and respond to our 
customers’ needs.

Positioning our portfolio to benefit from the 
structural changes to society which have been 
driving demand for our asset class has been a 
key part of our strategy for a number of years, 
and in 2020 we have seen an acceleration of 
these trends.

The increase in e-commerce penetration 
has been much talked about and there has 
been some debate over where it will settle 
once the pandemic has passed. We believe 
there has been a step-change in consumer 
behaviour. Some of the factors that were 
considered as barriers to increased levels of 
online sales penetration (for example concerns 
about the quality of food bought online and 
reluctance to share financial information 
over the internet) have been overcome and 
habits have potentially changed irrevocably. 
Our customers certainly do not expect there 
to be a significant retreat and are already 
preparing to adapt their businesses to respond 
to levels of online sales that are well ahead of 
previous expectations. 

Whilst the pandemic may change the way that 
cities such as London, Paris or Berlin operate, 
we continue to believe that they will act as 
centres of commerce, innovation and culture 
and, they will continue to attract people to 
work, live and play. The nature of our urban 
warehouses, being mostly located inside or on 
the edges of cities, also means that they attract 
businesses servicing the commuter belt and 
beyond. For example, our Heathrow portfolio 
has for some time been used to provide 
goods and services for those living in the 
surrounding area and outside the M25 as well 
as to service the airport. 

Finally, we expect that localisation and the 
renewed focus on supply chain resilience will 
also contribute to occupier demand over the 
coming years.

ADJUSTED PROFIT1 BEFORE TAX

£296.5m (+10.8%)

2019: £267.5m

IFRS PROFIT BEFORE TAX

£1,464.1m (+62.3%)

2019: £902.0m

ADJUSTED EARNINGS PER SHARE1

25.4p (+4.1%)

2019: 24.4p

IFRS EARNINGS PER SHARE

124.1p (+56.5%)

2019: 79.3p

ADJUSTED NAV PER SHARE1

814p (+16.3%)

2019: 700p

IFRS NAV PER SHARE

809p (+16.1%)

2019: 697p

PORTFOLIO VALUE 2

£13.0bn

2019: £10.3bn

TOTAL DIVIDEND PER SHARE

22.1p (+6.8%)

2019: 20.7p

Important Explanatory Notes about Alternative Performance 
Metrics used in this Report
1  EPRA and Adjusted metrics: The Financial Statements are 

prepared under IFRS. SEGRO management monitors a number 
of adjusted performance indicators in assessing and managing 
the performance of the business which they believe reflect the 
underlying recurring performance of the property rental business 
which is the Group’s core operating activity. These include 
those defined by EPRA as part of their mission to establish 
consistency of calculation across the European listed real estate 
sector. Pages 162-163 contain more information about the 
adjustments and the reconciliation of these to IFRS equivalents. 
SEGRO discloses EPRA alternative metrics on pages 205-211. 
Adjusted NAV per share is in line with EPRA NTA.

2  Proportionally consolidated figures and metrics: SEGRO owns 
assets both wholly itself and through stakes in 50-50 joint 
ventures. In the Financial Statements, the profit from joint ventures 
is stated as a single figure in the Income Statement and the net 
asset value of joint ventures is stated as a single equity figure on 
the Balance Sheet; Note 7 to the Financial Statements provides the 
component parts of these figures. In operational terms, SEGRO 
does not distinguish between assets held in joint ventures from 
those assets which are wholly-owned. Therefore, unless specifically 
stated, in the Strategic Report, performance metrics and financial 
figures are stated reflecting SEGRO’s wholly-owned assets and its 
share of joint venture assets (known commonly as a ‘proportionally 
consolidated; basis). Where the Strategic Report refers to the area 
of a property, it is stated at 100 per cent of the space, irrespective 
of whether the property is wholly-owned or held in a joint venture.

17

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Chief Executive’s statement 

SEGRO delivered another strong set of results in 2020 
and we are confident about the future 
continued

We also launch alongside our Full Year 
2020 results our new Responsible SEGRO 
priorities and targets, which address the key 
areas where we believe that we can make the 
greatest business, environmental and social 
contribution, and will also help to position 
SEGRO for another 100 years of success. 

Our three priorities are:

 } Championing low-carbon growth – we 
recognise the world faces a climate 
emergency and are committed to playing 
our part in tackling climate change. 

 } Investing in our local communities and 

environments – as a long-term investor we 
are committed to contributing to the vitality 
of the communities in which we operate. 

 } Nurturing talent – our people are vital 

to and inseparable from our success and 
we are committed to attracting, creating 
and retaining talented individuals from 
diverse backgrounds.

Within each area we have also set ambitious 
new targets, including being net carbon zero 
by 2030. We have thought long and hard 
about these goals, wanting to make sure that, 
as with everything else we do as a business, 
they are authentic and really challenge us 
to make a tangible impact. What is also 
important to note in respect of these targets 
is that, for us at least, it is how we get there 
that matters as much as the end goal itself. 
For example, we cannot completely eliminate 
carbon from our buildings as physical assets 
inherently produce carbon, but we intend to 
reduce those carbon emissions as much as is 
physically possible through our own actions 
before we will consider offsetting. 

BILLBOARDS ON THE SLOUGH TRADING ESTATE
We installed these billboards on the Slough Trading 
Estate to recognise the efforts of all the key workers 
whose commitment and often unseen work kept us 
going during lockdown. 

We expect these trends to benefit our entire 
business in the years ahead. In the UK we 
have been seeing their effects for a number 
of years as e-commerce has taken off and our 
customers have modernised their supply chains 
and distribution networks to respond to it. 

On the Continent however, our customers 
are much less advanced in this journey and 
e-commerce penetration has been lagging 
behind the UK. The pandemic has accelerated 
the need for them to make these changes. 
We see this as a significant opportunity going 
forward and are well-placed to respond to 
it with our strong operating platform across 
France, Germany, Italy, Spain, Poland, the 
Netherlands and the Czech Republic.

The pandemic has also impacted the way 
that we will run our business going forwards. 
One of the most significant changes is that it 
is now very clear that our people do not need 
to be based in an office five days a week to do 
their jobs efficiently. 

Although there are obvious benefits to an 
office work environment in terms of ease of 
communication and collaboration, as well as 
supporting company culture, there are also 
times when it is more appropriate to work 
quietly at home. We have always enabled 
flexible working, which allowed us to transition 
from office working to home working quickly 
and seamlessly and we have now formally 
introduced a company-wide Agile Working 
Policy that gives our employees the autonomy 
to decide where they work. This change has the 
potential to enhance everyone’s quality of life 
and also provides greater flexibility that should 
help us to increase diversity in our business and 
ensure that we continue to retain talent. 

One thing that the pandemic has not changed, 
and in fact has reiterated, is the importance 
of our close relationships with our customers, 
our suppliers, our investors, our communities 
and other business partners and we continue 
to place the utmost importance on developing 
and growing these partnerships. 

18

NEW RESPONSIBLE SEGRO TARGETS

‘ESG’, ‘Purpose’, ‘Culture’ and other similar 
terms have all become more common words 
in the past couple of years, and rightly so. 
Good businesses need to recognise that their 
actions are far reaching, and in order to drive 
sustainable growth, the considerations of wider 
stakeholders need to be taken into account 
when making decisions that may impact them. 

However, this is not something that is new 
to SEGRO. Throughout the 100 years that 
we have been operating as a company we 
have had a rich history of making a positive 
contribution to the society around us (for 
examples of this see some of the stories in the 
100 Year Review section at the front of this 
report). It is also something that will be just 
as important to us for the 100 years to come. 
We have always prided ourselves on being a 
company that people want to work for and 
with, which is reflected in our goal of being 
the partner ‘of choice’ for our people, our 
customers, our suppliers, our investors and all 
of our other stakeholders. We believe that this 
will enable us to create long-term economic 
and social value. 

What is new to us is talking about it and 
measuring it – a genuine culture is something 
intangible; something that is embedded 
within an organisation. It is integral to the 
way a business operates day-to-day and 
guides our actions and decisions. Trying to 
capture it and write it down in black and white 
can be challenging, but we recognise that 
there is a growing interest from our various 
audiences to understand how and why we do 
business using more than purely financial and 
quantitative means. In recognition of this we 
have, for the first time, integrated our wider 
stakeholder considerations into the main 
body of the 2020 Annual Report & Accounts, 
reflecting the way that we run our business 
and make decisions. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020RESPONSIBLE SEGRO

Our Responsible SEGRO 
framework helps us to articulate 
and focus on our ESG goals.

Read more about our 
new targets Pages 28-29

OUR VALUES:

SAY IT LIKE IT IS

STAND SIDE BY SIDE

KEEP ONE EYE ON THE HORIZON

IF THE DOOR IS CLOSED…

DOES IT MAKE THE BOAT GO FASTER?

Read more
Page 90

OUTLOOK

We remain confident in the outlook for 
our business, its resilience and its ability to 
deliver growth. 

We believe that the already prevalent 
structural drivers, which have been accelerated 
by the pandemic, will continue to drive both 
occupier and investor demand for our prime 
portfolio of modern industrial properties for 
the foreseeable future. However, we remain 
alert to potential macroeconomic headwinds 
such as the ongoing Covid-19 pandemic as 
well as the departure of the UK from the 
European Union. 

Market rental growth has continued, driven by 
increased occupier demand and a shortage of 
modern warehouse space, particularly in our 
urban markets. 

Our development pipeline continues to 
expand, allowing us to both modernise our 
portfolio and generate additional rental 
income, enhanced by the rental growth from 
the active asset management of our existing 
estate. Whilst structural trends continue to 
drive occupier demand we expect to be able 
to develop to both meet this elevated level of 
requirements and maintain our approach of 
de-risking the majority of our pipeline through 
pre-leasing.

We continue to keep one eye on the horizon, 
staying close to our customers so that we can 
anticipate their changing needs and adapt 
our portfolio to meet them. We are also very 
aware of our wider responsibility to society 
and believe that our new Responsible SEGRO 
targets will position us to make a material 
difference to the areas in which we can make 
the most impact and help us to truly create 
the space which enables extraordinary things 
to happen… for our people, our customers, 
our communities, our investors and our many 
other stakeholders.

DAVID SLEATH
CHIEF EXECUTIVE

This framework is a further stepping stone in 
a long journey and we look forward to sharing 
more of it with you as we travel through it, 
learning from and adapting to the inevitable 
twists and turns ahead. 

POSITIONING OUR BUSINESS FOR 
SUSTAINABLE LONG-TERM PERFORMANCE

The world around us is changing at a great 
pace and we are in continuous dialogue with 
our customers as we strive to understand 
and prepare to meet the longer-term trends 
within our industry. By doing this we are able 
to ensure that our portfolio continues to meet 
the needs of, and play an integral part in, our 
customers’ operations and that our business 
remains relevant. 

We have embedded a culture of continuous 
improvement within SEGRO and are 
constantly questioning how and why we do 
things while pushing ourselves to do better – 
this is reflected in some of our values such as 
‘does it make the boat go faster?’ and ‘if the 
door is closed’.

This means we are constantly refining not just 
our existing portfolio but also how we design, 
plan and build our assets, with sustainability 
and technology at the heart of our thinking.

The creation of our Strategy, Innovation and 
Investment team at the start of 2020 was an 
important part of this process, reflecting our 
belief that we should consider investments in 
data and technology in the same way that we 
consider investments in physical assets. 

The industry within which we operate offers 
significant opportunities to make changes 
that not only help improve inefficiencies, 
but also help us make better and more 
informed decisions.

Key to this is the use of data and analytics 
– just as data centres are becoming a more 
significant part of our portfolio, so the use 
of data itself is becoming a more important 
part of the way that we do business. We are 
excited about the opportunities we believe it 
will present once we are able to fully capture 
and understand this data and its potential. 

Over the course of 2020 we worked on a 
number of exciting projects which we hope 
will improve the way we do business, enhance 
the way our buildings are used and reduce 
their impact on the environment, while 
positioning our business for sustainable long-
term success.

Read more
Page 48-49

19

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT

Our response to the Covid-19 pandemic 
Prioritising our people, our customers  
and our communities

The onset of the Covid-19 
pandemic had wide reaching 
implications for our stakeholders. 
Given our presence in markets 
such as Italy and Spain, where 
the impacts were felt earliest, we 
had an early indication of what 
the pandemic might mean for 
our business European-wide.

OUR PEOPLE

The immediate priority at the start of the 
Covid-19 outbreak was to ensure the health, 
safety and wellbeing of our people. 

We were quick to move to a working from 
home model and the investments that we 
made into technology over the past years 
to facilitate flexible working enabled us to 
transition rapidly with minimal disruption 
to day-to-day operations. Throughout the 
pandemic we have been able to use these 
technologies to keep in close contact with 
employees and encourage team interaction 
to ensure our people feel connected 
and supported. 

Everyone within the business rose to the 
occasion. In addition to Group-wide and 
more regular local video conferences, we had 
virtual quizzes, team challenges, weekly drinks 
and regular lunchtime chair yoga sessions. 
Our employee intranet became the portal 
for sharing pictures and stories including 
employee contributions to our 100 Acts of 
Kindness initiative, which replaced our usual 
Annual Day of Giving and formed part of 
our SEGRO Centenary events programme 
throughout the year. 

To ensure safe home working conditions, 
we produced specific guidance, including an 
online workstation assessment, and where 
necessary provided any additional equipment 
that was needed. Managers were given 
advice on how to manage teams remotely 
and also to look after the wellbeing of their 
team members. 

When the lockdowns across our geographies 
started to be lifted, we asked everyone to 
complete a survey called ‘Future Way of 
Working’, which helped us to understand how 
our people felt about returning to the office. 

The feedback from this was taken into account 
when we started to plan a gradual return to 
office working. Health and Safety assessments 
were conducted in all of our locations to 
ensure that social distancing could effectively 
be put in place. Restrictions were put on the 
number of employees in each office, one-way 
systems were implemented, sanitisation stations 
were set up and regular deep cleaning was 
introduced. Return to office guidelines were 
produced and these were reviewed regularly 
to factor in any new government guidance 
throughout the months that followed and 
differed for each office depending on the 
local situation.

We did not furlough any of our employees 
throughout the pandemic, nor did we take up 
any other government support measures. 

How has it changed the way we will 
do business?

It was a revelation to us how quickly everyone 
adapted to working from home and how 
efficiently people have been able to continue 
to do their day-to-day jobs. The Future Way of 
Working survey also showed that employees 
enjoyed working from home in many cases 
(79 per cent said that they liked or loved it). 
Most would not want to do it permanently 
but they would like to have more flexibility to 
choose where they work depending on what 
they are working on.

As a result, we have introduced a new 
company wide Agile Working Policy that 
gives everyone the freedom to work more 
flexibly in the future, as we look beyond the 
pandemic. We still believe that office working 
plays an important role in meeting, socialising 
and collaborating to generate new ideas and 
solve problems but we also recognise that 
for times when colleagues need to focus and 

CASE STUDY: SEGRO 100TH BIRTHDAY CELEBR ATIONS

This was part of a series of events that were 
organised to mark our Centenary and were 
made virtual, including a presentation by 
a local historian on the background to the 
Slough Trading Estate and SEGRO; the 
release of ‘Contraption’, a video of a kinetic 
sculpture featuring more than 60 products 
from over 40 different customers; Talking 
Archives, a series of short interviews with 
people who have a strong association with 
the Slough Trading Estate; and, last but not 
least, a video performance by the newly 
formed cross-border SEGRO choir that sang 
‘Happy Birthday’. 

We had been due to celebrate our Centenary 
in May and plans had been put in place for 
an employee-wide conference and celebration 
in London. As we were in the height of 
lockdown in Europe at this stage we had to 
cancel the physical event but didn’t want to 
let the occasion go unmarked and miss an 
opportunity to bring everyone together. 

Instead a SEGRO branded birthday cake 
was sent to the home of each employee 
and a virtual company-wide celebration 
was organised with presentations from the 
senior management team and contributions 
from every single one of our nine country 
teams. The company-wide broadcast was 
followed by separate team virtual parties 
as everyone enjoyed a slice of cake and 
toasted 100 years of SEGRO and the 
Slough Trading Estate. 

20

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020concentrate, working from a quiet space at 
home might be more appropriate and so 
we put trust in our employees to decide for 
themselves what best suits their day-to-day 
work requirements. 

OUR CUSTOMERS

The diversity of our customer base means 
that the impacts of the pandemic were wide-
ranging, many benefiting from a sudden 
increase in demand for their goods and 
services and others finding that their revenues 
stopped overnight or having to shut down 
their operations temporarily as employees 
were no longer able to travel to their premises. 
We acted swiftly to help those businesses 
who were fundamentally sound but suffering 
short-term cash flow issues by deferring rents 
to alleviate some of the pressure that they 
were facing. 

The majority of these deferrals took the 
form of moving customers from quarterly to 
monthly payment plans which proved to be 
very effective in helping the most impacted 
to survive the crisis. As of 31 December 
2020 we had received 98 per cent of rents 
due in 2020 with the remaining 2 per cent 
due in the early part of 2021. Insolvencies in 
2020 were in line with usual levels and our 
vacancy rate as of 31 December 2020 was 
3.9 per cent (31 December 2019: 4.0 per 
cent), with the vacancy on our standing 
stock (i.e. excluding newly completed 
speculative developments) only 2.5 per cent 
(31 December 2019: 2.6 per cent).

On the positive side the pandemic has 
undoubtedly accelerated the structural themes 
that have been driving occupier demand 
for our warehouses – from the rapid rise 
in e-commerce penetration across Europe 
to increased usage of data and therefore 
the requirement for data centre capacity to 
support this. 

Our larger customers plan their expansion 
18-24 months ahead and we therefore believe 
that the majority of this increase in demand 
will flow through over the next few years.

How has it changed the way we will 
do business? 

Prior to the pandemic rent collection levels 
were high and, when issues arose, they were 
limited to a small number of customers and to 
specific circumstances. 

The restrictions imposed by governments 
across all of our markets had a more wide-
spread impact on our customer base and our 
property and finance teams quickly engaged 
with our customers to understand their 
ability to operate and, as part of that, to pay 
their rent. 

We swiftly put processes in place to gather 
and monitor this information in as close to real 
time as possible so that we could fully assess 
the position and respond appropriately. 

As a result of our experiences with rent 
collection during the pandemic we are 
reviewing our rental collection processes, 
including automating the system 
where possible.

City Harvest’s successful, rapid 
response to growing levels of 
hunger during the COVID crisis 
was made possible by SEGRO’s 
support. This crisis will leave a 
long-lasting need for our scaled-
up food redistribution efforts 
amongst London’s vulnerable 
communities. With SEGRO as 
a partner, we will utilise this 
additional depot space to triple 
our impact, allowing us to deliver 
millions of additional nourishing 
meals annually.

LAUR A WINNINGHAM
CEO OF CIT Y HARVEST

CASE STUDY: CITY HARVEST LONDON

80,000

MEALS PER WEEK PROVIDED  
TO COMMUNITY PROGRAMMES   
ACROSS LONDON

London City Harvest was already a 
customer of SEGRO prior to the pandemic. 
It is a fantastic charity that aims to address 
the problem of more than 2.3 million 
Londoners living below the poverty line 
by collecting surplus food and delivering 
high-quality, nourishing ingredients to over 
300 local organisations across the capital. 
These organisations in turn provide over 
80,000 meals per week for community 
programmes including homeless shelters, 
soup kitchens, family centres and domestic 
abuse victims.

During the pandemic we enabled the charity 
to meet the increase in demand for its 
services by expanding its existing space on 
our Acton Park Industrial Estate by providing 
two rent free units totalling 6,000 sq ft and 
trebling its presence. The additional space 
helped the charity to improve its operational 
efficiency and helped many thousands 
of vulnerable Londoners to benefit from 
regular, healthy food donations. 

21

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Our response to the Covid-19 pandemic

Prioritising our people, our customers  
and our communities  
continued

835,900 sq m

NEW SPACE BY 31 DECEMBER 2020

POZNAN, POLAND

’

AMSTERDAM, NETHERLANDS

KET TERING, UK

COLOGNE, GERMANY

COLLEGIEN, FR ANCE

OUR DEVELOPMENT PROGR AMME

Our development programme was also 
impacted by the crisis with most of our 
projects in Southern Europe and some 
in the UK temporarily suspended when 
the lockdown measures were introduced 
in March. We worked closely with our 
contractors to monitor the situation and, as 
soon as it was feasible, safe, and permitted 
by regulation, sites were re-opened with 
the appropriate social distancing and other 
necessary measures in place. 

All of our development projects had resumed 
operations by the time we reported our 
half year results in August, with only minor 
delays to completion. Furthermore, they 
were not impacted by subsequent lockdowns 
as construction sites were classified as 
essential work.

There were some delays to sourcing certain 
raw materials and components that were 
coming from further afield but the impact was 
significantly mitigated relative to what it might 
have been as we try to source as much as we 
can locally. 

By 31 December 2020 we had completed 
835,900 sq m of new space which was in line 
with our expectations for the year and there 
were no projects due to complete in 2020 that 
have carried over into 2021 due to pandemic 
related delays. 

22

In fact, we were able to deliver on a number 
of projects ahead of schedule and help 
our customers to respond more quickly 
to the increased demand for their goods 
and services.

How has it changed the way we will 
do business? 

Just as the pandemic has highlighted the 
importance of supply chain resilience 
to our customers, it has also underlined 
how integral our supply chain is to our 
development programme, including 
maintaining strong relationships with our 
development contractors. 

We always try to ensure that the local 
economy benefits as much as possible 
from our operations and our development 
programme is no different. We will therefore 
continue to source as much of the materials 
needed for our development projects locally 
as possible and to encourage our contractors 
to do the same when sourcing providers 
and subcontractors. In addition to the 
economic benefits, the local initiatives also 
have a positive impact on the environment in 
terms of reducing transportation and related 
carbon emissions.

Read more about our development programme
Pages 55-56

OUR OTHER SUPPLIERS

Also key to keeping our business operating 
as close to normal as possible during the 
pandemic, were our interactions with our 
other suppliers.

One of the priorities for our procurement 
team during 2020 was to maintain these 
close working relationships so that we could 
de-risk our business and ensure that we 
transitioned to a remote/virtual relationship 
management successfully. 

We identified 40 key supplier relationships 
and contacted them 2-3 times during the year 
to understand their ongoing ability to handle 
the pandemic (and also most recently their 
preparedness for Brexit).

How has it changed the way we will 
do business?

We are planning to introduce a Supplier Key 
Account Management programme during 
2021 to ensure that we remain close to our 
most important suppliers and continue to 
build on the strong relationships that we 
established during 2020.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OUR COMMUNITIES

We quickly recognised a need to provide 
emergency funding to help alleviate some of 
the pressures caused by the pandemic on the 
communities nearest to our assets. As a result 
we decided to bring forward the launch of our 
£10 million Centenary Fund, which we had 
previously planned to announce in May as 
part of our 100 year anniversary celebrations. 
Furthermore we decided to allocate the first 
round of funds to causes and projects aimed 
at helping to assist those most negatively 
impacted by the pandemic.

SEGRO is contributing to the Fund from 
corporate resources, and in addition, all Board 
Directors waived 25 per cent of their salary 
and fees for the second quarter of 2020 to 
the Fund.

In 2020 we made £967,000 of grants to 
100 community projects across the UK and 
Continental Europe, directly helping around 
77,000 people navigate the impact of the 
pandemic. In addition to this we provided 
warehouse space on heavily discounted, or 
zero, rents amounting to assistance in kind of 
a further £541,000.

The first phase of funding in 2020 responded 
directly to emergency projects such as 
providing basic necessities, including 
food, medicines and household essentials, 
and to support other initiatives which 
helped to alleviate the impact of the crisis 
on communities.

This was quickly followed by broadening 
support for employability and training 
initiatives to help get back into work those 
people who face barriers to employment or 
lost their jobs because of the pandemic.

How has it changed the way we will 
do business? 

We are very proud to have been able to help 
those negatively impacted by the pandemic 
and it has highlighted the importance of being 
strategic in our charitable giving and to direct 
it to those most in need and where we can 
make the greatest impact. 

The future emphasis of the SEGRO Centenary 
Fund will include local community projects 
which can help and inspire disadvantaged 
people into education, training and 
employment. This aligns with the approach 
we intend to take as part of our Investing 
in our local communities and environments 
focus area within our re-launched Responsible 
SEGRO framework.

Read more about our communities
Pages 41-43

OUR FINANCING AND 
INVESTOR ENGAGEMENT

During the pandemic we raised over £1 billion 
of equity and debt via a £680 million equity 
raising in June and a €450 million US private 
placement debt issue in July. The proceeds 
will allow continued and possible expansion 
of our development programme and will 
ensure that our balance sheet remains 
conservatively geared. 

We were able to carry out both of these 
issuances without any physical meetings 
thanks to the efficiency of our IT systems and 
internal networks – carrying out numerous 
“virtual” meetings with our advisors and 
engaging with over 30 institutions via video 
and audio conference calls throughout 
both processes.

We have taken our investor relations 
programme fully virtual and have participated 
in our regular roadshows as well as 15 
conferences and met with over 260 investors 
in almost 400 meetings during 2020. 
We have taken the opportunity to participate 
in conferences that we would otherwise not 
have been able to attend physically and also to 
engage with investors in regions that we would 
not normally have had the capacity to visit.

For our half year results presentation we 
organised a live presentation followed by 
Q&A which was broadcast via webcast to 
investors. Our AGM took place in April at 
the height of lockdown measures in the UK. 
As a result we advised our shareholders not 
to attend in person and instead encouraged 
them to vote on all of the resolutions online or 
by appointing the Chair of the AGM as proxy. 

How has it changed the way we will 
do business? 

The pandemic has forced us to use new 
technologies for our financing activity and 
investor engagement and has made us 
realise how efficient and practical virtual 
communications can be. 

We believe there will always be a place for 
physical human interaction but we now look 
to complement this with other methods of 
communication to spread our reach wider 
and provide better management access to 
shareholders not based in the UK. 

We plan to use a mixture of real life and 
virtual events in our investor relations 
programme in the future, allowing us to 
maximise the use of management time, 
engage with investors further afield and 
also to help us reduce travel and the carbon 
emissions usually related to these activities. 

Read more about our capital structure
Page 40

£10m

CENTENARY FUND LAUNCHED AND 
ALLOCATED TO THE EMERGENCY RESPONSE 
AS WELL AS EMPLOYABILITY AND SKILLS 
PROJECTS AIMED AT HELPING THOSE MOST 
NEGATIVELY IMPACTED BY THE PANDEMIC

>£1bn

EQUITY AND DEBT RAISED DURING 
THE PANDEMIC TO BE PUT TOWARDS 
FURTHER EXPANSION OF OUR 
DEVELOPMENT PROGRAMME

CASE STUDY: OUR COMMUNITIES

During Spring 2020, SEGRO Poland 
donated 300 professional Secura 
3000 masks, 2,100 mask filters, 200 
pairs of protective overalls and 10 hand 
sanitising stations to Szpital Wolski in 
Warsaw and Isolation Hospital in Poznan´. 

With hospitals in Poland suffering 
from shortages in personal protection 
equipment at this time, we prioritised these 
donations in order to help protect hospital 
staff from Covid-19 and to prevent the 
spread of the pandemic.

We also supplied masks to families and 
children in Marseille, municipal workers in 
Aulnay-sous-Bois (Paris) and construction 
sites, municipal workers and hospitals 
throughout our communities in Italy.

23

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRUCTURAL DRIVERS

STR ATEGIC REPORT

Market overview 
A look at our  
market drivers

The performance of real estate, 
like all asset classes, is driven by 
the interplay of demand and 
supply: investor demand for 
property assets and occupier 
demand for space, with 
performance dependent on the 
supply of properties to buy or 
lease to satisfy that demand.
The property market is therefore typically 
considered to be cyclical but more 
recently our business has been driven by 
structural trends. These have amplified 
the impacts of positive cyclical drivers 
and have outweighed the impact of any 
negative ones.

CYCLICAL DRIVERS: 
Factors often linked to the economic 
cycle that influence supply and demand 
and therefore impact asset values and 
rental levels.

STRUCTURAL DRIVERS: 
Changes in the way that an industry or 
market functions that results in longer-term 
or even permanent change.

We monitor both cyclical and structural 
drivers and use them to shape our strategy 
and influence decisions on the shape of our 
portfolio and the nature of our investments.

REAL ESTATE AS AN 
INVESTMENT ASSET: 
If investor demand increases, in the 
absence of additional supply, the value 
of real estate will rise; if demand wanes 
or supply increases, the value will 
fall. Real estate pricing is commonly 
expressed as a yield which is the rent 
payable for a building as a percentage of 
its value. Assuming rents remain static, as 
the value of real estate rises, its yield falls 
(often referred to as ‘yield compression’) 
and vice versa.

REAL ESTATE AS AN 
OPERATING NECESSITY:  
As occupier demand increases, in 
the absence of additional supply, 
overall lease terms will become more 
expensive for the occupier, including 
(but not exclusively) an increase in rents. 
If demand for space falls, or supply 
increases ahead of occupier demand, 
overall lease terms, including rent, will 
become cheaper. 

24

SUPPLY CHAIN EFFICIENCY AND RESILIENCE

Manufacturers, retailers (both traditional and 
online) and distributors require efficient, reliable 
distribution networks and supply chains in order to 
compete effectively – to meet the ever-increasing 
demands of their customers and to reduce costs.

To achieve this they need to invest in modern 
warehouse facilities well-located to serve their 
customers, but also close to labour pools to 
staff their facilities and provide truck drivers. 
They frequently need larger buildings in central 
locations, where there is space and power to 
support automation; and they need smaller 
buildings close to the end consumer to facilitate 
the ‘last mile’ of the distribution journey.

The pandemic has highlighted the importance of 
resilient supply chains more than ever before and 
this has stimulated new demand from occupiers 
looking to compete more effectively in the future. 
Brexit and the threat of border disruption has 
added further demand for more resilience in the 
supply chains. 

What it means for SEGRO?
 } Increased demand for modern, well-located 
warehousing for supply-chain efficiency or 
for resilience.

URBANISATION 

Most major European cities are forecast to grow 
over the next decade leading to ambitious new 
housing targets being adopted. A growing 
population leads to increased demand for goods 
and services and for warehouse space from which 
to supply them, particularly for ‘last mile’ deliveries. 

Land previously used for industrial purposes in and 
around major towns and cities is increasingly being 
used for the construction of houses and other uses. 

As a result land available to meet the need for 
increased warehouse demand is being eroded 
and this tends to lead to higher land prices and 
increased rents for well-located industrial properties.

The pandemic has meant that cities such as London 
and Paris are currently functioning very differently 
but, longer term, we believe they will continue to 
act as centres of commerce, innovation and culture 
and therefore attract people to live, work and play 
in them. 

What it means for SEGRO?
 } Two-thirds of our portfolio is in urban locations 

so we are well positioned to benefit from 
this trend.

 } In London, rental values for our urban 

warehouses increased by 3.3 per cent in 2020, 
reflecting that supply/demand imbalance despite 
the pandemic. 

 } The shortage of land in urban areas is also 

leading us to innovate to intensify land use, for 
example, by constructing multi-level buildings. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020NEED FOR EFFICIENT,  
SUSTAINABLE BUILDINGS 

With the world around us becoming more 
environmentally aware there is an increasing focus 
on the impact of buildings on the environment and 
finite natural resources. Our customers also want 
to minimise their own footprints and reduce their 
overall occupancy costs. It is important that landlords 
and developers own and create buildings that are 
sustainable in the long term and that use natural 
resources efficiently. 

What it means for SEGRO?
 } Our developments are designed to meet  
our net-zero carbon environmental targets 
(see pages 29, 57 and 89).

 } A building’s sustainability is an important factor 

in our investment decisions, not only for potential 
acquisitions but also for deciding whether to 
refurbish or dispose of assets.

 } We are constantly looking at ways of innovating 

using new materials and technologies, for 
example we piloted SMART technology sensors 
in 2020 to help our customers understand how 
they can use their buildings more efficiently. 

DIGITALISATION OF OUR SOCIETY 
(AND RESULTANT CHANGES IN 
CONSUMER BEHAVIOUR)

E-commerce has been on the rise across 
Europe for a number of years and this has been 
accelerated by the pandemic, with the majority 
of our markets now reporting online penetration 
levels above 10 per cent. Supporting an online 
or omni-channel retail model requires more and 
different warehousing than is needed to service 
a traditional retail store network.

The growth of e-commerce, the move to cloud 
computing by businesses and the generation 
of more and more digital data by businesses 
and consumers leads to increased demand 
for data centres to store and process the data. 
The pandemic has added to this with more people 
working from home, using video conferencing 
and streaming home entertainment content. 

We believe these trends will remain in place long 
after the pandemic has receded and are likely to 
have been accelerated as a result of it. 

What it means for SEGRO?
 } Strong occupier demand for our urban 

warehouses located on the edge of cities to 
cater for ‘last-mile’ delivery.

 } Almost two-thirds of our lettings in 2020 were 

to customers linked to e-commerce.

 } We have experienced strong demand for data 
centre space during 2020 and this is likely to 
continue in 2021.

CYCLICAL DRIVERS

ECONOMIC OUTLOOK 

Economic growth is an important driver of 
occupier demand for space. A supportive 
economic environment encourages businesses 
to grow and therefore to secure extra space. In a 
recession, customer insolvencies and industrial 
vacancy rates tend to increase. 

Global economic growth has been impacted by 
the pandemic in 2020 and Brexit could also have 
a negative impact on economic growth in the 
short and long-term. 

What it means for SEGRO?
 } We have a very diverse customer base 
covering many different sectors which  
offers us some protection against problems  
in specific industries. So far, the structural  
drivers impacting our business have more  
than offset the negative economic impacts  
of the pandemic. We do however remain alert 
to the risk of a longer global recession that 
could impact occupier demand in the future. 

INTEREST R ATE ENVIRONMENT 

Monetary policy across Europe – and globally 
– means that we continue to operate in a low 
interest rate environment. Prime industrial real 
estate yields in the UK and Europe are between 
3 and 6 percentage points higher than their 
respective risk-free benchmarks making industrial 
real estate attractive on a relative basis.

What it means for SEGRO?
 } This relatively attractive yield profile is enhanced 
by rental growth as a result of high occupier 
demand. Our portfolio increased in value by 
10.3 per cent in 2020, reflecting significant yield 
compression and improving rental values.

 } Greater competition for completed assets from 
investors has increased their prices meaning 
we can generally achieve better returns from 
developing than acquiring assets, short-term 
price of our land is increasing as well.

COMPETITIVE SUPPLY 

The relatively short construction time for 
warehousing means that the availability of new 
speculatively developed buildings can sometimes 
exceed demand, leading to increased vacancy 
rates and weaker rents. 

Despite the pandemic, occupier demand has 
remained strong and the supply of speculatively 
developed space has been more moderate. 
This could change in the future, although tight 
planning laws and limited availability of land 
(particularly in urban areas) are likely to help to 
keep supply in check.

What it means for SEGRO?
 } Rental values have increased in most areas of 

our portfolio in 2020.

 } We continue to take a cautious approach to 
speculative development, preferring most of 
our developments to be de-risked through 
pre-letting. 

25

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT

Driving superior performance through 
a Purpose-led, responsible approach to business

Our Business Model describes what we do and our Strategy describes how we 
do it, both are driven by our Purpose and underpinned by our strong culture. 
This ensures we create long-term value for all of our stakeholders. 

WHAT WE DO

HOW WE DO IT

ACQUISITIONS

MARKET 
ANALYSIS

DEVELOPMENT

O

E SE G R

L
SIB
N
O
P
S
E
R

OUR  
CUSTOMERS

ASSET 
RECYCLING

CUSTOMER 
RELATIONSHIPS

PORTFOLIO 
REVIEW

ACTIVE ASSET  
MANAGEMENT

O

U

R

P

U

R

P

O

S

E

OUR  
GOAL

OPERATIONAL  
EXCELLENCE

DISCIPLINED  
CAPITAL ALLOCATION

EFFICIENT CAPITAL AND  
CORPORATE STRUCTURE

OUR CULT U R E

Creating long-term value  
for all of our stakeholders 

26

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
  
OUR PURPOSE:

OUR CULTURE:

We create the space that 
enables extraordinary 
things to happen.
Our Purpose encapsulates why we exist as 
a company and what energises us. 

It was formed in 2015 with the involvement of 
the entire company and we work hard to ensure 
that it remains an organic part of our culture and 
is owned by everyone at SEGRO. 

We have a strong and unique company culture 
that permeates through the whole business. 

This culture is underpinned by our Values, our 
core beliefs about how we do business which 
guide our decision making, large and small. 
They are the ways in which we work together 
to make things happen.

SAY IT LIKE IT IS

STAND SIDE BY SIDE

KEEP ONE EYE ON THE HORIZON

IF THE DOOR IS CLOSED…

DOES IT MAKE THE BOAT GO FASTER?

OUR BUSINESS MODEL

RESPONSIBLE SEGRO

At the heart of our Business 
Model is a deep understanding 
of our customers’ needs. We 
explain how we create value 
for our stakeholders and the 
Resources & Relationships 
that we need to do this on 
pages 30-45.

ACQUISITIONS

MARKET 
ANALYSIS

DEVELOPMENT

OUR  
CUSTOMERS

ASSET 
RECYCLING

CUSTOMER 
RELATIONSHIPS

Our Responsible SEGRO 
framework helps us to 
articulate and focus on  
our ESG goals.

PORTFOLIO 
REVIEW

ACTIVE ASSET  
MANAGEMENT

We recognise that our responsibility goes well beyond the space 
that we own and we work hard to make a positive contribution to 
our environment, our customers, our people, our partners and the 
communities in which we operate. 

Understanding the needs and priorities of our various stakeholders 
is embedded in the way we do business and in recognition of that 
we have for the first time this year integrated this information into 
the Strategic Report. 

O

E SE G R

L
SIB
N
O
P
S
E
R

O

U

R

P

U

R

P

O

S

E

OUR  
GOAL

OPERATIONAL  
EXCELLENCE

DISCIPLINED  
CAPITAL ALLOCATION

EFFICIENT CAPITAL AND  
CORPORATE STRUCTURE

OUR CULT U R E

HEALTH & SAFETY

Page 45

OUR PEOPLE

Pages 20,  
34-36, 90-91

OUR SUPPLIERS

Pages 22, 39, 90

OUR CUSTOMERS

Pages 21, 32-33

OUR COMMUNITIES

Pages 23, 41-43

OUR INVESTORS

Pages 23, 40

OUR ENVIRONMENT

Pages 57-59, 
86-89

27

OUR STR ATEGY

We have been following a 
simple but effective strategy 
since late 2011. 

Read more
Page 46-47

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
STR ATEGIC REPORT

Responsible SEGRO  
Re-launching our Responsible SEGRO framework

The future success of SEGRO depends on our 
ability to make a positive contribution to our 
customers, employees, suppliers, investors and our 
communities. As a creator and manager of physical 
spaces, we naturally take a long-term approach to 
how we do business and acting with integrity has 
always been at the heart of what we do at SEGRO. 
The renewed Responsible SEGRO framework 
outlines how championing low-carbon growth, 
supporting local communities and nurturing 
talent will be our primary areas of focus going 
forward. By stretching ourselves to be net-zero 
carbon by 2030, becoming a more diverse and 
inclusive business and a greater support to our 
local communities, we aim to be the first choice 
for our customers, employees, suppliers, investors, 
communities and other stakeholders.

DAVID SLEATH
CHIEF EXECUTIVE 

Our Purpose is to create the 
space that enables extraordinary 
things to happen. It highlights 
our dual roles: as creators of 
physical spaces and enablers for 
our stakeholders to achieve their 
own ambitions. 
It is true for our customers who depend 
on our properties to be able to deliver the 
extraordinary range of goods and services 
which are essential to modern life. It is true for 
our colleagues, whom we want to thrive and 
to maximise their potential while working with 
us. And it is true of other stakeholders such as 
the people and communities who work in, live 
near or provide services to our properties.

Our commitment to be a force for societal and 
environmental good is integral to our Purpose 
and Strategy. This has been at the core of how 
we do business for over 100 years, and will be 
just as important for the next 100. 

This commitment is led by our Board, but 
lived by SEGRO colleagues every day. It’s 
about doing the right thing and making a 
positive impact wherever we operate. 

To make sure that we continue to meet 
our own high standards and those that are 
expected of us, as part of this process we 
have listened to our customers, employees, 
suppliers, investors and other stakeholders 
to understand what’s important to them and 
how we can be a force for good beyond the 
buildings we create and own. Our ambition 
is to be the partner of choice for all of our 
stakeholders, to enable us to create long-term 
economic and societal value. 

Our long-held commitments to leadership in 
health and safety, stakeholder engagement, 
corporate governance and being a good 
corporate citizen are stronger than ever and 
our Responsible SEGRO priorities have been 
designed to support and enhance these.

Our new Responsible SEGRO framework 
introduces three long-term priorities to 
which we can make the greatest business, 
environment and social contribution. 
Our three priorities are:

 } Championing low-carbon growth;

 } Investing in our local communities and 

environments; and

 } Nurturing talent

For each of these areas we have established 
challenging initial targets, against which we 
will report annually, and have set out the 
actions needed to achieve them. 

We will set additional, more specific, 
supporting targets as necessary and we expect 
our actions and approach to evolve over time 
to reflect our achievements, technological 
change and the priorities of our stakeholders 
and wider society. 

We have put the right structures in place 
throughout our business to monitor how 
we are performing against our targets, and 
we will achieve our goals by drawing on our 
expertise in our field; our strong relationships 
with our investors, customers and suppliers; 
and the resourcefulness and determination of 
our people.

Our goals will be achieved by working with 
our local communities, our partners – in 
particular our customers – and our suppliers 
in order to deliver real change for the 
greater good.

We believe that working towards and achieving 
the goals within the Responsible SEGRO 
framework will ensure we remain a business 
fit for the future, one that helps our customers 
grow, our communities flourish and our 
people thrive.

In short, that we will continue to create the 
space which enables extraordinary things to 
happen for many years to come.

28

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OUR THREE LONG-TERM PRIORITIES

T
X
E
T
N
O
C

S
T
E
G
R
A
T

S
N
O

I
T
C
A

CHAMPIONING   
LOW-CARBON GROWTH

INVESTING IN OUR 
LOCAL COMMUNITIES 
AND ENVIRONMENTS

NURTURING  
TALENT

SEGRO recognises that the world faces a 
climate emergency and we are committed 
to playing our part in tackling climate 
change by limiting global temperature 
rise to less than 1.5 degrees, in tandem 
with growth in our business and the 
wider economy.

We will be net-zero carbon by 2030

SEGRO is an integral part of the 
communities where it operates, and we are 
committed to contributing to their long-
term vitality.

SEGRO’s people are vital to and 
inseparable from its success, and we are 
committed to attracting and retaining a 
diverse range of talented individuals in 
our business.

We will create and implement Community 
Investment Plans for every key market in 
our portfolio by 2025

We will increase the overall diversity 
of our own workforce throughout 
the organisation

We will aim to reduce carbon 
emissions from our development 
activity and the operation of our 
existing buildings, and eliminate them 
where possible.

We will implement plans to absorb 
any residual carbon. 

We will research and implement 
innovative approaches to absorb 
or offset residual carbon. 

We will work with our customers 
and suppliers to support our local 
businesses and economies.

We will help improve the skills 
of local people to enhance 
their career and employment 
opportunities by investing in local 
training programmes.

Equally, we will enhance the spaces 
around our buildings, working with 
local partners to ensure we meet the 
needs of our communities. 

We will provide a healthy and 
supportive working environment, 
develop fulfilling and rewarding 
careers, foster an inclusive culture 
and build a more diverse workforce.

ALIGNMENT WITH THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS

We have reviewed the United Nations Sustainable Development Goals against our Responsible SEGRO framework to understand which 
goals are particularly significant to our business and the three core priorities that we have outlined above. Elements of this framework are 
aligned with all of the Goals, but we believe that we are able to make the greatest contribution to the following six:

SEGRO is committed to championing 
low-carbon growth and has set a target 
to be net-zero carbon by 2030. We will 
reduce the embodied carbon in our new 
developments as well as reducing the 
carbon-intensity of our properties through 
initiatives such as increasing our solar 
generation capacity. We want to play our 
part in tackling the increasingly evident 
challenge that climate change presents.

SEGRO is committed to supporting local 
communities with a focus on providing 
training and helping people build the 
skills they need to gain employment. 
We will work together with our partners 
to reach more people and help them back 
into education, training or employment. 
We want to play our part in reducing 
inequalities and ensuring that more people 
have the right skills to be able to access 
meaningful work.

SEGRO is committed to being a good 
neighbour and to enhancing the spaces 
beyond our buildings. We will work to 
accelerate green transport solutions 
through promoting better public transport 
links and cycling infrastructure and 
installing electric vehicle charging points. 
We want to play our part in ensuring 
that our buildings are part of thriving, 
sustainable communities.

29

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT 

Our Business Model  
Creating long-term, sustainable value 

A deep understanding of our customers’ needs 
lies at the heart of how we do business and create 
value for our stakeholders.

WHAT WE NEED 

A DEEP UNDERSTANDING OF OUR 
CUSTOMERS’ NEEDS

We pride ourselves on the strength of our customer 
relationships and use insights that we gain from them 
to make better, mutually beneficial business decisions.

DIVERSE, MOTIVATED, TALENTED 
AND ENGAGED PEOPLE

We employ 355 people with expert skills across all aspects  
of real estate, corporate functions and also newer areas such 
as data analytics.

A PORTFOLIO OF PRIME, SUSTAINABLE ASSETS

We buy and build warehouse properties located inside or 
on the edge of major cities and key transport corridors and 
logistics hubs.

LAND TO FUEL THE DEVELOPMENT PIPELINE

SUPPLIERS AND OTHER BUSINESS PARTNERS

We work with suppliers and other business partners whose aims 
complement our own. 

AN EFFICIENT CAPITAL STRUCTURE

We forge strong relationships with our shareholders as well as our 
banks and bondholders who provide equity funding and debt.

STRONG COMMUNITY RELATIONSHIPS

We aim to deliver long-term economic and social benefits to the 
communities that we are part of. 

FUTURE-PROOFING THROUGH INNOVATION

Embracing technology is key to making sure our business is fit 
for the future and also provides us with a huge opportunity for 
smooth and more efficient operations.

Sourcing land is key to the future growth of our business and 
we leverage our Pan-European operating platform to secure 
attractive opportunities.

A ZERO-TOLERANCE APPROACH TO POOR  
HEALTH & SAFETY

Health and Safety is central to all of our business activities and we 
are committed to the prevention of harm to our employees and 
throughout our supply chain. 

CREATING VALUE FOR ALL OF OUR STAKEHOLDERS

FINANCIAL

NON-FINANCIAL

ADJUSTED PROFIT BEFORE TAX

CUSTOMER SATISFACTION

£296.5m (+10.8%)

87%

RENT ROLL GROWTH

CHARITABLE CONTRIBUTIONS

£60.1m (+10.3%)

£1.5m

ADJUSTED NAV

814p (+16.3%)

TOTAL DIVIDEND

22.1p (+6.8%)

  Full KPIs see pages 50-51

30

NEW DEVELOPMENTS TARGETED AS BREEAM 
‘EXCELLENT’ OR ‘VERY GOOD’ (OR LOCAL EQUIVALENT)

93%

A COMPANY WHERE PEOPLE WANT TO WORK 

97%

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
OUR STR ATEGY:

O

E SE G R

L
SIB
N
O
P
S
E
R

O

U

R

P

U

R

P

O

S

E

OUR  
GOAL

OPERATIONAL  
EXCELLENCE

DISCIPLINED  
CAPITAL ALLOCATION

EFFICIENT CAPITAL AND  
CORPORATE STRUCTURE

OUR CULT U R E

WHAT WE DO (OUR BUSINESS MODEL) 

DISCIPLINED CAPITAL ALLOCATION

OPER ATIONAL EXCELLENCE

ACQUISITIONS

We buy assets and land in 
key strategic markets and 
source opportunities off-
market where possible.

DEVELOPMENT

We build prime, sustainable 
warehouses in key locations.

MARKET 
ANALYSIS

We take into account 
long-term trends and our 
customers’ needs when 
deciding where and what 
to invest in.

ASSET RECYCLING

We dispose of assets where 
we believe we have  
optimised returns.

OUR 
CUSTOMERS

CUSTOMER 
RELATIONSHIPS

We aim to provide an 
excellent service to, and 
develop partnerships with, 
our customers.

PORTFOLIO 
REVIEW

We undertake a detailed 
analysis of our portfolio 
every year to ensure we 
understand the risk-return 
profile of every asset.

ACTIVE ASSET 
MANAGEMENT

We actively manage our 
assets to strike a balance 
between occupancy and 
rental growth.

  Read more about our strategy see pages 46-49

31

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
STR ATEGIC REPORT

Relationships & Resources 
What we need to create the space that 
enables extraordinary things to happen

WHAT WE NEED TO CREATE   
LONG-TERM VALUE:

 } A DEEP UNDERSTANDING OF OUR 

CUSTOMERS’ NEEDS

 } DIVERSE, MOTIVATED, TALENTED AND 

ENGAGED PEOPLE

 } A PORTFOLIO OF PRIME, 
SUSTAINABLE ASSETS

 } LAND TO FUEL THE 

DEVELOPMENT PIPELINE 

 } SUPPLIERS AND OTHER 
BUSINESS PARTNERS

 } AN EFFICIENT CAPITAL STRUCTURE

 } STRONG COMMUNITY RELATIONSHIPS

 } FUTURE-PROOFING 

THROUGH INNOVATION

 } A ZERO-TOLER ANCE APPROACH TO 

POOR HEALTH AND SAFETY

In this section we describe how we 
engage with some of our stakeholders. 
For our full s172 statement and further 
information see pages 83-84.

A DEEP UNDERSTANDING OF OUR CUSTOMERS’ NEEDS

Our customers are at the 
heart of our business and our 
understanding of their needs  
and requirements drives our 
decision making and helps us to 
make sure our portfolio is fit for 
the future.

ANDREW GULLIFORD
CHIEF OPER ATING OFFICER 

In addition to this collaboration on a 
practical level we also try to develop these 
relationships on a strategic level, helping us 
to understand the factors that are influencing 
their companies specifically, as well as their 
wider industries. Our ‘Futures Forums’ are 
an important part of this, bringing together 
customers to discuss near and longer terms 
trends that could impact them and us. 

We have dedicated cross-border teams for our 
larger multi-region customers and in 2020 we 
increased the number of customers covered 
by these teams, helping us to offer a greater 
portion of our customer base a coordinated 
and consistent service. We also developed 
a customer relationship management app 
which is a key tool for sharing information, 
insights and data amongst different parts of 
the business.

Understanding our customers’ needs and 
changing requirements is at the heart of 
everything we do as a business. It helps to 
shape our decisions on where and what to 
invest in; it is a key part of actively managing 
our portfolio; it is fundamental to the evolving 
design of our warehouses and influences our 
decisions when it comes to asset recycling. 

Essential to this understanding are the strong 
and meaningful relationships that we build 
with our customers and we believe that 
managing our portfolio internally is key to 
this. Part of the role of our asset and property 
managers is to build a knowledge of the 
businesses that occupy our space and just as 
buildings range in size and specification so do 
our customers, from small, owner-managed 
start-ups to global businesses. 

By understanding their differing priorities 
and challenges and feeding this back into the 
business we are able to offer them creative 
solutions to their real estate requirements. 
This can be as basic as offering additional, 
larger or smaller premises to align with their 
own growth aspirations but also goes beyond 
simple real estate transactions. 

Increasingly our customers are focused on the 
environmental sustainability of the buildings 
so that they can fulfil their own ESG targets. 
We are investigating ways in which we can 
help them achieve this and ran a number 
of pilot projects in 2020 to help shape our 
strategy in this area. These projects included 
installing sensors into some of our buildings, 
enabling our customers to better understand 
how they use their buildings and, ultimately 
to make financial and energy savings. 
We are also speaking to a number of our 
key customers about installing solar panels 
on the roofs of their buildings which will 
assist with carbon reduction targets and the 
growing demand for more power to service 
increased automation and the electrification 
of vehicle fleets.

During 2020, we were able to support our 
customers through the pandemic. For some 
that meant finding them additional space for 
a sudden increase in demand for their goods 
and services and for others that meant helping 
them survive temporary cash flow issues by 
deferring their rental payments. 

32

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020A DEEP UNDERSTANDING OF OUR CUSTOMERS’ NEEDS

In 2020, we employed an external firm of 
consultants to undertake research with some 
of our largest customers to get an insight 
into their relationships with us. Their findings 
have proved to be very useful and will form 
the basis of our next Futures Forum, which 
will include many of the customers who took 
part in the project. We have also continued 
with our customer satisfaction surveys and in 
2020, for the first time, included questions on 
the future business needs of our customers, 
as well as measuring overall satisfaction. 
The survey established that 87 per cent 
of respondents rated SEGRO as ‘good’ or 
‘excellent’ (2019: 88 per cent). 99 per cent 
of respondents said they would be willing to 
recommend SEGRO (2019: 96 per cent).

By working closely with our customers to 
understand their needs and issues, we aim to 
provide a first class consistent service and real 
estate solutions long into the future. We also 
hope that this approach will encourage 
customer loyalty and help us to generate new 
business – almost 60 per cent of our headline 
rent comes from customers with whom we 
have multiple leases and nearly two-thirds of 
our current development pipeline has been 
secured by a pre-let with an existing customer.

NUMBER OF CUSTOMERS

 1,383

2019: 1,190

CUSTOMERS WHO WOULD RECOMMEND 
SEGRO TO OTHERS

99%

2019: 96%

CUSTOMER RETENTION RATE

86%

2019: 88%

-75%

REDUCTION IN GREENHOUSE 
GAS EMISSIONS, HELPING MEET 
SUSTAINABILITY OBJECTIVES

We have enjoyed working  
with SEGRO on a number of 
projects throughout 2020. The 
SEGRO team fully understand 
our strategy and are committed 
to ensuring an excellent 
customer relationship.

STEPHANE CASSAGNE
MANAGING DIRECTOR EXPRESS 
AND DISTRIBUTION, GEODIS

CASE STUDY: GEODIS

We have been working with GEODIS for 
many years now and they are one of our 
customers who benefit from our cross-
border service teams. We now work together 
with them across five countries – UK, France, 
Germany, Poland and Italy.

In 2020, we partnered with them to 
develop a new unit at SEGRO Logistics 
Park Dourges (located 30 km south from 
Lille). The multimodal capabilities at the unit 
enabled GEODIS to increase their activities 
in rail transport between the north and 
south of France, helping them to meet their 
sustainability objectives. 

Two trains use the new building daily, 
representing the equivalent of 100 fully 
loaded lorries. This has helped them to 
reduce their greenhouse gas emissions by 
up to 75 per cent and also make significant 
cost savings. This opportunity came about 
as a result of our understanding and 
appreciation for the Geodis strategy and 
their business priorities. 

We are also currently building a last 
generation cross-dock unit located 35 km 
south of Paris which is due for completion in 
July 2021. This urban distribution hub will be 
dedicated to a GEODIS subsidiary and allow 
a further increase in activities from its current 
operation of over five million parcels a year.

We hope to continue to work closely with 
GEODIS to help them meet their aspirations 
into the future. 

33

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Relationships & Resources

What we need to create the space that 
enables extraordinary things to happen 
continued

DIVERSE, TALENTED, MOTIVATED AND ENGAGED PEOPLE

We want SEGRO to be a place 
where everyone is able to 
be themselves in a working 
environment which is inclusive, 
free from bias and provides  
equal opportunities for all.

LIZ REILLY
GROUP HUMAN   
RESOURCES DIRECTOR

Although real estate is a physical asset class, 
the business of acquiring, developing and 
managing it requires great people and our 
long-term success is therefore dependent on 
the expertise, commitment and motivation 
of our workforce. We have just over 350 
employees with expert skills across all aspects 
of real estate and it is these employees 
who manage our relationships on a day-to-
day basis. 

We believe that it is our responsibility to make 
SEGRO a place where people feel fulfilled 
by the work that they do, are inspired by the 
environment they work in and are supported 
and developed to reach their full potential. 
This in turn should enable us to attract and 
retain talented people and will ensure the 
future success of our business. 

EMPLOYEES SERVING 1,383 CUSTOMERS

CULTURE & WORKING ENVIRONMENT

We have a strong company culture which 
is brought to life by our people every single 
day. The Purpose & Values that we created 
five years ago, with the input of every single 
employee, continue to guide our decision 
making and the approach we take to running 
our business on a daily basis. A company 
culture is inherently intangible but we 
support it by: 

 } providing a working environment 
that encourages collaboration and 
communication and we have catered for 
this by creating open-plan offices with 
flexible workspaces that encourage people 
to interact and engage with colleagues. 

 } taking a proactive approach to 

communication, keeping our employees up 
to date about information relating to them 
individually as well as what is happening 
around the business, and encouraging 
them to give feedback both formally 
and informally. 

51%

49%

67%

33%

EMPLOYEE SURVEY RESULTS

We carried out our bi-annual employee 
survey in November 2020 and had a very 
high level of participation with 94% of 
employees taking part.

KEY HIGHLIGHTS:

 } A record employee engagement score 

of 94%

 355

2019: 332

VOLUNTARY STAFF TURNOVER IN 2020

 2.3%

2019: 5%

EMPLOYEE ENGAGEMENT 

94%

2018: 92%

GENDER DIVERSITY

WORKFORCE 

1. Male (182)

2. Female (173)

LEADERSHIP TEAM 

1. Male (10)

2. Female (5)

For further information on our new 
Responsible SEGRO targets:
see page 28-29

34

 } carrying out an employee engagement 
survey every two years, which asks all 
employees to comment on various aspects 
of their work at SEGRO and the results of 
this are reported to the Board, Leadership 
team and local team members, highlighting 
both areas of notable success and areas 
for improvement.

The pandemic made supporting our culture 
more challenging but we adapted quickly and 
have detailed some of the measures taken on 
page 20 of this report. 

We believe that the Company’s culture 
supports honest and open expression 
of concerns between employees and 
management but in the event that an 
employee (or third party supplier) wishes 
to raise a concern on a confidential and 
anonymous basis, the Company offers a 
whistle-blowing helpline which is operated by 
an independent company.

INCLUSION & DIVERSITY

One of the new focus areas within our 
Responsible SEGRO framework is our 
ambition to have a truly diverse workforce 
which broadly reflects the make-up of the 
population of the countries that we operate in.

We understand that people need to feel 
comfortable and free to be themselves. 
and have therefore created a working 
environment which is inclusive, supportive and 
free from bias, with equal opportunities for all.

We have robust policies in place with regard 
to equal opportunities supporting our belief 
that everyone deserves the right to be treated 
equally and should not be discriminated 
against for any reason. In order to support 
these policies, every employee is required 
to complete diversity training, particularly 
to combat unconscious bias. This includes 

SEGRO ENGAGEMENT: LONG-TERM TREND

94

92

89

90

 } 97% of employees said they are proud 
to work for SEGRO and care about the 
future of the company 

79

 } 95% of employees felt that SEGRO 

respects individual differences

2012

2014

2016

2018

2020

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020   
DIVERSE, TALENTED, MOTIVATED AND ENGAGED PEOPLE

appropriate support, retraining and facilities 
for employees who are disabled or who 
become disabled whilst in our employment. 

Our overall workforce is diverse in terms of 
gender (49 per cent of our workforce are women). 
However, at senior levels the representation of 
women falls and within the Property functions 
there is a lack of all types of diversity. 

We are working hard to improve the 
representation of women at senior levels and 
support the 30% Club. Our CEO has also signed 
the Real Estate Balance ‘CEO Commitments for 
Diversity’. We have also implemented an Agile 
Working Policy to provide more flexibility around 
working locations and hours.

Our next priority is attracting people from 
different backgrounds into SEGRO and the 
sector and therefore helping to increase 
other forms of diversity within our business, 
particularly within the Property functions. 

This is an industry wide issue but we are 
committed to being a part of the solution 
and intend to make significant progress 
towards this over the next 3-5 years. Key to 
this will be our new Diversity and Inclusion 
Framework which builds on our participation 
in programmes such as Pathways to Property 
and will fundamentally change the way that 
we recruit into our business.

We believe that analysing diversity data and 
being transparent is an important step towards 
creating meaningful change. This is why we 
have voluntarily published our UK Gender 
Pay Gap data since 2017 and are voluntarily 
publishing our UK Ethnicity Pay Gap data for 
the first time this year.

In 2020 our mean UK Gender Pay Gap was 
51 per cent, an improvement from 52 per 
cent in 2019. In 2020 our mean UK Ethnicity 
Pay Gap was 27 per cent. Like many other 
organisations the reasons for our Gender Pay 
Gap and Ethnicity Pay Gap is the fact that we 
have more men than women and more white 
employees than ethnic minority employees in 
senior roles. 

We believe in treating all employees equally, 
and are committed to becoming a more 
diverse and inclusive organisation, thereby 
reducing our gender and ethnicity pay gap 
over time. 

For our Gender and Ethnicity Pay Gap data:
see page 91 of our Additional ESG Disclosures.

REWARDING & RETAINING TALENT

Every permanent employee is entitled to variable 
compensation which is based on their own and 
the Company’s performance against targets and 
objectives. In addition, the Company operates 
share incentive plans through which shares are 
awarded to employees based on the Company 
achieving profit targets against budget (see 
page 135 for more details). 

In 2020, 99 per cent of eligible employees 
chose to participate in the UK and Continental 
European plans, each receiving 369 SEGRO 
shares. In addition to fixed and variable 
compensation, we provide a generous benefits 
package which includes health insurance and 
is reflective of market competitive packages in 
each of our geographies. 

TRAINING & DEVELOPMENT

We want our people to achieve great things 
during their time with SEGRO, supported by 
appropriate resources, training and coaching. 

Every employee has an interim and full 
year appraisal, at which their performance 
is reviewed, objectives are set and training 
needs are identified to help them achieve 
their objectives. 

Employees are encouraged to set personal as 
well as professional objectives and training is 
available to support both. We also sponsor our 
employees to study professional qualifications 
that are relevant to their role. Aside from the 
formal appraisal process, the management 
structure facilitates two-way communication 
between manager and team member 
throughout the year.

We believe that this approach to rewarding and 
developing talent, alongside a supportive and 
collaborative company culture, is reflected in our 
low employee turnover of 2.3 per cent (2019: 5 
per cent). Furthermore, while our training hours 
decreased in 2020, this was largely due to the 
remote nature of opportunities available and we 
expect higher levels of training to return when 
face-to-face interaction is possible again.

HEALTH & WELLBEING 

The wellbeing of our employees is paramount 
– both in and out of their working lives – and 
one of our highest priorities as a business is 
to ensure that our employees can work in a 
healthy, safe and secure environment and to 
ensure that everyone goes home safely at the 
end of the day.

We have a comprehensive Health and Safety 
training programme which starts when an 
employee joins SEGRO and is refreshed 
regularly depending on the requirements 
of their role. 

We believe that by investing in our people we 
are investing in the long-term success of our 
business as this helps to ensure that SEGRO 
is the employer of choice for diverse, talented, 
motivated and engaged people.

For further information on our People:
see pages 20-23 on our pandemic response and 
also pages 90-91 of Additional ESG Disclosures.

CASE STUDY: MENTAL HEALTH AND WELLBEING

SEGRO is committed to raising the profile of mental health and 
wellbeing within the workplace, encouraging others to recognise 
those who may need help and to create an environment that enables 
employees to talk openly about their mental health. 

Our Mental Health and Wellbeing programme provides awareness 
training to SEGRO line managers across the Group on the subject. 
We have also enhanced our BUPA offering to include the Healthy 
Minds service, which offers our UK employees a 24/7 confidential 
helpline offering short-term counselling with fully qualified 
counsellors. Similarly in Continental Europe, we offer an Employee 
Assistance Line offering 24/7 confidential help.

SEGRO aims to promote mental health awareness within the workplace 
through a number of initiatives including blogs, employee forums, 
videos, printed materials and events. We have a comprehensive 
wellbeing hub containing a wealth of support and information on our 
intranet and in December 2020, we also offered all employees free 
access to a mental wellbeing app. An internal working group, attended 
by trained wellbeing ambassadors, has been formed to plan events and 
discussions around the subject on an ongoing basis, which also helps 
encourage openness around the topic.

35

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS   
   
STR ATEGIC REPORT
Relationships & Resources

What we need to create the space that 
enables extraordinary things to happen 
continued

In the summer of 2019 
I attended the Pathways to 
Property Summer School, 
followed by a 4-day work 
experience placement at 
SEGRO. Thank you all for the 
knowledge you shared, the 
opportunities you have given 
me and funding provided. 
Your support has truly been 
life changing and I’m now 
feeling very positive about 
my future career prospects!

SOPHIA PIAT TO
SUMMER SCHOOL PARTICIPANT 

CASE STUDY: PATHWAYS TO PROPERTY – INCREASING DIVERSITY IN THE REAL ESTATE SECTOR

As part of our ambition to bring more diversity into the real 
estate sector, SEGRO has been a Gold sponsor of the Pathways to 
Property programme run by the University of Reading since 2012. 
This initiative aims to attract students from diverse backgrounds to 
gain an understanding of our industry through a Summer School, 
work experience placement, e-mentoring scheme, university bursary 
and an open online course.

The eighth Pathways to Property Summer School took place in July 
2020 and was an online event for the first time due to the restrictions 
resulting from the pandemic. The three-day course included lectures, 
virtual site visits, career counselling sessions, advice about going 
to university and a group project. Two of our Executive Directors 
presented as part of the 2020 Summer School programme.

97 students from Year 12 of school/college attended the 2020 
event. 99 per cent of the participants said the Summer School 
met or exceeded expectations and 83 per cent confirmed they are 
considering a career in property.

In October 2020, SEGRO hosted two of the Summer School students 
for virtual work experience over three days. Despite the Covid-19 
restrictions, the experience gave the students the opportunity to 
learn more about the industry, meet different individuals within 
the business and receive advice about how to get into the property 
industry. The online element required them to be self-motivated and 
taught them key skills such as time management and communication 
as well as a maturity needed to meet the demands of the placement 
in testing conditions.

Since the launch of the project in 2012, Pathways to Property have 
engaged with multiple students, school staff and parents to promote 
the exciting opportunities within the industry. 

Below is a breakdown of the level of engagement across 
different areas.

LEVEL OF ENGAGEMENT SINCE 2012

Number of students engaged with

Number of teachers and career advisors 
engaged with

Number of parents engaged with

Number of events attended

Number of Summer Schools run

Total number of Summer School attendees 
since 2012

Number of work experience placements arranged

Number of learners signed up to complete online 
course (OOC)

Percentage of Summer School attendees 
who were female

Percentage of Summer School attendees who have 
no family experience of Higher Education

>20,000

c 3,900

>1,000

294

8

701

310

14,000

47%

84%

Source: Pathways to Property

36

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020A PORTFOLIO OF PRIME, SUSTAINABLE ASSETS

As a result of our portfolio 
reshaping over the past decade 
and our active development 
pipeline, we are now proud 
owners of one of the most 
modern and sustainable 
warehouse portfolios in Europe.

ANDREW GULLIFORD
CHIEF OPER ATING OFFICER

ASSETS UNDER MANAGEMENT

£15.3bn

2019: £12.2bn

DISPOSALS SINCE 2012

£3.7bn

ASSET ACQUISITIONS SINCE 2012

£2.7bn

We buy and build warehouse properties 
located on the edge of major cities as well as 
in key transportation corridors and logistics 
hubs and actively manage £15.3 billion of 
assets. This prime, modern portfolio is a 
result of an ambitious portfolio reshaping 
programme that we embarked on in late 2011. 

Since then we have disposed of almost 
£3.7 billion of assets and land (excluding sales 
to our joint venture SELP) in markets or sub-
sectors that we identified as non-core. We now 
own what we believe to be one of the best 
portfolios of industrial property in Europe. 

With that reshaping now complete our 
disposal activity has slowed but we still 
continually review and refine the portfolio, 
carrying out an annual asset review process 
which looks at the opportunities, risks and 
potential returns for every single asset. As a 
result of this we identify assets (and sometimes 
markets) where we believe we have 
maximised the potential or where we believe 
the risk of holding an asset outweighs the 
potential benefits. The assets that we identify 
through this process form the basis of our 
investment disposal list. 

During the same period we acquired over 
£2.7 billion of assets in key strategic markets, 
taking advantage of our market knowledge 
and local networks to source opportunities off-
market where possible and therefore achieve 
better pricing. 

More recently we have focused our attention 
on development rather than asset acquisitions, 
where we can gain competitive advantage by 
exploiting our land bank and the skills of our 
development teams across Europe.

This has allowed us to generate superior 
returns than from buying assets and given 
us access to opportunities that would not be 
available on the investment market. 

Since late 2011 we have built almost 
4.4 million sq m of new space, adding 
over £240 million to the rent roll. We have 
been able to do this whilst keeping our 
development yield at around a 150 basis point 
margin over the equivalent investment yields.

In addition to building new assets we are also 
continually refurbishing and redeveloping 
existing warehouses that we believe are 
prime in terms of their location but perhaps 
need modernising to meet our customers’ 
ever changing requirements. Increasingly this 
involves the retrofitting of sustainability 
features to improve their performance and 
help our customers to reduce their own 
energy consumption. 

41 per cent of our assets are currently 
environmentally certified and for all new 
developments we target a rating of BREEAM 
‘Very Good’ or higher (or the equivalent local 
standard). In 2020, 93 per cent of our eligible 
development projects are expected to meet 
that target. 

The constant refinement and modernisation of 
the portfolio aims to ensure that our assets are 
the warehouses of choice for our customers; 
helping us to grow rents, keep vacancy low 
and mean that in the longer term our portfolio 
should outperform the benchmark and 
create value.

CASE STUDY: A NEW STANDARD FOR REFURBISHMENTS, 
UNIT E PREMIER PARK, LONDON

To meet our climate change ambitions, we 
must improve the sustainability performance 
of our existing buildings. This year we 
completed our first EPC A+ refurbishment 
at Unit E Premier Park, originally constructed 
in 1995. The energy efficient refurbishment 
included LED lighting, a switch from a gas-
powered heating system to an air source heat 
pump and a 176 kWp solar array which will 
generate 161 MWh of electricity per year. 
The solar electricity will help power 3 dual 
electric vehicle charge points which can each 
provide a charging capacity of 22 kW, for 
customer or commercial use. 

The 4,250 sq m building features bird and 
bat boxes to improve biodiversity, a green 
wall to the reception, a rainwater harvesting 
system and environmentally friendly paint 
which absorbs air pollutants. These measures 
have helped the building achieve a BREEAM 
‘Excellent’ rating. 

The specification also utilises re-used and 
recycled products to reduce embodied 
carbon. This included an eco-friendly carpet 
with biobased content, a re-used raised 
access floor moved from the ground floor to 
the first-floor extended office, and a reception 
desk made from 100% recycled plastic. 

37

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Relationships & Resources

What we need to create the space that 
enables extraordinary things to happen 
continued

LAND TO FUEL THE DEVELOPMENT PIPELINE

Over the past five years we have focused our 
capital expenditure more on development 
than acquiring finished assets as we believe 
this provides a better return on investment. 
As a result we have increased development 
capex from less than £200 million per year 
to over £500 million in 2020. In 2020 we 
completed 835,900 sq m of space, capable of 
generating £47 million of new headline rent. 

In order to facilitate this increased amount 
of development we need land to fuel 
the pipeline.

We currently have a landbank of over 
650 hectares that is capable of supporting 
approximately 2.8 million sq m of new space 
and generating rental income of £157 million. 
In addition to this we have land options that 
support almost another 1.0 million sq m 
of new space, equating to £62 million of 
potential new rent.

At the current rate of development spend 
our landbank should last us 3-5 years so it 
is important that we replenish it to enable 
us to meet anticipated future demand from 
consumers. We invested £286 million in 
development land during 2020 and utilised 
£185 million of land.

Sourcing industrial land is not easy and 
requires an in-depth knowledge of the market 
and also important are the relationships with 
local authorities to ensure a smooth permitting 
process. Our teams on the ground in each 
region do extensive research and think 
creatively to source opportunities, for example 
partnering with the French developer Icade 
as part of the redevelopment of Gobelins rail 
station in Central Paris and acquiring land for 
a 75,000 sq m underground logistics hub. 

Our operating platform in eight countries 
across Europe is an important part of our 
competitive advantage, allowing us to access 
off-market opportunities and continue to 
acquire land. 

Where possible we acquire land under option 
until it is zoned for industrial usage and we 
can progress with our development plans. 
We aim to keep land to within 5 to 7 per cent 
of gross asset value and are currently sitting at 
around 5 per cent.

We have a fantastic land bank 
and our local presence and 
knowledge in all of our key 
markets provides us with a 
competitive advantage when it 
comes to replenishing it.

ANDREW GULLIFORD
CHIEF OPER ATING OFFICER

LAND ACQUIRED IN 2020

£286m

2019: £147m

LAND UTILISED IN 2020

£185m

2019: £166m

POTENTIAL DEVELOPMENT 
FROM LANDBANK

 2.8m sq m

2019: 2.1m sq m

NET LAND UTILISATION, 2015–2020 
(BASED ON OPENING BOOK VALUE OR ACQUISITION VALUE)

Land acquired

Land utilised for development

Land disposed

Net

300

200

100

m
£

0

-100

-200

-300

134

69

94

(74)

(97)

(28)

38

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

0
2
0
2

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
SUPPLIERS AND OTHER BUSINESS PARTNERS

Our relationships with our suppliers and other 
business partners are key to helping us create 
value. We invest a lot of time in developing 
these and trying to ensure that our aims and 
objectives are aligned and mutually beneficial.

SUPPLIERS

We work with over 3,000 suppliers across the 
Group, ranging from small local businesses 
to multinational companies, and spent over 
£650 million with them in 2020.

We want to work with suppliers who share our 
values and our approach to matters such as 
health and safety, compliance, anti-bribery and 
corruption and modern slavery.

We are committed to ensuring that our 
supply chain is safe, secure and efficient. 
We follow a strict supplier assurance process 
which enables us to be confident that 
our supply chain is maintained to a high 
standard and improvements can be made 
whenever possible. 

For more details on our approach to Modern Slavery  
and Anti-Bribery and Corruption 
see page 90-91 of our Additional ESG Disclosures.

Our comprehensive supplier assurance 
process is automated, so it is easy for suppliers 
to use and update information. It requires all 
suppliers to provide information appropriate 
to their service, including health and safety 
policy, evidence of insurance and confirmation 
of skills and experience. They need to 
provide this data before they become an 
accredited supplier. We re-test and re-assess 
our suppliers, and regularly update the list of 
assured suppliers.

We have service review sessions with many 
of the professional services suppliers (for 
example, with our lawyers and agents), while 
those involved in construction activities have 
regular visits from our Health and Safety 
team. We also have a rolling programme 
of meetings with our suppliers’ senior 
management teams to discuss in more detail 
their compliance with our approach to anti-
bribery and corruption and modern slavery. 
There were no concerns or issues arising out 
of the meetings conducted during 2020.

We want to work in partnership with suppliers 
and we value long term relationships where 
they understand us, our standards and our 
preferred ways of working. This has been 
particularly important in 2020 and has 
helped us to ensure business continuity and 
also to help our key suppliers through this 
difficult time. 

In the spirit of partnership, we treat our 
suppliers well and ensure that they are paid 
on time. We are a signatory to the UK Prompt 
Payment Code and, in 2020, over 95 per 
cent of UK invoices were paid within 30 days 
of receipt, with an average payment time of 
16 days.

SELP

The majority of our portfolio is wholly 
owned but we have one main joint venture, 
the SEGRO European Logistics Partnership 
(SELP), owned 50-50 by SEGRO and PSP 
Investments. This joint venture focuses solely 
on big box warehouses in Continental Europe 
and has allowed us to achieve scale in this 
market at a much faster pace than we could 
have done as sole owners and in more capital 
efficient manner. The partnership started in 
2013 with €1 billion of assets and now owns 
over €5.3 billion of land and assets in seven 
European countries. 

SELP has a Board comprising four directors, 
two from each parent company and it meets 
at least quarterly. SEGRO manages the joint 
venture and advises the Board on investment 
and financial matters, with decisions taken 
jointly by the two owners. 

More information on SELP can be found at 
www.selp.lu.

CASE STUDY – VALLEY PROVINCIAL

Valley Provincial provide landscape 
management services and has been a supplier 
to SEGRO’s Greater London business since 
2009. Our relationship has evolved into a 
strong partnership based on excellent working 
relations and continuity of service.

Through 2020, we maintained particularly 
close contact with Valley Provincial in 
order to provide support through the 
Covid-19 pandemic.

We established regular calls to ensure we 
were able to support each other as necessary, 
checking in with how teams were coping and 
establishing if there was additional support we 
could provide. They were also beneficial as a 
discussion forum for ideas how best to manage 
imminent challenges as well as proactively 
manage those possible in the future.

Our collaboration ensured that the excellent 
services we received from Valley Provincial 
were maintained throughout the pandemic 
period. The precautionary initiatives 
undertaken by both companies also helped 
ensure that Valley Provincial saw no positive 
Covid-19 cases among their employees.

Valley Provincial appreciated that SEGRO 
cared about their business during a very 
challenging period. By working in partnership, 
both companies were also able to achieve 
a deeper understanding of each other’s 
businesses which will benefit the relationship 
into the future.

During 2020, we were delighted to further 
our partnership with Valley Provincial on some 
of SEGRO’s new estates in Perivale Park and 
Canning Town.

Valley Provincial and SEGRO’s partnership 
has continued to thrive through the  
Covid-19 pandemic. We greatly 
appreciated the support that SEGRO 
has shown during the unprecedented 
period and look forward to working 
together into the long term future.

GAVIN SIMS
OPER ATIONS DIRECTOR,  
VALLEY PROVINCIAL

39

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS   
STR ATEGIC REPORT
Relationships & Resources

What we need to create the space that 
enables extraordinary things to happen 
continued

AN EFFICIENT CAPITAL STRUCTURE

We have strong relationships 
with our investors thanks to 
our proactive investor relations 
programme – in 2020 this 
allowed us to access funding  
for our development pipeline 
even during a difficult time in  
the markets.

SOUMEN DAS
CHIEF FINANCIAL OFFICER

NEW FINANCING IN 2020

£1.1bn

2019: £498m

LTV

 24%

2019: 24%

NUMBER OF INVESTOR MEETINGS IN 2020

 194

2019: 185

We fund our investment activities through a 
combination of equity, debt and the proceeds 
of disposals. In 2020 we raised £1.1 billion 
of capital as a result of a £680 million equity 
raise and a €450 million US Private Placement 
as well as other financing activity. We disposed 
of £139 million of assets and land, slightly less 
than in recent years. 

The combination of this activity and the 
increase in value of our portfolio has meant 
that our LTV has remained low at 24 per cent, 
which provides us with the flexibility to take 
advantage of investment opportunities arising.

We forge strong relationships with our 
shareholders as well as with our banks 
and bond holders who provide our equity 
and debt funding. As a listed company we 
have a responsibility to those individuals 
and institutions who have invested money 
in our business either through equity (our 
shareholders and joint venture partners) 
or debt (our banks and bond holders) to 
deliver long-term and sustainable returns on 
their investment.

We ensure regular communication with our 
investors through an extensive programme, 
mainly managed by a dedicated Investor 
Relations team. This includes roadshow and 
other ad hoc meetings (most of which were 
done virtually in 2020), attendance at investor 
conferences as well as site visits. 

Unfortunately we had to cancel our planned 
site visits in 2020 but are looking forward to 
resuming them as soon as it is safe to do so 
and are also looking into the possibilities for 
a virtual format which would make these tours 
accessible to a wider audience. 

The Annual General Meeting normally also 
provides an excellent opportunity to meet 
many of our retail shareholders and answer 
their questions about the business but 
unfortunately due to the pandemic we had 
to ask shareholders not to attend in person 
and instead to vote online or appoint the 
Chair of the AGM as proxy. We will return 
to a physical meeting as soon as government 
regulations allow.

Our website contains comprehensive 
information about our strategy and 
performance, regulatory news and press 
releases as well as information about our 
debt and our approach to Environmental, 
Social and Governance (ESG) issues. 
The Investors section of the site also includes 
the presentations made during the investor 
tours, a summary of the analysts’ financial 
forecasts (consensus) and webcasts of the 
Chief Executive, Chief Financial Officer and 
Chief Operating Officer presenting the full 
year and half year results.

During 2020, the Executive Directors and 
the Investor Relations team held meetings 
with representatives from over 260 institutions 
(including 14 of our top 20 shareholders 
– the remaining 6 are passive institutions) 
across over 190 meetings (most of them 
virtual) to update them on our performance 
and to provide an opportunity for them to 
ask questions. We also held a series of one 
on one and group meetings with our lending 
banks and investors in SEGRO and SELP’s 
bonds during the year.

These investor interactions not only update 
our investors on our business but also allow 
us to understand their priorities and any 
concerns. This feedback is vital to help shape 
our strategy and our communications and 
disclosure to make sure that we are meeting 
their expectations of us.

40

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020STRONG COMMUNITY RELATIONSHIPS

By working with local 
stakeholders we are able to 
provide a range of benefits to 
residents and local businesses 
ensuring that we have a positive 
impact beyond our space.

NEIL IMPIAZZI
PARTNERSHIP DEVELOPMENT 
DIRECTOR

TOTAL CONTRIBUTION TO CHARITY IN 2020

£1.5m

2019: £876,780

NUMBER OF CHARITIES SUPPORTED

 100

NUMBER OF PEOPLE BENEFITING FROM 
THE SEGRO CENTENARY FUND

 77,000

For further information on our new 
Responsible SEGRO targets:
see pages 28-29

It is our responsibility, as a long-term investor 
and developer to enable our communities to 
benefit from the economic and social benefits 
we can deliver. To do this effectively, we 
continue to collaborate with local stakeholder 
partners to better understand the needs of a 
local area so we can contribute positively to its 
growth and development. 

One of our new targets within our Responsible 
SEGRO framework is to create and implement 
Community Investment Plans covering every 
market within our portfolio by 2025.

LOCAL AUTHORITIES & PLANNING OFFICERS

We work closely with the local authorities in 
each of our key markets to make sure that we 
are familiar with their priorities and attempt 
to support these with our own plans. Due to 
pressure to provide new homes for growing 
cities such as London and Paris there has been 
a significant loss in industrial land over recent 
years which threatens the proper functioning 
of these urban conurbations – industrial land 
is key to providing goods and services to these 
growing populations.

Our lobbying of the Greater London Authority 
through the Keep London Working plan 
resulted in a decision by the Mayor’s Office 
that there should be no net loss of industrial 
land in the London Plan. We subsequently 
introduced the Deputy Mayor of London to 
the Vice President of the Paris region in which 
they discussed the challenges of urbanisation 
and its impact on the industrial sector. 

These relationships are key to understanding 
the challenges around zoning of land and the 
planning process and this forms an important 
part of our decisions on where to invest.

IMPROVING LOCAL INFRASTRUCTURE AND 
CREATING SUSTAINABLE ENVIRONMENTS

Our urban warehouse developments 
typically involve the regeneration of older 
industrial sites and brownfield land as well 
as the ongoing modernisation of our existing 
assets. We take pride in the difference our 
industrial estates can make to the surrounding 
areas, particularly through the provision of 
employment opportunities and economic 
prosperity. Our big box parks are typically 
built on former farmland and result in the 
creation of a significant number of jobs in the 
local and regional economy. 

We work closely with local authorities on 
the section 106 agreements (or equivalent) 
that form part of the planning process 
and we often go above and beyond what 
is required. This can involve making 
investment in local road networks or 
contributing to improvements in public 
transportation networks.

Increasingly our estates include green 
areas such as employee amenity space and 
landscaped grounds. For example our latest 
UK logistics park close to Northampton will 
have 32 hectares of parkland with more 
than 18 kilometres of footpaths and we will 
be planting over 60,000 new trees. We are 
also making efforts to promote biodiversity 
by planting native flora and fauna and 
introducing features such as beehives, insect 
houses and bat boxes.

41

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS   
STR ATEGIC REPORT
Relationships & Resources

What we need to create the space that 
enables extraordinary things to happen 
continued

STRONG COMMUNITY RELATIONSHIPS CONTINUED

TRAINING & EMPLOYMENT

SUPPORTING LOCAL ECONOMIES

We work hard to make sure that our assets, 
which are often situated in or close to 
residential areas, are valued by the local 
community, in particular as local employment 
hubs. We want to help residents to take full 
advantage of the opportunities offered by 
the customers occupying our buildings so 
that we can have a positive impact beyond 
the development and ownership of modern 
warehouse and industrial space.

In partnership with our contractors and 
customers, we are increasing our efforts 
in the provision of community training 
and employment opportunities. Our aim 
is to support the development of the local 
community by funding development 
programmes that enables them to 
access a wide range of high-quality and 
sustainable jobs.

We have a unique opportunity to invest in 
and support the local communities around 
our sites as a result of our active development 
programme. We encourage our contractors 
to source materials from local suppliers and 
with our contractors, we create on-site training 
and job opportunities during the construction 
stage of our projects.

Our Enterprise Quarters help to encourage 
innovation and the growth of small local 
businesses by offering space specifically 
designed for start-ups with all-inclusive, 
flexible leases. Shared collaborative 
workspaces and additional support services 
help them to develop their networks, learn 
from each other and grow together. 

INVESTING IN LOCAL COMMUNITIES

Beyond the work we do to improve the job 
prospects of local residents, we also help to 
improve the lives of vulnerable members of 
the local community.

100 ACTS OF KINDNESS

By working with local charities, which have 
the knowledge and expertise to best help 
those that require specialist or intensive 
support, we are able to fund a range of 
training and education programmes that help 
these members of society on the journey 
into employment.

INVESTING IN OUR PEOPLE’S PASSIONS

We also support causes close to the hearts 
of our own people and the wider real estate 
sector. We encourage all employees to 
participate in charitable activities, providing 
their time and skills.

Our company-wide ‘Day of Giving’ allows 
our employees to volunteer to support a 
cause close to them or their team, or to work 
with one of the local charities that SEGRO 
supports corporately. Unfortunately the 
pandemic meant that we were not able to 
run a centralised programme in 2020 but 
employees were encouraged to use their 
charity day to make contributions to their 
local communities. We also launched ‘100 
Acts of Kindness’, encouraging employees 
to share their stories of how they supported 
members of their own community during the 
Covid-19 crisis.

Away from the Day of Giving, our people 
run, cycle, swim, skydive, walk and ‘sleep out’ 
overnight to raise money for a wide range of 
great causes of which SEGRO will match the 
funds raised.

In 2020, we also corporately supported a 
number of causes focused on improving the 
lives of, and improving access to employment 
for, disadvantaged young people, including 
Patchwork Foundation, LandAid and Pathways 
to Property. 

I set up a local aid group  
for my area where we  
help local elderly and 
vulnerable people.

I gave an old school friend 
one of my bicycles so that she 
could commute to work in 
London as an ICU nurse.

I walked the dogs for  
elderly people in my 
neighbourhood. 

