2023 Annual Report
Shaftesbury Capital PLC is a Real Estate Investment Trust which invests in
London’s West End including Covent Garden, Carnaby, Soho, Chinatown and
Fitzrovia. Our portfolio extends to 2.9 million square feet of lettable space
spanning the most vibrant areas of the London’s West End.
At a glance
Our purpose
Strategic report
Landmark year
2
4
6
8
10
14
16
18
40
46
48
59
66
75
77
78
92
Our portfolio
Why we invest in London’s West End
Our competitive strengths
Chief Executive’s statement
Our strategy and business model
Measuring performance
Portfolio and operating review
Stakeholder engagement
People and culture
Financial review
Principal risks and uncertainties
Task Force on Climate-related financial disclosures
Viability statement
Non-financial and sustainability information
statement
Sustainability
Health, safety, security and well-being
Corporate Governance
Board of Directors
96
100 Chairman’s introduction
104
106
108
The role of the Board and its Committees
Principal Board activities
Section 172(1) statement
112 Division of responsibilities
114 Composition, succession and evaluation
115 Nomination Committee report
119
125
Audit Committee report
ESC Committee report
127 Directors’ remuneration report
153 Directors’ report
www.shaftesburycapital.com
Financial statements
156 Directors’ responsibilities
157
165
Independent auditors’ report
Financial statements
169 Notes to the financial statements
Additional information
214
Alternative performance measures
215
219
223
Pro forma information
EPRA measures
Analysis of property portfolio
224 Historical record
225
Board and advisers
226 Dividends
227 Glossary
231
Shareholder information
Presentation of information
The all-share merger of Capital & Counties Properties PLC (“Capco”) and
Shaftesbury PLC to create Shaftesbury Capital PLC (“Shaftesbury Capital”)
completed on 6 March 2023. The financial information included within the
annual results presents the results of Shaftesbury Capital with the consolidated
income statement reflecting the standalone performance of Capco for the
period 1 January 2023 to 6 March 2023 and the performance of the merged
business, Shaftesbury Capital, between that date and 31 December 2023.
The 31 December 2023 balance sheet reflects the position of the combined
Group as at 31 December 2023. The 2022 comparative information relates
to Capco only.
Pro forma information has been included for certain metrics primarily on the
balance sheet to provide relevant comparative information. More information
on pro forma data, and reconciliation to reported numbers, is included on page
215. Where pro forma information has been included within the results this is
noted as pro forma.
Investing to create thriving destinations in London’s West End where people enjoy visiting,
working and living.
Financial returns
Total property return
+2.2%
Financial performance
L-f-L annualised gross income1
Total accounting return
Total shareholder return
+5.8%
+33.1%
Underlying earnings per share
Dividend per share
+10.4%
1. Growth versus pro forma 2022
3.7p
3.15p
Financial strength
Property valuation
£4.8bn
Net debt
£1.5bn
EPRA NTA
£3.5bn
EPRA LTV
31%
EPRA NTA per share
190p
Liquidity
£486m
See page 16 to 17 and 214 where we discuss
our alternative performance measures.
Diverse mixed-use portfolio
Valuation
Annualised gross income
ERV
14%
12%
11%
18%
£4.8bn
34%
16%
34%
33%
Retail
£193m
21%
£237m
Hospitality and leisure
Office
Residential
34%
38%
35%
A responsible forward-looking approach
― Future proofing our heritage buildings
― Committed to Net Zero Carbon by 2030
― Committed to minimising the impact of our operations
― Strong record of supporting community-led initiatives and
on the environment
charities in the West End
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1
Strategic Report | Landmark year
The leading central London
mixed-use REIT
A landmark year
In March 2023, the merger of Capco and Shaftesbury PLC completed, creating Shaftesbury Capital PLC, the leading central London
mixed-use REIT with an irreplaceable portfolio of approximately 660 buildings in the heart of the West End.
Our property portfolio extends to 2.9 million square feet of lettable space across the most vibrant areas of London’s West End.
With a diverse mix of shops, restaurants, cafés, bars, offices and residential homes, our destinations include the high footfall, thriving
neighbourhoods of Covent Garden, Carnaby, Soho and Chinatown, together with holdings in Fitzrovia.
Delivering on strategy
― Excellent momentum with positive operating metrics
across the business
― Customer sales are tracking 10 per cent L-f-L ahead
of 2022 levels
― Annualised gross income increased 10.4 per cent
L-f-L to £193 million
― Cost savings well above our initial ambitions
― Valuation movement –0.8 per cent L-f-L in 2023
― ERV increased by 6.9 per cent L-f-L to £237 million
― 526 leasing transactions completed with a total value
of £37.0 million, 10.0 per cent ahead of Dec 2022 ERV
― High occupancy, 2.1 per cent available to let
― Active asset rotation; sale of eight properties for £145
million completed to date, 8 per cent ahead of valuation
― Successful completion of refinancing of £550 million
of debt
― Combined 2030 Net Zero Carbon pathway published
Medium-term priorities
1 Deliver growth in rents, earnings and dividends
2 Realise the long-term potential of our assets
3 Accelerate cost savings and operating efficiencies
4 Accretive investment into our portfolio
5 Active asset rotation through capital recycling
6 Maintain a strong balance sheet with access
to liquidity
7 Deliver on our environmental commitments and
support our local communities and stakeholders
8 Be a good partner for our people, customers
and stakeholders
Medium-term targets1:
5-7%
ERV growth
7-9%
Total property
return
8-10%
Total accounting
return
1. Assuming stable cap rates
Our values are fundamental to our behaviour, decision-making and delivery on purpose and strategy
Take a responsible,
long-term view
Act with integrity
Take a creative
approach
Listen and
collaborate
Make a difference
Underpinned by our talented team and dynamic culture
”Our purpose, values, good
governance and the strength of
our team underpin our approach
to promote the long-term success
of the Group.”
“With our ambitious and talented
team, Shaftesbury Capital is
positioned to deliver long-term
total returns as the leading central
London mixed-use REIT.”
Jonathan Nicholls
Chairman
Ian Hawksworth
Chief Executive
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London’s West End Strategic Report | Our portfolio
Impossible
to replicate
portfolio in the
heart of London’s
West End
£4.8bn
Portfolio valuation
2.9m sq ft
Lettable space
c. 660
Buildings
c. 2,000
Lettable units1
34%
Retail
34%
Hospitality
& leisure
Represents percentage of portfolio valuation
18%
Office
14%
Residential
27m exits.
Bond Street
(Hanover Square)
to Carnaby: 6 mins
Dean Street exit to
Berwick Street:
5 mins
41m exits.
Tottenham Court
Road to Seven Dials:
6 mins
1. Excludes long-leasehold residential interests
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Map is for indicative purposes only As at 31 December 2023Source: Transport for London Strategic Report
Why we invest in London’s
West End
Our property portfolio, valued at £4.8 billion, extends to 2.9 million square feet
of lettable space across the most vibrant areas of London’s West End
London is a leading global city and has long demonstrated its
enduring appeal as one of the world’s greatest cities; it has the
largest economy of any Western European city. Additionally,
there is a substantial population in south east England within
easy commuting or visiting distance.
The breadth of its economy encompasses:
― a leading global commercial centre
― a major hub for creative industries, from technology to media
― a globally-recognised location for education and research
― home to world-class visual and performing arts facilities
― diverse and vibrant residential communities
― an unrivalled variety of heritage and cultural attractions which
draw large numbers of domestic and international visitors
At the heart of the city, the West End is a world-class destination
for innovative and accessible dining, shopping, leisure,
entertainment and culture with approximately 43 theatres
and over 10,000 hotel keys across the district, attracting
approximately 200 million domestic and international visitors
per annum. Its huge working and residential population provides
a regular, daily customer base for its hospitality, retail and
leisure businesses.
We are invested in the heart of London’s West End,
establishing and extending our ownership in high footfall
areas, close to major employment locations, transport hubs
and visitor attractions. We adopt a disciplined approach to
investment to deliver long-term income and value growth
through investment, curation and responsible stewardship,
benefitting all stakeholders and contributing to the success
of the West End.
The West End, and our portfolio in particular, provides the
prospect of high occupancy, low capital requirements and
reliable, growing long-term cash flows. Whilst the buildings we
buy tend to contain a mix of uses, we prefer those which either
have, or have the potential for, hospitality, retail or leisure-led
uses on the lower floors.
At the heart of London’s transport network, our properties
are close to the main West End Underground stations,
within ten minutes’ walk of the two West End transport hubs
for the Elizabeth Line at Tottenham Court Road and Bond
Street, where passenger traffic has increased significantly,
as well major main line transport including Charing Cross
Station and Waterloo Station.
Our iconic destinations provide a seven-days-a-week trading
environment and exposure to an extensive and diverse local,
domestic and international customer base which has proven to
be resilient throughout economic cycles. There is a broad pool
of domestic and international investors attracted to prime West
End real estate.
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London’s West End Strategic Report
Our competitive strengths
Our people
– High-performance, professional, inclusive
and entrepreneurial culture, reflective of
our business strategy where creativity and
innovation are promoted across the business
– Collaborative environment where people are
motivated to give their best
West End mixed-use
expertise
– Strong track record of delivering long-term
value across the West End
– Extensive knowledge of the West End
property market
– Creative and active approach to asset
management to meet consumers’ and
our customers’ evolving needs
Read more on pg 46
Read more on pg 6
Our portfolio
– Concentrated in iconic, high footfall
destinations in the West End
– Balance of uses with diversified
income streams
– Long history of occupier demand
exceeding availability
– Long-term resilience of exceptional
destinations
Customer focus
& insights
– Placing our customers at the heart of
our business through providing best in
class service
– Leveraging our deep understanding of
our customers and consumers together
with data-led insights to inform our
business strategy
Read more on pg 18
Read more on pg 28
Strong capital structure
– Resilience, flexibility and efficiency
– Access to significant liquidity
– Disciplined approach to capital allocation
– Prudent approach to financial leverage
and risk
Stakeholder relationships
– Delivering positive environmental and
social outcomes to enhance value for
all stakeholders
– Collaborative approach maintaining
good relationships with our customers
and local communities
– Commitment to becoming Net Zero
Carbon by 2030
Read more on pg 48
Read more on pg 40
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Strategic Report
Chief Executive’s
statement
“Shaftesbury Capital has made an excellent
start as the leading central London mixed-
use REIT. We are delighted with the pace
and performance in our first year with rental
growth, leasing transactions well ahead of ERVs
and cost savings above our initial ambitions.”