ELLIE RUSH
ASSOCIATE DIRECTOR, 
GROUP INVESTMENT

42

CHRIS FINCH
HE AD OF DIGITAL PRODUCTS

DIANA HÜLS, 
SERVICE CHARGE ANALYST,   
LOGISTICS, GERMANY

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020STRONG COMMUNITY RELATIONSHIPS CONTINUED

SEGRO CENTENARY FUND

In 2020 we launched our new £10 million 
fund which is to be invested over the next 
decade to make a positive impact within our 
communities across the UK and Continental 
Europe. We had intended to launch the fund 
in May to mark our 100 year anniversary but 
brought the date forward to provide urgent 
support to members of the community who 
were particularly vulnerable to the impacts 
of the pandemic. To date, we have allocated 
almost £1 million to 100 charities, directly 
helping around 77,000 people. 

The first phase of funding provided 
emergency relief such as food, medicines 
and household essentials to communities that 
needed it most as well as donations of PPE 
equipment to organisations working on the 
frontline to combat the immediate impacts of 
the pandemic. 

Subsequent phases were directed to fund 
training and development initiatives to help 
back into work those people who face barriers 
to employment or have lost their job because 
of the pandemic. This approach will be a 
key part of our goal to Invest in our local 
communities and environment, one of our 
three new Responsible SEGRO focus areas.

For further information on our new Responsible SEGRO targets:
see page 28-29 

We are extremely grateful for 
SEGRO’s support of the LandAid 
Covid-19 Emergency Fund. The fund 
was launched in response to the crisis 
we are all facing at the moment – 
a crisis which for young homeless 
people is even more acute. Thanks 
to SEGRO and the industry’s support 
we have now given out emergency 
grants of over £950,000. These 
grants will help thousands of young 
people across the country, giving 
them emotional and financial support 
at a time that they needed it most. 
Thank you.

ALICE LAMB 
DEPUT Y CEO OF L ANDAID

Since 2018, SEGRO has always been 
very ‘hands on’ in supporting us, 
especially the team from the Munich 
office who have often helped at 
our distribution points on their 
Day of Giving. We were grateful 
that SEGRO has made an extra 
donation to the Münchner Tafel 
as part of the Centenary Fund in 
response to the Covid-19 pandemic. 
This is something very special 
for us especially in these times 
of increasing numbers of needy 
people. We thank you from our 
“Tafel” heart for being on our side.

BIRGIT SCHUSTER-FUCHS
COORDINATOR,   
MÜNCHNER TAFEL E.V

PROVIDING SHORT AND LONG TERM SUPPORT FOR THE 
HOMELESS: LANDAID

DELIVERING ESSENTIAL FOOD ITEMS IN MUNICH: 
MÜNCHNER TAFEL E.V.

The pandemic has had a significant impact on over 280,000 
homeless people in England as a result of food charities and shelters 
having to close as a consequence of lockdown. 

In 2020, SEGRO donated £40,000 to LandAid’s Covid-19 
Emergency Response fund and a further £120,000 to refurbish an 
existing shelter in West London. 

Our donation to LandAid’s emergency response fund is continuing 
to provide those in need with essential food, clothing, medicine and 
toiletries, as well as give support through the crisis.

The longer term three-year project will provide additional 
temporary accommodation for young homeless people as well as a 
dedicated training and support centre on site. In addition to the new 
bed space, we aim to work closely with Look Ahead, the charity that 
manages the shelter. It is hoped that we will align our own initiatives 
to Look Ahead’s training and development programme to help 
young people develop their skills on one of our construction sites or 
secure long-term employment with one of our customers.

The Coronavirus pandemic created an unprecedented demand on 
services that support vulnerable communities. In Munich the rise in 
unemployment, and the impact of panic buying, has put pressure 
on local food bank services and there is a growing need to find 
enough food as well as keeping the food banks operational. 

SEGRO is working with Münchner Tafel e.V. (Foodbank Munich) 
to support the set up, and expansion, of delivery services needed 
to help the local community. Every week, the foodbank receives 
over 125 tonnes of groceries that need to be distributed, in 
18 refrigerated vehicles across the city, to reach 27 individual 
foodbanks. In 2020, we donated €10,000 to help support the 
transport and logistics of the food items, enabling essential food 
items to reach the equivalent of 128 people for one year. 

43

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS   
STR ATEGIC REPORT
Relationships & Resources

What we need to create the space that 
enables extraordinary things to happen 
continued

FUTURE-PROOFING THROUGH INNOVATION

Technology and digitalisation continue to drive 
ever-accelerating change for ourselves and our 
customers. As well as challenges, this presents 
opportunities for businesses that anticipate 
and adapt to these changes.

In recognition of this we created our new 
Strategy, Innovation and Investment function 
in early 2020 to enable us to better integrate 
technology and innovation into our strategy 
and investment programme.

Our vision is that digital assets and capabilities 
will play an increasing role in our business and 
that we, our customers, and other stakeholders 
will benefit in a variety of ways:

 } Digital innovation will differentiate our 

assets and services to customers;

 } Digital skills, tools and processes will enable 

our people to be more effective;

 } Data and analytics will enhance our 

decision-making; and

 } Digitally enabled processes will benefit us in 

agility and cost.

We have long-recognised the value of a 
strong technology capability in the business. 
We have, therefore, steadily increased our 
investment in our digital and technology 
capabilities over a number of years. As a 
result, when the pandemic struck, we were 
able to transition to remote working almost 
overnight with minimal disruption, as all 
employees were already equipped with 
remote working and collaboration technology. 
We were also able to bring forward planned 
upgrades to our technology to further support 
remote collaboration. 

We also supported employees in practical 
steps to enhance their home working 
environments. We were pleased to see this 
reflected in very high levels of satisfaction with 
equipment and resources in our 2020

employee engagement survey. In addition 
to enabling ‘business as usual’ technology 
services in very unusual circumstances, 
we initiated or continued a wide range of 
initiatives in digital and technology during 
2020, including:

 } Collaborating with customers and supplier 
partners to pilot sensor-enabled smart 
industrial buildings in several of our 
markets. As well as helping us understand 
the technical and practical challenges of 
implementing this kind of technology 
in industrial buildings, we have gained 
invaluable insight into the environmental, 
operational and employee wellbeing 
benefits that can be delivered.

 } Building our data and analytics team 

and implementing a new data platform 
infrastructure to enable all of our data and 
analytics initiatives. 

 } Building decision-support analytics tools, in 
particular, to enhance our understanding of 
our customers and locations. 

 } Exploring new approaches to scaling up 
renewable energy generation on our 
built assets.

 } Piloting the use of artificial intelligence 

to improve our management 
of documentation.

 }  Re-engineering back-office processes and 
systems to simplify processes and improve 
data quality.

We recognise the benefit of both learning 
from, and contributing to, industry-wide 
collaboration initiatives. We have active 
partnerships with the ‘PropTech’ firms 
Fifth Wall and Concrete Ventures, and we 
participate in formal and informal industry 
bodies, including the British Property 
Federation’s Technology and Innovation 
Working Group.

CASE STUDY: SEGRO CUSTOMER NEWSLETTER

Our customers are at the heart of our 
business and we strive to better understand 
their needs and further improve our 
relationships with them.

In 2020, we initiated work to explore 
how analytics can help us build a deeper 
understanding of our customers. 

We developed a digital service which 
constantly searches over 40 million news 
sources for articles about our customers, with 
an artificial intelligence engine identifying 
those which it considers most insightful and 
valuable to our customer-facing teams.

The news is distributed to staff via daily 
emailed newsletters and into our customer 
relationship management mobile app. 

The content shared this way has helped 
inform our teams about when customers are 
changing their business models, launching 
new products, and investing in technologies 
which affect their property needs, all of 
which has helped us to have more informed 
and valuable interactions with them.

Technology is not just important 
in terms of making sure our 
business is fit for the future, there 
is also the potential for SEGRO 
to achieve significant advantage 
from its digital assets.

JAMES POWER
DIRECTOR OF DIGITAL 
AND TECHNOLOGY

44

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020We are committed to the 
prevention of harm to our 
employees and throughout  
our supply chain.

PAUL DUNNE
MANAGING DIRECTOR   
OF GROUP OPER ATIONS

HEALTH & SAFETY TRAINING HOURS

 560+ 

(2019: 700+)

CONTRACTOR WORKSHOPS

9

For over 70 contractors and consultants

SAFETY PERFORMANCE AWARD

For our Group Health & Safety Policy and more details 
on our initiatives in this area please see our website:
http://www.segro.com/csr

A ZERO-TOLERANCE APPROACH TO POOR HEALTH AND SAFETY 

Health and Safety is central to all of our 
business activities. It is our responsibility 
to ensure that we provide and promote a 
healthy, safe and secure environment in 
which our employees and customers can 
work, extending throughout our supply chain, 
and in particular on our development projects. 

We aim to achieve these high standards 
through a combination of risk mitigation, 
training and promoting a widespread 
awareness and culture of Health and Safety.

In 2020, our Accident Frequency Rate 
for employees remained low at 0.14. 
Whenever incidents occur, we fully investigate 
to understand the causes, involving external 
consultants where appropriate. Findings and 
learnings are disseminated across the Group, 
including to the Board and Executive 
Committee, to ensure that we (and where 
appropriate, third parties) respond and 
improve our processes where necessary. 

We continue to be recognised for our 
safety performance through the RoSPA 
(Royal Society for the Prevention of 
Accidents) Awards. In 2020, we were 
awarded Gold for the eighth consecutive 
year. These awards recognise our Group 
commitment and practical application of 
Health and Safety procedures across all of our 
business operations.

HEALTH AND SAFETY 
DURING DEVELOPMENT

We only want to work with businesses who 
share our Health and Safety approach for Zero 
tolerance of poor health and safety practices. 
We require all of our suppliers to confirm that 
they meet our Health and Safety Standards, 

CASE STUDY: RETURN TO OFFICE PLANNING

When our offices closed at the start of the 
Covid-19 pandemic, SEGRO quickly started 
working on how to make them safe for our 
employees to return when they were able to. 

Throughout the year, SEGRO established 
comprehensive Return to Office processes to help 
all offices implement suitable control measures 
and to ensure that our Health and Safety standards 
remain aligned with local legislation changes. 
These include:

 } Sanitising and cleaning stations for employees as 

well as increased frequency of cleaning. 

 } Reduced office occupancy for each office.

 } Introduction of an office booking system. 

This system also allows SEGRO to undertake 
track and trace if any Covid-19 incidents 
are reported.

 } Planned and clearly marked seating and office 
movement arrangements to ensure colleagues 
remained suitably distanced from each other.

and we undertake particularly rigorous 
assessments of those companies working 
on our development sites.

We encourage our contractors to innovate and 
work with us to ensure that Health and Safety 
considerations on our development sites are 
paramount. During 2020, nine contractor 
workshops were held to discuss the updated 
Health and Safety construction standards 
developed by SEGRO. The workshops focused 
on the requirements of the standards and 
examples of good and bad practice. 

These workshops provided a forum for 
contractors to share experiences, ask 
questions and further their understanding of 
the importance of Health and Safety within 
SEGRO. We have, and continue to, support 
our contractors by providing additional 
guidance, signage and health and safety 
visits to our development sites throughout 
each project.

Specific to the Covid-19 pandemic, all of 
our construction sites are monitored and 
checked for Covid compliance and we have 
regular communication of Construction 
Leadership Council Covid documents with key 
UK contractors.

Our Health and Safety commitment doesn’t 
end when we complete a project but extends 
to the ongoing day-to-day life of our estates. 
Many of our estates are accessed by both 
our customers and the public and there are 
a wide variety of risks which we assess and 
mitigate. By providing training and raising 
awareness we ensure our customers and 
communities are well informed and able to 
make appropriate decisions when necessary.

 } Restriction of lift use and employees encouraged 

to use stairs.

 } Protective screens installed at reception desks.

Once our plans had been developed and 
implemented these were signed off by the Health 
and Safety team, the Executive Committee 
and the Business Continuity leads before being 
communicated to the employees. 

Following the introduction of the initial plans, 
the work continued to ensure that our Health 
and Safety standards remain aligned with local 
legislation changes. 

Throughout the process, SEGRO has prioritised 
regular communication through a number of 
forums in order to ensure employees remain up-
to-date on how each office is individually impacted.

45

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
   
STR ATEGIC REPORT

Our Strategy 
Generating attractive, 
sustainable returns

Our goal is to be the leading owner-
manager and developer of industrial 
properties in Europe and the partner 
of choice for our customers and 
other stakeholders.

E SE G R O

L
SIB
N
O
P
S
E
R

O

U

R

P

U

R

P

O

S

E

OUR  
GOAL

OPERATIONAL  
EXCELLENCE

DISCIPLINED  
CAPITAL ALLOCATION

EFFICIENT CAPITAL AND  
CORPORATE STRUCTURE

OUR CULT U R E

WE APPLY OUR STR ATEGY TO MAXIMISE THE RETURNS FROM OUR BUSINESS

1. OUR GOAL

3. DISCIPLINED CAPITAL ALLOCATION

Our goal is to be the leading owner-manager 
and developer of industrial properties in Europe 
and the partner of choice for our customers and 
other stakeholders. 

Using our in-depth knowledge of our customers and 
the trends impacting their businesses, to pick the 
right markets and assets to create the right portfolio 
shape, actively manage its composition and adapt our 
capital deployment according to our assessment of the 
property cycle. 

2. OPER ATIONAL EXCELLENCE

 4. EFFICIENT CAPITAL AND CORPOR ATE STRUCTURE

Leveraging our operating platform to optimise 
performance through dedicated customer service, 
expert asset management, development and 
operational efficiency.

We aim to underpin the property level returns 
from our portfolio with a lean overhead structure, 
an efficient capital structure and appropriate 
financial leverage.

46

  For more information on our KPIs see pages 50-51

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
 
 
 
We seek to enhance returns through 
development, while ensuring that the short-
term income ‘drag’ associated with holding 
land does not outweigh the long-term 
potential benefits.

Fundamental to our strategy are three key 
pillars of activity which should combine to 
deliver the returns that we seek:

 } Disciplined Capital Allocation

SINCE 2012:

TOTAL ASSETS DISPOSED

£3.5bn

TOTAL ASSETS ACQUIRED

£2.7bn

 } Operational Excellence

DEVELOPMENT CAPEX

 } Efficient Capital and Corporate Structure.

The combination of these elements should 
translate into sustainable, attractive returns for 
our shareholders in the form of progressive 
dividends and net asset value growth over 
time. This is in addition to all of the other value 
that is created in the process of managing and 
building our portfolio (see pages 30 to 45 for 
further information).

Our portfolio comprises modern big box 
and urban warehouses which are well 
specified and located, with good sustainability 
credentials, and which should benefit from a 
low vacancy rate and relatively low-intensity 
asset management requirements. Our assets 
are concentrated in the strongest European 
submarkets which display attractive property 
market characteristics, including good 
growth prospects, limited supply availability 
and where we already have critical mass, 
or believe we will be able to achieve it in a 
reasonable timeframe.

£2.7bn

TODAY:

AUM

£15.3bn

PASSING RENT

£462m

(from £333.5m)

VACANCY

 3.9%

(from 9.1%)

LTV

 24%

(from 51%)

COST OF DEBT

 1.6%

(from 4.6%)

While our Business Model describes what we 
do as a company, our Strategy describes how 
we do it. 

Our Strategy operates within the context 
of our Purpose, our culture, our Business 
Model and our Responsible SEGRO approach 
to doing business, with all of these factors 
influencing both how we operate on a day-to-
day basis and also when making key strategic 
decisions on how to position our business for 
the future. 

This ensures not only that we manage risk 
appropriately (for more information on how 
we manage risk see pages 72 to 81), but it also 
means that the decisions we make take into 
account the interests of all relevant parties. 
It is this that allows us to ‘create the space that 
enables extraordinary things to happen’ and 
also ensures that SEGRO is positioned to do 
so over the longer term. 

At the heart of it are the relationships that 
we build with our customers, helped by the 
fact that we manage the majority of our 
portfolio internally and therefore really get 
to know their businesses. The insights that 
we gain from the partnerships we build with 
our customers help us to anticipate longer 
term trends and make strategic decisions that 
shape our portfolio and ensure the continued 
success of our business.

Our goal is to be the leading owner-manager 
and developer of industrial properties in 
Europe and the partner ‘of choice’ for our 
customers and other stakeholders. The use 
of the words ‘of choice’ reflects that we 
recognise that our customers, employees 
and other partners have the option to choose 
whether they work with SEGRO, so we need 
to continuously improve and adapt to stay 
relevant and ensure that they choose to work 
with us not only today but also in the future.

On a property level our goal reflects our 
ambition to create a portfolio of high-quality 
industrial properties in the strongest markets 
– a portfolio that generates attractive, low 
risk, income-led returns as providing above 
average growth (both in terms of rent and 
capital values) when market conditions are 
positive, and that proves to be resilient in 
a downturn. 

47

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
STR ATEGIC REPORT

Review of 2020 
Delivering on our Strategy in 2020

We have continued to follow our 
Strategy during 2020 which has 
been a significant contributor 
to the continued performance 
of our business during very 
challenging times. 

48

OPER ATIONAL EXCELLENCE

We have a well-established operating platform 
that strives for Operational Excellence, both 
in the approach that we take to managing our 
existing portfolio as well as in the execution of 
our development pipeline.

We pride ourselves on the strength of 
our customer relationships and these 
have been built as a result of the excellent 
customer service that our property and asset 
management teams provide. This has been 
extremely important throughout the Covid-19 
pandemic and has meant that we have been 
able to help our customers respond to the 
various challenges that they have faced and it 
also helped us to quickly understand the level 
of risk within our portfolio. 

Our long-standing focus on the active asset 
management of our portfolio meant that we 
went into the crisis in good shape in terms 
of low vacancy rates and strong customer 
covenants. As a result of this the pandemic 
has had very little impact on our portfolio and 
we have been able to continue to grow the 
rent roll in 2020 helped by a record lettings 
performance, as well as the re-gear of leases 
and the capture of some of the reversionary 
potential that has built up over recent years. 

Operational Excellence was also important in 
keeping our development pipeline on track 
in 2020 and our strong working relationships 
with our contractors meant that we were able 
to catch up on delays caused by the lockdown 
without compromising on safety measures and 
all of the projects that were due to complete 
during the year have done so, with some even 
finishing ahead of schedule. 

DISCIPLINED APPROACH TO 
CAPITAL ALLOCATION

Over recent years we have focused more of 
our investment into our development pipeline, 
as we see better returns from this than 
investing our capital in completed assets. 

This continued in 2020 and we once again 
increased our spend on development capex 
and made some significant land acquisitions, 
helping us to replenish the land bank 
and ensure that we can continue to grow 
our business. 

We did, however, also identify opportunities 
to acquire some attractive assets in 2020 
and as a result have been more active in the 
investment markets than in recent years. 

This included the purchase of two urban 
warehouse estates in London and another 
in Paris that we believe offer attractive long-
term returns. All three assets complement 
our existing portfolio and provide us with 
a great opportunity to offer our customers 
a wider range of choice in these supply 
constrained markets. 

We have continued with the annual review 
of our portfolio to identify assets where we 
believe we have maximised our returns and 
to dispose of these when the opportunity 
arises. As a result of this we disposed of 
our remaining assets and land in Austria 
as well as making some other stand alone 
disposals with the proceeds recycled into our 
future investment.  

CASE STUDY: UK LAND ACQUISITIONS FOR FUTURE BIG BOX PARKS 

In the first half of the year we acquired £184 million of land associated with two new major UK 
big box parks in the prime logistics hubs of Coventry and Northampton. These acquisitions 
both originated from land options secured through the Roxhill development platform and are 
projects that we have been taking through the planning process for a number of years with 
the options becoming exercisable once this process had completed. Gaining control of land via 
option and only acquiring it once it is approved for development is very efficient, and a lower 
risk way of adding to our land bank.

These two sites have planning consent for over 800,000 sq m of modern space to be 
developed over a number of years. These acquisitions reflect our view that we can create better 
long term returns by investing in the development of big box logistics parks rather than owning 
stand alone assets and followed the disposal of a portfolio of £241 million stand-alone UK 
big box warehouses at the end of 2019, at which time we stated that the proceeds would be 
invested into our future development pipeline. 

SEGRO Logistics Park Northampton Gateway (SLPNG) will involve infrastructure works 
that include the building of a dedicated Strategic Rail Freight Interchange that will help to 
reduce road traffic coming onto the site and there will be significant additional road and rail 
improvements for the region. It will also create more than 7,500 new jobs and an employment 
skills programme will provide training for local members of the community so that they can 
become active members of the workforces created by the scheme. Finally, it will incorporate 
over 32 hectares of parkland with 18 km of footpaths and the planting of more than 60,000 
new trees for the local community to enjoy. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020EFFICIENT CAPITAL AND 
CORPOR ATE STRUCTURE

In a year where we have invested over 
£1.4 billion in the growth of our business we 
have also needed to take steps to maintain our 
Efficient Capital and Corporate Structure. 

We aim to balance operational and financial 
risk by keeping the loan to value ratio (“LTV”) 
low, making sure that should the property 
cycle turn we can easily absorb lower 
valuations and also giving us the capacity to 
take advantage of any resulting investment 
opportunities. In 2020 this resulted in us 
raising £680 million of new equity and 
€450 million of US Private Placement debt. 
Our LTV at 31 December 2020 was 24 
per cent.

In order for us to protect the efficiency of 
our corporate structure we also launched 
a Secondary Listing on Euronext Paris in 
November 2020 to ensure that we maintained 
a listing within the European Union once 
the UK left following the end of the Brexit 
transition period on 31 December 2020.

SEGRO employees from around Europe participated in the virtual Euronext Paris Opening 
Bell ceremony when our Secondary Listing started trading on the 24 November 2020. 

CASE STUDY: £680 MILLION 
EQUITY PLACING

In June we went to the equity market 
and raised £680 million to help fund the 
growth of our development pipeline. 

We outlined a plan to invest more than 
£1 billion of capital into our development 
pipeline, including over £600 million of 
development capex and a further almost 
£400 million of land acquisitions. 

The placing was very well received and 
we increased its size from £650 million to 
£680 million to reflect the strong demand 
– it priced at 820 pence, less than a 5 per 
cent discount to previous closing price. 

The strong relationships that we have built 
with our shareholders and our established 
track record helped to make this 
transaction possible during a volatile time 
in the markets. As a result of the placing 
we have significant capacity to continue 
to invest in our development pipeline and 
position the business for further growth.

49

CASE STUDY: SELLING OUR ASSETS AND LAND IN AUSTRIA

Scale is a very important part of managing our business efficiently and we have always been 
clear that we will exit markets where we do not have or do not expect to be able to achieve 
scale in a meaningful timeframe. 

We entered the Austrian market in 2016 after building a pre-let warehouse for a major 
customer on the outskirts of Vienna. We built an urban warehouse park on some 
neighbouring land which we completed in 2019 but have not found significant other 
opportunities within the local market that met our returns criteria. 

We therefore made the decision during 2020 to exit Austria and sold our assets and land 
there, making an attractive return on our original investment. We will be redeploying the 
proceeds in other parts of the business where we see greater potential for returns.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Review of 2020

Key performance indicators 
Measured against our targets

One of our goals is to 
deliver attractive returns to 
our shareholders through 
the execution of our strategy.

We track our progress against nine 
Key Performance Indicators on which 
we report each year. They are based 
on proportionally consolidated metrics, 
incorporating our share of joint ventures.

Some of these metrics are also used 
to determine how management and 
employees are remunerated.

Further details on our remuneration policies and the 
metrics used to determine remuneration are set out in the 
Remuneration Committee Report on pages 123-145

WE APPLY OUR STR ATEGY  
TO MAXIMISE PERFORMANCE:

TOTAL PROPERTY RETURN 
(% TPR)1

ADJUSTED NAV PER SHARE 
(PENCE)2 3

 14.6%

814p

2020

2019

2018

2017

2016

14.6%

2020

10.5%

2019

15.4%

2018

18.9%

2017

9.3%

2016

814p

700p

650p

556p

478p

What it is: TPR is the ungeared combined income and 
capital return from our portfolio of standing investments held 
throughout the year. It is an important measure of the success 
of our strategy in terms of asset selection and management. 
MSCI Real Estate prepares the calculation, as well as providing 
benchmark TPR data for similar properties in their wider 
universe. We aim to outperform the benchmark over the 
long term. Details on how TPR impacts short- and long-term 
incentives are provided on pages 126 to 143.

Our performance: The TPR of the Group’s standing assets 
held throughout 2020 was 14.6 per cent (2019: 10.5 per cent). 
The UK portfolio generated a TPR of 13.8 per cent, performing 
ahead of the benchmark calculated by MSCI Real Estate UK All 
Industrial Quarterly of 9.2 per cent. The TPR of our Continental 
Europe portfolio was 16.2 per cent. Benchmark data for 
Continental Europe will be received later in the year.

What it is: Adjusted NAV (Net Asset Value) is the value of our 
assets less the book value of our liabilities that is attributable 
to our shareholders. It is calculated in accordance with EPRA 
guidelines and aligns with the EPRA NTA metric that was 
introduced in 2020 (the 2019 figure above has been restated to 
align with this definition). We aim for sustainable long-term asset 
value growth whilst carefully managing our liabilities to maintain 
balance sheet strength.

Our performance: Adjusted NAV increased by 114 pence per 
share over the year to 31 December 2020, most of which was 
due to a 10.3 per cent like-for-like increase in the value of the 
Group’s property portfolio. Diluted NAV per share increased 
by 112 pence to 809 pence. The reconciliation between Diluted 
NAV per share and Adjusted NAV per share can be found in 
Note 12(ii) on page 175.

O

U

R

P

U

R

P

O

S

E

EPR A VACANCY R ATE 
(%)

CUSTOMER SATISFACTION 
(%)

 3.9%

87%

2020

2019

2018

2017

2016

3.9%

2020

4.0%

2019

5.2%

2018

4.0%

2017

5.7%

2016

87%

88%

80%

87%

79%

What it is: The vacancy rate measures our ability to minimise 
the quantity of non-income producing built assets within our 
portfolio. An improving vacancy rate generally implies additional 
rental income and lower vacant property costs. Some level of 
vacancy will always exist within our portfolio in order to support 
our asset management activities and allow our customers the 
opportunity to move premises. We target a longer-term vacancy 
rate of 4 to 6 per cent based on the ERV of vacant space 
compared to the ERV of the portfolio.

Our performance: The portfolio vacancy rate decreased to 
3.9 per cent (31 December 2019: 4.0 per cent) reflecting a 
strong performance in letting both existing space and recently 
completed speculative developments. Further details can be 
found in Table 7 on page 208.

What it is: The percentage of our customers who rate their 
experience as occupiers of our buildings as ‘good’ or ‘excellent’ 
as opposed to ‘poor’ or ‘average’. Our customers are at the heart 
of our business and we strive to ensure that we are providing the 
best level of service possible to maximise customer retention.

Our performance: Satisfaction as an occupier of our buildings 
was rated as ‘good’ or ‘excellent’ by 87 per cent of the 200 
customers which participated in the 2020 survey (2019: 88 per 
cent). The continued high satisfaction rate reflects our focus on 
communication, being responsive and understanding the needs 
of our customers and we intend to target similarly high levels 
in the future. 99 per cent of our customers said that they would 
recommend SEGRO to others.

O

E SE G R

L
SIB
N
O
P
S
E
R

OUR  
GOAL

OPERATIONAL  
EXCELLENCE

DISCIPLINED  
CAPITAL ALLOCATION

EFFICIENT CAPITAL AND  
CORPORATE STRUCTURE

OUR CULT U R E

Read more about how we are delivering on our strategy: 
Our strategy pages 46-52
Principal risks pages 72-81

RISK MANAGEMENT 

We recognise that the management of 
risk has a role to play in the achievement 
of our strategy and nine KPIs. Risks can 
hinder or help us meet our desired level 
of performance.

The relationship between our principal risks and our KPIs 
is identified in the Principal Risks on pages 72-81

50

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020  
  
  
 
OPER ATIONAL   
EXCELLENCE

DISCIPLINED CAPITAL  
ALLOCATION

EFFICIENT CAPITAL AND   
CORPOR ATE STRUCTURE

ITEMS ARE DIRECTLY   
CAPTURED IN SEGRO’S   
INCENTIVE SCHEMES

LOAN TO VALUE R ATIO (LTV) 
(% INCLUDING JOINT VENTURES AT SHARE)

TOTAL SHAREHOLDER RETURN 
(% TSR)

 24%

2020

2019

2018

2017

2016

8.7%

24%

2020

24%

2019

29%

2018

30%

2017

33%

2016

ADJUSTED EPS 
(PENCE) 3

 25.4p

8.7%

2020

56.8%

2019

3.1%

2018

38.7%

2017

10.8%

2016

25.4p

24.4p

23.4p

19.9p

18.8p

What it is: The proportion of our property assets (including 
investment, owner-occupier and trading properties at carrying 
value and our share of properties in joint ventures and excludes 
head lease ROU asset) that are funded by borrowings. At this 
stage in the cycle, and based on our investment plans, we aim 
to maintain our LTV at around 30 per cent for the forseeable 
future. We believe that REITs with lower leverage offer a lower 
risk and less volatile investment proposition for shareholders.

Our performance: The Group’s LTV ratio was flat at 24 per 
cent year on year, despite £1.3 billion of net investment in our 
business during 2020. This was due to the equity raise in June 
2020 combined with the unrealised gain on the value of our 
portfolio. The timing of investment decisions and disposals, 
as well as movement in the value of our assets may cause the 
LTV to fluctuate. 

What it is: TSR measures the change in our share price over 
the year assuming that dividends paid are reinvested. This KPI 
reflects our commitment to delivering enhanced returns for our 
shareholders through the execution of our strategy over the 
medium term. TSR is a key metric used in setting the long-term 
incentive plan remuneration for both the Executive Directors and 
senior management.

Our performance: The TSR of the Group was 8.7 per 
cent, compared with -16.6 per cent for the FTSE 350 Real 
Estate index. This performance reflects a combination of the 
21.3 pence dividend (14.4 pence 2019 final dividend and 
6.9 pence 2020 interim dividend) paid during the year and 
an increase in the share price from 897 pence at 31 December 
2019 to 948 pence at 31 December 2020. 

What it is: Our headline Adjusted earnings per share 
(EPS) reflects earnings from our operating business: rental 
income less operating, administrative and financing costs and 
tax. It is the primary determinant of the level of the annual 
dividend. IFRS EPS includes the impact of realised and unrealised 
changes in the valuation of our assets which can often mask the 
underlying operating performance. The reconciliation between 
Basic EPS and Adjusted EPS can be found in Note 12(i) on 
page 175. 

Our performance: Adjusted EPS increased by 4.1 per cent 
during the year, reflecting higher rental income from 
our standing assets, new income from acquisitions and 
developments, partly offset by higher finance costs and 
additional shares from the equity placing in June 2020. 

TOTAL COST R ATIO 
(%)

 21.1%

RENT ROLL GROW TH 
(£)

£60.1m

2020

2019

2018

2017

2016

21.1%

2020

22.9%

2019

22.9%

2018

24.6%

2017

23.0%

2016

1   The TPR has been calculated independently by MSCI Real 
Estate in order to provide a consistent comparison with an 
appropriate MSCI benchmark. It 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 concerned for standing investments held 
throughout the year, excluding land.

2   Adjusted NAV is an alternate metric that is calculated in 
accordance with the Best Practices Recommendations of 
the European Public Real Estate Association (EPRA) and 
aligns with EPRA NTA. SEGRO discloses EPRA alternative 
metrics on pages 205 to 210 to provide a transparent and 
consistent basis to enable comparison between European 
property companies. See www.epra.com for further details.

3   As a result of the Rights Issue in March 2017, a bonus 

adjustment factor of 1.046 has been applied to per share 
metrics prior to 2017, including Earnings per share and 
Adjusted NAV per share.

£60.1m

£54.5m

£53.5m

£41.5m

£29.7m

What it is: The ratio of our total administration and 
property operating costs expressed as a percentage of gross 
rental income. This is an indicator of how cost-effectively we 
manage both our property assets and our administrative costs 
in order to improve profitability. Over the medium term we 
are targeting a total cost ratio of 20 per cent.

Our performance: The total cost ratio was lower at 21.1 per 
cent (2019: 22.9 per cent). Excluding share-based payments, the 
total cost ratio would have been 18.8 per cent, also lower than 
in 2019 (19.9 per cent). Further details can be found in Table 8 
on page 209.

What it is: The headline annualised gross rental income 
contracted during the year less income lost from takebacks. 
There are two elements: to grow income from our standing 
assets by reducing vacancy and increasing rents from lease 
renewals and rent reviews; and to generate new rent by 
developing buildings either on a pre-let or speculative basis. 
Rent from new acquisitions is not included.

Our performance: In total, we generated £60.1 million of 
net new annualised rent during the year (2019: £54.5 million). 
The increase was driven substantially by higher rents on 
review and renewal in the UK and by the increased volume of 
rent from development completions and pre-let agreements 
secured during the year.

51

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
STR ATEGIC REPORT
Review of 2020

Strong portfolio growth 
Valuation update

PORTFOLIO VALUATION CHANGE

+10.3%

2019: +7.5%

ERV GROWTH

+2.5%

2019: +2.7%

52

VALUATIONS: WHAT TO EXPECT IN 2021

Capital growth forecasts are notoriously 
difficult given the multitude of drivers 
(particularly interest rates and credit spreads) 
most of which are outside our direct control. 

Nevertheless, the prospects for our portfolio of 
big box and urban warehouses remain strong, 
supported by structural drivers of demand 
and relatively limited amounts of new supply. 
This means that we are optimistic about the 
potential for further rental value growth, 
particularly in our urban warehouse portfolio. 

Prime yields continue to appear attractive 
compared to government (risk-free) bond 
yields or most other property types, and this 
premium should be supportive for valuations. 
We believe that our high-quality portfolio and 
our focus on asset management will enable us 
to outperform the wider market. 

UNREALISED GAINS AND LOSSES 
ON WHOLE PORTFOLIO

Capital growth

%
9
9
+

.

.

%
3
0
1
+

%
3
7
+

.

.

%
8
7
1
+

.

%
6
0
1
+

%
3
2
+

.

.

%
3
0
1
+

Unrealised
gains

£1.25bn

£1bn

£750m

£500m

£250m

l

a
t
o
T

n
o
d
n
o
L

r
e
t
a
e
r

G

y
e

l
l

a
V
s
e
m
a
h
T

s
c

i
t
s
i
g
o
L

l

a
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o

i
t
a
N

e
p
o
r
u
E

n
r
e
h

t
r
o
N

e
p
o
r
u
E

n
r
e
h

t

u
o
S

e
p
o
r
u
E

l

a
r
t

n
e
C

VALUATION GAINS FROM MARKET-
DRIVEN YIELD IMPROVEMENT, ASSET 
MANAGEMENT AND DEVELOPMENT

Warehouse property values across Europe 
increased throughout the year with the UK, 
France and Germany seeing the strongest 
growth. Investment volumes continued to be 
healthy, with the UK hitting record levels and 
Continental Europe almost level with 2019 
figures. Both investor and occupier demand 
for the asset class remained strong.

The Group’s property portfolio was valued 
at £13.0 billion at 31 December 2020 
(£15.3 billion of assets under management). 
The portfolio valuation, including completed 
assets, land and buildings under construction, 
increased by 10.3 per cent on a like-for-like 
basis (adjusting for capital expenditure and 
asset recycling during the year) compared to 
7.5 per cent in 2019.

This primarily comprises a 9.5 per cent 
increase in the assets held throughout the year 
(2019: 5.8 per cent), driven by strong yield 
compression in most markets (30 basis points 
across the whole portfolio) and a 2.5 per cent 
increase in our valuer’s estimate of the market 
rental value of our portfolio (ERV). In total, our 
portfolio generated a total property return of 
14.6 per cent (2019: 10.5 per cent).

Assets held throughout the year in the UK 
increased in value by 9.2 per cent (2019: 2.5 
per cent), outperforming the MSCI Real Estate 
UK All Industrial Quarterly 2020 index which 
increased by 4.6 per cent. The performance 
was due to yield compression and the 
continued capture of reversionary potential 
in lease reviews and renewals, particularly in 
London. The true equivalent yield applied to 
our UK portfolio was 4.3 per cent, 30 basis 
points lower than at 31 December 2019 (4.6 
per cent) reflecting yield compression, the 
acquisition of some low yielding assets, rental 
growth and the impact of newly completed 
developments. Rental values improved by 3.1 
per cent (2019: 2.6 per cent).

Assets held throughout the year in Continental 
Europe increased in value by 10.2 per cent 
(2019: 13.5 per cent) on a constant currency 
basis, reflecting a combination of yield 
compression to 4.8 per cent (31 December 
2019: 5.2 per cent) and rental value growth of 
1.5 per cent (2019: 0.7 per cent). 

More details of our property portfolio can be 
found in Note 27 to the Financial Statements 
and in the 2020 Property Analysis Report 
available at www.segro.com/investors.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
 
 
 
 
 
 
OVERVIEW
STR ATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS

BIG BOX WAREHOUSES

Big box warehouses account for 32 per cent 
of our portfolio value. They tend to be used 
for storage, processing and distribution of 
goods on a regional, national or international 
basis and are, therefore, much larger than 
urban warehouses. 

They are focused on the major logistics 
hubs and corridors in the UK (South-East 
and Midlands regions), France (the logistics 
‘spine’ linking Lille, Paris, Lyon and Marseille), 
Germany (Düsseldorf, Berlin, Frankfurt and 
Hamburg) and Poland (Warsaw, Łódz, Pozna´n, 
and the industrial region of Silesia). 26 per 
cent of our big box warehouses are in the 
UK and the remaining 74 per cent are in 
Continental Europe. 

Occupier demand continues to be healthy 
across all of our markets but the nature (and 
typical location) of big box warehouses tends 
to mean that, over time, supply is able to 
increase more easily to satisfy demand, as 
there is generally more land available in out of 
town locations.

There was a fairly high level of competing 
supply in the UK big box market at the start 
of 2020 but record levels of take-up during 
the year have meant that most of this has 
been absorbed (and as a result vacancy 
levels have come down). On the Continent 
supply has continued to broadly keep up with 
occupier demand. 

Overall, we believe the prospects for 
significant rental growth in big box 
warehouses are, and have always been, 
limited but this asset class brings other 
benefits including lower asset management 
intensity and long leases which help to ensure 
a sustainable level of income. In addition, 
by holding the majority of our Continental 
European big box warehouses in SELP, we 
receive additional income from managing the 
joint venture which increases total returns. 

Creating value through Operational Excellence 
Asset management update

Our portfolio comprises two main 
asset types: urban warehouses 
and big box warehouses. The 
demand-supply dynamics in 
both asset classes continue to 
be positive.

URBAN WAREHOUSES

Urban warehouses account for 66 per cent of 
our portfolio value. They tend to be smaller 
warehouses, and are located mainly in and on 
the edges of major cities where land supply 
is restricted and there is strong demand for 
warehouse space, particularly catering for 
the needs of last mile delivery and, around 
London, from data centre users.

Our urban portfolio is concentrated in London 
and South-East England (80 per cent) and 
major cities in Continental Europe (20 per 
cent), including Paris, Düsseldorf, Frankfurt, 
Berlin and Warsaw. These locations share 
similar characteristics in terms of limited 
(and shrinking) supply of industrial land and 
growing populations, while occupiers are 
attracted to modern warehouses with plenty 
of yard space to allow easy and safe vehicle 
circulation. We believe that this enduring 
occupier demand and limited supply bodes 
well for future rental growth.

PORTFOLIO PASSING RENT

£462m

2019: £378m

RENT CONTRACTED DURING THE YEAR

£77.9m

2019: £65.8m

CUSTOMER RETENTION

86%

2019: 88%

VACANCY RATE

3.9%

2019: 4.0%

WHAT WE SAID WE WOULD DO

We expected occupier demand to remain 
strong in all of our markets and expected 
vacancy rates to remain low. With supply 
also remaining limited we expected 
customer retention to remain high and 
rental growth to continue. 

WHAT WE ACHIEVED IN 2020

We contracted a record level of rent during 
2020 reflecting a strong performance in 
rent reviews and renewals and continued 
momentum in pre-lettings. The vacancy 
rate remained low, aided by a strong 
performance in letting up recently 
completed speculative developed space.

WHAT TO EXPECT IN 2021

We are anticipating strong occupier 
demand in all of our markets and expect 
vacancy rates to remain low. The limited 
supply in most of our markets, particularly 
urban warehousing, means that we expect 
retention to remain high with further 
rental growth.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

53

 } £16.1 million of net new rent from 

existing assets. We generated 
£15.6 million of headline rent 
from new leases on existing assets 
(2019: £13.2 million) and £12.9 million 
from rent reviews, lease renewals and 
indexation (2019: £11.9 million). This was 
offset by rent from space returned of 
£12.4 million (2019: £11.0 million). 

 } Continued strong demand from 

customers for pre-let agreements. 
In addition to increased rents from existing 
assets, we contracted £41.1 million of 
headline rent from pre-let agreements 
and lettings of speculative developments 
prior to completion (2019: £33.2 million). 
Included in this within the UK are three 
new data centres on the Slough Trading 
Estate, our first letting at SEGRO Park 
Hayes and two further big boxes at SEGRO 
Logistics Park East Midlands Gateway 
(SLP-EMG). On the Continent we signed 
our largest ever pre-let in Germany for 
an e-commerce homewares provider, 
over 370,000 sq m of space in Southern 
Europe for customers including a leading 
global online retailer and three big box 
warehouses in Pozna´n, helping us to build 
scale in this attractive market. 

 } Rent roll growth increased to 

£60.1 million. An important element of 
achieving our goal of being a leading 
income-focused REIT is to grow our rent 
roll, primarily through increasing rent 
from our existing assets and then from 
generating new rent through development. 
Rent roll growth, which reflects net new 
headline rent from existing space (adjusted 
for take-backs of space for development), 
take-up of developments and pre-lets 
agreed during the period, increased to 
£60.1 million in 2020, from £54.5 million 
in 2019. 

STR ATEGIC REPORT
Review of 2020

Creating value through Operational Excellence 
Asset management update  
continued

 } Vacancy has remained low. The vacancy 
at 31 December 2020 was 3.9 per cent 
(31 December 2019: 4.0 per cent). 
This reduction was mainly due to a very 
strong performance in letting recently 
completed speculatively developed 
space, particularly in Germany and Spain. 
The vacancy rate on our standing stock 
remains low at 2.5 per cent (2019:  
2.6 per cent). The vacancy rate is now  
at the bottom end of our target range of 
between 4 and 6 per cent. The average 
vacancy rate during the period was  
4.8 per cent (2019: 4.6 per cent).

 } High retention rate of 86 per cent. 
During the period, space equating 
to £12.4 million (2019: £11.0 million) 
of rent was returned to us, including 
£1.5 million of rent lost due to insolvency 
(2019: £1.1 million). We took back space 
equating to £4.0 million of rent for 
redevelopment. Approximately £60 million 
of headline rent was at risk from a break 
or lease expiry during the period of which 
we retained 85 per cent in existing space, 
with a further 1 per cent retained but in 
new premises.

 } 98 per cent of Group rents collected. 

Rent collection understandably came into 
focus during 2020. The diversity of our 
customer base meant that whilst some 
of their businesses benefited from the 
acceleration of structural drivers as a result 
of the pandemic, others whose business 
were fundamentally sound suffered 
cashflow issues and we were pleased to 
be able to support them. This mostly took 
the form of moving them from quarterly 
rents in advance to monthly payments 
agreements. 98 per cent of the 2020 rent 
due has now been paid with the remaining 
2 per cent due in early 2021.

 } Lease terms continue to offer attractive 
income security. The level of incentives 
agreed for new leases (excluding those on 
developments completed in the period) 
represented 6.8 per cent of the headline 
rent (2019: 6.6 per cent). The portfolio’s 
weighted average lease length was 
maintained with 7.5 years to first break 
and 8.8 years to expiry (31 December 
2019: 7.8 years to first break, 9.2 years to 
expiry). Lease terms are longer in the UK 
(8.8 years to break) than in Continental 
Europe (5.9 years to break), reflecting the 
market convention of shorter leases in 
countries such as France and Poland.

GROWING RENTAL INCOME FROM 
LETTING EXISTING SPACE AND 
NEW DEVELOPMENTS

At 31 December 2020, our portfolio 
generated passing rent of £462 million, 
rising to £508 million once rent free periods 
expire (‘headline rent’). During the year, we 
contracted £77.9 million of new headline rent, 
a new record level for SEGRO. New pre-let 
agreements continue to contribute strongly 
to this number but in 2020 we also grew rent 
on our existing space significantly, helped by 
the last of the lease re-gears at the Heathrow 
Cargo Centre. 

Our customer base remains well diversified, 
reflecting the multitude of uses of warehouse 
space. Our top 20 customers account for 
31 per cent of total headline rent, and Amazon  
became our largest customer during 2020, 
accounting for 5 per cent of the total. 

Just over half of our customers are involved in 
businesses affected by e-commerce, including 
third party logistics and parcel delivery 
businesses, and retailers. These businesses 
accounted for almost 60 per cent of our take-
up during the year.

We monitor a number of asset management 
performance indicators to assess 
our performance:

 } Rental growth from lease reviews and 
renewals. These generated an uplift of 
19.1 per cent (2019: 17.8 per cent) for the 
portfolio as a whole compared to previous 
headline rent. During the year, new rents 
agreed at review and renewal were  
28.2 per cent higher in the UK (2019:  
25.1 per cent) as reversion accumulated 
over the past five years was reflected in 
new rents agreed, adding £10.5 million of 
headline rent. In Continental Europe, rents 
agreed on renewal were 0.5 per cent higher 
(2019: 0.7 per cent lower), turning positive 
for the first time in a number of years as 
market rental growth starts to outpace the 
indexation provisions that have accumulated 
over recent years. 

 } High levels of customer satisfaction. 

Although the quality and location of our 
portfolio is important to our customers, we 
believe that the service we provide is crucial 
to maintaining high customer retention and 
low vacancy. We carry out a rolling survey 
of our customer base throughout the year 
to identify and rectify issues promptly. 
In 2020, one third of our customer base 
responded and 99 per cent of the 200 
participants in the surveys said that they 
would recommend SEGRO to others 
(2019: 96 per cent) and 87 percent said 
they rated their experience with SEGRO 
as ‘Excellent’ or ‘Very Good’ (2019:  
88 per cent).

54

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Growing through development 
Development activity and pipeline update

DEVELOPMENT COMPLETIONS 

835,900 sq m

2019: 871,800 sq m

CURRENT PIPELINE POTENTIAL RENT

£54m

2019: £50m

CURRENT PIPELINE YIELD ON COST

6.5%

2019: 6.6%

POTENTIAL RENT FROM FUTURE PIPELINE

£157m

2019: £100m

WHAT WE SAID WE WOULD DO

We expected to continue developing 
at an increased pace during 2020 and 
anticipated investing over £600 million in 
development capex and land.

WHAT WE ACHIEVED IN 2020

Occupier demand has continued to 
be strong throughout 2020, reflected 
in another high level of development 
completions, the majority of which have 
been let. The pandemic resulted in 
development being temporarily suspended 
on some of our sites but we were able to 
catch up on any delays and finished all of 
our development projects due to complete 
this year. During the year, we invested 
£817 million in our development pipeline, 
comprising £531 million on development 
capital expenditure (including £74 million 
on infrastructure) and £286 million on 
land acquisitions. 

WHAT TO EXPECT IN 2021

We have 838,100 sq m of development 
projects under way, capable of generating 
£54 million of new headline rent, of which 
66 per cent has been secured. 

We expect to invest in excess of 
£700 million in development capex 
including approximately £90 million of 
infrastructure expenditure.

DEVELOPMENT ACTIVITY

During 2020, we invested £817 million in 
our development pipeline which comprised 
£531 million (2019: £409 million) in 
development spend, of which £74 million was 
for infrastructure, and a further £286 million 
to replenish our land bank to enable 
future development. 

DEVELOPMENT PROJECTS COMPLETED 

We completed 835,900 sq m of new space 
during the year, with all of our projects 
completing on time (or in some cases 
ahead of schedule) despite the pandemic. 
These projects were 71 per cent pre-let 
prior to the start of construction and were 
84 per cent let as at 31 December 2020, 
generating £39 million of headline rent, with a 
potential further £8 million to come when the 
remainder of the space is let. This translates 
into a yield on total development cost 
(including land, construction and finance costs) 
of 6.8 per cent when fully let. 

We completed 652,400 sq m of big box 
warehouse space, including a further unit 
at SEGRO Logistics Park East Midlands 
Gateway and our first unit at SEGRO Logistics 
Park Kettering Gateway. Within this was 
also 614,000 sq m of big box warehouses 
across all of our major European markets, 
let to customers such as third party logistics 
operators, online retailers, food retailers and 
businesses linked to electronic vehicles. 

We completed 170,000 sq m of urban 
warehouses, of which 65 per cent is already 
let. This included SEGRO Park Enfield 
in North London, which has set a new 
benchmark for industrial and warehouse space 
and has been designed to take the wellness 
of its occupiers into account. In the UK we 
also completed three new data centres on 
the Slough Trading Estate and our largest 
London pre-let in a decade. On the Continent 
we completed urban warehouse parks in the 
key markets of Frankfurt, Düsseldorf and Paris 
as well as a number of delivery stations for a 
global online retailer in Southern Europe.

Of the eligible space completed in 2020, 
93 per cent has been, or is in the process of 
being, accredited as BREEAM ‘Excellent’ or 
‘Very Good’ (or a local equivalent).

Development also helped us to increase our 
renewable energy capacity by 45 per cent 
in 2020, bringing it to 26.8 MW, enough to 
power over 8,000 homes.

CURRENT DEVELOPMENT PIPELINE 

At 31 December 2020, we had development 
projects approved, contracted or under 
construction totalling 838,100 sq m, 
representing £397 million of future capital 
expenditure to complete and £54 million of 

annualised gross rental income when fully 
let. 66 per cent of this rent has already been 
secured and these projects should yield 6.5 
per cent on total development cost when 
fully occupied. 

 } In the UK, we have 207,300 sq m of space 
approved or under construction. Within this 
are three more data centres on the Slough 
Trading Estate (taking the total number to 
32), developments in all of our key London 
markets and two large pre-lets at our big 
box logistics park SLP-EMG.

 } In Continental Europe, we have 570,000 sq m  
of space approved or under construction. 
This includes pre-let big box warehouses 
for a variety of different occupiers, from 
retailers to manufacturers, across all of our 
European markets. We are also developing 
further phases of our successful urban 
warehouse parks in Berlin, Cologne, Leipzig 
and Düsseldorf.

 } In addition to the above projects that we are 
developing ourselves, we also have 60,800 
sq m of space under construction as part 
of forward-funded agreements with local 
developers. This is proving to be a very 
effective way to get access to opportunities 
in competitive markets where accessing 
land is more difficult.

We continue to focus our speculative 
developments primarily on urban warehouse 
projects, particularly in the UK, France and 
Germany, where modern space is in short 
supply and occupier demand is strong. In the 
UK, our speculative projects are focused in 
London and on the Slough Trading Estate. 
In Continental Europe, we continue to 
build scale in Germany, where projects are 
underway in a number of major cities. 

Within our Continental European 
development programme, approximately 
£15.5 million of potential gross rental income 
is associated with big box warehouses 
developed outside our SELP joint venture. 
Under the terms of the joint venture, SELP 
has the option, but not the obligation, to 
acquire these assets shortly after completion. 
Assuming SELP exercises its option, we would 
retain a 50 per cent share of the rent after 
disposal. In 2020, SEGRO sold £93 million of 
completed assets to SELP, representing a net 
disposal of £47 million.

Further details of our completed projects and current 
development pipeline are available in the 2020 Property  
Analysis Report, which is available to download at:  
www.segro.com/investors

55

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Review of 2020

Growing through development 
Development activity and pipeline update 
continued

The options are held on the balance sheet at 
a value of £16 million (including joint ventures 
at share). Those we expect to exercise over 
the next two to three years are for land 
capable of supporting just under 1.0 million 
sq m of space and generating approximately 
£62 million of headline rent (SEGRO share) for 
a blended yield of approximately 6-7 per cent. 

IMPACT OF OUR DEVELOPMENT PIPELINE 
ON OUR RENTAL INCOME

Our development pipeline added a potential 
£47 million of rent to our income in 2020 and 
this has a meaningful impact on our earnings 
and dividend growth. 

The chart below outlines how we can grow 
our net rental income over the next four 
to five years through asset management of 
our existing assets and the execution of our 
current, near-term and future pipeline as well 
as through our land options. It does not reflect 
the impact of future rental growth or any 
future acquisitions or disposals.

NET RENTAL INCOME 
as at 31 December 2020 (£million)

2
6
4

9
9

1
8

2
9
1

4
3
8

Passing rent at
31 December
2020

Rent in rent-free,
reversions and
vacant space

Current and
near-term
development pipeline

Future pipeline
and Land held
under option

Total
potential

FUTURE DEVELOPMENT PIPELINE

NEAR-TERM DEVELOPMENT PIPELINE 

Within the future development pipeline 
are a number of pre-let projects which are 
close to being approved, awaiting either final 
conditions to be met or planning approval to 
be granted. We expect to commence these 
projects within the next six to 12 months. 

These projects total 385,500 sq m of space, 
equating to approximately £302 million of 
additional capital expenditure and £27 million 
of additional rent. 

LAND BANK 

Our land bank identified for future 
development (including the near-term projects 
detailed above) totalled 654 hectares at 
31 December 2020, valued at £636 million, 
roughly 5 per cent of our total portfolio value. 
We invested £286 million in acquiring new 
land during the year, including land associated 
with developments already underway or 
expected to start in the short term. 

We estimate that our land bank can support 
2.8 million sq m of development over the 
next five years. The prospective capital 
expenditure associated with the future 
pipeline is approximately £1.6 billion. It could 
generate £157 million of gross rental income, 
representing a yield on total development cost 
(including land and notional finance costs) 
of around 6-7 per cent. These figures are 
indicative based on our current expectations 
and are dependent on our ability to secure 
pre-let agreements, planning permissions, 
construction contracts and on our outlook for 
occupier conditions in local markets. 

CONDITIONAL LAND ACQUISITIONS AND 
LAND HELD UNDER OPTION AGREEMENTS 

Land acquisitions (contracted but subject 
to further conditions) and land held under 
option agreements are not included in 
the figures above but together represent 
significant further development opportunities. 
These include sites for big box warehouses in 
the UK Midlands as well as in Germany and 
Italy. They also include urban warehouse sites 
in East London and close to Heathrow. 

56

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020STR ATEGIC REPORT
Review of 2020

Environmental sustainability within  
our development pipeline

As an industry, we need to be 
transparent about what net zero 
carbon means and collaborate to 
accelerate the transition to a low 
carbon future.

BEN BR AKES
GROUP SUSTAINABILIT Y MANAGER

TOTAL FLOORSPACE   
ENVIRONMENTALLY CERTIFIED 
41% OF THE PORTFOLIO

 3.5m sq m

2019: 2.7m sq m (35% of portfolio)

PROPORTION OF PORTFOLIO  
EPC RATED ‘C’ OR ABOVE

66%

2019: 58%

ON-SITE RENEWABLE ENERGY CAPACITY 
+8.3 MW

 26.8 MW

2019: 18.5 MW

It is our responsibility, as a long-
term investor, to use the latest 
technologies and construction 
techniques to ensure that our 
buildings are efficient to use and 
stand the test of time. 
We recognise that our planet is facing a 
climate emergency and that we need to play 
our part in helping to combat the challenge of 
climate change and natural resource depletion. 

We continuously monitor and, where 
appropriate, adopt new approaches, 
technologies and techniques to reduce 
the environmental footprint of our 
existing properties and our developments. 
The Investment Committee considers the 
environmental impact of all capital investment 
decisions to ensure that they are consistent 
with our environmental targets and ambitions.

We take a materiality-based approach to our 
environmental strategy, focusing on the areas 
where our footprint is greatest. 

The largest source of carbon emissions from 
our own activities is the embodied carbon 
in our buildings. For our existing buildings, 
we can work to improve their efficiency in 
operational terms (with more energy-efficient 
LED lighting, for example); but it is in our 
development programme, which delivered 
835,900 sq m of new space in 2020 with 
a further 838,100 sq m of space under 
construction at year end, where we can make 
the greatest impact. In many cases, once we 
hand a building over to a customer, they 
control all operational aspects so it is our 
responsibility to provide them with an efficient 
building and the tools to operate it efficiently.

Net Zero Carbon Metrics

Operational Carbon

We will reduce the carbon intensity of properties, 
where we have influence, by 40% by 2025 against 
a 2017 baseline, in line with the Paris Agreement1

Embodied Carbon

We will reduce the average embodied carbon 
intensity of all new developments by 20% by 
2025 (against our average benchmark in 2019)2

Energy Efficiency

We will improve the primary energy demand to 
at least an Energy Performance Certificates (EPC) 
C rating, or equivalent3

Group floorspace rated C or better

Group floorspace rated D or lower

Group floorspace unrated

On-site Renewable Energy Generation

We will increase the amount of on-site renewable 
energy capacity and generation across the portfolio

Off-site Renewable Energy Procurement

All off-site electricity supplies to be sourced 
from 100% certified renewables4

(Baseline)

2019

2020

45.8 kgCO2e/m2

42 kgCO2e/m2 37.5 kgCO2e/m2

348 kgCO2e/m2

348 kgCO2e/m2

334 kgCO2e/m2

–

–

–

57.8%

18.4%

23.8%

66.2%

12.6%

21.2%

Capacity

18.5 MW

26.8 MW

Generated

16,887 MWh

20,976 MWh

–

6.4%

11.1%

1  Represents the energy use of 41 per cent of our total property footprint by area. The remaining 59 per cent was controlled by 

our customers during the year.

2  SEGRO undertook an embodied carbon assessment across 35 per cent of the development footprint by area.
3  For the purpose of creating a group EU EPC metric an equivalent C rating is assumed for building with a primary energy 

demand of 200 kWh/m2 or less for Germany and Poland where alphabetical ratings do not exist.

4  89 per cent of electricity was procured by SEGRO. 63 per cent of this electricity is located in Poland where the main supply 

contract will be on a green tariff from 1st January 2021.

57

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS  
 
 
 
 
 
 
STR ATEGIC REPORT
Review of 2020

Environmental sustainability within our development pipeline 
continued

depending on the materials they use and 
the lettable floor space delivered – i.e cross 
dock warehouse versus big-box warehouse. 
With every assessment undertaken we 
learn more about how we can influence this 
often ignored issue. We aim to increase the 
coverage of life cycle assessments and apply 
lessons learned across the wider development 
programme as we progress against our target.

We are increasingly using Building Information 
Management (BIM) in our development 
projects, a technology which facilitates three 
dimensional modelling of the proposed 
building. It allows us to assess more accurately 
the amount of material needed for the 
construction (reducing waste) and the carbon 
emissions from the materials. It also allows 
us to model the building across its whole life, 
making it an important contributor to our 
target of reducing the level of whole life-cycle 
embodied carbon in our developments.

We will continue to adopt the latest techniques 
to reduce embodied carbon within our 
developments and to expand the number of 
projects assessed to attain greater visibility 
of our progress in reducing this important 
element of our overall carbon footprint.

WASTE

While waste generated across our own offices 
(where we have control) is monitored, tracked 
and reported, the majority of our waste is 
created as a result of our construction and 
demolition projects. Our target is to send zero 
waste to landfill by 2025.

For demolition waste, which makes up the 
bulk of our total waste, it is important to re-
use as much as possible on-site to avoid the 
carbon emissions related to transportation 
of waste off-site and the import of virgin 
materials from elsewhere.

We undertake pre-demolition audits 
to identify waste materials taking into 
consideration the quantity and quality of 
waste to be re-used on site as aggregate. 
We also re-use on site where materials are 
non-hazardous and will not have a detrimental 
effect on the environment. Hazardous waste 
is treated differently and is not included within 
these figures. Hazardous waste is dealt with 
in the appropriate manner, fully in line with 
relevant regulation.

In 2020, 93 per cent of construction, 
demolition and operational waste controlled 
by SEGRO was diverted from landfill.

Having established where we could make 
most impact on our carbon footprint, in 
2019 we announced our new sustainability 
targets which were created using a science 
based approach, to ensure that we play our 
part in achieving the aim of limiting global 
temperature rises to two degrees by 2050. 
Over the past year we have been embedding 
our new approach into all areas of the 
business, raising awareness and undertaking 
new initiatives to ensure we are progressing 
against the new targets. Our progress on our 
targets is outlined in this report, with further 
information available on our website.

Our science based approach has meant that 
we have expanded our focus to the key areas 
in which we have a direct impact and are 
challenging ourselves to reduce not only our 
direct operational carbon footprint but also the 
footprint of our buildings and, where possible, 
those of our customers.

As a result, we have joined many of our sector 
peers in signing a pledge to be Net Zero 
carbon by 2050, and this year announce that 
we will be going further and faster by reaching 
that aim by 2030.

MATERIALS

Our materiality assessment identified 
that the carbon in the materials which we 
use for our developments is significant 
for SEGRO. Our sustainability strategy 
ensures that we target the upfront carbon 
footprint of our developments, related to the 
construction materials and transportation 
emissions attributed to each and every 
new development.

We also now aim to carry out assessments 
on as many projects as possible to identify 
how we can reduce a building’s carbon 
footprint over its full life cycle both by utilising 
alternative, more sustainable materials during 
construction and by considering the emissions 
related to the deconstruction at the end of the 
building’s useful life. We believe this holistic 
approach to embodied carbon is the most 
impactful. In 2020, we conducted nine full life 
cycle assessments, covering approximately 35 
per cent of the development footprint by area 
in the year.

2019 was the first year we had undertook 
enough life cycle assessments to set a baseline 
for improving embodied carbon performance. 
In 2019 the average embodied carbon 
intensity was 348 kilograms of CO2 per sq m 
of delivered floor space. In 2020 this average 
was 334 kilograms CO2 per sq m of delivered 
floor space. The reduction is mainly attributed 
to our largest development using high levels 
of cement replacement in the foundations and 
a cladding system with better environmental 
performance. Naturally, there is a variability 
to be embodied across all our projects, 

58

CASE STUDY:   
REDUCING EMBODIED CARBON 

Embodied Carbon has for a long time 
been side-lined whilst the focus of the 
real estate industry has primarily been 
on the operational carbon of buildings. 
In 2019, SEGRO announced a target to 
reduce the average embodied carbon 
on its developments by 20 per cent by 
2025. Since then, we have learnt much 
about our embodied carbon emissions 
and investigating what we can do to 
reduce them. This year we completed an 
embodied carbon assessment across 35 
per cent of the development footprint, up 
from 20 per cent the year before. 

The design can play a key role in reducing 
embodied carbon. Each project is different 
and presents new opportunities. This can 
be reducing the design loads and therefore 
the quantity of material required or by 
influencing the materials which we choose. 
Sustainably sourced timber is at the top 
of SEGRO’s material hierarchy. At SEGRO 
Park Collégien in France, the short spans 
offered an opportunity to use glue 
laminated timber beams. Every one tonne 
of steel replaced results in a 2.5 tonnes of 
CO2e saving. 

It is not always possible to use preferred 
materials in the design and it is unlikely 
that more energy intensive materials such 
as steel and concrete will be replaced 
anytime soon. Therefore, upgrading the 
specification to increase recycled content 
and cement replacements is required to 
make progress in this area. SEGRO Park 
Rainham in London used a warm-mix 
asphalt product which reduced the carbon 
content in the asphalt by 45 per cent. 

Transparency within the supply chain 
is equally important, and by requesting 
Environmental Product Declarations from 
our suppliers, we can make decisions about 
the products we use. This is particularly 
important for composite systems, such as 
cladding systems used to construct the 
walls and roof, where we are using this to 
make informed choices. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020ENERGY

ZERO CARBON ENERGY

As well as having the responsibility for our 
own energy consumption, in many markets 
we also procure the energy used by our 
customers in their operations. In order to 
accelerate the shift to a low carbon economy, 
in 2018, we began moving all our electricity 
contracts onto zero carbon tariffs. In some 
regions where we are in long-term contracts, 
we have already sourced zero carbon energy 
from 2021 and beyond.

Following the movement of our German and 
Netherlands operations, our UK controlled 
portfolio moved on to a zero carbon electricity 
contract in 2020. This certified renewable 
energy, helps SEGRO and our customers 
decrease carbon emissions in operation.

Where we do not have operational control, 
we engage with our customers on their own 
energy provision. On the Slough Trading 
Estate, for example, we have 29 data centres 
which are significant consumers of power. 
Our largest data centre customers source 
their own electricity to power their buildings 
and most have stated publicly that they 
source through renewable energy contracts. 
They, along with several other major Data 
Centre operators formed the Climate Neutral 
Data Centre Pact in 2020 and SEGRO fully 
supports the leadership shown in this self 
regulatory initiative.

CASE STUDY: MONITORING ENERGY 
PERFORMANCE, SEGRO PARK 
AMSTERDAM AIRPORT

In February 2020, we completed the third 
phase of our development at SEGRO 
Amsterdam Airport in the Netherlands. 
The first building was developed in 2018 
and the total lettable area across the three 
buildings now stands at over 40,000 sq m. 

Each phase was built to high energy 
efficiency standards with a large rooftop 
solar photovoltaic array, LED lighting, and 
heating and cooling provided by aquifer 
thermal energy storage. This allows the 
development to operate on electricity only, 
without the need for natural gas or any 
other fossil fuel, and renewable heat from 
the ground.

Over the last 12 months, the industrial 
estate has exported more energy to the 
grid from the solar photovoltaic system 
than was imported from the grid, making 
the building net zero energy in operation. 
Furthermore, the electricity imported 
from the grid is supplied from off-site 
renewable sources backed by renewable 
energy certificates, resulting in zero carbon 
emissions in operation. 

It is important to continue to monitor 
the energy performance of our buildings 
to learn how our buildings are being 
used and their energy requirements. 
By engaging with our customers to offer 
a holistic energy solution, we can not only 
achieve our target to reduce operational 
carbon by 40 per cent but achieve a net 
zero carbon portfolio. 

CASE STUDY: FOCUS ON WELLBEING  
AT SEGRO PARK ENFIELD, LONDON

We are constantly pushing the sustainability 
boundaries for industrial development 
schemes by offering the market new 
innovative products. In London, our 
development schemes regularly achieve 
Energy Performance Certificate ‘A+’ and 
BREEAM ‘Excellent’ ratings. SEGRO Park 
Enfield has taken these concepts and gone 
one step further by incorporating wellbeing 
and sustainability innovations. 

Unit 3, which is the largest of the three 
buildings, has been designed to meet 
the WELL ‘Gold’ standard, integrating a 
range of measures focused on maximising 
occupier wellness. The buildings have 
been designed to increase natural daylight, 
with operable windows to increase natural 
ventilation and adjustable blinds to 
control glare. Located near the George V 
reservoir and River Lea, the Park also offers 
4,690 sq m of green space, with 189 trees 
planted during development. This will 
provide opportunities for customers’ 
employees to experience nature in 
their daily lives, which studies show can 
contribute to wellbeing and productivity.

To encourage active lifestyles, fitness 
equipment has been installed and a 
riverside footpath has been created, 
connecting to local footpaths. There are 
also cycle spaces, on-site showers and 
changing facilities, along with a water 
cooler for bottle refilling.

Air quality sensors in Unit 3 will monitor 
aspects including particulate matter, 
carbon dioxide, carbon monoxide, ozone, 
nitrogen dioxide and volatile organic 
compounds, so customers can actively 
manage the environment for wellbeing. 
Air quality thresholds have been set and 
lease agreements allow for sensors to 
be calibrated annually. Informed by this 
project, wellbeing enhancements are now 
part of SEGRO’s standard specification. 

59

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Review of 2020

A record year of investment in our business 
Investment update

ACQUISITIONS OF ASSETS

£603m

2019: £136m

ACQUISITIONS OF LAND

£286m

2019: £147m

DEVELOPMENT CAPEX

£531m

2019: £409m

DISPOSALS OF LAND & ASSETS

£139m

2019: £442m

WHAT WE SAID WE WOULD DO

We expected demand for warehouse 
assets to remain strong and said that we 
would continue to trim the portfolio and 
sell assets where we believe we have 
maximised our returns to release funds 
for other opportunities offering a better 
risk-return profile. We intended to continue 
the focus of our investment activity 
on development, taking advantage of 
opportunities to acquire income-producing 
assets offering attractive risk-adjusted 
returns if they arose.

WHAT WE ACHIEVED IN 2020

2020 was a very active year on the 
investment front with continued high levels 
of spend on our development pipeline. 
We also created a number of interesting 
land and asset acquisition opportunities, 
meaning that spend in this area was much 
higher than in recent years. Net investment 
during the year was £1.3 billion with 
disposals relatively low, partly due to the 
fact we disposed of a large portfolio of big 
box warehouses at the end of 2019 which 
brought forward some of our planned 
2020 disposals. 

WHAT TO EXPECT IN 2021

We will continue our disciplined approach 
to capital allocation, focusing the majority 
of our investment into development but 
making strategic asset acquisitions when 
the opportunity arises. 

60

We invested £1.4 billion in our portfolio 
during 2020: development capital expenditure 
of £531 million, £603 million of assets and 
£286 million of land. This was partly offset by 
£139 million of disposals.

ACQUISITIONS FOCUSED ON BUILDING 
SCALE IN URBAN WAREHOUSING

We found a number of compelling acquisition 
opportunities in 2020 and as a result were 
more active on the investment front than we 
have been in recent years. 

We bought two very attractive urban 
warehouse parks in London, one close to our 
existing assets in Park Royal and the other 
that complements our East Plus portfolio 
and is now our most centrally located asset 
in London. 

We also acquired a further 75 per cent of the 
shares of the listed French urban warehouse 
company Sofibus Patrimoine SA whose main 
asset (“PAPC”) is a large industrial warehouse 
estate close to the centre of Paris.

Other acquisitions included an urban 
warehouse park that adjoins the Slough Trading 
Estate and a big box warehouse in Łódz. 

The consideration for the asset acquisitions 
was £603 million, reflecting a blended 
topped-up initial yield of 4.0 per cent. 

ACQUISITIONS: WHAT TO EXPECT IN 2021

We will continue to look for acquisitions of 
income-producing assets in line with our 
strategy and which offer attractive risk-
adjusted returns. However, the majority of 
our investment is likely to remain focused 
on development.

ACQUISITIONS COMPLETED IN 2020

Asset Type

Big box logistics

Urban warehousing

Other

Land2

Acquisitions completed in 20203

ASSET RECYCLING TO IMPROVE 
PORTFOLIO FOCUS

During 2020, we sold £139 million of land 
and assets, taking advantage of strong investor 
demand to realise profits and release capital to 
reinvest in our business. 

These disposals included our land and assets 
in Austria, some older big box warehouses 
in France and an urban warehouse in West 
London where we believe we had maximised 
the potential returns and could take advantage 
of a strong investor market to crystallise 
some profits.

As in previous years, we sold a portfolio of 
Continental European big box warehouses 
developed by SEGRO to SELP for which we 
received £47 million net proceeds from an 
effective sale of a 50 per cent interest.

The consideration for the asset disposals was 
£123 million, reflecting a blended topped-
up initial yield of 4.7 per cent. The disposals 
generated a modest gain on sale compared 
to book values at 31 December 2019.

Additionally, we disposed of £16 million of 
land, primarily comprising plots in non-core 
markets (including the land mentioned in 
Austria above).

DISPOSALS: WHAT TO EXPECT IN 2021

While investor demand for industrial 
properties remains strong, we expect to 
continue to recycle assets where we believe 
we can generate better returns from 
deploying our capital in other opportunities. 
A typical run rate would be £150-250 million 
per year.

Purchase price 
(£m, SEGRO 
share)

£9.3m

£556.2m

£37.5m

£285.9m

£888.9m

Net initial yield 
(%)

Topped-up net 
initial yield (%)

6.7

3.9

3.5

–

3.91

6.7

4.0

3.5

–

4.01

1  Yield excludes land transactions.
2  Land acquisitions are discussed in Future Development Pipeline.
3  A reconciliation of acquisitions completed to the Financial Statements is provided in Table 8 of the Supplementary Notes.

DISPOSALS COMPLETED IN 2020

Asset Type

Big box logistics

Urban warehousing

Land

Disposals completed in 20202

Disposal proceeds 
(£m, SEGRO 
share)

Net initial yield 
(%)

Topped-up net 
initial yield (%)

£49.7m

£73.5m

£15.6m

£138.8m

5.0

4.2

–

4.71

5.0

4.2

–

4.71

1  Yield excludes land transactions.
2  A reconciliation of disposals completed to the Financial Statements is provided in Table 8 of the Supplementary Notes.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020PERIVALE
GREENFORD, LONDON, UB6 7RL

CITY OF 
LONDON

WESTMINSTER

WHITE 
CITY

A406
(North Circular)

OLD OAK
COMMON

PARK 
ROYAL

PARK ROYAL 
UNDERGROUND

HANGER LANE 
UNDERGROUND

ACTON CENTRAL 
UNDERGROUND

A406
(North Circular)

EAILING 
BROADWAY 

ALPERTON 
UNDERGROUND

PERIVALE 
BUSINESS PARK

A40

CENTRAL 
LINE

TESCO HOOVER 
BUILDING

PERIVALE
UNDERGROUND

A40

HORSENDEN
LANE

PERIVALE PARK, WEST LONDON

PARC D’ACTIVITIES DES PETITS CARREUX, PARIS

SEGRO PARK COVENTRY GATEWAY

SEGRO PARK CANNING TOWN (FORMERLY ELECTR A PARK), EAST LONDON

URBAN WAREHOUSE DISPOSAL, WEST LONDON

61

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Review of 2020

Regional reviews

GREATER LONDON

RENTAL GROW TH, STR ATEGIC ACQUISITIONS AND 
FURTHER DEVELOPMENT

Our strategy in London continues to deliver results with 
rental growth across all of the sub-markets in which we 
operate. We have made very good progress in capturing 
the revisionary potential that has accumulated across the 
portfolio, supported by strong occupier demand from a 
wide variety of businesses, all of whom need to be close to 
their customers and their labour force. 

Despite strong competition in the investment markets 
we were also able to use our market expertise to make 
some strategic asset acquisitions that create exciting 
opportunities for our business and the momentum has 
continued in our development pipeline.

THAMES VALLEY

MODERNISING THE SLOUGH TR ADING ESTATE AND 
EXPANDING OUR PRESENCE IN THE THAMES VALLEY

We are constantly modernising the Slough Trading Estate 
to ensure that it is the location of choice for businesses 
in the Thames Valley. 

The Estate is home to businesses both large and small,  
from a wide range of sectors. We continue to attract data 
centres due to the close proximity of the estate to London, 
the access to a robust power supply and the  
fibre-optic connectivity. 

We expanded our presence in the Thames Valley with the 
addition of our new estate SEGRO Park Bracknell and are 
looking for further opportunities.

62

OPER ATING SUMMARY OF THE YEAR

 } The portfolio has proved to be resilient to the impacts of the pandemic 

and we have been able to continue to grow rents and capture 
reversionary potential due to the high levels of occupier demand for our 
prime located assets. 

 } We acquired two key assets (Perivale and Canning Town) in strategic 
growth corridors that are excellent additions to our Greater London 
portfolio, allowing us to offer customers even more choice.

 } Continued momentum in the development pipeline – we completed 

our largest ever London pre-let on schedule and have started work on 
SEGRO Park Hayes and SEGRO Park Tottenham.

OPPORTUNITIES FOR THE YEAR AHEAD

 } Vacancy is currently only 5.2 per cent in Greater London and almost 
half of this is recently completed speculatively developed space so we 
will be focusing on letting this up, potentially also targeting new types 
of customers in growth sectors.

 } We continue to look for new land to consider ways of intensifying land 
use so that we can continue to support our customers’ growth plans. 

RISKS FOR THE YEAR AHEAD

 } The customers in our Greater London portfolio were some of those most 
impacted by government restrictions to combat the pandemic, particularly 
those linked to passenger travel at Heathrow and those exposed to the 
hospitality industry, we continue to monitor this closely. 

OPER ATING SUMMARY OF THE YEAR

 } Very strong operating metrics with low vacancy of 3.0 per cent, a high 

level of rent collection and a record leasing performance.

 } The data centre success story continued in 2020 with two more 

completed and another three under construction, which will take us 
to a total of 32 on the Estate.

 } Acquisition of adjoining Perth Trading Estate providing us with more 

space and future development opportunities.

OPPORTUNITIES FOR THE YEAR AHEAD

 } We are exploring opportunities to intensify the estate by building multi-

level warehousing.

 } We are also investigating the potential to expand further into the Thames 
Valley corridor following the successful completion and leasing of SEGRO 
Park Bracknell.

RISKS FOR THE YEAR AHEAD

 } The limited amount of available space on the Estate means that it can be 
hard to find space for expanding businesses and we must be innovative 
to accommodate our customers’ expansion plans. Our full ownership of 
the Estate allows us to be creative in our solutions to achieve this.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020NATIONAL LOGISTICS (UK BIG BOX WAREHOUSES)

STRONG LETTINGS PERFORMANCE AND SUCCESS 
IN BRINGING FURTHER SITES FORWARD FOR 
DEVELOPMENT

We continue to see high levels of interest for our well-
located logistics parks and supply in UK big box has 
reduced in 2020 due to the particularly strong levels of 
take up.

We made good progress at SEGRO Logistics Park East 
Midlands Gateway (SLPEMG) and SEGRO Park Kettering 
(SPK) during 2020 and have also successfully brought 
two further major sites forward for development and have 
already started the infrastructure works. 

NORTHERN EUROPE (GERMANY AND NETHERLANDS)

STRONG DEMAND FOR OUR RECENTLY DEVELOPED 
URBAN ASSETS, RENTAL GROW TH AND PRE-LETS.

Occupier demand continues to be very high for all of our 
assets, with increased levels of e-commerce penetration, 
and demand for ‘last-mile’, particularly benefiting our 
urban warehouse parks. 

This helped us to deliver a strong lettings performance 
and achieve high-levels of rental growth across all of 
major markets.

OPER ATING SUMMARY OF THE YEAR

 } We completed and delivered buildings at SLPEMG and SPK on time, in 
the middle of the pandemic, and signed two further pre-lets at SLPEMG 
(which when complete will mean that the park is almost two-thirds full).

 } Acquired land and commenced infrastructure works for our next two 

major logistics parks: SEGRO Park Coventry Gateway (SPCG) and SEGRO 
Logistics Park Northampton Gateway (SLPNG), which between them will 
create almost 900,000 sq m of prime big box warehouse space. 

OPPORTUNITIES FOR THE YEAR AHEAD

 } We will be working hard to secure further pre-lets at SLPEMG and SPK. 

 } Continuing the infrastructure works at SPCG and SLPNG and working on 

bringing further sites forward for development. 

RISKS FOR THE YEAR AHEAD

 } Development of large-scale sites such as SPCG and SLPNG bring with 
them a certain amount of execution risk but we are confident in our 
ability to manage this given our strong development track record.

 } There was an increase in speculative development towards the end of 

2020 but take-up levels remain high and vacancy is low. We continue to 
build UK big box on a mostly pre-let basis.

OPER ATING SUMMARY OF THE YEAR

 } High levels of rental growth across all of our assets, driven by strong 

customer demand and restricted supply.

 } Our vacancy rate has reduced to 5.1 per cent, despite the recent delivery 
of a very ambitious speculative programme, thanks to a strong letting 
performance with SEGRO CityPark Frankfurt and the most recent phase 
of SEGRO Airport Park Berlin both now fully let. 

 } We signed our largest ever German pre-let in Leipzig for a homewares 
e-commerce operator, and also signed a pre-let in the Netherlands (a 
market which tends to be speculatively led). 

OPPORTUNITIES FOR THE YEAR AHEAD

 } Demand continues to be high across all of our assets but we see a 

particular opportunity in responding to the growing demand for ‘last-mile’ 
from online retailers and food grocers.

 } We will be looking to let up the remaining space in our recently 

completed development in Düsseldorf Sud.

RISKS FOR THE YEAR AHEAD

 } Slower take up of the urban speculatively developed schemes which 

We continue to focus on achieving scale in the 
Netherlands and made good progress during the period.

complete later this year due to the marcoeconomic impacts of 
the pandemic.

63

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Review of 2020

Regional reviews 
continued

SOUTHERN EUROPE (FR ANCE, ITALY AND SPAIN)

RECORD LEVELS OF DEVELOPMENT, STRONG LETTING 
ACTIVITY AND STR ATEGIC ACQUISITIONS

Our business continues to go from strength to strength 
with strong occupier demand, driven by increased levels 
of e-commerce penetration, and our well-established 
operating platform enabling us to increase rents and sign 
new pre-lets. 

The momentum in our development pipeline continues 
and we significantly increased our presence in Paris 
through a strategic asset acquisition. The purchase of a 
land portfolio in Spain positions us to achieve scale in our 
chosen markets of Barcelona and Madrid.

CENTRAL EUROPE (POLAND AND CZECH REPUBLIC)

ESTABLISHING A STRONG POSITION 
IN CENTR AL EUROPE

We have made good progress in 2020 in increasing 
our presence in key logistics markets, both through 
development and the acquisition of assets. 

In Poland we continue to focus on the five key logistics 
markets of Gliwice, Łódz, Poznan,   Warsaw and Wrocław.

Occupier demand in the Czech Republic continues to be 
strong and as a result our portfolio once again performed 
well in 2020. 

64

OPER ATING SUMMARY OF THE YEAR

 } A record year of development completions in Southern Europe with 

517,200 sq m of space delivered.

 } Our Spanish portfolio now has zero vacancy with all of the recently 

completed speculative developments now fully let. 

 } We signed a preliminary agreement to deliver a pioneering 75,000 sq m 
underground development in Central Paris as part of the redevelopment 
of the Gobelins rail station.

 } We also acquired a controlling stake in Sofibus Patrimoine SA, whose 

major asset is the 149,900 sq m urban warehouse asset Parc d’Activités 
des Petits Carreaux (PAPC) in Paris. 

OPPORTUNITIES FOR THE YEAR AHEAD

 } Internet penetration in Southern Europe is behind markets such as the UK 
and Germany, creating a huge opportunity for both our customers and 
our business.

RISKS FOR THE YEAR AHEAD

 } The challenge of finding land and securing building permits in markets 

such as Paris and increasing competition in Italy.

 } Our development in Spain tends to comprise a higher level of speculative 
projects in line with the market norm, meaning that there is heightened 
letting risk compared to most of our other markets.

OPER ATING SUMMARY OF THE YEAR

 } Strong operating metrics with only 4.9 per cent vacancy and high 

customer retention rate of 95 per cent.

 } We enlarged our land bank in Poznan and delivered the first phase of 

our project there (which was fully pre-let) and have started work on the 
second phase. 

 } We also added a further 62,500 sq m of new space to the portfolio 

through developments and acquisitions in Łódz, Warsaw and Wrocław.

OPPORTUNITIES FOR THE YEAR AHEAD

 } Over 43,000 sq m of new big box and urban warehouses under 

construction in Poznan, Łódz and Warsaw. 

 } With demand for urban warehouse space in Warsaw increasing, we 

continue to look for opportunities to acquire land.

RISKS FOR THE YEAR AHEAD

 } Competition for customers in Poland remains strong, particularly from 
trader-developers, which may impact the potential for rental growth.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020SELP

SEGRO EUROPEAN LOGISTICS 
PARTNERSHIP (SELP)

SELP is our Continental European big box 
joint venture with PSP Investments, one 
of Canada’s largest pension investment 
managers. SELP started in 2013 with 
€1 billion of assets. At the end of 2020, it 
has a portfolio worth just under €5.3 billion. 
It generates €247 million of headline rent with 
an occupancy rate of 97 per cent. 

This partnership continues to be a vital 
element of our strategy to build scale in 
Continental European big box warehousing 
in a capital efficient manner. By sharing the 
capital investment with PSP Investments, we 
have been able to grow the portfolio further 
and faster than we could have done on our 
own. Both partners benefit from the attractive 
yield on the portfolio, the development 
potential from the land and from the 
economies of scale we can extract from this 
extremely high quality, modern collection of 
big box warehouses.

As a result, SEGRO now has in excess of 
€1 billion assets under management in 
each of Germany, France and Poland, and 
we are building scale in the smaller markets 
of Italy, Spain, the Czech Republic and the 
Netherlands. The appetite for investing in 
big box warehousing in strategic locations 
in Continental Europe remains strong from 
both partners and we look forward to further 
successful collaboration into the future. 

ASSETS UNDER MANAGEMENT 
(€bn)

Assets under management at 31 December 2020

Assets under management at inception

m
8
9
5
1
€

,

m
9
9
1
1
€

,

m
8
1
0
1
€

,

m
2
1
8
€

m
3
2
3
€

m
9
0
3
€

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

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n
a
m
r
e
G

/
d
n
a

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P

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R

h
c
e
z
C

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a
t
I

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c
n
a
r
F

i

n
a
p
S

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a

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e
h
t
e
N

65

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
 
STR ATEGIC REPORT

Financial Review 
An active year of financing and strong 
financial results

During 2020, we have taken advantage of 
favourable financing conditions to continue 
improving SEGRO’s capital structure. 

FINANCING

In May 2020, SEGRO extended the maturity 
of €1.1 billion of revolving credit facilities for 
a further year to 2025. This was followed by 
amendments to transition the facilities from 
sterling LIBOR to SONIA in anticipation of the 
ending of LIBOR in 2021.

In June 2020, SEGRO issued 83 million new 
shares, raising £680 million of gross proceeds 
to help to fund our development programme 
while also retaining an appropriate capital 
structure. The shares were issued at 820.0 
pence per share, a 4.5 per cent discount to the 
prior day’s closing share price.

In July 2020, SEGRO agreed a third US 
private placement debt issue of €450 million 
across four tranches with a number of 
institutional investors. The notes have an 
average maturity of 16.8 years and a weighted 
average coupon of 1.6 per cent. Closing took 
place in August 2020 followed by funding in 
October and December 2020.

In August 2020, SEGRO redeemed its 
£79.3 million 6.75 per cent sterling bonds due 
to mature in 2021, followed by redemption 
in September of its £39.1 million 7.0 per 
cent sterling bonds due to mature in 2022. 
The combined cash settlement for the bonds 
redeemed was £130.5 million, which included 
£1.4 million of accrued interest.

In November 2020, SEGRO completed 
its secondary listing on Euronext Paris. 
The Secondary Listing reflects the growth and 
importance to the Company of its Continental 
European investor base and operations and 
ensures that SEGRO maintains an optimum 
and efficient holding structure following 
the end of the Brexit transition period on 
31 December 2020.

As 31 December 2020, the gross 
borrowings of SEGRO Group and 
its share of gross borrowings in joint 
ventures totalled £3,201.2 million 
(31 December 2019: £2,637.8 million), of 
which only £21.1 million (31 December 
2019: £27.6 million) are secured by way 
of legal charges over specific assets. 
The remainder of gross borrowings are 
unsecured. Cash and cash equivalent 
balances were £113.2 million (31 December 
2019: £153.5 million). Average debt maturity 
was 9.9 years (31 December 2019: 10.0 years) 
and average cost of debt (excluding non-cash 
interest and commitment fees) was 1.6 per 
cent (31 December 2019: 1.7 per cent).

Funds available to SEGRO Group 
(including its share of joint venture funds) at 
31 December 2020 totalled £1,189.3 million 

(31 December 2019: £1,370.0 million), 
comprising £113.2 million cash and short-term 
investments and £1,076.1 million of undrawn 
revolving credit facilities of which only 
£11.6 million was uncommitted. Cash and 
cash equivalent balances, together with the 
Group’s interest rate and foreign exchange 
derivatives portfolio, are spread amongst a 
strong group of banks, all of which have a 
credit rating of A- or better.

MONITORING AND MITIGATING 
FINANCIAL RISK

As explained in the Risks section of this 
Annual Report, the Group monitors a number 
of financial metrics to assess the level of 
financial risk being taken and to mitigate 
that risk.

TREASURY POLICIES AND GOVERNANCE

The Group Treasury function operates within 
a formal policy covering all aspects of treasury 
activity, including funding, counterparty 
exposure and management of interest rate, 
currency and liquidity risks. Group Treasury 
reports on compliance with these policies on 
a quarterly basis and policies are reviewed 
regularly by the Board.

GEARING AND FINANCIAL COVENANTS

The key leverage metric for SEGRO is its 
proportionally consolidated (‘look-through’) 
loan to value ratio (LTV) which incorporates 
assets and net debt on SEGRO’s balance sheet 
and SEGRO’s share of assets and net debt on 
the balance sheets of its joint ventures. The LTV 
at 31 December 2020 on this basis was 24 per 
cent (31 December 2019: 24 per cent).

SEGRO’s borrowings contain gearing covenants 
based on Group net debt and net asset value, 
excluding debt in joint ventures. The gearing 
ratio of the Group at 31 December 2020, 
as defined within the principal debt funding 
arrangements of the Group, was 24 per cent 
(31 December 2019: 23 per cent). This is 
significantly lower than the Group’s tightest 
financial gearing covenant within these debt 
facilities of 160 per cent.

Property valuations would need to fall by 
around 64 per cent from their 31 December 
2020 values to reach the gearing covenant 
threshold of 160 per cent. A 64 per cent fall in 
property values would equate to an LTV ratio 
of approximately 66 per cent.

The Group’s other key financial covenant 
within its principal debt funding arrangements 
is interest cover, requiring that net interest 
before capitalisation be covered at least 
1.25 times by net property rental income. 
At 31 December 2020, the Group comfortably 
met this ratio at 6.6 times. Net property rental 
income would need to fall by around 81 per 
cent from 2020 levels to reach the interest 

WHAT WE SAID WE WOULD DO

We intend to keep our LTV at around 
30 per cent. 

WHAT WE ACHIEVED IN 2020

Through a combination of asset disposals 
and the increase in value of our portfolio, 
the LTV at 31 December 2020 is 24 per 
cent. Our cost of debt remains low at 
1.6 per cent.

WHAT TO EXPECT IN 2021

We aim to maintain our LTV at around 
30 per cent, taking into account our 
investment plans. We believe this ensures 
significant headroom to our tightest 
gearing covenant should property 
values decline, as well as providing the 
flexibility to take advantage of investment 
opportunities which may arise. We have 
cash and available facilities of £1.2 billion 
(including our share of joint ventures) 
on which we can draw to fund our 
investment plans.

ADJUSTED PROFIT BEFORE TAX

£296.5m

2019: £267.5m

IFRS PROFIT BEFORE TAX

£1,464.1m

2019: £902.0m

NEW FINANCING DURING THE YEAR

£1.1bn

2019: £0.5bn

LOAN TO VALUE RATIO

 24%

2019: 24%

66

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020The fixed only level of debt is 44 per cent 
at 31 December 2020 (31 December 
2019: 57 per cent).

£158 million and there would have been a 
reduction in gearing of approximately 1.7 per 
cent and in the LTV of 1.3 per cent.

cover covenant threshold of 1.25 times. On a 
proportionally consolidated basis, including 
joint ventures, the interest cover ratio was 
6.5 times.

We mitigate the risk of over-gearing the 
Company and breaching debt covenants by 
carefully monitoring the impact of investment 
decisions on our LTV and by stress testing 
our balance sheet to potential changes in 
property values.

As a result of the fixed rate cover in place, if 
short-term interest rates had been 1 per cent 
higher throughout the year to 31 December 
2020, the adjusted net finance cost of the 
Group would have increased by approximately 
£12.6 million representing around 4 per cent 
of Adjusted profit after tax.

Our intention for the foreseeable future is 
to maintain our LTV at around 30 per cent. 
This provides the flexibility to take advantage 
of investment opportunities arising and 
ensures significant headroom compared to our 
tightest gearing covenants should property 
values decline.

The Group elects not to hedge account its 
interest rate derivatives portfolio. Therefore, 
movements in its fair value are taken to the 
income statement but, in accordance with 
EPRA Best Practices Recommendations 
Guidelines, these gains and losses are 
eliminated from Adjusted profit after tax.

At 31 December 2020, the only debt maturity 
falling due within 12 months is a €1 million 
principal repayment on an amortising 
loan, acquired with Sofibus Patrimoine SA. 
The weighted average maturity of the gross 
borrowings of the Group (including joint 
ventures at share) was 9.9 years. With the 
majority of the Group’s revolving credit 
facilities not due to mature until 2025, and no 
material Group debt maturities until 2024, this 
long average debt maturity translates into a 
favourable, well spread debt funding maturity 
profile which reduces future refinancing risk.

INTEREST R ATE RISK

The Group’s interest rate risk policy is 
designed to ensure that we limit our exposure 
to volatility in interest rates. The policy states 
that between 50 and 100 per cent of net 
borrowings (including the Group’s share of 
borrowings in joint ventures) should be at 
fixed or capped rates, including the impact 
of derivative financial instruments.

At 31 December 2020, including the impact 
of derivative instruments, 70 per cent 
(2019: 89 per cent) of the net borrowings 
of the Group (including the Group’s share 
of borrowings within joint ventures) were at 
fixed or capped rates. 

FOREIGN CURRENCY TR ANSLATION RISK

The Group has minimal transactional foreign 
currency exposure, but does have a potentially 
significant currency translation exposure 
arising on the conversion of its substantial 
foreign currency denominated assets (mainly 
euro) and euro denominated earnings into 
sterling in the Group consolidated accounts.

The Group seeks to limit its exposure 
to volatility in foreign exchange rates by 
hedging its foreign currency gross assets 
using either borrowings or derivative 
instruments. The Group targets a hedging 
range of between the last reported LTV ratio 
(31 December 2020: 24 per cent) and 100 
per cent. At 31 December 2020, the Group 
had gross foreign currency assets which 
were 61 per cent hedged by gross foreign 
currency denominated liabilities (31 December 
2019: 65 per cent).

Including the impact of forward foreign 
exchange and currency swap contracts used 
to hedge foreign currency denominated net 
assets, if the value of the other currencies in 
which the Group operates at 31 December 
2020 weakened by 10 per cent against 
sterling (to €1.23, in the case of euros), net 
assets would have decreased by approximately 

FINANCIAL POSITION AND FUNDING

Net borrowings (£m)

Available cash and undrawn facilities (£m)

Balance sheet gearing (%)

Loan to value ratio (%)

Weighted average cost of debt¹ (%)

Interest cover² (times)

Average duration of debt (years)

31 December 2020

SEGRO  
Group

SEGRO Group 
and JVs at share

2,325.0

1,061.4

3,088.0

1,189.3

SEGRO Group

1,811.0

1,173.2

24

22

1.7

6.6

11.7

N/A

24

1.6

6.5

9.9

23

22

1.8

6.2

11.6

31 December 2019

SEGRO Group 
and JVs at share

2,484.3

1,370.0

N/A

24

1.7

6.3

10.0

1  Based on gross debt, excluding commitment fees and non-cash interest.
2  Net rental income/Adjusted net finance costs (before capitalisation).

The average exchange rate used to translate 
euro denominated earnings generated during 
2020 into sterling within the consolidated 
income statement of the Group was 
€1.13:£1. Based on the hedging position at 
31 December 2020, and assuming that this 
position had applied throughout 2020, if the 
euro had been 10 per cent weaker than the 
average exchange rate (€1.24:£1), Adjusted 
profit after tax for the year would have been 
approximately £9.7 million (3.3 per cent) 
lower than reported. If it had been 10 per cent 
stronger, Adjusted profit after tax for the year 
would have been approximately £11.9 million 
(4.1 per cent) higher than reported.

GOING CONCERN

As noted in the Financial Position and 
Funding section above, the Group has 
significant available liquidity to meet its capital 
commitments, a long-dated debt maturity 
profile and substantial headroom against 
financial covenants. 

 } In 2020, the Group has raised £680 million 
of new equity and secured €450 million of 
new debt as well as extending the term of 
€1.1 billion of revolving credit facilities by 
one year, significantly enhancing its liquidity.

 } Cash and available facilities at 31 December 
2020 were £1.1 billion, well in excess of the 
Group’s capex commitment of £0.6 billion.

 } The Group continuously monitors its 

liquidity position compared to committed 
and expected capital and operating 
expenses on a rolling forward 18-month 
basis. The quantum of committed capital 
expenditure at any point in time is typically 
low due to the short timeframe to construct 
warehouse buildings. 

 } The Group also regularly stress tests its 
financial covenants. As noted above, at 
31 December 2020, property values would 
need to fall by around 64 per cent before 
breaching the gearing covenant. In terms 
of interest cover, net rental income would 
need to fall by 81 per cent before breaching 
the interest cover covenant. Both would 
be significantly in excess of the Group’s 
experience during the financial crisis, its 
experience in 2020 and in 2021 to date, 
and the plausible scenarios modelled.

 } Customer rent collections remain high, 
with 98 per cent of rent collected for 
the year ending 2020. The results of our 
Covid-19 stress test (modelling 20 per cent 
of customers delaying rent payments and 
10 per cent of customer defaulting on their 
rent payments) was that the Group would 
continue as a going concern.

67

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Financial Review

An active year of financing and 
strong financial results 
continued

Having made enquiries and having considered 
the principal risks facing the Group, including 
liquidity and solvency risks, and material 
uncertainties, the Directors have a reasonable 
expectation that the Company and the 
Group have adequate resources to continue 
in operational existence for the foreseeable 
future (a period of at least 12 months from the 
date of approval of the financial statements). 
Accordingly, they continue to adopt the 
going concern basis in preparing these 
financial statements.

INCOME STATEMENT REVIEW

PRESENTATION OF FINANCIAL INFORMATION 

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 and 
subsidiaries are consolidated at 100 per cent.

The Adjusted profit measure reflects the 
underlying financial performance of the 
Group’s property rental business, which is 
our core operating activity. It is based on 
EPRA earnings as set out the Best Practices 
Recommendations Guidelines of the European 
Public Real Estate Association (EPRA) which 
are widely used alternate metrics to their 
IFRS equivalents within the European real 
estate sector (further details can be found at 
www.epra.com). In calculating Adjusted profit, 
the Directors may also exclude additional 
items considered to be non-recurring, unusual, 
or significant by virtue of size and nature. 
In the current and prior periods there have 
been no such adjustments and therefore 
Adjusted profit and EPRA earnings are 
the same. 

A detailed reconciliation between Adjusted 
profit after tax and IFRS profit after tax 
is provided in Note 2 to the Financial 
Statements. This is not on a proportionally-
consolidated basis.

Reconciliations between SEGRO Adjusted 
metrics and EPRA metrics are provided in 
the Supplementary Notes to the Financial 
Statements, which also include EPRA 
metrics as well as SEGRO’s Adjusted income 
statement and balance sheet presented on a 
proportionally consolidated basis.

SEGRO monitors these alternative metrics, 
as well as the EPRA metrics for vacancy rate, 
net asset value, capital expenditure and total 
cost ratio, as they provide a transparent and 
consistent basis to enable comparison between 
European property companies.

68

ADJUSTED PROFIT (NOTE 2)

GROSS RENTAL INCOME

2020  
£m

2019  
£m

392.9

362.0

PROPERTY OPERATING EXPENSES

(88.3)

(80.7)

NET RENTAL INCOME

304.6

281.3

JOINT VENTURE FEE INCOME

21.6

20.4

ADMINISTRATION EXPENSES

(51.5)

(51.5)

SHARE OF JOINT VENTURES’ ADJUSTED PROFIT1

61.5

54.0

ADJUSTED OPERATING PROFIT BEFORE 
INTEREST AND TAX

336.2

304.2

NET FINANCE COSTS (including adjustments)

(39.7)

(36.7)

ADJUSTED PROFIT BEFORE TAX 

296.5

267.5

TAX ON ADJUSTED PROFIT

(4.0)

(3.2)

NON-CONTROLLING INTERESTS SHARE 
OF ADJUSTED PROFIT

(0.2)

(0.2)

ADJUSTED PROFIT AFTER TAX

292.3

264.1

1  Comprises net property rental income less administration expenses, net interest expenses 

and taxation.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020NET RENTAL INCOME 

£23.3m higher

Net rental income increased by £23.3 million 
to £304.6 million (or by £32.7 million to 
£385.1 million including joint ventures at 
share), reflecting the positive net impact 
of like-for-like rental growth, development 
completions and investment activity during 
the period, offset by the impact of disposals.

Rent collection levels across the real estate 
industry were significantly impacted by the 
Covid-19 pandemic. Within our business, 
rent collections in the second quarter were 
initially lower than typical levels as our 
customers reacted to the lockdown, and 
we offered help on a case-by-case basis to 
those customers who most required support. 
However, collection levels increased during 
the year, and 98 per cent of 2020 rent has 
been collected so far. Much of the remainder 
is expected to be collected through payment 
plans during 2021, but having assessed the 
unpaid balance, a provision for bad debts 
(being loss allowance and impairment of 
receivables) including joint ventures at share, 
of £4.1 million (1 per cent of the total rent 
roll) has been made.

On a like-for-like basis¹, before other items 
(primarily corporate centre and other costs 
not specifically allocated to a geographic 
Business Unit), net rental income increased 
by £6.7 million, or 2.1 per cent, compared to 
2019 (increased by £9.3 million, or 2.9 per 
cent before the impact of bad debts). This is 
due to strong rental performance across our 
portfolio in the UK: 0.9 per cent increase and 
Continental Europe: 4.3 per cent increase (or 
UK: 2.0 per cent increase and Continental 
Europe: 4.6 per cent increase before 
bad debts).

INCOME FROM JOINT VENTURES  

£1.2m higher

Joint venture fee income increased by 
£1.2 million to £21.6 million. This increase is 
due to an increase in the SELP management 
fee as the size of the portfolio has grown. 

In 2018 SEGRO received a performance fee 
from SELP, of which £26.2 million is subject 
to possible clawback and consequently has 
been not been recognised as income but 
deferred until such time that the risk of 
clawback becomes less likely (see Note 7  

for further details). The performance fee is 
calculated and receivable on the fifth and 
tenth-year anniversaries of the joint venture, 
should the SELP property portfolio meet 
certain performance criteria. It does not 
meet the recognition criteria in this period 
due to the volatility and uncertainty around 
its measurements.

SEGRO’s share of joint ventures’ Adjusted 
profit after tax increased by £7.5 million from 
£54.0 million in 2019 to £61.5 million in 
2020 almost entirely from the growth in the 
SELP joint venture.

ADMINISTRATIVE AND   
OPERATING COSTS  

Cost ratio: 21.1%

The Group is focused on managing its cost 
base and uses a Total Cost Ratio (TCR) as a 
key measure of cost management. The TCR 
for 2020 has improved to 21.1 per cent 
compared to 22.9 per cent in 2019, but still 
above our 20 per cent target. The calculation 
is set out in Table 8 of the Supplementary 
Notes to the Financial Statements. 

Excluding share-based payments, the 
cost ratio would be 18.8 per cent, an 
improvement from 19.9 per cent in 2019.

The cost ratio calculation is detailed in 
Table 8 in the Supplementary Notes, which 
shows that the reduction in the ratio has 
been primarily caused by the increase 
in gross rental income by £33.5 million 
to £448.4 million reflecting the growth 
through development and like-for-like 
income discussed in the Net Rental Income 
section above. Total costs in respect of 
the TCR remained relatively stable at 
£94.8 million compared to £95.2 million in 
2019. Whilst wholly-owned administration 
expenses have remained flat at £51.5 million 
(as detailed in Note 6), property operating 
expenses have increased by £7.6 million to 
£88.3 million in 2020, primarily from the 
increase in service charge expenses, which 
are netted against service charge income 
in the cost ratio calculation. Costs grew less 
than anticipated as a result of our response 
to the pandemic, with lower levels of travel 
and a slowdown in the pace of recruitment.

Total costs (see Note 5) have decreased by 
£19.6 million to £104.3 million. This balance 
includes trading property cost of sales which 
have decreased by £27.2 million. 

NET FINANCE COSTS 

£3.0m higher

Net finance costs (including adjustments) 
increased by £3.0 million in 2020 to 
£39.7 million primarily as a result of 
higher debt levels compared to the 
prior period primarily funding our 
development programme.

ADJUSTED PROFIT 

£29.0m higher

Adjusted profit before tax increased 
by 10.8 per cent to £296.5 million 
(2019: £267.5 million) during 2020 as a 
result of the above movements (see Note 2).

TAXATION  

Effective rate: 1.3%

The tax charge on Adjusted profit of 
£4.0 million (2019: £3.2 million) reflects an 
effective tax rate of 1.3 per cent (2019: 1.2 
per cent), consistent with a Group target tax 
rate of less than 3 per cent. 

The Group’s target tax rate reflects the fact 
that over three-quarters of its assets are 
located in the UK and France and qualify for 
REIT and SIIC status respectively in those 
countries. This status means that income 
from rental profits and gains on disposals of 
assets in the UK and France are exempt from 
corporation tax, provided SEGRO meets 
a number of conditions including, but not 
limited to, distributing 90 per cent of UK 
taxable profits.

ADJUSTED EARNINGS PER SHARE

25.4p, +4.1%

Adjusted earnings per share are 25.4 pence 
compared to 24.4 pence in 2019. The lower 
growth rate compared to Adjusted profit 
reflects the increase in the average number 
of shares (the denominator in the earnings 
per share calculation) by 69 million shares 
compared to 2019 primarily due to the 
equity placing undertaken in June 2020.

1  The like-for-like rental growth metric is based on properties held throughout both 2020 and 2019 on a proportionally consolidated basis. This provides details of underlying rental income 

growth excluding the distortive impact of acquisitions, disposals and development completions. Where an asset has been sold into a joint venture (sales to SELP, for example) the 50 per cent 
share owned throughout the period is included in like-for-like calculation, with the balance shown as disposals. Further details are given in Table 10 of the Supplementary Notes. 

69

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
 
STR ATEGIC REPORT
Financial Review

An active year of financing and 
strong financial results 
continued

IFRS PROFIT

IFRS profit before tax in 2020 was 
£1,464.1 million (2019: £902.0 million), 
equating to basic post-tax IFRS earnings 
per share of 124.1 pence compared with 
79.3 pence for 2019, principally reflecting 
higher realised and unrealised gains in the 
property portfolio.

A reconciliation between Adjusted 
profit before tax and IFRS profit 
before tax is provided in Note 2 to the 
Financial Statements.

Realised and unrealised gains on 
wholly-owned investment properties of 
£975.7 million in 2020 (2019: £483.9 million) 
and realised and unrealised gains on trading 
and other property interests of £14.1 million 
(2019: £12.2 million) have been recognised 
in the Income Statement as the value of 
our portfolio increased during the year. 
These primarily relate to an unrealised 
valuation surplus on invested properties of 
£970.6 million (2019: £476.7 million). 

SEGRO’s share of realised and unrealised 
gains on properties held in joint ventures was 
£215.6 million (2019: £214.2 million) largely 
in respect of the SELP portfolio and is further 
analysed in Note 7. 

The cost of closing out debt in the year was 
£10.9 million (2019: £18.6 million) following 
the buy-back of the small outstanding amount 
of the SEGRO bonds maturing in 2021 and 
2022. IFRS earnings were also impacted 
by a net fair value gain on interest rate 
swaps and other derivatives of £13.7 million 
(2019: £7.9 million) and a tax charge of 
£35.0 million (2019: £41.4 million) of which 
£31.0 million (2019: £38.2 million) arises in 
respect of adjustments, primarily in relation to 
property valuation movements.

BALANCE SHEET

At 31 December 2020, IFRS net assets 
attributable to ordinary shareholders 
were £9,659.2 million (31 December 
2019: £7,677.6 million), reflecting 809 pence 
per share (31 December 2019: 697 pence) on 
a diluted basis.

Adjusted NAV per share at 31 December 
2020 was 814 pence (31 December 
2019: 700 pence). The 16.3 per cent increase 
primarily reflects property gains in the 
period. Note that the comparative balance 
has changed from the amount previously 
reported of 708 pence in respect of EPRA 
NAV, following the issuance of new EPRA 
guidance applicable in the current period (see 
Note 12 for further details). The chart opposite 
highlights the other principal factors behind 
the increase. A reconciliation between IFRS 
and Adjusted NAV is available in Note 12 to 
the Financial Statements.

70

CASH FLOW AND NET 
DEBT RECONCILIATION

Cash flows from operating activities of 
£233.2 million are £58.4 million lower than 
the prior year. This is primarily due to the 
impact of trading properties, for which there 
was an outflow of £19.6 million in the current 
year, following an acquisition and development 
expenditure, compared to an inflow of 
£30.9 million in the prior period following a 
disposal. Excluding trading properties, which 
are transaction driven and therefore not 
consistent year on year by their nature, the 
cash flows from operations is £252.8 million 
in the current year which is £7.9 million below 
the prior year primarily due to the deferral 
rentals agreed with certain tenants in light of 
the Covid-19 pandemic.

The Group made net investments of 
£1,100.7 million of investment and 
development properties (including options 
and loans to joint ventures) during the year 
on a cash flow basis (2019: £217.2 million). 
This is principally driven by expenditure 
of £1,215.9 million (2019: £602.9 million) 
to purchase and develop investment 
properties to deliver our strategy of growth. 
Disposals of investment properties reduced by 
£253.2 million to £159.2 million compared to 
the prior period (2019: £412.4 million).

The largest financing cash flow arose in 
respect of net proceeds from the issue of 
shares of £672.1 million primarily from an 
equity placing undertaken in June 2020. 
Other significant cash flows include dividends 
paid of £179.5 million (2019: £141.7 million) 
where cash flows are lower than the total 
dividend due to the level of scrip uptake.

Overall, net debt has increased in the year 
from £1,811.0 million to £2,325.0 million.

CAPITAL EXPENDITURE

Table 9 in the Supplementary Notes sets out 
analysis of the capital expenditure during 
the year. This includes acquisition and 
development spend, on an accruals basis, 
in respect of the Group’s wholly-owned 
investment and trading property portfolios, 
as well as the equivalent amounts for joint 
ventures, at share.

Total spend for the year was £1,548.4 million, 
an increase of £655.6 million compared to 
2019. More detail on acquisitions can be 
found in the Investment Update on pages 60 
to 61.

Development capital expenditure of 
£531.4 million was spent in the year 
(2019: £408.7 million) across all our Business 
Units, particularly Southern Europe and 
National Logistics, reflecting our development-
led growth strategy.

Development spend incorporates interest 
capitalised of £7.5 million (2019: £9.0 million) 
including joint ventures at share.

Spend on existing completed properties, 
totalled £40.1 million (2019: £30.8 million), of 
which £24.2 million (2019: £17.4 million) was 
for major refurbishment, infrastructure and 
fit-out costs prior to re-letting. The balance 
mainly comprises more minor refurbishment 
and fit-out costs, which equates to 5 per 
cent of Adjusted profit before tax and less 
than 1 per cent of total spend. Of the total 
spend £2.5 million (2019: £nil) increased 
lettable space.

ADJUSTED NET ASSET VALUE

p
0
0
7

p
1
0
1

p
4
2

p

)

1
2

(

p

)

1

(

p
7

p
4

p
4
1
8

Adjusted NAV
per share
at 31 December
2019

Realised and
unrealised
property gain

Adjusted proﬁt
after tax
and non-
controlling
interests

Dividend net
of scrip
shares issued
(2019 ﬁnal &
2020 interim)

Early
repayment
of debt

Issue 
of shares

Other
including
exchange
rate
movement

Adjusted NAV
per share
at 31 December
2020

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020DIVIDEND INCREASE REFLECTS A STRONG 
YEAR AND CONFIDENCE FOR THE FUTURE

In considering the final dividend, the Board 
took into account:

Under the UK REIT rules, we are required 
to pay out 90 per cent of UK-sourced, tax-
exempt rental profits as a ‘Property Income 
Distribution’ (PID). Since we also receive 
income from our properties in Continental 
Europe, our total dividend should normally 
exceed this minimum level and we target 
a payout ratio of 85 to 95 per cent of 
Adjusted profit after tax. We aim to deliver a 
progressive and sustainable dividend which 
grows in line with our profitability in order to 
achieve our goal of being a leading income-
focused REIT.

The Board has concluded that it is appropriate 
to recommend an increase in the final 
dividend per share by 0.8 pence to 15.2 
pence (2019: 14.4 pence) which will be paid 
as a PID. The Board’s recommendation is 
subject to approval by shareholders at the 
Annual General Meeting, in which event the 
final dividend will be paid on 4 May 2021 to 
shareholders on the register at the close of 
business on 19 March 2021.

 } the policy of targeting a payout ratio of 

between 85 and 95 per cent of Adjusted 
profit after tax;

 } the desire to ensure that the dividend is 

sustainable and progressive throughout the 
cycle; and

 } the results for 2020 and the outlook 

for earnings.

The total dividend for the year will, therefore, 
be 22.1 pence, a rise of 6.8 per cent versus 
2019 (20.7 pence) and represents distribution 
of 87 per cent of Adjusted profit after tax.

The Board has decided to retain a scrip 
dividend option for the 2020 final dividend, 
allowing shareholders to choose whether to 
receive the dividend in cash or new shares. 
In 2020, 35 per cent of the 2019 final 
dividend and 7 per cent of the 2020 Interim 
Dividend was paid in new shares, equating 
to £61 million of cash retained on the 
balance sheet.

CASH FLOW BRIDGE (£m)

)

.

0
1
1
8
1

,

(

)

.

1
2
1

(

.

2
3
3
2

)

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.

(

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.

0
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,

(

Opening
net debt

Gross
debt
acquired

Cash ﬂows
from
operating
activities

Finance
costs
(net)

Debt close
out costs

Dividends
received
(net)

Tax
paid

Dividends
paid

Acquisition
and
development
of investment
property

Investment
property
sales
(including
joint
ventures)

Acquisition
of interest
in property
and other
investments

Net
investment
in joint
ventures

Proceeds
from
issue of
shares

Exchange
rate
movements

Net
settlement
of foreign
exchange
derivatives

Other

Closing
net debt

71

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT

Principal risks 
Effective risk management

Dynamic risk management is 
embedded in our business and 
ensures we are able to adapt to 
the ever-changing environment in 
which we do business.

The continually evolving circumstances caused 
by the Covid-19 pandemic, coupled with the 
backdrop of geopolitical and macroeconomic 
uncertainty, has, and continues to present, 
a rapidly changing operating environment 
for the business to navigate. Despite this, 
the Group’s performance has continued to 
be positive, as evidenced by our financial 
results, and demonstrates the importance of 
our risk process which is embedded within 
our business to enable effective, responsive 
decision making. 

Looking forward to 2021, whilst there is 
still much uncertainty, it is anticipated that 
Covid-19 will still be prevalent in society, 
notwithstanding the efficacy of the vaccine 
rollout. Therefore, risk management and 
controls, and the Group’s continued ability 
to be flexible in responding to the risks 
presented, will be fundamental to our ability 
to continue to operate successfully.

COVID-19

The impact of the pandemic continues to 
evolve and impact our entire risk landscape. 
We have incorporated commentary into 
each relevant principal risk and continue 
to monitor a new wave of infections and/
or prolonged impact as an emerging risk. 
In most cases Covid-19 has acted to increase 
either the impact, the probability, or both in 
respect of risks already identified on the Risk 
Register. Major event/business disruption 
has been specifically identified and reported 
as a principal risk this year (as detailed 
further below).

During the year, the Group’s Board and key 
Committees continued to meet regularly 
to identify, assess and record the Covid-19 
related risks as they arose and evolved 
and to consider appropriate responses and 
mitigations accordingly.

Areas of particular concern relate to our 
people, customers, development programme, 
other suppliers, communities and financing 
and investor engagement as set out in more 
detail on pages 20 to 23. Some key areas 
specific to risk management include:

 } Our people: The top priority was the health 

and wellbeing of our people. A central 
incident management team oversaw 
the process to ensure each local office 
maintained safe working conditions in 
line with local regulations and this was 
managed and regularly updated. As the 
working environment changed, staff were 

supplied with the necessary tools including 
IT equipment to be able to work effectively 
at home. This is detailed in the Health 
and Safety section and Principal Risk 
sections below.

 } Customers: We maintained regular 

communication with our customers to 
ensure they were properly supported such 
as offering financial flexibility and facilities 
maintenance. The elevated risk of tenant 
default is covered further in the Operational 
Delivery and Compliance principal 
risk below.

 } Our development programme and other 
suppliers: We worked closely with our 
supply chain during the pandemic with 
many sites subject to closure and other local 
regulations in the response to the outbreak. 
We reopened the sites as soon as it was 
possible and have worked collaboratively 
with our contractors to ensure a safe, 
compliant working environment on our 
sites. Whilst there were some delays in 
sourcing labour and raw materials, the 
mitigations such as sourcing locally where 
possible, have meant there have been no 
significant delays in delivering the projects. 
This is detailed further in the Development 
Plan Execution principal risk. We have 
worked closely with our other suppliers 
even though face to face interactions have 
been less frequent and continue to pay 
suppliers promptly. 

 } Operations and financing: A full, detailed 
assessment of our key operations was 
undertaken to ensure we could continue 
to operate under the new working 
environment and that appropriate processes 
and controls were in place, including the 
robustness of our IT systems. For example, 
during the year, we worked closely with 
our banks and other providers of finance 
in order to undertake various fund raises 
remotely thanks to the internal processes 
in place supported by our IT systems. 
For more information please refer to the 
Operational Delivery and Compliance 
principal risk.

DISCIPLINED CAPITAL ALLOCATION 

We have continued to pursue opportunities 
to invest capital in line with the Group’s 
investment stance and appetite for 
risk. In 2020, this focused again on our 
development pipeline (bearing in mind our 
appetite for non-income producing assets – 
discussed further overleaf) but was notably 
supplemented by a small number of large 
acquisitions in our key strategic markets 
(described in more detail on pages 60-61). 
Relevant Key Risk Indicators are considered 
each month by the Investment Committee 
to inform its decisions. 

Robust risk management 
has ensured we were 
well placed to navigate 
the challenges presented 
during the year.

SOUMEN DAS
CHIEF FINANCIAL OFFICER

72

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020We continue to manage our risk exposure by:

 } utilising options on land whenever feasible;

 } maintaining a balanced exposure to 

speculative development; 

 } using a broad range of key contractors 
and closely managing them during 
our developments; 

 } maintaining an efficient capital structure and 
liquidity position to fund the development 
activity; and 

 } planning for the combined impact of 

significant decisions – land acquisitions, 
infrastructure commitments and 
development commitments – that 
will be required by our pipeline of 
development opportunities.

ENVIRONMENTAL SUSTAINABILITY AND 
CLIMATE CHANGE

Environmental sustainability is an ever more 
important risk for the business and has been 
separately reported on as a new Principal Risk 
in the year. 

The risk includes the short to medium-term 
impacts including transitional changes (for 
example, legislation and financial) which we 
closely monitor and the long-term emerging 
risk of climate change (for example, physical 
changes including the increased likelihood of 
extreme weather events) for which we have 
undertaken extensive research. 

The environmental and climate change related 
risks are managed by our Group Sustainability 
Manager and his dedicated sustainability 
team, reporting to the Executive Committee 
and ultimately the Board. Our activity during 
2020 and looking ahead to 2021 and beyond 
is described in more detail on pages 85 to 89.

BREXIT 

Brexit, and particularly a disruptive Brexit, was 
a key focus for the Group during the year. 
The UK and EU reached a trade agreement 
shortly before the end of the transition period, 
which redefined the UK’s relationship with the 
EU on trade and other areas of cooperation. 
The risk of what might have been the most 
disruptive form of Brexit was, at least in part, 
mitigated. While the new arrangements 
bed in and their implications become better 
understood and more transparent, the risk 
that future issues may arise remain elevated. 
The Group continues to actively monitor and 
manage the identified risks and remains alert 
to new issues which may arise.

The responsibility for monitoring and 
managing the risk of a disruptive Brexit is 
the responsibility of a Brexit Committee 
made up of senior management from across 
the business, reporting to the Executive 
Committee. This Committee maintains 
a dedicated Risk Register to identify and 
prioritise key risks actions and mitigations. 

Key elements of such risk included macro 
factors which would impact the Group’s 
performance which we had to be aware 
of and responsive to but could do little to 
proactively mitigate. A small number of 
risks at a corporate level merited further 
focus, including compliance with a new 
regulatory regime, and actions were taken to 
mitigate their impact insofar as was possible 
and practicable. Other impacts were more 
indirect, such as those on our suppliers and 
customers, with whom we maintain a close 
and transparent dialogue. 

The risk of a disruptive Brexit continues to be 
reported as a principal risk until the situation 
clarifies further, after which, it is envisaged, 
the specific risks arising will be reported 
and monitored within their relevant areas of 
impact. To date, whilst we remain constantly 
vigilant, no elements of Brexit risk have 
come to light which would be outside the 
Group tolerance.

FINANCING

The Group’s financing strategy is balanced 
between supporting investment in our growth, 
and to enable the Group to be well positioned 
and resilient against potential risks faced in 
both the short and long term, including the 
impact of the pandemic. The Group maintains 
a low appetite to liquidity and solvency risk. 
The Group’s management of its capital 
structure, including extending debt facilities 
and maturities, is described on pages 66 to 67.

HEALTH AND SAFETY

Health and Safety remains at the very heart 
of our business. The Health and Safety 
Working Group oversees the Health and 
Safety Policy and Safety Management System 
to ensure further proactive collaboration and 
communication to mitigate Health and Safety 
risk across the Group. During the year, the 
Health and Safety team was instrumental in 
the Group’s response to the pandemic and the 
relevant regulations as they evolved, including 
in respect of employees as they worked away 
from the office and on our building sites. 
This and other activity in 2020 and looking 
ahead to 2021, are described on page 45.

TECHNOLOGY 

The Group remains alert to the risks and 
opportunities that potentially disruptive 
technology could have on the business. 
We continued to engage with a number of 
external organisations – both in the property 
sector and in the wider technology realm 
– to assist us in identifying and assessing 
potentially disruptive technologies, none of 
which currently is believed to present an 
imminent significant risk to the Group. 

During 2020 we created a Strategy, 
Investment and Innovation function to 
assess the potential impacts of a wide range 
of technologies; evolving our digital and 
technology strategy; and continuing to invest 
in this function in order to deliver that strategy, 
as described on page 44.

OUR RISK APPETITE

The Group recognises that its ability to 
manage risk effectively throughout the 
organisation continues to be central to its 
success. Our approach to risk management 
aims to bring controllable risks within our 
appetite, and to enable our decision making 
to balance uncertainty against the objective 
of creating and protecting, now and in the 
long term, value for our shareholders and 
other stakeholders.

The Group’s risk appetite is reviewed annually 
and approved by the Board in order to 
guide management. As well as qualitative 
descriptions, the risk appetite defines 
tolerances and targets for key metrics. It is 
equally applicable to wholly-owned operations 
and joint ventures.

While our appetite for risk will vary over time 
and during the course of the property cycle, 
in general the Group maintains a fairly low 
appetite for risk, appropriate to our strategic 
objectives of delivering sustainable, attractive 
returns in the form of progressive dividends 
and net asset value growth over time.

PROPERTY RISK

We recognise that, in seeking outperformance 
from our portfolio, the Group must accept a 
balanced level of property risk – with diversity 
in geographic locations and asset types and 
an appropriate mixture of stabilised income 
producing and opportunity assets – in order 
to enhance opportunities for superior returns. 
This is balanced against the backdrop of the 
macroeconomic climate and its impact on the 
property cycle.

73

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Principal risks

Effective risk management continued

OUR INTEGR ATED AND ROBUST 
APPROACH TO RISK MANAGEMENT

The Board has overall responsibility for 
ensuring that risk is effectively and consistently 
managed across the Group. The Audit 
Committee monitors the effectiveness of 
the Group’s risk management process on 
behalf of the Board. Further information 
on compliance with the risk management 
provisions of the UK Corporate Governance 
Code can be found in the Governance section 
on pages 106-107.

The risk management process is designed to 
identify, evaluate and mitigate the significant 
risks (including emerging risks) that the Group 
faces. The process aims to understand and 
mitigate, rather than eliminate, the risk of 
failure to achieve business objectives, and 
therefore can only provide reasonable and 
not absolute assurance. 

Identification and review of emerging 
risks are integrated into our risk review 
process. Emerging risks are those risks 
or a combination of risks which are often 
rapidly evolving for which the impact and 
probability of occurrence have not yet been 
fully understood and consequently necessary 
mitigations have not yet fully evolved. All risk 
owners and managers within the business are 
challenged to consider emerging risks and 
this is enhanced through formal twice-yearly 
horizon scans with the Executive Committee.

The Board recognises that it has limited 
control over many of the external risks it 
faces, such as the pandemic, as well as the 
macroeconomic, geopolitical, and regulatory 
environment, but it reviews the potential 
impact of such risks on the business and 
consequential decision making.

The Board also monitors internal risks 
and ensures that appropriately designed 
controls are in place and operate in order to 
manage them.

The Board has performed a robust assessment 
of the principal and emerging risks facing 
the Group. The Board has formally reviewed 
the principal and emerging risks twice during 
the year. The Board has also completed its 
annual review and approval of the Group’s risk 
appetite, and the Group’s risk management 
policy. The Audit Committee reviews the 
process over how the Group Risk Register has 
been compiled twice a year.

The Group adopts the ‘three lines of 
defence’ model of risk management. 
Operational management, the individual risk 
manager and risk owner provide the first 
line of defence. The Executive Committee, 
other monitoring committees, and the risk 
management function overseen by the Group 
Risk Committee provide the second line of 
defence. Finally, Internal Audit provides the 
third line of defence.

Risks are considered within each area of the 
business to ensure that risk management is 
fully embedded within the Group’s operations, 
culture and decision-making processes.

Accountabilities for the Group’s risk 
management are outlined in the diagram 
on page 75.

We have put risk appetite at the heart of our 
risk management processes. Risk appetite is 
integral both to our consideration of strategy 
and to our medium-term planning process. 
Risk appetite also defines specific tolerances 
and targets for key metrics and the criteria for 
assessing the potential impact of risks and our 
mitigation of them.

The most significant risks and mitigating 
controls are detailed in the Group Risk 
Register. Risks are assessed in both 
unmitigated (assuming that no controls are in 
place) and residual (with mitigating controls 
operating normally) states. This assessment 
directly relates potential impact to risk 
appetite so that it is clear whether each risk 
is comfortably within appetite, tolerable, 
intolerable or below appetite. We also formally 
assess the velocity of the most significant 
risks to determine how quickly they might 
become intolerable.

A Key Risk Indicator (KRI) dashboard is 
produced and monitored regularly to show 
actual and forecast performance against risk 
appetite metrics, allowing informed decision 
making. KRIs are considered regularly by 
the relevant monitoring committees as well 
as being integral to the Group’s Medium 
Term Plan.

Mitigations for each risk are documented 
and monitored in the Group Risk Register. 
The Register is used as a key input to 
determine priorities for the Group’s internal 
audit assurance programme. Furthermore, 
management’s annual assessment of control 
effectiveness is driven by the Group’s 
Risk Register.

Our target portfolio should deliver attractive, 
low risk income returns with strong rental 
and capital growth when market conditions 
are positive and show relative resilience in a 
downturn. We aim to enhance these returns 
through development, but we seek both to 
ensure that the ‘drag’ associated with holding 
development land does not outweigh the 
potential benefits, and to mitigate the risks – 
including letting, construction and contractor 
risks – inherent in development.

In line with our income focus, we have a low 
appetite for risks to income from customer 
default or insolvency, and accordingly seek 
to maintain a diverse occupier base with 
strong covenants and avoid over-exposure to 
individual occupiers in specialist properties.

FINANCIAL RISK

The Group maintains a low to moderate 
appetite for financial risk in general, with a 
very low appetite for risks to solvency and 
gearing covenant breaches.

As an income-focused REIT we have a 
low appetite for risks to maintaining stable 
progression in earnings and dividends over 
the long term. We are, however, prepared to 
tolerate fluctuations in dividend cover as a 
consequence of capital recycling activity.

We also seek long-term growth in net asset 
value. Our appetite for risks to net asset value 
from the factors within our control is low, 
albeit acknowledging that our appetite for 
moderate leverage across the cycle amplifies 
the impact of market driven asset valuation 
movements on net asset value.

CORPOR ATE RISK

We have a very low appetite for risks to 
our good reputation and risks to being 
well-regarded by our customers and wider 
stakeholders, including investors, regulators, 
employees, business partners, suppliers, 
lenders and by the communities in which 
we operate.

Our responsibilities to these stakeholders 
include compliance with all relevant laws; 
accurate and timely reporting of financial and 
other regulatory information; safeguarding 
the health and safety of employees, suppliers, 
customers and other users of our assets; our 
impact on the environment; the impact of 
new and evolving technologies; compliance 
with codes of conduct and ethics; ensuring 
business continuity; and making a positive 
contribution to the communities in which 
we operate.

74

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Our framework for risk governance

BOARD

AUDIT COMMITTEE

 } Overall responsibility for ensuring that risk 
is effectively managed across the Group.

 } Determines the Group’s risk appetite 

and policy.

 } Conducts robust assessment of current 

and emerging risks. 

 } Monitors effectiveness of the Group’s 
risk management process and internal 
control systems.

STAGE 1 

STAGE 2

STAGE 3

EXECUTIVE RISK OWNERS

EXECUTIVE COMMITTEE

INTERNAL AUDIT

 } Own risks in domain.

 } Oversees execution of risk management 

 } Agrees internal audit programme in 

 } Assign accountability for mitigating 

individual risks to senior risk managers.

 } Ensure that risks are identified, assessed 
and adequately controlled and mitigated.

 } Review and identify existing and emerging 
risks with the risk management function at 
least twice per year.

across the business.

conjunction with the Group Risk Register.

 } Formally considers risks, including 

emerging risks, twice a year.

 } Directly oversees strategic risks.

 } Delegates accountability for risk 

management and monitors performance 
of risk controls.

 } Assigns Executive Risk Owners to 

each risk.

 } Conducts internal audit programme 
and reports to Audit Committee.

 } Continues to be responsive to issues as 
they arise and amend their programme 
accordingly.

RISK MANAGERS

MONITORING COMMITTEES

 } Responsible for ensuring the risk is 

 } Regularly identify and monitor the 

within appetite.

 } Drive design and implementation 

of controls.

 } Review, identify and assess existing and 
emerging risks with risk management 
function at least twice per year.

significant risks and corresponding controls 
within their domains. 

 } Risk management function attends 

regularly.

GROUP RISK COMMITTEE

 } Coordinates the risk management process 
on behalf of the Executive Committee.

 } Develops risk policy. 

 } Oversees the work of the Risk 

Management function, which in turn:
–  Manages and reports on the Risk 

Register.

–  Assesses and documents risks and 

controls.

–  Provides quality assurance and challenge 

to risk owners and managers.

75

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Principal risks

Principal risks

PRINCIPAL RISKS

The principal risks have the potential to 
affect SEGRO’s business materially. Risks are 
classified as ‘principal’ based on their potential 
to intolerably exceed our appetite (considering 
both inherent and residual impact) and cause 
material harm to the Group.

Some risks that may be unknown at present, 
as well as other risks that are currently 
regarded as immaterial and therefore not 
detailed here, could turn out to be material in 
the future.

The current principal risks facing the Group 
are summarised in the diagram below and 
described across the following pages.

The descriptions indicate the potential areas 
of impact on the Group’s strategy; the 
time-horizon and probability of the risk; the 
principal activities that are in place to mitigate 
and manage such risks; the committees that 
provide second line of defence oversight; 
changes in the level of risk during the 
course of 2020; whether the risk is within 
our appetite (after the application of our 
mitigations); and links to further relevant 
information in this report.

RESIDUAL RISK

Management has actively considered 
emerging risks during the year. To this end, 
the Executive Committee undertakes a risk 
‘horizon scan’ twice a year, and the risk 
management function undertakes an annual 
survey of peers and other listed companies to 
identify potential risks for consideration. 

Two principal risks have been added in 2020 
being the Major Event/Business Disruption risk 
in response to the pandemic arising during 
the year and Environmental Sustainability in 
light of its significance to the Group. Both risks 
have been specifically identified as stand-
alone principal risks whereas previously they 
were part of the Operational Delivery and 
Compliance risk. 

Two previously reported principal risks, 
Portfolio Strategy and Investment Plan 
Execution, have been combined below 
(called Portfolio Strategy and Execution) to 
recognise the congruent nature of the original 
risks as part of one contiguous process. 
The Market Cycle risk now also includes 
reference to macroeconomic impacts in order 
to highlight the external aspect of this risk. 

h
g
H

i

Furthermore, two of our risks, Political and 
Regulatory and Operational Delivery and 
Compliance, have increased as discussed 
further below, whilst the others have remained 
in line with the prior year.

= New risk

I

I

Y
T
L
B
A
B
O
R
P

4

Disruptive 
Brexit

3

Major event/business disruption 

1

2

Macroeconomic impact on market cycle

Portfolio strategy and execution

5
Political & 
regulatory

9

Health & safety

6

Environmental sustainability 

Operational delivery 
& compliance

10

7

Development plan execution

8

Financing strategy

w
o
L

76

Below appetite

Within appetite
IMPACT

Intolerable

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OPER ATIONAL   
EXCELLENCE

DISCIPLINED CAPITAL  
ALLOCATION

EFFICIENT CAPITAL AND   
CORPOR ATE STRUCTURE

INCRE ASED RISK

SIMIL AR RISK

DECRE ASED RISK

1.  MACROECONOMIC IMPACT ON MARKET CYCLE

2.  PORTFOLIO STR ATEGY AND EXECUTION

The property market is cyclical and there is a continuous external 
risk that the Group could either misread the market or fail to react 
appropriately to changing market and wider related geopolitical 
conditions, which could result in capital being invested or disposals 
taking place at the wrong price or time in the cycle.

The Group’s Total Property and/or Shareholder Returns could 
underperform in absolute or relative terms as a result of an 
inappropriate portfolio strategy. This could result from:

 } Holding the wrong balance of prime or secondary assets;

MITIGATIONS

The Board, Executive Committee and Investment Committee 
monitor the property market cycle on a continual basis and adapt 
the Group’s investment/divestment stance in anticipation of changing 
market conditions.

Multiple, diverse investment and occupier market intelligence is 
regularly reviewed and considered – both from internal ‘on the ground’ 
sources and from independent external sources.

Upside and downside scenarios are incorporated into Investment 
Committee papers to assess the impact of differing market conditions.

CURRENT YEAR ACTIVITY

During the year, the pandemic has led to greater market volatility and 
less predictability and in response we have increased the regularity of 
our economic outlook assessments. Whilst we are not entirely immune 
to these fluctuations, the most material adverse impacts appear to be 
focused in sectors where we do not have significant exposures.

 } Holding the wrong amounts or types of land, leading to diluted 

returns and/or constraints on development opportunities;

 } Holding the wrong mix of risk assets (for example, between higher 
risk ‘opportunity’ assets and lower risk ‘core’ assets) or too many old 
or obsolete assets which dilute returns; and

 } Holding assets in the wrong geographical markets; missing 
opportunities in new markets or lacking critical mass in 
existing markets.

MITIGATIONS

The Group’s portfolio strategy is subject to regular review by the Board 
to consider the desired shape of the portfolio in order to meet the 
Group’s overall objectives and to determine our response to changing 
opportunities and market conditions.

The Group’s Disciplined Capital Allocation is informed by 
comprehensive asset plans and independent external assessments of 
market conditions and forecasts.

Regular portfolio analysis enables the portfolio to be correctly 
positioned in terms of location and asset type, and retains the right 
mix of core and opportunity assets. The annual asset planning exercise 
provides a bottom-up assessment of the performance and potential 
for all assets to identify underperforming assets that are considered 
for sale. Asset plans are prepared annually for all estates to determine 
where to invest capital in existing assets and to identify assets for 
disposal. Locally based property investment and operational teams 
provide market intelligence and networking to source attractive 
opportunities. Policies are in place to govern evaluation, due diligence, 
approval, execution and subsequent review of investment activity. 
Investment hurdle rates are regularly reappraised taking into account 
estimates of our weighted average cost of capital. Major capital 
investment and disposal decisions are subject to Board approval in line 
with portfolio strategy.

CURRENT YEAR ACTIVITY

During the year, the potential market volatility caused by the pandemic, 
discussed in the Macroeconomic Impact on Market Cycle risk, has led 
to a degree of caution in our approach to portfolio management and 
capital allocation. We do, however, continue to closely monitor the 
situation and take advantage of opportunities as they arise (as discussed 
further on pages 60 to 61).

IMPACT ON STR ATEGY

IMPACT ON STR ATEGY

CHANGE IN 2020

CHANGE IN 2020

RESIDUAL RISK WITHIN APPETITE?

RESIDUAL RISK WITHIN APPETITE?

OVERSEEN BY: EXECUTIVE COMMIT TEE 

OVERSEEN BY: EXECUTIVE COMMIT TEE; INVESTMENT COMMIT TEE

FURTHER INFORMATION: THE MARKET OUTLOOK IS DETAILED 
IN THE CHIEF EXECUTIVE’S STATEMENT ON PAGES 16-19.

FURTHER INFORMATION: THE MARKET OUTLOOK IS DETAILED IN THE CHIEF 
EXECUTIVE’S STATEMENT ON PAGES 16-19.

77

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Principal risks

Principal risks continued

OPER ATIONAL   
EXCELLENCE

DISCIPLINED CAPITAL  
ALLOCATION

EFFICIENT CAPITAL AND   
CORPOR ATE STRUCTURE

INCRE ASED RISK

SIMIL AR RISK

DECRE ASED RISK

3.  MA JOR EVENT/BUSINESS DISRUPTION 

4. DISRUPTIVE BREXIT

Unexpected global, regional or national events result in severe adverse 
disruption to SEGRO, such as sustained asset value or revenue 
impairment, solvency or covenant stress, liquidity or business continuity 
challenges. A global event or business disruptor may include, but is not 
limited to a global financial crisis, health pandemic, civil unrest, act of 
terrorism, cyber-attack or other IT disruption. Events may be singular 
or cumulative, and lead to acute/systemic issues in the business and/or 
operating environment.

MITIGATIONS

In ‘normal’ circumstances, the Group positions itself to withstand 
a global event and business disruption through its financing 
strategy (see separate principal risk); diverse portfolio strategy (see 
separate principal risk) including a diverse portfolio, staying close to 
customers to understand their changing needs, property insurance 
and strong customer base; organisational resilience of the work 
force; and detailed business continuity and disaster recovery plans. 
Going concern and viability is assessed through a detailed bottom-up 
medium-term planning process including a business stress test and 
downside scenarios.

CURRENT YEAR ACTIVITY

During the year, the pandemic was a significant factor in the risks 
facing the Group, as detailed further above. This includes the 
instigation of our incident management team to oversee our initial 
response to the pandemic; ensuring employees were working in safe 
and secure conditions with the appropriate equipment; our Health and 
Safety team working closely with local teams to ensure compliance 
with local regulations both at our offices and building sites; working 
closely with our customers and being flexible for their requirements 
in both providing safe space and financially; working closely with our 
contractors to maintain safe building sites and reviewing our core 
processes in light of the new working conditions in order to maintain 
appropriate internal controls and operational resilience.

The agreement of the trade deal between the UK and the EU in 
December 2020 provided clarity around the future trade relationship 
between the EU and UK and consequently reduced but not fully 
mitigated the risk of disruption caused by Brexit. Ongoing risks around 
how this trade deal and the wider implications of Brexit may impact 
investment, capital, financial (including exchange rates), occupier and 
labour markets in the UK are yet to be fully understood.

In the long term, exit from the EU could impact levels of investor and 
occupier demand as a result of reduced trade, in particular those in 
industries more at risk to the impact of a disruptive Brexit, and/or the 
relocation of corporations and financial institutions away from the UK. 
Nevertheless, the likelihood of severe adverse impact on the Group is 
judged to be low. 

MITIGATIONS

The Group is mindful of continuing political and economic 
uncertainties but remains focused on controlling what it can within 
its own business. Much of the potential short-term economic impact 
has been overshadowed by the pandemic. We continue to engage in 
dialogue with key customers, and with key suppliers to understand 
labour and material supply risks. To date, we have not observed 
significant adverse factors. Structural drivers of demand appear to have 
continued to outweigh any Brexit-related uncertainties.

The Group has, however, continued to adopt a disciplined approach to 
land acquisition and speculative development.

The Group’s strategy provides resilience through the market cycle. 
As well as the underlying quality and diversity (in terms of both asset 
type and location) of the portfolio, mitigations include substantial 
covenant headroom, access to diverse sources of funding, exchange 
rate and interest rate hedging, and short development lead-times.

CURRENT YEAR ACTIVITY

During the year, the Brexit Committee has continued to meet regularly 
to monitor risks and associated mitigating actions arising using a 
dedicated Brexit Risk Register. This includes a limited number of 
corporate level actions in response to the new regulatory regime. 
Whilst the Trade Agreement signed in December 2020 averted the 
most disruptive outcome, the Committee and wider business continue 
to monitor the position to ensure issues arising are appropriately 
identified and mitigated.

IMPACT ON STR ATEGY

IMPACT ON STR ATEGY

CHANGE IN 2020
NEW RISK IDENTIFIED FOLLOWING PANDEMIC IMPACT DURING THE YE AR

CHANGE IN 2020

RESIDUAL RISK WITHIN APPETITE?

RESIDUAL RISK WITHIN APPETITE?

OVERSEEN BY: EXECUTIVE COMMIT TEE; TECHNOLOGY COMMIT TEE

OVERSEEN BY: EXECUTIVE COMMIT TEE

FURTHER INFORMATION: THE MARKET OUTLOOK IS DETAILED 
IN THE CHIEF EXECUTIVE’S STATEMENT ON PAGES 16-19.

78

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OPER ATIONAL   
EXCELLENCE

DISCIPLINED CAPITAL  
ALLOCATION

EFFICIENT CAPITAL AND   
CORPOR ATE STRUCTURE

INCRE ASED RISK

SIMIL AR RISK

DECRE ASED RISK

5. HEALTH AND SAFETY

6.  ENVIRONMENTAL SUSTAINABILITY

Health and Safety management processes could fail, leading to a loss of 
life, litigation, fines and serious reputational damage to the Group.

This risk is somewhat increased by the scale of the Group’s 
development activity.

MITIGATIONS

The Group manages an active Health and Safety management system, 
with a particular focus on managing the quality and compliance to 
good Health and Safety practice of all our suppliers.

A published Health and Safety policy is supported by annual site 
inspections of existing assets, as part of proactive management, and 
development project inspections against SEGRO’s Health and Safety 
Construction Standard.

We continue to improve Health and Safety standards on our 
development sites and work more closely with our suppliers and health 
and safety consultants to increase understanding and implementation 
of SEGRO’s requirements.

The Health and Safety Working Group is responsible for overseeing 
the implementation of, and compliance with, the Health and Safety 
Policy and Safety Management System. We undertake continuous 
monitoring of Health and Safety practices, including incidents, 
inspections and training tracked across the Group. Legal guidance and 
further support is provided through local Health and Safety consultants 
who provide regulatory assurance support to the Group.

CURRENT YEAR ACTIVITY

During the year, the pandemic has meant the safety of the internal 
workforce in working away from the office and the management of 
available office space to the extent permitted by local regulations, 
has been a priority for the Health and Safety team. Furthermore, the 
team has also worked with our contractors to ensure that work on our 
development sites was undertaken in a safe and compliant manner.

Failure to anticipate and respond to the impact of both physical and 
transitional risks from climate change on the sustainability of our 
environment as both a principal and emerging risk. Changes in social 
attitudes, laws, regulations, policies, taxation, obligations, and customer 
preferences associated with environmental sustainability could cause 
significant reputational damage and impact on our business, through 
non-compliance with laws and regulations, increased costs of tax and 
energy and loss of value through not meeting stakeholder expectations in 
addressing these challenges when reporting. 

MITIGATIONS

A dedicated sustainability team is in place who regularly update the 
Executive Committee and Board, including monitoring against our stated 
sustainability targets. We actively participate and engage in several Real 
Estate and Sustainability organisations (such as EPRA and the World 
Green Building Council) to ensure we are aware of future initiatives and 
challenges. We set minimum standards for developments to ensure all 
are undertaken to achieve, if not exceed, the highest environmental 
standards. All acquisitions include an assessment for climate-related risk. 
The portfolio is reviewed against future climate-related metrics such as 
increasing temperature to mitigate against future obsolescence. Group and 
local teams are constantly kept up to date with new laws and regulations 
as they become relevant through regular training and use of a panel of 
expert advisors.

CURRENT YEAR ACTIVITY

During the year, we have launched our ‘Responsible SEGRO’ framework 
which details how we will rise to this challenge. We will lead a low-carbon 
transformation in our industry to address climate change, working with our 
customers in order to achieve this. We have reviewed our targets including 
seeking to be Net Zero Carbon by 2030.

See pages 57 to 59 for further detail on our approach to environmental 
sustainability and climate change in our development pipeline. We also 
provide disclosures in line with those required by the Task Force on 
Climate-Related Financial Disclosures framework on page 87.

IMPACT ON STR ATEGY

IMPACT ON STR ATEGY

CHANGE IN 2020

CHANGE IN 2020
THIS IS A NEW RISK R ATING WHICH REFLECTS THE INCRE ASED ENVIRONMENTAL 
CHALLENGES FACING THE BUSINESS AND WIDER COMMUNITIES 

RESIDUAL RISK WITHIN APPETITE?

RESIDUAL RISK WITHIN APPETITE?

OVERSEEN BY: OPER ATIONS COMMIT TEE; EXECUTIVE COMMIT TEE

OVERSEEN BY: OPER ATIONS COMMIT TEE; EXECUTIVE COMMIT TEE

FURTHER INFORMATION: HE ALTH AND SAFET Y RISK MITIGATIONS 
ON PAGE 45.

FURTHER INFORMATION: ESG RISK MANAGEMENT ON PAGES 85-89.

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SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT
Principal risks

Principal risks continued

OPER ATIONAL   
EXCELLENCE

DISCIPLINED CAPITAL  
ALLOCATION

EFFICIENT CAPITAL AND   
CORPOR ATE STRUCTURE

INCRE ASED RISK

SIMIL AR RISK

DECRE ASED RISK

7. DEVELOPMENT PLAN EXECUTION

8. FINANCING STR ATEGY

The Group could suffer an acute liquidity or solvency crisis, financial 
loss or financial distress as a result of a failure in the design or 
execution of its financing strategy.

Such an event may be caused by: a failure to obtain debt or equity 
funding (for example, due to market disruption or rating downgrade); 
having an inappropriate debt structure (including leverage level, 
debt maturity, interest rate or currency exposure); poor forecasting; 
default on loan agreements as a result of a breach of financial or other 
covenants; or counterparty default. 

MITIGATIONS

The Group’s financing strategy is aligned with our long-term business 
strategy, the Medium Term Plan and our risk appetite. The Treasury 
policy defines key policy parameters and controls to support execution 
of the strategy.

The Group regularly reviews its changing financing requirements in 
light of opportunities and market conditions and maintains a good 
long-term relationship with a wide range of sources of finance.

Liquidity remains strong and there is substantial headroom against all 
of our financial covenants.

CURRENT YEAR ACTIVITY

During the year, financing activity has strengthened the balance sheet, 
increased average debt maturity, lowered the average cost of debt, and 
demonstrated our ability to access a range of debt capital markets (see 
pages 66 to 67).

The Group has an extensive current programme and future pipeline of 
developments. The Group could suffer significant financial losses from:

 } Cost over-runs on larger, more complex projects, for example, due 

to contractor default or poor performance and management.

 } Increased competition and/or construction costs (from labour 
market changes or supply chain pressures) leading to reduced 
or uneconomic development yields.

 } Above-appetite exposure to non-income producing land, 

infrastructure and speculatively developed buildings arising from 
a sharp deterioration in occupier demand.

MITIGATIONS

Our appetite for exposure to non-income producing assets (including 
land, infrastructure and speculative developments) is monitored 
closely, for example, when acquisition decisions are being made by 
the Investment Committee.

We retain a high level of optionality in our future development 
programme including at the point of land acquisition, commitment 
to infrastructure and commitment to building.

The development programme remains weighted towards pre-
let opportunities.

The risk of cost-overruns is mitigated by our experienced development 
teams and the use of trusted advisors and contractors.

The risk of contractor default is mitigated by using a diversified 
selection of companies who have been through a rigorous onboarding 
process and closely monitoring their financial strength.

Our short development lead-times enable a quick response to 
changing market conditions.

CURRENT YEAR ACTIVITY

During the year, development sites initially experienced delays 
following shutdowns due to the pandemic. As discussed above in our 
Health and Safety risk, our teams worked closely with contractors to 
ensure working practices on all sites complied with local regulations 
and were operated in a safe and compliant manner. We continue 
to regularly monitor the performance and financial strength of our 
contractors as contracts are awarded through the year.

IMPACT ON STR ATEGY

IMPACT ON STR ATEGY

CHANGE IN 2020

CHANGE IN 2020

RESIDUAL RISK WITHIN APPETITE?

RESIDUAL RISK WITHIN APPETITE?

OVERSEEN BY: EXECUTIVE COMMIT TEE, OPER ATIONS COMMIT TEE

OVERSEEN BY: EXECUTIVE COMMIT TEE

FURTHER INFORMATION: DEVELOPMENT ACTIVIT Y IN THE ASSET 
MANAGEMENT UPDATE ON PAGES 55-56.

FURTHER INFORMATION: MANAGING FINANCING RISKS IN THE FINANCE 
REVIEW ON PAGES 66-67.

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SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OPER ATIONAL   
EXCELLENCE

DISCIPLINED CAPITAL  
ALLOCATION

EFFICIENT CAPITAL AND   
CORPOR ATE STRUCTURE

INCRE ASED RISK

SIMIL AR RISK

DECRE ASED RISK

9. POLITICAL AND REGULATORY

10.  OPER ATIONAL DELIVERY AND COMPLIANCE

The Group could fail to anticipate significant political, legal, tax or 
regulatory changes, leading to a significant unforecasted financial or 
reputational impact.

In general, regulatory matters present medium- to long-term risks with 
a medium likelihood of causing significant harm to the Group.

Political risks could impact business confidence and conditions in the 
short and longer terms.

The Group’s ability to protect its reputation, revenues and shareholder 
value could be damaged by operational failures such as: failing to 
attract, retain and motivate key staff; major customer default; supply 
chain failure or the structural failure of one of our assets. 

Compliance failures, such as breaches of joint venture shareholders’ 
agreements, loan agreements or tax legislation could also damage 
reputation, revenue and shareholder value. 

MITIGATIONS

MITIGATIONS

Emerging risks in this category are reviewed regularly by the Executive 
Committee. Corporate heads of function consult with external advisers, 
attend industry and specialist briefings, and sit on key industry bodies 
such as EPRA and BPF.

As countries respond to the economic impact of the pandemic, the 
likelihood of changes to taxation regulations increases. We continue 
to closely monitor the taxation regulations with our advisors to ensure 
changes which may impact the Group or our customers, are identified 
and addressed accordingly in a timely fashion. 

CURRENT YEAR ACTIVITY

During the year, as detailed in the Brexit risk above, there has been 
heightened uncertainty around the future legal and regulatory 
environments. The situation has been closely monitored by the Brexit 
Committee who have sought flexible and pragmatic mitigations as the 
circumstances evolved. 

The Group maintains a strong focus on Operational Excellence. 
The Executive, Operations, and Technology Committees regularly 
monitor the range of risks to property management, construction, 
compliance, organisational effectiveness and customer management.

The Group’s tax compliance is managed by an experienced internal tax 
team. REIT and SIIC tax regime compliance is demonstrated at least 
bi-annually. Compliance with joint venture shareholder agreements 
is managed by experienced property operations, finance and legal 
employees. The SELP joint venture additionally has comprehensive 
governance and compliance arrangements in place, including 
dedicated management, operating manuals, and specialist third party 
compliance support.

CURRENT YEAR ACTIVITY

During the year, the working life of staff has been significantly 
impacted and we have continually monitored the organisational 
resilience to respond to this, for example, ensuring that staff have 
the ability and resources to work away from the office for sustained 
periods, and that the resilience and security of our technology systems 
is fully maintained.

We continue to work closely with our customers to manage rent 
collection whilst balancing the challenges they are facing. The depth of 
knowledge of our customers has enabled us to estimate the impact on 
our customers from the particular circumstances of this global event, 
based initially on the twice-yearly, customer-by-customer assessment of 
default risk.

IMPACT ON STR ATEGY

IMPACT ON STR ATEGY

CHANGE IN 2020
THE INCRE ASED R ATING REFLECTS LEVELS OF POLITICAL  
AND REGUL ATORY UNCERTAINT Y IN RESPONSE TO THE   
PANDEMIC ACROSS OUR GEOGR APHIES AND BREXIT IN THE UK

CHANGE IN 2020
THE INCRE ASED R ATING REFLECTS THE IMPACT OF THE PANDEMIC   
ON EMPLOYEES’ RESILIENCE IN LIGHT OF WORKING CONDITIONS 
AND ELEVATED TENANT DEFAULT RISK

RESIDUAL RISK WITHIN APPETITE?

RESIDUAL RISK WITHIN APPETITE?

OVERSEEN BY: EXECUTIVE COMMIT TEE

OVERSEEN BY: OPER ATIONS COMMIT TEE; TECHNOLOGY COMMIT TEE; 
EXECUTIVE COMMIT TEE

81

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT

Viability statement

CONFIRMATION OF VIABILITY 

The Directors have considered the Group’s 
prospects, including reference to the 
Group’s principal risks, to form the basis of 
our assessment of short-term and longer-
term viability. The process for conducting 
this assessment is summarised in the Audit 
Committee’s report on page 119.

The Directors confirm that they have a 
reasonable expectation that the Group will 
be able to continue in operation and has 
adequate resources to meet its liabilities as 
they fall due over the next five years.

The assessment of viability is split into short-
term and longer-term time horizons. 

SHORT-TERM ASSESSMENT

The short-term assessment included 
consideration of our going concern 
assessment, a specific Covid-19 related 
income scenario and a review of key controls 
around liquidity management. 

In response to the Covid-19 pandemic, 
an additional stress test was carried out, 
modelling 20 per cent of customers 
delaying rent payments and 10 per cent of 
customers defaulting on their rent payments. 
This scenario was significantly more extreme 
than SEGRO experienced, with 98 per cent of 
rent collected for the year ending 2020, but 
was used as a severe but plausible scenario for 
modelling purposes.

Management regularly review the Group’s 
liquidity position and operating results. 
In addition, key treasury metrics including 
financial covenants are reviewed by the 
Executive Committee on a quarterly basis.

LONGER-TERM ASSESSMENT

The period assessed for the longer term is the 
same five-year time horizon as covered by 
the Group’s annual rolling five-year strategic 
financial plan. This is considered to be the 
optimum balance between our need to plan 
for the long term, recognising that property 
investment is a long-term business, and the 
progressively unreliable nature of forecasting 
in later years, particularly given the historically 
cyclical nature of the property industry. 
The Directors confirm that they have no 
reason to expect a step-change in the Group’s 
viability immediately following the five-year 
period assessed. 

82

In addition to the robust ongoing assessment 
and management of the risks facing the Group, 
as already set out in this section, the Group 
has stress tested its five-year strategic financial 
plan. This stress test has considered the risks 
that could either individually, or in aggregate, 
threaten the viability of the Group. The process 
for conducting the Group’s assessment is the 
responsibility of the Chief Financial Officer and 
is overseen by the Audit Committee.

In particular the stress test has considered the 
potential impacts of:

 } A systemic crisis, such as a major dislocation 
or failure of capital markets or a failure of 
the insurance market;

 } An acute deterioration in occupier or 

property investment market conditions;

 } 10 per cent movement in interest rates and 

foreign exchange rates;

 } An inability to refinance maturing debt; 

and,

 } A sustained interruption to the Group’s 

business continuity.

In stress testing we assessed the limits at 
which key financial ratios and covenants 
would be breached, causing a threat to 
the Group’s viability. We then assessed the 
likelihood of that limit being reached as a 
result of the individual event or combination 
of events occurring, using a combination of 
historic data (for example the acute property 
valuation decline in 2007–2009) and forward-
looking probability analysis where available. 

In our modelling none of the financial 
covenants were breached with gearing 
remaining comfortably below 160 per cent 
and interest cover well above 1.25 times. 

Reverse stress testing was undertaken over 
the period under review. In isolation, it would 
take at least a 58 per cent fall in property 
values during the five-year assessment period, 
to breach the gearing covenant. A decrease 
in rental income of over 79 per cent or an 
increase in interest rates by over 18 per cent, 
during the five-year assessment period, would 
be required to breach the interest cover 
covenant. This assumes that the current levels 
of fixed rate debt are maintained.

In addition, we have undertaken two 
downside risk scenarios. The first is a severe 
economic shock (consistent with the financial 
crisis of 2007-2009 crisis) at a point when the 
Group is most exposed with its development 
programme. The second is an occupier 
slow-down scenario. Whilst both reduced 
the headroom on the financial covenants the 
Group is able to continue in operation under 
either scenario. Under the severe economic 
shock scenario, focused on the impact on 
gearing from a sharp fall in capital values, the 
gearing ratio increased, peaking at 42 per 
cent. Under the occupier slow down scenario, 
focused on the impact of reduced take up and 
rental growth on capital values and earnings, 
the gearing ratio increased by no more than 
1% and actually decreased in later years 
due to mitigating actions taken. The interest 
cover ratio fell slightly to 5.8 times at its 
tightest point.

The scenarios set out are hypothetical and 
severe for the purpose of creating outcomes 
which have the ability to threaten the 
viability of the Group. We also note that, 
in the event of a severe threat to liquidity, 
various options are available to the Group 
to maintain viability. These options include 
reduction of any non-committed capital 
expenditure and acquisitions, selling assets, or 
reducing cash dividends (including the use of 
scrip dividends). 

We are optimistic about the longer-term 
prospects of our business based on, amongst 
other indicators, a weighted average lease 
length of 7.5 years to break (UK: 8.8 years; 
Continental Europe: 5.9 years), enduring high 
levels of customer retention (86 per cent of 
customers retained in existing or new SEGRO 
space) and positive customer feedback from 
our rolling customer surveys. These are 
supported by the long-term trends in the 
warehouse and industrial real estate sector 
of growing e-commerce share of retail sales 
and increasing urbanisation across Europe 
(see Market Drivers on pages 24-25 for 
more information).

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020STR ATEGIC REPORT

Section 172 Statement 
Companies Act 2006 (s172) 

Each of the Directors is mindful of their duties 
under s172 to run the Company for the benefit 
of its shareholders, and in doing so, to take into 
account the long-term impact of any decisions on 
stakeholder relationships and the impact of the 
Company’s activities on the environment whilst 
maintaining its reputation for high standards of 
business conduct at all time. 
The Company cannot operate in a vacuum. We can only succeed 
if we conduct ourselves in a responsible manner and have positive 
relationships with all of our stakeholders.

WHO ARE OUR STAKEHOLDERS AND HOW ARE THEY RELEVANT 
TO OUR STR ATEGY?

The Board has identified the Company’s key stakeholders as those 
where we have an impact on – employees, suppliers, communities – 
and those who have an impact on us – customers and investors.

WHERE ELSE YOU CAN READ ABOUT STAKEHOLDER 
ENGAGEMENT AND OUR APPROACH TO S172

EMPLOYEES

Chief Executive’s statement

Relationships and Resources

Governance

CUSTOMERS

Relationships and Resources

Governance

SUPPLIERS

Relationships and Resources

Governance

INVESTORS

Our approach to business

Relationships and Resources

Governance

ENVIRONMENT

Review of 2020

Without any of these key stakeholders, we simply would not have a business. 

 } our people deliver our strategy, nothing would happen without their 

HIGH STANDARDS 
OF CONDUCT

hard work and dedication.

Health and safety

Business ethics and 
modern slavery

Governance

 } our suppliers provide us with everything we need to offer buildings and 
services to our customers and to keep the Company running efficiently.

 } our relationship with our local communities means that we are good 
neighbours and support each other. We need the support of local 
communities to gain approvals for our developments. We deliver long 
term economic and social benefits in the communities where we operate.

 } our investors rely on us to invest their money wisely, to grow the 

business and deliver good returns. 

 } our customers are at the heart of our business purpose. The space 

we provide enables them to deliver an extraordinary range of goods 
and services to their customers.

Underpinning these stakeholder relationships is a culture which 
promotes high standards of business ethics, is focused on a long 
term, sustainable strategy and which recognises our responsibilities to 
the environment.

HOW DOES THE BOARD ENGAGE WITH STAKEHOLDERS?

There are many engagement mechanisms with these stakeholders 
within the business, as well as at Board level. The Directors engage 
directly with as many stakeholders as they can but given the number 
of stakeholders, who are spread across nine geographies, engagement 
often takes place at the operational level.

In Responsible SEGRO on pages 28 to 29 we explain how the business 
engages with our stakeholders, while in the Governance section on 
pages 100 to 105 we explain the Board’s involvement. Examples of 
engagement in action:

CUSTOMERS EXPERIENCING CASH FLOW CHALLENGES 

The pandemic inevitably put pressure on the cash flows of some of 
our customers most of whose businesses were fundamentally sound. 
Our strong customer relationships meant that we could engage with 
and then understand their needs. The Board received reports on 
customer feedback and approved an approach which gave constructive 
support and appropriate relief, on a case by case basis, to this small 
proportion of customers facing genuine cash flow challenges as a result 
of government lockdown measures. 

COMMUNITY

Responsible SEGRO

Governance

LONG TERM

Our strategy

Disciplined capital allocation

Efficient capital and 
corporate structure

Risk management

Viability statement

Governance, strategy day

EQUITY RAISE 

At our AGMs, the Directors have an opportunity to meet with our retail 
shareholders. Following the equity raises in 2016 and 2019, a number 
of these shareholders had expressed disappointment at being unable 
to participate in these placings. As a result of this engagement, when 
the Board approved the equity placing in June, it decided to appoint 
PrimaryBid to facilitate participation by retail shareholders. See page 95 
for more information. 

APPROVAL OF A PRE-LET DEVELOPMENT TO AMAZON

In Spring, the Board was presented with a paper to approve a 
189,000 sq m development in Novara Italy, for a 15-year lease to 
Amazon. Having met with a senior manager for Amazon at a Board 
dinner in January, the Directors were well placed to assess the 
investment opportunity, not just based on the financial returns, but also 
they had an understanding of Amazon’s requirements. The land was 
well located and would have good access to a labour market which 
are both key considerations for logistics customers. The Directors’ 
discussion also focused on job opportunities for our construction 
partners and for the local community and the environmental features 
of the building which was designed to achieve BREEAM ‘Very Good’ 
rating. Having taken account of all of these factors and applied 
disciplined capital allocation, the Directors approved the investment 
in this site.

83

16-19

34-36

101

32-33

102

39

102

26-27

40

103

57-59

45

90-91 

105

41-43

103

46-47

48

49 

72-81

82

98

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
STR ATEGIC REPORT

Non-financial information statement

This table signposts related non-financial information in this report and further reading on our website.

Reporting requirement

Policies

Website (www.SEGRO.com)

Reference in 2020 Annual Report

1.  ENVIRONMENTAL 

MATTERS

Responsible SEGRO — Environment —  
Environmental Sustainability: Our Vision

Environmental Sustainability 
57-59

2. EMPLOYEES

Our Covid-19 response 20-23 

Code of Ethics 

Responsible SEGRO — Policies and CSR Governance —  
Code of Ethics

Additional ESG Disclosures and 
Governance 90-91 and 105

Our Purpose & Values 

Responsible SEGRO — Our People — Culture 

Diversity & Inclusion Policy 

Group Health & Safety Policy

Responsible SEGRO — Policies and CSR Governance —  
Diversity & Inclusion Policy

Responsible SEGRO — Policies and CSR Governance —  
Group Health & Safety Policy

Relationships & Resources and 
Governance 34-36 and 99

Relationships & Resources 34-36 

Health and Safety 45

3. HUMAN RIGHTS

Anti-Slavery and Human 
Trafficking Policy

Responsible SEGRO — Policies and CSR Governance —  
Anti-Slavery and Human Trafficking Policy

Additional ESG Disclosures and 
Governance 90-91 and 105

Modern Slavery and Labour 
Standards Supplier Code

Responsible SEGRO — Policies and CSR Governance —  
Modern Slavery and Labour Standards Supplier Code

Additional ESG Disclosures and 
Governance 90-91 and 105

4. SOCIAL

Modern Slavery and Labour 
Standards Supply Code

Group Health & Safety Policy

Responsible SEGRO — Policies and CSR Governance —  
Modern Slavery and Labour Standards Supplier Code

Additional ESG Disclosures and 
Governance 90-91 and 105

Responsible SEGRO — Policies and CSR Governance —  
Group Health & Safety Policy

Health & Safety page 45

5.  ANTI-CORRUPTION 
AND ANTI-BRIBERY

Code of Ethics

Responsible SEGRO — Policies and CSR Governance —  
Code of Ethics

Additional ESG Disclosures and 
Governance 90-91 and 105

6. BUSINESS MODEL

About Us — Our Business — What We Do —  
Our Business Model

Our Business Model 30-31

7.  PRINCIPAL RISKS AND 

UNCERTAINTIES

Effective Risk Management on 
pages 72-81

About Us — Our Business — What We Do — KPIs

Measured Against Our Targets 
on pages 50-51

8.  NON-FINANCIAL 

KEY PERFORMANCE 
INDICATORS

84

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Additional ESG Disclosures

RESPONSIBLE SEGRO

Our Responsible SEGRO  
framework helps us to articulate  
and focus on our ESG goals.

We recognise that our responsibility goes well beyond the space that we own and we work hard 
to make a positive contribution to our environment, our customers, our people, our partners and 
the communities in which we operate. 

Understanding the needs and priorities of these various stakeholder groups is embedded 
in the way we do business and in recognition of that we have for the first time this year 
integrated this information into the Strategic Report. 

The index to the right indicates where you can find additional information on each of the 
relevant areas and we have provided some additional disclosures within this section. You can 
also find further information, including further case studies, within the Responsible SEGRO 
section of our website.

OUR PEOPLE

Pages 20, 34-36

OUR SUPPLIERS

Pages 22, 39

OUR CUSTOMERS

Pages 21, 32-33

OUR COMMUNITIES

Pages 23, 41-43

OUR INVESTORS

Pages 23, 40

HEALTH & SAFETY

Page 45

OUR ENVIRONMENT

Page 57-59

ESG METRICS

We monitor our performance across various Environmental, Social and 
Governance (ESG) indices and review trends to ensure our approach 
and the information we disclose meets the needs of our stakeholders. 

There are a number of different organisations and structures for 
reporting on our wider ESG metrics, and we report against the 
following either in this Annual Report or on the Responsible SEGRO 
area on our website: 

Reporting Frameworks:

Global Reporting Initiative (GRI)

Task Force on Climate-related Financial Disclosure project (TCFD)

Better Building Partnership

Workforce Disclosure Initiative – 83% (sector average 54%)

Rating Agencies:

MSCI: AAA

European Public Real Estate Association (EPRA) – Gold

Carbon Disclosure Project (CDP) — A-

Global Real Estate Sustainability Benchmark (GRESB)
 } Standing Investments – Rated three-star
 } Development – Rated five-star
 } Public Disclosure – A
Dow Jones Sustainability Index (DJSI) – 85th Percentile

FTSE4Good – 3.5 (industry average 2.5)

85

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
STR ATEGIC REPORT

Additional ESG Disclosures 
continued

ENVIRONMENT

STREAMLINED ENERGY AND CARBON REPORTING (SECR)

REPORTING METHODOLOGY

Global GHG Emissions data in metric tonnes CO2e

Emissions from:

Scope 1 emissions – combustion of fuels

Scope 2 emissions – purchased energy (location based)*

Scope 2 emissions – purchased energy (market based)**

Scope 3 emissions – business travel

Gross CO2e footprint (using location based)

Responsible floor area (sq m)

Carbon intensity per sq m floor space (kgCO2e/sq m) 

Total Energy Use (kWh)

2019

830 

2,244 

2,055 

61 

3,135

2020

1,401

2,357

2,088

45

3,803

970,409

1,117,121

3.2

3.4

12,001,480

15,607,448

*  Electricity emissions are calculated using standard national conversion factors (location based).
**  Electricity emissions are calculated using supplier specific conversion factors where we are reducing our carbon footprint 
by procuring a low-carbon electricity tariff, and ‘residual’ factors where we have not yet moved to a low-carbon tariff. 
(market based).

  Corporate citizenship provide limited independent assurance to ASAE3000. See www.segro.com/csr for more details of the 

independent assurance.

The greenhouse gas (GHG) section has been prepared 
in accordance with our regulatory obligation to report 
greenhouse gas emissions pursuant to section 7 of the 
Companies Act 2006 (Strategic Report and Directors’ 
Report) Regulations 2013 and the Companies (Directors’ 
Report), and Limited Liability Partnerships (Energy and 
Carbon Report) Regulations 2018; the latter commonly 
referred to as streamlined energy & carbon reporting. 
As well as fulfilling these mandatory greenhouse gas 
reporting requirements, SEGRO is committed to 
following EPRA best practice recommendations for 
sustainability reporting. We report our data using an 
operational control approach to define our organisational 
boundary, as per the greenhouse gas protocol. 
The market-based methodology has been applied to 
calculate the scope 2 emissions where they are available; 
where they are not available the IEA residual emission 
factors have been applied. We have chosen lettable 
floor space as our chosen intensity metric, using total 
floor area with scope 1 and 2 emissions in the reporting 
year. Business travel covers the grey fleet only, which is 
expensed mileage for employee owned vehicles. The total 
energy use covers the electricity, fuels and district heating 
converted to kWh units. The performance data pack and 
a detailed description of our methodology can be found 
at www.segro.com/csr/reports. 

Greenhouse gas emissions and energy use data for 
the period 1 October 2019 to 30 September 2020. 
This period is referred to as 2020. 

CARBON FOOTPRINT – SCOPE 3 REPORTING

In order to have full visibility of our value chain emissions, we have again measured our scope 3 carbon footprint. Capital goods, which is the 
embodied carbon of our developments, and downstream leased assets, which is the operational carbon of occupied buildings, contribute the 
majority of our scope 3 emissions. These operational activities are essential for SEGRO to meet our net zero carbon ambitions and included 
within our metrics, alongside purchased services and corporate activities. Our Net Zero Carbon commitment has been developed in accordance 
with the Better Building Partnership Net Zero Carbon framework.

GREENHOUSE GAS (GHG) REPORTING 

GHG Protocol Reporting Category

Scope 1
Scope 2 (location-based)
Scope 2 (market-based)
Scope 3
1. Capital goods
2. Downstream Leased Assets*
3. Other

 Purchased goods and services
 Fuel and Energy related activities
 Use of sold products

 Upstream transportation and distribution
 Waste generated from operations
 Business travel

 Commuter travel

 Upstream leased assets

 Downstream transportation and distribution
 Processing of sold products
 End-of-life treatment of sold products
 Franchises
 Investments

Total

2020 Tonnes 
CO2e

1,401
2,357
2,088
466,775
285,975
113,482

36,471
22,181
3,651

3,039
1,304
374

202

96

N/A
N/A
N/A
N/A
N/A
470,533

%

0.3
0.5
0.4

60.8
24.1

7.8
4.7
0.8

0.6
0.3
0.1

0.0

0.0

0.0
0.0
0.0
0.0
0.0
100%

Net Zero 
Commitment

3

Yes
Yes
Yes

Yes
Yes

Yes
No
No

No
Yes
Yes

No

Yes

N/A
N/A
N/A
N/A
N/A

2

1

The carbon emissions figure for Downstream 
Leased Assets uses a market-based methodology 
and only covers building where SEGRO has sight 
of the energy consumption, which represents 
41 per cent of the portfolio with partial or full data. 
We introduced internal targets to increase data 
coverage of the portfolio as we aim to report actual 
data as opposed to estimations. For this reason, 
we expect the proportion of carbon emissions 
relating to downstream leased assets to increase in 
the coming years. There will always be part of the 
portfolio where we do not have this information and 
we will use best estimation techniques to capture 
these assets once actual data is sufficient. Every asset 
owned by SEGRO, regardless of whether we have 
data, is captured within our net zero carbon target.

*  The downstream leased assets category shows the carbon emissions where SEGRO has sight of the data. We aim to increase  

this coverage over the coming years to provide an accurate representation of the total operational carbon.

86

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
ENVIRONMENT

TASKFORCE FOR CLIMATE-RELATED 
FINANCIAL DISCLOSURE (TCFD)

CLIMATE-RELATED TRANSITION RISKS 
AND OPPORTUNITIES 

“The risk climate change poses to businesses 
and financial markets is real and already 
present. It is more important than ever 
that businesses lead in understanding and 
responding to these risks — and seizing the 
opportunities — to build a stronger, more 
resilient, and sustainable global economy.” 
Michael R. Bloomberg, in his letter to Mark 
Carney, Chair of the Financial Stability Board, 
15 June 2017.

The TCFD was established to help identify 
the information needed by investors, lenders, 
and insurance underwriters to appropriately 
assess and price climate-related risks and 
opportunities. The Taskforce structured its 
recommendations around four thematic 
areas that represent core elements of how 
organisations operate: governance; strategy; 
risk management; and metrics and targets.

We are committed to implementing the 
recommendations of the TCFD, providing 
investors and other stakeholders with 
information on climate-related risks and 
opportunities that are relevant to our 
business. Our TCFD disclosures are on page 
89. During 2021, we will work to assess the 
financial impact of the risks from climate 
change on our portfolio and our business. 

NET ZERO CARBON PLAN 

As part of our approach to manage transition 
risks, in 2020 we outlined our strategy to 
become a net zero carbon business by 2030. 
This strategy will focus on reducing our 
operational emissions by investing in on-site 
renewables and energy efficient technologies, 
as well as reducing embodied carbon on new 
build programs. Other direct carbon sources, 
such as our corporate emissions, are also 
captured and targeted. For further information 
on our net zero strategy see page 29.

Transition risks are those associated 
with the transition to a low or ultra-low 
carbon economy.

 } Policy and Legal – We are committed to 

becoming a Net Zero Carbon business by 
2030. We believe that this will ensure we 
are compliant with future changes to current 
legislation such as MEES in the UK and any 
future energy efficiency regulations in the 
EU markets. In addition, we believe that our 
customers will expect the properties they 
occupy to comply with high standards of 
energy efficiency to reduce their operating 
costs and deliver their own carbon emission 
targets. We expect that buildings which 
incorporate the highest sustainability 
standards will have a competitive advantage 
over those which do not.

 } Technology – The adoption of new 

and evolving technologies is key to our 
approach. We continue to incorporate 
solar panels in our developments where 
viable and have continued to install electric 
vehicle charging points across all of our 
geographies to enable our customers to 
reduce their use of fossil fuels in operations. 
We also ensure our new buildings have 
large enough power capacity (supplied by 
renewable energy tariffs where possible) to 
support the move towards means of heating 
buildings with electricity.