Ian Hawksworth
Chief Executive
Overview
London and particularly our West End portfolio continues
to display its enduring appeal and resilience as a leading
global destination with strong leasing demand across all uses.
It has been an excellent start as Shaftesbury Capital, with
good progress on integration and positive metrics delivered
across the business.
We set clear priorities and are delighted with the pace and
performance over the first year with rental growth, leasing
transactions well ahead of ERV and cost savings above our
initial ambitions. We have completed the sale of a number
of properties ahead of valuation and successfully completed
the early refinancing of the unsecured loan arranged at
the time of the merger. Our active approach, informed by
a deep knowledge of the West End, positions the business
to deliver rental growth through converting the portfolio’s
reversionary potential into contracted income and cash flow,
whilst establishing new rental tones. We continue to take
a responsible approach, operating in an environmentally
sustainable manner and reconfirmed our commitment to
Net Zero Carbon by 2030 publishing a combined pathway.
Despite macroeconomic uncertainty our portfolio has
demonstrated its exceptional qualities with a stable portfolio
valuation, in a market characterised by widened yields.
People, purpose, culture and values
Integration is well advanced with the business and the team
is now located in a single office in Covent Garden. Our people
have a shared passion for the West End and are one of
our key strengths. I’d like to thank everyone at Shaftesbury
Capital for their dedication and hard work through a period of
significant change. The team is delivering excellent operational
performance and creating an environment that is exciting to
work in. I am proud of the energy and enthusiasm shown and
the Company we are building. We have a professional, inclusive
and entrepreneurial culture, reflective of our business strategy
where creativity and innovation are encouraged.
Our purpose is investing to create thriving destinations in
London’s West End where people enjoy visiting, working and
living. Engaging with our senior leadership team, we have
reviewed our purpose and values and rolled these out across
the business. These important commitments form the basis of
how we operate. Our people conduct their day-to-day activities
guided by these values which are to: Act with integrity; Take a
creative approach; Listen and collaborate; Take a responsible,
long-term view; and Make a difference.
We continue to invest in our people’s personal development
and have introduced a number of initiatives to support our
colleagues and leadership team, providing greater career
development opportunities over time. Furthermore, we have
established the Employee Engagement Forum attended by
Charlotte Boyle on behalf of the Board. This forum aims
to establish a meaningful platform for communication and
collaboration between the Board and employees.
Strategy and priorities
Our strategy is to deliver long-term income and value growth
from our unique portfolio of properties through investment,
curation and responsible stewardship, benefitting all
stakeholders and contributing to the success of the West End.
We place our customer at the heart of the business to deliver
best in class service and leverage our deep understanding
of customers and consumers. We take a creative and active
approach to our portfolio investing in our remarkable
locations, refreshing the offer through a dynamic leasing and
asset management strategy and delivering high quality public
realm. We believe in responsible stewardship and working in
partnership with the wider community.
The merger has already begun unlocking both immediate and
longer-term benefits including greater efficiencies, cost and
operational synergies, a more diverse portfolio of scale with a
stronger operational platform and enhanced access to capital
and greater equity market liquidity. We are seeing delivery of
broader benefits, including the use of data insights, active asset
management, cross location marketing and leasing activity for
customers across different parts of the portfolio and other
incremental revenue opportunities.
Our priorities are to grow rents, earnings and dividends
and realise the long-term potential of our real estate. As we
move beyond the initial stage of integration we are seeking
to accelerate operating efficiencies whilst providing excellent
service to our customers. As announced in November 2023,
we are targeting a significant reduction in the EPRA cost ratio
towards 30 per cent over the medium-term. Shaftesbury
Capital is financially strong and we have access to £486 million
of liquidity. We are well-progressed in our plan to rotate
five per cent of the portfolio value initially, allocating capital
towards accretive investments. We will seek to manage the
absolute level of finance costs to ensure efficient conversion of
income to earnings. We are committed to reducing the impact
of our operations on the environment, whilst engaging and
collaborating with our wide range of stakeholders which is
integral to our strategy and values.
There is significant potential from each of our locations.
By fulfilling our Company priorities, and assuming stable cap
rates, we are targeting to deliver a total property return of 7-9
per cent and total accounting return of 8-10 per cent over the
medium-term. Individual components of the portfolio have
different investment characteristics. We see Covent Garden
which represents 53 per cent portfolio value as the most
immediate area of opportunity as we enhance adjacencies
through marketing Covent Garden as one district. There is
an opportunity to evolve and improve Carnaby | Soho which
is a vibrant mixed-use district, with iconic shopping and a
strong day-to-night restaurant scene over the medium-term to
enhance returns. Europe’s premier Chinatown, located in the
heart of the West End’s entertainment district, leading to high
occupancy, providing resilience and growing cash flows.
Growth in rents, earnings and dividends
Shaftesbury Capital’s total shareholder return for the year,
which comprises share price performance plus dividends
paid during the year, was 33.1 per cent, and total accounting
return for the year was 5.8 per cent. EPRA NTA increased by
4 per cent over the year to 190 pence per share (Dec 2022:
182 pence per share). Annualised gross income increased by
10.4 per cent (like-for-like) to £192.8 million. ERV increased by
6.9 per cent (like-for-like) to £236.9 million, 23 per cent above
annualised gross income.
526 new leases and renewals representing £37.0 million
of rental income, 10.0 per cent ahead of December 2022
ERV, completed in the year. EPRA vacancy was 4.9 per cent
(pro forma Dec 2022: 4.9 per cent) with 2.1 per cent available
to let and the balance being under offer.
There have already been significant cost savings across
the business as we progress towards an effective and
efficient organisational structure and cost base. Underlying
administration costs were £39.3 million for the year.
Total annualised recurring cost savings are expected to be
over £16 million, which is well ahead of the initial target of
£12 million within two years. Underlying earnings for the year
are £60.4 million, equivalent to 3.7 pence per share and the
Board has proposed a final dividend of 1.65 pence per share
taking the total dividend for the year to 3.15 pence per share,
reflecting the progression in underlying and cash earnings.
We maintain a strong balance sheet with a focus on flexibility
and efficiency. EPRA LTV is 31 per cent and the interest cover
ratio is 2.1 times, with significant headroom against debt
covenants. During the year, we successfully completed the
early refinancing of the unsecured loan arranged at the time of
the merger. The Group has access to £486 million of liquidity,
ensuring it is well-positioned to act on market opportunities.
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Covent Garden, Market Building refurbishments. Key sustainability activities include investment
in our buildings, prioritising pedestrians where possible through
initiatives to enhance the public realm, improving air quality
and our extensive greening programme. As we look ahead,
we will utilise our data, technology and innovation to enhance
our activities and continue to collaborate closely with our
customers and other stakeholders to help deliver our shared
sustainability goals.
Ongoing community engagement
As a responsible, long-term investor, community engagement
and collaboration are integral to our strategy and activities.
Being a good neighbour is important to us. We value the
communities that make our places thrive. With our experience
and knowledge of the West End, we make an important
contribution to safeguarding its long-term appeal and prospects.
We continue to work with our local authorities and residents
to make public realm enhancements which improve the
experience and appeal of our vibrant destinations for
visitors, workers, residents, businesses and communities.
Our community programme prioritises initiatives and charity
partners in the boroughs of Westminster and Camden. This
includes financial support, the provision of space at reduced
rates and staff volunteering. Our active approach includes
supporting charities which work with local young people, the
homeless, military veterans, food banks and the elderly as well
as hospitality, cultural and retail foundations.
Outlook
Excellent future prospects; well-
positioned to drive total returns
Shaftesbury Capital has had an excellent start following
completion of the merger in March 2023. Despite the
challenging geopolitical and macroeconomic environment, we
have delivered strong performance with growth in cash rents
and ERV. We are confident in the growth prospects of the West
End which continues to demonstrate its enduring appeal and
our portfolio is well-positioned to outperform.
We are already seeing the benefits of the merger with excellent
levels of activity and a strong leasing pipeline. Footfall within our
portfolio is high, customer sales are tracking well ahead of 2022
levels and there is limited vacancy across the portfolio. We are
focused on delivering on our priorities in order to achieve our
targets of an annualised total property return of 7-9 per cent
and accounting return of 8-10 per cent over the medium-term.
Shaftesbury Capital has a strong balance sheet, significant
liquidity and benefits from enhanced access to capital. Our aim
is to generate sustained growth in income whilst managing costs
appropriately to deliver a progressive dividend.
As long-term responsible owners, we are committed
to implementing our Environmental, Sustainability and
Community strategy, particularly achieving Net Zero Carbon
by 2030. With our ambitious and talented team, Shaftesbury
Capital is positioned to drive total returns and meet our
important sustainability objectives as the leading central
London mixed-use REIT.
Ian Hawksworth
Chief Executive
Strategic Report | Chief Executive’s Statement
Strong leasing demand delivering
rental growth
The occupational market increasingly demonstrates strong
polarisation of demand and a flight to quality. Our West End
portfolio continues to attract target brands and concepts.
There is strong demand for good quality, sustainable space
with high amenity value. The West End, and particularly our
portfolio, is a destination of choice for both market entry and
expansion. It is a strong retail leasing market with units often
attracting interest from multiple occupiers. Availability of
restaurant and leisure space is very limited given the strong
trading prospects together with constrained planning and
licensing policies.
The office portfolio is performing well, with robust demand
for well-fitted new space. During the year, we completed a
significant office refurbishment pipeline with rents for well-
fitted, high-quality space regularly achieving more than £100
per square foot. We rolled out our ‘Assemble’ product across
the Group which provides for more flexible office packages
and brings the offer under one brand. Our residential offer
continues to appeal to a broad range of occupiers, delivering
rental growth and limited vacancy. Any available space is
typically let within a matter of days.
We are implementing our marketing strategy across the
portfolio and are taking advantage of cross location
promotional opportunities. Our digital engagement and
followers continued to grow across all destinations, with more
than 1.2 million followers across all social platforms. Through
events and brand collaborations, there is potential to increase
revenue from our non-leased income activities, whilst working
with stakeholders to benefit the wider West End. We had a
very successful Christmas period with a programme of festive
events and shopping evenings. With a robust leasing pipeline
and positive trading conditions across our West End portfolio,
we are confident in its growth prospects.