 } Market – During 2020, we continued 

to hold meetings with our customers to 
understand their sustainability ambitions. 
We aim to build to a minimum BREEAM 
standard (or equivalent) of Very Good 
and above to meet the demands of our 
customers for sustainable buildings. 
In addition, we work with them to allow 
them to meet their own sustainability 
requirements. For example, in new 
buildings, we install smart and sub-
metering, and are retrofitting it in 
existing buildings, to enable customers to 
understand how their buildings are working 
in operation and to identify potential 
measures to reduce energy wastage

 } Reputational – Our stakeholders expect 
to work with and invest in a company 
which has a strong sense of environmental 
responsibility. Failure to act, and to be seen 
to act, is a source of reputational risk for 
SEGRO. To mitigate this risk, we have set 
out our main environmental sustainability 
objectives in our Responsible SEGRO 
framework which can be found on page 
28-29 and at www.segro.com. In addition, 
we participate in a number of independent 
market and sector ESG frameworks which 
assess our disclosure and performance, 
including MSCI, GRI, S&P and SASB 
(market) and EPRA and GRESB (real estate 
sector), to ensure our stakeholders can 
make their own assessment of our activity in 
this important area.

CLIMATE-RELATED PHYSICAL RISKS 
AND OPPORTUNITIES

Physical risks are those associated with the 
physical effects of climate change. The map on 
page 88 shows the main physical risks facing 
our portfolio geographies.

All new investment, whether acquisition 
or development, is only undertaken after 
extensive due diligence of potential physical 
and climate risks at both a macro and a micro 
level. For example, in southern Europe (Spain, 
Italy and southern France), we carry out 
enhanced thermal modelling due to the risk of 
rising temperatures. Similarly, water shortage 
is a greater risk in southern Europe than in 
northern Europe so we may look to install 
enhanced rain water harvesting.

While these are risks, they are also 
opportunities. Solar photovoltaic panels are 
more productive in southern Europe than in 
northern Europe, for example, allowing our 
customers to use more directly-produced 
energy and reduce electricity drawn from 
the grid. This can not only reduce their own 
carbon footprint from operations but reduce 
their operating costs.

87

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Additional ESG Disclosures 
continued

ENVIRONMENT CONTINUED

PROJECTED CLIMATE IN EUROPE

In 2018, we undertook a Climate Resilience 
study to assess the physical risk to our portfolio 
by geography and building type. The map, and 
associated key, identifies the main risks from 
climate change for our portfolio geographies. 

The risks are split into:

Acute: relating to specific phenomena, such as 
extreme weather events.

Chronic: relating to more gradual, longer-term 
shifts in climate patterns.

MIDL ANDS

HAMBURG

LONDON &  
THAMES VALLEY

AMSTERDAM

BERLIN

POZNAN

WARSAW

DÜSSELDORF

LEIPZIG

ŁODZ

FR ANKFURT

PR AGUE

K ATOWICE

PARIS

LYON

MARSEILLE

MUNICH

MIL AN

BOLOGNA

BARCELONA

MADRID

ROME

NORTH-WESTERN EUROPE

CENTR AL & EASTERN EUROPE

MEDITERR ANEAN & SOUTHERN EUROPE

CHRONIC

	} Temperature increase (greatest in winter)
	} Increased precipitation
	} Sea level rise
	} Decrease in snow, lake and river ice cover

ACUTE

	} Temperature extremes & heat waves
	} Extreme precipitation events
	} Greater flood risk (coastal, river 

& drainage network)

CHRONIC

 } Temperature increase

CHRONIC

 } Increase in temperatures (above European average)

 } High variability in weather patterns

 } Sea level rise

 } Decreased precipitation, especially in summer 

 } Decreased precipitation (medium confidence)  

(medium confidence)

& water availability

 } Decrease in river flow (medium confidence)

ACUTE

 } Extreme precipitation events & risk of flash floods

ACUTE

 } Increased duration & intensity of high 

 } Increase in duration & intensity of heat waves

temperature extremes

 } Extreme precipitation events, flooding 

 } Extreme sea level events (e.g. storm surges)

& flash floods

	} Winter wind speed extremes (medium confidence) 

 } Increased intensity & frequency of droughts 

 } Extreme sea level events

(medium confidence)

 } Increased intensity & frequency of droughts 

 } Winter wind speed extremes (medium confidence) 

(medium confidence)

88

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
 
 
 
 
 
 
 
 
ENVIRONMENT CONTINUED

TCFD DISCLOSURE

Recommendation

SEGRO Approach

Governance

Disclose the 
organisation’s 
governance around 
climate-related risks and 
opportunities.

Strategy

Disclose the actual and 
potential impacts of 
climate-related risks 
and opportunities 
on the organisation’s 
businesses, strategy, 
and financial planning 
where such information 
is material.

The Board has overall responsibility for ensuring risks, including climate-related risks and opportunities, are effectively 
and consistently managed throughout the Group. The Board delegates the execution of the risk management process 
to the Executive Committee. At an operational level, the Chief Operating Officer, supported by the Operations 
Committee and the Cross Border Technical Working Group, is responsible for ensuring that our environmental 
(and wider Responsible SEGRO) targets are met on both existing assets and new developments.

Further information

Governance 
(page 95)

As a long term property owner, we need to ensure that our buildings are fit for purpose for the future. One of the 
ways we do this is to build relatively generic buildings, suited to more than one customer. This ensures a longer  
life-span for the building as well as reducing the risk of vacancy and future refurbishment costs.

Strategy Report 
(page 46-47)

In order to ensure that our buildings are fit for purpose and meet the requirements of our customers for the long term 
we have integrated adaptation and mitigation into our standard building design. With the potential for a changing 
climate across Europe, we ensure that aspects such as heating and sustainable drainage are assessed and costed in 
all designs. Although these adaptations involve additional cost, we believe that buildings with enhanced sustainability 
aspects will increasingly be valued more highly than those without.

Climate Change adaptation is now a standard process of our maintenance programme. We have identified climate 
change as a risk to the ongoing operation of our buildings. We have increased climate change related aspects of 
maintenance, such as sewer clearance, enhanced drainage and glazing replacement.

Principal Risks 
(page 72-81) 

See page 88 for 
a map showing 
the climate risks 
assessed for 
our portfolio 
geographies

Risk Management

Disclose how the 
organisation identifies, 
assesses, and manages 
climate-related risks.

The Board considers climate-related risks and opportunities as part of the risk review process. The Group Head of 
Sustainability reports on climate-related risks and opportunities to the Executive Committee and to the Board. These 
risks include regulatory risk, reputational risk, and physical environmental risk.

Climate Change has been recognised as having a potential for both risks and opportunities across the business for 
some time but in light of SEGRO’s recognition of the Climate Emergency, Climate Change has now been recognised 
as a Principle Risk. 

In order to determine how our business could potentially be impacted, both positively and negatively, by a changing 
climate, we have conducted extensive research to determine the potential impacts of a changing physical world both 
in terms of the physical changes (weather patterns, temperature increase etc) and the transitional changes (legislative, 
financial etc).

To manage risks at an operational level, KPIs are set for various stages of the building life cycle including; Design 
stage, Development, Refurbishment and demolition. The use of building ratings tools such as BREEAM and DGNB, 
along with the targets set as part of SEGRO 2025 such as EPC C and above for all refurbishments, ensure a consistent 
approach to sustainability and specifically to managing the risks of climate change across our entire portfolio. 

Each of our projects, whether it is a light touch refurbishment or a full scale demolition and rebuild, are subject to 
comprehensive targets to ensure that climate related issues are considered at an every stage such as how to limit 
overheating, how to limit flood risk, and to ensure good choices in materials are made. 

These risks have been modelled out to short, medium and long-term time horizons and taking into account of the 
scenarios used by the Intergovernmental Panel on Climate Change (IPCC) which cover the impact of a 2 degree 
Celsius increase in global temperatures as well as the worst case scenario and business as usual. Having reviewed all of 
the IPCC scenarios, we have conducted our risk assessment based on the 2 degree and 4 degree scenarios.

The modelling of the different Representative Concentration Pathways (the different climate scenarios identified by the 
IPCC) across an 80 year timeframe enabled us to understand the likelihood of varying chronic and acute physical risks 
across the geographies in which we operate.

–  Chronic risks are long-term changes in the overall climate and include increased average temperatures which in turn 

lead to increased cost through increased cooling demands;

–  Acute risks include the more regular occurrence of extreme weather events such as wind or rain causing flooding or 

structural property damage which could lead to increased insurance costs and pre-emptive mitigation measures.

Transitional risks, such as changes to legislation are also dependent on the different scenarios. For example, in order to 
transition to a 2 degree scenario, it will be necessary for countries to adopt strong regulatory and legislative measures. 
Behaviours of consumers would also need to adapt greatly. An example of some of the transitional risks that we have 
identified include, strengthening localised legislation such as the proposed changes to MEES legislation in the UK and 
the Green Deal Policy from the European Union.

Metrics and Targets

Disclose the metrics and 
targets used to assess 
and manage relevant 
climate-related risks and 
opportunities where 
such information is 
material.

To enable our stakeholders to consider and compare our reporting, we compile and align our outputs in line with the 
EPRA Best Practices Recommendations on Sustainability Reporting.

In order to ensure that we also report on those issues that we can have a direct impact upon, we use our materiality 
assessment to identify the key metrics that are material to the business. For SEGRO, these are carbon emissions, waste 
production and the embodied carbon of our developments.

Environmental 
Sustainability 
(page 57-59)

www.segro.com/csr

For our carbon emissions target, we have produced carbon reduction targets, in line with the Paris International 
Climate Change Agreement in 2016, to ensure we align our carbon reduction programme to its objectives, as well as 
minimising our risk exposure to climate change on our managed portfolio.

89

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTR ATEGIC REPORT

Additional ESG Disclosures 
continued

OUR PEOPLE

BUSINESS ETHICS AND COMBATTING 
MODERN SLAVERY AND 
HUMAN TR AFFICKING

In everything we do at SEGRO, we recognise 
that we need to behave morally, ethically and 
lawfully. This is core to the way in which our 
business is run, and the work that we do. 
Acting responsibly and in the interests of all 
of our stakeholders is therefore a principal 
part of SEGRO’s make-up. Our Code of 
Ethics sets out these high ethical standards 
expected of all employees in their daily work 
and gives guidance on how to put those 
standards into practice to enable us to act 
with honesty and integrity. The Code of Ethics 
incorporates policies on bribery, corruption 
and fraud; gifts and hospitality; insider 
trading; confidentiality; conflicts of interest; 
relationships with stakeholders; political and 
charitable donations; raising serious concerns 
including whistle-blowing; and modern slavery 
and human trafficking. 

Compliance with the Code of Ethics is a 
condition of each employee’s employment. 
We are committed to building our employee 
awareness on ethical business practices, and 
our people and others who work with SEGRO 
are encouraged to speak up without recourse, 
either by talking to their line manager or 
a member of the Executive Committee or 
through the independent confidential whistle-
blowing reporting service, details of which are 
available on the Company’s intranet, as well 
as on posters in each office. Any supplier or 
other person who works with us may report 
issues confidentially through the service too. 

Training is provided on the subject matters 
covered in the Code of Ethics to raise 
awareness and to help all employees 
understand what behaving ethically and in 
accordance with the Code of Ethics means in 
practice. As usual, in 2020 all new employees 
received information on the Code of Ethics 
and completed the compulsory training when 
they joined the Company. In addition, all 
employees are obliged to make an annual 
certification that they continue to understand 
and adhere to the Code of Ethics. As part of 
the certification, all employees are also asked 
to confirm their compliance with the Criminal 
Finances Act 2017 to help ensure that the 
Company and its employees have not, and are 
not, facilitating tax evasion. 

Any breaches of the Code of Ethics are fully 
investigated and managed accordingly by the 
General Counsel or Group HR Director as 
appropriate. There were no material reported 
incidents of breaches of the Code of Ethics 
during the year. 

90

WHAT WE EXPECT FROM THIRD PARTIES 
WHO WORK FOR US

We are also committed to implementing 
systems and controls to ensure anyone who 
works with us is appointed and managed 
responsibly, in accordance with the Code 
of Ethics. 

We have a long term approach to business, 
and are keen to build lasting stakeholder 
relationships. We therefore want to ensure that 
our suppliers not only understand our stance 
on business ethics, particularly with regard to 
bribery, corruption and fraud, and modern 
slavery and human trafficking, but also share 
our views on these matters, consistent with 
our Purpose and Values.

As part of our supplier screening process, 
all new suppliers are required to provide 
information about their polices and answer 
questions about how they ensure bribery, 
corruption and fraud is not taking place in 
their organisation or in their supply chain. 
Where applicable, suppliers must also provide 
information on the work that they carry out 
to safeguard against modern slavery and 
human trafficking occurring in their own 
supply chains, before they can be approved 
as a SEGRO supplier. This screening exercise 
is repeated every other year in respect of 
bribery, corruption and fraud, and every year 
in respect of modern slavery and human 
trafficking. We also check that those UK 
businesses who are required to publish a 
statement in accordance with section 54 of the 
Modern Slavery Act 2015, have done so. 

In addition, each year the General Counsel 
and / or the Legal Counsel meet with a 
number of suppliers in both the UK and 
Continental Europe to discuss their approach 
to bribery, corruption and fraud, as well 
as modern slavery and human trafficking. 
When selecting which suppliers to visit, we 
generally adopt a risk based approach, taking 
account of the risks associated with their 
sector and how material the impacts they 
have on our behalf would be, as indicated by 
our annual spend with them, but we will also 
visit a supplier if we have a specific concern. 
We try to visit our suppliers’ offices for these 
meetings as we feel this gives us a real chance 
to get a better understanding for their culture 
and their business ethics. During 2020, seven 
meetings with suppliers from the construction, 
cleaning and landscaping sectors took place, 
although due to the pandemic and travel 
restrictions they had to be virtual. It remained 
a valuable exercise nonetheless as it still 
allowed us to develop an impression of their 
culture as well as understand how they have 

adapted to the difficulties wrought by the 
pandemic and the pressures, if any, it had on 
them and their supply chain. All suppliers we 
spoke to in 2020 remained SEGRO suppliers.

Any findings that raise material concerns 
from our due diligence processes would 
be communicated to the Board and acted 
upon swiftly. We continue to monitor the 
effectiveness of the steps we have taken to 
prevent bribery, corruption and fraud, as well 
as modern slavery and human trafficking 
from taking place in our business and supply 
chains. We adapt our processes where 
necessary in response to evolving guidance 
and industry action.

MODERN SLAVERY AND 
HUMAN TR AFFICKING

We have long recognised the importance 
of respecting the human rights of our 
stakeholders including our own employees, 
our suppliers and the wider communities in 
which we operate. We take that responsibility 
seriously and, as a real estate company 
involved in construction, are particularly aware 
of the risks of slavery and human trafficking 
within our own organisation and supply chain. 
Modern slavery and human trafficking is a 
crime and a violation of fundamental human 
rights. It has no place in modern society, 
in our organisation or in our supply chain. 
The Board is committed to ensuring that we 
maintain systems and controls throughout 
the business to prevent modern slavery from 
taking place anywhere within SEGRO or in 
any of our supply chains.

We publish an annual transparency statement 
in compliance with the UK Modern Slavery 
Act 2015 outlining the steps we have taken 
during the financial year to prevent modern 
slavery and human trafficking taking place 
in any of our supply chains, or any parts of 
our business. The Board approved our latest 
statement in April 2020. 

As detailed above, we ensure that all of our 
applicable suppliers, contractors and business 
partners are aware of our approach to modern 
slavery and human trafficking and adhere 
to the principles in our Modern Slavery 
and Labour Standards Supplier Code, in 
accordance with our Anti-Slavery and Human 
Trafficking Policy. Both the Supplier Code 
and the Policy, can be found on our website, 
together with our latest annual Modern 
Slavery statement (https://www.segro.com/
modern-slavery). All relevant suppliers must 
also undertake the annual screening checks 
described above.

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OUR PEOPLE

Our Modern Slavery policies are supported 
by a clear statement that any person with 
concerns about modern slavery or human 
trafficking, either within SEGRO or within our 
supply chain, may report their concerns on a 
confidential basis to our General Counsel, our 
Group HR Director or to our whistle-blowing 
reporting service. 

Any Employee who breaches our Anti-
Slavery and Human Trafficking Policy 
will face disciplinary action, which could 
result in dismissal for misconduct or gross 
misconduct. We reserve the right to terminate 
our relationship with other individuals and 
organisations working on our behalf if they 
do not comply with our Modern Slavery and 
Labour Standards Supplier Code.

LOOKING AHEAD TO 2021 AND BEYOND

As a responsible business, we are always 
looking at ways to further promote 
robust business ethics and strengthen 
our relationships with suppliers and other 
stakeholders. In 2021, we will again review our 
supplier screening process to ensure it remains 
suitable for our business and reflects best 
practice. We also plan to update our training 
module on bribery, corruption and fraud 
which will be compulsory for all employees. 
We will promote awareness training to all of 
our colleagues to help them identify when 
modern slavery or human trafficking might be 
taking place, as well as remind them about our 
policies and procedures in this area. 

We will be looking at how to raise awareness 
of the modern slavery helpline and our 
confidential whistle-blowing reporting service 
in all of our UK developments. We will work 
with our colleagues in Continental Europe 
with their local equivalent helplines.

We will continue to work with our operations 
team to foster stronger supplier relationships 
and will seek to carry out more meetings with 
them to discuss the common topics which 
affect our industry, and look to share and 
understand ideas and best practice. 

UK GENDER AND ETHNICITY PAY 
GAP REPORTING

We believe that analysing diversity data and 
being transparent is an important step towards 
creating meaningful change. This is why 
we have voluntarily published our Gender 
Pay Gap data since 2017 and are voluntarily 
publishing our Ethnicity Pay Gap data for the 
first time this year. Please note that this data 
covers our employees in the UK only

 } In 2020, our mean Gender Pay Gap was 
50.9 per cent, an improvement from 51.6 
per cent in 2019. The Gender Bonus Pay 
Gap was 77.3 per cent, which was improved 
from 78.8 cent in 2019. 

 } In 2020, our mean Ethnicity Pay Gap was 

26.9 per cent. The Ethnicity Bonus Pay Gap 
was 58.0 per cent. As this is the first time 
we are reporting our Ethnicity Pay Gap 
there is no comparison from last year. 

Like many other organisations, particularly in 
the property sector, the reason for our Gender 
Pay Gap and our Ethnicity Pay Gap is the fact 
that we have more men than women and 
more white employees than ethnic minority 
employees in senior roles. 

In SEGRO, our employees are paid equally 
for doing equivalent jobs across our business 
and our reported Pay Gaps are a direct 
result of our employee profile and do not 
represent pay discrimination. The bonus pay 
gap, which includes share scheme payments, 
is a reflection of share schemes being part 
of the remuneration package of senior roles 
in SEGRO. 

A core element of our Responsible SEGRO 
framework is to improve the diversity of our 
business, throughout the organisation at 
all levels of seniority. This is crucial for the 
enduring success of our business but should 
also be reflected in reducing our Gender and 
Ethnicity Pay Gaps over time.

PAY QUARTILES

The proportion of male and female employees by quartile pay bands

Male

Female

UPPER QUARTILE

83%

UPPER MIDDLE

81%

LOWER MIDDLE

43%

LOWER QUARTILE

21%

17%

19%

57%

79%

0%

10%

20% 30% 40% 50% 60% 70%

80% 90% 100%

The proportion of White and BAME employees by quartile pay bands

White

BAME

UPPER QUARTILE

98%

UPPER MIDDLE

85%

LOWER MIDDLE

81%

LOWER QUARTILE

79%

2%

15%

19%

21%

0%

10%

20% 30% 40% 50% 60% 70%

80% 90% 100%

UK GENDER AND ETHNICITY PAY GAP

Gender Pay Gap

vs 2019

Gender Bonus Pay Gap

vs 2019

Ethnicity Pay Gap

Ethnicity Bonus Pay Gap

Notes

Mean

50.9%

-0.7%

77.3%

-1.5%

26.9%

58.0%

Median

48.7%

-1.6%

76.9%

+2.6%

34.1%

61.5%

SEGRO has fewer than the 250 UK employee threshold required for statutory UK Gender Pay Gap and we are 
therefore reporting this information on a voluntary basis.

The UK Ethnicity Pay Gap is being voluntarily reported for the first time. As the methodology for the Ethnicity Pay 
Gap has not yet been determined by the UK Government, we have used the Gender Pay Gap methodology. 

91

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE

Governance at a glance

2018 UK CORPOR ATE GOVERNANCE CODE (THE CODE). We have complied with the Code during the year, as set out in this section of the 
Annual Report with the exception of provision 38, please see page 124 for further detail. You may find a copy of the Code at www.frc.org.uk.

Leadership and purpose 
Our Board is responsible for leading the business in the  
way which we believe is most likely to lead to long-term  
sustainable success. This includes effective engagement  
with our stakeholders and particularly our colleagues.

p98 –105

14 meetings of the Board (from March held virtually)

3 shareholder consultations

Workforce engagement sessions held on Teams

Online Board Strategy day

AGM – hybrid in 2021

p94

Chair’s introduction

Division of responsibilities 
Our Board ensures we have the right combination of Executive 
and Non-Executive Directors without any individual or group of 
individuals dominating the decision making.

p106-111

Chair independent on appointment

Major Board decisions included the 
acquisitions of: Perivale Park, West London; 
Electra Park, Canning Town, London; Sofibus 
Patrimoine SA in France, Secondary Listing on 
Euronext Paris; raised over £1 billion through 
US Private Placement and equity placing. 

Approval of new Responsible 
SEGRO Framework

Approval of new Diversity and 
Inclusion Framework

p106

Governance framework

92
92

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Composition, succession 
and evaluation
Our Nomination Committee ensures that we  
have a balanced Board with the appropriate skills  
to govern the business, an effective evaluation  
and a succession plan.

Audit, risk  
and internal control
Our Audit Committee monitors the integrity  
of the Financial Statements and oversees 
the risk management process and internal 
control environment.

p112-117

p118-122

Internal Board evaluation – outcomes on pages 112 to 113

Impact of the pandemic on the Internal Control environment

Commenced the search for a Non-Executive Director

Gender diversity on our Board 33%

Ethnic diversity on our Board 11%

Independence on our Board 56%

Risk Management

Financial statements

Approved Policy on Approval of Non-Audit Fees

Remuneration 
Our Remuneration Committee determines the Remuneration Policy 
which aims to incentivise strong performance whilst avoiding excess 
and oversees its implementation. We are also mindful of the pay of 
our colleagues across the business.

p123-145

Waiver of 25 per cent of salary and fees 
for three months by all Directors

Post-cessation shareholding policy 
introduced and implemented 

Alignment of remuneration and strategy

Pension alignment with workforce  
by end of 2022

Consideration of awards during 
the pandemic

p123

Directors’  
Remuneration Report

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020

9393

Chair independent on appointment

Major Board decisions included the 

acquisitions of: Perivale Park, West London; 

Electra Park, Canning Town, London; Sofibus 

Patrimoine SA in France, Secondary Listing on 

Euronext Paris; raised over £1 billion through 

US Private Placement and equity placing. 

Approval of new Responsible 

SEGRO Framework

Approval of new Diversity and 

Inclusion Framework

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Chair’s introduction

An excellent performance  
in a challenging year

I am delighted to present this year’s 
Governance Report. 

2020 was a year of unprecedented turmoil 
with disruption from the Covid-19 pandemic 
reaching all parts of the world and impacting 
the global economy. The pandemic has 
driven the acceleration of the adoption of 
technology, particularly e-commerce, across 
society and has resulted in a renewed focus 
by many occupiers on the critical importance 
of efficient, resilient logistics supply chains. 
These factors play to the quality of our 
portfolio and should continue to support and 
enhance occupier and investor demand for 
our prime warehouses, both in the UK and, 
increasingly, Continental Europe. 

We had a busy year, dealing with the impact 
of the pandemic not just on the Group 
but also considering the impact on all our 
stakeholders. These themes are reflected 
throughout this Annual Report as they have 
played such a large role in how our business 
and the Board have operated during the 
year. It is worth noting that we have taken 
no Government subsidies or loans, nor have 
we furloughed any employees during the 
pandemic. We continued to pay dividends, in 
line with the policy, throughout the year. 

Following the Government’s decision in March 
2020 to ask everyone to stay home, my Board 
colleagues and I quickly adapted to working 
and meeting remotely and using technology 
to operate seamlessly. Our governance 
framework stood us in good stead for dealing 
with the increased workload and managing 
decision making virtually as well as navigating 
our way through some challenging times. 
We were able to make a smooth transition 
to online meetings assisted by the stable 
relationship between members of the Board 
whose composition remained unchanged 
during the pandemic. The number of 
meetings doubled reflecting the need to keep 
the Board apprised of the changing situation.

We undertook a number of financings, raising 
over £1 billion during the year with additional 
debt through a US Private Placement and an 
equity raise through a placing. This latter offer 
was extended, in part, to retail shareholders 
who had in the past expressed a wish to be 
included in fund raisings of this type. 

We completed a secondary listing of our 
shares on Euronext Paris reflecting the growth 
and importance of the Company’s Continental 
European investor base and operations. 
Continental Europe represents a large part of 
our portfolio and the Secondary Listing will 
ensure that SEGRO can maintain an optimum 
and efficient holding structure in respect of 
these assets following the end of the Brexit 
transition period on 31 December 2020.

AGM 

My fellow Directors and I were disappointed 
not to have the opportunity to meet with 
shareholders in person at the AGM in April 
2020. Unfortunately due to the pandemic and 
the Government’s compulsory Stay at Home 
Measures, we had to have a closed meeting. 
This enabled us to continue to operate in 
accordance with the resolutions passed at 
the meeting. 

At the time of writing, we remain in a National 
Lockdown. This year we have taken the 
decision to facilitate online attendance at our 
AGM. What this means is that shareholders 
will still be able to attend, ask questions and 
vote at the meeting by electronic means. 
We would encourage shareholders to take 
this opportunity to join the meeting, which 
we hope will ensure more shareholders are 
able to participate in the AGM. Please check 
our Notice of Meeting for the most up to 
date information about our AGM as we will 
continue to follow Government guidance 
in response to the pandemic. I suggest 
shareholders also check our website which 
will be updated if there are any changes in 
the situation. 

Our governance framework 
stood us in good stead for 
dealing with the increased 
workload and managing 
decision making virtually 
as well as navigating 
our way through some 
challenging times. 

GER ALD CORBET T 
CHAIR

You can read more about our strategy and performance  
in the Strategic Report on pages 16-91

94

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020In addition to the usual business at the AGM, 
we are proposing resolutions to renew our 
SCRIP authority so we can continue to offer 
shareholders the opportunity to use their 
dividend to acquire more of our shares, and 
we are delighted to propose resolutions 
to renew our popular all-employee share 
schemes: Sharesave and SIP, which encourage 
our employees to become shareholders in 
the Company.

BOARD CHANGES

As reported in the 2019 Annual Report, 
Phil Redding, stepped down from the Board 
in January 2020 following changes to our 
organisation’s structure. There were no other 
changes to the Board during the year. 

CULTURE, STAKEHOLDERS AND S172

Our role is not to focus exclusively on financial 
returns for shareholders but to recognise 
our responsibility to work together with all 
of our stakeholders and to make a positive 
contribution to wider society. 

Our 100th year has been very different from the 
year we envisioned. In April 2020, we launched 
the SEGRO Centenary Fund, a £10 million 
commitment over 10 years to our communities. 
Originally planned to coincide with our 100th 
birthday on 19 May 2020, we brought forward 
the launch due to the pandemic. See page 43.

Set out on page 27 is our Purpose and our 
culture. We have reported our compliance 
with s172 on page 83 of the Strategic Report 
and on pages 100 to 103 of this Report we 
explain how the Directors consider s172 
in their decision making. This has been 
of great importance this year as we have 
continued to consider our stakeholders in our 
Board discussions. 

GOVERNANCE AND THE DELIVERY 
OF STR ATEGY

Governance plays a key contributing role to 
the effective delivery of strategy. Pages 110 
to 111 describe the key activities of the Board 
during the year, including the part that we 
played in setting the strategic objectives of 
the Company. In accordance with our terms 
of reference, any investment over £50 million 
requires Board approval. The Board therefore 
considered and approved some key strategic 
acquisitions: Perivale Park, West London; 
Electra Park, Canning Town, London; and 
Sofibus Patrimoine SA in France, as well as 
£184 million of land associated with two new 
big box parks in Coventry and Northampton. 
All these acquisitions are important and as 
a Board, our discussions focused around 
sustainable returns for investors, job creation 
for the local communities and our approach 
to ESG. 

At our Strategy day, the Board considered 
and approved our Responsible SEGRO 
Framework which included a new Diversity 
and Inclusion Framework. 

ENVIRONMENTAL, SOCIAL 
AND GOVERNANCE 

The Board considered and endorsed our new 
targets, including the target to be carbon 
neutral by 2030. You can read more about 
our progress on pages 28 to 29. 

ESG remains an important topic for our 
employees, investors and other stakeholders 
even more so during the pandemic. There has 
been an increased focus on responsible 
investment practices, a heightened awareness 
of social risk across supply chains and growing 
demand for sustainable business models along 
with requests for increased disclosure so we 
are pleased with our progress in this area.

BOARD EVALUATION

We undertook an internal Board evaluation 
this year and the process and outcomes are 
set out on pages 112 to 113. 

OUR PEOPLE

We recognise that we have an extraordinary 
team of people who are the cornerstone of the 
success that the Company has enjoyed over the 
last few years. On behalf of my fellow Board 
members, I would like to take this opportunity 
to recognise the hard work, diligence and 
commitment of our employees during a very 
difficult, challenging year and for adjusting and 
adapting to the change in working practices 
and keeping day-to-day operations running 
smoothly. In particular, to David and the 
Executive team, whose insight and leadership 
have ensured the business has been able 
to maximise the demand for our assets and 
maintained our high standards of Operational 
Excellence during the year. 

LOOKING FORWARD

After 100 years, there is still plenty for us 
to do as the world around us is changing 
rapidly with new technologies and consumer 
requirements affecting us and our customers’ 
businesses. Competition is intensifying and 
the expectations of our stakeholders are 
becoming more demanding. 

We have an energetic and dynamic Executive, 
ably supported by the Leadership team and the 
wider workforce, who are keen to further drive 
forward the successful delivery of strategy.

GER ALD CORBET T
CHAIR

Centenary Certificate received from Companies House

CASE STUDY: EQUITY PLACING 
AND PRIMARYBID 

In response to feedback from some of 
our longstanding, loyal retail shareholders 
who have expressed disappointment at 
being unable to participate in previous 
placings, we decided to appoint PrimaryBid 
to facilitate the participation by retail 
shareholders in the June equity placing.

We hoped that launching the retail offer 
in the afternoon rather than at 7.00 am 
would enable more individual investors 
to participate. The offer was made at the 
same issue price as the main placing. 

Whilst the Board appreciates that it is 
not a replacement for full shareholder 
participation, and that not all investors 
were able to utilise the PrimaryBid 
platform, it was pleased that the option 
proved popular with retail shareholders. 
Over £7 million was raised from more 
than 400 individual investors. 

A number of shareholders subsequently 
provided feedback which the Board 
reviewed. The main consideration was the 
short window for responses to the placing. 
The timetable is driven by market demand 
and the share price, so the timeframe 
is short. 

Shareholders who wish to be notified of 
similar activity in the future are encouraged 
to register for regulatory alerts on the 
Investor Relations section of our website as 
all transactions are notified to the market. 
You will also be kept up to date with other 
news on our activity.

95

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Leadership and purpose

Board of Directors

N

GER ALD CORBETT
CHAIR

DAVID SLEATH
CHIEF EXECUTIVE

Appointed: 1 March 2016 (Chair: 22 April 2016)

Skills, experience and contribution
Gerald’s extensive experience as a director and a 
Chair across various sectors brings indispensable 
strategic insight to the boardroom. Throughout his 
career he has been a director of 13 public companies, 
seven of which he has chaired. 

Current appointments
Chair of the Marylebone Cricket Club

Previous appointments
Chair, Betfair | Chair, Britvic plc | Chair, 
Moneysupermarket.com | Chair, Numis Corporation 
plc | Chair, SSL International plc | Chair, Woolworths 
Group plc | Non-Executive Director, MEPC | Non-
Executive Director, Greencore Group | Non-Executive 
Director, Burmah Castrol | Finance Director, Redland 
and Grand Metropolitan | Chief Executive, Railtrack

Appointed: 1 January 2006 
(Chief Executive from 28 April 2011; Finance Director 
from 1 January 2006 to 28 April 2011)

Skills, experience and contribution
David has considerable board level experience of listed 
companies and has extensive knowledge of the real 
estate, manufacturing and distribution sectors and 
the Company. His financial and general management 
experience has helped lead the successful design and 
implementation of the Company’s strategy during his 
tenure as Chief Executive. 

David is a Fellow of the Institute of Chartered 
Accountants in England and Wales.

Current appointments
Senior Independent Non-Executive Director, 
Electrocomponents plc | Board member, European 
Public Real Estate Association

Previous appointments
Finance Director, Wagon plc | Partner, Arthur Andersen 
| President and board member of the British Property 
Federation | Non-Executive Director, Bunzl plc

SOUMEN DAS
CHIEF FINANCIAL OFFICER

Appointed: 16 January 2017

Skills, experience and contribution
Soumen combines leadership of the finance functions 
with a wider contribution to the business through 
strategy, investment, digital and innovation. He brings 
his extensive board-level experience and deep 
knowledge of capital markets to the Group, having 
been Chief Financial Officer of listed companies 
for over ten years and with a background as a 
corporate financier.

Previous appointments
Managing Director and Chief Financial Officer, 
Capital & Counties Properties plc (Capco) | Partner, 
Mountgrange Investment Management LLP | 
Executive Director, UBS

N R

N

ANDY GULLIFORD
CHIEF OPER ATING OFFICER

Appointed: 1 May 2013

MARY BARNARD
INDEPENDENT NON-EXECUTIVE DIRECTOR

SUE CLAYTON
INDEPENDENT NON-EXECUTIVE DIRECTOR

Appointed: 1 March 2019

Appointed: 1 June 2018

Skills, experience and contribution
Andy has worked in a variety of real estate roles and 
brings extensive knowledge of the Company and 
the real estate sector in both the UK and Continental 
Europe. He joined SEGRO in 2004 and has been 
influential in the successful delivery of a record 
number of development completions for the Company 
as well as for its strong operational performance.

Andy is a member of the Royal Institution of Chartered 
Surveyors (MRICS).

Previous appointments
European Director, Jones Lang LaSalle | Director 
of Corporate Acquisitions; Business Development 
Director; Managing Director for Continental 
Europe, SEGRO

Skills, experience and contribution
Mary has extensive commercial and general 
management experience and a deep understanding 
of customer needs and trends through her various 
international roles in sales and marketing. She has a 
strong knowledge of the operation of the retail market 
and supply chain. 

Current appointments
President US Sales, Mondelez International Inc

Previous appointments
Senior Vice President and General Manager, 
Pepsi-Lipton Partnership | Non-Executive Director, 
Poundland Group plc | Chair, Cadbury Foundation | 
EXCO member, Food & Drink Federation and Institute 
of Grocery Distribution 

Skills, experience and contribution
Sue brings a wealth of property market knowledge 
to the Board. She has over 30 years of experience in 
property investment markets, having worked in the 
UK commercial property market for her whole career. 
She is active in promoting diversity including through 
her roles as the former Chair of Women’s Network at 
CBRE and as co-founder of Real Estate Balance.

Sue is a Fellow of the Royal Institution of Chartered 
Surveyors (FRICS).

Current appointments
Non-Executive Director, Helical plc | Member of the 
Committee of Management, Hermes Property Unit 
Trust | Chair, Barwood 2017 Property Fund | Trustee, 
Reading Real Estate Foundation

Previous appointments
Executive Director; Head of National Investment; 
Managing Director of Capital Markets, CBRE | Board 
member, CBRE UK Management and Executive 
Boards, CBRE Group Inc

96

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020A

N

R

A

N

R

A

N R

CAROL FAIRWEATHER
INDEPENDENT NON-EXECUTIVE DIRECTOR

CHRISTOPHER FISHER
INDEPENDENT NON-EXECUTIVE DIRECTOR

MARTIN MOORE
SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR

Appointed: 1 January 2018

Appointed: 1 October 2012

Appointed: 1 July 2014

Skills, experience and contribution
Carol has recent and relevant finance experience 
and brings commercial knowledge to the Board. 
Her experience as Chief Financial Officer of the retailer 
Burberry Group is valuable to the Company in her 
understanding of retail and digital commerce trends.

Skills, experience and contribution
Christopher has spent his career in corporate finance 
and has over 15 years of listed Board experience. 
His knowledge of large scale, international business, 
coupled with his financial expertise, brings a range of 
valued insights to the Board. 

Carol is a Fellow of the Institute of Chartered 
Accountants in England and Wales.

Current appointments
Non-Executive Director, Smurfit Kappa Group plc | 
Trustee, Somerset House Trust

Previous appointments
Chief Financial Officer, Burberry Group | Director 
of Finance, News International Ltd | UK Regional 
Controller, Shandwick plc

Current appointments
Non-Executive Director, National Savings & 
Investments | Senior Adviser, Penfida

Previous appointments
Managing Director, Lazard | Vice Chair, KPMG, 
Corporate Finance | Senior Partner, Penfida | Chair, 
Bank of Ireland UK | Chair, Southern Cross Healthcare 
| Non-Executive Director, Kelda | Chair, Council of the 
University of Reading | Trustee, Imperial War Museum 
| Chair, Marshall Aid Commemoration Commission

Skills, experience and contribution
With over 40 years’ experience of real estate and the 
property sector, Martin brings industry knowledge 
and breadth of practice to the Board. 

He is a member of the Royal Institution of Chartered 
Surveyors (MRICS).

Current appointments
Chairman, BMO Commercial Property Trust |  
Non-Executive Director, Secure Income REIT plc 

Previous appointments
Senior Adviser, Kohlberg Kravis Roberts & Co LLP | 
Chief Executive and Chair, M&G Real Estate | Adviser 
and Commissioner, The Crown Estate | Board member 
and President, British Property Federation | Board 
member and Chair, Investment Property Forum | 
Commissioner, Historic England | Non-Executive 
Director, M&G Asia Property Fund

ELIZABETH BLEASE
GENER AL COUNSEL AND 
GROUP COMPANY SECRETARY

Elizabeth joined SEGRO as General Counsel and 
Group Company Secretary in May 2008. 

Previous appointments 
Solicitor, Addleshaw Goddard | Group Company 
Secretary, Brammer plc | Group Company Secretary, 
Marshalls plc

AUDIT COMMIT TEE MEMBER

NOMINATION COMMIT TEE MEMBER

REMUNER ATION COMMIT TEE MEMBER

CHAIR OF COMMIT TEE

A

N

R

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

Mary Barnard1

Sue Clayton1

Gerald Corbett

Soumen Das

Carol Fairweather

Christopher Fisher

Andy Gulliford1

Martin Moore2

Phil Redding3

David Sleath

Total number of meetings

Board

13/14

13/14

14/14

14/14

14/14

14/14

13/14

14/14

–

14/14

14

Audit 
Committee

Nomination 
Committee

Remuneration 
Committee

–

–

–

–

4/4

4/4

–

4/4

–

–

4

2/2

2/2

2/2

–

2/2

2/2

–

1/2

–

–

2

4/5

–

–

–

5/5

5/5

–

5/5

–

–

5

All the Board and Committee members attended each meeting that they were eligible to attend except as set out below. 
There were seven scheduled meetings and an additional seven meetings during the year as a result of Covid-19 and to provide 
business updates. Due to Government restrictions on numbers of people in a public place, the AGM was a closed meeting with 
a quorum of shareholders. No directors attended the meeting. 

1  Mary Barnard, Sue Clayton and Andy Gulliford were unable to attend one Board meeting which was unscheduled and 
arranged at short notice. Mary Barnard was also not able to attend one Remuneration Committee meeting which was 
unscheduled and arranged at short notice. Directors received the papers and their views were considered in the deliberations 
of the meetings. 

2  Martin Moore did not attend one meeting of the Nomination Committee as the sole purpose of that meeting was to consider 

his reappointment.

3  Phil Redding stepped down as an Executive Director on 31 January 2020. There were no meetings which he could have 

attended between 1 and 31 January 2020. 

Further details on directors’ skills and the composition of the board,  
including diversity and tenure, is available on pages 116 and 117

97

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Leadership and purpose

Board leadership  
and Company Purpose

AN EFFECTIVE AND 
ENTREPRENEURIAL BOARD

PROMOTING LONG-TERM 
SUSTAINABLE SUCCESS

The Board is responsible for creating and 
delivering shareholder value by setting the 
strategic direction of the Group. The Executive 
team has day-to-day responsibility for 
implementing this strategy and it is the Board’s 
role to hold management to account for 
ensuring that it is delivered. The work of the 
Board should and does complement, enhance 
and support the work of the Executive team.

Information about our strategy is on pages 32 
to 49. You can read more about the annual 
Board Strategy day below. 

The Board is made up of a number of talented 
individuals, with a depth of commercial 
experience from a range of industries. 
This diversity helps create an effective and 
entrepreneurial Board as each member has 
a fresh perspective to bring to discussions. 
See pages 96 and 97 for more information 
about the Directors and the contribution they 
bring to the Board. 

SEGRO’s principal duty is to deliver lasting, 
sustainable success and generate value for 
shareholders and other investors, whilst 
being mindful of our impact on stakeholders 
and wider society. 2020 was another year of 
financial and operational outperformance. 
Once again, earnings grew strongly, supported 
by rental growth and the additional income 
generated from our active development 
pipeline. Looking ahead, the combination of 
new rental income from the development 
programme, and the benefits of active asset 
management of our existing portfolio, should 
enable us to drive sustainable growth in both 
earnings and dividends. The Chief Executive’s 
Statement on pages 16 to 19, along with the 
Financial Review on pages 66 to 71, sets out 
in much more detail our strategy and the 
reasons for our continued success. 

The TSR chart on page 134 tells this story. 
Shareholders have benefited from sustained 
share price growth with £100 invested in 
our shares in 2010 worth £517 at the end 
of 2020. The dividend has increased every 
year for the last eight years. At the end of 
2020, SEGRO was the largest REIT on the 
London Stock Exchange and the 42nd largest 
company in the FTSE 100.

This financial strength ensures that we have 
the ability to provide employment and support 
businesses in the areas in which we operate.

INVESTING FOR THE LONG TERM

Much of the Board’s decision making is 
focused around ensuring that the Company is 
sustainable in the long term. 

 } Each year, the Board considers our Medium 
Term Plan, which assesses the opportunities 
and risks for the Company over the 
following five years, and forms the basis of 
our Viability Statement.

 } Once a year, the Board takes time to 

consider the long-term strategy of the 
business, incorporating presentations and 
discussions on longer-term opportunities 
and threats to the business. See below.

 } Throughout the year, the Board reviews 

the Company’s approach to Risk and takes 
a keen interest in how risks rise and fall 
in importance and what measures the 
Company is taking to mitigate the near- and 
longer-term risks to the business.

Real estate is an inherently long-term business 
and the Board therefore takes a long-term 
approach to all of its decision making. 
The Board approved the current strategy in 
2011, which included the repositioning of the 
portfolio. The results have been felt over the 
past few years, and are reflected in the strong 
share price performance, high customer 
retention rates, low vacancy and consistently 
strong employee engagement scores 
which has seen the business less impacted 
throughout this challenging year. 

The Board is responsible 
for creating and delivering 
shareholder value by setting the 
strategic direction of the Group. 

98

STRATEGY DAY

Each year, the Board takes an opportunity 
to step away from the routine of the 
corporate calendar to spend some time 
reflecting on strategy and the wider 
business environment. The usual two day 
offsite was replaced with a day and a half of 
online activity this year. Though there were 
fewer topics, each item received a more 
detailed focus.

We spent the first part of the day considering 
the wider macroeconomic outlook for the 
UK and Europe including the impact of the 
pandemic and Brexit with presentations from 
Lord Hill (a former EU Commissioner and 
member of the House of Lords) and Capital 
Economics. We then considered how this 
might impact our markets as well as the 
investment outlook for the business. 

We debated the assumptions, strategic 
choices and outputs underlying the Group’s 
Medium Term Plan and considered the 
annual portfolio review which, alongside our 
view of the property cycle and a detailed 
analysis of the sectors in which we operate, 
will form the basis of our investment 
decisions in future years. We concluded that 

our strategy remains appropriate despite the 
macro and geopolitical uncertainty. 

There was a session on diversity and 
inclusion and management of talent, looking 
at future employment and other trends 
for the Group and a presentation on the 
proposals for activity in 2021. We were 
delighted with the new Diversity and 
Inclusion Framework which you can read 
about on pages 34 and 35. 

At the end of day one, the Board had an 
informal debrief discussion. 

On the second day, we dedicated the 
entire session to our sustainability strategy 
review and refresh. The ESG working 
group presented their proposals for a new 
Responsible SEGRO Framework and our 
targets to be carbon neutral by 2030. 
The Framework, which was wholeheartedly 
approved, and our approach is discussed in 
more detail on pages 28 and 29. 

The Board was pleased with the format of 
the Strategy day despite the necessity to 
hold it fully virtually, which did not detract 
from the content. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020CULTURE, PURPOSE AND VALUES 

Culture is the character and personality 
of a business. It is what makes us unique 
and is the sum of our purpose, values, 
behaviours and traditions. It guides our 
relationships not just with our employees 
but with our other stakeholders as well. 
Our culture is unique and permeates 
throughout the whole business. It sets the 
tone for good governance. 

We are proud of our Purpose to create the 
space that enables extraordinary things 
to happen and our five Values. In 2015, 
our Executive Committee invested in a 
significant programme to engage everyone 
in the business in creating our Purpose 
and Values. We wanted to develop a 
unifying purpose which aligned with our 
strategy and a set of principles to guide 
the development of our future culture. 
Our Purpose and Values are now well 
embedded in the business and form the 
basis of our workforce policies. They help 
to unify employees and describe the core 
beliefs about how SEGRO does business. 
They are a universal language across 
our business and the countries in which 
we operate.

WHY  
WE EXIST 

WHAT   
WE WANT  
TO ACHIEVE

HOW  
WE WORK 

WHY

Our Purpose is our compelling, 
memorable and differentiating statement 
that energises us as a team, beyond  
money or profit.

HOW

Our Values are our core beliefs about how 
we do business, which guide our decision 
making, large and small.

WHAT

Our Strategy is the goal we are aiming for.

It is essential that the Directors lead by 
example and live the Values. The Executive 
Directors are obviously more visible leaders 
around the business and help to set the 
tone. When the Directors are together, they 
live the Values in the boardroom as follows:

SAY IT LIKE IT IS

The Directors are honest and transparent 
in dealings with each other and those 
who interact with them both in and out 
of the boardroom. The Chair encourages 
constructive debate and challenge 
during meetings.

STAND SIDE BY SIDE

The Non-Executive Directors bring 
to the Board their knowledge and 
experience from other businesses. 
The Directors are supportive and take 
collective responsibility for decisions.

Within the boardroom, the consistent 
feedback from all of the recent Board 
evaluations is that all of the Directors feel 
they can contribute, speak freely and do not 
feel constrained by the Board. The Chair 
encourages open debate and no one 
individual dominates. Board members can 
say it like it is and have their thoughts heard 
in a challenging yet supportive environment. 
This culture has helped the Board remain 
positive, focused and cohesive during the 
pandemic. This close understanding amongst 
the Directors has meant that whilst Board and 
Committee meetings have been held remotely 
since March, the Board has continued to 
operate effectively and efficiently. 

The Board considers that the Company’s 
culture can be defined by the 
following characteristics:

 } a strong desire to create a successful 

business we can be proud of; 

 } trust and strong professional  

integrity – we deliver on promises; 

 } pragmatism – a ‘sleeves up’ approach 

KEEP ONE EYE ON THE HORIZON

regardless of status; 

The Directors look to the long term in 
their decision making. They want to 
understand future trends and how the 
Company can use them for the benefit 
of itself and others.

IF THE DOOR IS CLOSED…

The Non-Executive Directors support 
the Executive Directors to find solutions 
to more complex transactions and 
provide assistance where more difficult 
judgement calls and decisions need 
to be made.

DOES IT MAKE THE BOAT GO FASTER?

The Directors look at different ways of 
working to create effective relationships 
and discuss regularly where they can 
best add value.

 } thoughtful, detailed and measured  

decision-making; 

 } respectful and transparent; and

 } caring about people and taking an interest 

in their wellbeing. 

The Board continues to monitor the culture of 
the Company through indicators which serve 
as a temperature check. They consider:

 } employee engagement survey results;

 } workforce engagement meetings;

 } feedback from office and site visits by 
Executive Directors and the Board as 
a whole;

 } data on employee turnover;

 } Health and Safety incident statistics;

 } customer satisfaction surveys;

 } breaches of the Code of Ethics; 

 } internal audit reports; and

 } whistleblowing incidents.

Read more about our purpose
see page 27

99

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Leadership and purpose

Stakeholder engagement from 
the Board’s perspective

We have identified our key stakeholders – those important 
groups that are an integral part of our business model: 
people, land, assets. 

EMPLOYEES

INVESTORS

CUSTOMERS

OUR 
STAKEHOLDERS

COMMUNITIES

SUPPLIERS

100

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
 
Our s172 statement is on page 83 together with additional information about our key stakeholders 
and why they are important to us. 

Set out below is how the Board has considered the s172 requirements and applied them in our  
decision-making and our engagement with stakeholders during the year. Stakeholder engagement  
is an integral part of the Board’s decision-making process and all proposals to the Board relating to  
major decisions must demonstrate that the impact on stakeholders has been considered. 

EMPLOYEES

ENGAGEMENT

OUTCOME

...deliver our strategy in line with 
values and culture.

 } Two all-employee ‘temperature check’ surveys 
were conducted: one at the beginning of the 
pandemic, with the closure of offices to ensure 
everyone was safe and had the resources they 
needed; and a second during the summer, 
called ‘Future Way of Working’ to gauge how 
employees felt about returning to the office. 

 } The Board received the results of the ‘Your 
Say’ 2020 Employee Engagement Survey. 
See page 34.

 } Talent management, and diversity and 

inclusion were dedicated topics for discussion 
at the Strategy day. 

 } The Board developed its implementation 

of the Code’s provision relating to 
workforce engagement.

 } The Board receives regular updates from the 
Group HR Director about policies, workforce 
remuneration and data on employee turnover. 

 } Employees attended Board meetings to 

provide Business Unit updates.  

 } As a result of the pandemic, new policies were 
introduced to enable our people to work from 
home safely and provide guidance and support 
on all aspects of remote working.  

 } An updated Agile Working policy has been 

introduced as a result of the ‘temperature check’ 
surveys and the indication that our people enjoy 
the flexibility of working from home. 

 } The 2020 Employee Engagement Survey 

received a 94 per cent response rate and 97 
per cent of employees were proud to work for 
SEGRO. The Executive Committee reported 
back to the Board with measures to ensure that 
the high engagement scores can be maintained.

 } The Board approved the new Diversity and 
Inclusion Framework for implementation 
in 2021.

 } Online meetings have facilitated more 

employees attending Board meetings to give 
business updates. 

 } Non-Executive Directors hosted online 

sessions with employees. These sessions will be 
continued in 2021. See case study on page 104. 

101

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Leadership and purpose

Stakeholder engagement from the Board’s perspective 
continued

CUSTOMERS

...are our occupiers and we want 
to hear about what they want from 
our assets so we can continue 
to create the space that enables 
extraordinary things to happen.

ENGAGEMENT

OUTCOME

 } Site visits usually give the Board an 

 } The Board finds it insightful to hear directly 

opportunity to meet some of our customers.

 } The Board has formal and informal meetings 

with customers, including Board and 
senior management. 

 } The Key Account Management Team attended 
a Board meeting to explain how they manage 
the relationships.

 } The Board receives regular updates about 
customers and the results of our annual 
Customer Satisfaction survey. 

 } KPIs on vacancy and customer retention are 
provided on a regular basis to the Board. 

 } The Board considered the impact on our 

customers of the pandemic. 

from our customers about their business, why 
they have chosen a particular location, or 
how we have met their specific requirements 
and our customers’ priorities and challenges 
and future trends, so we can understand how 
we can continue to meet their needs going 
forward. This year the Board met with senior 
representatives of Amazon and Ocado to hear 
directly from them about their experience of 
working with us.

 } The Customer Satisfaction survey and statistics 
are discussed at the Board and help guide 
longer-term planning. The Company received an 
87 per cent satisfaction score and 99 per cent of 
customers would recommend the Company.

 } We have a high retention rate of 86 per cent.

 } The Board received regular updates on rent 
collection, an area which had not previously 
been regularly reported on. The Board agreed 
to the principle of deferral of rents or moving 
to monthly payments to alleviate pressure on 
customers most impacted by the pandemic. 
See page 21.

 } The Board considered the structural drivers 
of occupier demand for our assets as the 
pandemic unfolded.

SUPPLIERS

ENGAGEMENT

OUTCOME

...include all the advisers, 
construction firms and everyone 
involved in our supply chain. 
Our suppliers are key to 
the creation of the space for 
occupation by our customers.

 } The Board receives regular presentations 

from our advisers such as property agents, 
valuers and lawyers. The Board meets other 
components of the supply chain when 
they visit sites and developments under 
normal circumstances. 

 } Directors use the opportunity when meeting 
with contractors to see the Health and Safety 
measures in place.

 } Individual countries managed their own 
supplier response plan for Covid-19 and 
reports were provided to the Board. 

 } Presentations from our advisers keep the Board 
up to date on market trends. These have been 
conducted online this year.

 } Results of visits to suppliers, conducted online 

this year, relating to compliance with policies on 
anti-bribery and corruption and modern slavery 
are reported to the Board. 

 } Health and Safety reports, with a particular focus 

on construction suppliers, are received as a 
standing Board item. 

 } The Board received a detailed report about 

construction sites and safe working procedures 
being implemented during the pandemic to 
protect the health and safety of workers.

 } The Board received updates on the supply chain 

impact of the pandemic.  

 } The Board approved the Modern Slavery and 
Human Trafficking Statement which applies to 
our suppliers. 

102

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020COMMUNITIES

ENGAGEMENT

OUTCOME

...are the people who live and 
work in the areas where our assets 
are located and include local 
residents, local government and 
community groups. They can also 
be members of any of our other 
stakeholder groups.

 } The Board approved the accelerated launch 
of the Centenary Fund, with a commitment 
of £10 million over 10 years, to enable the 
Company to respond to the impact of the 
pandemic in its communities.

 } Directors waived 25 per cent of their salary 

and fees for three months and the Company 
donated an equivalent amount to the 
Centenary Fund.

 } The Board approved the new Responsible 

SEGRO Framework. 

 } The Board heard about the range of community 

engagement activities and donations. 

 } We build partnerships with the communities 
where we have a presence, either through 
work with local government or directly with 
community groups, mainly focusing on 
helping unemployed residents back into the 
workforce through skills training and greater 
exposure to the occupiers of our estates. 
The Board usually hears about these initiatives 
throughout the year formally in meetings and 
on an ad hoc basis when visiting offices or on 
asset tours.

 } The Responsible SEGRO Framework 
establishes ‘investing in our local 
communities and environment’ as one of 
its three main objectives. It will also seek to 
encourage stronger links with customers 
to support local community training and 
recruitment programmes.

 } The Company makes direct and indirect 

donations to community partners.

INVESTORS

...provide the capital through 
equity or debt which finances our 
business and its future growth. 
Shareholders, both institutional 
and retail, are the owners of 
our business. They are also 
the financial institutions who 
provide debt and our joint 
venture partners.

Read more about our response to Covid-19
see pages 20-23

ENGAGEMENT

OUTCOME

 } There is an extensive investor relations 

 } The Board receives regular updates on meetings 

programme and shareholders can meet the 
Executive team individually or at group events 
such as investor roadshows following results 
announcements. This year the Half Year 
results event was held online.

held with shareholders. 

 } The Board receives a weekly commentary 

about the share performance, together with any 
analysts’ notes.

 } The Company’s brokers attended a Board 

meeting to talk about shareholder feedback 
and investor trends.

 } The Chair, Senior Independent Director 
and Committee Chairs are available to 
shareholders to discuss any governance, 
strategy or other matters they wish to raise.

 } The Board has received feedback from retail 
shareholders in response to equity placings 
that they would like to participate. 

 } Engagement with shareholders at the AGM.

 } Annual review of the SELP joint venture. 

 } A number of consultations with major 
shareholders occurred during the year. 
See page 105.

 } The Board took the decision to make the 2020 
AGM a closed meeting due to Government 
restrictions but shareholders were still able to 
vote and submit questions. Arrangements are 
being made for the 2021 AGM to facilitate 
electronic access to the meeting.

 } The Board approved payment of the 2019 final 

and 2020 half year dividend. 

 } The Board approved the equity placing which 

included the appointment of PrimaryBid 
to facilitate retail shareholder participation. 
See page 95.

 } The Board is kept up to date with the activities 

of SELP. 

103

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Leadership and purpose

Stakeholder engagement 
continued

CASE STUDY: WORKFORCE ENGAGEMENT

Two Non-Executive Directors – Martin Moore and Sue Clayton – 
held a series of sessions with employees to speak directly to them 
and hear their views. 

The sessions were held with a cross-section of employees from 
across the Group and its different geographical locations and at 
different levels and grades, giving a broad cross-section of views 
and cultures. The meetings were an open, two-way dialogue and 
enabled employees to ask the Directors about the topics they 
discuss in the boardroom as well as sharing their experiences about 
working day-to-day in the Group. To ensure an open discussion, no 
members of the Leadership team attended these meetings.  

Non-attributable feedback was relayed to the next Board meeting. 
The topics that they discussed included: employees’ experiences 
of working from home during the pandemic especially technical 
support, work-life balance, wellbeing and the opportunity for new 
ways of working following the pandemic. Other areas discussed 
included the Company’s ESG strategy, customer relationships, 
communications and innovation. 

The meetings gave us the opportunity to hear from a 
wide range of employees in different roles and offices. It 
was good to hear the views from the ground in addition 
to those we hear at our Board meetings and site visits.

SUE CLAY TON 
NON-EXECUTIVE DIRECTOR

I enjoyed the opportunity to talk in an informal group 
with Sue and Martin and gain an insight into items 
on the agenda for the Board and their discussions. 
Sue and Martin were open and honest with us and were 
interested in how we, as employees, were adapting to 
the working from home environment.

GINA BIGGS 
HE ALTH AND SAFET Y MANAGER, GROUP OPER ATIONS

104

EMPLOYEE ENGAGEMENT

The Board has a tailored approach to its adoption of the Code’s 
provision on workforce engagement mechanisms. The Group has a 
non-unionised business with a headcount of 355 people spread across 
offices in nine geographies. The Board felt that it was important that 
its approach should mirror the Company’s Values of openness and 
transparency in order for the engagement to be authentic, meaningful 
and received positively. Against this backdrop, it was agreed that 
alternative arrangements as permitted by the Code were more 
appropriate to the business. This involves a three-stage approach which 
continues to evolve as we implement it, recognising that it should be 
appropriate and add value to our business as well as encompass the 
spirit of the provision which is to enable the voice of the employee to 
be heard in the boardroom.

INDIVIDUAL MEETINGS WITH THE DIRECTORS

There are many formal and informal occasions when the  
Non-Executive Directors meet with employees, including through the 
induction of a Non-Executive Director, or where a Non-Executive 
Director makes an ad hoc asset visit or otherwise meets with individuals 
to discuss a particular topic.

The Committee Chairs have individual meetings with employees in 
relation to the business of their Committee meetings.

PRESENTATIONS AT BOARD AND COMMITTEE MEETINGS

The Executive Directors encourage their teams to present at Board 
meetings and join asset tours. During the year, the Directors heard 
from employees about key customer accounts and received reports 
from asset managers and investment managers on day-to-day 
operational matters, sustainability and cyber security. They also 
received updates on the 2020 centenary celebrations and the 
Centenary Fund, Health and Safety, community engagement and 
PropTech. These were all conducted remotely and the Board has 
enjoyed the opportunity to hear from more of our people directly and 
see them in action, albeit via Teams. 

INFORMAL MEETINGS WITH THE WHOLE BOARD

Usually there are plenty of opportunities for formal and informal 
meetings with the Board during visits to the offices but since March 
2020, this has not been possible due to the pandemic. It is hoped that 
these visits may resume in 2021.

We therefore introduced a series of workforce engagement meetings 
for two of our Non-Executive Directors with groups of employees. 
These were held on Teams and proved to be very successful and will 
be extended into 2021. 

The feedback from these meetings will be considered during the year 
in conjunction with the results of the employee engagement survey 
and other surveys and used to develop policies for the future. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OUR SHAREHOLDERS

NUMBER OF INSTITUTIONS

NUMBER OF MEETINGS

1,971

99% of issued share capital

NUMBER OF INDIVIDUALS

4,861

1% of issued share capital

194

More infomation
see page 40

CONSULTATIONS WITH SHAREHOLDERS

Each year, the Chair writes to our larger shareholders offering them a 
meeting with him, our Senior Independent Director and the Chairs of 
our Audit and Remuneration Committees. This year, no meetings were 
arranged as a result of the invitation.

As one of the proxy voting advisers raised a question prior to the 2020 
AGM about Sue Clayton’s independence, we engaged with some of 
our larger shareholders to ensure that they remain happy that we deem 
her independent. Although Sue was a Director of CBRE at the time, 
the Board considers her to be independent and indeed, the experience 
she brings due to her long career in real estate is of great value to the 
Company (see page 96 for more information). Shareholders confirmed 
our approach and Sue was re-elected with a vote of 89 per cent in 
favour. Sue retired from CBRE at the end of 2020.

We also consulted with shareholders on remuneration following 
the management restructuring, see page 124. Those shareholders 
that responded were supportive of the Remuneration 
Committee’s approach.

We will continue to engage with our shareholders as well as 
representative bodies to make sure that there is an ongoing dialogue 
about the Company’s approach to governance, including remuneration, 
and to ensure all views are fully understood and considered. 

The feedback from shareholders is shared with the Board. 

SCRIP

We offer a SCRIP dividend scheme which enables our shareholders 
to opt to receive dividends in shares rather than cash with no dealing 
costs or stamp duty. The scheme is proposed for renewal for a further 
three years at the 2021 AGM. Full details are available on our website. 

AGM

The AGM was very different this year. Stay at Home Measures 
implemented by the UK Government meant that shareholders and, 
indeed, Directors and employees were not able to travel to the 
meeting. Shareholders received all regular communications and 
were able to vote on the resolutions, all of which were passed (81 
per cent of issued share capital voted). 

We hope to hold our usual AGM in 2021, but we are also making 
plans to hold a hybrid AGM. This means that shareholders will be 
able to attend virtually, be able to ask questions and vote on the 
resolutions through electronic means. 

IDENTIFYING AND MANAGING CONFLICTS  
OF INTEREST

The Board operates a policy to identify and, when appropriate, 
manage actual or potential conflicts of interest affecting Directors. 
Directors are required to submit any actual or potential conflicts of 
interest they may have with the Company to the Board for approval. 
Any conflicts of interest are recorded and reviewed by the Board 
at each meeting. Directors have a duty to keep the Board updated 
about any changes to these conflicts. Sue Clayton was absent for the 
discussion involving CBRE’s reappointment during the year. 

EFFECTIVE CONTROLS AND NECESSARY RESOURCES

The Board has a responsibility to ensure that appropriate controls 
and resources are in place to enable the Company to achieve its 
long-term goals. We have a Schedule of Matters Reserved for 
Decision by the Board. This includes financial decisions, such as the 
annual budget and reviewing the Medium Term Plan, major capital 
expenditure, the approval of the financial statements, the dividend 
policy and compliance with the Code.

You can read about the Company’s approach to Risk and risk 
management on pages 72 to 81, whilst page 122 contains further 
details about the Audit Committee’s role in ensuring that robust 
processes have been put in place to ensure risks are identified, 
evaluated and managed. The Board regularly discusses the 
Company’s principal risks, along with new and emerging risks and 
considers how they may impact on the Company’s long-term goals.

The Board is ever mindful of the need to balance the pursuit of 
opportunities without taking unacceptable or excessive risk and 
ensures that the Company has the appropriate resources, in terms 
of time, people and funding, to do so.

CODE OF ETHICS

The Board has taken an active interest in ensuring that appropriate 
policies and practices are in place, consistent with the Company’s 
Purpose and Values. One such policy is the Code of Ethics which is 
core to the way in which our business is run, the work we do, and to 
our reputation.

The Code of Ethics sets out the high ethical standards expected 
of all employees in their daily work to enable us to act with 
honesty and integrity. The Code of Ethics incorporates policies on 
a wide range of activities and any breaches would be thoroughly 
investigated with appropriate action taken. The Board receives 
regular reports on compliance with the Code of Ethics and the 
Company’s policy on whistleblowing which sets out the procedure 
by which employees and any third parties can use a confidential 
external service to raise concerns. 

The Code of Ethics also sets out our approach to human rights of all 
our stakeholders. Our due diligence to combat slavery and human 
trafficking is set out in our Modern Slavery Statement which is 
approved by the Board and available on our website. See page 90.

The Audit Committee receives an anti-bribery and corruption report 
at each meeting since it is responsible for ensuring that appropriate 
safeguards are in place for the detection of fraud and prevention of 
bribery, including overseeing and monitoring the Group’s Anti-
Bribery and Corruption policies and procedures. Details of how 
matters of concern can be reported, and will be investigated are set 
out on page 90. No matters of concern were raised during 2020. 

105

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Division of responsibilities

Our governance framework

GOVERNANCE FR AMEWORK

THE BOARD

CHAIR 
GER ALD CORBET T

CHIEF EXECUTIVE 
DAVID SLEATH

EXECUTIVE DIRECTORS 
SOUMEN DAS 
ANDY GULLIFORD

SENIOR INDEPENDENT  

INDEPENDENT NON-EXECUTIVE DIRECTORS 

NON-EXECUTIVE DIRECTOR 

MARY BARNARD 

MARTIN MOORE

SUE CLAY TON 

CAROL FAIRWEATHER   

CHRISTOPHER FISHER

GROUP COMPANY   

SECRETARY 

ELIZABETH BLEASE

 Leads the Board and is responsible 
for its overall effectiveness in directing 
the Company.

Sets the agenda, style and tone of Board 
discussions to promote constructive 
debate and effective decision making.

Ensures that the corporate governance 
of the Group is maintained in line with 
current best practice.

Ensures effective communication with 
shareholders and stakeholders and makes 
sure that the members of the Board 
develop an understanding of the views of 
major investors.

Ensure Directors receive the information 
they require to fulfil their duty to promote 
the success of the company.

 Recommends the Group’s 
strategy to the Board 
and is responsible for the 
implementation of that 
strategy and for the Group’s 
overall performance.

Manages the business of 
the Group.

Ensures that the interests 
of the Group’s stakeholders 
are taken into account with 
regard to the long-term 
impact which the Group’s 
decisions may have on 
various stakeholder groups.

Manage the business operations 
within each Director’s area of 
responsibility in accordance with 
the Group’s strategy.

Acts as a sounding board to the 

Bring independent judgement and scrutiny to the decisions taken by the Board.

Responsible for advising the Board on all 

Monitor the success of management in delivering the agreed strategy within the 

risk appetite and control framework set by the Board.

Chair and serves as an intermediary 

for other Directors when necessary.

Available to shareholders should 

the occasion arise where there is 

a need to convey concerns to the 

Board other than through the Chair 

or the Chief Executive.

Leads the annual appraisal 

of the Chair by the Non-

Executive Directors.

governance matters.

Ensures timely and appropriate information 

flows within the Board, the Board 

Committees and between the Directors and 

senior management.

Ensures compliance with relevant statutory 

and regulatory requirements.

Gives guidance and advice within the 

Company on matters of business ethics and 

good governance.

Provides detailed practical support and 

guidance to Directors both individually 

and collectively.

EXECUTIVE COMMITTEE

Assists the Chief Executive with the 
development and implementation 
of Group strategy, the management 
of the business and the discharge of 
responsibilities delegated by the Board.

The Chair is responsible for the 
leadership of the Board and its 
overall effectiveness in directing 
the Company and promoting an 
open environment for challenge 
and debate. 
He is also responsible for encouraging 
participation by all of the Directors, facilitating 
constructive relations and creating the 
right atmosphere to promote a culture of 
open debate. Along with the other Non-
Executives, he is responsible for holding 
the Executive to account against agreed 
objectives. Further information about the 
Directors is available on pages 96 and 97, 
while pages 114 to 117 explain how the 
Nomination Committee considers the skills 
and diversity on the Board and Non-Executive 
Director independence. 

The Board retains responsibility for the 
approval of certain matters which include: 
Group strategy; the annual budget; the 
dividend policy; major investments and 
disposals; and the financial structure. There is 
an approved Schedule of Matters Reserved 
for Decision by the Board, which is reviewed 
periodically. The Board has delegated a 
number of its responsibilities to the Audit, 
Nomination and Remuneration Committees. 
The Terms of Reference of these Committees 
can be found at www.SEGRO.com. 
Further details on the roles and responsibilities 
of these Committees are set out opposite. 

The division of responsibilities of the Chair, 
Chief Executive and Senior Independent 
Director are clearly established in writing and 
approved by the Board. Martin Moore, as 
the Senior Independent Director, provides a 
sounding board for the Chair and serves as an 
intermediary for Directors and shareholders 
should communication through the normal 
channels fail. Martin also leads the appraisal 
of the Chair’s performance each year (see 
page 114). For further information on the 
responsibilities of each Board member, see the 
Governance Framework opposite. 

The day-to-day running of the Group is 
delegated by the Board to the Chief Executive 
who is supported by the Executive Committee. 

The Executive Committee supports the Chief 
Executive in the delivery of strategy and 
reviews operational and financial performance. 
The Committee carries out a pre-approval 
review of items requiring Board authorisation. 
It also acts as a primary approval channel for 
matters delegated by the Board at each of 
its meetings. 

106

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020GOVERNANCE FR AMEWORK

THE BOARD

CHAIR 

GER ALD CORBET T

CHIEF EXECUTIVE 

EXECUTIVE DIRECTORS 

DAVID SLEATH

SOUMEN DAS 

ANDY GULLIFORD

 Leads the Board and is responsible 

 Recommends the Group’s 

Manage the business operations 

for its overall effectiveness in directing 

strategy to the Board 

within each Director’s area of 

responsibility in accordance with 

the Group’s strategy.

the Company.

Sets the agenda, style and tone of Board 

discussions to promote constructive 

debate and effective decision making.

Ensures that the corporate governance 

of the Group is maintained in line with 

current best practice.

Ensures effective communication with 

shareholders and stakeholders and makes 

sure that the members of the Board 

develop an understanding of the views of 

major investors.

Ensure Directors receive the information 

they require to fulfil their duty to promote 

the success of the company.

and is responsible for the 

implementation of that 

strategy and for the Group’s 

overall performance.

Manages the business of 

the Group.

Ensures that the interests 

of the Group’s stakeholders 

are taken into account with 

regard to the long-term 

impact which the Group’s 

decisions may have on 

various stakeholder groups.

SENIOR INDEPENDENT  
NON-EXECUTIVE DIRECTOR 
MARTIN MOORE

INDEPENDENT NON-EXECUTIVE DIRECTORS 
MARY BARNARD 
SUE CLAY TON 
CAROL FAIRWEATHER  
CHRISTOPHER FISHER

GROUP COMPANY   
SECRETARY 
ELIZABETH BLEASE

Bring independent judgement and scrutiny to the decisions taken by the Board.

Monitor the success of management in delivering the agreed strategy within the 
risk appetite and control framework set by the Board.

Acts as a sounding board to the 
Chair and serves as an intermediary 
for other Directors when necessary.

Available to shareholders should 
the occasion arise where there is 
a need to convey concerns to the 
Board other than through the Chair 
or the Chief Executive.

Leads the annual appraisal 
of the Chair by the Non-
Executive Directors.

Responsible for advising the Board on all 
governance matters.

Ensures timely and appropriate information 
flows within the Board, the Board 
Committees and between the Directors and 
senior management.

Ensures compliance with relevant statutory 
and regulatory requirements.

Gives guidance and advice within the 
Company on matters of business ethics and 
good governance.

Provides detailed practical support and 
guidance to Directors both individually 
and collectively.

BOARD COMMITTEES

AUDIT

NOMINATION

REMUNERATION

Monitors the integrity of the Group’s Financial 
Statements, reviews the relationship with 
the auditor and the role and effectiveness 
of the internal audit function. Oversees the 
risk management process and internal 
control environment. 

Ensures that the Board, its Committees and 
the Leadership team have the appropriate 
skills, knowledge, diversity and experience to 
operate effectively and to oversee the delivery 
of the strategy.

Determines the reward strategy for the 
Executive Directors to align their interests 
with those of shareholders and employees.

MANAGEMENT COMMITTEES

OPERATIONS

RISK

INVESTMENT

Assists the Chief Operating Officer to 
manage the operations of the Group and to 
discharge the responsibilities delegated to 
him by the Chief Executive.

Establishes, monitors and reports to the 
Executive Committee and ultimately the 
Board and Audit Committee on the Group’s 
approach to risk management.

Manages the allocation of capital across the 
Group and oversees all major investment 
and divestment decisions on behalf of the 
Executive Committee.

HEALTH AND SAFETY COMMITTEE

SEGRO CENTENARY FUND COMMITTEE

Develops and manages the implementation of 
Health and Safety policies, reviews the outcomes 
of the Health and Safety Working Group as well 
as any other Health and Safety matters.

Reviews applications for the SEGRO Centenary 
Fund and applications for other charity funding, 
approving donations for applications that meet 
SEGRO’s funding and eligibility criteria.

107

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSThe Nomination Committee considered 
the commitments of all of the Company’s 
Non-Executive Directors and concluded that 
each of them has sufficient time to commit 
to the Company, and are not overboarded. 
Their individual contributions are, and 
continue to be, important to the Company’s 
long-term sustainable success. 

AVAILABILITY OF THE CHAIR, 
CHIEF EXECUTIVE AND THE GROUP 
COMPANY SECRETARY

The Chair, the Chief Executive and the Group 
Company Secretary are always available for 
the Directors to discuss any issues concerning 
Board meetings or other matters. All Directors 
have access to the advice and services of 
the Group Company Secretary, who is 
responsible for ensuring compliance with 
Board procedures. Directors also have the 
right to seek independent professional advice 
at the Company’s reasonable expense should 
they so wish. 

The Directors value meeting and hearing from 
different people in the business who are close 
to the Company’s markets and who can tell 
the Board what they are seeing and hearing 
on the ground, as well as from external 
sources who give a wider perspective on 
market trends. During the year, presentations 
were given by Managing Directors and their 
teams across Business Units as well as the 
SELP Joint Venture and a presentation on 
digital and technology strategy. This allows 
the Directors to gain further insight on market 
trends and provides the context for them to 
make strategic decisions about acquisitions, 
disposals and the development pipeline. 

INDEPENDENCE AND COMMITMENTS OF 
THE NON-EXECUTIVE DIRECTORS

Details of the Directors, including the skills 
and experience that they bring to the Board, 
are set out on pages 96 to 97. The Board 
comprises a Non-Executive Chair, three 
Executive Directors, and five Independent 
Non-Executive Directors, all of whom 
are equally responsible for the effective 
stewardship and leadership of the Group. 
Each of the Non-Executive Directors is 
considered independent in character and 
judgement. The Chair was considered 
independent on appointment and the Board 
still considers him to be so. By having a 
majority of Independent Non-Executive 
Directors, the Executive are held to account 
and are not able to dominate Board decision 
making, which promotes the good governance 
of the Company.

For further details on how the Board has 
reached its conclusions on Non-Executive 
Director independence, see page 114 
of the Composition, Succession and 
Evaluation section.

GOVERNANCE
Division of responsibilities

EFFECTIVE AND EFFICIENT FUNCTIONING 
OF THE BOARD

In order to respond to the global crisis from 
the pandemic and to ensure that employees, 
customers, suppliers and contractors were 
safe and that the business could continue to 
operate, the Board met an additional seven 
times to the scheduled seven meetings. 

From March 2020, meetings were held 
virtually. The pandemic has meant there 
has been a greater use of technology for 
Board meetings. One of the advantages 
of virtual meetings has been the ability to 
invite other employees to join to present on 
a particular topic or provide background to a 
discussion. This has been particularly so for 
Continental European colleagues who have 
been able to contribute to a Board discussion 
by simply joining an online meeting rather 
than having to travel to London to attend a 
physical meeting. 

Each Director has committed to attending all 
scheduled Board and Committee meetings 
and would not do so only in exceptional 
circumstances. Similarly, every effort is made 
by Directors to attend ad hoc meetings. 
On the rare occasion that a Director cannot 
attend a meeting they are still provided with 
the papers in advance of the meeting and are 
given an opportunity to discuss them with the 
Chair or the Chief Executive. 

Directors receive accurate, timely and clear 
information on the matters to be considered. 
Electronic Board packs are available to 
the Directors a week before a meeting. 
During the Board evaluation interviews, 
the Non-Executive Directors commented 
positively on the quality of the papers 
received from the Company and in particular, 
the Chief Executive’s review paper which 
sets the scene for the Board meeting and 
signposts the important aspects for decision. 
Everyone agreed that the Board meetings 
were well run and facilitated discussion of the 
appropriate topics and focus areas. 

Regular meetings between the Chair, the 
Chief Executive and the Group Company 
Secretary help further ensure that Board 
meetings contain the appropriate mix 
of strategy, culture, regulatory and 
financial matters.

108

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Our Executive Committee 
and Leadership team 

The Executive Committee has 
its own Terms of Reference. 
This Committee meets formally 
each month and during the year 
there are dedicated sessions to 
discuss strategy as well as ad hoc 
meetings to keep the Committee 
up to date with day-to-day 
operational issues.

The Executive Committee delegates 
some of its responsibilities to three 
management Committees:

 } the Investment Committee;

 } the Operations Committee; and

 } the Risk Committee.

These Committees also have their own Terms 
of Reference and membership includes at least 
one member of the Executive Committee and 
members of the Leadership team.

There are two further Committees which focus 
on specific activities within the organisation: 
the Health and Safety Committee and the 
SEGRO Centenary Fund Committee. 

LEADERSHIP TEAM

SEGRO’s Leadership team comprises the 
members of the Executive Committee and 
their senior direct reports, each of whom has 
responsibility for the Group’s operations or 
investment activities in a particular geography, 
or for one or more of the Group’s main 
functional areas.

Whilst the day-to-day management of the 
Group’s activities and the governance and 
oversight of them are carried out under the 
structures described on pages 106 to 107, the 
Leadership team serves as a useful discussion 
forum and sounding board with which the 
Executive Directors can share knowledge 
and ideas and gain a better understanding 
of the local market outlook and share cross-
functional and cross-border information. 
Prior to the pandemic, the Leadership team 
would normally meet three times a year and 
review areas such as:

 } market conditions and competitor activity;

 } future trends affecting our customers’ 

businesses and which may impact SEGRO;

 } interests of the Group’s stakeholders;

 } horizon scanning for emerging topics 

which might impact on our business in the 
medium to long term;

 } the Group’s asset plans and Medium 

Term Plan;

 } development and implementation of the 
Group’s culture and Values including our 
approach to diversity and inclusion in its 
broadest sense; and

 } the results of the Group’s Employee 

Engagement Survey.

During the pandemic, the Leadership team 
has been an essential part of the Company’s 
incident management process and business 
continuity plans. In the initial weeks of the 
crisis, this team met weekly and, more latterly 
have met every two to three weeks, to update 
each other on emerging local government 
rules in their country, reporting on the impact 
this had on both our employees and for 
the business, especially for customers and 
construction sites. The Leadership team, 
along with the Executive Committee, was 
able to debate issues and agree Group-wide 
solutions. Its members were then an integral 
part of the communications plan, to cascade 
information in a consistent way to teams as 
well as ensuring our approach was in line with 
local regulations. 

During the pandemic, the 
Leadership team has been an 
essential part of the Company’s 
incident management process 
and business continuity plans.

109

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Division of responsibilities

Key activities of the Board during 2020

SUSTAINABILITY, HEALTH AND SAFETY

MATTERS CONSIDERED

OUTCOME

 } Presentation of the 

sustainability strategy and 
targets for achieving net zero 
carbon by 2030.

 } Potential for the generation 
of solar energy from photo 
voltaic panels, including 
trialling their installation with 
a number of key customers 
and using the findings to help 
us form the basis of a Group-
wide strategy.

 } Review of the Annual Health 

and Safety report and 
monthly incident report.

 } The Board approved the 
new Responsible SEGRO 
Framework with a headline 
target of net zero carbon 
by 2030 which has 
been launched with this 
Annual Report. 

 } The Board monitors 

performance against the Zero 
Tolerance approach to Health 
and Safety breaches and 
reviews findings and learnings 
from incidents. 

Read more about Responsible SEGRO
see pages 28 to 29

STAKEHOLDER ENGAGEMENT

MATTERS CONSIDERED

OUTCOME

 } Presentations from the 
Company’s brokers on 
shareholders’/analysts’ 
attitudes to the Company and 
investor feedback.

 } Modern Slavery and Human 

Trafficking Statement.

 } Report on the Code of Ethics 
including the Anti-Bribery 
and Corruption policies.

 } Regular reports on 

community engagement and 
charitable giving.

 } Annual report on the 
results of Customer 
Satisfaction survey.

 } Report on s172 activities 

and update.

 } Proposals for the SEGRO 

Centenary Fund.

 } The Board is aware of the 

Company’s stakeholders and 
their engagement with us. 
This enables the Board to 
consider their views and the 
impacts on all stakeholders 
arising from Board 
decision making. 

 } The regular updates on 

compliance with the Code of 
Ethics and Anti-Bribery and 
Corruption policies as well as 
reports from the externally-
managed whistleblowing 
line provide assurance that 
the Company maintains 
its reputation. 

 } The Board notes the results 
of the customer satisfaction 
survey to ensure that we are 
providing the best level of 
service possible to maximise 
customer retention.

Read more about Stakeholders
see pages 83 and 100 to 103

110

BOARD MEETING

The Board met remotely from March 2020 as a result of the 
pandemic and Stay at Home Measures. 

OPERATIONAL

MATTERS CONSIDERED

OUTCOME

 } Presentations from different 
areas of the business to 
ensure that the Board remains 
up to date on the operational 
aspects of the business.

 } The Board approves 
all major acquisitions, 
developments and sales over 
a £50 million threshold. 

 } The Board reviews the 

performance of the SELP 
joint venture which continues 
to be a vital element of our 
strategy to build scale in 
Continental European big 
box warehousing in a capital 
efficient manner.

 } Visibility of key customers and 
engagement at Board level. 

 } The Board approved the exit 
from Austria due to lack of 
other significant opportunities.

 } Presentations from the 
Managing Directors of 
Northern Europe, Southern 
Europe, Thames Valley and 
Greater London.

 } Investment approvals 

including the acquisition of 
Perivale Park, West London 
and Electra Park, Canning 
Town, London.

 } All transactions 

include a stakeholder 
impact assessment. 

 } Customer concentration and 

portfolio risk.

 } Report on Key 

Account Management.

 } Received the annual update 
on the SELP joint venture.

 } Considered the sale of 

City Park, Vienna and exit 
from Austria.

 } Acquisition of 

development sites.

 } Considered the acquisition 
of Sofibus Patrimoine SA, 
a French listed company.

Read more about our operations
see pages 53 to 56

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020PEOPLE AND CULTURE

GOVERNANCE

MATTERS CONSIDERED

OUTCOME

MATTERS CONSIDERED

OUTCOME

 } Considered culture, Purpose 

and Values.

 } Reviewed the people strategy, 

succession planning and 
talent management.

 } Reviewed the diversity and 

inclusion policy.

 } Received feedback 

on workforce 
engagement sessions.

 } Feedback on the Employee 
Engagement Survey and 
temperature check results.

 } The Board has good oversight 
of, and input into, the people 
aspects of the business.

 } The 2021 Diversity and 

Inclusion Framework was 
approved and will be 
launched to employees. 

 } The workforce engagement 

meetings proved to be 
a useful addition to hear 
directly from employees 
and further sessions will 
be held in 2021 with an 
expanded remit.

Read more about our people
see pages 34 to 35

STRATEGY

MATTERS CONSIDERED

OUTCOME

 } Covid-19 pandemic response.

 } Robust response to pandemic 

across the business. 

 } Proceeds of fund raisings 
deployed in strategic 
acquisitions of Electra Park, 
Canning Town, London 
and Sofibus Patrimoine SA 
in France.

 } The secondary listing in 

France will ensure we can 
maintain an optimum and 
efficient holding structure 
following the end of the 
Brexit transition period on 
31 December 2020.

 } Creation of a Strategy, 

Innovation and Investment 
function for the 
implementation of the digital 
and technology strategy.  

 } Review and discussion of 

strategic objectives and plans 
to achieve them.

 } Proposal for a Secondary 
Listing on Euronext Paris.

 } Reports on the market 

outlook for the occupier and 
investment markets.

 } Reviews of the wider 

economic environment, 
political uncertainty and 
Brexit considerations.

 } Held a Strategy day including 
a review of asset plans and 
portfolio planning.

 } Review of the evolving digital 

and technology strategy.

 } Rolling reviews of the 

performance of investments 
and developments over the 
previous three years.

 } Compliance with the 

requirements of the UK 
Corporate Governance Code 
and updates on corporate 
and regulatory changes and 
reporting requirements. 

 } Internal Board evaluation 

process for 2020 including 
progress with the actions 
arising from the 2019 
internal evaluation. 

 } Principal Risks and 

risk appetite.

 } Risk and control framework.

 } Directors’ remuneration 

and implementation in line 
with Policy. 

 } Board succession.

 } The Company complies 
with the UK Corporate 
Governance Code (with 
the exception of provision 
38) and seeks to maintain 
best practice governance 
procedures to facilitate the 
operation of the Board.

 }  The Board evaluation process 

ensures that Directors 
feel that the Board and its 
committees continue to 
operate effectively. 

 } Approved the Principal 

Risks and risk appetite of 
the Company.

 } Commenced the search 
for an additional Non-
Executive Director. 

Read more about our governance
see pages 92 to 111

FINANCIAL

MATTERS CONSIDERED

OUTCOME 

 } Approved results 
and dividends.

 } Presentation from the 

 } Approval of the Half Year and 
Full Year Financial Statements 
and Annual Report.

Company’s independent 
valuers on the 2019 Full Year 
and 2020 Half Year valuation.

 } The Board approved the 
payment of the dividend 
throughout 2020.

 } The Board approved the 

2021 budget and noted the 
Medium Term Plan. 

 }  The Board appointed  
CBRE for a further  
four-year term, having 
reviewed their independence 
and performance.

 } The Board approved the Tax 
Strategy and Treasury Policy.

 } Received reports on internal 
and external audit functions.

 } Reviewed 2021 budget.

 } Reviewed Medium Term Plan.

 } Raised over £1 billion through 
US Private Placement, debt 
and equity placing.

 } Considered debt; extension 
of maturity of revolving 
credit facility and redemption 
of bonds.

 } Treasury Policy.

 } Tax Strategy.

 } Reappointment of the 
Company’s valuers.