2.2%
5.8%
33.1%
Total property
Total accounting
Total shareholder
return
return
return
Portfolio valuation
The valuation movement of the wholly-owned property was
–0.8 per cent (like-for-like) in the year to £4.8 billion, implying
a capital value equivalent to approximately £1,680 per square
foot on average. ERV increased across all uses, 6.9 per cent
overall (like-for-like) and the equivalent yield was 4.34 per
cent, reflecting 26 basis points of outward movement over
the year. The equivalent yield for the commercial portfolio
(excluding residential) is approximately 4.58 per cent.
Total property return for the year was +2.2 per cent versus
the MSCI Total Return Index which recorded –0.1 per cent.
Higher interest rates and inflation have impacted the broader
investment market, however investment yields in prime West
End, which comprise predominantly freehold properties and
often smaller lot-sizes, remain relatively resilient. There is a
broad pool of domestic and international investors attracted
to prime West End real estate, where investment can provide
the prospect of high occupancy, good demand for space and
reliable growth in long-term cash flows as demonstrated by
recent sales above valuation.
Investment activity
We maintain an active and disciplined approach to capital
allocation. Having identified the opportunity to recycle five
per cent of the portfolio, to date we have completed the sale
of 8 properties, for £145 million, 8 per cent ahead of valuation,
with several other assets under offer.
Our priority is to realise the long-term potential from our
assets. Active asset management and refurbishment initiatives
continue to enhance value and environmental performance
across the portfolio. Capital expenditure of approximately 1
per cent of portfolio value per annum is expected. The Group
successfully completed a number of refurbishments this year,
including several office schemes, establishing rental tones in
excess of £100 per square foot.
Acquisition opportunities have remained limited, with the West
End’s existing owners typically private, equity rich investors
reluctant to sell their scarce assets. However, there are some
opportunities currently under review. Our focus is on buildings
which add to and complement our existing ownership and
have the potential to generate sustainable long-term growth
in income and capital values.
Sustainable approach
Our sustainability strategy is founded in future proofing our
heritage buildings, and creating sustainable and healthy places
which people enjoy visiting, working and living. During the
year, we reconfirmed our commitment to becoming a Net Zero
Carbon business by 2030 and published a combined Net Zero
Pathway. We have already made great progress in reducing
our carbon emissions and, working with our customers, will
continue to decarbonise energy where practical by replacing
gas with electricity.
We continue to improve the energy efficiency of our buildings
to meet energy performance standards and customers’
expectations though our ongoing refurbishment programme.
Approximately 80 per cent of our portfolio by ERV has EPC
ratings of A-C and we target at a minimum a B rating with new
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Strategic Report
Our purpose-led strategy
and business model
Our purpose
Investing to create thriving destinations
in London’s West End where people enjoy
visiting, working, and living
Our strategy
To deliver long-term income and value growth
from our unique portfolio of properties
through investment, curation and responsible
stewardship, benefitting all stakeholders and
contributing to the success of the West End
Our values
Take a responsible, long-term view
Act with integrity
Take a creative approach
Listen and collaborate
Make a difference
Underpinned by our talented team
and dynamic culture
Our
resources
Impossible to replicate
portfolio
A diverse mixed-use portfolio in
the heart of London’s West End
Experienced, creative
team
An experienced, creative team
with strong leadership and a deep
understanding of our markets and
a long track record of delivering
value creation
Strong capital structure
Resilient and flexible capital
structure with a prudent
approach to financial leverage
and risk
Effective governance
and risk management
A strong governance structure
that supports the business
and helps achieve its strategic
objectives with transparency
How we deliver
How we measure
Place our customers at the heart of
the business
― Deliver best in class service to all customers
― Leverage deep understanding of consumers
and commercial data
Value creation
― Create, grow and deliver long-term sustainable
economic and social value
Creative and active approach
People
― Invest in and nurture remarkable destinations in
― Attract, develop and retain talented people
London’s West End
― Dynamic leasing strategy
― Re-use, re-purpose and improve our buildings
― Enhance public realm
Disciplined financial management
Sustained long-term growth
― Prudent, conservative approach to financial
leverage and risk
― Maintain cost and capital discipline
― Deliver long-term growth in portfolio value,
earnings, cash flow and dividends
Sustainable and community minded
Impact
― Broad community and stakeholder engagement
― Minimise the environmental impact of
― Responsible stewardship
― Commitment to the environment and clear
sustainability goals
our operations
Creating value for our stakeholders
Customers
Shareholders
Employees
Partners
Local community
Finance providers
Suppliers
Visitors
Joint ventures and associates
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Strategic Report
Measuring performance
We measure performance against key performance indicators which are
selected to reflect Group strategy. Many of these metrics are performance
measures under Group remuneration arrangements, ensuring alignment with
shareholder interests.
Total property return
+2.2%
+2.2%
+2.3%
-0.1%
1 year
Total accounting return
+5.8%
+5.8%
+4.6%
Comparator group
Shaftesbury Capital
Outperformance
+1.2%
1 year
Comparator group
Shaftesbury Capital
Outperformance
Total shareholder return
+33.1%
+33.1%
+22.1%
+11.0%
1 year
Comparator group
Shaftesbury Capital
Outperformance
Measures gains and losses on portfolio valuation
including disposals, and rents received less
associated costs. Benchmarked against
the MSCI Total Return All Property Index
(Comparator Group).
During 2023, the Group generated TPR of
2.2 per cent, outperforming its benchmark
of -0.1 per cent by 2.3 percentage points.
(Target: 1.5 per cent per annum outperformance).
Measures growth in EPRA NTA per share plus
dividends per share paid during the year.
Benchmarked against the FTSE 350 Real
Estate companies (comparator group).
The Group generated total return of 5.8 per cent
in the year outperforming the median of the
comparator group by 1.2 percentage points.
Measures shareholder value creation (share
price movement plus dividend per share paid
during the year). Benchmarked against the FTSE
350 Real Estate companies (comparator group).
The Group generated total shareholder return
of 33.1 per cent in the year, outperforming the
comparator group by 22.1 percentage points.
Underlying earnings per share1
3.7p
3.7p
2.2p
0.1p
2021
2022
2023
EPRA net tangible assets per share1
190.3p
213.0p
182.1p
190.3p
Measures income generation and cost control.
During 2023, the Group generated
underlying EPS of 3.7 pence per share.
The net assets as at the end of the year including
the excess of the fair value of trading property
over its cost and revaluation of other non-current
investments, excluding the fair value of financial
instruments and deferred tax on revaluations,
divided by the diluted number of ordinary shares.
EPRA NTA per share as at 31 December 2023
was 190.3 pence, an increase of 4.5 percentage
points from 31 December 2022.
2021
2022
2023
1. Underlying earnings per share for 2023 reflects the standalone performance of Capco for the period 1 January to 5 March 2023 and the performance of the
merged business, Shaftesbury Capital, from the completion date to 31 December 2023. The 2021 and 2022 comparative information for underlying earnings per
share and EPRA NTA per share relates to Capco pre-merger.
Other measures
We also measure performance against a range of other financial and non-financial measures including health and safety
performance, HR statistics and environmental targets. This includes measuring the EPC ratings of our properties.
Read more within our Sustainability reporting from page 78.
Properties with an EPC rating of A to C
80%
68%
Measures the number of our properties with
an A to C EPC rating. 80 per cent of our
properties by ERV have an EPC rating of A to
C, an increase of 12 percentage points from
31 December 2022.
20221
2023
1. 2022 measure reflects the combined portfolio based on ERV.
We are proud to have received the following environmental accreditations1:
A performance measure under Executive Directors’ short-term or long-term incentive arrangements.
Read more in the Directors’ Remuneration Report from page 127.
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Shaftesbury Capital PLC | 2023 Annual Report
17
1. Benchmark scores primarily based on legacy Capco data. This will be updated for Shaftesbury Capital as part of forthcoming index reporting cycle.
Strategic Report | Portfolio and operating review
Portfolio and operating review
20
Delivering income and value growth
22
24
26
28
30
34
36
Covent Garden
Carnaby | Soho
Chinatown
Enhancing the attractiveness of our destinations
Portfolio valuation
Retail
Hospitality and leisure
38 Offices
39
Residential
Well-positioned
for growth
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Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
19
Strategic Report | Portfolio and operating review
Delivering income and value growth
Map is for indicative purposes only
As at 31 December 2023
World-class mixed-use destination
Most immediate opportunity of growth; taking a holistic approach to
marketing the district
53%
Vibrant mixed-use district, with iconic shopping and
dining offering
Opportunity to evolve and enhance the district over the medium-term
31%
Europe’s premier Chinatown
High occupancy providing resilient income stream and growing cashflows
14%
Metrics reflect percentage of wholly-owned portfolio value.
Fitzrovia portfolio represents a further 2% of total portfolio value.
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Shaftesbury Capital PLC | 2023 Annual Report
Portfolio and operating review
Summary:
― Total property valuation movement –0.8 per
cent L-f-L to £4.8 billion (pro forma Dec 2022:
£4.9 billion)
― 10.4 per cent growth in annualised gross
income to £192.8 million (pro forma Dec
2022: £174.7 million)
― 6.9 per cent ERV growth to £236.9 million
(pro forma Dec 2022: £221.4 million)
― 526 leasing transactions, £37.0 million,
10.0 per cent ahead of Dec 2022 ERV
― High occupancy, 2.1 per cent of ERV
available to let
― £145 million asset disposals to date,
on average 8 per cent ahead of valuation
Strategy:
― Deliver long-term sustainable rental income
and value growth
― Creative and active approach to asset
management across the portfolio
― Place our customer at the heart of the
business to deliver best in class service to all
customers
― Leverage deep understanding of consumers
and commercial data
― Attract the best brands and concepts to meet
evolving consumer demand
― Invest in and nurture our remarkable
destinations in London’s West End
― Dynamic leasing strategy
― Re-use, re-purpose and improve our buildings
― Enhance public realm
― Responsible stewardship – minimising our
environmental impact
― Broad community and stakeholder
engagement
21
Carnaby StreetShaftesbury Capital PLC | 2023 Annual Report £2.5bn
Value
£122m
ERV
£97m
Annualised gross
income
1.5m
Sq. ft. of
lettable space
Strategic Report | Portfolio and operating review
A world-class
mixed-use
destination
Covent Garden
Covent Garden is a world-class global destination in the heart of the
West End, steeped in history with a rich heritage, made up of unique
neighbourhoods including the iconic Piazza, Market Building and surrounding
streets, together with Seven Dials, a seventeenth-century network of streets
and courtyards.
Covent Garden offers unique shopping and dining experiences complemented
by offices and a high quality residential neighbourhood. These sit alongside
historic architecture and cultural institutions including the world-renowned
Royal Opera House and more than half of London’s West End theatres,
attracting both domestic and international visitors alike.
This exceptional mixed-use portfolio of approximately 1.5 million square feet
provides a broad range of unit sizes, attracting a wide spectrum of retail and
hospitality customers.
72%
Hospitality
and retail
18%
Office
10%
Residential
% of Covent Garden portfolio ERV
22
Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
23
£1.5bn
Value
£76m
ERV
£59m
Annualised gross
income
0.9m
Sq. ft. of
lettable space
Strategic Report | Portfolio and operating review
A globally
recognised,
vibrant district
Carnaby | Soho
Carnaby | Soho is an internationally renowned vibrant mixed-use district
with a bustling day-to-night restaurant scene. The portfolio comprises
approximately 0.9 million square feet.
Carnaby offers a critical mass of global flagships to one-off concept stores,
and independent brands. There are over 100 hospitality concepts across
our Carnaby | Soho portfolio which are a key ingredient to the vibrancy
within the area.
Our portfolio in central Soho, focused on Berwick, Beak and Broadwick
Street offers a diverse array of creative and independent businesses,
iconic restaurants and entertainment venues. This is a renowned hub for
the creative sector which adds to the unique character of the area.
57%
Hospitality
and retail
35%
Offices
8%
Residential
% of Carnaby | Soho portfolio ERV
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Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
25
£0.7bn
Value
£33m
ERV
£31m
Annualised gross
income
0.4m
Sq. ft. of
lettable space
Strategic Report | Portfolio and operating review
Europe’s premier
Chinatown
Chinatown
Europe’s premier Chinatown is in the heart of the West End’s entertainment
district. Its twelve predominately pedestrianised and interconnected
streets, lined with iconic red lanterns, offer an exceptional concentration of
restaurants with a wide range of Chinese and East Asian dining choices.
Equally thriving day and night, the area’s restaurants, bars, shops and cafés,
as well as its unique mix of oriental supermarkets and authentic Asian retail
stores, attract large numbers of Londoners, tourists, Asian students and
local workers.
78%
Hospitality
and retail
18%
Residential
4%
Offices
% of Chinatown portfolio ERV
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Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
27
Strategic Report | Portfolio and operating review
Enhancing the attractiveness
of our destinations
We offer unique consumer experiences across our vibrant, predominantly
pedestrianised, thriving destinations
We work closely with our customers to enhance operating
metrics such as footfall, conversion and spend which in turn
support our rental growth prospects.
We have rolled out a holistic marketing and brand partnership
strategy. We have direct access to over 1.2 million consumers
across our social media channels and have launched portfolio-
wide digital collaborations. During the year, our level of
engagement and number of followers continued to grow
across all destinations.
We had a successful Christmas period across the portfolio
with a programme of festive events and shopping evenings.
Covent Garden unveiled a new Christmas scheme,
the first in nearly a decade, while the vibrant Carnaby
Universe Christmas campaign offered a series of events
and collaborations including working with our important
charity partner, Choose Love.
Chinatown continues to see engagement and growth across
both its Chinese and Western social media channels.
The annual Chinese New Year parade, the largest outside of
Asia, took place in February 2024 celebrating the year of the
Dragon throughout a 15-day celebration period.
Key initiatives included:
― American Express spend incentive campaign across
Covent Garden and Carnaby | Soho, driving spend,
brand loyalty and data insights
― In celebration of the Coronation of King Charles III, a
variety of activities took place across the portfolio,
including welcoming Their Majesties King Charles III
and Queen Camilla to the Covent Garden estate
― A sculpture trail linking the enlarged Covent Garden
portfolio, in aid of conversation charity Tusk
― Celebrations to mark Pride and Earth Day
― Brand partnerships included Wimbledon Screenings,
pop ups from Lego®, Marc Jacobs, MaxMara and
Formula E
― An installation of handcrafted parasols in Chinatown
― Immersive dining campaigns across Carnaby | Soho
― Extensive Christmas campaigns across our portfolio
― Brand partnership with Paul Smith illuminating the
Market Building
1.2m
total social
audience
170k
email
subscribers
147k
new followers
in 2023
Active digital channels
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Shaftesbury Capital PLC | 2023 Annual Report
29
Carnaby Street, ChristmasThe Tusk Gorilla Trail at Covent GardenFormula E, Carnaby StreetCovent Garden, ChristmasChinese New Year celebrationsPiazza activationsImmersive Market Building light installation in partnership with Paul SmithShaftesbury Capital PLC | 2023 Annual Report Strategic Report | Portfolio and operating review
Portfolio and operating review
-0.8%
Valuation
+6.9%
ERV
+10.4%
Annualised gross
income
526
Leasing
transactions
2.1%
ERV available
to let
Portfolio valuation
The valuation movement of the wholly-owned property
portfolio was –0.8 per cent to £4.8 billion, equivalent to
approximately £1,680 per square foot on average (pro forma
Dec 2022: £1,705 per square foot) (H1: +0.2 per cent; H2:
–1.0 per cent). ERV increased across all uses by 6.9 per
cent blended (like-for-like) and the equivalent yield was 4.34
per cent, reflecting 26 basis points of outward movement.
Total property return for the year was +2.2 per cent versus
the MSCI Total Return Index which recorded –0.1 per cent.
Whilst continuing economic uncertainties have led to greater
caution among investors and lower transaction volumes,
London remains attractive to international and domestic
investors. This is particularly so in the West End, where
investment provides the prospect of high occupancy, low
capital requirements and reliable growing long-term cash flows.
Portfolio by use as at 31 December 2023
Valuation (£m)1
Annualised gross income (£m)
ERV (£m)
Net initial yield
Topped up net initial yield
Equivalent yield
L-f-L valuation movement
L-f-L ERV movement
WAULT (years)
Area (sq. ft. m)2
Portfolio by location as at 31 December 2023
Valuation (£m)1
Annualised gross income (£m)
ERV (£m)
Net initial yield
Topped up net initial yield
Equivalent yield
L-f-L valuation movement
L-f-L ERV movement
WAULT (years)
Area (sq. ft. m)2
Independent valuations of the wholly-owned portfolio
undertaken by CBRE and Cushman & Wakefield represent the
aggregated value of predominantly freehold properties. There
is no reflection of any premium which some potential investors
may ascribe to the comprehensive ownership of retail,
hospitality and leisure properties in adjacent, or adjoining,
locations in London’s West End where there is a long record
of demand exceeding availability of space. In certain market
environments, this may lead prospective purchasers to regard
parts of the portfolio, for example by street, to have a greater
or lower value than the aggregate of the individual property
values. Such parties may consider a combination of some, or
all, parts of the portfolio to command a premium or discount
than currently reflected in the valuation, which has been
prepared in accordance with Royal Institution of Chartered
Surveyors guidelines.
Hospitality
and leisure
Offices
Residential
Total wholly-
owned
portfolio
1,621.7
879.1
687.4
4,793.2
72.7
82.0
4.2%
4.4%
4.7%
-0.8%
+8.4%
8.3
1.0
31.5
50.2
3.1%
3.6%
4.8%
-0.5%
+5.1%
2.7
0.7
23.8
26.3
2.2%
n/a
2.8%
-1.8%
+6.1%
1.3
0.52
Carnaby |
Soho
Chinatown
Fitzrovia
1,482.2
689.5
59.0
76.1
3.4%
3.9%
4.5%
-1.6%
+4.2%
3.9
0.9
31.2
33.0
4.0%
4.1%
4.2%
-0.2%
+7.6%
5.5
0.4
99.9
5.2
5.5
4.5%
4.7%
4.7%
-17.4%
+0.7%
4.9
0.1
192.8
236.9
3.5%
3.8%
4.3%
-0.8%
+6.9%
4.6
2.9
Total wholly-
owned
portfolio
4,793.2
192.8
236.9
3.5%
3.8%
4.3%
-0.8%
+6.9%
4.6
2.9
Retail
1,605.0
64.8
78.4
3.6%
4.0%
4.4%
-0.5%
+6.7%
3.3
0.7
Covent
Garden
2,521.6
97.4
122.3
3.4%
3.7%
4.3%
+0.3%
+8.7%
4.9
1.5
1. Excludes £2.1 million of Group properties primarily held in Lillie Square Holdings (a wholly-owned subsidiary).
2. Excluding long-leasehold residential interests.
“Our active investment approach
is creating value through income
and ERV growth in our portfolio.
The West End’s vibrancy and our
unique destinations continue to attract
strong demand across every use.”
Michelle McGrath
Executive Director
Covent Garden generated ERV growth of 8.7 per cent
primarily driven by leasing and asset management activity
across retail and hospitality space. 84 new commercial
leases and renewals were agreed 10.1 per cent ahead of
ERV. Across Carnaby | Soho, ERV growth was 4.2 per cent
during the year, as a result of 78 new commercial leases and
renewals agreed 12.9 per cent ahead of ERV, primarily driven
by office letting and asset management activity. During the
year, 17 new commercial leases and renewals were agreed
in Chinatown, 10.1 per cent ahead of ERV. ERV growth in
Chinatown was 7.6 per cent over the year. In Fitzrovia, 9 new
commercial leases were agreed 5.5 per cent ahead of ERV.
The ERV growth was 0.7 per cent during the year which
reflected the small volume of transactions together with the
less consolidated nature of our holdings, compared with
our other locations.
Retail and hospitality and leisure ERVs are currently 17 per
cent and 3 per cent, respectively, below pre-pandemic levels.
Overall portfolio ERV value is 5 per cent lower than 2019 levels
on a like-for-like basis.
Our interests comprise a combination of properties which are
wholly-owned and a 50 per cent share of property held in the
Longmartin associate investment and the Lillie Square joint
venture. The consolidated financial statements, prepared under
IFRS, include the Group’s interest in the associates and joint
ventures as one-line item in the Income Statement and Balance
Sheet. Investments in associates and joint ventures account for
an additional £224.1 million of property interests (our 50 per
cent share).