Read more about our Strategy
see pages 32 to 49

Read more about our Financial Review
see pages 66 to 71

111

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Composition, succession and evaluation

Internal Board evaluation

The last externally facilitated evaluation was arranged by Independent 
Audit in 2018. During 2020, the Board undertook an internal  
review led by myself as Chair. The process was divided into a number 
of stages, as set out below:

REVIEW OF THE CONCLUSIONS OF THE 2019 REVIEW 

In July 2020, the Board revisited the conclusions of the 2019 review to 
make sure that progress was being made on all of the actions.

PROGRESS WITH ACTION POINTS AGREED IN 2019

What we said we’d do

What we’ve done

Due to Covid-19, it has not been possible 
to arrange office or asset tours. However, 
holding Board meetings by video conference, 
has made it easier for our senior team 
to join meetings for specific discussions. 
For example, the Board has heard from 
managers responsible for customer relations, 
for our joint ventures and those leading 
our sustainability strategy. During 2020 
the Board also received presentations from 
4 of the 6 Managing Directors.

Again, Covid-19 has meant that the Directors 
could not meet customers on asset tours. 
However, in January 2020, the Board hosted 
a dinner for senior representatives from 
Amazon and Ocado. The Board received 
regular reports during the year on how 
customers were coping with the effects 
of the pandemic, it reviewed the results 
of the Customer Satisfaction Survey and 
had a presentation on the Key Customer 
Programme. We will endeavour to arrange 
more customer meetings once it is safe to do 
so and the Covid-19 restrictions permit.

Covid-19 has impacted on this objective too. 
The Directors commented how much they 
have missed the chance to have informal 
discussions, or general catch ups over lunch 
or dinner. Again, this will stay on our radar 
for 2021.

ESG strategy was one of the three main 
topics for the Board Strategy day. The Board 
had a presentation on PropTech, led by our 
Director of Digital & Technology, in January 
2020 and January 2021, along with updates 
during the year, including a presentation 
in July about the potential to extend the 
generation of solar energy from photo  
voltaic panels.

Lord Hill and Capital Economics both 
presented to the Board about Brexit and 
the macroeconomic outlook. 

CBRE attended two Board meetings to 
present the valuation results and also 
comment on the property market in the 
countries where we operate.

Continue to arrange asset 
tours and visits to regional 
offices for the Board to 
meet the local teams.

Meet more customers, 
especially on asset tours.

To have some occasions 
during the year to 
spend some informal 
time together for 
‘unscripted debate’.

To allocate more 
time discussing ESG, 
technology and disruptors. 

Make sure that the Board 
stays focused on what is 
happening in the outside 
world, keep looking out for 
disruptors, be exposed to 
external stimuli to help 
challenge convention and 
provoke new discussions 
and perspectives as 
the Directors look to 
the future.

STAGE 1

Our General Counsel and Group Company Secretary, Elizabeth 
Blease, our Senior Independent Director, Martin Moore and I had 
an initial meeting to discuss how to run the internal review process. 
We reviewed the process which we had followed in 2019 which the 
Directors had felt worked well.

Following the meeting, and after consultation with the Chief 
Executive, David Sleath, we decided that Martin should again lead 
the process, with support from Elizabeth. This would create an 
environment for the Directors to speak freely to Martin but we also 
made it clear that my door was open if any Director wanted to speak 
privately with me should they wish to do so. 

STAGE 2

Martin, Elizabeth and I agreed the themes that we wanted to 
cover. These were a combination of more standard items, such 
as Board dynamics and relationships, individual participation and 
contribution, along with more topical matters such as how the Board 
had responded to the pandemic and what lessons had been learnt, 
progress with s172, stakeholder interests, ESG and people strategy. 
The Directors were also asked to comment on the performance 
of the Board Committees. These themes were circulated to the 
Directors ahead of their interviews.

STAGE 3

Immediately after the Board strategy sessions in November, Martin 
and Elizabeth had meetings with, and collected feedback from, 
each of the Directors. The discussions were based around the 
themes which we had identified but were informal enough to let the 
conversation flow to give the Directors the freedom to say what they 
wanted to and focus on the points that were important to them. 

At the end of each session, Martin also had a private meeting with 
the Directors to take their feedback on my performance as Chair.

STAGE 4

Martin and Elizabeth collated the feedback they had gathered from 
the interviews into a draft report for me. Martin and I had a meeting 
to discuss the conclusions, to review the feedback about me and to 
consider next steps. He also had a meeting to brief David.

STAGE 5

The final report was circulated at the December Board meeting and 
time was allocated for an open discussion about the conclusions and 
the list of recommendations, which are set out opposite.

STAGE 6

During 2021, I will continue my practice of having regular meetings 
with each of the Non-Executive Directors and will base some of my 
discussions around the feedback. As usual, midway through the 
year, the Board will review the 2020 conclusions to make sure that 
we are making progress with the actions. In the Autumn, we will 
consider how to run the next external review.

112

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020CONCLUSIONS OF THE 2020 REVIEW

The evaluation confirmed the conclusions 
of the 2019 review that the Board and its 
Committees continued to operate effectively. 
In particular, it re-confirmed a positive, 
collegiate and collaborative culture between 
members of the Board, where everyone felt 
comfortable speaking openly, did not feel 
inhibited and with no one person dominating 
the proceedings. The Chair promoted an 
inclusive style which maintained a good 
balance between support and challenge. 

Notwithstanding the challenges of working 
remotely and virtual Board meetings, the 
Directors were pleased that along with 
running the business the Executive Committee 
had continued to make progress with the ESG, 
diversity and inclusion, and funding strategies. 
The Board had benefited from being stable, 
settled and well bonded. Although there had 
been additional meetings this year, everyone 
felt this was appropriate and that they had 
been informed about business performance 
and employee engagement. They all missed 
the informal interaction that takes place 
around Board meetings.

All three Board Committees were considered 
to be operating effectively and were well 
Chaired. The Non-Executive Directors found 
that the additional Audit Committee meeting 
in June was helpful to set the context for 
the Half Year results, especially with the 
SEGRO and audit teams working remotely. 
The Remuneration Committee had had a 
quieter year but succession planning for the 
Committee Chair would be a priority this year.

There was particularly positive feedback 
on the Strategy day, which had followed 
a different format to previous years. 
Fewer topics were discussed than usual, but in 
more detail, which enabled the Non-Executive 
Directors to make an even more constructive 
contribution to the evolution of some of these 
strategic areas.

The results of the Board evaluation were presented to 
the December meeting.

ACTIONS

As ever, these reviews provide a helpful 
opportunity for the Directors to stand back 
and reflect, to consider how they work, how to 
maximise the Board’s strengths and highlight 
areas for further development.

There was unanimous support to resume 
visits to regional offices, to meet the local 
teams and have tours of assets as soon as 
it is safe to do so. There were a number of 
specific matters that the Board would like to 
consider during 2021. These include more 
time discussing some of the specific elements 
of the ESG strategy, including climate change 
and diversity and inclusion. The Directors had 
enjoyed hearing from the management team 
more regularly while meetings had been held 
virtually and hoped that the ability for people 
to join meetings remotely will not be lost 
when the physical meetings resume. 

Finally, it was recognised that while the 
business continued to deliver strong 
performance, the Board should stay focused 
on what is happening in the outside world, 
keep looking out for disruptors and ensure 
it was exposed to external stimuli to help 
challenge convention and provoke new 
discussions and perspectives as they look to 
the future.

GER ALD CORBET T
CHAIR

113

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Composition, succession and evaluation

Nomination Committee Report 
Skills, experience and size of the Board

I am delighted to present to you the report of 
the Nomination Committee.

The Committee continued to fulfil its role of 
oversight of the composition of the Board, 
its Committees and monitoring the skills and 
diversity of its members. 

BOARD EVALUATION 

Details of the internal Board evaluation which 
was carried out during the year are set out in 
the case study on pages 112 to 113. 

At its most recent review, the Committee 
concluded that the Board was currently a 
suitable size with the appropriate range of 
skills and experience to lead the Company. 
It further concluded that the Directors worked 
well together. The Company’s strategy 
was well established and its execution not 
dependent on any one individual.

The performance of the Directors is 
considered each year. The annual appraisal 
of the Chair is led by the Senior Independent 
Director, Martin Moore, who met with each 
of the Directors to discuss his performance. 
There was agreement that the Chair was 
performing his role well. The Chair leads the 
appraisal of the Chief Executive by arranging 
a meeting of Non-Executive Directors to 
discuss his performance. The Non-Executive 
Directors agreed that the Chief Executive 
continues to perform his role with energy 
and commitment and leads an effective 
executive team. The performance of the  
other Non-Executive Directors is appraised 
by the Chair, whilst the Chief Executive 
gives feedback to the Committee about the 
Executive Directors. 

Following the appraisal processes, the 
Committee concluded that each of the 
Directors makes an effective contribution 
to the Board. It also considered the time 
commitments of the Non-Executive Directors 
and concluded that each Director is able to 
commit sufficient time to the Company and 
to fulfil their duty to promote the success of 
the Company.

INDEPENDENCE 

} Chair

} Independent Non-Executive Directors

} Executive Directors

11%

56%

33%

The Committee considers the Chair and 
each of the Non-Executive Directors to be 
independent, in accordance with the criteria 
set out in the Code. 

The independence of Sue Clayton, who joined 
the Board in 2018 and retired from CBRE at 
the end of 2020, is discussed on page 105 
and on page 89 of the 2019 Annual Report. 
The Board is firmly of the opinion that Sue 
Clayton is independent. 

REAPPOINTMENTS DURING THE YEAR

Martin Moore reached six years’ service 
in July 2020 and the Committee held a 
dedicated meeting, with him absent, to 
consider his re-election and discussed 
Martin’s:

 } contribution to the Board and participation 

in discussions;

 } overall performance; and

 } time commitment to the role and other 

non-executive directorships.

I would like to record my thanks to Martin 
for his contribution as Senior Independent 
Director, for his support during a challenging 
year and for his role in managing the internal 
Board evaluation process again this year. 

GER ALD CORBET T
CHAIR OF THE NOMINATION COMMIT TEE

COMMITTEE MEMBERS

Gerald Corbett (Chair) 
Mary Barnard 
Sue Clayton 
Carol Fairweather 
Christopher Fisher 
Martin Moore

KEY RESPONSIBILITIES

 } Composition of the Board and 

its Committees

 } Manage the Board appointment 

process and make recommendations to 
the Board

 } Succession planning for the Board and 

Leadership team

 } Oversight of the Board 

evaluation process

 } Oversight of the policy on diversity 

and inclusion

MEETINGS AND ATTENDANCE

 } Two scheduled 

 } 92% attendance* 

*  Martin Moore did not attend one meeting, the sole 
purpose of which was to discuss his reappointment

2020 HIGHLIGHTS

 } Reappointment of Martin Moore and 
Carol Fairweather for a further three-
year term

 } Commenced search for an additional 

Non-Executive Director

114

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Following a detailed and rigorous review, 
which was the subject of a single meeting of 
the Committee, the Committee was satisfied 
that Martin continues to be a valuable 
member of the Board and the Committee 
agreed that his tenure should be extended 
for a further three years, subject to annual  
re-election by shareholders. 

Carol Fairweather reached three years’ 
service in January 2021. The Committee 
considered Carol’s re-election at its meeting 
in December 2020 (with Carol not present 
for that item) and discussed the same topics. 
The Committee also concluded that Carol’s 
contribution as a Non-Executive Director 
and as Chair of the Audit Committee was 
exemplary and that her term should be 
extended for a further three years, subject 
to annual re-election by shareholders. 

My thanks also go to Carol for the oversight 
of the Audit Committee in a calm and careful 
way during the pandemic and for ensuring the 
integrity of the process to produce financial 
statements whilst working remotely. 

NON-EXECUTIVE DIRECTOR SUCCESSION 
AND RE-ELECTION

The Committee monitors the tenure of 
Directors to ensure that it plans sufficiently  
in advance of retirements from the  
Board to ensure orderly succession of  
Non-Executive Directors. Christopher Fisher 
will reach nine years’ service in October 2021. 
The Committee has commenced a search 
process for an additional Non-Executive 
Director to join the Board during the year. 
An external search agency, Russell Reynolds, 
has been appointed to undertake the search. 
They have worked with the Group on previous 
occasions and therefore understand the 
business, the culture and the type of individual 
that would work well with the Board. 

As Christopher Fisher is Chair of the 
Remuneration Committee, the Committee 
has discussed the successor specifically for 
that role and whether the new Non-Executive 
Director or an existing Non-Executive Director 
would succeed Christopher, bearing in mind 
the Code requirement that the Chair needs to 
have 12 months’ remuneration experience to 
Chair the Remuneration Committee. 

ROLE REQUIREMENTS FOR   
A NON-EXECUTIVE DIRECTOR

The Committee has considered and 
discussed the specification and key 
attributes that it is seeking, including 
diversity, through the right blend of skills, 
experience and style to complement the 
current mix of the Board is important. 
These include but are not limited to 
public company experience, the ability to 
constructively challenge, an understanding 
of capital markets and sector knowledge. 

The skill set was discussed by the 
Committee and as part of the internal 
Board evaluation process. 

All of the Directors stand for re-election at 
each AGM. The Committee considers their 
skills and performance and makes a formal 
recommendation to the Board that they are 
re-elected. 

Non-Executive Directors are appointed by the 
Board for three-year terms. At the conclusion 
of each term, the Committee undertakes a 
review of their performance and contribution 
before making any recommendation to the 
Board for their reappointment. 

All the Directors will therefore stand for  
re-election at the 2021 AGM.

EXECUTIVE SUCCESSION PLANNING

Along with considering Board succession 
regularly, the Committee also reviews the 
quality of the senior management team as 
it recognises the importance of creating 
and developing a suitably talented, diverse 
pipeline of leaders ready to serve as the next 
generation of Directors. 

The Chief Executive, supported by the Group 
HR Director, presents to the Committee on 
senior management succession planning 
and the talent development programme. 
For Executive Directors and for roles in 
the Leadership team, plans are in place for 
both sudden, unforeseen absences, and 
for longer-term succession. These form the 
basis of development plans for our most 
talented people and will ensure that, looking 
forward, we have the right people to deliver 
our strategy. We encourage regular contact 
between members of senior management 
and the Board. This may be by way of a Board 
presentation, a tour of assets or a one-to-
one session with Non-Executive Directors to 
discuss a specific issue.

0-3 years

3-6 years

6-9 years

9+ years

TENURE

Executive Directors

David Sleath

Andy Gulliford

Soumen Das

In addition, the Committee will this year be 
starting a search for a further Non-Executive 
Director, with the appropriate skills and 
experience to be a potential successor for the 
Chair in due course. 

Non-Executive Directors

Christopher Fisher

Martin Moore

Gerald Corbett

Carol Fairweather

Sue Clayton

Mary Barnard

115

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGENDER BALANCE OF 
SENIOR MANAGEMENT

As defined by the Code, the Executive 
Committee are considered to be the 
Company’s senior management. As at 
31 December 2020, the gender balance of:

 } the Directors was 67 per cent male 
(6 men) and 33 per cent female 
(3 women);

 } the senior management was 60 per cent 
male (3 men) and 40 per cent female 
(2 women); 

 } the senior management’s direct reports 

(who include members of the Leadership 
team) and who are the next layer of 
management below senior management, 
was 68 per cent male (13 men) and 
32 per cent female (6 women); and

 } the gender balance of the total 

workforce at 31 December 2020 was 
51 per cent male (182 men) and 49 per 
cent female (173 women).

The composition of the Board 
meets the criteria of the 
Hampton-Alexander review on 
gender balance and the Parker 
Review on ethnic diversity.

GOVERNANCE
Composition, succession and evaluation

Nomination Committee Report 
Skills, experience and size of the Board 
continued

DIVERSITY

GENDER 

BOARD 

Female (3)

Male (6)

ETHNICITY

33%

67%

BOARD

Non-Ethnic Minority background

Ethnic Minority background

89%

11%

The Directors are committed to having a 
balanced Board which recognises the benefits 
of diversity in its broadest sense and the value 
that this brings to the organisation in terms of 
skills, knowledge and experience. We have a 
Group-wide policy which sets out the Group’s 
policy towards diversity and inclusion and the 
same approach applies to the Board as the 
rest of our people.

The composition of the Board meets the 
criteria of the Hampton-Alexander review on 
gender balance and the Parker Review on 
ethnic diversity. 

With respect to gender specifically, the 
Board aspires to promote greater gender 
diversity across the business. When running 
the process to search for an additional  
Non-Executive Director, the Committee is 
aware that it selects and briefs the executive 
search firm and, in particular, how it describes 
the skills and experience needed for the roles 
are an important part in attracting as wide a 
pool of candidates as possible. The Committee 
will only use the services of executive search 
firms who have signed up to the Voluntary 
Code of Conduct for Executive Search Firms. 

In the final selection decision, all Board 
appointments are made on merit and relevant 
experience, against the criteria identified by 
the Committee with regard to the benefits of 
diversity, including gender. 

Development of a diverse executive pipeline 
is essential for the continuity of the business 
and for future leadership. The 2020 Employee 
Engagement Survey contained a section 
on employees’ views about diversity and 
inclusion. For more information about our 
policy and approach see pages 34 to 35.

For further information about the Company’s approach 
to diversity and inclusion see pages 34-35

116

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020WHAT THE COMMITTEE DID IN 2020:

Throughout the year, the Committee has 
had responsibility for:

 } reviewing the reappointment of Martin 
Moore and Carol Fairweather, each for 
a further three-year term;

 } reviewing succession planning for 

Executive and Non-Executive Directors;

 } reviewing the size and composition of 
the Board, including the independence 
of the Directors;

 } reviewing the skills of the members 

of the Board;

 } reviewing the diversity of the members 

of the Board;

 } reviewing the talent of the Company 

as part of the Strategy day presentation 
from the Group HR Director;

 } appointing an external agency to 

undertake a search for an additional 
Non-Executive Director; 

 } undertaking an internal Board evaluation; 

 } recommending all the Directors stand 
for re-election at the 2021 AGM; and 

 } reviewing the effectiveness of 

the Committee.  

TR AINING

Ongoing training is provided to the Board on 
both business related and regulatory matters 
during the year. Directors may also request 
training on specific issues with some attending 
external courses (which is often provided by 
the Company’s professional advisers) which 
are specific to their area of expertise, such as 
remuneration or audit. This helps to ensure 
that the Board keeps up to date with evolving 
regulatory and legal matters. From time to 
time, meetings with specialists in the business 
are arranged for Directors who may wish to 
gain a deeper insight into a particular topic. 
The Directors may also raise any training 
needs with the Chair which helps to ensure 
that the training programme meets the needs 
of the Board, Directors and the business.

COMMITTEE EFFECTIVENESS

As part of the internal Board evaluation 
process, the operation of the Board 
committees was considered (see page 112 
and 113). 

The Committee continues to operate 
effectively and provides updates on its 
activities at each subsequent Board meeting.

LOOKING AHEAD

In 2021, the Committee will focus on the 
search for a Non-Executive Director and the 
successor for Christopher Fisher as Chair 
of the Remuneration Committee as well as 
commencing the search for an additional 
Non-Executive Director in due course. 

GER ALD CORBET T
CHAIR OF THE NOMINATION COMMIT TEE

THE BOARD

Gerald Corbett 

David Sleath

Soumen Das 

Andy Gulliford

Mary Barnard

Sue Clayton

Carol Fairweather

Christopher Fisher

Martin Moore

Total

FTSE Listed  
Executive
}
}
}
}

}

 5

Real Estate 
Industry

Banking/City
}

}
}
}

}

}
 5

}

}

 3

SKILLS

Finance
}
}
}

}
}

 5

Experience in retail, 
manufacturing and 
distribution industries
}
}

}

}

 4

International
}
}
}
}
}

}

 6

Remuneration
}
}

}
}
}
}
}
 7

117

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Audit, risk and internal control

Audit Committee Report 
Letter from the Chair of the Audit Committee

As Chair of the Audit Committee, I am 
pleased to present the Committee’s report 
for 2020. Over the following pages you will 
see how the Committee has discharged its 
responsibilities, as well as other key areas 
which the Committee has focused on during 
the year.

COMPOSITION

The Committee is made up entirely of 
Independent Non-Executive Directors and 
each Committee member has considerable 
commercial knowledge and industry expertise. 
I satisfy the requirement to bring recent and 
relevant financial experience. Christopher, 
who has spent his career in corporate finance, 
also brings much financial acumen to the 
Committee, whilst Martin brings a wealth of 
property experience. 

The Board is therefore satisfied that the 
Committee as a whole has the relevant 
competence to properly discharge its duties.

MEETINGS

We met four times during the year, twice to 
discuss the financial statements and once to 
focus more deeply on other areas including 
internal audit and the risk management 
process. An additional meeting was held 
prior to the Half Year results to consider 
the impact of Covid-19 on the Company’s 
internal control systems and processes and on 
financial reporting. 

Outside of the scheduled meetings, we can 
also use time set aside for Board meetings to 
discuss any matters that arise in real time. 

As usual, our external and internal auditors 
joined our meetings throughout the year, 
together with a number of employees from 
across the business. We continue to find 
this incredibly valuable as it allows us to see 
the pool of talent within the Company, and 
facilitates a greater depth of discussion and 
debate on some specialist topics. In 2020, we 
were joined by the Group Financial Controller 
and Head of Financial Reporting to consider 
the accounting judgements and treatments 
that have been adopted for particular 
transactions; the Head of Technology, to 
update the Committee on the work the 
Company does to safeguard against cyber 
security issues; and the Head of Tax and the 
General Counsel to provide specialist tax, legal 
and regulatory updates. 

COVID-19

As you would expect, the Committee spent a 
significant amount of time throughout the year 
considering the impact that the pandemic had 
on the internal control and risk management 
systems, the external and internal audit, the 
valuation process and the preparation of the 
financial statements.

This work included: 

 } receiving regular updates on whether 
there had been any changes to the 
internal control environment as a result 
of remote working and thereby obtaining 
confirmation that both internal controls and 
risk management processes continued to 
work effectively; 

 } considering the Financial Reporting 

Council’s guidance on reporting during 
Covid-19; 

 } expanding the scope of the internal audits 
planned for 2020 on technology, treasury 
and property valuations and adding an 
audit on cyber security processes;

 } understanding the impact remote working 
had on the external and internal audit 
work and valuation process and gaining 
assurance that the quality of the work had 
not been affected;

 } additional updates to the Committee on 

cyber security matters;

 } review of the detailed Covid-19 Risk 

Register and enhanced risk disclosures; 

 } specific consideration of the impact of 

Covid-19 on the going concern and viability 
processes; and

 } closely monitoring, together with 

management and the external auditor, the 
progress on the preparation of the Half 
Year and Full Year Financial Statements to 
ensure the timetable for completion could 
be met with adequate time for review 
and discussion.

DISCHARGE OF RESPONSIBILITIES

It has been another successful year for the 
Company highlighted by the strong set of 
results you will have read about elsewhere 
in this Annual Report. Notwithstanding the 
challenges of the pandemic and the need 
for remote working, the quality of debate 
and challenge between the Committee, 
management and the internal and external 
audit teams, together with the comprehensive 
information provided to the Committee, 
has continued, which has assisted us in 
appropriately discharging our responsibility. 

I would like to thank all those who have 
contributed to the Audit Committee this year 
for their exceptional efforts. 

LOOKING AHEAD

As a Committee, we continue to follow 
closely the various reviews that are taking 
place on audit reform and will respond 
appropriately to any regulations, guidance 
or recommendations.

CAROL FAIRWEATHER
CHAIR OF THE AUDIT COMMIT TEE

CAROL FAIRWEATHER
CHAIR OF THE AUDIT COMMIT TEE

COMMITTEE MEMBERS

Carol Fairweather (Chair) 
Christopher Fisher 
Martin Moore

KEY RESPONSIBILITIES

 } Oversight of internal and external audit 
processes and independence of the 
external auditor

 } Monitoring the integrity of the financial 

statements of the Group including 
reviewing significant judgements

 } Reviewing internal controls and risk 

management systems

 } Advising the Board on the statements 
made in the Annual Report and Half 
Year Report on viability, going concern, 
risk and controls and whether the 
statements are, when taken, as a whole, 
fair, balanced and understandable

MEETINGS AND ATTENDANCE

 } Three scheduled 

 } One additional meeting

 } 100% attendance 

2020 HIGHLIGHTS

 } Internal control environment remained 

strong throughout the year following the 
move to remote working as a result of 
the pandemic

 } Continuing to produce high-quality 
and timely external reporting whilst 
working remotely

118

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020WHAT THE COMMITTEE DID IN 2020

The Committee has had responsibility for:

 } considering the impact of Covid-19 on the 
preparation of the Financial Statements, 
with the majority of employees in the 
finance team and the auditors working 
from home during the Half Year and Full 
Year Financial Statements process; 

 } ensuring compliance with applicable 
accounting standards, monitoring 
developments in accounting regulations as 
they affect the Group and reviewing the 
appropriateness of accounting policies and 
practices in place;

 } amending the scope of the internal audit 
plan to address Covid-19 specific risks; 

 } reviewing cyber security process and 

remote working environment and ensuring 
that the technology was sufficiently 
robust to deal with cyber issues and 
working remotely;

 } reviewing and monitoring the integrity 
of the Financial Statements including 
reviewing significant financial reporting 
judgements and estimates made by 
management, to ensure that the quality 
of the Company’s financial reporting is 
maintained, in the Company’s Half and Full 
Year Financial Statements;

 } assessing the objectivity and competence 

of the external valuer of the Group’s 
property portfolio and gaining assurance 
around the valuation process;

 } considering Brexit related risks as part 
of reviewing the risk process and the 
Risk Register;

 } overseeing matters relating to tax and any 
potential impact tax matters may have on 
the integrity of the Financial Statements;

 } monitoring the effectiveness of the Group’s 
risk management systems and considering 
the adequacy of the process being 
undertaken to identify risks and mitigate 
the exposure of the Group to them;

 } reviewing the adequacy of internal 

financial controls and broader internal 
control systems;

 } examining the performance of the external 

and internal auditors, their objectivity, 
effectiveness and independence, as well as 
the terms of their engagement and scope 
of their audit and agreeing the annual 
internal audit plan;

 } reviewing the Policy for Approval of Non-

Audit fees;

 } monitoring the ratio and level of audit to 

non-audit fees paid to the external auditor 
and agreeing their remuneration for 
the year;

 } analysing and challenging the results of 

internal audit reviews and management’s 
plans to resolve any actions arising 
from them;

 } advising the Board on whether the 

process supporting the preparation of 
the Annual Report taken as a whole, is 
appropriate to allow the Board to conclude 
that the Annual Report is fair, balanced 
and understandable and provides the 
information necessary to shareholders to 
assess the Group’s position, performance, 
business model and strategy;

 } ensuring the process followed to support 
the making of the going concern and 
viability statements remained robust and 
was correctly followed; and

 } ensuring appropriate safeguards are 

in place for the detection of fraud and 
prevention of bribery. This extends 
to responsibility for overseeing and 
monitoring the Group’s Anti-Bribery 
and Corruption policies and procedures 
contained in the Company’s Code 
of Ethics.

FAIR, BALANCED AND UNDERSTANDABLE

The Board is required to confirm that they 
consider, taken as a whole, that the Annual 
Report is fair, balanced and understandable 
and provides the information necessary for 
shareholders to assess the Company’s position, 
performance, business model and strategy. 

Each member of the team involved in the 
preparation of the Annual Report is reminded 
of the Code and its requirements. 

The Committee reviewed the process that 
management had undertaken to make the 
statement and confirmed to the Board that the 
processes and controls around the preparation 
of the Annual Report are appropriate, robust 
and consistent. 

The statement is made on page 148.

VIABILITY STATEMENT AND 
GOING CONCERN

The Committee is responsible for ensuring 
that the process put in place to allow the 
Board to make the viability statement, on 
page 82, remains robust, in line with market 
practice and is correctly and properly followed. 
The Committee reviewed the process, 
including the additional scenarios and reverse 
stress tests performed to assess the impact 
of the pandemic and is comfortable with 
the process followed to make the viability 
statement and has confirmed this to the Board. 

The Committee reviewed the recommendation 
setting out the support for adopting the 
going concern basis in preparing the 
financial statements including extended 
scenarios in relation to the pandemic. 
The Committee confirmed to the Board 
that the recommendation was appropriate. 
The Board’s statement is set out on page 67.

119

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Audit, risk and internal control

Audit Committee Report 
continued

THE SIGNIFICANT JUDGEMENTS MADE BY THE COMMITTEE IN 2020

Significant matter

Valuation of the property portfolio

The action taken

Valuation is central to the business performance and is a significant estimate 
for the Committee as it is inherently subjective, because the valuer must make 
assumptions and judgements in reaching its conclusions. This is a recurring risk 
for the Group as it is key to its IFRS profitability, balance sheet portfolio value, 
net asset value, total property return, and employee incentives. It also affects 
investment decisions and the implementation of the Company’s Disciplined 
Capital Allocation policy. It is included on the Risk Register and the process 
risk map as a potential key business risk.

The Committee ensured that there was a robust process in place to satisfy itself 
that the valuation of the property portfolio by CBRE, a leading firm in the UK 
and Continental European property markets, was carried out appropriately and 
independently. Given the significance, the full Board met twice with CBRE to 
review, challenge, debate and consider the valuation process; understand any 
particular issues encountered in the valuation; and discuss the processes and 
methodologies used.

The Chair of the Audit Committee also met separately with CBRE to discuss 
such matters which allowed the Committee to scrutinise the valuation process, 
to consider the impact of remote working on the process and ensure the valuer 
remained independent, objective and effective.

The auditors also meet with the valuers, and they use the services of their own 
in-house property valuation expert to test the assumptions made by CBRE. They 
report to the Audit Committee on their findings.

The Committee confirmed that it was satisfied that the valuation was not subject 
to undue influence and had been carried out fairly and appropriately, and in 
accordance with the industry valuation standards, and therefore suitable for 
inclusion in the Financial Statements.

For details of the Group’s properties and related accounting policies see Note 13 
and Note 1 of the Financial Statements. For details of the results of the valuation 
see Note 13 of the Financial Statements. 

Significant matter

The action taken

Accounting for significant acquisitions, disposals and transactions 

During the year, the Company made a number of property acquisitions and 
disposals and carried out other transactions, which were large and/or complex. 
Certain transactions were considered to be significant because of the level of 
materiality involved and/or any unusual terms or conditions or judgements, 
and because of the risks inherent in the accounting process, including when 
a transaction or revenue should be recognised, and what the appropriate 
accounting treatment should be.

The accounting treatment of acquisitions, disposals and transactions themselves, 
is a recurring risk for the Group and is considered to be significant, since an 
inappropriate approach could cause a misstatement of the Group’s financial position 
and/or results. The application of the accounting treatment for each particular 
transaction is judged on its own particular facts and circumstances.

The Committee considered the accounting treatment of key, complex transactions 
during 2020 including the accounting treatment applied to the equity placing, and 
acquisitions and disposals of various properties and the acquisition of the majority 
interest in Sofibus Patrimoine SA by reviewing and challenging management’s 
papers on accounting treatments and judgements.

Following a review of the accounting treatment for these significant transactions, in 
particular the point at which each transaction should be recognised, the Committee 
was satisfied that all relevant matters had been fully and adequately addressed and 
that the approach adopted by the Company was appropriate in each case, and in 
accordance with IFRS.

The Committee challenged the application of accounting policy and internal 
controls relating to revenue recognition and reviewed reports from the external 
auditor and management.

For further details of the accounting treatment applied to such significant 
transactions, see Note 1 of the Financial Statements.

120

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020VALUERS

The single most important judgement that 
the Committee and the Board has to make 
is the value of its portfolio. The Committee 
is assisted in reaching this judgement by its 
external valuers. CBRE are the Group’s valuers 
and have valued the assets in the portfolio 
since 2012. 

During the year, the Committee and the 
Board considered whether to reappoint 
CBRE when their current contract expires in 
2021. In doing so, the Committee and the 
Board considered CBRE’s independence, 
their internal protocols in terms of valuation 
rigour and their performance. The Committee 
noted that the fees paid by the Group to 
CBRE are significantly less than 5 per cent 
of CBRE’s income, the level at which CBRE 
would start to consider whether the matter 
of their independence was in line with RICS 
professional guidance. 

On the basis of the above considerations, the 
Committee and the Board reappointed CBRE 
for a further four years. 

The Committee is aware of the RICS 
Independent Review into the Valuation of 
Property Assets for Investment Purposes. 
The Review will report in September 2021 
and the Committee will monitor its progress 
and its findings once published. 

EXTERNAL AUDITOR

The Committee has continued to enjoy 
a constructive working relationship with 
PricewaterhouseCoopers LLP (PwC). 
John Waters is the lead audit partner and 
this is his second year on the SEGRO 
audit. The Committee Chair has had video 
conference meetings and telephone calls with 
John or his colleagues to discuss matters as 
they arise throughout the year. 

The Committee also regularly meets privately 
with John to discuss their work and PwC’s 
observations on the Company. No areas of 
concern have been raised. 

OVERSIGHT

PwC presented their audit plan for the 
year which the Committee considered and 
approved. PwC highlighted the key areas of 
risk, which were primarily identified as areas 
of judgement and complexity and were 
consistent with those areas identified by the 
Committee. The level of audit materiality was 
also discussed and agreed.

the work undertaken and the findings and 
the key assumptions made, with particular 
attention to the areas of audit risk identified.

EFFECTIVENESS

The Committee assesses the effectiveness of 
the external audit process on an annual basis, 
by reviewing a number of factors:

 } performance in discharging the audit and 

Half Year review;

 } independence and objectivity; and

 } reappointment and remuneration.

Taking into account the views of management 
involved in the audit, the Committee was 
satisfied with the performance of PwC and 
recommended to the Board that it propose to 
shareholders that PwC should be reappointed 
for the 2021 financial year. The Company 
complies with the Competition and Market 
Authority Order 2014 relating to audit 
tendering and the provision of non-audit 
services. There are no contractual obligations 
which restrict the Committee’s choice of 
external auditor or which put in place a 
minimum period for their tenure. The external 
audit was last tendered in 2015 following 
which the auditor changed in 2016 from 
Deloitte LLP to PwC, and so there are no 
current plans to re-tender the services of the 
external auditor. 

REMUNERATION AND INDEPENDENCE

The Committee considers the remuneration 
of the external auditor at least on a semi-
annual basis and approves its remuneration. 
It also keeps under close review the ratio of 
audit to non-audit fees to ensure that the 
independence and objectivity of the external 
auditor are safeguarded. 

In 2020, fees for audit services amounted 
to £0.99 million and the non-audit fees 
amounted to £0.1 million. 

The non-audit fee for 2020 equates to 12 
per cent of the average audit fees of the last 
three years. 

The chart below sets out the ratio of audit to 
non-audit fees for each of the past three years. 

Audit fees (£m)

Non-audit fees (£m)

Ratio of non-audit fees 
to audit fees (%)

2020

0.99

0.10

10

2019 

2018 

0.88

0.11

12

0.72

0.06

9

PwC presented a detailed report of their audit 
findings at the year end, which were reviewed 
and discussed. A similar review of the external 
auditor’s report was undertaken by the 
Committee at the Half Year. As part of this 
review the Committee probed and challenged 

The Committee has concluded that PwC 
remains independent and objective, and 
that the level of non-audit to audit fees is 
acceptable for 2020. PwC has provided 
written confirmation of its independence to 
the Committee. 

We have voluntarily provided details on the 
fees relating to the audit of the Group’s SELP 
joint venture, for which PwC is the auditor, 
in Note 6(ii) to the Financial Statements. 
The Committee has no oversight or control 
over these fees as the SELP joint venture 
operates totally independently and is not 
controlled by SEGRO. The fees are provided 
solely for information purposes. They do not 
form part of the audit fees for SEGRO.

POLICY FOR APPROVAL OF NON-AUDIT FEES

The Company’s policy on non-audit 
services, which is available on our website, 
was updated during the year to reflect the 
Financial Reporting Council’s Revised Ethical 
Standard 2019. 

The policy sets out the very limited 
circumstances where PwC may be appointed 
to carry out non-audit services but only with 
the prior consent of the Chief Financial Officer 
or the Chair of the Committee. There must 
be an obvious and compelling reason why 
they should be appointed and there should 
be no threat to the independence of PwC. 
The impact on non-audit to audit fees must 
also be considered. All non-audit fees are 
reported to the Committee. 

COMMITTEE EFFECTIVENESS

The review of the Committee’s effectiveness 
was included as part of the internal Board 
evaluation process (see pages 112 and 113) 
and found the Committee to be performing 
effectively. In addition, the quality of the 
papers and presentations by management, 
coupled with the level of challenge by the 
Committee with management, PwC, KPMG 
and CBRE, and the quality of discussions 
held, gives the Committee further comfort 
and assurance that it is performing its 
role effectively. 

121

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
FINANCIAL REPORTING PROCESS

The Group has established internal controls 
and risk management systems in relation 
to the process for preparing the Financial 
Statements. Various checks on internal 
financial controls take place throughout 
the year, including internal audits. 
Developments in accounting regulations 
and best practice in financial reporting are 
monitored by the Company and, where 
appropriate, reflected in the Financial 
Statements. Training is also provided to the 
finance teams and the Committee is kept 
appropriately informed.

The financial reporting from each Business 
Unit is subject to review by a local finance 
manager prior to being submitted to the 
Group Finance function. The results of each 
Business Unit are subject to further review by 
the Group Finance function. The results are 
then consolidated by Group Finance and are 
subject to various levels of review including by 
senior management.

The draft consolidated statements are 
reviewed by various individuals including 
those independent of the preparer. The review 
includes checking internal consistency, 
consistency with other statements, and 
consistency with internal accounting records. 
The Committee and the Board review the 
draft consolidated Financial Statements. 
The Committee receives Reports from 
management and the auditor on significant 
judgements, changes in accounting policies, 
and other relevant matters relating to 
the consolidated Financial Statements. 
The Financial Statements are also subject to 
external audit.

GOVERNANCE
Audit, risk and internal control

Audit Committee Report 
continued

RISK

Risk management is taken seriously by all at 
SEGRO. The Board recognises that effective 
risk management is key to the long-term 
sustainable success and future growth of the 
business and the achievement of the Group’s 
strategic objectives (see pages 72 to 75). It is 
ever aware of the need to ensure that new and 
emerging risks, as well as the more established 
principal risks, are adequately managed and 
mitigated. Risk management is therefore 
embedded in the Company’s decision making 
and robust processes have been put in place 
to ensure this remains the case. There is an 
ongoing process for identifying, evaluating 
and managing the principal risks faced by the 
Group, which has been in place during the 
year, together with a process for identifying 
those emerging risks which may impact 
the Group in the future. These emerging 
risks are discussed throughout the business 
by the appropriate working groups, at 
both a granular level and a more horizon 
scanning style discussion. The Board assumes 
responsibility for the effective management 
of risk across the Group, determined by its 
risk appetite, as well as ensuring that each 
business area implements appropriate internal 
controls. The Committee reviews regularly 
the effectiveness of the risk management 
process on behalf of the Board and is satisfied 
that it remains robust for the financial year in 
question and up to the date of this Report. 

INTERNAL AUDIT

The Committee believes that given the 
Company’s size and structure using a third 
party to perform the internal audit function 
continues to be the most appropriate model. 
This provides independent challenge of 
management and gives access to a wide 
range of expertise. KPMG has performed 
the role since its appointment in 2007 and 
reappointment in 2014 following a tender. 
During their tenure, there has been a 
number of rotations of lead partners and 
audit managers (including both during 
2019) to ensure that a fresh perspective is 
given, and their independence and scrutiny 
are maintained.

Topics included in the internal audit plan for 
2020 were selected based on a review of 
the Group’s principal risks and the timing of 
previous internal audits. The proposed internal 
audit programme for 2020 was considered 
and approved by the Committee in December 
2019, but amended during the year as a 
result of the pandemic. The scope of internal 
audits on Treasury, Technology and Property 
Valuations were expanded and an additional 
audit added on cyber security processes.  

The Committee believes that both the process 
for determining the internal audit programme, 
and the programme itself, are appropriate and 
effective, particularly since, as demonstrated 
this year, there is scope for the Company to 
react to events, new information and situations 
which come to light during the year and 
include them if necessary.

Each internal audit during 2020 confirmed 
that no significant control issues were 
identified. However, a number of process 
and minor control improvement points 
were identified with follow up actions and 
timelines which were regularly monitored by 
the Committee. 

Feedback on each internal audit is given by 
the Company and was largely positive and no 
areas of particular concern have been brought 
to the Committee’s attention. The lead KPMG 
partner also attends Committee meetings to 
present its report and the Committee also 
meets privately with him during the year. 
The Committee is satisfied that the internal 
audit function continues to perform effectively. 

INTERNAL CONTROLS

The Committee is responsible for reviewing 
the adequacy and effectiveness of internal 
control systems, (covering all material controls 
including financial, operational and compliance 
controls and risk management systems) on 
behalf of the Board. 

The Committee has reviewed the adequacy 
and effectiveness of the Group’s internal 
control systems regularly through various 
activities including:

 } reviewing the effectiveness of the risk 

management process;

 } reviewing and challenging management’s 

self assessment of the internal 
controls framework; 

 } reviewing the work undertaken by the 

internal and external auditor, in relation to 
internal controls; and

 } the regular reporting on any control or 
fraud-related whistleblowing issues.

On the basis of the Committee’s work, it 
confirms that it has not been advised of, or 
identified, any failings or weaknesses which 
it regards to be significant in relation to 
the Group’s internal control systems. It also 
confirms that the Group’s internal control 
systems have been in place for the year under 
review and up to the date of approval of the 
this Annual Report and are in accordance 
with the Guidance on Risk Management, 
Internal Control and Related Financial and 
Business Reporting issued by the Financial 
Reporting Council.

122

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Directors’ Remuneration Report
Letter from the Chair of the Remuneration Committee

On behalf of the Board, I am pleased to 
present our Remuneration Report for 2020. 

The role of the Remuneration Committee is to 
determine remuneration policies and practices 
which promote the long-term sustainable 
success of the Company and which are 
aligned with the Company’s Purpose and 
Values and its strategy. The fundamental 
principles which underpin our Directors’ 
Remuneration Policy (the Policy) remain:

 } alignment with our strategy and the 

success of the business in the short and the 
long term;

 } performance orientation;

 } ease of understanding;

 } consistency of application; and

 } transparency to the executives, the 

workforce and shareholders.

Our remuneration framework for both our 
Executive Directors and the wider workforce 
is aligned with the strategic direction and 
performance of SEGRO as well as the interests 
of our shareholders, and this is set out in the 
charts on pages 135 to 136.

COMPANY PERFORMANCE 

See Remuneration at a glance on page 126 
for a summary of the Group’s key financial 
metrics which relate to remuneration. 

In 2020, we delivered another year of strong 
operating and financial performance, as 
reviewed by David Sleath on pages 16 to 19.

The Company undertook an equity raise 
through a placing and a retail offer in June 
2020. This provided the Company with 
additional capital to respond to an expected 
increase in occupier demand across the UK 
and Continental Europe by executing its 
development plans and acquiring new land 
and investments. Since the equity placing, the 
Company has made two major acquisitions: 
Electra Park in Canning Town, London 
and Sofibus Patrimoine SA, a French listed 
company. We have also completed 835,900 
sq m of new developments during the year. 
Further information on these activities may 
be found in the Strategic Report. 

Adjusted profit before tax is up 10.8 per cent 
to £296.5 million and adjusted earnings per 
share are up 4.1 per cent. Adjusted NAV per 
share has risen by 16.3 per cent to 814 pence. 
The balance sheet remains in good shape 
with a loan-to-value ratio of 22 per cent. 
The Board is recommending a final dividend 
of 15.2 pence per share, making the full year 
dividend 22.1 pence per share, an increase of 
6.8 per cent. 

TSR was 8.7 per cent versus the FTSE 350 
Real Estate index of -16.6 per cent.

COVID-19

Executive remuneration is considered and 
balanced against the wider performance 
of the Company over the financial year, for 
short-term remuneration, and over the longer 
term for LTIPs. It is not considered in isolation. 
The pandemic has provided a number of 
challenges and SEGRO has continued to 
perform well as set out in the Strategic Report. 
The decisions which the Committee has made 
have been against the backdrop of the wider 
macroeconomic conditions in the UK and 
Continental Europe, taking into consideration 
market guidance and practice balanced against 
performance. SEGRO has not furloughed 
any employees during the pandemic and has 
not taken any Government funding, loans or 
subsidies in the UK or in any of the countries 
in which we operate. Dividend payments have 
continued to be made to shareholders, in line 
with our usual practice, and the share price at 
the year end was higher than at the start. 

Given the Company’s performance, and the 
returns for shareholders, the Committee 
considered it was entirely appropriate that 
the variable components of pay for the 
Executive Directors pay out in accordance 
with their respective performance conditions 
having been met. When approving these 
payments, the Committee considered whether 
or not they represented a fair reflection 
of the underlying performance of the 
business, and was satisfied that they did and 
that no overriding adjustment would have 
been appropriate. 

REMUNER ATION IN 2020

DIRECTORS’ SALARY/FEE WAIVER

In April 2020, the SEGRO Centenary Fund 
was launched. It had originally been intended 
to be launched in May to coincide with the 
100th anniversary of SEGRO’s establishment. 
The plan is to use the funds to make a 
positive impact within communities in the UK 
and Continental Europe where we operate. 

The role of the Committee is to 
determine remuneration policies 
which promote the long-term 
sustainable success of the 
Company and which are aligned 
with the Company’s Purpose 
and Values and its strategy.

123

CHRISTOPHER FISHER
CHAIR OF THE REMUNER ATION COMMIT TEE

COMMITTEE MEMBERS

Christopher Fisher (Chair) 
Mary Barnard 
Carol Fairweather 
Martin Moore

KEY RESPONSIBILITIES

 } Determine the remuneration policy for 
Executive Directors and the Leadership 
team and set the Chair’s fees

 } Ensure Executive remuneration is 
aligned to the Company’s Purpose 
and Values and the delivery of its  
long-term strategy

 } Oversee workforce remuneration 

and policies

 } Consider individual remuneration 

outcomes for the Executive Directors

MEETINGS AND ATTENDANCE

 } Three scheduled

 } Two additional meetings

 } 95% attendance*

*  Mary Barnard was unable to attend one of the 

additional meetings

2020 HIGHLIGHTS

 } Aligned Executive Directors’ future 

pensions with the workforce

 } Finalised the practical application of the 
post-cessation shareholding guidelines

 } Reflected on the impact of the 

management restructuring on executive 
responsibilities and remuneration

 } Agreed exit terms for Phil Redding 

including post-cessation shareholdings

 } Considered the impact of Covid-19 on 

LTIP and Bonus awards in 2020

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
GOVERNANCE
Remuneration

Directors’ Remuneration Report 
continued

The majority of the first year’s funding has 
been allocated to projects which provide 
emergency relief and will help address the 
longer-term impacts of the pandemic. 

At the same time, all of the Board members 
waived an amount equal to 25 per cent 
of their salaries and fees for a three-
month period. 

The amount of salaries and fees waived by the 
Directors are excluded from the single total 
figure of remuneration tables on pages 128 
and 142, as the amounts were not received 
by the Directors. The benefits which the 
Executive Directors received during the year, 
which are based on a percentage of base 
salary, continued to be calculated against the 
full contractual salary.  

The Company donated an amount equivalent 
to the value of the salaries and fees waived by 
the Directors to the SEGRO Centenary Fund, 
which will help make a difference to those 
impacted by the pandemic. 

The work of the Fund is discussed on page 43.  

VARIABLE REMUNER ATION

Taking account of our strong results and our 
continuing outperformance of the peer group 
over the year, the Committee has confirmed 
the following performance-related payments 
to the Executive Directors this year:

2020 ANNUAL BONUS 

The annual Bonus payment will be 91.2 per 
cent of their maximum award (subject to 
the final TPR data being available) (see page 
130). The performance targets for the Bonus 
have not been altered by the Committee. 
See Impact of Covid-19 on page 125.

2018 LTIP PERFORMANCE

Vesting is calculated by reference to two 
equally-weighted performance conditions. 
The awards will pay out 100 per cent (subject 
to the final TPR data being available) (see page 
132). These awards are subject to a two-year 
post-vesting holding period. The net amount 
of shares will be held in a nominee account 
and subject to restrictions until 2023. 

2020 LTIP AWARD

Each of the Executive Directors received 
an LTIP award in March 2020 with three 
equally-weighted performance conditions in 
line with the Policy. The performance targets 
for the award have not been altered by 
the Committee.  

REMUNER ATION IN 2021

2021 LTIP AWARDS

We will continue to operate Executive 
Remuneration in line with the Policy. 

SALARY REVIEWS

The Committee reviews the salaries 
of Executive Directors and takes into 
consideration the increases for all other 
employees as part of the process. This year, 
employees will receive salary increases of 
1.5 per cent on average. Reflecting their 
performance and that of the business, we have 
approved salary increases of circa 1.5 per cent 
to all three Executive Directors to take effect 
from 1 April 2021. See page 127.

The Committee considered the impact of 
the management restructuring announced in 
January 2020 on executive responsibilities and 
remuneration following the departure of the 
Chief Investment Officer. His responsibilities 
were assumed by the other Executive 
Directors from the end of January 2020. 
Most notably, Soumen Das took on Strategy, 
Innovation and Investment, materially 
expanding his Chief Financial Officer 
responsibilities. The Committee has observed 
how Soumen Das has developed extremely 
well in his role as Chief Financial Officer since 
joining SEGRO. The Committee assessed 
and concluded that he has successfully 
assumed these additional responsibilities over 
the last 11 months and this now justified an 
adjustment to his salary. The Committee 
has checked this new salary against market 
comparisons and is satisfied that it is 
appropriate. In line with the authority within 
the Policy, the Committee awarded an increase 
of £24,905 (4.93 per cent of salary) from 
1 January 2021 to Soumen Das. We consulted 
with a number of the Company’s largest 
shareholders and those that responded were 
supportive of the Committee’s approach.

2021 BONUS TARGETS

Targets for the annual Bonus are set at the 
beginning of the year. The measures of the 
Bonus for 2021 will remain as set out in the 
Policy and each component will continue to 
be equally weighted. The Committee agreed 
to one minor change to remove the threshold 
target for rent roll growth which had been 
introduced at a time when vacancy rates in 
the portfolio were much higher. With current 
low levels of vacancy, we decided that this was 
no longer appropriate as a gateway to this 
element of the Bonus as its maintenance could 
have had unintended consequences in current 
market conditions. The actual target for Bonus 
achievement continues to be based on a 
challenging level of rent roll growth. 

The Committee anticipates that it will make 
awards in March 2021 in line with the Policy. 
The performance measures, targets and 
their equal weighting will remain unchanged 
from those that have been operated for the 
previous two awards. The level of award will 
be determined at the time of grant but is 
expected to be 250 per cent of each Executive 
Director’s salary. The Committee considers 
market practice and will review the Company’s 
share price at the time of grant to ensure that 
any award is appropriate when compared with 
those made in 2020.

EXECUTIVE DIRECTORS’ PENSIONS

As I reported last year, the Committee has 
been monitoring the direction of travel of 
alignment of Executive Directors’ pensions 
with those of the workforce as set out in 
provision 38 of the Code. 

The Policy, approved by shareholders in 2019, 
provides for any new Executive Director 
joining the Board to receive a pension benefit 
in line with the UK workforce. 

Incumbent Executive Directors currently 
receive a pension entitlement equivalent to 
20 per cent of base salary. David Sleath’s 
pension entitlement has reduced from 30 per 
cent to 20 per cent over the past two years. 
Each of the Executive Directors has agreed 
to a reduction in their pension entitlement to 
the same level as the UK workforce rate of 12 
per cent by 31 December 2022, recognising 
that this is a matter of importance to the 
Company’s shareholders. 

POST-CESSATION SHAREHOLDING POLICY

The guidelines were finalised during the 
year and have been applied this year. 
Executive Directors are required to retain 
the equivalent of the minimum of their 
shareholding policy (250 to 300 per cent 
of base salary) for a period of 24 months 
from ceasing to be a Director. There are 
mechanisms in place to ensure that retention 
of the shares is maintained throughout 
the whole timeframe. See page 139 for 
further information about how this has been 
applied following the departure of the Chief 
Investment Officer. 

DEPARTURE OF THE CHIEF 
INVESTMENT OFFICER

As explained in last year’s report, Phil Redding 
ceased to be a Director of SEGRO on 
31 January 2020 and his employment ended 
three months later. As a good leaver under 
the incentive plans he has to wait until the 
deferred shares awarded to him under the 

124

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020WHAT THE COMMITTEE DID IN 2020

Key areas of focus for the Committee were: 

 } the approval of the Executive Directors’ 
annual salary increases, the approval of 
the 2019 Bonus payments and the outturn 
of the 2016 and 2017 LTIP awards, along 
with the approval of the 2020 Bonus and 
2020 LTIP targets;

 } the approval of the 2020 SIP and GSIP 
awards and approval of the new targets 
for these schemes in 2020;

 } a review of the Chair’s fee;

 } a review of workforce pay to ensure 
that it continues to be aligned with 
the structure of remuneration for the 
Executive Directors;

 } noting the Group-wide all-employee 
2020 salary review and the salary 
increases, Bonus and LTIP awards for 
the Leadership team;

 } receiving a governance update from 
Korn Ferry on emerging themes and 
best practice; 

 } considering the remuneration 

arrangements on the termination 
of Phil Redding’s employment;

 } adjusting the salary of the Chief Financial 
Officer to reflect increased responsibilities 
arising from the departure of the Chief 
Investment Officer; 

 } Covid-19 and reviewing the impact 

on remuneration; and 

 } determining a reduction in Executive 
Director’s future pension allowances. 

IMPACT OF COVID-19

When the Committee finalised the 
awards in early 2020 relating to the 
2019 financial year, the country was in 
the first few weeks of the pandemic. 
The Committee paused to re-appraise the 
decisions it had made around the award 
and vesting of LTIPs and the payment of 
the 2019 Bonus. 

The financial performance measures 
had been achieved, and the outturns 
had been approved by the Committee 
in February 2020, as part of the year- 
end approval process. However, by mid 
March as the crisis unfolded, its severity 
was unknown and there was uncertainty 
around its impact on the business. 
This caused the Committee to pause 
and reflect on whether or not it was 
appropriate to proceed with these awards 
and payments or whether discretion 
should be exercised to scale back. 
The Committee took advice and reflected 
on the regular trading updates the 
Board was receiving from the Executive 
Directors, the Board’s intention to pay 
the 2019 final dividend, and the fact 
that the Company was not seeking any 
government assistance. 

The Committee concluded that the 2020 
LTIP awards should be made in March 
2020 as originally scheduled and that it 
was appropriate to proceed with the 2019 
Bonus payment and LTIP vestings in April 
2020 as approved.

DSBP vest at the normal date. He also retains 
the time prorated (to the date he ceased to 
be employed) awards granted under the LTIP, 
subject to their three-year performance targets 
being met. He was not granted an LTIP award 
and received no Bonus in relation to 2020. 

COMMITTEE COMPOSITION

There have been no changes to the 
composition of the Committee during 
the year, providing stable oversight of 
Executive Remuneration. 

I will reach nine years’ service on the Board of 
SEGRO in October 2021 and the Nomination 
Committee is considering succession plans for 
the role of Chair of the Committee.

LOOKING AHEAD

The key areas of focus for the Committee in 
2021 will be:

 } the three-yearly review of the Directors’ 

Remuneration Policy, to ensure it remains 
appropriate and aligned with the purpose 
and strategy of the business for the period 
to which it will apply. The new policy will be 
presented to shareholders for approval at 
the Company’s 2022 AGM;

 } considering ways in which the ESG strategic 
review set out on pages 28 to 29 might be 
reflected in the remuneration framework, 
and in particular the integration of ESG 
measures into the annual Bonus and the 
LTIP schemes; and 

 } monitoring emerging trends in 

corporate governance.

CONCLUSION 

Thank you for your support and engagement 
during the year. We always welcome 
feedback and hearing from our shareholders 
so if you have any questions about 
remuneration generally, or the contents 
of this Report, do please contact me at 
christopher.fisher@segro.com. 

We were unable to hold a conventional 
AGM in 2020. However, we are making 
arrangements for an AGM in 2021 which 
will enable electronic attendance. My fellow 
Directors and I plan to attend the AGM 
and we would be pleased to answer any 
questions which you may have about the 
Committee’s work.

CHRISTOPHER FISHER
CHAIR OF THE REMUNER ATION COMMIT TEE

125

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Remuneration

Directors’ Remuneration Report
Remuneration at a glance

GROUP PERFORMANCE METRICS

PORTFOLIO VALUE

TOTAL DIVIDEND PER SHARE

EPRA VACANCY RATE

£13.0bn

2019: £10.3bn

22.1p

+6.8%

3.9%

-0.1%

ADJUSTED EARNINGS 
PER SHARE

ADJUSTED NAV  
PER SHARE

25.4p

+4.1%

814p

+16.3%

BREAKDOWN OF EXECUTIVE DIRECTORS’ TOTAL REMUNERATION IN 2020

SEGRO Directors waived salaries 
and fees to the value of

£145,291 

during the year, and the 
Company made a donation of 
equivalent value to the SEGRO 
Centenary Fund.

David Sleat h

Soumen Das

Andy Gulliford

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Short term

Salary, Taxable Benefits and Pension

Bonus

Fixed

Variable

Long term

2018 LTIP

2020 BONUS PAYMENT

2018 LTIP AWARD PAYOUT

Adjusted PBT

RRG

TPR

73.5%

100%

100%

TPR

Adjusted 
PBT

RRG

TPR

TSR

100%

100%

TPR

TSR

p130

CHIEF EXECUTIVE

£3,752k 

2020 Single Figure

p132

WORKFORCE REMUNERATION

-2.2% 

+6% 

£3,000 

Salary increase received by  
the Chief Executive in 2020

The average employee  
salary increase in 2020

worth of free shares received by 
all eligible employees in 2020

1,076% 

of salary held in SEGRO plc 
shares by Chief Executive

(Policy: 300%)

37:1 

CEO Pay Ratio

(Median Pay Ratio)

100% 

of eligible employees  
received a Bonus in 2020

84% 

of employees participate in 
one or more all-employee 
share scheme

126

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Directors’ Remuneration Report
How we intend to apply the Policy for 2021

EXECUTIVE DIRECTORS

SALARY

BONUS

From 1 April 2021, all Executive Directors will receive an increase to 
salary in line with the average employee increase:

DAVID SLEATH

SOUMEN DAS1

ANDY GULLIFORD

Base salary 
with effect from 1 April 2021

£723,500

£538,000

£473,500

1  Soumen Das received a salary increase to £530,000 from 1 January 2021. See page 124.

Read more about our Remuneration Policy
see pages 144-145

PENSION

The maximum Bonus opportunity in 2021 is 150 per cent of salary 
as at 31 December 2021 and is subject to the following three 
equally-weighted performance conditions:

 } Profit – Adjusted PBT against target

 } Rent Roll Growth (RRG) against target

 }  Total Property Return (TPR) – Relative TPR against the 

MSCI benchmark

Any payments to be made under this Bonus would be payable in 2022.

50 per cent of the 2021 Bonus will be deferred into shares under 
the DSBP. The 2021 DSBP will vest in April 2025, on the third 
anniversary of the payment of the 2021 Bonus.

All Executive Directors will receive cash in lieu of pension to the value of 20 per cent of their base salaries. This will reduce to 12 per cent 
by 31 December 2022. 

LTIP AWARD

The 2021 LTIP award for Executive Directors will be subject to the following equally-weighted performance conditions:

Total Shareholder Return (TSR)

Total Property Return (TPR)

Total Accounting Return (TAR)

This benchmark is based on the weighted mean  
TSR of other FTSE 350 REITs.

This benchmark is based on the MSCI All Industrial 
Country benchmarks weighted to reflect the 
approximate geographical mix of the Group’s portfolio.

This benchmark is based on the market capitalisation 
weighted TAR of other FTSE 350 REITs.

20 per cent of this element vests if the Company’s 
TSR over the performance period is in line with 
benchmark TSR, rising on a straight-line basis to 
100 per cent vesting if the benchmark is exceeded 
by 6 per cent per annum.

20 per cent of this element vests if the Company’s 
TPR over the performance period is in line with the 
MSCI Benchmark, rising on a straight-line basis to 
100 per cent if the MSCI Benchmark is exceeded by 
1.5 per cent per annum.

20 per cent of this element vests if the Company’s 
TAR over the performance period is in line with 
benchmark TAR, rising on a straight-line basis 
to 100 per cent vesting if the benchmark is 
exceeded by 2.5 per cent per annum.

These awards will be calculated as a percentage of Executive Directors’ salaries as at 31 December 2020 and will be granted during 2021. 

During the performance period, dividends will accrue on the gross number of LTIP shares which are released. The Committee will decide 
whether the payment will be made in cash or shares.

NON-EXECUTIVE DIRECTORS 

FEES

Fees for the Chair and Non-Executive Directors are reviewed on an annual basis. The review of the fees paid to the Chair is within the remit of 
the Committee, whilst the review of Non-Executive Directors fees is a matter for the Board in the absence of the Non-Executive Directors. 

With effect from 1 January 2021, the Chair received a base fee of £279,125 and the Non-Executive Directors received a base fee of 
£64,500, with an additional £16,100 per annum for chairing a Board Committee or for filling the role of the Senior Independent Director. 
This represents an increase of 1.5 per cent, in line with the average employee increase:

Total fees with effect from 1 January 2021

GERALD CORBETT

MARY BARNARD

SUE CLAYTON

CAROL FAIRWEATHER

CHRISTOPHER FISHER

MARTIN MOORE

£279,125

£64,500

£64,500

£80,600

£80,600

£80,600

127

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS 
 
 
 
 
 
 
 
GOVERNANCE
Remuneration

Directors’ Remuneration Report 
How we applied the Policy in 2020

EXECUTIVE DIRECTORS’ SINGLE TOTAL FIGURE OF REMUNER ATION (AUDITED)

CHART 1: EXECUTIVE DIRECTORS’ SINGLE TOTAL FIGURE OF REMUNERATION FOR 2020

DAVID SLEATH

SOUMEN DAS

ANDY GULLIFORD

PHIL REDDING1

TOTAL

2020  

(£000)

2019  

(£000)

2020  

(£000)

2019  

(£000)

2020  

(£000)

2019  

(£000)

2020  

(£000)

2019  

(£000)

2020  

(£000)

2019  

(£000)

SALARY5

TAXABLE BENEFITS

PENSION BENEFITS

TOTAL FIXED

SINGLE YEAR VARIABLE2 –
BONUS, INCLUDING DSBP

MULTIPLE YEAR VARIABLE2,3,4 
– LTIP

OTHER – SIP AND SHARESAVE

TOTAL VARIABLE

TOTAL

663

20

150

833

975

678

20

178

876

1,038

470

20

100

590

691

486

434

20

97

603

736

20

93

547

637

444

20

89

553

679

1,940

4,693

1,442

3,774

1,270

3,072

4

2,919

3,752

4

5,735

6,611

4

2,137

2,727

4

4,514

5,117

4

1,911

2,458

4

3,755

4,308

38

2

8

48

–

–

3

3

51

444

1,605

2,052

20

89

553

679

62

351

80

453

2,018

2,585

2,303

3,132

3,072

4,652

14,611

4

15

16

3,755

4,308

6,970

8,988

17,759

20,344

1  Phil Redding stepped down from the Board with effect from 31 January 2020.
2  The Single Year Variable and Multiple Year Variable figures for 2019 have been updated since the 2019 Annual Reports as some values were estimated. For further information, see pages 131 

and 133 respectively.

3  As explained further on pages 104 and 105 of the 2019 Annual Report, the 2019 Multiple Year Variable figure comprises the 2016 and 2017 LTIP Awards which both vested in 2020.
4.  For further information on the 2020 Multiple Year Variable figure and share price appreciation on the 2018 LTIP Award, see Chart 7 on page 132. 
5.  Between May 2020 and July 2020, all Directors waived 25 per cent of their salary for three months. Actual salaries reported reflect this waiver. 

CASE STUDY: SEGRO CENTENARY FUND

As you will have read on page 43, in April 2020 we brought 
forward the launch of the SEGRO Centenary Fund, providing much 
needed support for those in our local communities who have been 
hardest hit by the pandemic. 

All SEGRO Directors waived 25 per cent of their salaries and 
fees for three months during the year, and the Company made 
a donation equivalent to this amount, totalling £145,291, to the 
SEGRO Centenary Fund. 

Read more about our Centenary Fund
see page 43

128

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020SALARY (AUDITED)

CHART 2: SALARY

DAVID SLEATH

SOUMEN DAS

ANDY GULLIFORD

TAXABLE BENEFITS (AUDITED)

Base salary 
as at 1 April 2020

£712,760

£505,095

£466,108

Taxable benefits include private medical healthcare, plus a cash allowance in lieu of a company car. 

Executive Directors are entitled to life assurance which is not a taxable benefit. 

PENSION BENEFITS (AUDITED)

Each of the Executive Directors received cash in lieu of pension as detailed in Chart 1.

In April 2019, the Chief Executive’s cash in lieu of pension entitlement was reduced from 30 per cent of base salary to 25 per cent, and in April 
2020 was further reduced to 20 per cent of base salary. The other Executive Directors received a cash allowance of 20 per cent of base salary. 

As detailed in the Chair’s letter on page 124, the cash allowances for all existing Executive Directors will reduce to 12 per cent by 31 December 
2022 and newly appointed Executive Directors will receive a pension or cash allowance in line with the UK workforce. 

CHART 3: DEFINED BENEFIT SCHEME

ANDY GULLIFORD

Defined benefit pension 
accrued as at 31.12.2020

£46,616

Normal retirement age

62

Andy Gulliford ceased contributions to the SEGRO Pension Scheme on 31 March 2016. Chart 3 above details the defined benefit pension 
accrued as at 31 December 2020. 

There are no contractual arrangements that would guarantee a pension with limited or no abatement on severance or early retirement.

129

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Remuneration

Directors’ Remuneration Report 
continued

SINGLE YEAR VARIABLE – BONUS, INCLUDING DSBP (AUDITED)

The Bonus is paid 50 per cent in cash with the remainder awarded as shares under the DSBP. Shares will vest in three years subject to continued 
employment or good leaver status. 

2020 BONUS

The 2020 Bonus comprised three equally-weighted components: Adjusted Profit Before Tax (PBT); rent roll growth (RRG); and relative TPR, each 
accounting for one third of Executive Directors’ Bonus.

The 2020 Bonus payment will be 91.2 per cent of the maximum award (subject to the final TPR data being available).

CHART 4i: PROFIT – ADJUSTED PBT 
AGAINST TARGET

CHART 4ii: RENT ROLL GROWTH (RRG) 
AGAINST TARGET

CHART 4iii: TPR – RELATIVE TPR AGAINST 
THE MSCI BENCHMARK

73.5%

100%

100%

For this element, a Bonus is earned for Adjusted 
PBT performance against target. 50 per cent 
is earned on achieving the threshold target 
(£293.8 million for 2020), rising to 100 per cent 
for achieving the maximum target (£315.9 million 
for 2020).  

73.5 per cent of this element was achieved in 2020, 
with Adjusted PBT performance for Bonus purposes 
of £302.5 million.

For this element, a Bonus is earned if the rent roll 
growth from the existing standing stock is positive 
(the threshold). Once the threshold is achieved, the 
Bonus is determined based on total RRG (existing 
standing stock plus the impact of development 
RRG), with a sliding pay-out scale rising from 0 per 
cent for flat total RRG through to 100 per cent for 
achieving the maximum increase (£53.2 million in 
2020). 

In 2020, RRG from standing stock was positive, thus 
ensuring the threshold was achieved. Total RRG 
including the contribution from developments was 
£60.0 million for Bonus purposes and, accordingly, 
100 per cent of this element was achieved.

The performance period for the for Adjusted PBT and RRG start from 1 January. The outturns were calculated 
using a consistent exchange rate and also include adjustments for specific items (including acquisitions and 
disposals made during the year) in accordance with the Bonus scheme rules as approved by the Committee.

The Adjusted PBT and RRG element of the 2020 Bonus are expected be paid in April 2021, less a 50 per cent 
deferral for the DSBP.

For this element, a Bonus is earned if the Company’s 
TPR is in line with the TPR of a comparable externally 
calculated Benchmark, rising on a straight-line basis 
to 100 per cent when the Company’s TPR exceeds 
the Benchmark by 1.5 per cent. The Company’s 
TPR performance excludes land. The Benchmark is 
calculated by MSCI based on All Industrial Country 
benchmarks weighted to reflect the approximate mix 
of the Company’s portfolio.

The actual TPR performance for the Company’s 
assets for Bonus purposes in 2020 was 15.4 per cent, 
being 14.3 per cent for the UK and 17.2 per cent for 
Continental Europe. At the date of this report the 
MSCI Benchmark was only available for the UK, at 
9.4 per cent.

On the basis of the performance of the Company’s 
assets against the MSCI TPR Benchmark as noted 
above, and for the purposes of this Report, the 
Committee has estimated that 100 per cent of 
the overall TPR will be achieved for 2020 Bonus 
payments. The TPR figures stated above are different 
to those stated in the KPls on page 50, which relate to 
standing investments only.

Payment of the TPR element will be deferred potentially 
until Summer 2021, when the European MSCI 
Benchmarks become available. Accordingly, the actual 
payment made under the TPR element of the 2020 
Bonus, together with the deferral under the DSBP, may 
differ from the amount disclosed in this Report.

The DSBP award will be made once the European MSCI Benchmarks become available and final Bonus figures can be calculated.

Bonus payments are calculated as a percentage of Executive Directors’ salaries as at 31 December of the previous year.

As explained on page 123, the Committee assessed the underlying performance of the business and concluded that no discretion should be 
exercised in respect of the 2020 Bonus.

The vesting of the 2020 DSBP will be in April 2024, the third anniversary of the payment of the Adjusted PBT and RRG element of the 2020 
Bonus. Details of the DSBP awards granted to Executive Directors are set out in Chart 14 on page 140.

130

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
 
UPDATED 2019 BONUS (ESTIMATED IN 2019 ANNUAL REPORT) 

As previously reported on page 102 of the 2019 Annual Report, 100 per cent of the Adjusted PBT and RRG elements were achieved for the 
2019 Bonus and it was estimated that 49 per cent of the TPR element would be achieved. 

The MSCI TPR Benchmark has since been confirmed at 9.4 per cent, whilst the Company’s TPR was 12.6 per cent. The Company’s 
outperformance of the Benchmark by 320 basis points per cent resulted in 100 per cent of the TPR element being achieved and the 2019 
Bonus figure in Chart 1 has been re-presented to reflect this. 

The 2019 Bonus was paid and shares were awarded under the DSBP on 28 April 2020. 

CHART 5i : BONUS PAYMENT 2019 – ESTIMATED

CHART 5ii : BONUS PAYMENT 2019 – ACTUAL

100%

100%

49%

49%

PBT

TPR

PBT

TPR

PBT

TPR

PBT

TPR

100%

RRG

100%

RRG

100%

100%

100%

RRG

100%

RRG

100%

100%

131

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Remuneration

Directors’ Remuneration Report 
continued

MULTIPLE YEAR VARIABLE – LTIP (AUDITED)

LTIP awards are subject to a three-year performance period and a compulsory two-year post-vesting holding period for Executive Directors. 

LTIP VESTING IN 2021

The 2018 LTIP Award will vest on 26 April 2021, subject to relative TSR and TPR over the three-year performance period to 31 December 2020. 

The 2018 LTIP Award will pay out 100 per cent (subject to the final TPR data being available).

CHART 6: 2018 LTIP

100%

TSR

TPR

100%

The Company’s TSR over the performance period was 81.8 per cent 
and the benchmark TSR was -18.7 per cent. The Company’s TSR 
target is 5 per cent per annum above the benchmark, which equates to 
TSR of -5.9 per cent for this element to fully vest. 

The Company’s TSR outperformance of +5 per cent per annum 
compared with the benchmark will lead to 100 per cent of the TSR 
element vesting for this award.

The estimated TPR calculation is based on the Company’s actual 
annualised TPR between 2018 and 2020 of 14.9 per cent and an 
estimated MSCI Benchmark over the same period of 12.4 per cent.

On this basis, the Company’s three-year TPR to 31 December 2020 
has exceeded the estimated MSCI Benchmark by more than 1.5 per 
cent which would lead to 100 per cent of the TPR element vesting.

Vesting of the TPR element of the 2018 LTIP will be deferred potentially until Summer 2021, when the European MSCI Benchmarks become 
available. Accordingly, the actual number of shares which will vest may differ from the amount disclosed in Chart 1 of this Report. 

The Committee has the discretion to adjust awards downwards at vesting if it is not satisfied that the outcome is a fair reflection of underlying 
performance, or in the event of excessive risk-taking or misstatement. As explained on page 123, the Committee assessed the underlying 
performance of the business and concluded that no such discretion should be exercised in respect of the vesting of the 2018 LTIP.

Once vested, the shares released under the 2018 LTIP will be subject to a further two-year post-vesting holding period. The Executive Directors 
will be the beneficial owners of the shares and will be entitled to any dividend payments and have voting rights at any general meeting of the 
Company during the holding period, however, during this time, they will not be able to sell or transfer these shares. The Company has measures 
in place to prevent these shares from being sold or transferred until they are free of the restrictions.

CHART 7: 2018 LTIP AWARD

Share price on 
award 
(pence)

Percentage 
of salary 
awarded 
(%)

Percentage of  
award vesting
(%)

Estimated 
share price on 
vesting 
(pence)1

Estimated 
share price 
appreciation 
(pence)

Estimated 
share price 
appreciation 
(%)

Value in Chart 1 
attributable to share 
price appreciation 
(£)

Dividend 
(pence per 
share)2

Total dividend 
on vesting 
shares
(Gross3) (£)

Number of  

shares vesting

DAVID SLEATH

SOUMEN DAS

ANDY GULLIFORD

628.8

628.8

628.8

200

200

200

196,892

146,310

128,913

100

100

100

923.9

923.9

923.9

295.1

295.1

295.1

46.9

46.9

46.9

581,028

431,761

380,422

61.6

61.6

61.6

121,285

90,127

79,410

1  The vesting share price has been estimated as the three-month average share price ending 31 December 2020. 
2  The figure in Chart 1 includes a cash value of 61.6 pence per share, equivalent to the dividends that the Executive Directors would have received on the 2018 LTIP shares from the award date.
3  This amount is subject to Income Tax and National Insurance Contributions. 

132

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020UPDATED LTIP VESTING IN 2020 (ESTIMATED IN 2019 ANNUAL REPORT)

In 2017, shareholders approved the reduction of the performance period for LTIP awards from four years to three years, with the addition of a 
two-year post-vesting holding period for Executive Directors.

As a result, both the 2016 and 2017 LTIP Awards vested on 28 April 2020, subject to the TSR and TPR performance conditions over the three- 
and four-year performance periods to 31 December 2019. As previously reported, 100 per cent of the TSR element vested for both awards.

The 2019 Directors’ Remuneration Report estimated that the TPR element for both awards would vest at 100 per cent.

 } In respect of the 2016 LTIP, the Company’s actual TPR over the four-year performance period was 14.8 per cent and the benchmark was 

12.2 per cent.

 } In respect of the 2017 LTIP, the Company’s actual TPR over the three-year performance period was 16.5 per cent and the benchmark was 

13.9 per cent.

The Company’s outperformance of 2.3 per cent for each led to 100 per cent of the TPR element vesting for both awards.

Overall, this resulted in a total payout of 100 per cent for the 2016 and 2017 LTIP Awards as estimated. In the 2019 Annual Report the 
estimated vesting share price for the 2016 and 2017 LTIP Awards was 850.29 pence, and the figure in Chart 1 has been re-presented to 
reflect the actual vesting share price of 814.32 pence.

OTHER – SIP AND SHARESAVE (AUDITED)

The ‘other’ figure in Chart 1 comprises SIP and Sharesave:

SHARE INCENTIVE PLAN (SIP)
This is calculated as the number of shares awarded multiplied by the 
share price as at the grant date. 

SHARESAVE (SAYE)
This is the discount used to calculate the Option Price, multiplied by the 
Executive Directors’ annual savings. 

During the year, SIP awards of £3,000 were made to eligible UK 
employees and Global Share Incentive Plan (GSIP) awards of £3,000 
were made to eligible employees based outside of the UK. 

The number of shares awarded was calculated using a share price of 
811.40 pence, based on the five-day average share price prior to the 
date of award.

All eligible employees, including the Executive Directors, received 
369 shares in respect of the 2020 SIP and GSIP. 

All eligible UK employees are invited to join the SAYE annually, and can 
save up to a maximum of £500 a month across all open schemes.

At the end of the three-year savings period they can purchase shares 
at the Option Price, based on a 20 per cent discount to the share price 
on award. 

The Option Price for the 2020 SAYE was 616.48 pence. 

133

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GOVERNANCE
Remuneration

Directors’ Remuneration Report 
continued

CHIEF EXECUTIVE

Chart 8 below shows the TSR for the Company over the last 10 financial years compared with the FTSE 350 REIT Index and the FTSE 100 Index. 
The Committee has determined that these indices provide useful comparators as the Company, and its peers, are constituents of them.

CHART 8: COMPOSITE 10-YEAR TSR CHART AND 10-YEAR CHIEF EXECUTIVE SINGLE TOTAL FIGURE OF REMUNERATION

Year

20111

2012

2013

2014

2015

2016

2017

2018

2019

2020

SEGRO

FTSE 100

FTSE 250

FTSE 350 REITs

600

500

400

300

200

100

Chief Executive single 
figure of remuneration  
(£000)

Short-term incentive 
payout against maximum 
opportunity  
(%)

Long-term incentive 
payout against maximum 
opportunity  
(%)

DAVID SLEATH

IAN COULL

2010

860

411

2011

2013

2014

2015

2016

1,194

1,370

2,043

2,388

3,788

–

–

–

–

–

2017

4,125

–

2018

2019

2020

3,947

6,6112

3,752

–

–

–

DAVID SLEATH

100.0

56.7

75.4

66.7

100.0

99.2

100.0

94.3

100.0

91.2

IAN COULL

100.0

–

DAVID SLEATH

19.1

21.6

IAN COULL

26.0

–

–

0.0

–

–

–

–

–

–

–

–

42.9

42.3

100.0

100.0

100.0

100.0

100.0

–

–

–

–

–

–

–

1  On 28 April 2011, David Sleath was appointed as Chief Executive and Ian Coull retired from this role. The values shown above have been pro-rated accordingly. 
2  This figure has been updated since the 2019 Annual Report as some values were estimated. For further information see Chart 1. As explained further on pages 104 and 105 of the 2019 Annual 

Report, the 2019 figure comprises the 2016 and 2017 LTIP Awards which both vested in 2020. 

CEO PAY RATIO

The table below shows how CEO pay compares to employees at the lower, median and upper quartiles. The ratios have been calculated in 
accordance with Option A of the The Companies (Miscellaneous Reporting) Regulations 2018, though the disclosure is made here on a voluntary 
basis as SEGRO falls below the qualifying threshold of 250 UK employees as determined by the Regulations. 

CHART 9: CEO PAY RATIO

Year

2020

2019

2018

25th percentile  

Median  

75th percentile  

Method

pay ratio

pay ratio

pay ratio

A

A

A

64:1

111:1

65:1

37:1

70:1

41:1

23:1

40:1

24:1

The Chief Executive’s single total figure of remuneration for 2020, detailed further in Chart 1, has been used for the purposes of this calculation. 

As detailed on page 107 of the 2019 Annual Report, the above average increase to the 2019 CEO Pay Ratio was largely attributable to the vesting 
of both the 2016 and 2017 LTIP Awards in 2020, which was an exceptional event with a subsequent one-off impact. The 2020 CEO Pay Ratio 
comprises the 2018 LTIP Award only, which will vest in 2021, and reflects an improvement on the 2018 CEO Pay Ratio, which is more indicative 
of a normal year. 

The Chief Executive registered a decrease in his single total figure of remuneration for 2020 of 43 per cent, due to the return to a single LTIP 
vesting and the waiver of 25 per cent of salary for three months during the year, whilst, as detailed in Chart 11, the average per employee 
remuneration has increased. 

SEGRO’s median CEO Pay Ratio remains below the FTSE 100 2019 average of 73.1 (source: CIPD).

134

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020CHART 10: RELATIVE IMPORTANCE OF SPEND ON PAY

Total dividend pay

Total employee expenditure

REMUNER ATION AND STR ATEGY

2020 
(£m)

240.1

46.7

2019  
(£m)

212.6

44.7

Increase  

(%)

13

4

Variable remuneration is aligned with KPIs on pages 50 and 51 that measure performance against our strategy, as set out below:

OUR GOAL AND STR ATEGIC PILLARS

HOW OUR PERFORMANCE MEASURES ALIGN TO OUR STR ATEGY

 OUR GOAL

OUR GOAL IS TO BE THE BEST   
OWNER-MANAGER AND DEVELOPER  
OF WAREHOUSE PROPERTIES IN  
EUROPE AND A LE ADING  
INCOME-FOCUSED REIT.

 OPER ATIONAL   
EXCELLENCE

DISCIPLINED CAPITAL 
ALLOCATION

 EFFICIENT CAPITAL & 
CORPOR ATE STRUCTURE

CURRENT KPIs

EPRA vacancy rate 

Customer satisfaction 

Total property return 

Adjusted NAV per share 

Loan to value ratio 

Total shareholder return 

Adjusted EPS 

Total cost ratio 

Rent roll growth 

PERFORMANCE MEASURES

BONUS (SEE PAGES 130 -131)

Adjusted PBT (33.3%)

Rent roll growth (33.3%)

Relative TPR over 1 year (33.3%)

LTIP (SEE PAGES 132-133)

Relative TSR over 3 years (33.3%)

Relative TPR over 3 years (33.3%)

Relative TAR over 3 years (33.3%)

SIP (SEE PAGE 136)

PBT v budget

All of the above performance measures are integrated directly into both Executive Directors’ and employees’ remuneration. See page 136 for a 
comparison of Executive Director and employee remuneration components.

TOTAL PROPERTY RETURN PERFORMANCE MEASURE 

Shareholders have asked us why we use the same measure, TPR, in both the Bonus and the LTIP. The Committee believes that TPR is one of the 
best metrics for measuring performance as the Executives are being measured against the relative performance of our portfolio against industry 
benchmarks. So, for example, in the property cycle, where asset values rise in our sector, for executives to be rewarded they cannot just rely on 
market uplift but must also ensure that our portfolio is outperforming.

Having established that TPR is such an important measure, it was included in the Bonus scheme to ensure that everyday decisions about the 
portfolio were being taken with this in mind. The LTIP scheme, by definition, measures performance over a longer period and so in using TPR 
here, it acts as a balance to the Bonus scheme making sure that decisions are made for the long term and not just for short-term benefit.

The TPR measures used for the Bonus and LTIP reflect the different award periods of one and three years, and so identical data is not used twice.

135

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Remuneration

Directors’ Remuneration Report 
continued

WORKFORCE REMUNER ATION

ALL EMPLOYEES

EXECUTIVE DIRECTORS

Increases approved by the 
Remuneration Committee

All employees are eligible for a bonus
Targets: TPR, RRG, Profit, Personal performance

 SAL ARY

 BONUS

Leadership team 25%
Deferred for 3 years

 DEFERRED SHARE BONUS PL AN

Pay rise in line with employee pay

Maximum 150%
Targets: TPR, RRG, Profit

50%
Deferred for 3 years

Leadership team and senior managers
3-year performance period, No holding period
Targets: TSR, TPR, TAR

 LONG TERM INCENTIVE PL AN

Maximum 250%
3-year performance period, 2-year holding period
Targets: TSR, TPR, TAR

(UK)
12% matched contribution

 PENSION BENEFIT

20% cash, reducing to 
12% by 31 December 2022

Maximum £3,600
Minimum 3-year hold

(UK)
£500/month
3-year savings period

 SHARE INCENTIVE PL AN

 SHARESAVE

Maximum £3,600
Minimum 3-year hold

£500/month
3-year savings period

CASE STUDY: EMPLOYEE SHARE OWNERSHIP

SEGRO is proud to operate two types of all-employees share scheme. This encourages employees to own shares in the Company, aligning 
their interests with our shareholders:

 } SIP/GSIP: all eligible employees can receive an award of up to £3,600 worth of SEGRO shares each year. These are held in Trust on their 
behalf for a minimum of three years, following which they can be released subject to continued employment. In 2020, the targets for the 
SIP and GSIP were updated to include both a financial and non-financial element. In order to achieve the maximum payout in respect of 
the 2020 awards, PBT needed to exceed budget by 102 per cent and we needed to reduce printed paper usage in our offices by 50 per 
cent compared with 2019. We are pleased that we achieved the targets, and all eligible employees will be awarded £3,600 worth of SEGRO 
shares in May 2021.

 } Sharesave: all UK employees are invited to join Sharesave on an annual basis, where they can save up to £500 a month across all open 
schemes. After three years, they can use their savings to buy SEGRO shares at a 20 per cent discount to the share price when they 
started saving.

84% 

of SEGRO employees  
participate in one or more  
all-employee share scheme,  
as at 31 December 2020. 

In May 2020, all eligible 
employees received the 
maximum award of

£3,0001

worth of SEGRO shares  
through the SIP or GSIP.

70%

of UK employees participate in 
Sharesave, saving on average

£347 each 
month.

As at 31 December 2020, 
there were

5.8 million

SEGRO shares under award 
in employee share schemes, 
representing

0.49%

of our issued share capital. 

1  The maximum amount available for the 2020 SIP and GSIP awards was £3,000. This has been increased to £3,600 for awards to be made in 2021 onwards. 

136

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020CHART 11: PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION COMPARED TO AVERAGE EMPLOYEE

AVERAGE PER 
EMPLOYEE2
(% change)

EXECUTIVE DIRECTORS
(% change)

NON-EXECUTIVE DIRECTORS6
(% change)

DAVID 
SLEATH

SOUMEN 
DAS

ANDY 
GULLIFORD

GERALD 
CORBETT3

MARY
BARNARD4

SUE  

CLAYTON

CAROL
FAIRWEATHER5

CHRISTOPHER 
FISHER

MARTIN  
MOORE

Salary/Fees1

Taxable Benefits

Annual variable pay

6

2

-2

-2.2

0

-6.1

-3.4

0

-6.1

-2.3

0

-6.1

3.1

–

–

-0.6

–

–

-0.6

–

–

-0.6

–

–

-0.6

–

–

-0.6

–

–

1  Between May 2020 and July 2020, all Directors waived 25 per cent of their salaries and fees for three months. Actual salaries reported reflect this waiver. 
2  The Executive Directors are employed by SEGRO plc and all other UK employees are employed by SEGRO Administration Limited, which is a subsidiary of SEGRO plc. The average per employee 
figure is based on UK employees who have been continually employed for the entirety of 2019 and 2020 and entitled to receive annual variable payment. UK employees represent approximately 
55 per cent of the workforce.

3  The fee increase for Gerald Corbett reflects the period between 2016 and 2020 and represents a three per cent increase per annum, which is aligned with the annual average all-employee 

increase over the same period. 

4  Mary Barnard was appointed as a Director on 1 March 2019 and her fees have been annualised. 
5  Carol Fairweather was appointed as Chair of the Audit Committee on 18 April 2019, and the increase in her fees to reflect the additional responsibilities of this position have been annualised. 
6  Non-Executive Directors do not receive any taxable benefits and do not participate in the Bonus scheme.