Excellent leasing momentum across all uses
There is 2.9 million square feet of lettable space, comprising
1.7 million square feet of retail, hospitality and leisure space
together with 0.7 million square feet of offices and over 700
residential apartments.
Operational performance across the portfolio has been strong
with rental growth and low vacancy underpinned by sustained
demand. 68 new brands and concepts were introduced during
the year, reflecting the enduring appeal of our West End
portfolio. Store productivity is an important measure of retail
and hospitality success, and we target categories and brands
across the price spectrum and market our locations to enhance
sales densities and performance.
During the year 526 leasing transactions were concluded with
a combined rental value of £37.0 million, comprising:
― 188 commercial lettings and renewals: £24.2 million, 11.2
per cent ahead of 31 Dec 2022 ERV and 13.0 per cent ahead
of previous passing rents; and
― 338 residential lettings: £12.8 million, 11.7 per cent above
previous passing rents.
Leasing transactions concluded during 2023
New
contracted
rent (£m)
Transactions
Use
Retail
Hospitality & leisure
Offices
Residential
Total
84
37
67
338
526
11.6
4.7
7.9
12.8
37.0
% above Dec-
22 ERV
9.3
14.1
12.4
7.9
10.0
In addition, 69 commercial rent reviews with a rental value of
£15.8 million were concluded on average 9.1 per cent ahead of
previous passing rents.
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Shaftesbury Capital PLC | 2023 Annual Report
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Shaftesbury Capital PLC | 2023 Annual Report Strategic Report | Portfolio and operating review
Annualised gross income and ERV
At 31 December 2023, annualised gross income had increased
by 10.4 per cent (like-for-like) to £192.8 million. ERV was
£236.9 million, up 6.9 per cent over the year (like-for-like).
A key priority is to deliver growth in cash rents, capturing
the reversion between annualised gross income and the
valuers’ ERV as well as generating sustained rental growth in
line with our medium-term target of 5-7 per cent. Our active
approach is informed by a broad base of experience and
deep knowledge of the West End. This enables the business
to deliver rental growth through converting the portfolio’s
reversionary potential into contracted income and cash flow,
whilst establishing new rental tones, the benefit of which is
often compounded across nearby buildings.
As at 31 December 2023, the portfolio’s reversion was £44.1
million, with the opportunity to grow annualised gross income
by 22.9 per cent before taking into account any further ERV
growth. The components of this reversion are set out below.
Components of the reversion
“We are already seeing the benefits
of the combined operating platform
through revenue opportunities
and efficiencies.”
Annualised gross income
Contracted
Under offer
Available to let
Under refurbishment
Net under-rented
ERV
High occupancy
31 December 2023
£m
Andrew Price
Executive Director
192.8
17.3
6.2
4.7
13.9
2.0
Available to let space
Use
Retail
Hospitality & leisure
236.9
Offices
Residential
Total
% of
portfolio
ERV
ERV (£m)
Area
(‘000 sq. ft.)
0.6
0.6
0.8
0.1
2.1
1.3
1.4
1.8
0.2
4.7
17.9
20.6
25.1
4.0
67.6
At 31 December 2023, EPRA vacancy (including units under
offer) was 4.9 per cent of portfolio ERV; 2.8 per cent was under
offer and 2.1 per cent was available to let.
Under offer
Use
Retail
Hospitality & leisure
Offices
Residential
Total
% of
portfolio
ERV
ERV (£m)
Area
(‘000 sq. ft.)
0.3
0.9
1.5
0.1
2.8
0.7
2.0
3.3
0.2
6.2
5.6
18.2
35.3
4.2
63.3
1. Includes 5 units let on a temporary basis (ERV: £0.7 million).
Refurbishment activity
Active asset management and refurbishment initiatives continue
to unlock income and value as well as enhance environmental
performance. During the year, refurbishments with an ERV of
£10.6 million completed, of which £9.0 million is contracted
or under offer including 72 Broadwick Street representing
£3.6 million.
On average, we expect approximately one per cent of
portfolio value to be invested per annum in refurbishment,
asset management and repositioning opportunities, including
actions to improve energy performance. This year, £35.1 million
of capital expenditure has been incurred, and capital
commitments amount to £24.8 million as at 31 December 2023.
The ERV of space under refurbishment amounts to £13.9
million across 0.2 million square feet, representing 5.8 per cent
of portfolio ERV (30 June 2023: 6.7 per cent).
Under refurbishment
Longmartin
Use
Retail
Hospitality & leisure
Offices
Residential
Total
% of portfolio
ERV
ERV (£m)
Area
(‘000 sq. ft.)
1.0
1.5
2.9
0.4
5.8
2.4
3.6
6.9
1.0
17.8
61.4
86.7
18.9
13.9
184.8
Active capital recycling
In 2023, we completed the sale of seven properties for gross
proceeds of £88.1 million, 11.8 per cent ahead of the latest
valuation (before sale costs). Subsequent to year end, a further
£57 million disposals completed bringing total disposals to
£145 million, 8 per cent ahead of valuation, and with a total
ERV of £9.0 million.
We are well-positioned with access to significant liquidity to act
on appropriate market opportunities. Assets remain tightly held
in the area, however there are acquisition opportunities under
review which meet our criteria to deliver attractive long-term
rental growth and total returns. During the year we completed
the lease regear of the Royal Opera House Arcade in Covent
Garden and acquired a residential apartment in Seven Dials.
Joint ventures and associates
We own 50 per cent of Longmartin and Lillie Square and
in the summaries that follow, all figures represent our
50 per cent share.
At 31 December 2023, Longmartin’s long leasehold
property was valued at £158.8 million (2022: £160.3 million).
After allowing for capital expenditure, the valuation decrease
for the year was 1.3 per cent. Like-for-like, ERVs increased
9.4 per cent, of which 5.8 per cent was recorded in the second
half of the year. At 31 December 2023, the equivalent yield
was 4.86 per cent, an increase of 38 basis points over the year
(31 December 2022: 4.48 per cent).
Pursuant to the terms of the Longmartin investment (forming 3
per cent of the Group’s property portfolio), the merger triggered
the right for The Mercers’ Company (the “Mercers”) to require
the Company to offer to sell its shares in the Longmartin
investment to them (or to a third-party purchaser identified
by them). The Mercers have elected to consider acquiring
the Company’s shares in the Longmartin investment and
discussions are ongoing. There is no certainty that a transaction
relating to the Company’s investment in Longmartin will be agreed.
Lillie Square
Shaftesbury Capital owns 50 per cent of the Lillie Square
joint venture, a residential estate and remaining development
phases located in West London. The property valuation as at
31 December 2023 was £65.3 million, 10.3 per cent lower
(like-for-like) than the 31 December 2022 valuation of
£77.0 million. In addition, Shaftesbury Capital owns £1.8 million
of other related assets adjacent to the Lillie Square estate.
In total, 355 Phase 1 and 2 residential apartments have been
sold. 65 units are available and 32 units have been leased on a
short-term basis. The sale of 4 units completed during the year
representing £6.8 million of value. (Shaftesbury Capital share:
£3.4 million). The joint venture is in a cash position of £15.9
million (£7.9 million Shaftesbury Capital share).
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Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
33
Covent Garden Strategic Report | Portfolio and operating review
Retail
Our retail portfolio of 0.7m square feet is primarily located in Covent Garden,
Carnaby and Soho with a broad range of unit sizes and rental tones on offer
415
Shops
£1.6bn
£64.8m
£78.4m
Valuation
Annualised gross income
ERV
Retailers are increasingly
focusing on fewer stores,
placing greater emphasis on
global location, consumer
experience, service and
flagship retailing with better
digital engagement.
We offer a broad range of
unit sizes and rental tones.
The average ERV is £108 per
square foot.
Reflecting strong demand
during the year, we
completed 84 new lettings
and renewals with a rental
value of £11.6 million, 9 per
cent ahead of December
22 ERV.
Rent reviews with rental
value of £2.7 million were
concluded during the year,
8 per cent ahead of previous
passing rents.
7%
1%
34%
of portfolio valuation
33%
of portfolio ERV
33%
ERV by village
Covent Garden
Carnaby | Soho
Chinatown
Fitzrovia
59%
As part of our strategy to unify the Covent Garden district
including the Piazza with Seven Dials, the brand mix of Seven
Dials is evolving to expand its consumer and leasing range whilst
preserving its unique character. There have been a number
of new signings on Neal Street, a key gateway into Seven Dials
not only from Covent Garden but from the Elizabeth Line at
Tottenham Court Road. These include premium shoe brand
Loake and the first UK store for Horace. On Earlham Street,
the streetwear offer has been strengthened with the signing
of Axel Arigato, a flagship Soho brand which has taken space
on the Dial anchoring this important street. Marking their first
permanent bricks-and-mortar stores, independent British
retailer Odd Muse and contemporary jewellery brand Missoma
have opened debut flagship locations on Monmouth Street.
Following its success on Long Acre, performance outdoor
brand Arc’teryx has upsized with a new flagship store on King
Street, joining footwear and apparel brand Hoka which opened
its first European retail location on James Street.
We continue to strengthen the luxury and jewellery offering
with the introduction of Messika, Hublot, Girard Perregeaux and
Omega in the Royal Opera House Arcade and as well as Tissot
which opened its debut flagship boutique on James Street.
Building on the strong brand line-up, there is an opportunity
to evolve the retail offer on Carnaby Street paying particular
attention to brand selection and categories that provide higher
productivity, whilst taking inspiration from the area’s rich
history and ever-evolving retail scene of its surrounding Soho
streets. A number of new retailers joined the offering including
Hollister and OG Kicks opening on Foubert’s Place. Award-
winning cult make-up concept Sculpted by Aimee opened
its new UK flagship while eyewear brand Oakley opened on
Carnaby Street joining premium outerwear concept Jott.
Farah relocated across the portfolio to Berwick Street, joined by
the UK flagship for Wolf and Badger which brings a unique retail
experience to the Soho portfolio with its collection of brands.
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Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
35
Floral Street Strategic Report | Portfolio and operating review
Hospitality and leisure
We are the largest single provider (1.0m square feet) of hospitality space in the
West End, with high-profile destinations such as Covent Garden, Chinatown,
Kingly Court and Soho
423
£1.6bn
£72.7m
£82.0m
Restaurants, cafés, bars
and pubs
Diverse range of food
concepts, from accessible
casual to premium with
breakfast to late night
dining offering
Valuation
Annualised gross income
ERV
Hospitality provides a halo
effect on footfall, increases
dwell time, and drives
improved trading
37 hospitality and leisure
leasing transactions
completed with a rental
value of £4.7 million, 14 per
cent ahead of December
2022 ERV
Rent reviews totalled £11.6
million, 10 per cent above
previous passing rents
3%
25%
34%
of portfolio valuation
35%
of portfolio ERV
ERV by village
51%
Covent Garden
Carnaby | Soho
Chinatown
Fitzrovia
21%
During the year, Covent Garden welcomed 13 new hospitality
offerings, ranging from independent to international operators.
These operators provide a variety of cuisines and price
points, bringing something different to the evolving dining
mix, reflecting its position as one of the West End’s most
popular dining destinations. Highlights include Parisian-
inspired rotisserie style restaurant, Story Cellar, from two
Michelin Star Chef Tom Sellers; British independent favourite,
The Breakfast Club; top chef Phil Howard’s pasta bar NOTTO;
and internationally renowned GAUCHO.
2023 marked a decade of dining at Kingly Court and it
continues to be one of our best trading hospitality locations
with strong sales and low rent to sales ratios on all levels.
Following the success of its 2021 opening, Imad’s Syrian
Kitchen has upsized into larger space on the upper floor,
alongside Darjeeling Express and newly opened critically
acclaimed Filipino concept Donia. The opening of Bébé Bob
in Soho, located opposite the flagship Bob Bob Ricard, marked
a new concept for restaurateur Leonid Shutov.
Chinatown is a sought-after location in the heart of the West
End’s entertainment district. The continually evolving line-up
welcomed Pan-Asian restaurant concept, YiQi, while Japanese
restaurant High Yaki launched its unique take on Japanese
barbecue in Newport Place, joining an unmatched collection
of authentic regional Chinese and pan-Asian restaurants.
Fitzrovia has introduced four UK dining debuts, including the
recently launched 64 Goodge Street by Woodhead Restaurant
Group, Ukrainian-born Spanish concept, Boca a Boca, July,
a brand-new Alsace-inspired dining concept, and Mealtime
Malatang, a Sichuanese street food operator.
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37
Kingly Court Strategic Report | Portfolio and operating review
Offices
Residential
We are a provider of boutique, flexible office space (0.7m square feet) in
the West End. Office occupiers provide a regular source of consumers to
our destinations.
Residential homes, across 0.5m square feet, are an important part of our
destinations’ eco-systems, bringing people to shop, dine, socialise and enjoy
the places we curate.
418
Suites
£0.9bn
£31.5m
£50.2m
Valuation
Annualised gross income
ERV
Our diverse office portfolio
offers a range of floor plates
providing the opportunity
for occupier expansion
Typically, office
accommodation is occupied
by media, creative,
technology and professional
services businesses
We are continuing to
increase the range of fitted-
out space to maximise
rental income
Long history of high
occupancy and good
retention rates
709
Apartments
£0.7bn
£23.8m
£26.3m
Valuation
Annualised gross income
ERV
Mostly heritage buildings
with a unique character
offering:
― studios, one or
two-bedroom
apartments
― largely unfurnished
Rolling upgrade programme
continues – improving
energy performance and
upgrading specifications
Occupancy traditionally
high (> 98 per cent); reliable
cash flow
WAULT: Approximately
1 year
Available space
typically let within a
matter of days, often
with competitive bidding
18%
of portfolio valuation
21%
of portfolio ERV
ERV by village
44%
53%
Covent Garden
Carnaby | Soho
Chinatown
Fitzrovia
14%
of portfolio valuation
11%
of portfolio ERV
ERV by village
46%
Covent Garden
Carnaby | Soho
Chinatown
Fitzrovia
2%
1%
7%
22%
25%
There is a growing number of customers relocating
to the West End from other central London
locations as employers continue to recognise the
importance of a vibrant atmosphere in attracting
and retaining staff. The Carnaby and Covent
Garden development pipeline is well-positioned
to capture this demand, with their high amenity
value and excellent environmental credentials.
There is a flight to quality with a preference for
fully fitted space and low-density use, provided
on flexible lease terms. We have developed our
fully fitted offering through our ‘Assemble’ brand
to capture this demand, delivering rental growth.
Demand for office space is robust across the
West End with recent lettings commanding a rental
tone of approximately £100 per square foot.
During the year, 67 office leasing transactions
with a rental value of £7.9 million were concluded
12.4 per cent ahead of December 2022 ERV.
Rent reviews with rental value of £1.5 million
completed, 5.8 per cent ahead of previous
passing rents.
The central London residential letting market
was positive throughout 2023. There continues
to be good leasing demand for residential
accommodation across the portfolio of
709 residential apartments. Our proposition
of characterful period buildings with modern
specification located in vibrant, well-managed
areas attracts interest from a broad range of
customers.
The sustained strong demand throughout the
year resulted in any available space typically
being let within a matter of days, often involving
competitive bidding.
During the year 338 residential lettings and
renewals with a rental value of £12.8 million
completed 11.7 per cent ahead of previous
passing rents and, at 31 December 2023 only
6 units were available to let.
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39
Shaftesbury Capital PLC | 2023 Annual Report Stakeholders
Stakeholder
engagement
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41
Strategic Report
Stakeholder engagement
Engaging with our stakeholders is an inherent part of our values.
We are committed to building long-term relationships founded
on respect, integrity and transparency.
Our Section 172(1) Statement, which explains how the Board considered stakeholder
interests and the other matters set out in section 172(1) of the Companies Act 2006 can
be found in our Governance reporting on pages 108 and 109.
Stakeholders
Material Issues
Why we engage
How we engage
Outcomes of our engagement
Further information
Customers
Our customers are the wide range of retailers,
hospitality and leisure operators, office
occupiers and residents throughout our
portfolio of c.660 buildings.
Visitors
Our visitors are those who come to our
destinations or engage with us through our
24 social media channels.
– Providing and promoting high quality, vibrant,
safe and well-maintained destinations to allow
our customers to prosper and flourish.
– Sustainability credentials.
– Economic, political and social issues impacting
cost of living, footfall, recruitment and retention
of staff, statutory consents and potential social
unrest and strikes.
– The vibrancy of our mix of retail, hospitality and
leisure, innovative street installations, greening
and wayfinding across our destinations.
– Informative and engaging social media and
communications, promoting our destinations
and our customers.
– Engaging international and domestic tourist
markets to encourage visits.
– Providing a clean and secure environment
across our destinations.
– Placing customers at the heart of our business
is key to delivery of our strategy. The success
of which is based on our ability to understand,
support and respond to our customers' and
potential customers' needs.
– To understand consumer trends, to ensure
our offer evolves to meet demand.
– To ensure our customers are kept well
informed of activities affecting them across
our destinations.
– Visitors contribute to the vibrancy of our
portfolio, and are vital to the success of
our customers.
– Our ability to communicate directly with our
visitors allows us to promote the benefits of
our destinations and our customer mix.
Employees
Our employees include those employed directly
by us on a permanent or fixed-term contract.
– Ensuring effective integration post-merger.
– Continuing to develop, retain and attract
talented people who share our values.
– Internal communications and ways of working.
– Well-being.
– Opportunities for development and progression.
– Our employees’ individual and collective
knowledge, experience and commitment
is critical to the delivery of our corporate
objectives. In addition, they are the
ambassadors for our business.
– To keep employees informed about business
changes affecting them.
– To continuously improve our processes and
ways of working.
– Our teams liaise directly with our customers,
and potential customers, with the aim
of creating supportive, collaborative
relationships, for example through
communication of our marketing campaigns.
– Where applicable, our online portals enable
us to provide destination and occupier-specific
information, together with regular information
updates and for our customers to engage with us.
– Continued careful curation of our destinations.
– Strong working relationships with our customers, which
helps support their commercial success.
– £52.8 million new lettings, lease renewals and rent
reviews, including UK-first stores, and relocation or
expansion of a number of customers to suit their needs.
– We undertook over 50 marketing campaigns across the
portfolio, with participation of 310 brands.
Competitive strengths: page 9
Chief Executive’s Statement: page 10
Portfolio and operating review: pages
18 to 39
Sustainability report: pages 80 to 91
Chairman’s introduction: page 100
– We provide a comprehensive calendar of press
campaigns, events and marketing initiatives.
– Regular interaction via our 24 social channels,
– This year we undertook over 50 campaigns across
Why we invest in the West End: page 6
our destinations.
– We grew our digital audience by 147,000 new social
Chief Executive’s Statement: page 10
across all destinations.
media followers.
– We undertook a consumer engagement survey
for Covent Garden email and reward card
subscribers to better understand what they
would like to see from our destination.
– We received over 1,000 responses to the consumer
engagement survey for Covent Garden, with over 90 per
cent of those responding likely to recommend Covent
Garden to a friend.
Portfolio and operating review: pages
18 to 39
Enhancing the attractiveness of the West
End: page 28
– Six Company-wide meetings held including
Chief Executive’s Statement: page 10
– This year, in addition to regular Company-wide
meetings and email updates, we held informal
breakfast meetings with the Chief Executive and
the Chairman met with the senior employees.
presentations on our updated purpose and values,
our new remuneration arrangements and learning and
development framework.
– We also created the Employee Engagement
– A number of informal breakfast meetings held with the
Forum attended by Charlotte Boyle.
Chief Executive.
– 20 meetings held by the Chairman with senior employees.
– Representatives from senior management attend the
newly formed Senior Leadership Team meetings on
a monthly basis.
– Feedback from the Employee Engagement Forum
provided to the February 2024 Board meeting.
Our purpose-led strategy and business
model: pages 14 and 15
People and culture: pages 46 and 47
Chairman’s introduction: page 100
How the Board monitors culture and
employee engagement: page 103
How we behave: page 110
Our purpose-led strategy and business
model: pages 14 and 15
Sustainability report: pages 80 to 91
Health, safety, security and well-being:
page 92
How we behave: page 110
Chief Executive’s Statement: page 10
Sustainability report: pages 80 to 91
Suppliers
Our suppliers are those who have a direct
contractual relationship with us, including our
managing agents, outsourced service providers,
contractors and project managers, consultants
and a range of property and corporate advisers
across professional disciplines.
Partners
Our partners include our local authorities,
government bodies, regulators, Business
Improvement Districts, neighbouring landowners,
tourism partners, local amenities societies
and business associations, a variety of cultural
partners and industry bodies.