STAKEHOLDER ENGAGEMENT

The Committee has three primary stakeholders: 

SHAREHOLDERS
The Chair is committed to ensuring that 
there is always an open dialogue with 
our shareholders. The Committee values 
shareholder engagement and the Chair is 
available should shareholders wish to discuss 
the Company’s approach to remuneration 
or share their views on current practice or 
emerging issues.

DIRECTORS
After each meeting of the Remuneration 
Committee, the Chair reports to the Board 
on any significant decisions which will 
impact on the Company generally or on the 
principles of remuneration for the Directors.

The Committee is conscious that the 
remuneration environment continues 
to change and, this year, the Chair has 
committed to increasing his efforts to make 
sure that the Executive Directors in particular 
are kept up to date with the evolving trends.

THE COMPANY’S WORKFORCE
The Committee’s remit includes considering 
the remuneration framework for the workforce 
and monitoring the remuneration arrangements 
for the Executive Committee. It ensures that 
workforce remuneration is structured to 
reward everyone fairly and, in a year of strong 
Company performance, to ensure that everyone 
shares in its success. The reward framework for 
the workforce is based on the Policy and mirrors 
the structure which applies to the Executive 
Directors as shown opposite.

The Company offers all-employee share 
schemes to encourage employee share 
ownership as described opposite.

Each year, when considering pay increases, 
Bonus awards and targets for the Executives, the 
Committee receives a report from the Group 
HR Director on remuneration for every member 
of the Leadership team and a more general 
report on pay across the Group.

To ensure that all employees are kept up 
to date with Company performance and 
informed about the impact this has on their 
variable remuneration, the Executive Directors 
hold quarterly briefings where they deliver 
updates and communicate outturns for 
Bonus, SIP/GSIP awards and LTIP vestings to 
all employees. At these briefings, employees 
have the opportunity to ask questions on 
any topic. During 2020, these briefings were 
delivered remotely. 

Further details on workforce engagement can 
be found on page 104.

137

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Remuneration

Directors’ Remuneration Report 
continued

EXECUTIVE DIRECTORS’ SHAREHOLDINGS (AUDITED)

CHART 12: EXECUTIVE DIRECTORS’ OVERALL INTEREST IN SHARES

Beneficial interests1 
(including SIP 
shares) as at 
01.01.2020

Beneficial interests1 
(including SIP 
shares) as at 
31.12.2020

DAVID SLEATH

SOUMEN DAS

ANDY GULLIFORD

PHIL REDDING4

692,293

145,581

511,647

374,932

701,796

299,220

624,138

374,932

Subject 
to deferral  

under DSBP

195,850

143,358

128,180

134,134

Subject to 
achievement of 
performance 
conditions  
under LTIP

647,449

473,543

423,737

629,499

Options 
outstanding  
under  

Sharesave

Total  
overall interest  
in shares as at 
31.12.2020

2,919

2,919

3,267

3,616

1,548,014

919,040

1,179,322

1,142,181

Shares which 
contribute to 
shareholding 
guidelines as at 
31.12.20202

809,514

378,067

694,637

446,023

Value of shares 
which contribute 
to shareholding 
guidelines as at 
31.12.20203 

(£)

7,670,950

3,582,562

6,582,380

4,061,486

1  Beneficial interests represent shares beneficially held by each Executive Director, including any shares beneficially held by spouses as well as shares held on their behalf by the Trustees of the SIP. 
Between 31 December 2020 and 18 February 2021, there were no changes in respect of the Executive Directors’ shareholdings. The Trustees of the SIP held a non-beneficial interest in 454,256 
shares as at 1 January 2020 and 457,337 shares as at 31 December 2020 (2019: 454,256). The Trustees of the SEGRO plc Employees’ Benefit Trust held 345,210 shares as at 1 January 2020 
and 75,820 shares as at 31 December 2020 (2019: 345,210). There was no change in the holdings of either Trust between 31 December 2020 and 18 February 2021. As with other employees, 
Executive Directors are deemed to have a potential interest in these shares, being beneficiaries under these two Trusts. The Trustees of the SEGRO plc Employees’ Benefit Trust have waived the 
right to receive dividends on these shares.

2  The number of shares which contribute towards the shareholding requirement comprise beneficial interests (including SIP shares) and shares subject to deferral under DSBP, net of income tax 

and National Insurance, but excludes shares subject to achievement of performance conditions under LTIP and options outstanding under Sharesave. 

3  Value of shares calculated using a share price of 947.6 pence, as at 31 December 2020. 
4  Phil Redding’s holdings are shown as at 31 January 2020, which is the date he stepped down from the Board. The value of his holdings is calculated using a share price of 910.6 pence, as at 

31 January 2020. He left the Company on 30 April 2020 and his LTIP and Sharesave awards were pro-rated in accordance with the scheme rules. 

POLICY ON SHAREHOLDING GUIDELINES 

The Chief Executive is expected to build a shareholding in the Company equivalent to 300 per cent of the value of his base salary which is 
calculated each year by reference to the share price as at 31 December. The other Executive Directors are expected to hold shares equivalent 
to 250 per cent of their base salaries. 

Executive Directors are required to retain half of their LTIP and DSBP shares post vesting until the above guidelines have been met and are 
then maintained. 

The shareholding guidelines have been updated to include a post-cessation requirement for Executive Directors to retain their shareholding, 
up to the amount required by the shareholding guidelines, for two years after leaving the Company. 

CHART 13: EXECUTIVE DIRECTORS’ SHAREHOLDING AND SHAREHOLDING REQUIREMENTS

David Sleat h

Policy: 300%

Soumen Das

Policy: 250%

Andy Gulliford

Policy: 250%

0%

200%

400%

600%

800%

1000%

1200%

1400%

1600%

Percentage of salary

Value of shares calculated using a share price of 947.6 pence, as at 31 December 2020. 

138

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
POST-CESSATION SHAREHOLDING REQUIREMENTS: PHIL REDDING

Phil Redding stepped down from the Board with effect from 31 January 2020. He is required to hold shares equivalent to 250 per cent of his 
salary until 31 January 2022, calculated by reference to his salary and the share price on 31 January 2020. 

Shares which qualify towards the shareholding requirement comprise:

 } beneficial holdings; 

 } LTIP awards which have vested, and are subject to a two-year post-vesting holding period; and

 } unvested shares in the DSBP, net of income tax and National Insurance. 

We have arranged for the 2017 LTIP shares, which vested in 2020 and are subject to a two-year post-vesting holding period, to be held in a 
Global Nominee administered by Equiniti Limited, who provide Registrar and share scheme services to the Company. A restriction has been 
placed on these shares, preventing them from being sold or transferred until the post-vesting holding period has expired. During this holding 
period, Phil Redding is the beneficial owner of these shares and is entitled to any dividend payments and to vote at any general meeting. 

Phil Redding confirmed in writing in February 2021 that he continues to comply with his post-cessation shareholding requirements as 
summarised below:

Post-cessation 
shareholding 
requirement
(250% of salary)
(£)

Salary
(£)

Share price as at 
31 January 2020
(pence)

Number of 
shares required 
to satisfy 
post-cessation 
shareholding 
requirements

452,532

1,131,330

910.60

124,240

2018 DSBP

2019 DSBP

Global Nominee1

Shares held which contribute to post-cessation 
shareholding requirements

Post-cessation 
shareholding 
requirements 
met

Details

2017 DSBP

Gross

45,779 

41,072 

41,329 

 – 

Net

24,263 

21,768 

21,904 

84,606 

TOTAL

152,541

1 The 2017 LTIP award vested in 2020, and is subject to a two-year post-vesting holding period during which time the shares are held in the Global Nominee and cannot be sold or transferred.

139

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Remuneration

Directors’ Remuneration Report 
continued

EXECUTIVE DIRECTORS’ SHARE SCHEME HOLDINGS (AUDITED)

CHART 14: DSBP AWARDS OUTSTANDING

DAVID SLEATH

2016 DSBP

TOTAL

SOUMEN DAS

2017 DSBP

2018 DSBP

2019 DSBP3

2016 DSBP

2017 DSBP

2018 DSBP

2019 DSBP3

TOTAL

ANDY GULLIFORD 2016 DSBP

2017 DSBP

2018 DSBP

2019 DSBP3

TOTAL

Date of Grant

28.06.17

28.06.18

28.06.19

28.04.20

28.06.17

28.06.18

28.06.19

28.04.20

28.06.17

28.06.18

28.06.19

28.04.20

No. of shares 
under award 
01.01.20

90,271

69,920

62,730

–

63,200

222,921

14,474

51,957

46,615

–

–

–

–

44,786

113,046

47,283

45,779

41,072

–

–

–

–

41,329

134,134

No. of shares 
over which 
awards were 
granted during
the year1

Share price  
on grant 
(pence)2

Face value of 
award made  
in 2020  

(£)

–

–

–

518,998

–

–

–

367,783

–

–

–

339,394

No. of shares 
released during 
the year

Share price on 
date of release 
(pence)

No. of shares 
under award 
31.12.20

End of holding 
period

90,271

821.2

–

–

–

–

–

–

14,474

821.2

–

–

–

–

–

–

47,283

821.2

–

–

–

–

–

–

–

69,920

62,730

63,200

195,850

–

51,957

46,615

44,786

143,358

–

45,779

41,072

41,329

128,180

28.04.20

28.04.21

28.04.22

28.04.23

28.04.20

28.04.21

28.04.22

28.04.23

28.04.20

28.04.21

28.04.22

28.04.23

1  Awards are granted in the form of a provisional allocation of shares.
2  The share price on grant is based on the share price for the day before the award. 
3  Executive Directors were awarded 150 per cent of salary in respect of the 2019 Bonus, 50 per cent of which was deferred into shares under the 2019 DSBP. 

CHART 15: LTIP AWARDS OUTSTANDING

No. of shares 
over which 
awards were 
granted during
the year1

Share price  
on grant 
(pence)2

DAVID SLEATH

2016 LTIP

TOTAL

SOUMEN DAS

2017 LTIP

2018 LTIP

2019 LTIP

2020 LTIP5

2016 LTIP

2017 LTIP

2018 LTIP

2019 LTIP

2020 LTIP5

TOTAL

ANDY GULLIFORD 2016 LTIP

2017 LTIP

2018 LTIP

2019 LTIP

2020 LTIP5

TOTAL

Date of Grant

07.04.16

28.04.17

26.04.18

29.05.19

26.03.20

02.05.17

28.04.17

26.04.18

29.05.19

26.03.20

07.04.16

28.04.17

26.04.18

29.05.19

26.03.20

No. of shares 
under award 
01.01.20

290,152

243,813

196,892

230,680

–

219,877

961,537

153,674

279,9183

146,310

171,418

–

–

–

–

–

155,815

751,320

189,916

159,634

128,913

151,036

–

–

–

–

–

143,788

629,499

Face value of 
award made  
in 2020  

(£)

–

–

–

–

1,729,992

–

–

–

–

1,225,952

–

–

–

–

1,131,323

No. of shares 
released during 
the year

Share price on 
date of release 
(pence)

No. of shares 
under award 
31.12.20

290,152

243,813

814.32

814.32

–

–

–

–

–

–

153,674

279,918

814.32

814.32

–

–

–

–

–

–

189,916

159,634

814.32

814.32

–

–

–

–

–

–

–

–

196,892

230,680

219,877

647,449

–

–

146,310

171,418

155,815

473,543

–

–

128,913

151,036

143,788

423,737

End of 
performance 
period 
over which 
performance 
conditions have 
to be met

31.12.19

31.12.194

31.12.20

31.12.21

31.12.22

31.12.19

31.12.194

31.12.20

31.12.21

31.12.22

31.12.19

31.12.194

31.12.20

31.12.21

31.12.22

1  Awards are granted in the form of provisional allocation of shares. 
2  The share price on grant is based on the share price for the day before the award. 
3  As part of his recruitment package, Soumen Das was awarded 300 per cent of salary in respect of the 2017 LTIP. 
4  LTIP awards made under the current Policy are subject to a three-year performance period and two-year holding period. Awards made before the 2017 AGM were subject to a four-year 

performance period.

5  Executive Directors were awarded shares to the value of 250 per cent of salary in respect of the 2020 LTIP. These awards are subject to three equally-weighted performance conditions, TSR, TPR 
and TAR, over a three-year performance period and are subject to a two-year post-vesting holding period. As explained on page 123, the Committee assessed the underlying performance of the 
business and concluded that no such discretion should be exercised in respect of the award of the 2020 LTIP.

140

–

–

–

–

–

–

–

495.5

664.0

718.6

821.2

495.5

664.0

718.6

821.2

495.5

664.0

718.6

821.2

420.7

493.0

628.8

691.0

786.8

434.0

493.0

628.8

691.0

786.8

420.7

493.0

628.8

691.0

786.8

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020CHART 16: SHARESAVE OPTIONS OUTSTANDING

DAVID SLEATH

2017 Sharesave

2020 Sharesave

Date of grant

02.05.17

22.04.20

TOTAL

SOUMEN DAS

TOTAL

2017 Sharesave

2020 Sharesave

02.05.17

22.04.20

ANDY GULLIFORD

2017 Sharesave

2018 Sharesave

02.05.17

18.04.18

2020 Sharesave

22.04.20

TOTAL

No. of shares 
under option 
01.01.20

4,914

–

4,914

4,914

–

4,914

2,457

1,808

–

4,265

Options  
granted  
during  

the year

–

2,919

–

2,919

–

–

1,459

Option  
price  

(pence)

366.24

616.48

366.24

616.48

366.24

497.76

616.48

Options 
exercised 
during  

the year

Share price 
on date of 
exercise 
(pence)

No. of shares 
under option 
31.12.201

Period in which options  

can be exercised

4,914

–

4,914

–

842.2

–

842.2

–

–

01.06.20 – 31.11.20

2,919

2,919

01.06.23 – 31.11.23

–

01.06.20 – 31.11.20

2,919

2,919

01.06.23 – 31.11.23

2,457

842.2

–

01.06.20 – 31.11.20

–

–

–

–

1,808

1,459

3,267

01.06.21 – 31.11.21

01.06.23 – 31.11.23

1 There are no shares under option which have matured but have not been exercised. 

CHART 17: SIP SHARES HELD IN TRUST

DAVID SLEATH

SOUMEN DAS

ANDY GULLIFORD

No. of shares in trust  

01.01.20

8,326

907

9,143

Shares awarded  
during the year

369

369

369

No. of shares in trust  

31.12.20

8,695

1,276

9,512

Further information about the share schemes can be found in Note 19 to the Financial Statements on page 191. 

DILUTION HEADROOM

As the LTIP, SIP and Sharesave schemes are approved by shareholders, they may be satisfied by the issue of new shares in the Company, up 
to the dilution limits set by the Investment Association (IA). The chart below shows the total number of shares under award or option for both 
Executive and all-employee schemes in comparison to the IA limits. 

CHART 18: DILUTION HEADROOM

Executive schemes

0.34%

5%

All schemes

0.40%

10%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Actual

IA limit

141

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Remuneration

Directors’ Remuneration Report 
continued

CHAIR AND NON-EXECUTIVE DIRECTORS

NON-EXECUTIVE DIRECTORS’ SINGLE TOTAL FIGURE OF REMUNER ATION (AUDITED)

In 2020, the Chair’s annual fee was £275,000 (2019: £250,000), Non-Executive Directors’ annual fee was £63,600 (2019: £60,000), with an 
additional £15,900 per annum (2019: £15,000 per annum) for chairing a Board Committee or for filling the role of Senior Independent Director. 

The Chair and Non-Executive Directors do not participate in any of the Company’s share-based incentive schemes nor do they receive any other 
benefits or rights under the pension scheme. 

During the year, the Chair and the Non-Executive Directors waived 25 per cent of their fees for three months. See page 123 for further details. 

CHART 19: INDEPENDENT NON-EXECUTIVE DIRECTORS’ SINGLE TOTAL FIGURE OF REMUNERATION FOR 2020 (AUDITED)

GERALD CORBETT

Chair

MARY BARNARD2

SUE CLAYTON

CAROL FAIRWEATHER3

Chair of the Audit Committee (since 18 April 2019)

CHRISTOPHER FISHER

Chair of the Remuneration Committee

MARTIN MOORE

Senior Independent Director

DOUG WEBB4

Chair of the Audit Committee (until 18 April 2019)

1  Between May 2020 and July 2020, all Directors waived 25 per cent of their fees for three months. Actual fees reported reflect this waiver. 
2  Mary Barnard was appointed as a Director on 1 March 2019. 
3  Carol Fairweather succeeded Doug Webb as Chair of the Audit Committee on 18 April 2019. 
4  Doug Webb stepped down as Chair of the Audit Committee on 18 April 2019 and retired as a Director on 30 September 2019. 

TOTAL FEES

20201 

(£000)

259

2019  

(£000)

250

60

60

75

75

75

–

50

60

71

75

75

50

NON-EXECUTIVE DIRECTORS’ SHAREHOLDING GUIDELINES

Non-Executive Directors are expected to own shares equivalent to 100 per cent of their annual fees calculated by reference to the share price as 
at 31 December.

CHART 20: NON-EXECUTIVE DIRECTORS’ BENEFICIAL INTERESTS IN SHARES AND SHAREHOLDING REQUIREMENTS

BENEFICIAL INTERESTS

SHAREHOLDING REQUIREMENTS

GERALD CORBETT

MARY BARNARD

SUE CLAYTON

CAROL FAIRWEATHER

CHRISTOPHER FISHER

MARTIN MOORE

01.01.2020  

31.12.2020  

Ordinary 10p shares

Ordinary 10p shares

Value of shares held 
31.12.20201
(£)

63,960

–

7,000

12,000

20,592

17,442

63,960

8,543

7,000

12,000

20,592

17,442

 606,085 

80,953 

66,332 

113,712 

195,130 

165,280 

1  Value of shares calculated using share price of 947.6 pence as at 31 December 2020. 

There was no change in Directors’ holdings between 31 December 2020 and 18 February 2021. 

Shareholding  

requirements met

Shareholding  
as a percentage  
of annual fees  
as at 31.12.2020  

(%)

220

127

104

143

245

208

EXTERNAL APPOINTMENTS

Executive Directors are permitted to hold one external directorship, approved by the Board. Fees payable may be retained.

David Sleath is a Non-Executive Director of Electrocomponents Plc and he received a fee of £80,000 for this role during the year (2019: £39,166). 

142

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
EXIT PAYMENTS AND ARR ANGEMENTS (AUDITED)

Save for the disclosure made about Phil Redding below, no exit payments were made to Directors during the year.

PAYMENTS TO PHIL REDDING (AUDITED)

Phil Redding stepped down from the Board on 31 January 2020 and his employment ended on 30 April 2020. His remuneration on departure 
was in line with the Policy:

 } Salary and benefits

Phil Redding was paid his salary and provided with his contractual benefits (including car allowance and cash payments in lieu of pension 
contributions) until his leaving date of 30 April 2020. His salary and contractual benefits until 31 January 2020, the date at which he ceased to 
be a Director, are disclosed in Chart 1 and from 1 February 2020 to 30 April 2020 he received a total salary of £113,133, taxable benefits of 
£5,043 and cash in lieu of pension of £22,627. He received a payment in lieu of the remaining nine months of his notice period in the amount 
of £394,284, paid in monthly instalments over the period from 1 May 2020 until 31 January 2021. Payments made from November 2020 to 
January 2021 were reduced by a total of £28,125 in line with income Phil Redding received from alternative employment. 

He also received a Statutory Redundancy Payment of £13,125.

 } Bonus and DSBP

Phil Redding was awarded a Bonus of £678,798 in respect of the 2019 financial year. In accordance with the Policy, 50 per cent of any cash Bonus 
was deferred in shares under the DSBP. 

 } All-employee share scheme awards

Phil Redding was treated as a good leaver in accordance with the HMRC and shareholder-approved Sharesave scheme and SIP rules. 

All payments were made in accordance with the Policy and no other remuneration payments or payment for loss of office has been or are due to 
be made to Phil Redding. 

FORMER DIRECTORS (AUDITED)

Ex gratia payments totalling £17,000 (2019: £29,242) were made during the year to a former Director, who retired over 10 years ago. 
These payments were made under legacy arrangements which are no longer offered. 

Justin Read, a former Director of the Company, was appointed as Chair of the Trustees of the SEGRO Pension Scheme on 21 March 2017. 
He receives a fee of £35,000 from the Company for this role.

REMUNER ATION COMMITTEE ADVISERS

The Committee has access to sufficient resources to discharge its duties, which include access to independent remuneration advisers, the General 
Counsel and Group Company Secretary, the Group HR Director and other advisers as required. 

The Committee is responsible for appointing its external advisers and in 2018, following a competitive tender process, Korn Ferry was appointed. 
During 2020, Korn Ferry provided advice on Executive Directors’ remuneration and market and best practice guidance, including the provisions 
of the Code. Its total fees for advice to the Committee in 2020 were £34,422 (2019: £85,413), calculated on a time-cost basis. 

The Committee determined that Korn Ferry provided independent remuneration advice and does not have any connections with the Company or 
provide any other services which may impair its independence. Korn Ferry are a signatory to the Code of Conduct for Remuneration Consultants 
in the UK.

SHAREHOLDER VOTING

CHART 21: SHAREHOLDER VOTING AT THE AGM 

To approve the Directors’ Remuneration Report for the financial year ended 
31 December 2019

To approve the Directors’ Remuneration Policy contained in the Directors’ 
Remuneration Report for the financial year ended 31 December 2018

Votes for  
(including 
discretionary)

For
(%)

Votes  

against

Against
(%)

Total votes  

cast

Votes 
withheld1

857,630,912

95.98

35,959,890

4.02 893,590,802

140,681

713,030,591

82.92 146,916,256

17.08 859,946,847

2,293,478

1  A withheld vote is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a resolution. 

This report was approved by the Board on 18 February 2021 and signed on its behalf by

CHRISTOPHER FISHER
CHAIR OF THE REMUNER ATION COMMIT TEE

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SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE
Remuneration

Directors’ Remuneration Policy Summary

The Remuneration Policy was approved by Shareholders at the Annual General Meeting held on 18 April 2019 and became effective from this 
date. It applies to incentive awards with performance periods beginning on 1 January 2019.

The following is a summary of the Remuneration Policy. The full Remuneration Policy, as approved by shareholders, was included in the 2018 
and 2019 Annual Report and Accounts and is available at www.SEGRO.com.

CHART 1: REMUNERATION POLICY TABLE: EXECUTIVE DIRECTORS

Element

SALARY

Strategic purpose

Operation

Maximum potential value

To attract and motivate 
high-calibre leaders in 
a competitive market 
and to recognise their 
skills, experience and 
contribution to Group 
performance.

The Committee reviews 
Executive Directors’ base salaries 
each year in the context of total 
remuneration, taking into account 
the Directors’ responsibilities, 
experience and performance, 
pay across the Group and 
market competitiveness. 

PENSION 
BENEFITS

To provide a 
market competitive 
remuneration package.

Retirement benefits are available 
to all UK employees and 
employees in certain Continental 
European jurisdictions dependent 
on local market practice and 
geographical differences.

The maximum annual salary increase 
will not normally exceed the average 
increase which applies across the 
wider workforce. However, larger 
increases may be awarded in certain 
circumstances including, but not 
limited to: an increase in scope or 
responsibilities of the role; salary 
progression for a newly appointed 
Director; and where the Director’s 
salary has fallen significantly below 
the market positioning.

Currently, the Chief Executive 
receives a cash allowance of 30 per 
cent of salary in lieu of pension 
and other Executive Directors 
receive 20 per cent of salary. Future 
Executive Directors will receive 
the level received by the majority 
of the UK workforce (currently a 
contribution to their pension plan 
of 12 per cent of salary). The cash 
allowance for Directors is offered in 
lieu of membership of the defined 
contribution Group Personal 
Pension Plan. 

Bonuses are awarded annually 
and paid for performance over 
the financial year.

The maximum Bonus opportunity for 
Executive Directors is 150 per cent 
of salary.

Performance metrics

Not applicable.

None.

The Bonus Scheme is based on three, 
equally weighted elements which 
the Committee may review from 
time-to-time, to ensure that they 
continue to reflect the Company’s 
strategic priorities: Adjusted PBT 
against budget including adjustments 
for acquisitions and disposals, 
constant foreign exchange rate and 
other adjustments allowed under the 
scheme rules, which supports the 
objective of delivering a sustainable, 
progressive dividend; relative TPR 
against an MSCI Benchmark which is 
the best and most important internal 
driver of TSR; and rent roll growth 
which focuses on driving the future 
rental income and Adjusted PBT of 
the business.

BONUS

To focus on the 
delivery of annual 
goals, to strive for 
superior performance 
and to achieve specific 
targets which support 
strategy, in particular 
for income generation, 
total property returns 
and recurring profit.

DEFERRED SHARE 
BONUS PLAN 
(‘DSBP’)

To encourage retention 
of senior managers and 
provide a long-term 
link between the Bonus 
and share price growth 
so as to encourage 
long-term decision 
making.

144

The Bonus is reviewed each 
financial year to ensure 
performance measures and 
targets are appropriate and 
support the business strategy.

Payment is based on 
the achievement of 
performance targets. 

The Committee retains discretion 
to reduce the amount of the 
Bonus award in the light of 
underlying performance during 
the year.

The rules of the Bonus contain 
malus and clawback provisions.

50 per cent of any Bonus 
awarded in the year is deferred 
into shares in the DSBP for three 
years before vesting. The award 
does not carry any entitlement 
to dividends, however the 
Committee may, at the time of 
the release of the shares, deliver 
shares or a cash sum equivalent 
to the value of the dividends that 
would have been paid over the 
three-year holding period.

The rules of the DSBP contain 
malus and clawback provisions.

For Executive Directors, 50 per cent 
of the Bonus earned in respect of the 
previous year’s performance.

Vesting of shares is dependent on 
continued employment or good 
leaver status. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Element

Strategic purpose

Operation

Maximum potential value

Performance metrics

LONG TERM 
INCENTIVE PLAN 
(‘LTIP’)

SHARESAVE

To reward the 
execution of strategy 
and drive long-
term returns for 
shareholders. The 
awards are designed 
to align the most 
senior managers’ goals 
with the creation of 
sustainable growth 
in shareholder value. 
The awards will also 
increase retention of 
these senior managers.

To provide a 
market competitive 
remuneration package 
and to encourage 
employee share 
ownership across 
the Group.

SHARE INCENTIVE 
PLAN (‘SIP’) AND 
GLOBAL SHARE 
INCENTIVE PLAN 
(‘GSIP’)

OTHER BENEFITS

To provide a 
market competitive 
remuneration package 
and to encourage 
employee share 
ownership across 
the Group.

To provide a 
market competitive 
remuneration package.

For LTIP awards dividends will 
accrue on the LTIP shares which 
are released on vesting and 
will be paid in shares or cash. 
The Committee has discretion 
to adjust awards downwards at 
vesting if it is not satisfied that 
the outcome is a fair reflection 
of underlying performance, or in 
the event of excessive risk-taking 
or misstatement.

The rules of the LTIP contain 
malus and clawback provisions.

Sharesave is a HMRC approved 
scheme open to all UK 
employees. Savings can be made 
over a three-year period to 
purchase shares in the Company 
at a price which is set at the 
beginning of the saving period. 
This price is usually set at a 20 
per cent discount to the market 
price. 

SIP is a HMRC approved scheme 
open to all UK employees, subject 
to service. Eligible employees 
are awarded shares annually 
up to the HMRC limits. GSIP is 
designed on a similar basis to SIP, 
but is not HMRC approved and is 
operated for non-UK employees.

Other benefits currently include: 
car allowance; life assurance; 
disability insurance; private 
medical insurance; and health 
screening. The Committee 
retains the discretion to offer 
additional benefits as appropriate, 
for example, assistance with 
relocation.

The normal LTIP grant for Executive 
Directors is 250 per cent of salary in 
performance shares.

LTIP awards are subject to stretching 
performance conditions, which 
are measured over a three-year 
performance period. A two-year 
compulsory holding period applies 
to these LTIP shares after vesting 
and subject to payment of tax and 
statutory deductions.

Awards to be granted in 2019 will 
be subject to equally weighted Total 
Shareholder Return, Total Property 
Return and Total Accounting Return 
performance conditions.

Employees may save up to the 
HMRC limit across all Sharesave 
grants.

None.

The maximum award is subject to the 
HMRC limit.

Award is based on achievement of 
prior year profit before tax against 
budget and is subject to a three-year 
holding period.

–

None.

CHART 2: REMUNERATION POLICY TABLE: CHAIR AND NON-EXECUTIVE DIRECTORS

Element

FEES

Strategic purpose

Operation

Maximum potential value

Performance metrics

Any increase in the fees to the Chair 
or the Non-Executive Directors will 
be based upon changes in roles and 
responsibilities and market data. 

–

To attract high-calibre 
Non-Executive 
Directors and 
provide market 
appropriate rates.

Fees are reviewed every two 
years taking into account relevant 
market data. Additional fees 
are payable to reflect the time 
commitments and additional 
responsibilities.

The fee paid to the Chair is set 
by the Committee while the 
fees paid to the Non-Executive 
Directors are set by the Board.

No Director is involved in setting 
their own remuneration.

Non-Executive Directors do not 
participate in any performance 
related remuneration and they do 
not receive any benefits.

145

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE

Directors’ Report

DIRECTORS’ REPORT DISCLOSURES

Certain Directors’ Report disclosures, which have been incorporated into the Directors’ Report by reference, can be found on the following pages:

DISCLOSURE

Culture, Purpose and Values

Employee involvement

Diversity

Employment, training and advancement of disabled persons

Approach to investing in and rewarding the workforce

Charitable donations

Review of the Group’s business during the year and any future developments

Principal risks

Section 172 statement

Greenhouse gas emissions

Corporate Governance

Details of the Directors who served during the year

Stakeholder engagement

Directors’ waiver of emoluments

Financial instruments and certain financial risks

SHARE CAPITAL

The issued share capital for the year is set out on page 190.

SECTION

REFERENCE

Strategic Report

Strategic Report

Strategic Report

Strategic Report

Strategic Report

Strategic Report

Strategic Report

Strategic Report

Strategic Report

Strategic Report

Page 27

Pages 34-35

Pages 34-35

Page 35

Page 35

Page 41

Pages 48-52

Pages 76-81

Page 83

Page 86

Governance Report

Pages 92-148

Governance Report

Pages 96-97

Governance Report

Pages 100-105

Directors’ Remuneration Report

Pages 128 and 142

Financial Statements

Pages 180-188

There is one class of shares in issue and there are no restrictions on the voting rights attached to these shares or the transfer of securities in the 
Company, and all shares are fully paid.

The Company made no purchases of its own shares during the year. The Company was granted authority to make market purchases of its own 
shares at the 2020 AGM. This authority will expire at the conclusion of the 2021 AGM and a resolution will be proposed to seek further authority. 

DIVIDENDS

Subject to approval by shareholders at the 2021 AGM, a final dividend of 15.2 pence per share will be paid (2019: 14.4 pence) bringing the total 
dividend for 2020 to 22.1 pence (2019: 20.7 pence). The final dividend will be paid as a Property Income Distribution. The Board proposes to 
offer a scrip dividend option for the 2020 final dividend. 

The ex-dividend date for the final dividend will be 18 March 2021, the record date will be 19 March 2021 and the payment date will be 4 May 2021.

CHANGE OF CONTROL 

 } Contracts and joint venture agreements

There are a number of contracts and joint venture agreements that could allow the counterparties to terminate or alter those arrangements in 
the event of a change of control of the Company. These arrangements are commercially confidential and their disclosure could be seriously 
prejudicial to the Company. 

 } Borrowings and other financial instruments

The Group has a number of borrowing facilities provided by various lenders. These facilities generally include provisions that may require 
any outstanding borrowings to be repaid or the amendment or termination of the facilities upon the occurrence of a change of control of 
the Company. 

 } Employee share plans

The Company’s share plans contain provisions as a result of which options and awards may vest or become exercisable on change of control of 
the Company, in accordance with the rules of the plans.

146

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020EMPLOYEES AND DIRECTORS

There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or employment that 
occurs specifically because of a takeover bid, with the exception of provisions of the Company’s share schemes as detailed above.

 } Directors’ authorities in relation to shares

The Directors’ authorities in relation to issuing, allotting or buying back shares are governed by the Company’s Articles of Association and the 
resolutions passed by shareholders at a general meeting. These documents do not form part of this Report. 

 } Process for appointment/removal of Directors

The Company is governed by its Articles of Association, the UK Corporate Governance Code, the Companies Act 2006 and related legislation 
with regards to the appointment and removal of Directors. Directors are appointed by the Board and elected by shareholders. Directors may be 
removed by the Board or shareholders as applicable. 

SUBSTANTIAL INTERESTS IN THE SHARE CAPITAL OF THE COMPANY

Information provided to the Company under the Disclosure, Guidance and Transparency Rules (DTR 5) is published on a Regulatory Information 
Service and on the Company’s website. As at 31 December 2020 the Company had been notified of the following holdings. No further 
announcements were made to the Company between 31 December 2020 and 18 February 2021. 

Shareholder
BlackRock, Inc
APG Asset Management N.V.
PGGM Vermongensbeheer B.V.

ARTICLES OF ASSOCIATION

Shareholders may amend the Company’s Articles of Association by special resolution.

POLITICAL DONATIONS

No political donations were made by the Company or its subsidiaries during the year.

DIRECTORS’ INDEMNITIES AND INSUR ANCE

Number of  

shares

Percentage of Issued  
Share Capital 

121,329,779

65,185,877

37,546,063

10.18

5.47

3.15

The Company maintains directors’ and officers’ liability insurance which is reviewed annually and is permitted under the Company’s Articles 
of Association and the Companies Act 2006. During the year, the Company agreed to indemnify each Director under a Deed of Indemnity 
against any liability incurred in relation to acts or omissions arising in the ordinary course of their duties. The indemnity applies only to the extent 
permitted by law. 

No Company Directors were indemnified during the year. 

OVERSEAS BR ANCHES

The Company has a branch in Paris, France.

SECONDARY LISTING ON EURONEXT PARIS

On 24 November 2020, the Company’s entire issued share capital was admitted to listing and trading on Euronext Paris. No new shares were 
issued in connection with the secondary listing and the Company’s shares remain listed on the premium segment of the Official List of the 
Financial Conduct Authority and tradable on the Main Market of the London Stock Exchange. 

AUDITOR OF THE COMPANY

A resolution to reappoint PricewaterhouseCoopers LLP as auditor of the Company is to be proposed at the 2021 AGM. 

DISCLOSURE OF INFORMATION TO THE AUDITOR

Each of the persons who is a Director at the date of approval of this Report confirms that:

 } so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and

 } each Director has taken all the steps that they ought to have taken as a Director in order to make themself aware of any relevant audit 

information and to establish that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

The Directors’ Report has been approved by the Board and signed on its behalf by

ELIZABETH BLEASE 
GENER AL COUNSEL AND GROUP COMPANY SECRETARY

18 FEBRUARY 2021

147

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGOVERNANCE

Statement of Directors’ responsibilities 
in respect of the Financial Statements

The Directors are responsible for preparing the Annual Report 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 and Company Financial Statements in accordance with international accounting standards in conformity with the requirements of the 
Companies Act 2006. Additionally, the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules require the directors to 
prepare the Group financial statements in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 
1606/2002 as it applies in the European Union.

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 for the Group and Company, international accounting standards in conformity with the requirements of the Companies Act 2006 
and, for the Group, international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European 
Union have been followed, 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 also 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 responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s 
transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that 
the Financial Statements and the Directors’ Remuneration Report comply with the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the 
preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

DIRECTORS’ CONFIRMATIONS

The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information 
necessary for shareholders to assess the Group’s and Company’s position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed in the Governance section of the Annual Report confirm that, to the best of 
their knowledge:

 } the Group and Company Financial Statements, which have been prepared in accordance with international accounting standards in conformity 

with the requirements of the Companies Act 2006 and, for the Group, international financial reporting standards adopted pursuant to 
Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit 
of the Group and 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.

By order of the Board 

DAVID SLEATH 
CHIEF EXECUTIVE  
18 FEBRUARY 2021 

SOUMEN DAS 
CHIEF FINANCIAL OFFICER 
18 FEBRUARY 2021

148

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
 
 
Financial Statements

In this section we present our Financial Statements for the year, presented in accordance with 
International Accounting Standards in conformity with the requirements of the Companies Act 
2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) 
No 1606/2002 as it applies in the European Union.

Independent Auditors’ Report  
to the members of SEGRO plc

Group Income Statement

Group Statement of Comprehensive Income

Balance Sheets

Statements of Changes in Equity

Cash Flow Statements

Notes to the Financial Statements

Five-year financial results

Financial information

Shareholder information

Glossary of terms

p150 

p157 

p157 

p158 

p159 

p161 

p162 

p212 

p213 

p214 

p215 

149

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSIndependent auditors’ report to the members of SEGRO plc

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion
In our opinion, SEGRO plc’s Group Financial Statements and Company Financial Statements (the “Financial Statements”):

 } give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2020 and of the Group’s profit and the 

Group’s and Company’s cash flows for the year then ended;

 } have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 

2006; and

 } have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the Financial Statements, included within the Annual Report & Accounts 2020 (the “Annual Report”), which comprise: the 
Group and Company Balance Sheets as at 31 December 2020; the Group Income Statement and the Group Statement of Comprehensive 
Income, the Group and Company Cash Flow Statements, and the Group and Company Statements of Changes in Equity for the year then ended; 
and the notes to the Financial Statements, which include a description of the significant accounting policies.

Our opinion is consistent with our reporting to the Audit Committee.

Separate opinion in relation to international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 
as it applies in the European Union
As explained in Note 1 to the Group Financial Statements, the Group, in addition to applying international accounting standards in conformity 
with the requirements of the Companies Act 2006, has also applied international financial reporting standards adopted pursuant to Regulation 
(EC) No 1606/2002 as it applies in the European Union.

In our opinion, the Group Financial Statements have been properly prepared in accordance with International Financial Reporting Standards 
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

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 to the 
Group or the Company.

Other than those disclosed in Note 6 to the Financial Statements, we have provided no non-audit services to the Group or the Company in the 
period under audit.

Our audit approach
Overview
Audit scope

 } Audit procedures on Rental Income and Valuation of Investment Properties are performed centrally by the Group audit team from the UK. 

 } Full scope audit of the SELP Joint Venture by component auditors. 

 } In addition, component auditors performed the audit of specific balances and transactions in certain territories.

 } Due to the current restrictions on travel and social distancing measures, enacted in response to the global Covid-19 pandemic, the group 

engagement team used video conferencing to oversee the component auditor work and had remote discussions with the management of each 
business unit.

 } Over 73% coverage of Assets, Liabilities, Income and Expenditure of the Group. 

Key audit matters

 } Valuation of investment properties (Group and Company)

 } Large and/or complex transactions (Group and Company)

 } Covid-19 (Group and Company)

Materiality

 } Overall Group materiality: £126,600,000 (2019: £100,900,000) based on 1% of total assets.

 } Overall Company materiality: £89,228,000 (2019: £76,400,000) based on 1% of total assets.

 } Performance materiality: £94,950,000 (Group) and £66,921,000 (Company).

150

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the Financial Statements.

Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, 
outlined in the Auditors’ responsibilities for the audit of the Financial Statements section, to detect material misstatements in respect of 
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related 
to compliance with the Real Estate Investment Trust (REIT) status and SIIC regime, 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 preparation of 
the Financial Statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation 
of the Financial Statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate 
journal entries to increase revenue or reduce expenditure, and management bias in accounting estimates and judgemental areas of the Financial 
Statements such as valuation of investment properties. The Group engagement team shared this risk assessment with the component auditors 
so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the Group 
engagement team and/or component auditors included:

 } Discussions with management and internal audit, including consideration of known or suspected instances of non-compliance with laws and 

regulations and fraud, and review of the reports made by internal audit; 

 } Understanding management’s internal controls designed to prevent and detect irregularities; 

 } Assessment of matters, if any, reported on the Group’s whistleblowing helpline and the results of management’s investigation of such matters; 

 } Reviewing the Group’s litigation register in so far as it related to non-compliance with laws and regulations and fraud; 

 } Reviewing relevant meeting minutes, including those of the Board of Directors and the Audit Committee; 

 } Designing audit procedures to incorporate unpredictability around the nature, timing and extent of our testing of expenses; 

 } Review of tax compliance with the involvement of our tax specialists in the audit; 

 } Procedures relating to the valuation of investment properties described in the related key audit matter below; and

 } Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or posted by users posting a 

low number of journals in the period.

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.

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.

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OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Independent auditors’ report to the members of SEGRO plc 
continued

This is not a complete list of all risks identified by our audit.

Covid-19 is a new key audit matter this year. Otherwise, the key audit matters below are consistent with last year.

Key audit matter

How our audit addressed the key audit matter

Valuation of investment properties (Group and Company)

Refer to the Audit Committee Report and the Financial Statements (including 
notes to the Financial Statements; Note 1, Significant accounting policies;  
Note 13, Properties; and Note 27, Property valuation techniques and related 
quantitative information).

Given the inherent subjectivity involved in the valuation of investment properties, 
the need for deep market knowledge when determining the most appropriate 
assumptions, and the technicalities of valuation methodology, we engaged our 
internal valuation experts (qualified chartered surveyors) to assist us in our audit 
of this matter.

The Group’s investment properties were carried at £10,671.4 million as at 31 
December 2020 and a total (realised and unrealised) property gain of £988.6 
million was recognised in the Group Income Statement. We focused on this area 
due to the existence of significant judgement, coupled with the fact that only 
small differences in individual property valuations when aggregated could result 
in material misstatement. The portfolio includes warehouses and light industrial 
buildings, including warehouses used as data centres and for logistics operations. 
These are concentrated in the UK, France, Germany, and Poland. The remainder 
of the portfolio is located across other European countries including Italy, Spain, 
the Netherlands and the Czech Republic. The portfolio includes completed 
investments and properties under construction. The valuation of the Group’s 
portfolio is inherently subjective due to, among other factors, the individual nature 
of each property, its location and the expected future rentals for that particular 
property. The wider challenges currently facing the real estate sector as a result 
of Covid-19 further contributed to the subjectivity at 31 December 2020. For 
developments, factors include projected costs to complete, time until practical 
completion and the ability to let if no pre-let agreement is in place. Valuations 
are carried out by third party valuers, CBRE (the ‘Valuers’). The Valuers were 
engaged by the Directors, and performed their work in accordance with the Royal 
Institution of Chartered Surveyors (‘RICS’) Valuation – Professional Standards. 
The Valuers used by the Group have considerable experience of the markets in 
which the Group operates. The valuations take into account the property-specific 
information referred to above (including the current tenancy agreements and 
rental income, condition and location of the property, and future rental prospects), 
as well as prevailing market yields and market transactions.

The valuation of investment properties may also impact the carrying value of 
investment in the subsidiaries within the Financial Statements of the Company.

Assessing the Valuers’ expertise and objectivity

We assessed the Valuers’ qualifications and expertise and read their terms of 
engagement with the Group to determine whether there were any matters that 
might have affected their objectivity or may have imposed scope limitations upon 
their work. We also considered fees and other contractual arrangements that might 
exist between the Group and the Valuers. We found no evidence to suggest that the 
objectivity of the Valuers was compromised. 

Testing the valuations

Assumptions and capital movement:

Our work covered the valuation of every material property in the Group. We 
obtained and read the CBRE valuation reports covering every property. We held 
meetings with management and the Valuers, at which the valuations and the key 
assumptions therein were discussed. We focused on the largest properties and any 
outliers (where the assumptions used and/or year on year capital value movement are 
out of line with externally published market data for the relevant sector). 

To verify that the valuation approach was suitable for use in determining the carrying 
value for investment properties in the Financial Statements, we: 

 } Confirmed that the valuation approach was in accordance with RICS standards; 
 } Obtained valuation details of every property held by the Group and set an expected 
range for yield and capital value movement, determined by reference to published 
benchmarks and using our experience and knowledge of the market. Compared the 
investment yields used by the Valuers with the expected range of yields and the year 
on year capital movement to our expected range; 

 } Assessed the reasonableness of other assumptions that are not so readily 

comparable with published benchmarks, such as Estimated Rental Value; and

 } Verified where there could be alternative use opportunities, that this had been 

appropriately taken into account.

Where assumptions were outside the expected range or otherwise appeared 
unusual, and/or valuations showed unexpected movements, we undertook further 
investigations and, when necessary, held further discussions with the Valuers and 
obtained evidence to support explanations received. The supporting evidence and 
valuation commentaries provided by the Valuers, enabled us to consider the property 
specific factors that had or may have had an impact on value, including recent 
comparable transactions where appropriate. 

Information and standing data:

We tested the standing data the Group provided to the Valuers for use in the 
performance of the valuation. This involved re-performing controls on a sample 
basis over the input of lease data for leases and testing the accuracy of lease and 
other property information. For development properties, we also confirmed that 
the supporting information for construction contracts and budgets was consistent 
with the Group’s records, for example by inspecting construction contracts. For 
development properties, capitalised expenditure was tested on a sample basis to 
invoices, and budgeted costs to complete were compared with supporting evidence 
(for example construction contracts) to support the inputs included within their 
valuation at the year end. We agreed the amounts per the valuation reports to the 
accounting records and from there we agreed the related balances through to the 
Financial Statements. 

Overall outcome

We concluded that the assumptions used in the valuations by the Valuers were 
supportable in light of the evidence obtained and the disclosures within the Financial 
Statements are sufficient and appropriate.

152

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Key audit matter

How our audit addressed the key audit matter

Large and/or complex transactions (Group and Company)

Refer to the Audit Committee Report and the Financial Statements (including 
notes to the Financial Statements; Note 1, Significant accounting policies;  
Note 8, Realised and unrealised property gain; and Note 19, Share capital and  
share-based payments).

Group

There was a large asset acquisition of a listed French company, Sofibus Patrimoine SA 
(“Sofibus”), in the current year. This warranted additional audit focus due to the 
nature of the transaction and judgments applied.

Group and Company

In June 2020 SEGRO raised £680 million through an equity placing. This 
warranted additional audit focus due to the magnitude of the transaction and 
proceeds generated.

Covid-19 (Group and Company)

Refer to the Strategic Report – Principal risks and the Viability statement, the Audit 
Committee Report and Notes to the Financial Statements – Note 1, Significant 
accounting policies.

The outbreak of Covid-19 has been declared as a global pandemic and is having 
a major impact on economies and financial markets. In order to assess the impact 
of Covid-19 on the business, management have updated their risk assessment and 
prepared an analysis of the potential impact on the revenues, profits, cash flows, 
operations and liquidity position of the Group for the next 12 months and over the 
next five years. The analysis and related assumptions underpin the Group’s going 
concern and viability analysis.

We considered the impact of Covid-19 on the valuation of investment and 
development properties. Given the sector within which SEGRO operates, their 
portfolio has seen an uplift in value during the year.

Management’s analysis considers committed cash flow forecasts and debt facilities 
available to the Group. Further, the analysis considers the covenant headroom 
available, which includes sensitivity analysis and potential downward and plausible 
scenario assumptions. At the balance sheet date, the Group has an LTV of 
22% (2019: 22%) and access to cash and undrawn loan facilities of £1.1 billion 
(2019: £1.2 billion).

After considering these factors, the Directors have concluded that preparing the 
Financial Statements on a going concern basis remains appropriate and that a 
material uncertainty in relation to going concern does not exist.

For each large and/or complex transaction identified, we made inquiries with 
management in order to understand their nature and obtained supporting 
documentation as necessary to verify the transactions. We assessed the proposed 
accounting treatment in relation to the Group’s accounting policies and relevant IFRSs. 

Acquisition of Sofibus 

We tested the acquisition of Sofibus by examining:

 } The purchase and sale agreement;
 } Bank statements to agree funds paid;
 } Management’s memorandum of the accounting treatment for the transaction, 

including management’s assessment of the concentration test to support judgments 
applied in concluding on asset acquisition accounting;

 } Management’s allocation analysis of the purchase price to assets acquired and 

liabilities assumed; and

 } Consolidated financial statements to agree amounts recorded in light of adopted 

Group accounting policies for such transactions.

Equity placement

We tested the equity placement by examining:

 } Placement Agreement; 
 } Submissions to the London Stock Exchange and Companies House; and

 } Bank statements to agree funds received.

Overall outcome

No material issues were identified as a result of our testing.

We evaluated the Group’s updated risk assessment and analysis and considered 
whether it addresses the relevant threats posed by Covid-19. 

Our procedures in respect of the valuation of investment and development properties 
are set out in the valuation of investment properties key audit matter above. 

In respect of going concern, we have assessed management’s going concern analysis 
in light of Covid-19 and obtained evidence to support the Group’s current and 
forecast liquidity positions, along with the key judgments and assumptions used 
in preparing the model. We validated new and significant funding arrangements 
entered during the year and as of the balance sheet date. 

We reviewed current debt covenants as well as management’s assessment of these, 
which included sensitivity analysis and potential downward and plausible scenario 
assumptions to satisfy ourselves that no breaches are anticipated over the going 
concern period of assessment.

Our conclusions relating to going concern and other information are set out in 
the ‘Conclusions relating to Going Concern’ and ‘Reporting on other information’ 
sections of our report, respectively, below. 

We assessed the disclosures presented in the Annual Report in relation to Covid-19 by 
reading the other information, and assessing its consistency with the financial statements 
and the evidence we obtained in our audit. We considered the appropriateness of the 
disclosures on the increased uncertainty over accounting estimates and consider these 
to be adequate. We have reviewed the accounting for lease modifications and analysis of 
expected credit losses on financial assets where material. 

We evaluated management’s assessment and corroborated evidence of the 
operational impacts, considering their consistency with other available information 
and our understanding of the business. 

We considered whether changes to working practices brought about by Covid-19 had an 
adverse impact on the effectiveness of management’s business process and IT controls. 
We did not identify any evidence of material deterioration in the control environment.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Financial Statements as a 
whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which 
they operate.

The Group’s reportable segments are the geographical Business Units: Greater London, Thames Valley, National Logistics, Northern Europe, 
Southern Europe and Central Europe. In establishing the overall approach to the group audit, we determined the type of work that needed to 
be performed at reporting components by us, as the group engagement team, or component auditors operating under our instruction.

The Group operates a common IT environment, processes and controls for rental income and payroll across all its reported segments. 
The Group’s valuation and treasury functions are also based at the corporate centre in the UK. The related balances were therefore largely 
audited by the Group audit team from the UK. Additional specified procedures were performed by audit teams on location in each business unit, 
such that the total testing programme provided sufficient audit evidence over all financial statement line items. 

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OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Independent auditors’ report to the members of SEGRO plc 
continued

The SELP Joint Venture was included as being in scope for a full scope audit. As above, the work on rental income and valuation of investment 
properties for the Joint Venture was performed by the Group audit team. We determined the level of involvement we needed to have in the 
component auditor’s work to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on 
the group financial statements as a whole. We issued formal, written instructions to the component auditors setting out the work to be performed 
by each of them. Although we have not been able to visit our component teams or perform site visits this year due to the pandemic, throughout 
the audit process, the Group audit team has had various interactions through the use of video call technology with the audit teams on location 
in each business unit to oversee the audit process. Senior team members also attended via video conference the clearance meetings for each 
component. During the clearance meetings, the results of the work performed by all component teams were discussed. The group engagement 
team also evaluated the sufficiency of the audit evidence obtained by component teams. Taking into account the components and Joint Ventures 
subject to a full scope audit, the centralised and other testing performed, coverage over the Group Balance Sheet and Group Income Statement 
was as follows:

Assets

Liabilities

Income

Expenditure

92% coverage

91% coverage

96% coverage

73% coverage

The audit of the Company Financial Statements was performed entirely by the Group audit team in the UK, leveraging on the work performed 
on the Group audit where appropriate with additional audit procedures performed on other Company specific balances. 

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:

Overall materiality

£126,600,000 (2019: £100,900,000).

How we determined it

1% of total assets

Financial statements – Group

Financial statements – Company

£89,228,000 (2019: £76,400,000).

1% of total assets

Rationale for benchmark applied

The primary measurement attribute of the Group is the 
carrying value of property investments. On this basis, we set 
an overall Group materiality level based on total assets.

The primary measurement attribute of the Company is the 
carrying value of investments in subsidiaries. On this basis, we 
set an overall Company materiality level based on total assets.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of 
materiality allocated across components was £75.0 million and £110.0 million. Certain components were audited to a local statutory audit 
materiality that was also less than our overall Group materiality.

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% of overall materiality, amounting to £94,950,000 for the Group Financial Statements and £66,921,000 for the Company 
Financial Statements.

In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation 
risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £6.3 million (Group audit) 
(2019: £5.0 million) and £4.5 million (Company audit) (2019: £3.8 million) as well as misstatements below those amounts that, in our view, 
warranted reporting for qualitative reasons.

Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of 
accounting included:

 } Procedures to identify events or conditions that may cast significant doubt on the ability to continue as a going concern and whether or not 

a material uncertainty related to going concern exists;

 } Evaluation of management’s significant assumptions used to assess going concern, including whether or not they are appropriate in the context 

of changes from prior periods, maintain adequate support, and align with our understanding of the entity and other relevant areas of the 
entity’s business activities; 

 } Review of potential financial or non-financial debt covenant defaults leading to acceleration of repayment; and

 } Assessment of whether the entity has adequately disclosed all required going concern events and conditions.

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.

154

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020As 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 Company’s 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 December 2020 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 Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies 
Act 2006.

Corporate governance statement
The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the corporate 
governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. 
Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other 
information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance 
statement is materially consistent with the Financial Statements and our knowledge obtained during the audit, and we have nothing material to 
add or draw attention to in relation to:

 } The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

 } The disclosures in the Annual Report & Accounts 2020 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 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.

155

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Independent auditors’ report to the members of SEGRO plc 
continued

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate 
governance statement is materially consistent with the Financial Statements and our knowledge obtained during the audit:

 } The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the 

information necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;

 } The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and

 } The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the 
Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.

Responsibilities for the Financial Statements and the audit

Responsibilities of the Directors for the Financial Statements
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the Financial 
Statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also 
responsible for such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material 
misstatement, whether due to fraud or error.

In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going 
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either 
intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, 
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is 
not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can 
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the 
economic decisions of users taken on the basis of these Financial Statements.

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 Directors’ Remuneration 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 22 April 2016 to audit the Financial Statements 
for the year ended 31 December 2016 and subsequent financial periods. The period of total uninterrupted engagement is five years, covering the 
years ended 31 December 2016 to 31 December 2020.

JOHN WATERS (SENIOR STATUTORY AUDITOR)
FOR AND ON BEHALF OF PRICEWATERHOUSECOOPERS LLP
CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS
LONDON
18 FEBRUARY 2021

156

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Group Income Statement

For the year ended 31 December 2020

Revenue

Costs

Administration expenses

Share of profit from joint ventures after tax

Realised and unrealised property gain

Operating profit

Finance income

Finance costs

Profit before tax

Tax

Profit after tax

Attributable to equity shareholders

Attributable to non-controlling interests

Earnings per share (pence)

Basic

Diluted 

Group Statement of Comprehensive Income

For the year ended 31 December 2020

Profit for the year

Items that may be reclassified subsequently to profit or loss

Foreign exchange movement arising on translation of international operations

Fair value movements on derivatives and borrowings in effective hedge relationships

Tax on components of other comprehensive income/(expense)

Other comprehensive income/(expense)

Total comprehensive income for the year

Attributable to equity shareholders

Attributable to non-controlling interests

Notes

4

5

6

7

8

9

9

10

12

12

2020 
£m

 431.7 

 (104.3) 

 327.4 

(51.5)

 236.5 

 988.6 

 1,501.0 

 50.0 

 (86.9) 

 1,464.1 

 (35.0) 

 1,429.1 

 1,426.9 

 2.2 

124.1

123.6

2020 
£m

1,429.1

111.9

(52.5)

59.4

–

59.4

1,488.5

1,486.9

1.6

2019 
£m

432.5

(123.9)

308.6

(51.5)

203.1

489.2

949.4

65.3

(112.7)

902.0

(41.4)

860.6

857.9

2.7

79.3

78.9

2019 
£m

860.6

(110.2)

57.6

(52.6)

–

(52.6)

808.0

804.7

3.3

157

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Balance Sheets

For the year ended 31 December 2020

Assets

Non-current assets

Intangible assets

Investment properties

Other interests in property

Property, plant and equipment

Investments in subsidiaries

Investments in joint ventures 

Other investments

Other receivables 

Derivative financial instruments

Current assets

Trading properties

Trade and other receivables

Derivative financial instruments

Cash and cash equivalents

Total assets

Liabilities

Non-current liabilities

Borrowings

Deferred tax liabilities 

Trade and other payables

Derivative financial instruments

Current liabilities

Trade and other payables

Borrowings

Derivative financial instruments

Tax liabilities

Total liabilities

Net assets

Equity

Share capital

Share premium

Capital redemption reserve

Own shares held

Other reserves

Retained earnings brought forward

Profit for the year attributable to owners of the parent 

Other movements

Retained earnings

Total equity attributable to owners of the parent

Non-controlling interests

Total equity

Net assets per ordinary share (pence)

Basic

Diluted

GROUP

2020 
£m

2019 
£m

COMPANY

2020 
£m

2019 
£m

Notes

12,666.5

10,082.7

8,922.8

7,654.3

 2,413.1 

1,943.5

2,399.5

1,940.9

7

7

14

17

13

14

17

16

16

10

15

17

15

16

17

19

20

20 

21

 1.6 

13

 10,671.4 

 16.2 

 26.6 

–

2.5

8,401.7

28.3

23.0

–

1,423.0

1,121.4

1.6

37.2

63.2

27.5

110.6

59.7

12,240.8

9,774.7

52.1

269.4

15.2

89.0

425.7

20.2

146.6

8.7

132.5

308.0

 87.0 

 109.4 

 5.2 

53.2

102.9

–

2,614.7

2,099.6

 372.0 

298.6

0.9

 4.9 

 2.9 

380.7

 2,995.4

9,671.1

 119.1 

 3,277.5 

 113.9 

 (1.1) 

 252.6

 4,702.9 

 1,426.9

 (232.6) 

 5,897.2

 9,659.2

 11.9 

 9,671.1 

–

1.7

5.2

305.5

2,405.1

7,677.6

109.6

2,554.3

113.9

(2.6)

199.5

4,056.9

857.9

(211.9)

4,702.9

7,677.6

–

7,677.6

700

697

12

12

811

809

–

–

–

–

–

–

0.8

8,815.6

1.0

7,516.5

–

–

–

–

–

–

63.2

8,879.6

59.7

7,577.2

–

8.2

15.2

19.8

43.2

–

7.7

8.7

60.7

77.1

–

1,929.7

5.2

4,334.4

28.4

–

4.9

–

33.3

4,367.7

4,555.1

 119.1 

 3,277.5 

 113.9 

(1.1)

 224.4 

 934.0 

 123.3 

(236.0) 

 821.3 

–

1,747.4

–

3,688.3

29.0

–

1.7

–

30.7

3,719.0

3,935.3

109.6

2,554.3

113.9

(2.6)

226.1

818.5

328.8

(213.3)

934.0

 4,555.1 

3,935.3

–

–

4,555.1

3,935.3

The Financial Statements of SEGRO plc (registered number 167591) on pages 157 to 204 were approved by the Board of Directors and 
authorised for issue on 18 February 2021 and signed on its behalf by:

DJR SLEATH 
DIRECTOR    

S DAS 
DIRECTOR

158

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
Statements of Changes in Equity

For the year ended 31 December 2020

Attributable to owners of the parent

Ordinary 
share 
capital 
£m

Share 
premium 
£m

Capital 
redemption 
reserve1
£m

Other reserves

Share-
based 
payments 
reserves 
£m

Translation, 
hedging 
and other 
reserves1
£m

Own 
shares 
held 
£m

Merger 
reserve1
 £m

Retained 
earnings 
£m

Group

Balance at 1 January 2020

109.6 2,554.3

113.9

(2.6)

28.8

1.6

169.1 4,702.9

Profit for the year

Other comprehensive income

Total comprehensive income 
for the year

Transactions with owners 
of the Company 

Issue of shares

Own shares acquired

Equity-settled share-based transactions

Dividends

Movement in non-controlling interest2

Total transaction with owners 
of the Company 

–

–

–

–

–

–

8.7

663.4

–

–

0.8

–

–

–

59.8

–

9.5

723.2

–

–

–

–

–

–

–

–

–

Balance at 31 December 2020

119.1 3,277.5

113.9

–

–

–

–

(2.0)

3.5

–

–

1.5

(1.1)

–

–

–

–

–

(6.9)

–

–

(6.9)

21.9

Total equity 
attributable 
to owners of 
the parent  

£m

7,677.6

1,426.9

60.0

Non-
controlling 
interests2
£m

Total 
equity
£m

–

7,677.6

2.2 1,429.1

(0.6)

59.4

–

60.0

– 1,426.9

–

–

60.0

– 1,426.9

1,486.9

1.6 1,488.5

–

–

–

–

–

–

–

–

–

–

–

–

–

–

8.9

(240.1)

(1.4)

672.1

(2.0)

5.5

(179.5)

(1.4)

–

–

–

–

672.1

(2.0)

5.5

(179.5)

10.3

8.9

(232.6)

494.7

10.3

505.0

61.6

169.1 5,897.2

9,659.2

11.9

9,671.1

1  See Note 20.
2  Non-controlling interests relate to Vailog S.r.l and Sofibus Patrimoine SA. During the year non-controlling interests of £11.9 million were recognised upon the acquisition of Sofibus Patrimoine SA, 

see Note 8 for further details.

For the year ended 31 December 2019

Attributable to owners of the parent

Ordinary 
share 
capital
£m

Share 
premium
£m

Capital 
redemption 
reserve1
£m

Other reserves

Share-
based 
payments 
reserves
£m

Translation, 
hedging  
and other 
reserves1
£m

Own 
shares 
held
£m

Merger 
reserve1
£m

Retained 
earnings
£m

Total equity 
attributable 
to owners of 
the parent
£m

Non-
controlling 
interests2
£m

Total 
equity
£m

Group

Balance at 1 January 2019

101.3

2,047.7

113.9

(2.0)

22.3

54.8

169.1

4,056.9

6,564.0

–

6,564.0

Profit for the year

Other comprehensive income

Total comprehensive income 
for the year

Transactions with owners 
of the Company 

Issue of shares

Own shares acquired

Equity-settled share-based transactions

Dividends

Movement in non-controlling interest2

Total transaction with owners 
of the Company 

–

–

–

–

–

–

7.3

436.7

–

–

1.0

–

–

–

69.9

–

8.3

506.6

–

–

–

–

–

–

–

–

–

Balance at 31 December 2019

109.6

2,554.3

113.9

1  See Note 20.
2  Non-controlling interests relate to Vailog S.r.l.

–

–

–

–

(3.4)

2.8

–

–

(0.6)

(2.6)

–

–

–

–

–

6.5

–

–

6.5

28.8

–

(53.2)

(53.2)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

3.1

(212.6)

(2.4)

(211.9)

1.6

169.1

4,702.9

857.9

–

857.9

(53.2)

2.7

0.6

860.6

(52.6)

857.9

804.7

3.3

808.0

444.0

(3.4)

12.4

(141.7)

(2.4)

–

–

–

–

(3.3)

444.0

(3.4)

12.4

(141.7)

(5.7)

308.9

7,677.6

(3.3)

305.6

–

7,677.6

159

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Statements of Changes in Equity

For the year ended 31 December 2020

Balance at 31 December 2020

119.1 3,277.5

113.9

1  See Note 20.

For the year ended 31 December 2019

Company

Balance at 1 January 2020

Profit for the year

Other comprehensive income

Total comprehensive income for the year

Transactions with owners of the Company 

Issue of shares

Own shares acquired

Equity-settled share-based transactions

Dividends

Total transaction with owners of the Company 

Company

Balance at 1 January 2019

Profit for the year

Other comprehensive income

Total comprehensive income for the year

Transactions with owners of the Company 

Issue of shares

Own shares acquired

Equity-settled share-based transactions

Dividends

Total transaction with owners of the Company 

Ordinary 
share 
capital
£m

Share 
premium
£m

Capital 
redemption
reserve1
£m

Other reserves

Share-
based 
payments 
reserves
£m

Translation, 
hedging 
and other 
reserves
£m

Own 
shares 
held
£m

Merger 
reserve1
£m

Retained 
earnings
£m

Total equity 
attributable 
to equity 
shareholders
£m

109.6 2,554.3

113.9

(2.6)

9.6

47.4

169.1

–

–

–

–

–

–

8.7

663.4

–

–

0.8

9.5

–

–

59.8

723.2

–

–

–

–

–

–

–

–

–

–

–

–

(2.0)

3.5

–

1.5

(1.1)

–

–

–

–

–

(1.7)

–

(1.7)

7.9

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

934.0

123.3

–

3,935.3

123.3

–

123.3

123.3

–

–

4.1

(240.1)

(236.0)

672.1

(2.0)

5.9

(179.5)

496.5

47.4

169.1

821.3

4,555.1

Ordinary 
share  

capital
£m

Share 
premium
£m

Capital 
redemption 
reserve1
£m

Other reserves

Share-
based 
payments 
reserves
£m

Translation, 
hedging 
and other 
reserves
£m

Own 
shares 
held
£m

Merger 
reserve1
£m

Retained 
earnings
£m

Total equity 
attributable 
to equity 
shareholders
£m

101.3

2,047.7

113.9

(2.0)

7.3

47.4

169.1

–

–

–

–

–

–

7.3

436.7

–

–

1.0

8.3

–

–

69.9

506.6

–

–

–

–

–

–

–

–

–

–

–

–

(3.4)

2.8

–

(0.6)

(2.6)

–

–

–

–

–

2.3

–

2.3

9.6

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

47.4

169.1

818.5

328.8

–

328.8

–

–

(0.7)

(212.6)

(213.3)

934.0

3,303.2

328.8

–

328.8

444.0

(3.4)

4.4

(141.7)

303.3

3,935.3

Balance at 31 December 2019

109.6

2,554.3

113.9

1  See Note 20.

160

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes

26(i)

Cash Flow Statements

For the year ended 31 December 2020

Cash flows from operating activities

Interest received 

Dividends received

Interest paid 

Cost of new interest rate derivatives transacted

Proceeds from early close out of interest rate derivatives

Cost of early close out of debt

Tax paid

Net cash received from operating activities

Cash flows from investing activities

Purchase and development of investment properties1

Sale of investment properties

Acquisition of other interest in property

Purchase of plant and equipment and intangibles

Acquisition of other investments

Investment in subsidiary undertakings

Loan advances paid to subsidiary undertakings

Investment and loans to joint ventures 

Divestment and repayment of loans from joint ventures

Net cash used in investing activities

Cash flows from financing activities

Dividends paid to ordinary shareholders

Proceeds from borrowings

Repayment of borrowings

Principal element of lease payments

Settlement of foreign exchange derivatives

Purchase of non-controlling interest

Proceeds from issue of ordinary shares

Purchase of ordinary shares

Net cash generated from financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Effect of foreign exchange rate changes

Cash and cash equivalents at the end of the year

16

GROUP

COMPANY

2020 
£m

233.2

 42.6 

 33.8 

 (94.2)

 (12.4)

 12.4 

 (10.9)

 (5.2)

 199.3 

 (1,215.9)

 159.2 

 (3.9)

(4.9)

(0.3)

–

–

(39.8)

–

(1,105.6)

(179.5)

550.6

(122.1)

(1.6)

(55.0)

–

672.1

(2.0)

862.5

(43.8)

132.5

0.3

89.0

2019 
£m

291.6

47.1

33.3

(91.7)

(11.4)

6.9

(18.6)

(46.9)

210.3

(602.9)

412.4

(13.3)

(2.7)

(1.2)

–

–

(148.6)

136.4

(219.9)

(141.7)

10.2

(251.1)

(0.9)

26.9

(7.9)

444.0

(3.4)

76.1

66.5

66.5

(0.5)

132.5

2020 
£m

(13.7)

139.4

174.4

(90.9)

(12.4)

12.4

(10.9)

–

198.3

–

–

–

–

–

(58.8)

(1,044.7)

–

–

2019 
£m

(9.5)

145.9

210.3

(88.7)

(11.4)

6.9

(18.6)

–

234.9

–

–

–

(1.0)

–

(46.7)

(244.1)

–

–

(1,103.5)

(291.8)

(179.5)

550.6

(121.9)

–

(55.0)

–

672.1

(2.0)

864.3

(40.9)

60.7

–

19.8

(141.7)

10.2

(250.5)

–

26.9

–

444.0

(3.4)

85.5

28.6

32.3

(0.2)

60.7

1  Group cash payment for the purchase and development of investment properties of £1,215.9 million (2019: £602.9 million) represents total costs for property acquisitions and additions to 

existing investment properties per Note 13(i) of £1,329.3 million (2019: £595.9 million) adjusted for the following cash and non-cash movements: deducts interest capitalised of £6.8 million 
(2019: £8.2 million); deducts net movement in capital accruals and prepayments of £29.8 million (2019: adds back £15.2 million); deducts other non-cash movements of £76.8 million (2019: £nil) 
mainly for transfers from other interests in properties and investments and the acquisition of Sofibus Patrimoine SA.

161

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements

For the year ended 31 December 2020

1. SIGNIFICANT ACCOUNTING POLICIES

General information
SEGRO plc (the Company) is a public limited company, limited by shares, incorporated, domiciled and registered in England in the United 
Kingdom under the Companies Act. The address of the registered office is given on the inside back cover.

The principal activities of the Company and its subsidiaries (the Group) and the nature of the Group’s operations are set out in the Strategic 
Report on pages 30 to 31.

These Financial Statements are presented in pounds sterling because that is the currency of the primary economic environment in which the 
Group operates and is the functional currency of the Company.

Basis of preparation
The Financial Statements have been prepared in accordance with International Accounting Standards (IAS) in conformity with the requirements of 
the Companies Act 2006 and International Financial Reporting Standards (IFRS) adopted pursuant to Regulation (EC) No 1606/2002 as it applies 
in the European Union. In addition, the Group has also disclosed additional measures relating to the Best Practice Recommendations Guidelines 
issued by the European Public Real Estate Association (EPRA) as appropriate, as discussed further in Note 2 and Note 12.

The Financial Statements have been prepared on a going concern basis for a period of at least 12 months from the date of approval of the 
Financial Statements. As discussed in the Financial Review on pages 67 to 68, the Directors have a reasonable expectation that the Company 
and Group have adequate resources to continue in operational existence for the foreseeable future. At 31 December 2020 the Group held cash 
and available facilities of £1.1 billion and has a long-dated debt maturity profile. This provides significant liquidity to meet the Group’s operational 
requirements and capital commitments for the foreseeable future. The financial covenants have been stress tested and substantial headroom 
exists against the gearing and interest cover covenants at 31 December 2020 and the covenants are not expected to be breached in the 
foreseeable future.

The Directors have taken advantage of the exemption offered by section 408 of the Companies Act 2006 not to present a separate income 
statement and statement of comprehensive income for the Company. The Financial Statements have been prepared under the historical cost 
convention as modified by the revaluation of properties and certain financial assets and liabilities including derivatives.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group 
Financial Statements.

New and amended standards adopted by the Group
The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020:

 } Definition of a Business – amendments to IFRS 3

 } Definition of Material – amendments to IAS 1 and IAS 8

 } Interest Rate Benchmark Reform – amendments to IFRS 9, IAS 39 and IFRS 17

 } Revised Conceptual Framework for Financial Reporting

The impact of the adoption of the amendments to IFRS 3, ‘Business combinations’, Definition of a Business is disclosed further below. 

The other standards and amendments did not have any impact on the amounts recognised in prior period and are not expected to significantly 
affect the current or future periods. 

Amendments to IFRS 3 ‘Business Combinations’, Definition of a Business, provides a revised framework for evaluating a business and introduces an 
optional ‘concentration test’. The amendment impacts the assessment and judgements used in determining whether property transactions represent an 
asset acquisition or business combination. As a result of the amendment it is expected that future transactions are more likely to be treated as an asset 
acquisition. The optional ‘concentration test’ has been applied for the acquisition of Sofibus Patrimoine SA in the year, see Note 8 for further details.

New standards and amendments not yet adopted
Certain new accounting standards and amendments are effective for annual periods beginning after 1 January 2020, and have not been applied 
in preparing these Financial Statements:

 } Amendments to IAS 1, ‘Presentation of financial statements’, on classification of liabilities

 } Annual Improvement to IFRS Standards 2018-2020

The amendments that are not yet effective are not expected to have a material impact on the Group in the current or future reporting periods 
and on the foreseeable future transactions. 

Basis of consolidation
The consolidated Financial Statements comprise the Financial Statements of the Company and the Subsidiaries ‘the Group’, plus the Group’s 
share of the results and net assets of the joint ventures.

Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its 
involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into 
consideration potential voting rights. The acquisition date is the date on which control is transferred to the acquirer. The Financial Statements 
of subsidiaries are included in the consolidated Financial Statements from the date that control commences until the date that control ceases. 
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-
controlling interests to have a deficit balance.

162

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 20201. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Joint ventures
A joint venture is a contract under which the Group and other parties undertake an activity or invest in an entity, under joint control. The Group uses 
equity accounting for such entities, carrying its investment at cost plus the movement in the Group’s share of net assets after acquisition, less impairment.

Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains 
arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. 
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment on the asset transferred.

The Company holds investments in subsidiaries and joint ventures at cost less accumulated impairment losses.

Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the 
fair values of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. 
Acquisition related costs are recognised in the Income Statement as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities 
that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or 
disposal groups) that are classified as held for sale in accordance with IFRS 5 ‘Non-Current Assets Held for Sale and Discontinued Operations’, 
which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset measured at cost, being the excess of the cost of the business combination over the 
Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s 
interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, 
the excess is recognised immediately in the Income Statement.

The interest of non-controlling interest shareholders in the acquiree is initially measured at their proportion of the net fair value of the assets, 
liabilities and contingent liabilities recognised.

When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the contingent 
consideration is measured at its acquisition-date fair value. Changes in fair value of the contingent consideration that qualify as measurement 
period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are 
adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition 
date) about facts and circumstances that existed at the acquisition date.

Contingent consideration that is classified as an asset or a liability is re-measured at subsequent reporting dates in accordance with IFRS 9, as 
appropriate, with the corresponding gain or loss being recognised in the Income Statement.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the 
acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in the Income 
Statement within realised and unrealised property gain. The same treatment is applied for acquisitions of a subsidiary achieved in stages that meet 
the IFRS 3 concentration test to be treated as an asset acquisition.

For acquisitions of a subsidiary that meet the IFRS 3 concentration test to be treated as an asset acquisition, the Group allocates the cost between 
the individual identifiable assets and liabilities in the Group based on their relative fair values at the date of acquisition. Such transactions do not 
give rise to goodwill, generally no deferred tax is recognised on initial temporary differences and transaction costs are capitalised. The Group has 
elected to initially measure the interest of non-controlling interest shareholders in the acquiree at their proportion of the acquisition date net fair 
value of the assets, liabilities and contingent liabilities recognised. 

Foreign currency transactions
Foreign currency transactions are translated to the respective functional currency of Group entities at the foreign exchange rate ruling on the 
transaction date. Foreign exchange gains and losses resulting from settling these, or from retranslating monetary assets and liabilities held in 
foreign currencies, are booked in the Income Statement. The exception is for foreign currency loans and derivatives that hedge investments in 
foreign subsidiaries, where exchange differences are booked in equity until the investment is realised.

Consolidation of foreign entities
Assets and liabilities of foreign entities are translated into sterling at exchange rates ruling at the Balance Sheet date. Their income, expenses 
and cash flows are translated at the average rate for the period or at spot rate for significant items. Resultant exchange differences are booked in 
Other Comprehensive Income and recognised in the Group Income Statement when the operation is sold.

The principal exchange rates used to translate foreign currency denominated amounts in 2020 are:
Balance Sheet: £1 = €1.12 (31 December 2019: £1 = €1.18). Income Statement: £1= €1.13 (2019: £1 = €1.14).

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 professional valuers. Lease liabilities associated with 
leasehold properties are accounted for under IFRS 16, see the Leases accounting policy. If a valuation obtained for a property held under a lease 
is net of all payments expected to be made, any related lease liability recognised separately in the Balance Sheet is added back to arrive at the 
carrying value of the investment property for accounting purposes. Valuation gains and losses in a period are taken to the Income Statement. 
As the Group uses the fair value model, as per IAS 40 ‘Investment Property’, 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 their present condition and the sale is highly probable.

163

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 20201. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Investment properties are transferred to trading properties when there is a change in use and the property ceases to meet the definition of 
investment property. 

Other interests in property
Other interests in property include the cost and related fees in respect of land options, which are initially capitalised and regularly tested for 
impairment. The impairment review includes consideration of the resale value of the option and likelihood of achieving planning consent.

Other investments
Other investments are initially measured at cost, and then revalued to fair value. Gains and losses arising from valuation are recognised in the 
Income Statement within realised and unrealised property gain.

Trading properties
These are properties being developed for sale or being held for sale after development is complete, and are shown at the lower of cost and net 
realisable value. Cost includes direct expenditure and capitalised interest.

Trading properties are transferred to investment properties when there is a change in use usually evidenced by the commencement of an 
operating lease to another party, together with the intention to hold the property to generate rent, or for capital appreciation, or for both.

Property acquisitions and disposals
Properties are treated as acquired at the point when the Group assumes the control of ownership and as disposed when transferred to the buyer. 
Generally, this would occur on completion of the contract. Any gains or loss arising on de-recognition of the property, which is calculated as the 
difference between the net disposal proceeds and the carrying amount of the asset at the commencement of the accounting period plus capital 
expenditure in the period, is included in profit or loss in the period in which the property is derecognised.

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. 

Lease liabilities include the present value of payments which generally include fixed payments and variable payments that depend on an index 
(such as an inflation index). When the lease contains an extension or purchase option that the Group considers reasonably certain to be exercised, 
the cost of the option is included in the lease payments. 

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. 

Cash payments relating to the principal portion of the lease liabilities are presented as cash flows from financing activities and cash payments for 
the interest portion are presented as cash flows from operating activities. 

The ROU asset is measured at a cost based on the amount of the initial measurement of the lease liability, plus initial direct costs and the cost of 
obligations to refurbish the asset, less any incentives received. 

The ROU asset (other than the ROU assets that relate to land or property that meets the definition of investment property under IAS 40) 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 are included in the heading Property, plant and equipment, and the lease liability included in the 
headings current and non-current Trade and other payables on the Balance Sheet. 

Where the ROU asset relates to land or property that meets the definition of investment property under IAS 40, after initial recognition the ROU 
asset is subsequently accounted for as investment property and carried at fair value (see Investment properties accounting policy). Valuation gains 
and losses in a period are taken to the Income Statement. The ROU assets are included in the heading Investment properties, and the lease 
liability in the headings current and non-current Trade and other payables on the Balance Sheet.

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. The payments for such leases are recognised in the Income Statement on a straight-line basis over the lease term. 

Revenue
Revenue includes gross rental income, joint venture management and performance fee income, income from service charges and other 
recoveries from tenants and proceeds from the sale of trading properties. 

Rental income
Rental income from properties let as operating leases are recognised on a straight-line basis over the lease term. Lease incentives and initial costs 
to arrange leases are capitalised, then amortised on a straight-line basis over the lease term (‘rent averaging’). Surrender premiums received in the 
period are included in rental income.

Changes in the scope or the consideration for a lease, that was not part of the original terms and conditions, which might arise as a result of 
lease concessions, are accounted as a lease modification. Lease modifications are accounted for as a new lease from the effective date of the 
modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.

164

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 20201. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Service charges and other recoveries from tenants
These include income in relation to service charges, directly recoverable expenditure and management fees. Revenue from providing services 
is recognised in the accounting period in which the services are rendered. Revenue from services is recognised based on the actual service 
provided to the end of the reporting period as a proportion of the total services to be provided and recognised over time. The Group generally 
acts as the principal in service charge transactions as it directly controls the delivery of the services at the point they are provided to the tenant. 
Where the Group acts as a principal, service charge income is presented gross within revenue and service charge expense presented gross 
within costs. 

Joint venture management and performance fees 
Joint venture management and performance fees are recognised as income in the period to which they relate. Management fees are recognised 
in the accounting period in which the services are rendered. Revenue from services is recognised based on the actual service provided to the 
end of the reporting period as a proportion of the total services to be provided and recognised over time. Performance fees are based on the 
joint venture’s performance over the performance period and payable subject to meeting certain criteria and hurdle rates at the end of the period 
(further details are given in Note 7). Performance fees are recognised at the end of the performance period to the extent that it is highly probable 
there will not be a significant future reversal and the fee can be reliably estimated.

Sale of trading properties
Proceeds from the sale of trading properties are recognised at the point in time at which control of the property has been transferred to the 
purchaser. Therefore, revenue is recognised at a point in time and generally occurs on completion of the contract.

Property, plant and equipment
Plant and equipment are stated at historic cost less accumulated depreciation. Cost includes purchase price and any directly attributable costs.

Depreciation is recognised so as to write off the cost or valuation of assets (other than investment properties) less their residual values, using the 
straight-line method, on the following bases:

Plant and equipment 
Solar panels 

20% per annum
5% per annum 

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any 
changes in estimate accounted for on a prospective basis.

Property relates to the ROU recognised for office leases entered into by the Group. The ROU is initially measured based on the present value 
of lease payments, plus initial direct costs and the cost of obligations to refurbish the asset, less any incentives received. The ROU asset is 
depreciated over the shorter of the lease term or the useful life of the underlying asset. 

Financial instruments
Borrowings
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, borrowings are stated at 
amortised cost with any difference between the amount initially recognised and the redemption value being recognised in the Income Statement 
over the period of the borrowings, using the effective interest rate method.

Gross borrowing costs relating to direct expenditure on properties under development or undergoing major refurbishment are capitalised. 
The interest capitalised is calculated using the Group’s weighted average cost of borrowing for the relevant currency. Interest is capitalised from 
the commencement of the development work until the date of practical completion. The capitalisation of finance costs is suspended if there are 
prolonged periods when development activity is interrupted.

Derivative financial instruments
The Group uses derivatives (principally interest rate swaps, currency swaps, forward foreign exchange contracts and interest caps) in managing 
interest rate risk and currency risk, and does not use them for trading. They are recorded, and subsequently revalued, at fair value, with 
revaluation gains or losses being immediately taken to the Income Statement (fair value through profit or loss ‘FVPL’). The exception is for 
derivatives qualifying as hedges, when the treatment of the gain/loss depends upon the item being hedged, and may go to other comprehensive 
income within the Statement of Comprehensive Income (fair value through other comprehensive income ‘FVOCI’).

Derivatives with a maturity of less than 12 months or that expect to be settled within 12 months of the Balance Sheet date are presented as 
current assets or liabilities. Other derivatives are presented as non-current assets or liabilities.

Trade and other receivables and payables
Trade and other receivables are booked at fair value and subsequently measured at amortised cost using the effective interest method. Trade and other 
payables are initially measured at fair value, net of transaction costs and subsequently measured at amortised costs using the effective interest method. 

The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECLs) which uses a lifetime expected loss allowance for all 
trade receivables. Note 17(vi) details the Group’s calculation for measuring ECLs.

Pensions – Defined benefit scheme
The Scheme’s assets are measured at fair value, their obligations are calculated at discounted present value, and any net surplus or deficit is 
recognised in the Balance Sheet. Operating and financing costs are charged to the Income Statement, with service costs spread systematically 
over employees’ working lives, and financing costs expensed in the period in which they arise. Actuarial gains and losses are recognised in other 
comprehensive income within the Statement of Comprehensive Income. Where the actuarial valuation of the scheme demonstrates that the scheme 
is in surplus, the recognisable asset is limited to that for which the Group can benefit in the future either through a cash refund or reduction in future 
payments is available. Professional actuaries are used in relation to defined benefit schemes and the assumptions made are outlined in Note 18.

165

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Share-based payments
The cost of granting share options and other share-based remuneration is measured at their fair value at the grant date. The costs are expensed 
straight-line over the vesting period in the Income Statement, based on estimates of the shares or options that will eventually vest. Charges are 
reversed if it appears that non-market-based performance conditions will not be met.

The fair value excludes the effect of non-market-based vesting conditions.

At each Balance Sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-
market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the Income Statement such that the 
cumulative expense reflects the revised estimate, with a corresponding adjustment to equity within the share-based payment reserve.

Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a 
deduction, net of tax, from the proceeds.

When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised 
as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury 
shares are sold or reissued subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the 
transaction is presented within share premium.

Shares held by Estera Trust (Jersey) Limited and Equiniti Limited to satisfy various Group share schemes are disclosed as own shares held and 
deducted from contributed equity.

Income tax
Income tax on the profit for the year comprises current and deferred tax. Current tax is the tax payable on the taxable income for the year and 
any adjustment in respect of previous years. Current tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of 
the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income.

Deferred tax is provided in full using the Balance Sheet liability method on temporary differences between the carrying amounts of assets and 
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is determined using tax rates that have been 
enacted or substantively enacted by the reporting date and are expected to apply when the asset is realised or the liability is settled.

No provision is made for temporary differences (i) arising on the initial recognition of assets or liabilities, other than a business combination, 
that affect neither accounting nor taxable profit and (ii) relating to investments in subsidiaries to the extent that they will not reverse in the 
foreseeable future.

Deferred tax assets are recognised to the extent that it is probable that suitable taxable profits will be available against which deductible 
temporary differences can be utilised.

Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, the Directors are required to make judgements, estimates and assumptions about the 
carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based 
on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and 
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate 
is revised if the revision affects only that period, or in the period of the revisions and future periods if the revision affects both current and 
future periods.

Significant areas of estimation uncertainty

Property valuations
Valuation of property is a central component of the business. In estimating the fair value, the Group engage a third party qualified valuer to 
perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of the property portfolio is 
disclosed in Note 27 property valuation techniques and related quantitative information.

Significant areas of judgements in applying the Group’s accounting policies

Accounting for significant property transactions
Property transactions are complex in nature. Management considers each material transaction separately, with an assessment carried out to 
determine the most appropriate accounting treatment and judgements applied. The judgements include whether the transaction represents an 
asset acquisition or business combination and the cut-off for property transactions on recognition of property assets and revenue recognition. 
In making its judgement over the cut-off for property transactions, management considers whether the control of ownership of the assets 
acquired or disposed of has transferred to or from the Group (this consideration includes the revenue recognition criteria set out in IFRS 15 for 
the sale of trading properties). 

In making its judgement on whether the acquisition of property through the purchase of a corporate vehicle represents an asset acquisition or 
business combination, management considers whether the integrated set of assets and activities acquired contain both inputs and processes along 
with the ability to create outputs. Management also applies the optional ‘concentration test’ allowed under IFRS 3. When applying the optional 
test, management considers if substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar 
assets). Where management judge that substantially all of the fair value of the gross assets acquired are concentrated in a single asset (or a group 
of similar assets) and the ‘concentration test’ met, the assets acquired would not represent a business and the purchase would be treated as an 
asset acquisition. 

166

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 20201. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

During the year SEGRO acquired an additional 74.9 per cent of the share capital of Sofibus Patrimoine SA (‘Sofibus’) as detailed further in 
Note 8. As a result Sofibus is now controlled by the Group and the optional ‘concentration test’ has been applied to determine whether the 
transaction represents a business combination or an asset acquisition. The fair value of substantially all of the gross assets acquired was judged to 
be substantially concentrated in a group of industrial properties which are located in close geographical proximity and were also judged to have 
similar use and risk characteristics. For these reasons, management believes the ‘concentration test’ met and the transaction is therefore treated as 
an asset acquisition.