– Developing and maintaining constructive
relationships and working collaboratively.
– Appropriate, responsible, resourcing and
quality of service, including achievement of
agreed service levels.
– Fair payment terms.
– Long-term constructive and open relationships
based on mutual trust with suppliers, who are
aligned with our values, including throughout
their own supply chain, are essential for the
delivery of an appropriate high-quality level
of service to our customers, visitors to our
destinations, and our ongoing success.
– We hold frequent informal and formal
meetings to ensure collaboration,
communication, and to monitor progress
and performance.
– During the year, we met with suppliers across the
business to establish new relationships, strengthen
existing relationships and communicate our expectations,
resulting in enhanced performance.
– We have commenced a process of reviewing our
supply chain to maximise efficiencies in line with
business expectations.
– Proactive engagement and support of local
statutory and economic plans, and public
realm initiatives to ensure the continued
attractiveness of the West End.
– As a good neighbour and responsible long-
term investor, we are committed to working
collaboratively with a wide range of local
partners to achieve shared goals, and engaging
constructively with local government to ensure
that the West End remains a lively, safe and
preferred destination for those who live, work
and visit.
– As a responsible business we work
cooperatively with a range of government
organisations and regulators.
– During 2023, we engaged with our partners to
ensure they understood any changes that may
arise as a result of the merger.
– Our engagement is undertaken in a wide variety
of ways, and includes meetings, consultations,
working groups and submission of responses
to policy consultations and surveys.
– We take an active role in the groups where we
– Engaged throughout the year with the political leadership
and officers of Westminster City Council and the London
Borough of Camden Council to understand how we can
support our shared goals, contributing our practical
knowledge and experience.
have membership or representation.
– We participate in neighbourhood co-ordination
– Maintained our low risk tax rating.
– We are active members of trade associations including
groups, which help respond to social
challenges in our destinations.
the Westminster Property Association and Better
Buildings Partnership.
– We have participated in or supported initiatives including
the Sustainable City Charter; a trial of e-scooter and e-bike
parking bays; a review of public conveniences in the Soho
district conducted by the Soho Neighbourhood Forum; and
LCCA’s application for a new Chinese pagoda in Chinatown.
– Supported London Fashion Week and British Beauty
Week with the British Beauty Council.
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43
Strategic Report | Stakeholder engagement
Stakeholders
Material Issues
Why we engage
How we engage
Outcomes of our engagement
Further information
Local communities
Our communities are those people who work,
live and study, in or around our destinations, as
well as local organisations, including business and
social enterprises, schools, and charities.
– Understanding the wide variety of needs
– Community projects and initiatives enhance
across our local communities and how we
can support them.
– Keeping our communities regularly informed
of our activities and initiatives.
the vibrancy of our destinations.
– We strive to keep our community regularly
informed of our activities and initiatives, and
respond to the views and needs of local people
and organisations.
– We engaged with a variety of local community
organisations to ensure they understood changes
that may arise as a result of the merger, helping
to build new relationships and strengthen
existing relationships.
Joint Ventures and associates
– Implications of the merger on operations.
– Agreement of strategies to enhance
Our joint ventures and associates are our 50:50
Longmartin associate with The Mercers’ Company
and our 50:50 Lillie Square joint venture with the
The Kwok Family Interests.
our portfolios.
– Well-managed estates.
– We work closely with our partners to deliver
projects that benefit both parties, ensure
success and add long-term value to our
respective holdings.
Finance Providers
– Refinancing of the £576 million loan facility.
– Compliance with our financial covenants.
Our finance providers include our lending
banks, secured-debt providers, exchangeable
bondholders and private placement loan
note holders.
Shareholders
Our shareholders are the owners of our business.
– Completion of the all-share merger.
– Delivering on our purpose and strategy.
– Our financial and business performance.
– Making a long-term, positive impact.
– We value our strong and transparent relationships
with our range of finance providers, which are
based on mutual understanding, and engage
regularly to maintain these relationships.
– To ensure that our finance providers are kept
updated about our business performance and
activities, covenant compliance and actions
proposed in relation to underlying secured assets.
– We value our relationships with our shareholders
and engage regularly with existing shareholders,
potential investors and sell-side analysts,
to provide updates on our activities, communicate
our investment case and governance framework,
and understand their priorities.
Smart Works
Charity Smart Works gives women the confidence
they need to reach their full potential and secure
employment through their tailored support. The charity
offers a range of employment support, including CV
advice, interview preparation and a bespoke service
providing women with quality professional clothing
for interviews and the workplace.
In 2023, we provided Smart Works with two retail
spaces in our portfolio to create two pop-up Summer
and Winter seasonal boutiques. The boutiques
provided an opportunity for consumers to shop
sustainably and purchase premium fashion and
beauty brands, with all proceeds from sales re-invested
enabling Smart Works to fund their valuable work
and support services.
– On completion of the merger, we wrote
to a variety of stakeholders within the
local community to explain that the
merger was taking place, and held a
series of in-person engagements.
– We liaised with our community partners,
local enterprises and others to help
support projects and initiatives for the
benefit of our local communities and the
areas in or near our destinations.
– Our destination reward cards offer
discounts across local businesses for
those that live, work and study within
our destinations.
– We supported over 50 organisations or charities within our
Chief Executive’s statement: page 13
local community.
– We donated £476,000 in financial contributions and provided
£807,000 of in-kind support.
– Our employees spent 335 hours volunteering on local
community projects
– Following feedback from local occupiers/residents, we:
– Reduced the noise impact of the rigging and de-rigging of
our Christmas lights.
– Refreshed greening, shop fronts and street furniture in
Seven Dials and enhanced our security in Carnaby | Soho.
– Installed CCTV in Chinatown to enhance security and
address waste management issues.
Our purpose-led strategy and business
model: pages 14 and 15
Sustainability report: pages 89 to 91
– For Longmartin, Board meetings are
– The annual Business Plans covering priorities and actions for
Portfolio and operating review: page 33
the year ahead.
held at regular intervals throughout the
year, with property visits as appropriate.
Between Board meetings, management
meetings are held to oversee day-to-day
operations, which are reported back to
the Board.
– For Lillie Square, our engagement includes
regular dialogue between operational
and management teams, outside of
Board meetings.
– We engage through meetings and
– Refinanced the £576 million loan facility by:
providing tours across our portfolio,
where appropriate.
– Signing a new secured loan of £200 million with Aviva
Investors; and
Our purpose-led strategy and business
model: pages 14 and 15
– In November 2023, we hosted an in-depth
– Signing a new £350 million senior unsecured loan agreement.
Debt and gearing: pages 56 and 57
Investor Event.
– Our investor relations programme includes
regular results and reporting, press releases,
investor events, one-to-one meetings,
roadshows, property tours and our AGM.
– 33.1 per cent Total Shareholder Return for 2023.
– Successful completion of the all-share merger, following
shareholder approval at the General Meetings.
– Positive market feedback following our inaugural Investor
Chief Executive’s statement: page 10
Our purpose-led strategy and business
model: pages 14 and 15
– In November 2023, we hosted our
Event in November 2023.
inaugural Investor Event.
– Investor feedback following shareholder meetings and tours
– Our 2023 AGM was held in a hybrid
format, providing shareholders the
opportunity to attend in person or
virtually to ask questions and vote.
– Market and shareholder perspectives
study conducted by external advisers.
is shared with the Executive Committee and Board.
– All resolutions at our 2023 AGM passed with a majority in
excess of 89 per cent.
– Feedback from the market and shareholder perspectives
study considered by the Board.
Chairman’s introduction: page 100
Corporate governance report: pages
110 and 111
Directors' remuneration report: page 127
Investor Event
We held our inaugural Investor Event on 27
November 2023 at The Royal Opera House,
Covent Garden.
Our management team provided investors
and analysts an insight into our unique,
irreplaceable portfolio and set out medium-
term priorities and targets for the Company.
Read more about delivering on strategy and
our medium-term targets on page 2.
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Strategic Report
People and culture
Our people are key to our success and achieving our purpose.
Culture and values
We have a high-performing, professional, inclusive and
entrepreneurial culture where creativity and innovation is
encouraged and promoted. We provide a collaborative
environment where people are inspired to give their best and
contribute to the Company’s success. During the year, we revisited
our corporate values, which underpin our culture, and relaunched
these to the business (read more on pages 10 and 100).
Employee engagement & Integration
In making decisions impacting our employees, we seek the views
and opinions of our colleagues across the business. To ensure
that our employees were kept updated pre– and post-merger, our
Executive Directors led Company-wide meetings throughout
the year. A programme of portfolio tours was arranged to help
employees to get to know the enlarged portfolio and their new
colleagues, and our Chief Executive led a series of informal
breakfast meetings. We also established an Employee Feedback
Forum, attended by our Non-executive Director Charlotte Boyle.
Talent, training & development
We regularly undertake succession planning to review our
talent pipeline and to ensure individuals are appropriately
developed. Our learning and development programmes are
designed to strengthen our teams and challenge aspiring
leaders. Following completion of the merger, a new learning
and development framework was launched, focusing on the pillars
of core skills, professional learning, mandatory learning, internal
learning programmes and talent development programmes.
We make training available to all employees and encourage
continued professional development with 2,500 hours
of training undertaken during 2023. Bespoke coaching
programmes are provided to employees, and we sponsor
individuals undertaking further professional qualifications,
encouraging continuous learning.
New opportunities that arise in the business are advertised
internally, and we aim to promote internal candidates in order
to enhance career development and encourage mobility across
the Company.
Values
Take a responsible, long-term view
We have a responsibility to our multiple stakeholders, our people
and our planet. Our decisions are rooted in the lasting impact
of our actions to deliver long-term economic and social value
Act with integrity
We are a high-performance business and are committed to
the highest professional standards, acting with honesty and
transparency, and not compromising our integrity
Take a creative approach
We strive to be the best at what we do, with a creative and
entrepreneurial approach, imagining the art of the possible, to
seek opportunities to improve and deliver positive outcomes
for our multiple stakeholders
Listen and collaborate
We work collaboratively in an environment where everyone has
a voice and a part to play and where relationships are based
on respect, empathy and trust. We build and develop diverse
teams of extraordinary professionals, advocating inclusive and
supportive behaviours
Make a difference
We engage with stakeholders and aim to make a positive
impact through our people, local communities, partnerships
and in the great places we curate, invest in and manage
We aim to hire talented individuals who aspire to grow and
develop in their careers. We ensure our talent have the skillset
and expertise to advance, and we actively support and
encourage professional development through sponsorship
of the Chartered Surveyors Assessment of Professional
Competence (“APC”), accounting qualifications and various
other qualifications. Recently three of our employees
successfully qualified in Chartered Surveying and Chartered
Accountancy.