REIT Status
The Company has elected for UK REIT and French SIIC status. To continue to benefit from these tax regimes, the Group is required to comply 
with certain conditions as outlined in Note 10. Management intends that the Group should continue as a UK REIT and a French SIIC for the 
foreseeable future.

Other less significant judgements and sources of uncertainty relate to estimating the fair value of financial instruments and recognition of the 
SELP performance fee (see Note 7).

2. ADJUSTED PROFIT

Adjusted profit is a non-GAAP measure and is the Group’s measure of underlying profit, which is used by the Board and senior management to 
measure and monitor the Group’s income performance.

It is based on the Best Practices Recommendations Guidelines of European Public Real Estate Association (EPRA), which calculate profit excluding 
investment and development property revaluations and gains or losses on disposals. Changes in the fair value of financial instruments and 
associated close-out costs and their related taxation, as well as other permitted one-off items, are also excluded. Refer to the Supplementary 
Notes for all EPRA adjustments.

The Directors may also exclude from the EPRA profit measure additional items (gains and losses) which are considered by them to be non-
recurring, unusual or significant by virtue of size and nature. No non-EPRA adjustments to underlying profit were made in the current or 
prior period. 

Gross rental income

Property operating expenses

Net rental income

Joint venture fee income

Administration expenses

Share of joint ventures’ Adjusted profit after tax1

Adjusted operating profit before interest and tax

Net finance costs (including adjustments)

Adjusted profit before tax 

Adjustments to reconcile to IFRS:

Adjustments to the share of profit from joint ventures after tax1

Realised and unrealised property gain

Gain on sale of trading properties

Cost of early close out of debt

Net fair value gain on interest rate swaps and other derivatives

Total adjustments

Profit before tax

Tax

On Adjusted profit

In respect of adjustments 

Total tax adjustments

Profit after tax before non-controlling interests

Non-controlling interests:

Less: share of adjusted profit attributable to non-controlling interests

share of adjustments attributable to non-controlling interests 

Profit after tax and non-controlling interests

Of which:

Adjusted profit after tax and non-controlling interests

Total adjustments after tax and non-controlling interests

Profit attributable to equity shareholders

1  A detailed breakdown of the adjustments to the share of profit from joint ventures is included in Note 7.

Notes

4

5

4

6

7

9

7

8

13

9

9

10

10

2020 
£m

 392.9         

 (88.3) 

 304.6 

 21.6 

 (51.5) 

 61.5 

336.2

(39.7)

296.5

175.0

988.6

1.2

(10.9)

13.7

1,167.6

1,464.1

(4.0)

(31.0)

(35.0)

1,429.1

(0.2)

(2.0)

1,426.9

292.3

1,134.6

1,426.9

2019 
£m

362.0

(80.7)

281.3

20.4

(51.5)

54.0

304.2

(36.7)

267.5

149.1

489.2

6.9

(18.6)

7.9

634.5

902.0

(3.2)

(38.2)

(41.4)

860.6

(0.2)

(2.5)

857.9

264.1

593.8

857.9

167

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
3. SEGMENTAL ANALYSIS

The Group’s reportable segments are the geographical Business Units: Greater London, Thames Valley, National Logistics, Northern Europe 
(principally Germany), Southern Europe (principally France) and Central Europe (principally Poland), which are managed and reported to the 
Board as separate distinct Business Units. 

31 December 2020

Thames Valley 

National Logistics

Greater London

Northern Europe

Southern Europe

Central Europe

Other1

Total

31 December 2019

Thames Valley

National Logistics

Greater London

Northern Europe

Southern Europe

Central Europe

Other1

Total

Gross  
rental  
income  

£m

83.7

34.1

160.3

29.4

74.8

10.6

–

392.9

Gross  
rental  
income  

£m

78.9

40.2

142.6

26.9

61.9

11.5

–

362.0

Net  
rental  
income  

£m

78.3

33.9

140.3

17.9

43.9

4.2

(13.9)

304.6

Net  
rental  
income  

£m

72.8

36.8

129.7

15.6

35.7

4.5

(13.8)

281.3

Share of joint 
ventures’ 
Adjusted  
profit  
£m 

Adjusted 
PBIT²
£m

Total directly 
owned property  
assets  
£m

–

(0.1)

–

25.2

30.4

22.0

(16.0)

61.5

Share of joint 
ventures’  
Adjusted  
profit  
£m 

–

0.5

–

21.8

24.4

19.6

(12.3)

54.0

75.8

33.3

137.7

47.7

79.5

30.3

(68.1)

336.2

Adjusted 
PBIT2
£m

70.9

37.8

127.0

42.4

64.1

27.3

(65.3)

304.2

1,996.7

1,223.3

4,867.0

682.3

1,803.3

150.9

–

10,723.5

Total directly 
owned  
property  
assets  
£m

1,752.4

871.6

4,001.0

573.4

1,085.6

137.9

–

8,421.9

Investments 
in joint  
ventures  

£m

–

0.6

–

803.3

914.3

495.7

(790.9)

1,423.0

Investments 
in joint  
ventures  

£m

–

3.9

–

604.3

735.9

435.9

(658.6)

1,121.4

Capital
expenditure3
£m

57.5

267.1

453.9

29.2

566.0

3.7

5.0

1,382.4

Capital
expenditure3
£m

38.4

50.1

199.5

53.3

254.8

8.2

2.7

607.0

1  Other includes the corporate centre, SELP holding companies and costs relating to the operational business which are not specifically allocated to a geographical Business Unit. This includes the 

bonds held by SELP Finance S.à r.l, a Luxembourg entity.

2  A reconciliation of total Adjusted PBIT to the IFRS profit before tax is provided in Note 2.
3  Capital expenditure includes additions and acquisitions of investment and trading properties but does not include tenant incentives, letting fees and rental guarantees. Part of the capital 

expenditure incurred is in response to climate change including the reduction of the carbon footprint of the Group’s existing investment properties and developments. The environmental 
sustainability within the Group’s property portfolio is discussed in more detail on pages 57 to 59. The ‘Other’ category includes non-property related spend, primarily IT. 

Revenues from the most significant countries within the Group were UK £278.0 million (2019: £312.4 million), France £55.9 million 
(2019: £47.9 million), Germany £33.9 million (2019: £29.1 million) and Poland £15.4 million (2019: £15.8 million).

4. REVENUE

Rental income from investment and trading properties

Rent averaging

Service charge income*

Management fees*

Surrender premiums and dividend income from property related investments

Gross rental income1 

Joint venture fee income – management fees*

Proceeds from sale of trading properties*

Total revenue 

2020 
£m

 335.6 

 18.2 

 35.0 

 3.3 

 0.8 

 392.9 

 21.6 

 17.2 

 431.7 

2019 
£m

306.9

25.1

27.6

1.4

1.0

362.0

20.4

50.1

432.5

*  The above income streams reflect revenue recognition under IFRS 15 ‘Revenue from Contracts with Customers’ and total £77.1 million (2019: £99.5 million).
1  Net rental income of £304.6 million (2019: £281.3 million) is calculated as gross rental income of £392.9 million (2019: £362.0 million) less total property operating expenses of £88.3 million 

(2019: £80.7 million) shown in Note 5.

168

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 20205. COSTS

Vacant property costs

Letting, marketing, legal and professional fees

Loss allowance and impairment of receivables1

Service charge expense

Other expenses

Property management expenses

Property administration expenses2

Costs capitalised3

Total property operating expenses

Trading properties cost of sales

Total costs

2020 
£m

3.4

10.1

3.8

35.0

8.7

61.0

36.0

(8.7)

88.3

16.0

104.3

2019 
£m

4.8

8.5

1.0

27.6

10.5

52.4

35.6

(7.3)

80.7

43.2

123.9

1  See Note 17(vi) Credit risk management for further details on loss allowance and impairment of receivables. 
2  Property administration expenses predominantly relate to the employee staff costs of personnel directly involved in managing the property portfolio. Costs capitalised primarily relate to internal 

employee staff costs directly involved in developing the property portfolio.

3  Costs capitalised primarily relate to internal employee staff costs directly involved in developing the property portfolio.

6. ADMINISTR ATION EXPENSES

6(i) – Total administration expenses

Directors’ remuneration

Depreciation 

Other administration expenses

Total administration expenses

Other administration expenses include the cost of services of the Group’s auditors’, as described below.

6(ii) – Fees in relation to services provided by the Group’s auditors

Audit services:

Parent company

Subsidiary undertakings

Total audit fees

Audit related assurance services

Audit and audited related assurance services 

Other fees:

Other

Total other fees

Total fees in relation to audit and other services

2020 
£m

8.4

3.6

39.5

51.5

2019 
£m

9.2

3.4

38.9

51.5

2020 
£m

2019 
£m

0.7

0.3

1.0

0.1

1.1

–

–

1.1

0.6

0.3

0.9

0.1

1.0

–

–

1.0

In addition to the above, the Group’s auditors were paid audit fees of £0.7 million in respect of the audit of SEGRO European Logistics Partnership 
(SELP) for the year ended 31 December 2020 (2019: £0.6 million). There were no non-audit fees paid in respect of SELP (2019: £0.1 million).

6(iii) – Staff costs
The table below presents staff costs of the Group (including Directors) which are recognised in both property operating expenses and 
administration expenses in the Income Statement.

Wages and salaries

Social security costs

Pension costs

Share scheme costs

Termination benefits

Total

Average number of Group employees

– Direct property

– Indirect property and administration

2020 
£m

41.4

5.3

1.7

10.4

0.5

59.3

350

221

129

2019 
£m

38.7

6.0

1.5

12.5

–

58.7

323

208

115

Disclosures required by the Companies Act 2006 on Directors’ remuneration, including salaries, share options, pension contributions and pension 
entitlement and those specified by the Listing Rules of the Financial Services Authority are included on pages 123 to 143 in the Remuneration 
Report and form part of these Financial Statements.

169

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 20207. INVESTMENTS IN JOINT VENTURES AND SUBSIDIARIES

7(i) – Profit from joint ventures after tax
The table below presents a summary Income Statement of the Group’s largest joint ventures, all of which are accounted for using the equity 
method as set out in Note 1. Roxhill operates in the UK and develops big box logistics assets and SEGRO European Logistics Partnership (SELP) 
is incorporated in Luxembourg and owns logistics property assets in Continental Europe. The Group holds 50 per cent of the share capital and 
voting rights in the material joint ventures.

Revenue1

Gross rental income

Property operating expenses:

– underlying property operating expenses

– vacant property costs

– property management fees2

– service charge expense

Net rental income

Administration expenses

Finance costs

Adjusted profit/(loss) before tax 

Tax 

Adjusted profit/(loss) after tax 

Adjustments:

Profit/(loss) on sale of investment properties

Valuation surplus on investment properties

Impairment of other interests in properties

Profit on sale of trading properties

Other investment income

Tax in respect of adjustments

Total adjustments

Profit/(loss) after tax

Other comprehensive income

Total comprehensive income/(expense) for the year

SELP  
£m

242.4

242.4

(11.1)

(2.8)

(19.2)

(48.0)

161.3

(3.2)

(24.5)

133.6

(10.3)

123.3

1.9

424.0

–

–

–

(81.2)

344.7

468.0

–

468.0

Roxhill  

£m

6.9

–

–

–

–

–

–

–

–

–

–

–

–

–

–

0.1

5.2

–

5.3

5.3

–

5.3

Other  
£m

–

–

(0.2)

–

–

–

(0.2)

–

–

(0.2)

–

(0.2)

–

–

–

–

–

–

–

(0.2)

–

(0.2)

At 100%  
2020  
£m

249.3

242.4

At 100% 
2019 
£m

223.5

214.1

(11.3)

(2.8)

(19.2)

(48.0)

 161.1 

 (3.2)

 (24.5)

 133.4 

 (10.3)

 123.1

1.9

424.0

–

0.1

5.2

(81.2)

350.0

473.1

–

473.1

(8.5)

(2.1)

(17.1)

(44.1)

142.3

(3.3)

(20.1)

118.9

(10.9)

108.0

(1.1)

437.0

(9.7)

2.1

–

(130.2)

298.1

406.1

–

406.1

At 50%  
2020  
£m

124.7

121.2

(5.7)

(1.4)

(9.6)

(24.0)

80.5

(1.6)

(12.3)

66.6

(5.1)

61.5

1.0

212.0

–

–

2.6

(40.6)

175.0

236.5

–

236.5

At 50%  
2019  
£m

111.8

107.1

(4.2)

(1.1)

(8.6)

(22.1)

71.1

(1.6)

(10.0)

59.5

(5.5)

54.0

(0.6)

218.6

(4.9)

1.1

–

(65.1)

149.1

203.1

–

203.1

1  Total revenue at 100% of £249.3 million (2019: £223.5 million) includes: Gross rental income £242.4 million (2019: £214.1 million) and proceeds from sale of trading properties £6.9 million 

(2019: £9.4 million). Proceeds from sale of trading properties is presented net of cost of sale and shown in the line item ‘Profit on sale of trading properties’ in the table above.

2  Property management fees paid to SEGRO.

Trading properties held by joint ventures were externally valued resulting in no increase in provision (2019: £nil). Based on the fair value at 
31 December 2020, the Group’s share of joint ventures’ trading property portfolio has unrecognised surplus of £nil (2019: £0.9 million). 
There was no other comprehensive income included in the Group Statement of Comprehensive Income (2019: £nil).

SELP is a SPPICAV in France, and does not pay tax on its French property income or gains on property sales, provided that at least 85 per cent 
of the French subsidiaries’ property income is distributed to their immediate shareholder. In addition, SELP has to meet certain conditions such 
as ensuring the property rental business of each French subsidiary represents more than 60 per cent of its assets. Any potential or proposed 
changes to the SPPICAV legislation are monitored.

170

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 20207. INVESTMENTS IN JOINT VENTURES AND SUBSIDIARIES CONTINUED

7(ii) – Summarised Balance Sheet information in respect of the Group’s joint ventures

Investment properties

Other interests in property

Total non-current assets

Trading properties

Other receivables

Cash and cash equivalents

Total current assets

Total assets

Borrowings

Deferred tax

Total non-current liabilities

Borrowings

Other liabilities

Total current liabilities

Total liabilities

Net assets 

SELP 
£m

 4,695.3 

–

 4,695.3 

–

 111.2 

 46.6 

 157.8 

 4,853.1 

 (1,574.4)

 (345.5)

 (1,919.9)

–

(92.6)

 (92.6)

 (2,012.5)

 2,840.6 

Roxhill  

£m

–

0.2

 0.2 

–

 0.9 

 0.1 

 1.0 

 1.2 

–

–

–

–

–

–

–

Other 
£m

–

–

–

–

 2.5 

 1.6 

 4.1 

 4.1 

–

–

–

–

–

–

–

At 100%  
2020  
£m

 4,695.3 

 0.2 

At 100% 
2019 
£m

3,796.7

16.6

At 50%  
2020  
£m

At 50%  
2019  
£m

 2,347.7 

1,898.3

 0.1 

8.3

 4,695.5 

3,813.3

 2,347.8 

1,906.6

–

 114.6 

 48.3 

 162.9 

 4,858.4 

 (1,574.4)

 (345.5)

 (1,919.9)

–

 (92.6)

 (92.6)

1.9

127.3

42.0

171.2

3,984.5

(1,338.4)

(243.2)

(1,581.6)

(50.1)

(110.0)

(160.1)

–

 57.3 

 24.2 

 81.5 

1.0

63.7

21.0

85.7

 2,429.3 

1,992.3

 (787.2)

 (172.8)

 (960.0)

–

 (46.3)

 (46.3)

(669.2)

(121.6)

(790.8)

(25.1)

(55.0)

(80.1)

(870.9)

1,121.4

 1.2 

 4.1 

 2,845.9 

2,242.8

 1,423.0 

 (2,012.5)

(1,741.7)

 (1,006.3)

The external borrowings of the joint ventures are non-recourse to the Group. At 31 December 2020, the fair value of £1,574.4 million 
(2019: £1,388.4 million) of borrowings was £1,651.0 million (2019: £1,427.3 million). This results in a fair value adjustment decrease in 
EPRA NDV net asset value of £76.6 million (2019: £38.9 million decrease), at share £38.3 million (2019: £19.4 million), see Table 5 of the 
Supplementary Notes. 

SEGRO provides certain services, including venture advisory and asset management to the SELP joint venture and receives fees for doing so. 
Performance fees are payable from SELP to SEGRO based on its IRR subject to certain hurdle rates. The first calculation and payment was on 
the fifth anniversary of the inception of SELP, being October 2018, but 50 per cent of this is subject to clawback based on performance over the 
period to the tenth anniversary, October 2023. If performance has improved at this point, additional fees might be triggered.

In 2018 SELP paid a £52.4 million performance fee including the amount subject to clawback (fee denominated in euros). Only £26.2 million, 
representing the 50 per cent of the performance fee paid not subject to future clawback, was recognised by SEGRO in the 2018 Income 
Statement (SELP recognised a corresponding performance fee expense of £26.2 million (at share £13.1 million) in the SELP 2018 
Income Statement). 

SEGRO has not recognised the 50 per cent of the performance fee income subject to future clawback in the Income Statement as management 
has judged the recognition criteria set out in Note 1 is not met (accordingly the performance fee expense has not been recognised in the share of 
profits from joint ventures in table 7(i)). The IRR calculation to determine whether the hurdle rates will be met when the performance period ends 
in October 2023 is an estimation and sensitive to movements and assumptions in property valuations over the remaining performance period. 
Due to the estimation uncertainties that exist in calculating the IRR management do not consider it highly probable there will not be a significant 
reversal of the fee subject to clawback over the remaining performance period. The performance fee subject to clawback has been recognised by 
SEGRO as a contract liability within Trade and other payables at 31 December 2020 and 31 December 2019 (see Note 15).

7(iii) – Investments by the Group 

Cost or valuation at 1 January

Exchange movement

Net investments1

Disposals

Dividends received2 

Share of profit after tax

Cost or valuation at 31 December

1  Net investments represent the net movement of capital injections, loans and divestments with joint ventures during the period.
2  Dividends received from SELP and Roxhill.

2020 
£m

1,121.4

62.0

39.8

(2.9)

(33.8)

236.5

1,423.0

2019 
£m

999.9

(65.2)

16.9

–

(33.3)

203.1

1,121.4

171

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 20207. INVESTMENTS IN JOINT VENTURES AND SUBSIDIARIES CONTINUED

7(iv) – Investments by the Company

Cost or valuation of subsidiaries at 1 January

Exchange movement

Additions

Loan movement

(Increase)/decrease in provision for investments in and loans to subsidiaries

Cost or valuation at 31 December

2020 
£m

2019 
£m

7,516.5

7,188.1

46.9

58.8

1,226.5

(33.1)

8,815.6

(51.6)

46.7

304.1

29.2

7,516.5

Included in cost or valuation of subsidiaries at 31 December 2020 are investments of £2,752.4 million (2019: £2,691.7 million) and non-current 
loans of £6,063.2 million (2019: £4,824.8 million). 

Subsidiary entities are detailed in Note 28. 

In measuring expected credit losses (ECLs) of the intercompany loans under IFRS 9 the ability of each subsidiary to repay the loan at the reporting date if 
demanded by the Company is assessed. For the purpose of the impairment review the manner for recovering the loan is assumed to be through the sale 
of the investment properties held by the subsidiary. Investment properties are held at fair value at each reporting date and the assumptions and inputs 
used in determining their fair value are shown in Note 27. Therefore, the net asset value of the subsidiary is considered to be a reasonable approximation 
of the available assets that could be realised to recover the loan balance and the requirement to recognise expected credit losses.

8. REALISED AND UNREALISED PROPERTY GAIN

Profit on sale of investment properties

Valuation surplus on investment properties¹

(Increase)/decrease in provision for impairment of trading properties 

Increase in provision for impairment of other interests in property

Valuation surplus on other investments2

Total realised and unrealised property gain

2020 
£m

5.1

970.6

(0.1)

(0.6)

13.6

988.6

2019 
£m

7.2

476.7

1.4

(0.4)

4.3

489.2

1  Includes £971.1 million valuation surplus on investment properties (2019: £477.1 million) less £0.5 million valuation loss on head lease ROU asset (2019: £0.4 million). 
2  On 15 December 2020 SEGRO acquired an additional 74.9 per cent of the share capital of Sofibus Patrimoine SA (‘Sofibus’) for €178.6 million. This increased SEGRO’s total shareholding in 

Sofibus to 94.4 per cent and as a result Sofibus is now controlled by the Group. As control of Sofibus was achieved in stages, the carrying value of the previously held 19.5 per cent equity interest 
which was classified as Other investments has been remeasured to fair value at the acquisition date. This resulted in a fair value gain of £13.6 million which has been recognised in the Income 
Statement within realised and unrealised property gain and shown in the table above. For the reasons set out in Note 1 the transaction has been treated as an asset acquisition and therefore the 
property acquired is reflected in the ‘Property acquisitions’ line in the tables shown in Note 13. In February 2021 SEGRO filed a draft offer document with the French financial market authority as 
part of the process to acquire the remaining 5.6% shares in Sofibus at a price of €313.71 per share (€13.7 million in total). SEGRO intends to enter Sofibus into the French SIIC regime as detailed 
further in Note 10(iii).

Total valuation surplus on investment and trading properties total £1,182.5 million (2019: £696.7 million). This comprises £970.6 million 
surplus from investment properties (2019: £476.7 million), £0.1 million impairment from trading properties (2019: £1.4 million surplus) and 
£212.0 million surplus from joint ventures at share (2019: £218.6 million).

Details of realised gains on sale of trading properties are given in Note 13(ii).

9. NET FINANCE COSTS

Finance income

Interest received on bank deposits and related derivatives

Fair value gain on interest rate swaps and other derivatives

Exchange differences

Total finance income

Finance costs

Interest on overdrafts, loans and related derivatives

Cost of early close out of debt

Amortisation of issue costs

Interest on lease liabilities 

Total borrowing costs

Less amounts capitalised on the development of properties

Net borrowing costs

Fair value loss on interest rate swaps and other derivatives

Exchange differences

Total finance costs

Net finance costs

172

2020 
£m

27.0

23.0

–

50.0

2020 
£m

(68.0)

(10.9)

(2.4)

(3.1)

(84.4)

7.0

(77.4)

(9.3)

(0.2)

(86.9)

(36.9)

2019 
£m

32.0

33.1

0.2

65.3

2019 
£m

(71.8)

(18.6)

(2.3)

(3.0)

(95.7)

8.2

(87.5)

(25.2)

–

(112.7)

(47.4)

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 20209. NET FINANCE COSTS CONTINUED

Net finance costs (including adjustments) in Adjusted profit (Note 2) are £39.7 million (2019: £36.7 million). This excludes net fair value gains 
and losses on interest rate swaps and other derivatives of £13.7 million gain (2019: £7.9 million gain) and the cost of early close out of debt of 
£10.9 million (2019: £18.6 million). 

The interest capitalisation rates for 2020 ranged from 1.85 per cent to 2.15 per cent (2019: 1.8 per cent to 2.3 per cent). Interest is capitalised 
gross of tax relief. Further analysis of exchange differences is given in Note 17 within the foreign exchange and currency swap contracts section.

10. TAX

10(i) – Tax on profit

Tax:

On Adjusted profit

In respect of adjustments

Total tax charge

Current tax

United Kingdom 

Current tax credit

Total UK current tax credit

Overseas

Current tax charge

Adjustments in respect of earlier years

Total overseas current tax charge

Total current tax charge

Deferred tax

Origination and reversal of temporary differences

Released in respect of property disposals in the year

On valuation movements

Total deferred tax in respect of investment properties

Other deferred tax

Total deferred tax charge

Total tax charge on profit on ordinary activities

10(ii) – Factors affecting tax charge for the year
The tax charge is lower than (2019: lower than) the standard rate of UK corporation tax. The differences are:

Profit on ordinary activities before tax

Exclude valuation surplus in respect of UK properties not taxable

Multiplied by standard rate of UK corporation tax of 19.0 per cent (2019: 19.0 per cent)

Effects of:

REIT & SIIC exemption on income and gains

Non-deductible items

Joint venture tax adjustment

Higher tax rates on international earnings

Adjustment in respect of prior years

Adjustment in respect of assets not recognised

Total tax charge on profit on ordinary activities

2020 
£m

(4.0)

(31.0)

(35.0)

0.9

0.9

(8.1)

4.4

(3.7)

(2.8)

(3.2)

5.0

(39.0)

(37.2)

5.0

(32.2)

(35.0)

2020 
£m

1,464.1

(689.9)

774.2

(147.1)

76.2

(0.1)

44.9

(15.6)

4.9

1.8

(35.0)

2019 
£m

(3.2)

(38.2)

(41.4)

0.3

0.3

(12.0)

(0.3)

(12.3)

(12.0)

(6.1)

4.7

(39.2)

(40.6)

11.2

(29.4)

(41.4)

2019 
£m

902.0

(242.4)

659.6

(125.3)

71.0

–

38.6

(23.6)

(0.3)

(1.8)

(41.4)

10(iii) – REIT and SIIC regimes and other tax judgements
SEGRO is a Real Estate Investment Trust (REIT) and does not pay tax on its UK property income or gains on property sales, provided that at least 
90 per cent of the Group’s UK 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 its worldwide property rental business represents more than 75 per cent of total 
profits and assets. Any potential or proposed changes to the REIT legislation are monitored and discussed with HMRC. It is management’s 
intention that the Group will continue as a REIT for the foreseeable future.

SEGRO is also a SIIC in France, and does not pay tax on its French property income or gains on property sales, provided that at least 95 per cent 
of the French subsidiaries’ property income is distributed to their immediate shareholder. In addition, the Group has to meet certain conditions 
such as ensuring the property rental business of each French subsidiary represents more than 80 per cent of its assets. Any potential or proposed 
changes to the SIIC legislation are monitored. It is management’s intention that the Group will continue as a SIIC for the foreseeable future.

173

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202010. TAX CONTINUED

During December 2020, the Group bought a portfolio of assets in France through a corporate vehicle (see Note 8). SEGRO intends to apply 
the corporate vehicle for entry into the SIIC regime during 2021. The entry cost to the regime is expected to be between €40 million and 
€50 million and will be payable over a period of four years. The entire entry cost will be recognised in the Income Statement in the year of entry.

The joint venture tax adjustment is required because the profit on ordinary activities before tax includes share of profit from joint ventures after 
tax, whereas the total tax balance excludes joint ventures.

The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including 
interpretations of tax laws and prior experience.

10(iv) – Deferred tax liabilities
Movement in deferred tax was as follows:

Group – 2020

Valuation surpluses and deficits on properties/accelerated tax allowances

Deferred tax asset on revenue losses

Others

Total deferred tax liabilities

Group – 2019

Valuation surpluses and deficits on properties/accelerated tax allowances

Deferred tax asset on revenue losses

Others

Total deferred tax liabilities

Balance 
1 January  

Exchange 
movement  

Acquisitions/ 
disposals  

Recognised 
in income  

Balance 
31 December  

£m

51.4

(0.5)

2.3

53.2

£m

3.6

–

0.1

3.7

£m

(1.9)

–

(0.2)

(2.1)

£m

31.3

–

0.9

32.2

£m

84.4

(0.5)

3.1

87.0

Balance 
1 January  

Exchange 
movement  

Acquisitions/ 
disposals  

Recognised 
in income  

Balance 
31 December  

£m

25.2

(1.4)

3.1

26.9

£m

(2.3)

–

(0.2)

(2.5)

£m

(0.6)

–

–

(0.6)

£m

29.1

0.9

(0.6)

29.4

£m

51.4

(0.5)

2.3

53.2

The Group has recognised revenue tax losses of £41.7 million (2019: £71.5 million) available for offset against future profits. Further unrecognised 
tax losses of £744.5 million also exist at 31 December 2020 (2019: £734.2 million) of which £50.4 million (2019: £37.5 million) expires within 
nine years. The majority of the unrecognised tax loss balance relates to historic capital losses that arose on property disposals and on losses 
generated from debt close-out costs. The Directors do not consider it probable that there will be sufficient future taxable profit for the relevant 
losses to be utilised and so no deferred tax asset has been recognised for unused tax losses. 

For the purposes of measuring deferred tax liabilities or deferred tax assets arising from investment properties that are measured using the fair 
value model, the Directors have reviewed the Group’s investment property portfolios and concluded that the Group’s investment properties 
are not held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment 
properties over time, rather than through sale. Therefore, in determining the Group’s deferred taxation on investment properties, the Directors 
have determined that the presumption that the carrying amounts of investment properties measured using the fair value model are recovered 
entirely through sale is not rebutted. As a result, the Group has recognised deferred taxes on changes in fair value of investment properties for all 
jurisdictions, with the exception of the UK and France, where the Group is not subject to any corporate income taxes on the fair value changes of 
the investment properties on disposal.

10(v) – Factors that may affect future tax charges
No deferred tax is recognised on the unremitted earnings of international subsidiaries and joint ventures. In the event of their remittance to the 
UK, no net UK tax is expected to be payable.

11. DIVIDENDS

Ordinary dividends paid

Interim dividend for 2020 @ 6.90 pence per share

Final dividend for 2019 @ 14.40 pence per share

Interim dividend for 2019 @ 6.30 pence per share

Final dividend for 2018 @ 13.25 pence per share

Total dividends

2020 
£m

82.2

157.9

–

–

240.1

2019 
£m

–

–

68.9

143.7

212.6

The Board recommends a final dividend for 2020 of 15.2 pence which is estimated to result in a distribution of up to £181.1 million. The total 
dividend paid and proposed per share in respect of the year ended 31 December 2020 is 22.1 pence (2019: 20.7 pence). 

The total dividend in 2020 of £240.1 million (2019: £212.6 million) was paid: £179.5 million as cash (2019: £141.7 million) and £60.6 million in 
scrip dividends (2019: £70.9 million). For details on scrip dividends see Notes 19 and 20.

174

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202012. EARNINGS AND NET ASSETS PER SHARE

The earnings per share calculations use the weighted average number of shares in issue during the year and the net assets per share calculations 
use the number of shares in issue at year end. Earnings per share calculations exclude 0.4 million shares (2019: 0.4 million) being the average 
number of shares held on trust for employee share schemes and net assets per share calculations exclude 0.3 million shares (2019: 0.6 million) 
being the actual number of shares held on trust for employee share schemes at year end.

12(i) – Earnings per ordinary share (EPS)

Basic EPS

Dilution adjustments:

Share and save as you earn schemes

Diluted EPS

Basic EPS

Adjustments to profit before tax1

Tax in respect of Adjustments

Non-controlling interest on Adjustments

Adjusted Basic EPS

Adjusted Diluted EPS

1  Details of adjustments are included in Note 2.

2020

Earnings  

£m

Shares  
million

Pence  

per share

 1,426.9 

 1,149.8  

124.1

–

1,426.9

1,426.9

 (1,167.6) 

31.0

2.0

292.3

292.3

4.7

1,154.5

1,149.8

1,149.8

1,154.5

(0.5)

123.6

124.1

(101.6)

2.7

0.2

25.4

25.3

Earnings  

£m

857.9

–

857.9

857.9

(634.5)

38.2

2.5

264.1

264.1

2019

Shares  
million

1,081.3

5.8

1,087.1

1,081.3

1,081.3

1,087.1

Pence  

per share

79.3

(0.4)

78.9

79.3

(58.7)

3.6

0.2

24.4

24.3

12(ii) – Net assets per share (NAV)
In October 2019, EPRA issued new Best Practices Recommendations guidelines for Net Asset Value (NAV) metrics, these recommendations are 
effective for accounting periods starting on 1 January 2020 and have been adopted by the Group in reporting the 31 December 2020 position. 

EPRA have introduced three new NAV metrics: EPRA Net Tangible Assets (NTA), EPRA Net Reinstatement Value (NRV) and EPRA Net Disposal 
Value (NDV). 

EPRA NTA is considered to be most consistent with the nature of SEGRO’s business as a UK REIT providing long-term progressive and 
sustainable returns. EPRA NTA now acts as the primary measure of net asset value and is also referred to as Adjusted Net Asset Value (or 
Adjusted NAV).

A reconciliation from IFRS NAV to Adjusted NAV as at 31 December 2020 is set out in the table below along with the net asset per share metrics. 
The 31 December 2019 position has been represented on a comparable basis.

Table 5 of the Supplementary Notes provides more details of the changes and the calculation for each of the three new EPRA net asset 
value metrics.

2020

2019

Basic NAV

Dilution adjustments:

Share and save as you earn schemes

Diluted NAV

Fair value adjustment in respect of interest rate derivatives – Group

Fair value adjustment in respect of trading properties – Group

Fair value adjustment in respect of trading properties – Joint 
ventures

Deferred tax in respect of depreciation and valuation surpluses – 
Group1

Deferred tax in respect of depreciation and valuation surpluses – 
Joint ventures1

Intangible assets

Adjusted NAV

Equity 
attributable 
to ordinary 
shareholders  

£m

Shares  
million

9,659.2

1,191.3

–

3.4

9,659.2

1,194.7

(61.0)

0.9

–

42.2

85.5

(1.6)

Equity  
attributable 
to ordinary 
shareholders  

£m

7,677.6

–

7,677.6

(50.5)

–

0.9

26.0

60.6

(2.5)

Pence  

per share

811

(2)

809

(5)

–

–

3

7

–

Shares  
million

1,096.1

6.0

1,102.1

Pence  

per share

700

(3)

697

(5)

–

–

2

6

–

9,725.2

1,194.7

814

7,712.1

1,102.1

700

1  50 per cent of deferred tax in respect of depreciation and valuation surpluses has been excluded in calculating Adjusted NAV in line with option 3 of EPRA Best Practices 

Recommendations guidelines.

175

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020  
13. PROPERTIES

13(i) – Investment properties

At 1 January 2019

Exchange movement

Property acquisitions

Additions to existing investment properties 

Disposals

Transfers on completion of development

Transfer to trading properties

Revaluation surplus during the year

At 31 December 2019

Add tenant lease incentives, letting fees and rental guarantees

Investment properties excluding head lease ROU assets at 31 December 2019

Add head lease liabilities (ROU assets)1

Total investment properties at 31 December 2019

At 1 January 2020

Exchange movement

Property acquisitions

Additions to existing investment properties 

Disposals

Transfers on completion of development

Transfer from trading properties

Revaluation surplus during the year

At 31 December 2020

Add tenant lease incentives, letting fees and rental guarantees

Investment properties excluding head lease ROU assets at 31 December 2020

Add head lease liabilities (ROU assets)1

Total investment properties at 31 December 2020

Total  
£m

7,716.5

(98.0)

233.9

362.0

(473.3)

–

(3.1)

477.1

8,215.1

116.4

8,331.5

70.2

8,401.7

Total  
£m

8,215.1

96.8

824.3

505.0

(154.9)

–

1.5

971.1

Completed  

Development  

£m

6,827.8

(75.4)

98.6

25.2

(467.3)

625.8

–

372.5

7,407.2

116.4

7,523.6

70.2

7,593.8

£m

888.7

(22.6)

135.3

336.8

(6.0)

(625.8)

(3.1)

104.6

807.9

–

807.9

–

807.9

Completed  

Development  

£m

7,407.2

75.9

564.0

34.0

(140.3)

620.6

–

835.6

9,397.0

135.6

9,532.6

76.9

9,609.5

£m

807.9

20.9

260.3

471.0

(14.6)

(620.6)

1.5

135.5

1,061.9

10,458.9

–

135.6

1,061.9

10,594.5

–

76.9

1,061.9

10,671.4

1  At 31 December 2020 investment properties included £76.9 million (2019: £70.2 million) for the head lease liabilities recognised under IFRS 16. 

Investment properties are stated at fair value as at 31 December 2020 based on external valuations performed by professionally qualified, 
independent valuers. The Group’s wholly-owned and joint venture property portfolio is valued by CBRE Ltd on a half-yearly basis. The valuations 
conform to International Valuation Standards and were arrived at by reference to market evidence of the transaction prices paid for similar 
properties. In estimating the fair value of the properties, the valuers consider the highest and best use of the properties. There has been no 
change to the valuation technique during the year.

CBRE Ltd also undertakes some professional and agency work on behalf of the Group, although this is limited relative to the activities provided by 
other advisors to the Group as a whole. 

Completed properties include buildings that are occupied or are available for occupation. Development properties include land available for 
development (land bank), land under development and construction in progress.

The carrying value of investment properties situated on land held under leaseholds is £178.9 million (excluding head lease ROU assets) 
(2019: £151.5 million).

Further details on property valuation techniques and related quantitative information is set out in Note 27.

176

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202013. PROPERTIES CONTINUED

13(ii) – Trading properties

At 1 January

Exchange movement

Property acquisitions 

Additions to existing trading properties

Disposals¹

(Increase)/decrease in provision for impairment during the year

Transfer (to)/from investment properties

At 31 December

2020 
£m

20.2

1.4

34.2

13.9

(16.0)

(0.1)

(1.5)

52.1

2019 
£m

51.7

(1.2)

–

8.4

(43.2)

1.4

3.1

20.2

1  Gains on sale of trading properties of £1.2 million in the year (2019: £6.9 million) have been generated from total proceeds of £17.2 million (2019: £50.1 million), see Note 4, less costs of 

£16.0 million (2019: £43.2 million), see Note 5.

Trading properties were externally valued, as detailed in Note 13(i), resulting in an increase in the provision for impairment of £0.1 million (2019: 
decrease of £1.4 million). Based on the fair value at 31 December 2020, the portfolio has unrecognised surplus of £0.9 million (2019: £nil). 
Further information on valuation techniques and related quantitative information is given in Note 27.

14. TR ADE AND OTHER RECEIVABLES

Current

Trade receivables¹

Other receivables2,3

Prepayments

Amounts due from related parties

Total current trade and other receivables

Non-current

Other receivables4

Total non-current other receivables

Group

2020 
£m

49.5

204.2

11.8

3.9

269.4

37.2

37.2

2019 
£m

33.3

75.7

23.1

14.5

146.6

110.6

110.6

Company

2020 
£m

–

7.7

0.5

–

8.2

–

–

2019 
£m

–

7.5

0.2

–

7.7

–

–

1  Note 17 (vi) details the Group’s credit risk management and loss allowances held for trade receivables.
2  Group other current receivables includes deferred proceeds from the disposal of investment properties of £75.4 million that is due in 2021 (classified as non-current other receivable at 

31 December 2019). This receivable is guaranteed by an irrevocable standby letter of credit of matched duration, issued by a bank with an AA credit rating. Other current receivables also include 
VAT recoverable, tenant deposits and capital receivables. 

3  Other current receivables include tax recoverable of £2.4 million (2019: £2.7 million). 
4  Group non-current other receivables relate to an advance payment for the future acquisition of land of £37.2 million (2019: £35.2 million advance payment; £75.4 million deferred proceeds 

classified as current other receivables at 31 December 2020, see footnote 2).

15. TR ADE AND OTHER PAYABLES

Due within one year

Trade payables

Other payables 

Non-capital accruals1

Capital creditors and capital accruals

Rent in advance

Lease liabilities

Total trade and other payables due within one year

Due after one year

Contract liabilities2

Other payables

Lease liabilities

Loans due to subsidiaries

Total other payables due after one year

Group

2020 
£m

5.0

79.3

71.4

140.7

73.9

1.7

372.0

26.2

1.5

81.7

–

109.4

2019 
£m

2.7

62.0

65.0

97.3

70.1

1.5

298.6

25.0

1.6

76.3

–

102.9

Company

2020 
£m

–

2.6

25.8

–

–

–

2019 
£m

–

2.4

26.6

–

–

–

28.4

29.0

–

–

–

–

–

–

1,929.7

1,929.7

1,747.4

1,747.4

1  Includes accrued interest payable on borrowings for Group of £19.4 million (2019: £19.5 million) and Company of £19.3 million (2019: £19.5 million).
2  Contract liabilities primarily relate to amounts received in respect of the performance fee from SELP (see Note 7 for further details).

177

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202016. NET BORROWINGS

16(i) – Net borrowings by type

Secured borrowings:

Euro mortgages1 

Total secured (on land, buildings and other assets)

Unsecured borrowings:

Bonds

6.75% bonds 2021

7.00% bonds 2022

6.75% bonds 2024

2.375% bonds 2029

5.75% bonds 2035

2.875% bonds 2037

Private placement notes

1.77% notes 2027

1.82% notes 2028

2.00% notes 2029

2.27% notes 2032

1.35% notes 2032

2.37% notes 2033

1.45% notes 2035

1.83% notes 2040 (Series C)

1.83% notes 2040 (Series D)

Bank loans and overdrafts

Total unsecured

Total borrowings

Cash and cash equivalents

Net borrowings

Group

2020 
£m

14.5

14.5

–

–

82.1

347.2

198.7

395.5

2019 
£m

2.6

2.6

79.3

39.1

81.9

346.8

198.6

395.2

Company

2020 
£m

–

–

–

–

82.1

347.2

198.7

395.5

2019 
£m

–

–

79.3

39.1

81.9

346.8

198.6

395.2

1,023.5

1,140.9

1,023.5

1,140.9

356.7

89.0

133.7

89.1

133.3

177.9

44.4

168.2

53.1

1,245.4

130.6

2,399.5

2,414.0

(89.0)

2,325.0

338.4

84.4

126.9

84.6

–

168.7

–

–

–

803.0

(3.0)

1,940.9

1,943.5

(132.5)

1,811.0

2019 
£m

–

79.3

120.6

896.5

847.1

1,943.5

1,943.5

(132.5)

1,811.0

356.7

89.0

133.7

89.1

133.3

177.9

44.4

168.2

53.1

1,245.4

130.6

2,399.5

2,399.5

(19.8)

2,379.7

Company

2020 
£m

–

–

212.7

926.6

1,260.2

2,399.5

2,399.5

(19.8)

2,379.7

338.4

84.4

126.9

84.6

–

168.7

–

–

–

803.0

(3.0)

1,940.9

1,940.9

(60.7)

1,880.2

2019 
£m

–

79.3

118.0

896.5

847.1

1,940.9

1,940.9

(60.7)

1,880.2

1  The Group acquired €13.6 million of borrowings and €11.0 million of undrawn facilities on the acquisition of Sofibus in the year (see Note 8).

The maturity profile of borrowings is as follows:

Maturity profile of borrowings

In one year or less

In more than one year but less than two 

In more than two years but less than five

In more than five years but less than ten

In more than ten years

In more than one year

Total borrowings

Cash and cash equivalents

Net borrowings

Group

2020 
£m

0.9

0.9

217.8

934.2

1,260.2

2,413.1

2,414.0

(89.0)

2,325.0

Cash and cash equivalents comprise cash balances, call deposits held with banks and highly liquid short-term investments that are readily 
convertible to known amounts of cash within three months from acquisition and subject to an insignificant risk of changes in value.

There are no early settlement or call options on any of the borrowings. Financial covenants relating to the borrowings include maximum limits to 
the Group’s gearing ratio and minimum limits to permitted interest cover. Financial covenants are discussed in more detail in the ‘Gearing and 
financial covenants’ section in the Financial Review on page 66.

Bank loans and overdrafts include capitalised finance costs on committed facilities.

During the year the Group undertook a debt refinancing exercise including issuing €450 million of US Private Placement notes and redeemed 
£118 million of sterling bonds due in 2021 and 2022 at a cost of £10.9 million above carrying value (see Note 9). The debt refinancing is 
discussed in more detail in the Finance Review on page 66.

178

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202016. NET BORROWINGS CONTINUED

Maturity profile of undrawn borrowing facilities

In one year or less

In more than one year but less than two

In more than two years but less than five

Total available undrawn borrowing facilities

Group

Company

2020 
£m

18.8

–

953.6

972.4

2019 
£m

8.5

–

1,032.2

1,040.7

2020 
£m

8.9

–

953.6

962.5

2019 
£m

8.5

–

1,032.2

1,040.7

16(ii) – Net borrowings by interest rates
The weighted average interest rate profile of Group and Company net borrowings after derivative instruments is as follows: 

Interest rate profile – Group

Borrowings

Sterling

Euros

Total borrowings

Cash and cash equivalents

Sterling

Euros

US dollars

Total cash and cash equivalents

Net borrowings

Interest rate profile – Group

Borrowings

Sterling

Euros

Total borrowings

Cash and cash equivalents

Sterling

Euros

US dollars

Total cash and cash equivalents

Net borrowings

Fixed  
rate  
%

6.48

1.90

2.54

Fixed  
rate  
%

4.36

1.90

2.59

Fixed  
period  
years

Fixed  
debt  
£m

2020

Capped  
strike  

%

Capped  
debt  
£m

Variable  
debt/cash  

£m

Weighted average after derivative instruments

112.3

8.1

22.6

95.5

590.2

685.7

2.00

1.33

1.46

150.0

669.6

819.6

685.7

Fixed  
debt  
£m

2019

Capped  
strike  
%

819.6

Capped  
debt  
£m

Weighted average after derivative instruments

212.9

551.4

764.3

2.00

1.33

1.46

150.0

635.6

785.6

Fixed  
period  
years

57.6

9.2

23.0

764.3

785.6

(66.0)

974.7

908.7

(61.2)

(27.8)

–

(89.0)

819.7

Variable  
debt/cash  

£m

(178.2)

571.8

393.6

(125.7)

(6.7)

(0.1)

(132.5)

261.1

Total  
£m

179.5

2,234.5

2,414.0

(61.2)

(27.8)

–

(89.0)

2,325.0

Total  
£m

184.7

1,758.8

1,943.5

(125.7)

(6.7)

(0.1)

(132.5)

1,811.0

179

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202016. NET BORROWINGS CONTINUED

Interest rate profile – Company

Borrowings

Sterling

Euros

Total borrowings

Cash and cash equivalents

Sterling

Euros

Total cash and cash equivalents

Net borrowings

Interest rate profile – Company

Borrowings

Sterling

Euros

Total borrowings

Cash and cash equivalents

Sterling

Total cash and cash equivalents

Net borrowings

Fixed  
rate  
%

6.48

1.92

2.57

Fixed  
rate  
%

4.36

1.90

2.59

17. FINANCIAL INSTRUMENTS AND FAIR VALUES

17(i) Derivative instruments
The Group and Company holds the following derivative instruments:

Derivative assets

Current

Fair value of interest rate swaps – non-hedge

Fair value of forward foreign exchange and currency swap contracts – non-hedge

Fair value of forward foreign exchange and currency swap contracts – hedge

Total current derivative assets

Non-current

Fair value of interest rate swaps – non-hedge

Fair value of interest rate caps – non-hedge

Fair value of forward foreign exchange and currency swap contracts – non-hedge

Total non-current derivative assets

Derivative liabilities

Current

Fair value of forward foreign exchange and currency swap contracts – non-hedge

Fair value of forward foreign exchange and currency swap contracts – hedge

Total current derivative liabilities

Non-current

Fair value of forward foreign exchange and currency swap contracts – non-hedge

Fair value of interest rates swaps – non-hedge

Total non-current derivative liabilities

180

Fixed  
period  
years

Fixed  
debt  
£m

2020

Capped  
strike  

%

Capped  
debt  
£m

Variable  
debt/cash  

£m

Weighted average after derivative instruments

112.3

8.2

23.0

95.5

575.7

671.2

2.00

1.33

1.46

150.0

669.6

819.6

(66.0)

974.7

908.7

(19.7)

(0.1)

(19.8)

Total  
£m

179.5

2,220.0

2,399.5

(19.7)

(0.1)

(19.8)

819.6

888.9

2,379.7

Fixed  
period  
years

57.6

9.2

22.7

671.2

Fixed  
debt  
£m

2019

Capped  
strike  
%

Capped  
debt  
£m

Variable  
debt/cash  

£m

Weighted average after derivative instruments

212.9

551.4

764.3

2.00

1.33

1.46

150.0

635.6

785.6

764.3

785.6

Group

2020 
£m

–

14.9

0.3

15.2

60.8

2.4

–

63.2

Group

2020 
£m

4.9

–

4.9

3.0

2.2

5.2

2019 
£m

2.5

6.2

–

8.7

42.5

5.5

11.7

59.7

2019 
£m

0.3

1.4

1.7

–

–

–

(178.2)

569.2

391.0

(60.7)

(60.7)

330.3

Company

2020 
£m

–

15.2

–

15.2

60.8

2.4

–

63.2

Company

2020 
£m

4.9

–

4.9

3.0

2.2

5.2

Total  
£m

184.7

1,756.2

1,940.9

(60.7)

(60.7)

1,880.2

2019 
£m

2.5

6.2

–

8.7

42.5

5.5

11.7

59.7

2019 
£m

1.7

–

1.7

–

–

–

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202017. FINANCIAL INSTRUMENTS AND FAIR VALUES CONTINUED

17(ii) Carrying amount and fair values of financial assets and liabilities
The Group and Company holds the following financial instruments:

Group

2020  
£m

Notes

Financial assets

Financial assets at amortised cost

Loans due from subsidiaries

Lease incentives1

Trade receivables

Other current receivables2

Other non-current receivables

Cash and cash equivalents

Financial assets at fair value through profit or loss (FVPL)

Other investments

Derivative financial instruments

Used for hedging at FVOCI

Non-hedge at FVPL

Financial liabilities

Liabilities at amortised cost

Trade and other payables2

Borrowings 

Derivative financial instruments

Used for hedging at FVOCI

Non-hedge at FVPL 

7

13

14

14

14

16

17

17

15

16

17

17

2019  
£m

–

99.8

33.3

65.2

110.6

132.5

–

117.5

49.5

150.0

37.2

89.0

1.6

27.5

0.3

78.1

523.2

–

68.4

537.3

Company

2020  
£m

2019  
£m

6,063.2

4,824.8

–

–

7.7

–

19.8

–

–

–

–

7.5

–

60.7

–

–

78.4

6,169.1

68.4

4,961.4

406.0

2,414.0

329.8

1,943.5

1,958.1

2,399.5

1,776.4

1,940.9

–

10.1

1.4

0.3

–

10.1

–

1.7

2,830.1

2,275.0

4,367.7

3,719.0

1  Represents the carrying value of tenant lease incentives and rental guarantees held in Investment properties at the year end. This amount is included within the ‘tenant lease incentives, letting fees 
and rental guarantees’ balance in Note 13(i). Lease incentives and rental guarantees have been disclosed as a financial asset in the current year and the comparative figure represented accordingly.

2  Group excludes non-financial assets of £69.9 million (2019: £48.1 million) included within total other receivables per Note 14 and non-financial liabilities of £75.4 million (2019: £71.7 million) 

included within total trade and other payables per Note 15.

The carrying values of these financial assets and liabilities approximate their fair value, with the exception of unsecured bond issued and 
unsecured US Private Placement notes classified as borrowings. At 31 December 2020, the fair value of £1,023.5 million of unsecured bonds 
issued was £1,302.3 million (2019: £1,140.9 million compared with £1,311.4 million fair value). At 31 December 2020, the fair value of 
£1,245.4 million of unsecured US Private Placement notes was £1,433.1 million (2019: £803.0 million compared with £865.8 million fair value). 
This results in a fair value adjustment decrease in EPRA NDV net asset value of £466.5 million (2019: £233.3 million decrease), see Table 5.

The fair values of financial assets and financial liabilities are determined as follows:

 } Forward foreign exchange contracts are measured using quoted exchange rates and yield curves derived from quoted interest rates with 

maturities matching the contracts.

 } Interest rate swaps, currency swap contracts and interest rate caps are measured at the present value of future cash flows estimated and discounted 

based on the applicable yield curves derived from quoted interest rates and the appropriate exchange rate at the Balance Sheet date.

 } The fair value of non-derivative financial assets and financial liabilities traded on active liquid markets is determined with reference to the 

quoted market prices. 

 } Financial guarantees are issued by the Company to support bank borrowings of 100 per cent owned subsidiary companies domiciled overseas. 

Fair value measurements recognised in the Balance Sheet
The Group and Company financial instruments that are measured subsequent to initial recognition at fair value are listed equity investments, 
forward exchange and currency swap contracts, interest rate swaps and interest rate caps as detailed above. Investments in equity securities 
traded in active liquid markets are classified as level 1. All other financial instruments would be classified as level 2 fair value measurements, as 
defined by IFRS 13, being those derived from inputs other than quoted prices (included within level 1) that are observable for the asset or liability, 
either directly (i.e. as prices) or indirectly (i.e. derived from prices). There were no transfers between categories in the current or prior year.

17(iii) Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern and as such it aims to maintain 
a prudent mix between debt and equity financing. Our intention for the foreseeable future is to maintain our LTV (including joint ventures at 
share) at around 30 per cent. This provides the flexibility to take advantage of investment opportunities arising and ensures significant headroom 
compared to our tightest gearing covenants should property values decline. The current capital structure of the Group consists of a mix of equity 
and debt. Equity comprises issued capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity and Notes 19 to 21. 
Debt primarily comprises long-term debt issues and drawings against medium-term committed revolving credit facilities from banks as disclosed 
in Note 16.

The Group is not subject to externally imposed capital requirements. 

181

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202017. FINANCIAL INSTRUMENTS AND FAIR VALUES CONTINUED

17(iv) Foreign currency risk management
The Group’s transactional foreign exchange exposures mainly arise as a result of treasury financing and hedging activities. These activities are 
carried out in SEGRO plc on behalf of the Group and the resulting exposures to euro are not routinely hedged. The Group does not have any 
significant transactional foreign currency exposures resulting from cross-border flows in the operating business. The Group does however have 
operations in Continental Europe which transact business denominated mostly in euros, hence there is currency exposure caused by translating 
the local trading performance and local net assets into sterling for each financial period and at each Balance Sheet date. 

The Group’s approach to managing Balance Sheet translation exposure is described in the Foreign Currency Translation Risk section in the 
Financial Review on page 67.

The Group’s and Company’s Balance Sheet translation exposure (including the impact of derivative financial instruments) is summarised below:

Group

Gross currency assets

Gross currency liabilities

Net exposure

Company

Gross currency assets

Gross currency liabilities

Net exposure

2020

Euros
Total  
£m

4,425.2

(2,691.3)

1,733.9

1,576.2

(2,604.5)

(1,028.3)

2019

Euros
Total  
£m

3,064.8

(1,989.3)

1,075.5

1,047.2

(2,023.2)

(976.0)

2020 Group gross currency liabilities include €1,151.7 million (£1,028.3 million) designated as net investment hedges.

2019 Group gross currency liabilities include €1,151.7 million (£976.0 million) designated as net investment hedges.

The remaining gross currency liabilities of the Group shown in the table above that are not designated as net investment hedges are either held 
directly in a euro functional currency entity or passed down to such an entity from a sterling functional currency company through inter-company 
funding arrangements.

Foreign currency sensitivity analysis
The Group’s main currency exposure is the euro. The sensitivity of the net assets of the Group to a 10 per cent appreciation in the value 
of sterling against the euro would decrease net assets by £157.6 million (2019: £97.8 million). The sensitivity of the Group to a 10 per cent 
depreciation in the value of sterling against the euro would increase net assets by £192.7 million (2019: £119.5 million).

The 10 per cent sensitivity rate is used when reporting foreign currency risk internally to management and represents management’s assessment 
of the reasonably possible change in foreign exchange rates. The sensitivity analysis adjusts the translation of net assets (after taking account 
of external loans, currency swap contracts and forward foreign exchange contracts) at the period end for a 10 per cent change in the value of 
sterling against the euro. A 10 per cent appreciation in the value of sterling against the euro would decrease the Group’s profit for the year ended 
31 December 2020 by £50.8 million (2019: £42.8 million decrease). A 10 per cent depreciation in the value of sterling against the euro would 
increase the Group’s profit for the year ended 31 December 2020 by £62.0 million (2019: £52.3 million increase).

For the Company, the sensitivity of the net assets to a 10 per cent appreciation in the value of sterling against the euro would decrease net assets 
by £93.5 million (2019: £88.7 million). The sensitivity of the net assets to a 10 per cent depreciation in the value of sterling against the euro would 
increase net assets by £114.2 million (2019: £108.4 million).

Forward foreign exchange and currency swap contracts
Some of the forward foreign exchange and currency swap contracts held by the Group are designated as net investment hedges of euro 
denominated subsidiaries, where exchange differences are booked in reserves and recognised in the Income Statement when the operation is 
sold. The remaining foreign exchange and currency swap contracts are effectively economic cash flow hedges, for example using surplus cash 
in one currency to provide (typically through intercompany debt funding arrangements with overseas subsidiaries) funds to repay debt, or to 
fund development expenditure or acquisitions in another currency. These instruments have not been designated as hedges. As a consequence, 
exchange movements in respect of these instruments are taken through the Income Statement. Offsetting these movements are net exchange 
gains of £46.0 million (2019: £52.2 million loss) arising on intercompany debt funding arrangements (discussed above) and exchange movements 
arising from external borrowings not designated as hedges. This has resulted in a loss on exchange differences of £0.2 million (2019: £0.2 million 
gain) within net finance costs in Note 9.

The Group seeks to limit its exposure to volatility in foreign exchange rates by hedging its foreign gross assets using either borrowings or 
derivative instruments. The Group targets a hedging range of between the last reported LTV ratio (24 per cent at 31 December 2020) and 
100 per cent. At 31 December 2020, the Group had gross foreign currency assets, which were 61 per cent hedged by gross foreign currency 
denominated liabilities (31 December 2019: 65 per cent).

Further details are provided within the Foreign Currency Translation Risk section of the Financial Review on page 67.

182

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202017. FINANCIAL INSTRUMENTS AND FAIR VALUES CONTINUED

The following table details the forward foreign exchange and currency swap contracts outstanding as at the year end:

Average exchange rates

Currency contract (local currency)

Contract value

2020 

2019 

2020 
m

2019 
m

2020 
£m

2019 
£m

Fair value

2020 
£m

Group

Economic cash flow 
hedges

Sell euros (buy sterling)

Buy euros (sell sterling)

Net investment hedges

Sell euros (buy sterling)

Total

Company

Economic cash flow 
hedges

Sell euros (buy sterling)

Buy euros (sell sterling)

Total

1.10

1.09

1.12

1.11

1.09

1.15

1.17

1.19

1.16

1.17

975.7

235.8

963.3

40.1

883.1

215.6

837.4

34.2

201.7

201.7

180.3

169.6

1,177.4

235.8

1,165.0

40.1

1,063.4

215.6

1,007.0

34.2

11.9

(4.9)

0.3

7.3

12.2

(4.9)

7.3

2019 
£m

17.8

(0.2)

(1.4)

16.2

16.4

(0.2)

16.2

Effects of net investment hedge accounting on financial position and performance
The effects of the foreign currency related hedging instruments on the Group’s financial position and performance is detailed below. 

Forward foreign exchange contracts
The Group designated euro denominated forward foreign exchange contracts as net investment hedges during 2020 (2019: euro 
denominated contracts).

There was no ineffectiveness to be recorded from net investments in foreign entity hedges in 2020 and 2019 where the hedging instrument was 
forward foreign exchange contracts. This is because the critical terms of both the net investment in foreign entity and the hedging instrument 
match, and at each Balance Sheet date both are revalued to the closing spot rate. Any forward points in the foreign exchange contract are taken 
to the Income Statement.

Euro forward foreign exchange

Carrying amount 

Notional amount

Maturity date

Hedge ratio

Change in discounted spot value of hedging instruments since 1 January – gain

Change in value of hedged item used to determine hedge effectiveness – loss

Weighted average hedged rate for the year (including forward points)

Group

2020  
£m

–

–

–

–

–

–

–

2019  
£m

–

–

–

–

5.8

(5.8)

1.13

183

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202017. FINANCIAL INSTRUMENTS AND FAIR VALUES CONTINUED

Currency swap contracts
The Group uses cross currency swaps with two floating legs as designated net investment hedges. Although these instruments are expected to 
have a high degree of effectiveness, some ineffectiveness may arise due to the hedging instrument having periodic interest payments, which net 
investment does not. The ineffectiveness recorded from net investments in foreign entity hedges in 2020 and 2019 from currency swap contracts 
is shown in the table below. 

Euro currency swaps

Carrying amount – asset/(liability)

Notional amount

Maturity date

Hedge ratio

Change in discounted spot value of hedging instruments since 1 January – (loss)/gain

Change in value of hedged item used to determine hedge effectiveness – gain/(loss) 

Weighted average hedged rate for the year (including forward points)

Group

2020  
£m

0.3

180.1

2019  
£m

(1.4)

169.6

May 2021

Jun 2020

1:1

(9.4)

9.4

1.15

1:1

12.1

(12.1)

1.12

US private placement notes
There was no ineffectiveness to be recorded from net investments in foreign entity hedges in 2020 and 2019 where the hedging instrument was 
US private placement notes. This is because the critical terms of both the net investment in foreign entity and the hedging instrument match, and 
at each Balance Sheet date both are revalued to the closing spot rate.

Private placement notes

Carrying amount of Private placement notes (Note 16)

Carrying amount of Private placement notes designated as net investment hedging instruments

Hedge ratio

Change in carrying amount of USPP notes as a result of foreign currency movement since 1 January, recognised in OCI – (loss)/gain

Change in value of hedged item used to determine hedge effectiveness – gain/(loss)

Weighted average hedged rate for the year (including forward points)

Group

2020  
£m

1,245.4

848.2

1:1

(43.1)

43.1

1.14

2019  
£m

803.0

803.0

1:1

39.7

(39.7)

1.14

17(v) Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed 
by maintaining an appropriate mix between fixed and floating rate borrowings. The current Group policy states that 50 to 100 per cent of net 
borrowings should be at fixed rate provided by long-term debt issues attracting a fixed coupon or from floating rate bank borrowings converted 
into fixed rate or hedged via interest rate swaps, forwards, caps, collars or floors or options on these products. Hedging activities require approval 
and are evaluated and reported on regularly to ensure that the policy is being adhered to. The Board reviews the policy on interest rate exposure 
annually with a view to establishing that it is still relevant in the prevailing and forecast economic environment.

Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at 
the Balance Sheet date. For floating rate liabilities, the analysis is prepared assuming that the amount of liability outstanding at the Balance Sheet 
date was outstanding for the whole year. A 1 per cent increase or decrease is used when reporting interest rate risk internally to key management 
personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1 per cent higher/lower and all other variables were held constant, the Group’s profit for the year ended 31 December 
2020 would decrease/increase by £12.6 million (2019: decrease/increase by £8.8 million). This is attributable to the Group’s exposure to interest 
rates on its variable rate borrowings and cash deposits. Fixed rate debt issues are held at amortised cost and are not re-valued in the Balance 
Sheet to reflect interest rate movements.

Interest rate swap contracts
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on 
agreed notional principal amounts. Such contracts enable the Group to manage the interest rate risk of the Group’s borrowings. The fair value 
of interest rate swaps at the reporting date is determined by discounting the future cash flows using the yield curves at the reporting date and 
the credit risk inherent in the contract, and is disclosed below. The average interest rate is based on the outstanding balances at the end of the 
financial year.

184

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202017. FINANCIAL INSTRUMENTS AND FAIR VALUES CONTINUED

The following tables detail the notional principal amounts and remaining terms of interest rate swap contracts, based on their contractual 
maturities, outstanding as at the reporting date:

Receive fixed, pay floating contracts:

Group

In one year or less

In more than one year but less than two

In more than two years but less than five

In more than five years

Total

Company

In one year or less

In more than one year but less than two

In more than two years but less than five

In more than five years

Total

Average contract –  
fixed interest rate

Notional principal amount

Fair value

2020 
%

2019 
%

2020 
£m

2019 
£m

2020 
£m

2019 
£m

–

2.38

3.87

2.03

–

2.38

3.87

2.03

5.63

6.75

2.57

2.19

5.63

6.75

2.57

2.19

–

350.0

578.0

1,019.6

1,947.6

–

350.0

578.0

1,019.6

1,947.6

250.0

100.0

578.0

254.2

1,182.2

250.0

100.0

578.0

254.2

1,182.2

–

9.7

11.4

37.5

58.6

–

9.7

11.4

37.5

58.6

2.5

5.8

12.3

24.4

45.0

2.5

5.8

12.3

24.4

45.0

The above are effective economic hedges although the Group has not elected to adopt hedge accounting for them, hence their change in fair 
value is taken direct to the Income Statement.

The interest rate swaps settle on either a three-month or six-month basis with the floating rate side based on the EURIBOR or sterling LIBOR rate 
for the relevant period. The Group will settle or receive the difference between the fixed and floating interest rate on a net basis.

Interest rate cap contracts 
Under interest rate caps, the Group agrees to receive floating rate interest amounts calculated on agreed notional principal amounts, should 
prevailing market rates rise above a specified strike rate.

Such contracts enable the Group to manage the interest rate risk of the Group’s floating rate borrowings. The fair value of interest rate caps at the 
reporting date is determined by discounting the future cash flows using the yield curves at the reporting date and the credit risk inherent in the 
contract, and is disclosed below. The average interest rate is based on the outstanding balances at the end of the financial year.

The following tables detail the notional principal amounts and remaining terms of interest rate cap contracts, based on their contractual maturities, 
outstanding as at the reporting date:

Average strike price

Notional principal amount

Fair value

Group

In one year or less

In more than one year but less than two

In more than two years but less than five

In more than five years

Total

Company

In one year or less

In more than one year but less than two

In more than two years but less than five

In more than five years

Total

2020 
%

–

1.40

–

1.50

–

1.40

–

1.50

2019 
%

–

–

1.41

1.50

–

–

1.41

1.50

2020 
£m

2019 
£m

2020 
£m

2019 
£m

–

373.2

–

446.4

819.6

–

373.2

–

446.4

819.6

–

–

361.9

423.7

785.6

–

–

361.9

423.7

785.6

–

–

–

2.4

2.4

–

–

–

2.4

2.4

–

–

0.1

5.4

5.5

–

–

0.1

5.4

5.5

The above are effective economic hedges although the Group has not elected to adopt hedge accounting for them, hence their change in fair 
value is taken direct to the Income Statement.

The interest rate caps settle on either a three-month or six-month basis based on the EURIBOR or sterling LIBOR rate for the relevant period. 
The Group will receive the difference between the floating rate and the specified strike rate.

185

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202017. FINANCIAL INSTRUMENTS AND FAIR VALUES CONTINUED

IBOR reform
The Group is exposed to two benchmark interest rates, sterling London Inter-bank Offered Rate (GBP LIBOR) and the Euro Interbank Offered 
Rate (EURIBOR). These interest rates are found in the Group’s floating rate borrowings, and certain derivative contracts. Given the geography of 
the Group, there are no exposures to other benchmark interest rates.  

There are no changes in respect of EURIBOR within the Group’s financing or risk management activities.

In respect of GBP LIBOR, transition arrangements are complete for borrowing facilities, and are in progress in respect of interest rate derivatives. 
The Group’s €1,218 million of bank facilities were amended in 2020 and early 2021 to provide for a transition to Sterling Overnight Indexed 
Average (SONIA) from GBP LIBOR. This transition will occur at the earlier of 1 September 2021, or when sterling LIBOR ceases to be published 
or otherwise becomes unrepresentative of the underlying market.

In respect of derivative contracts, the Group has not transitioned legacy contracts, but has executed certain contracts including a SONIA 
reference in place of an equivalent GBP LIBOR reference.

The remaining derivative instruments with sterling LIBOR exposure are:

Instrument

Interest rate cap

Interest rate swap

Interest rate swap

Cross Currency Interest Rate Swap

Cross Currency Interest Rate Swap

Number of 
contracts

Notional 
outstanding

Maturity

3

7

12

7

9

£150m

£350m

£578m

£314m

£353m

2022

2022

2023

2021

2029

There have been no changes to the Group’s risk management strategy due to IBOR reform.

17(vi) Credit risk management 
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. 
Potential customers are evaluated for creditworthiness and where necessary collateral is secured. There is no concentration of credit risk 
within the lease portfolio to either business sector or individual company as the Group has a diverse customer base with no one customer 
accounting for more than 6 per cent of rental income. Trade receivables were less than 1 per cent of total assets at 31 December 2020 and at 
31 December 2019. 

Ageing of past due gross trade receivables and the carrying amount net of loss allowances is set out below.

0–30 days

30–60 days

60–90 days

90–180 days

>180 days

Past due 

Not due

Total trade receivables

2020

2019

Gross amount 
£m

Loss allowance 
£m

Net carrying 
amount 
£m

Gross amount
£m

Loss allowance
£m

Net carrying 
amount
£m

1.0

0.9

3.5

5.7

4.6

15.7

40.8

56.5

(0.5)

(0.3) 

(0.5) 

(2.4) 

(2.2) 

(5.9) 

(1.1) 

(7.0) 

0.5

0.6

3.0

3.3

2.4

9.8

39.7

49.5

0.8

0.5

0.7

1.1

0.1

3.2

33.1

36.3

(0.1)

–

–

(0.5)

(0.1)

(0.7)

(2.3)

(3.0)

0.7

0.5

0.7

0.6

–

2.5

30.8

33.3

Gross trade receivables mainly consists of amounts invoiced for rent, service charge and management fees, which form part of ‘Gross rental 
income’ (see Note 4) and are inclusive of VAT. Trade receivables at 31 December 2020 includes amounts due for 2020 rent and amounts billed 
in advance for 2021 rent. Both amounts have been considered in measuring expected credit losses (ECLs) detailed further below. The amounts 
billed in advance for 2021 rent are included within the ‘Not due’ category in the table above. 

Total gross trade receivables ‘past due’ at 31 December 2020 were £15.7 million, 4 per cent of total gross rental income for the year. This reflects 
strong rent collection during 2020 despite of the disruption from Covid-19, with high collection levels continuing in 2021. Excluding non-rental 
receivables and VAT and accounting for cash collected post year end, the equivalent outstanding receivable balance for 2020 rent, including joint 
ventures at share, is £9.4 million, 2 per cent of total rental income for the year.

Trade receivables are presented in the balance sheet net of loss allowances. The Group applies the IFRS 9 simplified approach to measuring 
expected credit losses (ECLs) which uses a lifetime expected loss allowance for all trade receivables. Expected loss rates are based on the historic 
credit loss experienced and adjusted for current and forward information affecting the ability of the individual customers to settle receivables. 
In the current reporting period, the current and forward information considers the impact of Covid-19. Trade receivables are written off when 
there is no reasonable expectation of recovery.

In determining the ECLs an analysis of various factors has been performed on a customer by customer basis and considers the impact of Covid-19 
and economic conditions. These factors include an assessment of the customer’s default risk based on: industry and geographic location; and 
payment record, which includes how many days past due the receivable is, payment concessions granted and credit rating. ECLs are recognised 
net of securities held for the customer.

186

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202017. FINANCIAL INSTRUMENTS AND FAIR VALUES CONTINUED

As at 31 December 2020, the Group held a loss allowance provision for trade receivables of £7.0 million (2019: £3.0 million). Whilst the risk of 
impairment and the loss allowance at year end has increased as a result of Covid-19, the impairment risk remains low and the loss allowance of 
£7.0 million represents 1.8 per cent of total gross rental income for the year (2019: 0.8 per cent).

Total impairment losses of £3.8 million were recognised in the Income Statement for the year ended 31 December 2020 (2019: £1.0 million). 
The impairment losses include the net impact from loss allowances, receivables written off and recoveries of receivables previously written off and 
are presented within operating profit (see Note 5).

The other financial assets and lease incentive balances held by the Group have been considered for impairment based on historical default rates 
over the expected life and are adjusted for forward-looking information. Based on that analysis, no material loss allowances are held against these 
assets in the current and prior period.

The current other receivable relating to deferred proceeds from the disposal of investment properties of £75.4 million (see Note 14) is guaranteed 
by an irrevocable standby letter of credit of matched duration, issued by a bank with an AA credit rating.

Investment in financial instruments is restricted to banks and short-term liquidity funds with a good credit rating. Derivative financial instruments 
are transacted via International Swaps and Derivatives Association (ISDA) agreements with counterparties with a good investment grade credit 
rating. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions 
concluded is spread among approved counterparties.

17(vii) Liquidity risk management 
Ultimate responsibility for liquidity risk management rests with the Board, which has built an appropriate liquidity risk management framework for 
the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity 
risk by requiring that adequate cash and committed bank facilities are available to cover and match all debt maturities, development spend, trade 
related and corporate cash flows over a rolling 18-month period. This is achieved by continuously monitoring forecast and actual cash flows and 
matching the maturity profiles of financial assets and liabilities. Liquidity risk management is discussed in more detail in the Financial Review on 
page 66.

187

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202017. FINANCIAL INSTRUMENTS AND FAIR VALUES CONTINUED

Liquidity and interest risk tables 
The following tables detail the Group’s and Company’s remaining contractual maturity profile for its financial instruments. The tables have been 
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be 
required to pay. The tables include both interest and principal cash flows.

2020

2019

Weighted  
average  
interest  
rate  
%

Under  
1 year  
£m

1–2  
years  
£m

2–5  
years  
£m

Over  
5 years  

£m

Total  
£m

Weighted  
average  
interest  
rate  
%

Under  
1 year  
£m

1–2  
years  
£m

2–5  
years  
£m

Over  
5 years  

£m

Total 
£m

Group

Non-derivative 
financial liabilities:

Trade and other payables¹ 

Lease liabilities 

Variable rate debt instruments

Fixed rate debt instruments

Derivative financial 
instruments:

277.0

5.0

1.4

61.4

3.9

1.05

2.62

–

5.0

1.4

26.2

13.8

137.1

–

137.6

–

303.2

161.4

139.9

61.4

258.5 2,403.3 2,784.6

207.5

4.8

–

61.0

–

4.9

–

25.0

14.8

–

–

129.6

–

232.5

154.1

–

139.7

278.7

1,806.3

2,285.7

3.9

3.1

Net settled interest rate swaps

(0.27)

(1.3)

(1.4)

(4.7)

(3.3)

(10.7)

–

–

–

–

–

–

–

–

–

–

–

(279.7)

280.3

144.6

318.5

1,935.9

2,672.9

(210.6)

215.5

348.4

–

–

–

–

(410.7)

(621.3)

389.8

605.3

66.4

430.9 2,516.7 3,362.4

(279.7)

280.3

273.9

2020

2019

Weighted  
average  
interest  
rate  
%

Under  
1 year  
£m

1–2  
years  
£m

2–5  
years  
£m

Over  
5 years  

£m

Total  
£m

Weighted  
average  
interest  
rate  
%

Under  
1 year  
£m

1–2  
years  
£m

2–5  
years  
£m

Over  
5 years  

£m

Total  
£m

1.05

2.64

9.1

1.4

60.3

1,929.7

1.4

60.3

–

137.1

– 1,938.8

–

139.9

252.9 2,395.1 2,768.6

3.1

Net settled interest rate swaps

(0.27)

(1.3)

(1.4)

(4.7)

(3.3)

(10.7)

9.5

–

61.0

–

1,747.4

–

–

–

–

–

1,756.9

–

139.7

276.0

1,806.3

2,283.0

–

–

–

–

–

–

–

–

–

–

(279.7)

280.3

(210.6)

215.5

–

–

–

–

(410.7)

(621.3)

389.8

605.3

(279.7)

280.3

74.4 1,990.0

385.3 2,370.9 4,820.6

71.1

1,887.1

276.0

1,806.3

4,040.5

1  Group trade and other payables disclosed as financial liabilities in Note 17(ii) of £406.0 million (2019: £329.8 million) includes, accrued interest of £19.4 million (2019: £19.5 million) and lease 

liabilities of £83.4 million (2019: £77.8 million). Accrued interest is shown in fixed rate debt instruments in the table above.

2  Company trade and other payables disclosed as financial liabilities in Note 17(ii) of £1,958.1 million (2019: £1,776.4 million) includes accrued interest of £19.3 million (2019: £19.5 million). 

Accrued interest is shown in fixed rate debt instruments in the table above.

188

Gross settled foreign exchange

–  Forward and currency 

swap contracts

   – Inflowing

   – Outflowing

Total

Company

Non-derivative 
financial liabilities:

Trade and other payables2

Variable rate debt instruments

Fixed rate debt instruments

Derivative financial 
instruments:

Gross settled foreign exchange

–  Forward and currency 

swap contracts

   – Inflowing

   – Outflowing

Total

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202018. RETIREMENT BENEFIT SCHEMES

Background 
The Group has one defined benefit pension scheme, the SEGRO Pension Scheme (‘the Scheme’), a trust-based scheme. This arrangement is 
closed to new entrants and to future accrual of benefits. In this arrangement, the assets of the Scheme are invested separately from those of the 
Group and the Scheme is run by an independent Trustee Board. The Trustee Board of the Scheme is required by law to act in the best interests 
of the fund and its members and also takes into consideration the interests of the employer. There is a requirement for the Trustee Board to have 
member representation, with the other Trustees being Company appointed. 

The Trustee Board is responsible for the investment policy in respect of the assets of the Scheme, although the Company must be consulted on 
this and typically has some input into the investment decisions. 

During 2018, and following approval from the SEGRO plc Board, the Trustees of the Scheme fully insured members’ benefits with a third party 
specialist insurance company (often referred to as a ‘pension buy-out’), and the terms and conditions of the insurance policy were agreed on 
6 December 2018. As is usual following such transactions, a data verification exercise is in progress which is expected to be completed during 
2021. In addition, the process to wind-up the Scheme was triggered in the year. A High Court Judgment in November 2020, confirmed that 
pension scheme trustees were responsible for equalising the guaranteed minimum pension (GMP) for members who had previously transferred 
out of defined benefit schemes. Based on current estimates, this is unlikely to result in material liability for the Scheme, but it may delay the buy-
out until the exercise is complete. There were no additional buy-out costs recognised in the Income Statement for the year ended 31 December 
2020 (2019: £nil). 

For the majority of the membership, the IAS 19 valuation is based on the membership data as at 25 September 2018 which was provided to the 
insurer as part of the buy-in exercise. Given the transaction described above a further actuarial valuation is not anticipated as the Scheme has 
commenced the winding up process. 

Following the transaction described above, the Scheme’s assets solely comprise Insured Pensions and their value is equal to the corresponding 
value of the benefit obligation. As such, the assets do not have quoted prices in an active market.

Further, the transaction has substantially mitigated market and demographic risks which are common to most other retirement schemes. 
The most significant risks applicable to the Scheme relate to the finalisation of the buy-out and transition of the responsibility to underwrite 
members’ benefits from the Company to the third party regulated specialist insurance company, which is expected to be completed in 2021.

By undertaking a buy-out process to fully insure member benefits, the Company has sought to mitigate the requirement to make any additional 
contributions to the Scheme. 

The major assumptions used were as follows:

Discount rate for scheme liabilities

Rate of inflation (RPI/CPI pre-2030/CPI post-2030)

Rate of increase to pensions in payment in excess of Guaranteed Minimum Pension (GMP):

Before April 2003 

From April 2003 to October 2005

After October 2005

Composition of Scheme’s assets

Insured Pensions

Total

The life expectancies at age 65 are as follows:

Current pensioners

Future pensioners (in 20 years’ time)

2020 
%

1.2

2019 
%

2.0

3.1/2.1/3.0

3.2/2.1/2.1

4.2

3.0

2.2

Analysis 
of assets 
2020 
£m

292.2

292.2

2020

Male

25.0

27.3

Female

26.1

28.4

2019

Male

24.9

27.1

4.2

3.1

2.1

Analysis 
of assets 
2019 
£m

262.0

262.0

Female

26.0

28.3

Both life expectancy estimates use the standard S2PA (2019: S2PA) base tables with a scaling factor of 80 per cent for males and 90 per cent 
for females (2019: 80 per cent and 90 per cent respectively). Future improvements to the life expectancy are in line with CMI 2014 projections 
with an assumed long-term rate of improvement of one and a half per cent p.a. (2019: CMI 2014 projections with an assumed long-term rate of 
improvement of one and a half per cent p.a.).

There was no charge or credit recognised in the Group Income Statement or Statement of Comprehensive Income for the year ended 
31 December 2020 (2019: £nil).

189

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202018. RETIREMENT BENEFIT SCHEMES CONTINUED

Fair value of the assets and liabilities of the schemes
The amount included in the Balance Sheet arising from the Group’s assets in respect of its defined benefit retirement schemes is as follows:

Movement in assets

1 January

Interest on scheme assets

Actuarial gains

Benefits paid

31 December

Movement in liabilities

1 January

Interest cost

Actuarial losses/(gains) – changes in demographic assumptions

– changes in financial assumptions 

– changes due to liability experience

Benefits paid

31 December

Analysis of net assets:

Market value of schemes’ assets

Present value of funded schemes’ liabilities

Retirement benefit asset recognised in Pension assets in the Balance Sheet

2020 
£m

262.0

5.1

36.2

(11.1)

292.2

2019 
£m

235.6

6.5

29.5

(9.6)

262.0

262.0

235.6

5.1

–

39.0

(2.8)

(11.1)

6.5

–

31.3

(1.8)

(9.6)

292.2

262.0

292.2

292.2

–

262.0

262.0

–

The actual return on the Scheme assets in the period was a gain of £41.3 million (2019: £36.0 million gain). 

The average duration of the benefit obligations at the end of the reporting period is 19 years (2019: 18 years) for the Scheme. As the Scheme 
has closed to future benefit accrual, there are no active members within the Scheme. The liabilities are split 39 per cent (2019: 35 per cent) to 
deferred and 61 per cent (2019: 65 per cent) to retired members. 

The expected employer’s contributions to be paid in the year ending 31 December 2021 are £nil (2020: £nil).

The Group also has a number of defined contribution schemes for which £1.7 million has been recognised as an expense (2019: £1.5 million).

Sensitivities 
These sensitivities have been calculated to show the movement in the defined benefit obligation in isolation and assuming no other changes in 
market conditions at the accounting date. By undertaking the buy-out process, the value of the assets held by the Scheme will move by the same 
amount and so there would be no change to the nil pension asset.

Assumption

Discount rate

Life expectancy

Rate of inflation (CPI and RPI)

Change in assumption

Increase/decrease by 0.5%

Increase/decrease by 1 year

Increase/decrease by 0.5%

Impact on SEGRO scheme liabilities

(Decrease)/increase by (£25.5m)/£29.4m

Increase/(decrease) by £16.0m/(£16.0m)

Increase/(decrease) by £11.7m/(£10.7m)

No separate sensitivity has been provided for the pensions in payment assumptions as these are not distinct assumptions in their own right, but 
dependent on market changes to inflation. This sensitivity is included within the overall inflation assumption sensitivity shown, which allows for the 
corresponding change in pension increases that would be caused by a change in inflation.

19. SHARE CAPITAL AND SHARE-BASED PAYMENTS

Share capital
GROUP AND COMPANY

Issued and fully paid

Ordinary shares of 10p each at 1 January 2020

Issue of shares – placing

Issue of shares – scrip dividend

Issue of shares – other

Ordinary shares of 10p each at 31 December 2020

Number  
of shares  
million

1,096.7

82.9

8.2

3.8

Par value  
of shares  

£m

109.6

8.3

0.8

0.4

1,191.6

119.1

On 9 June 2020 the Company announced the placing of 82.9 million ordinary shares of 10 pence each in the capital of the Company at a price 
of 820 pence per share. The Company raised £680.0 million, before £8.7 million expenses and as a result the Company’s share capital increased 
by £8.3 million and share premium by £663.0 million (see Note 20).

190

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202019. SHARE CAPITAL AND SHARE-BASED PAYMENTS CONTINUED

Share-based payments
The Group operates the share-based payments schemes set out below. 

19(i) – Deferred Share Bonus Plan (DSBP)
The DSBP is for Executive Directors and the Leadership team. A percentage of any payment made under the Bonus Scheme is deferred to shares 
and held in trust for three years. The percentage subject to deferral for Executive Directors is 50 per cent of the Bonus payment. This scheme is 
detailed in the Remuneration Report on page 144. If a participant ceases to be employed by the Group, the award will lapse unless the participant 
is deemed to be a Good Leaver, in which case the award will be released on the vesting date.

At 1 January

Shares granted DSBP

Shares vested

Shares lapsed

At 31 December

2020  

number

2019  

number

1,086,742

1,297,793

323,453

(441,696)

–

296,546

(500,375)

(7,222)

968,499

1,086,742

The 2019 DSBP grant was made on 28 April 2020, based on a 27 April 2020 closing mid-market share price of 821.2 pence.

19(ii) – Long Term Incentive Plan (LTIP) 
The LTIP is a discretionary employee share scheme for Executive Directors, the Leadership team and senior managers. Vesting of awards is 
subject to three-year performance conditions and is at the discretion of the Remuneration Committee. The performance conditions of the LTIP are 
detailed in the Remuneration Report on page 145.

If a participant ceases to be employed by the Group, the award will lapse, unless the participant is deemed to be a Good Leaver, in which case the 
award will be reduced pro-rata on length of employment in relation to the award date. From 2017 onwards, a mandatory two-year holding period 
after vesting was introduced for the Executive Directors. 

At 1 January

Shares granted LTIP

Shares vested

Shares expired/lapsed

At 31 December

2020  

number

6,532,839

1,303,169

2019  

number

6,711,683

1,565,907

(3,606,610)

(1,713,915)

(229,456)

(30,836)

3,999,942

6,532,839

The 2020 LTIP award was made on 26 March 2020. The calculation of the award was based on a share price of 786.8 pence, the closing mid-
market share price on 25 March 2020. No consideration was paid for the grant of any award.

The Black-Scholes model has been used to fair value the shares granted currently under award, apart from the TSR elements of the award which 
uses the Monte Carlo model. The assumptions used are as follows:

Date of grant

Market price used for award

Risk-free interest rate

Dividend yield

Volatility

Term

Fair value per share

19(iii) – Other share schemes
The Group also operates the following all-employee share schemes.

 } Share Incentive Plan (SIP)

 } Global Share Incentive Plan (GSIP)

 } Sharesave

7 April 2016

28 April 2017

26 April 2018

29 May 2019

26 March 2020

420.7p

0.5%

3.7%

19.0%

4 years

312.6p

493.0p

0.1%

3.3%

21.5%

3 years

446.1p

628.8p

0.9%

2.6%

20.6%

3 years

580.8p

691.0p

0.6%

2.7%

15.7%

3 years

482.1p

786.8p

0.12%

2.6%

17.1%

3 years

654.4p

Further details of these schemes are set out in the Remuneration Report on page 145. The total share-based payment charge for the schemes 
recognised in the 2020 Income Statement was £0.7 million (2019: £0.6 million). The total number of outstanding options for these schemes as at 
31 December 2020 was 879,975 (2019: 895,941). 

191

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202020. SHARE PREMIUM AND OTHER RESERVES

Share premium

GROUP AND COMPANY

Balance at 1 January

Premium arising on the issue of shares – equity placing

Premium arising on the issue of shares – scrip dividend

Premium arising on the issue of shares – other

Balance at 31 December

2020 
£m

2,554.3

663.0

59.8

0.4

2019 
£m

2,047.7

436.3

69.9

0.4

3,277.5

2,554.3

Other reserves
The capital redemption reserve of £113.9 million arose in 2009 where shares were reclassified, cancelled and consolidated in connection with a 
Rights Issue.

The merger reserve of £169.1 million also arose in 2009 in connection with the acquisition of Brixton plc where the Group acquired 100 per cent 
of the voting equity of Brixton plc in a share for share exchange.

The Group translation, hedging and other reserves of £61.6 million (2019: £1.6 million) comprises all foreign exchange differences arising from 
the translation of the Financial Statements of foreign operations, as well as from the translation of liabilities that hedge the Group’s net investment 
in foreign denominated subsidiaries.

21. OWN SHARES HELD 

GROUP AND COMPANY

Balance at 1 January

Shares purchased

Disposed of on exercise of options

Balance at 31 December

2020 
£m

2.6

2.0

(3.5)

1.1

2019 
£m

2.0

3.4

(2.8)

2.6

These represent the cost of shares in SEGRO plc bought in the open market and held by Estera Trust (Jersey) Limited and Equiniti Limited, to 
satisfy various Group share schemes.

22. COMMITMENTS

Contractual obligations to purchase, construct, develop, repair, maintain or enhance assets are as follows:

GROUP

Properties

2020 
£m

603.6

2019 
£m

222.6

In addition, commitments in the Group’s joint ventures at 31 December 2020 (at share) amounted to £34.6 million (2019: £41.6 million). 
The Group also has a £6.3 million commitment to a property related investment fund at 31 December 2020 (2019: £6.5 million).

23. CONTINGENT LIABILITIES

The Group has given performance guarantees to third parties amounting to £80.3 million (2019: £63.5 million) in respect of development 
contracts of subsidiary undertakings. It is unlikely that these contingencies will crystallise.

The Company has guaranteed loans and bank overdrafts of subsidiary undertakings and has indicated its intention to provide the necessary 
support required by its subsidiaries.

The Group and joint ventures are subject to claims and litigation generally and provides guarantees, representations and warranties arising in 
the ordinary course of its business. Provision is made when liabilities are considered likely to arise and the expected quantum of the exposure 
is estimable. The risk in relation to such items are monitored on an ongoing basis and provisions amended accordingly. It is not expected that 
contingent liabilities existing at 31 December 2020 will have a material adverse effect on the Group’s financial position.

192

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202024. LEASES

The Group as a lessor
The investment properties are leased to tenants under operating leases with rentals payable on a monthly or quarterly basis. Lease payments for 
some contracts include inflationary index increases, but there are no significant levels of variable lease payments that do not depend on an index 
or a rate. Where considered necessary to reduce credit risk, the Group may obtain bank guarantees or tenant deposits for the term of the lease. 
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 and discussed further in the Asset Management update on pages 53 to 54. 
The Group does not hold significant finance leases as a lessor. 

Future aggregate minimum rentals receivable under non-cancellable operating leases are:

Not later than one year

Later than one year but not later than five years

Later than five years

Balance at 31 December

There are no significant levels of contingent rent in the current or prior year.

25. RELATED PARTY TR ANSACTIONS

Group
Transactions during the year between the Group and its joint ventures are disclosed below:

Dividends received

Assets sold to joint ventures1

Management fee income

Group  
£m

 291.5 

 837.8 

 1,321.5 

 2,450.8 

Joint ventures 
at share  

£m

 95.4 

 284.0 

 159.1 

 538.5 

2020  
£m

 386.9 

 1,121.8 

 1,480.6 

 2,989.3 

2019  
£m

360.7

1,068.3

1,398.9

2,827.9

2020 
£m

33.8

92.1

21.6

2019 
£m

33.3

221.0

20.4

1  During the year investment properties with a carrying value of £92.1 million were sold to SELP (2019: £221.0 million). Total proceeds (and total cash proceeds) received by SEGRO were 

£92.9 million (2019: £229.0 million). The transaction resulted in the net assets of the Group increasing by £0.8 million (2019: £8.0 million increase). The net cash impact on a proportionally 
consolidated basis was an inflow of £46.5 million (2019: inflow £114.5 million) once the 50% ownership in SELP is taken into account. 

Amounts due from joint ventures are disclosed in Note 14. Investments in joint ventures at 31 December 2020 of £1,423.0 million disclosed in 
Note 7 (2019: £1,121.4 million) includes shareholder loans of £113.6 million (2019: £125.3 million).

Transactions between the Company and its subsidiaries eliminate on consolidation and are not disclosed in this Note.

Transactions between the Group and the pension scheme are set out in Note 18.

Company
Amounts due from subsidiaries are disclosed in Note 7 and amounts due to subsidiaries are disclosed in Note 15.

None of the above Group or Company balances are secured.

Remuneration of key management personnel
Key management personnel for the Group and Company comprise Executive and Non-Executive Directors, as outlined in the Governance 
Report on pages 96 to 97. Key management personnel compensation is shown in the table below:

Salaries and short-term benefits

Post-employment benefits

Share-based payments

Termination benefits

Total remuneration

2020 
£m

4.6

0.4

3.0

0.4

8.4

2019 
£m

5.4

0.4

3.4

–

9.2

More detailed information concerning Directors’ remuneration, shareholdings, pension entitlements, share options and other long-term incentive 
plans, as required by the Companies Act 2006, is shown in the Remuneration Report on pages 123 to 143.

193

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202026. NOTES TO THE CASH FLOW STATEMENTS

26(i) – Reconciliation of cash generated from operations

Operating profit

Adjustments for:

Depreciation of property, plant and equipment

Share of profit from joint ventures after tax

Profit on sale of investment properties

Revaluation surplus on investment properties

Valuation gain on other investments

Dividends and other income 

Other provisions

Increase/(decrease) in impairment of subsidiaries

Changes in working capital:

(Increase)/decrease in trading properties

(Increase)/decrease in debtors and tenant incentives

Increase in creditors

Net cash inflow/(outflow) generated from operations

Group

2020 
£m

1,501.0

3.6

(236.5)

(5.1)

(970.6)

(13.6)

–

3.9

–

2019 
£m

949.4

3.4

(203.1)

(7.2)

(476.7)

(4.3)

–

8.2

–

282.7

269.7

(19.6)

(52.4)

22.5

233.2

30.9

(59.3)

50.3

291.6

Company

2020 
£m

123.3

0.2

–

–

–

(174.4)

4.1

33.1

(13.7)

–

(1.4)

1.4

(13.7)

2019 
£m

220.3

0.9

–

–

–

–

(210.3)

3.1

(29.2)

(15.2)

–

0.1

5.6

(9.5)

26(ii) – Deposits
Term deposits for a period of three months or less are included within cash and cash equivalents.

26(iii) – Analysis of net debt
Management defines net debt as total borrowing less cash and cash equivalents.

Cash movements

Non-cash movements

At 1 January 
2020 
£m

Acquired4
£m

Cash
inflow1
£m

Cash
outflow2
£m

Exchange 
movement  

£m

Fair value 
changes  

£m

Cost of  
early close  
out of debt  

£m

Other  

non-cash
adjustments3
£m

At  
31 December 
2020  
£m

1,958.3

(14.8)

1,943.5

(132.5)

1,811.0

1,955.9

(15.0)

1,940.9

(60.7)

1,880.2

12.1

–

12.1

(19.6)

(7.5)

550.6

(133.0)

–

(4.1)

550.6

(137.1)

–

550.6

63.4

(73.7)

–

–

–

–

–

550.6

(132.8)

–

(4.1)

550.6

(136.9)

–

550.6

40.9

(96.0)

31.6

–

31.6

(0.3)

31.3

31.6

–

31.6

–

31.6

–

–

–

–

–

–

–

–

–

–

10.9

–

10.9

–

10.9

10.9

–

10.9

–

10.9

–

2.4

2.4

–

2.4

–

2.4

2.4

–

2.4

2,430.5

(16.5)

2,414.0

(89.0)

2,325.0

2,416.2

(16.7)

2,399.5

(19.8)

2,379.7

Group

Bank loans and loan capital 

Capitalised finance costs

Total borrowings

Cash in hand and at bank

Net debt

Company

Bank loans and loan capital

Capitalised finance costs

Total borrowings

Cash in hand and at bank

Net debt

1  Proceeds from borrowings of £550.6 million.
2  Group cash outflow of £137.1 million (Company: £136.9 million), comprises the repayment of borrowings of £122.1 million (Company: £121.9 million), cash settlement for early repayment of debt 

of £10.9 million (Company: £10.9 million) and capitalised costs of £4.1 million (Company: £4.1 million).

3  The other non-cash adjustment relates to the amortisation of issue costs. See Note 9. 
4  Acquired represents cash and borrowings assumed from the acquisition of Sofibus detailed further in Note 8.

194

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202026. NOTES TO THE CASH FLOW STATEMENTS CONTINUED

26(iv) – Analysis of financial liabilities and assets arising from financing activities
For the year ended 31 December 2020

Group

Total borrowings (Note 16)

Derivatives: (Net) Fair value of forward foreign 
exchange and currency swap contracts (Note 17)

Lease liabilities (Note 15)

Total net financial liabilities arising 
from financing activities

Cash movements

Non-cash movements

At 1 January 
2020  
£m

1,943.5

Acquired3
£m

12.1

(16.2)

77.8

–

3.4

Cash  
inflow  
£m

550.6

–

–

Cash  
outflow  

£m

(137.1)

(55.0)

(4.7)

Exchange
movement1
£m

Net fair value 
changes2
£m

31.6

67.1

3.7

–

(3.2)

–

Cost of  
early close  
out of debt  

Other  
non-cash 
adjustments  

£m

10.9

–

–

£m

2.4

–

3.2

At 31 
December 
2020  
£m

2,414.0

(7.3)

83.4

2,005.1

15.5

550.6

(196.8)

102.4

(3.2)

10.9

5.6

2,490.1

1  Exchange movement of £98.7 million from borrowings and forward foreign exchange and currency swap contracts consists of: Foreign exchange loss on effective hedge relationships recognised 

in OCI of £52.5 million and foreign exchange loss recognised within the Income Statement of £46.2 million. See Note 17 (iv).

2  Total net fair value gain of £13.7 million arising from derivatives per Note 9 also includes fair value gains from interest rate swaps and caps of £10.5 million.
3  Acquired represents borrowings and lease liabilities assumed from the acquisition of Sofibus detailed further in Note 8.

For the year ended 31 December 2019

Group

At 1 January 
2019  
£m

Recognised 
on adoption of 
IFRS 16
£m 

Total borrowings (Note 16)

2,243.5

Cash movements

Non-cash movements

Cash 
inflow 
£m

10.2

Cash 
outflow 
£m

(270.6)

Acquisition of 
leases 
£m

Exchange
movement1
£m

Fair value
changes2
£m

–

(60.5)

–

Cost of early 
close out 
of debt  

£m

18.6

Other 
non-cash 
adjustments 
£m

At  
31 December 
2019  
£m

2.3

1,943.5

Derivatives: (Net) Fair 
value of forward foreign 
exchange and currency 
swap contracts (Note 17)

Lease liabilities (Note 15)

Total net financial 
liabilities arising 
from financing activities

–

–

75.2

3.3

–

26.9

–

–

(3.9)

–

8.1

(49.5)

(4.6)

2,246.8

75.2

37.1

(274.5)

8.1

(114.6)

3.1

–

3.1

–

–

–

3.0

(16.2)

77.8

18.6

5.3

2,005.1

1  Exchange movement of £110.0 million from borrowings and forward foreign exchange and currency swap contracts consists of: Foreign exchange gains on effective hedge relationships 

recognised in OCI of £57.6 million and foreign exchange gains recognised within the Income Statement of £52.4 million. See Note 17 (iv).

2  Total net fair value gain of £7.9 million arising from derivatives per Note 9 also includes fair value gains from interest rate swaps and caps of £11.0 million.

Company
The Company’s financial liabilities and assets arising from financing activities comprise, Company total borrowings shown in Note 26(iii) of 
£2,399.5 million (2019: £1,940.9 million) and the Group derivatives shown in the table above of £7.3 million (asset) (2019: £16.2 million asset).

27. PROPERTY VALUATION TECHNIQUES AND RELATED QUANTITATIVE INFORMATION

All of the Group’s properties are level 3, as defined by IFRS 13, in the fair value hierarchy as at 31 December 2020 and there were no transfers 
between levels during the year. Level 3 inputs used in valuing the properties are those which are unobservable, as opposed to level 1 (inputs 
from quoted prices) and level 2 (observable inputs either directly, i.e. as prices, or indirectly, i.e. derived from prices).

Based on different approaches for different properties, the following valuation techniques can be used for the same class of assets:

The yield methodology valuation technique is used when valuing the Group’s assets which uses market rental values capitalised with a market 
capitalisation rate. The resulting valuations are cross-checked against the initial yields and the fair market values per square metre derived from 
actual market transactions for similar assets.

For properties under construction and the majority of land held for development, properties are valued using a residual method valuation. 
Under this methodology, the valuer assesses the investment value (using the above mentioned methodology for completed buildings). 
Deductions are then made for the total estimated costs to complete, including notional finance costs and developer’s profit, to take into account 
the hypothetical purchaser’s management of the remaining development process and their perception of risk with regard to construction and the 
property market (e.g. as regards potential cost overruns and letting risk). Land values are cross-checked against the rate per hectare derived from 
actual market transactions. Other land is also valued on this comparative basis. Land values per hectare range from £0.1 million – £11.4 million 
(2019: £0.1 million – £10.8 million) for the UK and £0.2 million – £3.6 million (2019: £0.1 million – £3.9 million) for Continental Europe.

195

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202027. PROPERTY VALUATION TECHNIQUES AND RELATED QUANTITATIVE INFORMATION CONTINUED

An increase/decrease to ERV will increase/decrease valuations, while an increase/decrease to yield will decrease/increase valuations. 
Management continues to consider a +/-5% change in ERV to be reasonably possible changes to the assumptions. A sensitivity analysis showing 
the impact on valuations of changes in yields and ERV on the property portfolio (including joint ventures at share) is shown below.

Sensitivity analysis

2020

20191

Group total completed property portfolio  

£m

11,807.2

9,316.9

Impact on valuation of 25bp change  
in nominal equivalent yield

Impact on valuation of 5% change  
in estimated rental value (ERV)

Increase  

£m

(616.1)

(473.5)

Decrease  

£m

607.8

425.3

Increase  

£m

436.0

342.1

Decrease  

£m

(430.9)

(337.7)

1  Following a change in the methodology for calculating sensitivities, the December 2019 sensitivities have been changed from those disclosed in the Annual Report & Accounts 2019 in order to be 

consistent with the December 2020 position. 

There are inter-relationships between all these inputs as they are determined by market conditions. The existence of an increase in more than 
one input would be to magnify the impact on the valuation. The impact on the valuation will be mitigated by the inter-relationship of two inputs 
in opposite directions, e.g. an increase in rent may be offset by an increase in yield. The table below includes the Group’s wholly-owned and joint 
venture assets at share in order to include the entire portfolio. The equivalent analysis for the range of inputs on a wholly-owned basis would not 
be significantly different.

2020 By asset type

Big box warehouses > 35,000 sq m

Big box warehouses < 35,000 sq m

Urban warehouses > 3,500 sq m

Urban warehouses < 3,500 sq m

High value and other uses of industrial land4

Completed  

£m

1,660.6

2,098.0

 4,951.5 

 2,821.5 

 275.6 

Valuation

Land &
development¹
£m

Combined 
property  
portfolio  

£m

 1,660.6 

 2,098.0 

 4,951.5 

 2,821.5 

 275.6 

Inputs

ERV2
£ per  
sq m

46.8

53.5

110.8

159.2

165.3

ERV range2
£ per 
sq m

30.8–147.8

32.1–130.1

26.8–280.6

53.6–291.2

53.6–215.3

 11,807.2 

1,188.0

 12,995.2 

75.1

26.8–291.2

By ownership

Wholly-owned5

Joint ventures

Group Total 

 9,566.6 

 2,240.6 

 1,080.9 

 10,647.5 

111.7

26.8–291.2

 107.1 

 2,347.7 

 11,807.2 

 1,188.0 

 12,995.2 

46.7

75.1

30.8–96.4

26.8–291.2

Net true 
equivalent

yield³ 
%

4.4

4.6

4.5

4.1

5.9

4.5

4.4

4.7

4.5

Net true 
equivalent yield 
range  

%

3.6–6.4

3.5–6.5

3.3–10.1

3.3–8.7

3.3–9.9

3.3–10.1

3.3–9.9

3.5–10.1

3.3–10.1

1  Land and development valuations by asset type are not available as land sites are not categorised by asset type. Combined property portfolio column will not cast down but row does cast across.
2  On a fully occupied basis.
3  In relation to the completed properties only.
4  High value and other uses of industrial land includes offices and retail uses, such as trade counters, car showrooms and self-storage facilities.
5  Included in the completed portfolio, the wholly-owned assets are: big box > 35,000 sq m £789.4 million; big box < 35,000 sq m £861.3 million; urban warehouses > 3,500 sq m 

£4,822.3 million; urban warehouses < 3,500 sq m £2,821.5 million; and other uses £272.1 million.

196

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202027. PROPERTY VALUATION TECHNIQUES AND RELATED QUANTITATIVE INFORMATION CONTINUED

2020 By geography

Greater London

Thames Valley

National Logistics

Northern Europe

Germany

Netherlands 

Southern Europe 

France

Italy/Spain

Central Europe 

Poland

Other

Group Total 

Valuation

Land &
development
£m

140.9

140.4

391.8

100.6

21.9

136.5

212.0

33.2

10.7

Completed  

£m

4,727.0

1,856.3

831.5

1,277.1

140.0

1,378.8

954.4

564.2

77.9

Combined 
property 
portfolio  

£m

4,867.9

1,996.7

1,223.3

1,377.7

161.9

1,515.3

1,166.4

597.4

88.6

11,807.2

1,188.0

12,995.2

Inputs

ERV1 
£ per  
sq m

ERV range1
£ per  
sq m

160.2

150.8

55.1–291.2

70.0–280.6

70.5

45.0–130.1

58.6

60.5

32.1–140.3

50.3–94.4

61.4

46.4

39.3–125.0

26.8–172.1

42.1

53.3

75.1

30.8–139.0

46.8–96.4

26.8–291.2

Net true 
equivalent

yield² 
%

4.0

4.7

4.6

4.1

4.7

4.9

4.8

6.0

5.5

4.5

Net true 
equivalent yield 
range  

%

3.3–7.3

4.3–7.4

4.2–5.2

3.5–5.7

3.9–10.1

3.6–9.2

3.9–9.9

5.4–6.4

5.4–5.5

3.3–10.1

Investment properties – Group (Note 13(i))³

Investment properties – Joint ventures (Note 7(ii))

Trading properties – Group (Note 13(ii))4

Trading properties – Joint ventures (Note 7(ii))

1  On a fully occupied basis. 
2  In relation to the completed properties only.
3  Excludes head lease ROU assets of £76.9 million.
4  Includes valuation surplus not recognised on trading properties of £0.9 million.

2019 By asset type

Big box warehouses > 35,000 sq m

Big box warehouses < 35,000 sq m

Urban warehouses > 3,500 sq m

Urban warehouses < 3,500 sq m

High value and other uses of industrial land4

By ownership

Wholly-owned5

Joint ventures

Group Total 

Completed  

£m

1,220.2

1,681.7

3,800.7

2,390.2

224.1

9,316.9

7,527.0

1,789.9

9,316.9

10,594.5

2,347.7

53.0

–

12,995.2

Combined 
property  
portfolio  

£m

1,220.2

1,681.7

3,800.7

2,390.2

224.1

Valuation

Land &
development¹
£m

934.1

10,251.0

824.7

109.4

934.1

8,351.7

1,899.3

10,251.0

Inputs

ERV² 
£ per  
sq m

ERV range²
£ per  
sq m

Net true 
equivalent

yield³ 
%

Net true 
equivalent  
yield range  

%

45.2

50.6

105.3

152.8

150.4

72.2

112.6

43.6

72.2

30.5–147.5

30.5–226.0

25.4–272.1

50.8–279.9

48.2–226.1

25.4–279.9

25.4–279.9

28.3–91.5

25.4–279.9

4.9

4.9

4.8

4.4

5.9

4.8

4.7

5.1

4.8

4.0–6.5

3.8–6.5

3.8–10.4

3.9–7.3

4.1–6.9

3.8–10.4

3.8–9.5

3.8–10.4

3.8–10.4

1  Land and development valuations by asset type are not available as land sites are not categorised by asset type. Combined property portfolio column will not cast down but row does cast across.
2  On a fully occupied basis. 
3  In relation to the completed properties only.
4  Higher value includes offices and retail uses, such as trade counters, car showrooms and self-storage facilities.
5  Included in the completed portfolio, the wholly-owned assets are: big box > 35,000 sq m £512.0 million; big box < 35,000 sq m £713.7 million; urban warehouses > 3,500 sq m 

£3,688.2 million; urban warehouses < 3,500 sq m £2,389.5 million; and other uses £223.6 million.

197

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202027. PROPERTY VALUATION TECHNIQUES AND RELATED QUANTITATIVE INFORMATION CONTINUED

Valuation

Inputs

2019 By geography

Greater London

Thames Valley

National Logistics

Northern Europe

Germany/Austria

Belgium/Netherlands 

Southern Europe 

France

Italy/Spain

Central Europe 

Poland

Other

Group Total 

Investment properties – Group (Note 13(i))3

Investment properties – Joint ventures (Note 7(ii))

Trading properties – Group (Note 13(ii))

Trading properties – Joint ventures (Note 7(ii))

1  On a fully occupied basis. 
2  In relation to the completed properties only.
3  Excludes head lease ROU assets of £70.2 million.

Completed  

Land & 
development  

£m

3,819.1

1,671.7

711.6

982.4

108.1

955.3

499.4

495.9

73.4

9,316.9

£m

181.9

80.7

161.0

122.5

29.3

82.9

235.0

30.4

10.4

934.1

Combined 
property  
portfolio  

£m

4,001.0

1,752.4

872.6

1,104.9

137.4

1,038.2

734.4

526.3

83.8

10,251.0

8,331.5

1,898.3

20.2

1.0

10,251.0

ERV¹
£ per 
sq m

157.3

143.4

69.6

55.0

53.5

56.4

42.8

40.0

50.6

72.2

ERV range¹
£ per  
sq m

48.7–279.9

61.9–226.1

43.3–127.1

30.5–150.3

28.3–83.2

37.3–114.8

25.4–91.5

30.5–131.9

44.4–91.5

25.4–279.9

Net true 
equivalent
yield2
%

Net true 
equivalent yield 
range 
%

4.4

4.9

4.9

4.7

5.0

5.0

5.2

6.2

5.6

4.8

4.0–7.8

4.0–6.6

4.5–6.9

3.8–6.5

4.2–10.4

3.8–9.5

4.1–9.3

5.5–6.5

5.2–5.6

3.8–10.4

198

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202028. RELATED UNDERTAKINGS

A list of the Group’s related undertakings as at 31 December 2020 is detailed below. Except where the Group’s percentage holding is disclosed 
below, the entire share capital of the subsidiary undertaking is held by the Group. Unless otherwise stated, the Group’s holding in the subsidiary 
undertaking comprises ordinary shares. Where subsidiaries have different classes of shares, the percentage effective holding shown represents 
both the Group’s voting rights and equity holding. All subsidiaries are consolidated in the Group’s Financial Statements. The Group’s related 
undertakings also includes its joint ventures primarily SELP and Roxhill. 

Audit exemption taken for subsidiaries
Certain UK subsidiaries are exempt from the requirement of the Companies Act 2006 (the Act) relating to the audit of individual account by 
virtue of Section 479A of the Act. These subsidiaries are identified with ** in the table below.

Certain UK partnerships are exempt from the requirement to prepare, publish and have audited individual accounts by virtue of regulation 
7 of The Partnership (Accountants) Regulations 2008. The results of these partnerships are consolidated within the Group accounts. 
These partnerships are identified with *** in the table below. 

% effective 
holding if 
not 100%

Direct / 
Indirect

Registered Office

Company Name

Airport Property GP (No.2) Limited**

Airport Property H1 Limited**

Airport Property Partnership6***

Allnatt London Properties plc2**

Amdale Holdings Limited NV

Beira Investments Sp z.o.o.

Bilton Homes Limited

Bilton plc**

Bonsol S.R.L.

Brixton (Axis Park) Limited

Brixton (Fairway Units 7-11) Limited**

Brixton (Great Western, Southall) Limited**

Brixton (Hatton Cross) 1 Limited

Brixton (Heathrow Estate) Limited

Brixton (Metropolitan Park) 1 Limited

Brixton (Origin) Limited

Brixton Asset Management UK Limited**

Brixton Greenford Park Limited

Brixton Limited**

Brixton Nominee 26 (Jersey) Limited

Brixton Nominee 27 (Jersey) Limited

Brixton Nominee 38 (Jersey) Limited

Brixton Nominee 39 (Jersey) Limited

Brixton Nominee 40 (Jersey) Limited

Brixton Nominee 41 (Jersey) Limited

Brixton Nominee 8 (Jersey) Limited

Brixton Nominee 9 (Jersey) Limited

Brixton Nominee Axis Park 1 Limited

Brixton Nominee Axis Park 2 Limited

Brixton Nominee Polar Park 1 Limited

Brixton Nominee Polar Park 2 Limited

Brixton Nominee Premier Park 1 Limited

Brixton Nominee Premier Park 2 Limited

Brixton Northfields (Wembley 1) Limited**

Brixton Northfields (Wembley) Holdings Limited**

Brixton Northfields (Wembley) Limited**

Brixton Northfields 1 Limited**

Brixton Northfields 2 Limited**

Brixton Northfields 3 Limited**

Brixton Northfields 4 Limited**

Brixton Northfields 5 Limited**

Brixton Northfields 6 Limited**

Brixton Premier Park Limited

Brixton Properties Limited

Brixton Sub-Holdings Limited**

Jurisdiction

England and Wales

England and Wales

England and Wales

England and Wales

Belgium

Poland

England and Wales

England and Wales

Italy

95

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

Jersey

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

Indirect

Indirect

Indirect

Direct

Indirect

Indirect

Indirect

Direct

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Direct

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Boulevard Louis Schmidt 87, 1040 Etterbeek, Belgium

Pl. Andersa 3, 61-894, Poznan, Poland

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

3rd Floor, One The Esplanade, St. Helier, JE2 3QA, Jersey

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

199

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202028. RELATED UNDERTAKINGS CONTINUED

Company Name

B-Serv Limited**

CHR Holdings II LLC5

CHR Holdings LLC

% effective 
holding if 
not 100%

Jurisdiction

England and Wales

Delaware

Delaware

Coventry & Warwickshire Development Partnership LLP6

England and Wales

CWDP Investment Limited**

England and Wales

De Hoek-Noord S-Park B.V.

Devon Nominees (No.1) Limited

Devon Nominees (No.2) Limited

Devon Nominees (No.3) Limited

Netherlands

England and Wales

England and Wales

England and Wales

Gateway Rugby Management Company Limited**

England and Wales 91.85

Granby Investments Sp z.o.o.

Poland

GrontFour s.r.o.

HelioSlough Limited**

Helios Northern Limited1**

Holbury Investments Sp z.o.o.

Howbury Park GP Limited5

Howbury Park SPV Limited5

IFP S.R.L.

IMPIANTI FTV S.R.L.

Karnal Investments Sp z.o.o.

Liacom-A Ingatlanforgalmazo KFT

London Distribution Park No.2 LLP6

Lynford Investments Sp z.o.o.

M0M4 Üzleti Park KFT

Nivindus NV

Ozarów Biznes Park Sp z.o.o.

Premier Greenford GP Limited1

Czech Republic

England and Wales

England and Wales

Poland

England and Wales

England and Wales

Italy

Italy

Poland

Hungary

95

95

England and Wales 50

Poland

Hungary

Belgium

Poland

England and Wales

50

Property Management Company (Croydon) Limited

England and Wales 72

Roxhill (Coventry M6 J2) Limited7

England and Wales

Roxhill (Coventry) Limited**7

England and Wales

Roxhill (Junction 15) Limited

England and Wales

Roxhill (Maidstone) Limited

Roxhill Management Rugby Limited

England and Wales 50

England and Wales

Direct / 
Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Roxhill Warth 2 Limited

England and Wales 28

Indirect

Roxhill Warth 3 Limited

England and Wales 50

Indirect

Roxhill-SEGRO (Rugby Gateway) LLP6

England and Wales 50

SEGRO (225 Bath Road) Limited

SEGRO (Acton Park Estate) Limited

SEGRO (BA World Cargo) Limited

SEGRO (Barking 1) Limited**

SEGRO (Barking 2) Limited**

SEGRO (Barking 3) Limited**

SEGRO (Barking) Limited

SEGRO (Beddington Lane) Limited

SEGRO (Blanc Mesnil) SARL

SEGRO (Bonded Stores) Limited**

200

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

France

England and Wales

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Registered Office

1 New Burlington Place, London W1S 2HR, United Kingdom

1209 Orange Street, Wilmington, Delaware, United States

400, 2711 Centerville Road, Wilmington, New Castle, Delaware, 
United States

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

Pl. Andersa 3, 61-894, Poznan, Poland
Praha 1, Na Prˇíkopeˇ 9/392 a 11/393, PSCˇ 110 00, 
Czech Republic

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Pl. Andersa 3, 61-894, Poznan, Poland

55 Baker Street, London, W1U 7EU, United Kingdom

55 Baker Street, London, W1U 7EU, United Kingdom

Strada 3 Palazzo B3, 20090 Assago Milanofiori, Milan, Italy

Strada 3 Palazzo B3, 20090 Assago Milanofiori, Milan, Italy

Zielna 37, 00-108 Warszawa, Mazowieckie, Poland

1024 Budapest, Löv ˝oház u. 39, Hungary

Leslie Ford House, Tilbury, Essex, United Kingdom, RM18 7EH

Zielna 37, 00-108 Warszawa, Mazowieckie, Poland

1024 Budapest, Löv ˝oház u. 39, Hungary

Boulevard Louis Schmidt 87, 1040 Etterbeek, Belgium

Pl. Andersa 3, 61-894, Poznan, Poland

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

1 New Burlington Place, London W1S 2HR, London

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

Lumonics House Valley Drive, Swift Valley Industrial Estate, 
Rugby CV21 1TQ, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

20 Rue Brunel, 75017, Paris, France

1 New Burlington Place, London W1S 2HR, United Kingdom

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202028. RELATED UNDERTAKINGS CONTINUED

Company Name

SEGRO (Brackmills) Limited**

SEGRO (Bracknell) Limited**

SEGRO (Colnbrook) Limited**

SEGRO (Crick) Limited**

SEGRO (Dagenham) Limited

SEGRO (Den Bosch) B.V.

SEGRO (Deptford Trading Estate) Limited**

SEGRO (D-Link House) Limited**

SEGRO (East Plus) Limited**

SEGRO (East Plus) Trading Limited

SEGRO (Electra Park) Limited

SEGRO (EMG Management Company) Limited¹**

SEGRO (EMG Rail Freight Terminal) Limited**

SEGRO (EMG Unit 1) Limited

SEGRO (EMG Unit 2) Limited

SEGRO (EMG Unit 4) Limited**

SEGRO (EMG Unit 8) Limited

SEGRO (EMG Unit 12) Limited

SEGRO (EMG) Limited

SEGRO (Faggs Road) Limited**

SEGRO (Fairways Industrial Estate) Limited

SEGRO (Gatwick) Limited

SEGRO (Grange Park) Limited**

Jurisdiction

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

Netherlands

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

SEGRO (Great Cambridge Industrial Estate) Limited

England and Wales

SEGRO (Hatton Farm Site A) Limited**

SEGRO (Hatton Farm Site B) Limited**

SEGRO (Hatton Farm Site C) Limited**

SEGRO (Hayes) Limited

SEGRO (Heathrow Cargo Area) Limited

SEGRO (Heathrow International) Limited**

SEGRO (Heathrow Park) Limited

SEGRO (Howbury) Limited5

SEGRO (Kettering Gateway Management Company) 
Limited**

SEGRO (Kettering) Limited

SEGRO (Lee Park Distribution) Limited

SEGRO (Loop) Limited**

SEGRO (Nelson Trade Park) Limited**

SEGRO (New Cross Business Centre) Limited**

SEGRO (Newport Pagnell) Limited**

SEGRO (NFTE & Mercury) Limited

SEGRO (Parc des Damiers) SAS

SEGRO (Perivale Park) Limited

SEGRO (Poyle 14) Limited

SEGRO (Purfleet) Limited

SEGRO (Rainham 1) Limited**

SEGRO (Rainham 2) Limited**

SEGRO (Rainham, Enterprise 1) Limited**

SEGRO (Rainham, Enterprise 2) Limited**

SEGRO (Reading) Limited2

SEGRO (Rockware Avenue) Limited

SEGRO (Rugby Gateway 1) Limited**

SEGRO (Rugby Gateway 2) Limited**

SEGRO (Rugby Gateway 3) Limited

SEGRO (Rugby Gateway 4) Limited**

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

France

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

% effective 
holding if 
not 100%

Direct / 
Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Registered Office

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

55 Baker Street, London W1U 7EU, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

20 Rue Brunel, 75017, Paris, France

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

201

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202028. RELATED UNDERTAKINGS CONTINUED

Company Name

SEGRO (Rugby Gateway 5) Limited**

SEGRO (Rushden) Limited**

SEGRO (Skyline) Limited

SEGRO (Spacewaye Park) Limited**

SEGRO (Stansted Cargo) Limited**

SEGRO (Stansted Fedex) Limited

SEGRO (Stockley Close) Limited**

SEGRO (The Portal) Limited

SEGRO (Tilbury 2) Limited

SEGRO (Tottenham) Limited

SEGRO (Trilogy) Management Company Limited

SEGRO (Tudor) Limited

SEGRO (UK Logistics) Limited**

SEGRO (Victoria Industrial Estate) Limited

SEGRO (Watchmoor) Limited**

SEGRO (Welham Green) Limited

SEGRO (West Zaan) B.V.

SEGRO (Westway Estate) Limited

SEGRO Achte Grundbesitz GmbH

SEGRO Achtzehnte Grundbesitz GmbH

SEGRO Administration Limited

SEGRO APP 1 Limited**

SEGRO APP 2 Limited**

SEGRO APP 3 Limited**

SEGRO APP 4 Limited**

SEGRO APP Management Limited**

SEGRO Asset Management Limited**

SEGRO B.V.

SEGRO Belgium NV

SEGRO Benelux B.V.4

SEGRO CHUSA Limited

SEGRO Communities Limited

SEGRO Czech Republic s.r.o.

SEGRO De Hoek B.V.

SEGRO Dreiundzwanzigste Grundbesitz GmbH

SEGRO Dreizehnte Grundbesitz GmbH

SEGRO Dritte Grundbesitz GmbH

SEGRO Einundzwanzigste Grundbesitz GmbH

SEGRO Elfte Grundbesitz GmbH

SEGRO Erste Grundbesitz GmbH

SEGRO Europe Limited**

Jurisdiction

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

Netherlands

England and Wales

Germany

Germany

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

Netherlands

Belgium

Netherlands

England and Wales

England and Wales

Czech Republic

Netherlands

Germany

Germany

Germany

Germany

Germany

Germany

England and Wales

94

SEGRO European Logistics Partnership S.á r.l.

Luxembourg

50

SEGRO Finance plc

SEGRO France SA

SEGRO Fünfte Grundbesitz GmbH

SEGRO Fünfundzwanzigste Grundbesitz GmbH

SEGRO Fünfzehnte Grundbesitz GmbH

SEGRO Gennevilliers (SCI)

SEGRO Germany GmbH

SEGRO Glinde B.V.

SEGRO Gobelins SCI

202

England and Wales

France

Germany

Germany

Germany

France

Germany

Netherlands

France

% effective 
holding if 
not 100%

Direct / 
Indirect

Registered Office

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Direct

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Direct

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

1 New Burlington Place, London W1S 2HR, United Kingdom

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

Boulevard Louis Schmidt 87, 1040 Etterbeek, Belgium

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom
Praha 1, Na Prˇíkopeˇ 9/392 a 11/393, PSCˇ 110 00, 
Czech Republic

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

1 New Burlington Place, London W1S 2HR, United Kingdom

35 – 37 avenue de la Liberté, L-1931, Luxembourg

1 New Burlington Place, London W1S 2HR, United Kingdom

20 Rue Brunel, 75017, Paris, France

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

20 Rue Brunel, 75017, Paris, France

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

20 Rue Brunel, 75017, Paris, France

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 202028. RELATED UNDERTAKINGS CONTINUED

Company Name

SEGRO Holdings France SAS

SEGRO Industrial Estates Limited

SEGRO Industrial Nederland B.V.

SEGRO Insurance Limited

SEGRO Investments Limited**

SEGRO Investments Spain SL

SEGRO Italy S.R.L.

SEGRO Logistics Nord SCI

SEGRO Logistics Park Aulnay SCI

SEGRO Logistics Sud SCI

SEGRO Luge S.à r.l

SEGRO Luxembourg S.à r.l

SEGRO Lyon 1 SCI

SEGRO Management Limited**

SEGRO Management NV

SEGRO Netherlands B.V. 

SEGRO Netherlands Holdings B.V.

SEGRO Neunte Grundbesitz GmbH

SEGRO Neunzehnte Grundbesitz GmbH

SEGRO Overseas Holdings Limited

SEGRO Pension Scheme Trustees Limited

SEGRO plc French Branch

SEGRO Poland Sp z.o.o.

SEGRO Properties Limited

SEGRO Properties Spain SL

SEGRO Reisholz GmbH

SEGRO Sechste Grundbesitz GmbH

SEGRO Sechzehnte Grundbesitz GmbH

SEGRO Siebte Grundbesitz GmbH

SEGRO Siebzehnte Grundbesitz GmbH

SEGRO Spain Management S.L.

SEGRO Spain Spare 1 SLU

SEGRO Spain Spare 2 SLU

SEGRO Spain Spare 3 SLU

SEGRO Trading (France) SNC

SEGRO Urban Logistics PR2 SCI

SEGRO Urban Logistics PRI SCI

SEGRO Vierte Grundbesitz GmbH

SEGRO Vierundzwanzigste Grundbesitz GmbH

SEGRO Vierzehnte Grundbesitz GmbH

SEGRO Wissous (SCI)

SEGRO Zehnte Grundbesitz GmbH

SEGRO Zwanzigste Grundbesitz GmbH

SEGRO Zweite Grundbesitz GmbH

SEGRO Zweiundzwanzigste Grundbesitz GmbH

SEGRO Zwölfte Grundbesitz GmbH

SELP (Alpha Holdings) S.á r.l.

SELP (Alpha JV) S.á r.l.

% effective 
holding if 
not 100%

Jurisdiction

France

England and Wales

Netherlands

Isle of Man

Direct / 
Indirect

Indirect

Indirect

Indirect

Direct

Registered Office

20 Rue Brunel, 75017, Paris, France

1 New Burlington Place, London W1S 2HR, United Kingdom

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

Third Floor, St George’s Court, Upper Church Street, Douglas, 
IM1 1EE, Isle of Man

England and Wales

Indirect

1 New Burlington Place, London W1S 2HR, United Kingdom

Spain

Italy

France

France

France

Luxembourg

Luxembourg

France

England and Wales

Belgium

Netherlands

Netherlands

Germany

Germany

England and Wales

England and Wales

France

Poland

Direct

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Direct

Avenida Diagonal 467, 6a planta, pta 2, 08036, Barcelona, 
Spain

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

20 Rue Brunel, 75017, Paris, France

20 Rue Brunel, 75017, Paris, France

20 Rue Brunel, 75017, Paris, France

5, rue Guillaume Kroll, L-1882, Luxembourg

35 – 37 avenue de la Liberté, L-1931, Luxembourg

20 Rue Brunel, 75017, Paris, France

1 New Burlington Place, London W1S 2HR, United Kingdom

Boulevard Louis Schmidt 87, 1040 Etterbeek, Belgium

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

Gustav Mahlerplein 62, ITO-toren, 1082MA Amsterdam, 
Netherlands

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

1 New Burlington Place, London W1S 2HR, United Kingdom

Indirect

1 New Burlington Place, London W1S 2HR, United Kingdom

Direct

20 Rue Brunel, 75017, Paris, France

Indirect

Pl. Andersa 3, 61-894, Poznan, Poland

England and Wales

Direct

1 New Burlington Place, London W1S 2HR, United Kingdom

Spain

Germany

Germany

Germany

Germany

Germany

Spain

Spain

Spain

Spain

France

France

France

Germany

Germany

Germany

France

Germany

Germany

Germany

Germany

Germany

Luxembourg

Luxembourg

50

50

Direct

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Direct

Direct

Direct

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Avenida Diagonal 467, 6a planta, pta 2, 08036, Barcelona, 
Spain

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Avenida Diagonal 467, 6a planta, pta 2, 08036, Barcelona, 
Spain

Avenida Diagonal 467, 6a planta, pta 2, 08036, Barcelona, 
Spain

Avenida Diagonal 467, 6a planta, pta 2, 08036, Barcelona, 
Spain

Avenida Diagonal 467, 6a planta, pta 2, 08036, Barcelona, 
Spain

20 Rue Brunel, 75017, Paris, France

20 Rue Brunel, 75017, Paris, France

20 Rue Brunel, 75017, Paris, France

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

20 Rue Brunel, 75017, Paris, France

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

Fichtenstrasse 33, 40233, Düsseldorf, Germany

283 Route d’Arlon, L-8011 Strassen, Luxembourg

283 Route d’Arlon, L-8011 Strassen, Luxembourg

203

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 202028. RELATED UNDERTAKINGS CONTINUED

Company Name

SELP Finance S.á r.l.

SELP Investments S.á r.l.

SELP Management Limited

Slough Trading Estate Limited

SOFIBUS Patrimoine SA

Steamhouse Group Limited**

Tenedor S.R.L.

The UK Logistics (Nominee 1) Limited

The UK Logistics (Nominee 2) Limited

The UK Logistics General Partner Limited**

The UK Logistics Limited Partnership6

Trafford Park Estates Limited**

UK Logistics Fund Unit Trust

UK Logistics Properties No 1 Unit Trust

UK Logistics Properties No 2 Unit Trust

UK Logistics Trustees Limited

Unitair General Partner Limited**

Unitair Limited Partnership6***

Colleferro SRL

Vailog Energy 1 S.R.L.

Vailog Energy 2 S.R.L.

Vailog Energy 3 S.R.L.

Vailog France SCI

Vailog S.R.L.

Woodside GP Limited

Zinc One S.R.L.

Zinc Seven S.R.L.

Zinc Six S.R.L.

% effective 
holding if 
not 100%

Direct / 
Indirect

Registered Office

Jurisdiction

Luxembourg

Luxembourg

50

50

England and Wales

England and Wales

France

94.4

England and Wales

Italy

England and Wales

England and Wales

England and Wales

England and Wales

England and Wales

Jersey

Jersey

Jersey

Jersey

England and Wales

England and Wales

Italy

Italy

Italy

Italy

France

Italy

95

95

95

95

95

England and Wales 33.3

Italy

Italy

Italy

Indirect

Indirect

Indirect

Direct

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

Indirect

35 – 37 avenue de la Liberté, L-1931, Luxembourg

35 – 37 avenue de la Liberté, L-1931, Luxembourg

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

20 Rue Brunel, 75017, Paris, France

1 New Burlington Place, London W1S 2HR, United Kingdom

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey

Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey

Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey

Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey

1 New Burlington Place, London W1S 2HR, United Kingdom

1 New Burlington Place, London W1S 2HR, United Kingdom

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

20 Rue Brunel, 75017, Paris, France

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

1 New Burlington Place, London W1S 2HR, United Kingdom

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

Strada 3 Palazzo B3, 20090 Assago, Milanofiori, Milan, Italy

1  Ownership held in class A and B shares. 
2  Ownership held in class of ordinary and deferred shares. 
3  Ownership held in class of A shares. 
4  Ownership held in class of G shares, K shares, S shares and preference shares. 
5  In liquidation.
6  Partnerships and Limited Liability Partnerships (LLPs) do not have a share capital, unless otherwise stated the Group holds 100 per cent interest in these entities.
7  Roxhill (Coventry M6 J2) Limited and Roxhill (Coventry) Limited were renamed SEGRO (Coventry M6 J2) Limited and SEGRO (Coventry) Limited on 12 January 2021. 

204

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 2020SUPPLEMENTARY NOTES NOT PART OF AUDITED FINANCIAL STATEMENTS

Table 1: EPRA performance measures summary

2020

2019

Pence per  

Pence per  

EPRA Earnings

EPRA NTA 

EPRA NRV

EPRA NDV

EPRA net initial yield 

EPRA topped-up net initial yield

EPRA vacancy rate 

EPRA cost ratio (including vacant property costs)

EPRA cost ratio (excluding vacant property costs)

Table 2: Income Statement, proportionally consolidated

Gross rental income

Property operating expenses

Net rental income 

Joint venture fee income1

Administration expenses

Adjusted operating profit before interest and tax

Net finance costs (including adjustments)

Adjusted profit before tax

Tax on adjusted profit

Adjusted/EPRA earnings before non-controlling interests

Non-controlling interest on adjusted profit

Adjusted/EPRA earnings after tax and non-controlling interests

Number of shares, million

Adjusted/EPRA EPS, pence per share

Number of shares, million

Adjusted/EPRA EPS, pence per share – diluted

Notes

2,7

2,7

2

2,7

2,7

2,7

2,7

12

12

Notes

Table 4

Table 5

Table 5

Table 5

Table 6

Table 6

Table 7

Table 8

Table 8

Group  
£m

 392.9  

 (88.3) 

 304.6  

 21.6  

 (51.5) 

 274.7  

 (39.7) 

 235.0  

 (4.0) 

 231.0  

 (0.2) 

 230.8  

£m

292.3

 9,725.2 

 10,571.2 

 9,155.3 

£m

264.1

7,712.1

8,370.7

7,425.8

share

25.4

 814 

 885 

 766 

3.8%

4.1%

3.9%

21.1%

20.1%

2019

Joint  
ventures  

£m

107.1

(27.4)

79.7

(8.6)

(1.6)

69.5

(10.0)

59.5

(5.5)

54.0

–

54.0

Group  
£m

362.0

(80.7)

281.3

20.4

(51.5)

250.2

(36.7)

213.5

(3.2)

210.3

(0.2)

210.1

2020

Joint  
ventures  

£m

 121.2  

 (31.1) 

 90.1  

 (9.6) 

 (1.6) 

 78.9  

 (12.3) 

 66.6  

 (5.1) 

 61.5  

– 

Total  
£m

 514.1  

 (119.4) 

 394.7  

 12.0 

 (53.1) 

 353.6  

 (52.0) 

 301.6  

 (9.1) 

 292.5  

 (0.2) 

 61.5  

 292.3  

 1,149.8  

 25.4  

 1,154.5  

 25.3  

1  Joint venture fee income includes the cost of such fees borne by the joint ventures which are shown in Note 7 within net rental income.

As discussed in Note 2 there were no non-EPRA adjustments to underlying profit made in the current or prior period, therefore Adjusted 
earnings is equal to EPRA earnings in the table above.

share

24.4

700

760

674

3.8%

4.3%

4.0%

22.9%

21.5%

Total  
£m

469.1

(108.1)

361.0

11.8

(53.1)

319.7

(46.7)

273.0

(8.7)

264.3

(0.2)

264.1

1,081.3

24.4

1,087.1

24.3

205

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020SUPPLEMENTARY NOTES NOT PART OF AUDITED FINANCIAL STATEMENTS CONTINUED

Table 3: Balance Sheet, proportionally consolidated

Investment properties 

Trading properties

Total properties

Investment in joint ventures

Other net liabilities

Net borrowings

Total shareholders’ equity1

EPRA adjustments

Adjusted NAV

Number of shares, million

Adjusted NAV, pence per share 

1  After non-controlling interests.

2020

Joint  
ventures  

£m

Group  
£m

Total  
£m

 10,671.4  

 2,347.7  

 13,019.1  

 52.1  

– 

 52.1  

 10,723.5  

 2,347.7  

 13,071.2  

Notes

13,7

13,7

7

 1,423.0  

 (1,423.0) 

– 

 (162.3) 

 (161.7) 

 (324.0) 

16,7

 (2,325.0) 

 (763.0) 

 (3,088.0) 

 9,659.2 

–

 9,659.2  

2019

Joint  
ventures  

£m

1,898.3

1.0

1,899.3

(1,121.4)

(104.6)

(673.3)

–

Group  
£m

8,401.7

20.2

8,421.9

1,121.4

(54.7)

(1,811.0)

7,677.6

12

12

12

12

 66.0  

 9,725.2  

 1,194.7  

 814  

Total  
£m

10,300.0

21.2

10,321.2

–

(159.3)

(2,484.3)

7,677.6

34.5

7,712.1

1,102.1

700

Note: Loan to value of 23.8 per cent is calculated as net borrowings of £3,088.0 million divided by total properties (excluding head lease ROU 
asset of £76.9 million) of £12,994.3 million (2019: 24.2 per cent; £2,484.3 million net borrowings; £10,251.0 million total properties). 

The portfolio valuation uplift of 10.3 per cent shown on page 52 of the Strategic Report cannot be directly derived from the Financial Statements 
and is calculated to be comparable with published MSCI Real Estate indices against which we are measured. Based on the Financial Statements 
there is a valuation surplus of £1,182.5 million (see Note 8) and property value of £12,994.3 million (paragraph above) giving a valuation uplift 
of 10.0 per cent. The primary differences are that the uplift excludes the impact of rent free incentives (£23.5 million, +0.2 per cent) and 
other movements (£7.0 million, +0.1 per cent) primarily due to foreign exchange based on closing rate as opposed to average used in the 
Financial Statements.

Total assets under management of £15,342.8 million (2019: £12,220.5 million) includes Group total properties of £10,647.5 million (see Note 27) 
and 100 per cent of total properties owned by joint ventures of £4,695.3 million (see Note 7 (ii)).

Table 4: EPRA Earnings 

Earnings per IFRS income statement 

Adjustments to calculate EPRA Earnings, exclude:

Valuation surplus on investment properties

Profit on sale of investment properties

Gain on sale of trading properties

Increase/(decrease) in provision for impairment of trading properties

Increase in provision for impairment of other interests in property

Valuation surplus on other investments

Tax on profits on disposals1

Cost of early close out of debt

Net fair value gain on interest rate swaps and other derivatives

Deferred tax charge in respect of EPRA adjustments1

Adjustments to the share of profit from joint ventures after tax

Non-controlling interests in respect of the above

EPRA earnings

Basic number of shares, million

EPRA Earnings per Share (EPS)

Company specific adjustments:

Non-EPRA adjustments

Adjusted earnings

Adjusted EPS

Notes

2020

Group
£m

1,426.9

2019

Group
£m

857.9

 (970.6) 

(476.7)

8

8

13

8

8

8

9

9

7

2

 (5.1) 

 (1.2) 

 0.1  

 0.6  

 (13.6) 

 (0.3) 

 10.9  

 (13.7) 

 31.3  

 (175.0) 

2.0

292.3

12

 1,149.8 

25.4

–

292.3

25.4

2

12

(7.2)

(6.9)

(1.4)

0.4

(4.3)

9.2

18.6

(7.9)

29.0

(149.1)

2.5

264.1

1,081.3

24.4

–

264.1

24.4

1  Total tax charge in respect of adjustments per Note 2 of £31.0 million (2019: £38.2 million charge) comprises tax credit on profits on disposals of £0.3 million (2019: £9.2 million charge) and 

deferred tax charge of £31.3 million (2019: £29.0 million charge).

206

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 2020SUPPLEMENTARY NOTES NOT PART OF AUDITED FINANCIAL STATEMENTS CONTINUED

Table 5: EPRA Net asset measures
In October 2019, the European Public Real Estate Association (EPRA) published new Best Practices Recommendations (BPR) for financial 
disclosures by public real estate companies. The BPR introduced three new measures of net asset value: EPRA net tangible assets (NTA), EPRA net 
reinstatement value (NRV) and EPRA net disposal value (NDV). 

These recommendations are effective for accounting periods starting on 1 January 2020 and have been adopted by the Group in reporting the 
31 December 2020 position.

EPRA NTA is considered to be most consistent with the nature of SEGRO’s business as a UK REIT providing long-term progressive and 
sustainable returns. EPRA NTA now acts as the primary measure of net asset value and is also referred to as Adjusted Net Asset Value (or 
Adjusted NAV).

A reconciliation of the three new EPRA NAV metrics from IFRS NAV is shown in the table below. The previously reported EPRA NAV and EPRA 
NNNAV have also been included for comparative purposes.

As at 31 December 2020

Equity attributable to ordinary shareholders

Fair value adjustment in respect of interest rate derivatives – Group

Fair value adjustment in respect of trading properties – Group

Fair value adjustment in respect of trading properties – Joint ventures

Deferred tax in respect of depreciation and valuation surpluses – Group1

Deferred tax in respect of depreciation and valuation surpluses – Joint ventures1

Intangible assets

Fair value adjustment in respect of debt – Group

Fair value adjustment in respect of debt – Joint ventures

Real estate transfer tax2

Net assets

Diluted shares (million)

Diluted net assets per share

Current measures

Previously reported measures

EPRA NTA
 £m

9,659.2

EPRA NRV  

EPRA NDV  

EPRA NAV  

£m

£m

£m

EPRA NNNAV 
£m

9,659.2

9,659.2

9,659.2

9,659.2

(61.0)

0.9

–

42.2

85.5

(1.6)

–

–

–

9,725.2

1,194.7

814

(61.0)

0.9

–

84.4

171.0

–

–

–

716.7

10,571.2

1,194.7

885

–

0.9

–

–

–

–

(466.5)

(38.3)

–

9,155.3

1,194.7

766

(61.0)

0.9

–

84.4

171.0

–

–

–

–

9,854.5

1,194.7

825

–

0.9

–

–

–

–

(466.5)

(38.3)

–

9,155.3

1,194.7

766

1  50 per cent of deferred tax in respect of depreciation and valuation surpluses has been excluded in calculating EPRA NTA in line with option 3 of EPRA BPR guidelines.
2  EPRA NTA and EPRA NDV reflect IFRS values which are net of purchasers’ costs. Purchasers’ costs are added back when calculating EPRA NRV.

As at 31 December 2019

Equity attributable to ordinary shareholders

Fair value adjustment in respect of interest rate derivatives – Group

Fair value adjustment in respect of trading properties – Group

Fair value adjustment in respect of trading properties – Joint ventures

Deferred tax in respect of depreciation and valuation surpluses – Group1

Deferred tax in respect of depreciation and valuation surpluses – Joint ventures1

Intangible assets

Fair value adjustment in respect of debt – Group

Fair value adjustment in respect of debt – Joint ventures

Real estate transfer tax2

Net assets

Diluted shares (million)

Diluted net assets per share

Current measures

Previously reported measures

EPRA NTA 
£m

EPRA NRV 
£m

7,677.6

(50.5)

7,677.6

(50.5)

–

0.9

26.0

60.6

(2.5)

–

–

–

7,712.1

1,102.1

700

–

0.9

51.9

121.1

–

–

–

569.7

8,370.7

1,102.1

760

EPRA NDV 
£m  

7,677.6  

–  

–  

0.9  

–  

–  

–  

(233.3) 

(19.4) 

–

7,425.8  

1,102.1  

674  

EPRA  
net assets 
£m

7,677.6

(50.5)

–

0.9

51.9

121.1

–

–

–

–

7,801.0

1,102.1

708

EPRA triple  
net assets 
£m

7,677.6

–

–

0.9

–

–

–

(233.3)

(19.4)

–

7,425.8

1,102.1

674

1  50 per cent of deferred tax in respect of depreciation and valuation surpluses has been excluded in calculating EPRA NTA in line with option 3 of EPRA BPR guidelines.
2  EPRA NTA and EPRA NDV reflect IFRS values which are net of purchasers’ costs. Purchasers’ costs are added back when calculating EPRA NRV.

207

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020SUPPLEMENTARY NOTES NOT PART OF AUDITED FINANCIAL STATEMENTS CONTINUED

Table 6: EPRA net initial yield and topped-up net initial yield 

Combined property portfolio including joint ventures at share – 2020

Total properties per financial statements 

Add valuation surplus not recognised on trading properties1

Less head lease ROU assets

Combined property portfolio per external valuers’ reports

Less development properties (investment, trading and joint ventures)

Net valuation of completed properties

Add notional purchasers’ costs

Gross valuation of completed properties including notional purchasers’ costs 

Income

Gross passing rent2

Less irrecoverable property costs

Net passing rent

Adjustment for notional rent in respect of rent frees

Topped up net rent

Including fixed/minimum uplifts4

Total topped up net rent

Yields – 2020

EPRA net initial yield3

EPRA topped-up net initial yield3

Net true equivalent yield

Notes

Table 3

13

13

A

B

C

B/A

C/A

UK  
£m

Continental 
Europe  

£m

Total  
£m

8,087.0

4,984.2

13,071.2

0.9

–

8,087.9

(673.1)

7,414.8

501.6

7,916.4

–

(76.9)

0.9

(76.9)

4,907.3

12,995.2

(514.9)

(1,188.0)

4,392.4

11,807.2

215.1

716.7

4,607.5

12,523.9

£m

£m

£m

282.3

(3.0)

279.3

23.7

303.0

10.8

313.8

UK  
%

3.5

3.8

4.3

198.5

(7.5)

191.0

22.2

213.2

0.1

213.3

Continental 
Europe  

%

4.1

4.6

4.8

480.8

(10.5)

470.3

45.9

516.2

10.9

527.1

Total  
%

3.8

4.1

4.5

1  Trading properties are recorded in the Financial Statements at the lower of cost and net realisable value, therefore valuations above cost have not been recognised.
2  Gross passing rent excludes short-term lettings and licences.
3  In accordance with the Best Practices Recommendations of EPRA.
4  Certain leases contain clauses which guarantee future rental increases, whereas most leases contain five-yearly, upwards only rent review clauses (UK) or indexation clauses (Continental Europe).

Table 7: EPRA vacancy rate

Annualised estimated rental value of vacant premises

Annualised estimated rental value for the completed property portfolio

EPRA vacancy rate

2020 
£m

21.8

560.9

3.9%

2019 
£m

19.2

474.2

4.0%

208

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 2020 
 
 
SUPPLEMENTARY NOTES NOT PART OF AUDITED FINANCIAL STATEMENTS CONTINUED

Table 8: Total cost ratio/EPRA cost ratio

Total cost ratio

Costs

Property operating expenses1

Administration expenses 

Share of joint venture property operating and administration expenses

Less: 

Joint venture property management fee income, service charge income, management fees and other 
costs recovered through rents but not separately invoiced2

Total costs (A)

Gross rental income 

Gross rental income

Share of joint venture property gross rental income

Less:

Service charge income, management fees and other costs recovered through rents but not separately invoiced.2

Total gross rental income (B)

Total cost ratio (A)/(B)

Total costs (A)

Share-based payments

Total costs after share-based payments (C)

Total cost ratio after share-based payments (C)/(B)

EPRA cost ratio

Total costs (A)

Non-EPRA adjustments

EPRA total costs including vacant property costs (D)

Group vacant property costs

Share of joint venture vacant property costs

EPRA total costs excluding vacant property costs (E)

Total gross rental income (B)

Total EPRA cost ratio (including vacant property costs) (D)/(B)

Total EPRA cost ratio (excluding vacant property costs) (E)/(B)

Notes

5

6

7

4

7

6

2

5

7

2020 
£m

 88.3  

 51.5  

 42.3  

 (87.3) 

 94.8  

 392.9  

 121.2  

 (65.7) 

 448.4  

21.1%

 94.8  

 (10.4) 

 84.4  

18.8%

94.8

–

 94.8  

 (3.4) 

 (1.4) 

 90.0  

 448.4  

21.1%

20.1%

2019 
£m

80.7

51.5

37.6

(74.6)

95.2

362.0

107.1

(54.2)

414.9

22.9%

95.2

(12.5)

82.7

19.9%

95.2

–

95.2

(4.8)

(1.1)

89.3

414.9

22.9%

21.5%

1  Property operating expenses are net of costs capitalised in accordance with IFRS of £8.7 million (2019: £7.3 million) (see Note 5 for further detail on the nature of costs capitalised).
2  Total deduction of £87.3 million (2019: £74.6 million) from costs includes: joint venture management fees income of £21.6 million (2019: £20.4 million), service charge income including 
joint ventures of £59.0 million (2019: £49.7 million) and management fees and other costs recovered through rents but not separately invoiced, including joint ventures, of £6.7 million 
(2019: £4.5 million). These items have been represented as an offset against costs rather than a component of income in accordance with EPRA BPR Guidelines as they are reimbursing the 
Group for costs incurred. Gross rental income of £392.9 million (2019: £362.0 million) does not include joint venture management fees income of £21.6 million (2019: £20.4 million) and are not 
included in the total deduction to income of £65.7 million (2019: £54.2 million).

209

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
SUPPLEMENTARY NOTES NOT PART OF AUDITED FINANCIAL STATEMENTS CONTINUED

Table 9: EPRA capital expenditure analysis

Acquisitions

Development4

Completed properties6

Other5

Total

Wholly  
owned  

£m

858.51

484.92

34.03

27.0

2020

Joint  
ventures  

£m

82.0

46.5

6.1

9.4

Total  
£m 

940.57

531.4

40.1

36.4

1,404.4

144.0

1,548.4

Wholly  
owned  
£m

233.9

345.2

25.2

44.7

649.0

2019

Joint  
ventures  

£m

164.1

63.5

5.6

10.6

243.8

Total  
£m 

398.0

408.7

30.8

55.3

892.8

1  Being £824.3 million investment property and £34.2 million trading property (2019: £233.9 million and £nil respectively) see Note 13.
2  Being £471.0 million investment property and £13.9 million trading property (2019: £336.8 million and £8.4 million respectively) see Note 13.
3  Being £34.0 million investment property and £nil trading property (2019: £25.2 million and £nil respectively) see Note 13.
4  Includes wholly-owned capitalised interest of £7.0 million (2019: £8.2 million) as further analysed in Note 9 and share of joint venture capitalised interest of £0.5 million (2019: £0.8 million).
5  Tenant incentives, letting fees and rental guarantees and other items.
6  Being £37.6 million expenditure used for enhancing existing space (2019: £30.8 million) and £2.5 million used for creation of additional lettable space (2019: £nil).
7  Total acquisitions completed in 2020 shown on page 60 of the Strategic Report of £888.9 million excludes share of assets acquired by SELP from SEGRO of £46.5 million (all of which was 

completed property, see Note 25) and certain land acquisitions relating to trading properties of £5.1 million. 

Total disposals completed in 2020 of £138.8 million shown on page 60 of the Strategic Report includes: Carrying value of investment properties 
disposed by SEGRO Group of £154.9 million (see Note 13) and profit generated on disposal of £5.1 million (see Note 8); proceeds from the sale 
of trading properties by SEGRO Group of £17.2 million (see Note 4); share of joint venture disposal proceeds of £7.6 million; carrying value of 
lease incentives, letting fees and rental guarantees disposed by SEGRO Group and joint venture (at share) of £3.0 million; and excludes 50 per 
cent of the disposal proceeds for assets sold by SEGRO to SELP JV of £46.5 million (see Note 25) and certain proceeds from the sale of trading 
properties of £2.5 million.

Table 10: Like-for-like net rental income

(including JVs at share)

UK

Continental Europe

Like-for-like net rental income before other items1

Other2

Like-for-like net rental income (after other)

Development lettings

Properties taken back for development

Like-for-like net rental income plus developments

Properties acquired

Properties sold

Net rental income before surrenders, dilapidations and exchange

Lease surrender premiums and dilapidation income

Other items and rent lost from lease surrenders

Impact of exchange rate difference between periods

Net rental income (including joint ventures at share)

SEGRO share of joint venture management fees

Net rental income after SEGRO share of joint venture fees

Change  

%

0.9

4.3

2.1

2.1

2020  
£m

205.8

119.9

325.7

(5.9)

319.8

46.0

2.3

368.1

9.5

3.1

380.7

1.0

13.0

–

394.7

(9.6)

385.1

2019  
£m

204.0

115.0

319.0

(5.9)

313.1

15.0

3.3

331.4

2.1

14.0

347.5

0.5

14.1

(1.1)

361.0

(8.6)

352.4

1  Includes expense for loss allowance and impairment of receivables for the Group of £3.8 million (2019: £1.2 million); UK £2.7 million (2019: £0.5 million); CE £1.1 million (2019: £0.7 million). 

Excluding these expenses, the like-for-like change would be Group 2.9%; UK 2.0%; CE 4.6%.

2   Other includes the corporate centre and other costs relating to the operational business which are not specifically allocated to a geographical Business Unit. 

210

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Notes to the Financial Statements continuedFor the year ended 31 December 2020 
SUPPLEMENTARY NOTES NOT PART OF AUDITED FINANCIAL STATEMENTS CONTINUED

Table 11: Top 10 estates as at 31 December 2020 (by value, including joint ventures at share)

UK 

Slough Trading Estate

SLP East Midlands Gateway 

Premier Park

Shoreham Rd Cargo Area

Greenford Park 

North Feltham Trading Estate

Axis Park

Metropolitan Park

Perivale Park

Rugby Gateway

Continental Europe

SEGRO Parc des Petits Carreaux

VAILOG Rome South Logistics Park

Ownership2
%

100

100

100

100

100

100

100

100

100

100

100

100

Location

Slough

Midlands

Park Royal

Heathrow

Park Royal

Heathrow

Heathrow

Park Royal

Park Royal

Lettable area 
(100%) sq m

537,230

216,084

78,720

93,704

79,805

57,929

61,753

69,970

55,129

Midlands

113,413

France

Italy

150,367

222,469

SEGRO Airport Park Berlin

50 / 100

SEGRO Logistics Park Krefeld-Süd

SEGRO Logistics Park Aulnay

50

100

VAILOG CSG Logistics Park

50 / 100

SEGRO Park Düsseldorf-Süd

SEGRO Park Gennevilliers

SEGRO CityPark Düsseldorf

SEGRO Logistics Park Stryków

100

100

100

50

Germany

Germany

France

Italy

Germany

France

Germany

119,497

212,989

47,288

271,850

95,731

75,232

50,393

Poland

301,550

Headline  
rent  
£m

Vacancy by 
ERV %

WAULT
years1

73.4

13.4

11.4

20.8

10.7

8.3

9.2

8.3

6.8

8.6

13.5

n/a

5.7

5.6

4.8

4.8

5.2

5.7

3.9

5.5

3.3

0.0

5.4

0.0

1.6

4.5

0.0

0.0

0.0

0.0

2.9

0.0

0.0

1.5

0.0

0.0

16.6

0.0

14.5

8.1

9.0

15.4

3.1

2.5

4.6

4.1

7.7

1.9

3.2

7.8

5.5

17.4

5.9

4.2

8.8

8.5

5.2

5.6

6.2

4.3

1  Weighted average unexpired lease term to earlier of break of expiry.
2  Wholly-owned are shown as 100 per cent excluding small amounts of non-controlling interests in Vailog and Sofibus assets.

Asset type

Multi-let urban warehouse estate

Big box warehouse park

Multi-let urban warehouse estate

Multi-let cargo facility

Multi-let urban warehouse estate

Multi-let urban warehouse estate

Multi-let urban warehouse estate

Multi-let urban warehouse estate

Multi-let urban warehouse estate

Big box warehouse park

Multi-let urban warehouse estate

Big box warehouse park

Multi-let urban warehouse  
and Big box estate

Big box warehouse park

Big box warehouse park

Big box warehouse park

Multi-let urban warehouse estate

Multi-let urban warehouse estate

Multi-let urban warehouse estate

Big box warehouse park

211

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020 
Five-year financial results

Group Income Statement

Net rental income

Joint venture fee income

Administration expenses

Share of joint ventures’ Adjusted profit after tax

Net finance costs (including adjustments)

Adjusted profit before tax1

Adjustments to the share of profit from joint ventures after tax

Profit on sale of investment properties

Valuation surplus on investment and owner occupied properties

Profit/(loss) on sale of trading properties

(Increase)/decrease in provision for impairment of trading properties and other 
interests in property

Other investment income

Goodwill and other amounts written off on acquisitions and amortisation  
of intangibles

Net fair value gain/(loss) on interest rate swaps and other derivatives

Net loss on early close out of debt

Pension buy-out costs

Profit before tax

Group Balance Sheet

Investment properties (including assets held for sale)

Trading properties

Total directly owned properties

Property, plant and equipment

Investments in joint ventures

Other assets

Cash and cash equivalents

Total assets

Borrowings

Deferred tax provision

Other liabilities and non-controlling interests

Total equity attributable to owners of the parent

Total movement in equity attributable to owners of the parent

Profit attributable to equity shareholders

Other equity movements

Data per ordinary share (pence)

Earnings per share

Basic earnings per share2

Adjusted earnings per share – basic2

Net assets per share basic

Basic net assets per share2

Adjusted NAV per share – diluted2,3

Dividend per share2

2020 
£m

304.6

21.6

(51.5)

61.5

(39.7)

296.5

175.0

5.1

970.6

1.2

(0.7)

13.6

–

13.7

(10.9)

–

1,464.1

10,671.4

52.1

10,723.5

26.6

1,423.0

404.4

89.0

12,666.5

 (2,414.0) 

 (87.0) 

 (506.3) 

 9,659.2  

2019  
£m

281.3

20.4

(51.5)

54.0

(36.7)

267.5

149.1

7.2

476.7

6.9

1.0

4.3

–

7.9

(18.6)

–

902.0

8,401.7

20.2

8,421.9

23.0

1,121.4

383.9

132.5

10,082.7

(1,943.5)

(53.2)

(408.4)

7,677.6

2018  
£m

247.6

44.9

(44.1)

39.0

(45.9)

241.5

85.2

56.5

791.4

–

–

4.7

–

(22.0)

(6.4)

(51.8)

1,099.1

7,801.4

51.7

7,853.1

13.3

999.9

235.8

66.5

9,168.6

(2,243.5)

(26.9)

(334.2)

2017  
£m

220.7

24.3

(39.7)

47.6

(58.7)

194.2

60.5

17.0

872.4

(0.4)

–

–

(0.6)

(21.5)

(145.3)

–

976.3

6,745.4

12.5

6,757.9

14.7

792.0

261.2

109.3

7,935.1

(2,063.5)

(34.6)

(251.6)

6,564.0

5,585.4

 1,426.9  

 554.7  

857.9

255.7

1,062.6

(84.0)

952.7

450.6

 124.1  

 25.4  

 811  

 814  

 22.1  

79.3

24.4

700

700

20.7

105.4

23.4

648

650

18.8

98.5

19.9

557

556

16.6

2016  
£m

180.6

18.6

(31.4)

55.4

(68.7)

154.5

29.7

16.4

231.3

0.3

(2.0)

–

(0.2)

(2.6)

(1.0)

–

426.4

4,714.4

25.4

4,739.8

16.1

1,066.2

254.6

32.0

6,108.7

(1,630.4)

(16.3)

(279.9)

4,182.1

417.7

274.5

51.6

18.8

483

478

15.7

1  There are no differences between the Adjusted profit before tax and the previously reported EPRA profit before tax for the years 2016, 2017, 2019 and 2020.
2  Earnings per share, net assets per share and dividend per share for 2016 has been re-presented for a bonus factor of 1.046 following a rights issue.
3   Adjusted NAV is calculated in accordance with EPRA guidelines and aligns with EPRA NTA metric that was introduced in 2020, the 2019 figure has been restated to align with this definition. 

2016, 2017 and 2018 Adjusted NAV is based on EPRA NAV previously reported and have not been restated.

212

FINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020  
 
FURTHER INFORMATION

Financial information

FINANCIAL CALENDAR AND SHAREHOLDER INFORMATION

FEBRUARY 2021

Announcement of year end results: 

Payment:

MARCH 2021

Ex-dividend date for final dividend:

Record date:

APRIL 2021

Final date for SCRIP election:

Annual General Meeting:

MAY 2021

Payment:

JUNE 2021

Payment:

JULY 2021

6¾ per cent bonds 2024 interest

Property Income Distribution

Property Income Distribution

Property Income Distribution

Property Income Distribution

5¾ per cent bonds 2035 interest

Announcement of Half-year results:

Provisional

19 February 2021

23 February 2021

18 March 2021

19 March 2021

12 April 2021

22 April 2021

4 May 2021

21 June 2021

29 July 2021

AUGUST 2021

Payment:

SEPTEMBER 2021

Payment:

OCTOBER 2021

Payment:

Payment:

6¾ per cent bonds 2024 interest

23 August 2021

Property Income Distribution and/or Dividend

September 2021

23/8 per cent bonds 2029 interest

27/8 per cent bonds 2037 interest

11 October 2021

11 October 2021

RECENT SHARE HISTORY OF THE COMPANY

 } On 2 September 2016, the Company placed 74,770,950 new ordinary shares at a price of 435 pence by way of an equity placing. The shares 
were issued and admitted to the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the 
London Stock Exchange plc on 6 September 2016. Total gross proceeds of approximately £325 million were raised from the placing.

 } On 10 March 2017, a Rights Issue was announced on the basis of one new share for every five shares held on 8 March 2017 at a subscription 

price of 345 pence per share. 166,033,133 new ordinary shares were issued and admitted to the Official List of the Financial Conduct Authority 
and to trading on the main market for listed securities of the London Stock Exchange plc on 28 March 2017. Total gross proceedings of 
approximately £573 million were raised from the Rights Issue. 

 } On 15 February 2019, the Company placed 71,000,000 new ordinary shares at a price of 635 pence by way of an equity placing. The shares 
were issued and admitted to the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the 
London Stock Exchange plc on 19 February 2019. Total gross proceeds of approximately £451 million were raised from the placing.

 } On 10 June 2020, the Company placed 82,926,829 new ordinary shares at a price of 820 pence by way of an equity placing. The shares were 
issued and admitted to the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London 
Stock Exchange plc on 12 June 2020. Total gross proceeds of approximately £680 million were raised from the placing.

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OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020FURTHER INFORMATION

Shareholder information

Shareholder enquiries
If you have any questions about your shareholding or if you require further 
guidance (e.g. to notify a change of address) please contact our Registrar:

Equiniti Limited 
Aspect House 
Spencer Road 
Lancing 
West Sussex BN99 6DA

Telephone 0371 384 2186 (or +44 121-415-0141 from overseas). 

Alternatively, you can check your shareholding and access dividend 
information by registering at www.shareview.co.uk, or you can securely 
send queries via the website by visiting https://help.shareview.co.uk.

Electronic communications
Shareholders have the opportunity to elect to receive shareholder 
communications electronically, e.g. Annual Reports, Notice of the 
Annual General Meeting and Proxy Forms. You can elect to receive 
email notifications of shareholder communications by registering at 
www.shareview.co.uk where you can also set up a bank mandate to 
receive dividends directly to your bank account and to submit proxy votes 
for shareholder meetings. Receiving the Company’s communications 
electronically allows the Company to communicate with its shareholders 
in a more environmentally friendly, cost effective and timely manner.

AGM 
The 2021 AGM will be held on 22 April 2021. 

For the first time we will be enabling shareholders to attend and 
participate in the AGM electronically. The AGM will be broadcast 
in video format with presentation slides and during the meeting 
shareholders will be able to vote and ask questions. Shareholders who 
wish to submit a question in advance of the AGM can do so by 
emailing companysecretariat.mailbox@SEGRO.com.

Details of how to join the AGM can be found in the Notice of Meeting.

Shareholders will be kept up to date with regards to physical 
attendance at the AGM in line with Government guidance and are 
encouraged to check www.SEGRO.com for any further updates.

ShareGift
ShareGift is a charity (registered under the name The Orr Mackintosh 
Foundation, registered charity number 1052686) which specialises in 
accepting donations of small numbers of shares which are uneconomic 
to sell on their own. Shares which have been donated to ShareGift 
are aggregated and sold when practicable, with the proceeds passed 
on to a wide range of UK charities. ShareGift can also help with larger 
donations of shares. Further details about ShareGift can be obtained 
from its website at www.sharegift.org or by writing to ShareGift 
at ShareGift, PO Box 72253, London, SW1P 9LQ, telephone:  
+44 (0)207 930 3737.

Dividends
A requirement of the REIT regime is that a REIT must distribute to 
shareholders by way of dividend at least 90 per cent of its profits from 
its tax-exempt UK property rental business (calculated under UK tax 
principles after the deduction of interest and capital allowances and 
excluding chargeable gains). Such distributions are referred to as 
Property Income Distributions, or PIDs. Any further distributions may 
be paid as ordinary dividends, which are derived from profits earned 
by its UK, non-REIT taxable business, as well as its overseas operations.

Withholding tax – PIDs
SEGRO is required to withhold tax at source from its PIDs at the basic 
tax rate (20 per cent). UK shareholders need take no immediate action 
(unless they qualify for exemption as described below) and will receive 
with each dividend payment a tax deduction certificate stating the 
amount of tax deducted.

214

UK shareholders who fall into one of the classes of shareholder 
able to claim an exemption from withholding tax may be able to 
receive a gross PID payment if they have submitted a valid relevant 
Exemption Declaration form, either as a beneficial owner of the 
shares, or as an intermediary if the shares are not registered in the 
name of the beneficial owner, to Equiniti. The Exemption Declaration 
form is available at www.SEGRO.com under Investors/Shareholder 
Information/REIT. A valid declaration form, once submitted, will 
continue to apply to future payments of PIDs until rescinded, and so it 
is a shareholder’s responsibility to notify SEGRO if their circumstances 
change and they are no longer able to claim an exemption from 
withholding tax.

Shareholders resident outside the UK may be able to claim a full 
or partial refund of withholding tax (either as an individual or as a 
company) from HMRC, subject to the terms of a double tax treaty, 
if any, between the UK and the country in which the shareholder 
is resident.

Ordinary dividends
Ordinary, non-PID dividends will be treated in exactly the same way by 
shareholders as ordinary dividends paid before the Company became 
a REIT. From 6 April 2016 the notional 10 per cent tax credit has been 
abolished and replaced with a tax free dividend allowance, which will 
apply to the ordinary, non-PID dividends received by UK resident 
shareholders who are subject to UK income tax. This allowance does 
not apply to the PID element of dividends. Further information is 
available from HMRC at https://www.gov.uk/tax-on-dividends.

Chequeless dividends from January 2021
From January 2021, payments to shareholders will no longer be 
made by cheque. Receiving dividends paid by direct credit rather 
than cheque is a more efficient, secure, and environmentally-friendly 
method of payment.

To continue to receive dividends, and any other money payable to you 
in connection with your SEGRO plc shares, you will need to provide 
your bank or building society account details so that payments can be 
made to your nominated account by direct credit.

If you have not already provided your details you can do so online 
through the Shareview Portfolio, visit www.shareview.co.uk to register, 
or, for sole holders with 2,500 or fewer shares, by contacting Equiniti 
(details above).

SCRIP Dividend 
Shareholders approved the re-introduction of a scrip dividend option 
(SCRIP) in respect of cash dividends (including those treated as 
Property Income Distributions) at the 2018 AGM. This authority will 
expire at the 2021 AGM. 

The Board has decided to recommended the renewal of the Directors’ 
authority to offer a SCRIP which, if approved by shareholders at 
the forthcoming AGM will allow shareholders who elect to receive 
the SCRIP, to take the final dividend in shares rather than cash. 
If shareholders approve the re-introduction of the SCRIP, it will run 
from three years ending on the earlier of 21 April 2024 and the 
beginning of the third AGM of the Company following the date of the 
2021 AGM.

Details of the proposed SCRIP, together with information on how 
shareholders can elect to receive it subject to shareholder approval, will 
be provided in the Notice of Meeting and full terms and conditions 
of the SCRIP will be set out in the SCRIP Dividend Scheme Booklet, 
which will be available on the Company’s website www.SEGRO.com. 

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020Glossary of terms

Completed portfolio: The completed investment properties and the 
Group’s share of joint ventures’ completed investment properties. 
Includes properties held throughout the period, completed 
developments and properties acquired during the period. 

Development pipeline: The Group’s current programme of 
developments authorised or in the course of construction at the 
Balance Sheet date (Current Pipeline), together with potential schemes 
not yet commenced on land owned or controlled by the Group 
(Future Pipeline).

EPRA: The European Public Real Estate Association, a real estate 
industry body, which has issued Best Practices Recommendations in 
order to provide consistency and transparency in real estate reporting 
across Europe.

Estimated cost to completion: Costs still to be expended on a 
development or redevelopment to practical completion, including 
attributable interest.

Estimated rental value (ERV): The estimated annual market rental value 
of lettable space as determined biannually by the Group’s valuers. 
This will normally be different from the rent being paid.

Gearing: Net borrowings divided by total shareholders’ equity 
excluding intangible assets and deferred tax provisions.

Gross rental income: Contracted rental income recognised in the 
period in the Income Statement, including surrender premiums. 
Lease incentives, initial costs and any contracted future rental increases 
are amortised on a straight-line basis over the lease term.

Headline rent: The annual rental income currently receivable on a 
property as at the Balance Sheet date (which may be more or less than 
the ERV) ignoring any rent-free period.

Hectares (Ha): The area of land measurement used in this analysis. 
The conversion factor used, where appropriate, is 1 hectare = 
2.471 acres.

IFRS: International Financial Reporting Standards, the standards under 
which SEGRO reports its financial accounts.

Investment property: Completed land and buildings held for rental 
income return and/or capital appreciation.

Joint venture: An entity in which the Group holds an interest and 
which is jointly controlled by the Group and one or more partners 
under a contractual arrangement whereby decisions on financial and 
operating policies essential to the operation, performance and financial 
position of the venture require each partner’s consent.

Loan to value (LTV): Net borrowings divided by the carrying value of 
total property assets (investment, owner occupied, trading properties 
and, if appropriate, assets held for sale on the balance sheet) and 
excludes head lease ROU asset. This is reported on a ‘look-through’ 
basis (including joint ventures at share).

MSCI: MSCI Real Estate calculates indices of real estate performance 
around the world.

Net initial yield: Passing rent less non-recoverable property expenses 
such as empty rates, divided by the property valuation plus 
notional purchasers’ costs. This is in accordance with EPRA’s Best 
Practices Recommendations.

Net rental income: Gross rental income less ground rents paid, net 
service charge expenses and property operating expenses.

Net true equivalent yield: The internal rate of return from an 
investment property, based on the value of the property assuming 
the current passing rent reverts to ERV and assuming the property 
becomes fully occupied over time. It assumes that rent is received 
quarterly in advance.

Passing rent: The annual rental income currently receivable on a 
property as at the Balance Sheet date (which may be more or less 
than the ERV). Excludes rental income where a rent free period is in 
operation. Excludes service charge income (which is netted off against 
service charge expenses).

Pre-let: A lease signed with an occupier prior to commencing 
construction of a building.

REIT: A qualifying entity which has elected to be treated as a Real 
Estate Investment Trust for tax purposes. In the UK, such entities must 
be listed on a recognised stock exchange, must be predominantly 
engaged in property investment activities and must meet certain 
ongoing qualifications. SEGRO plc and its UK subsidiaries achieved 
REIT status with effect from 1 January 2007.

Rent-free period: An incentive provided usually at commencement of a 
lease during which a customer pays no rent. The amount of rent free is 
the difference between passing rent and headline rent.

Rent roll: See Passing Rent.

215

OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020FURTHER INFORMATION

Glossary of terms 
continued

SELP: SEGRO European Logistics Partnership, a 50-50 joint venture 
between SEGRO and the Public Sector Pension Investment Board 
(PSP Investments) established in 2013 to own big box warehouses in 
Continental Europe.

SIIC: Sociétés d’investissements Immobiliers Cotées are the French 
equivalent of UK Real Estate Investment Trusts (see REIT).

Speculative development: Where a development has commenced prior 
to a lease agreement being signed in relation to that development.

SPPICAV: Société de Placement à Prépondérance Immobilière à Capital 
Variable is a French equivalent of UK Real Estate Investment Trusts 
(see REIT).

Square metres (sq m): The area of buildings measurements used in this 
analysis. The conversion factor used, where appropriate, is one square 
metre = 10.7639 square feet.

Takeback: Rental income lost due to lease expiry, exercise of break 
option, surrender or insolvency.

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. This is in accordance with EPRA’s Best 
Practices Recommendations.

Total property return (TPR): A measure of the ungeared return for 
the portfolio and 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 concerned, as 
calculated by MSCI Real Estate and excluding land.

Total shareholder return (TSR): A measure of return based upon 
share price movement over the period and assuming reinvestment 
of dividends.

Trading property: Property being developed for sale or one which is 
being held for sale after development is complete.

Yield on cost: The expected gross yield based on the estimated 
current market rental value (ERV) of the developments when fully 
let, divided by the book value of the developments at the earlier of 
commencement of the development or the balance sheet date plus 
future development costs and estimated finance costs to completion.

Yield on new money: The yield on cost excluding the book value of 
land if the land is owned by the Group in the reporting period prior to 
commencement of the development.

216

SEGRO PLC | ANNUAL REPORT & ACCOUNTS 2020GO ONLINE

To keep up to date with SEGRO, you can source facts and figures about the Group through 
the various sections on our website and sign up for email alerts for fast communication 
of breaking news.

Financial reports, shareholder information and property analysis are frequently updated and our 
current share price is always displayed on the Home Page.

As well as featuring detailed information about available property throughout the portfolio, 
www.SEGRO.com now also includes a dedicated property search function making it easy for 
potential customers, or their agents, to find business space that fits their requirement exactly. 
SEGRO’s performance in areas such as sustainability and customer care are also featured on the 
site, www.SEGRO.com.

We would encourage shareholders to consider electing to receive shareholder communications, 
including the Annual Report and Accounts, electronically as set out on Page 214. As part of our 
commitment to become net-carbon neutral by 2030, we want to reduce the amount of paper 
we use.

OTHER PUBLICATIONS

Additional disclosures on our property portfolio can be found in the 2020 Property Analysis 
Report at www.SEGRO.com. 

Our ESG policies, reporting guidelines, assurance statements and further case studies can be 
found at www.SEGRO.com/csr.  

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FORWARD-LOOKING STATEMENTS

The Annual Report contains certain forward-looking statements with 
respect to SEGRO’s expectations and plans, strategy, management 
objectives, future developments and performances, costs, revenues 
and other trend information. These statements are subject to 
assumptions, risks and uncertainties. Many of these assumptions, risks 
and uncertainties relate to factors that are beyond SEGRO’s ability to 
control or estimate precisely and which could cause actual results or 
developments to differ materially from those expressed or implied by 
these forward-looking statements. Certain statements have been made 
with reference to forecast process changes, economic conditions and 
the current regulatory environment. Any forward-looking statements 
made by or on behalf of SEGRO are based upon the knowledge and 
information available to Directors on the date of this Annual Report. 
Accordingly, no assurance can be given that any particular expectation 
will be met and SEGRO’s shareholders are cautioned not to place 
undue reliance on the forward-looking statements. Additionally, 
forward-looking statements regarding past trends or activities should 
not be taken as a representation that such trends or activities will 
continue in the future. The information contained in this Annual 
Report is provided as at the date of this Annual Report and is subject 
to change without notice. Other than in accordance with its legal or 
regulatory obligations (including under the UK Listing Rules and the 
Disclosure Guidance and Transparency Rules of the Financial Conduct 
Authority), SEGRO does not undertake to update forward-looking 
statements including to reflect any new information or changes in 
events, conditions or circumstances on which any such statement is 
based. Past share performance cannot be relied on as a guide to future 
performance. Nothing in this Annual Report should be construed as 
a profit estimate or forecast. The information in this Annual Report 
does not constitute an offer to sell or an invitation to buy securities in 
SEGRO plc or an invitation or inducement to engage in or enter into 
any contract or commitment of other investment activities. 

 
S EG RO PLC

1 NEW BURLINGTON PLACE 
LONDON W1S 2HR

T +44(0)20 7451 9100

WWW.SEGRO.COM/INVESTORS