Performance management
Annual performance objectives for each employee are agreed
at the beginning of the calendar year and ongoing performance
check-in meetings take place regularly throughout the year.
Remuneration
We regularly benchmark our approach to remuneration, to ensure
that we are appropriately competitive in the market. Following the
completion of the merger we launched a new remuneration
strategy to reward and incentivise our people, aligned to our
values and the Executive Director remuneration structure.
All permanent employees are eligible to receive share awards so
that everyone can participate in the success of the Company.
These awards have a three-year performance period and are
subject to corporate performance conditions.
Our core compensation package comprises base salary,
performance bonus linked to Company and personal
performance and discretionary share awards.
Benefits
We also offer an attractive package of additional benefits to
our employees. The Company offers a pension contribution
of 17.5 per cent of salary. We provide 30 days annual leave
and offer a flexible leave policy under which employees have
the ability to buy and sell up to 10 days holiday each year.
Well-being
The well-being of our people is of the utmost importance.
We deliver a lifestyle programme throughout the year focusing
on financial well-being, and both physical and mental health.
Sessions provided in 2023 covered topics including mortgages,
tax returns, financial health, resilience and anxiety.
Our head office fit-out has a strong focus on employee well-being,
with greenery, standing desks and amenity space for our
employees to collaborate and interact.
The Company offers Gymflex and Cycle to Work schemes,
and provided free yoga classes for employees during the year,
to support physical and mental well-being.
Diversity, Equality & Inclusion
We believe that every person in the Company has a part
to play in generating value, and we understand fully the
benefits of a diverse workforce. Diversity is considered
when making appointments at all levels, and an inclusive
and diverse culture forms part of our values.
Our maternity and shared parental leave benefits each pay
six months’ full salary. In addition, we regularly review our
policies to ensure that we continue to be an inclusive and
supportive employer. We hosted sessions to engage and
educate our employees on topics such as attitudes towards
LGBTQIA+ in the UK, neurodiversity and race-related
challenges in the workplace.
We support a number of initiatives which aim to increase
diversity within the property industry, including being a
member of the Employers Network for Equality & Inclusion
(“ENEI”), a member of Real Estate Balance, a sponsor of
the Reading Real Estate Foundation and a supporter of
the Pathways to Property work experience programme.
We are a corporate member of the British Property
Federation (“BPF”), support the BPF’s Futures programme
and are a member of the BPF’s Diversity & Inclusion
Champions network. We are a corporate sponsor of
Freehold, a London-based forum for LGBTQIA+ real estate
professionals, and a corporate member of AbilityRE and
the Business Disability Forum.
We work with initiatives including the 10,000 Black Interns
and 10,000 Able Interns initiatives, and the social mobility
charity UpReach to provide work experience placements
to students. We are also an active supporter of the Reading
Real Estate Foundation’s Access programme, which aims to
provide work experience to students from underprivileged
backgrounds, and supported a second scholar from the
University of Westminster, committing to continuing to fund
fees and a bursary, together with work-experience for an
undergraduate student studying Real Estate.
A summary of the Company’s gender diversity is set out on
page 117.
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47
Financial review
Delivering
financial
performance
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Strategic Report
Financial review
“Having made good progress in 2023,
Shaftesbury Capital is well-positioned
to deliver long-term value creation and
growth in earnings and dividends, driven
by favourable prospects for rental growth,
further operating efficiencies, investment
activity and capital management.”
Situl Jobanputra
Chief Financial Officer
Financial results
£141.9m Gross profit
£750.4m Profit for the year
£60.4m Underlying earnings
3.7p
3.15p
Underlying earnings per share
Dividend per share
£4,795m Total portfolio market value
£3,480m Net assets
190.3p
EPRA NTA per share
30.9%
EPRA loan-to-value
£485.7m Cash and undrawn facilities
2.2%
5.8%
Total property return
Total accounting return
33.1%
Total shareholder return
Disciplined capital allocation
Presentation of information
The all-share merger of Capital & Counties Properties PLC
(“Capco”) and Shaftesbury PLC to create Shaftesbury Capital
PLC (“Shaftesbury Capital”) completed on 6 March 2023.
The financial review sets out the results of Shaftesbury Capital
with the consolidated income statement reflecting the standalone
performance of Capco for the period 1 January to 6 March and
the performance of the merged business, Shaftesbury Capital,
between the completion date of 6 March and 31 December 2023.
The balance sheet as at 31 December 2023 reflects the position
of the combined Group. The 2022 comparative information
relates to Capco pre-merger.
Reflecting the Company’s focus primarily on the wholly-owned
portfolio, all information is presented on an IFRS basis, with
Group share (which included the share of joint ventures and
associates on a proportionally consolidated basis) no longer
being presented. Key performance metrics have been restated to
reflect this change. Pro forma information has been included for
the balance sheet to provide relevant comparative information.
Further details on pro forma information, and reconciliation to
reported numbers, is included on page 215.
Accretive investment
in portfolio, including
refurbishment, asset
management and repositioning
opportunities
Rotation of capital from
non-strategic or mature assets
Efficient balance sheet,
capital discipline and
returns focus
Acquisitions
in line with strategy to create
long-term value
Dividend distributions
reflecting progression in
underlying earnings and cash
generation
Financial highlights
Shaftesbury Capital has had an excellent 2023 characterised
by operational momentum across our portfolio, with strong
leasing demand across all uses resulting in rental growth.
Footfall trends across the West End are positive, buoyed by
increasing international visitor numbers, contributing to growth
in sales for our retail and hospitality customers. Against a
backdrop of geopolitical and macroeconomic uncertainty,
the resilient performance over the year demonstrates the
exceptional qualities of our portfolio, which has generated
growth in annualised income and ERV as well as a stable
property valuation, particularly in a market characterised by
widened yields.
Underlying earnings for the year were £60.4 million, equivalent
to 3.7 pence per share based on the weighted average number
of shares during the year. Net rental income has increased in the
year, offset in part by higher finance costs and administration
expenses. The Directors have declared a final dividend of 1.65
pence per share, which when combined with the interim dividend
of 1.5 pence results in a total dividend per share in respect of the
year of 3.15 pence per share.
The wholly-owned portfolio has been independently valued at
£4,795.3 million, reflecting a –0.8 per cent like-for-like movement
relative to the pro forma 31 December 2022 valuation of
£4,857.8 million. ERV increased by 6.9 per cent (like-for-like)
to £236.9 million and the equivalent yield was 4.34 per cent,
reflecting outward movement of 26 basis points.
The sale of seven properties was completed in the year for total
proceeds of £88.1 million, 11.8 per cent ahead of the latest
valuation. Subsequent to year end a further property has been
sold for £56.5 million bringing total disposals to £145 million,
8 per cent ahead of valuation.
Overall EPRA NTA (net tangible assets) per share increased
by 4.5 per cent in the year from 182.1 pence at 31 December
2022 to 190.3 pence. Combined with the 3.15 pence per
share dividend paid to shareholders during the year, the total
accounting return for the year is 5.8 per cent. Total shareholder
return for the year was 33.1 per cent, reflecting dividends paid
and the increase in the share price from 106.5 pence to 138.1
pence per share.
Significant progress has been made on cost savings across
the business, well ahead of the phasing included in the merger
documentation, which set out a run rate of £12.0 million within
two years, of which £6.0 million would be achieved within a year
of completion. Total annualised savings are expected to amount
to over £16 million, primarily in administration costs, the majority
of which relate to actions or decisions already taken. A number
of broader benefits from the merger have also been identified,
including incremental revenue opportunities. We continue to
work towards an effective and efficient organisational structure,
with the EPRA cost ratio (which measures property-level and
administration costs relative to gross rental income) targeted to
reduce towards 30 per cent over the medium-term.
The Group has a strong balance sheet with a focus on resilience,
flexibility and efficiency. The EPRA loan-to-value ratio at year
end was 31 per cent. There is significant headroom against debt
covenants and access to liquidity, comprising cash and undrawn
facilities of £485.7 million (31 December 2022: £416.5 million).
During the year, £550 million of debt was raised comprising a
£200 million 10-year loan facility, secured against a portfolio
of assets within the Carnaby portfolio, and an unsecured
medium term bank financing of £350 million (upsized from
£300 million) comprising a term loan and a revolving credit
facility. The proceeds, together with the Group’s cash resources,
were used to repay the loan facility which was drawn down in full
in April 2023 to fund redemption of the Chinatown and Carnaby
bonds for £575 million. Priorities over the forthcoming period
are to refinance the 2026 debt maturities as well as consideration
of longer-term financing options to evolve our capital structure,
taking advantage of the Group’s enhanced credit profile.
As set out in the November 2023 investor event, we are targeting
average annual rental growth of 5-7 per cent and, assuming
stable cap rates, total property returns of 7-9 per cent and total
accounting returns of 8-10 per cent over the medium-term.
Accounting implications of the merger
As detailed in note 1 ‘Principal accounting policies’ under
‘Critical accounting judgements and key sources of estimation
uncertainty’, from an accounting perspective, Capco was the
deemed acquirer of Shaftesbury. The book value of Shaftesbury’s
net assets has been adjusted to reflect their fair value at the
completion date of 6 March 2023, in accordance with IFRS 3.
The major adjustments required by IFRS 3 included:
― the derecognition of Shaftesbury tenant lease incentives
and deferred letting fees of £42.0 million held within other
receivables. The balance would have been amortised to net
rental income on a straight-line basis over the remaining term
of the lease to the earlier of break or expiry. As a result of
this adjustment, net rental income for the Shaftesbury assets
from 6 March 2023 reflects amortisation of new tenant lease
incentives and deferred letting fees only.
― £959.8 million nominal fixed rate debt held by Shaftesbury
was fair valued at £889.0 million, resulting in a £70.8 million
fair value movement. The Group’s 50 per cent share of the
Longmartin debt was fair valued at £56.6 million, £3.4 million
lower than nominal value of £60 million, leading to a total
fair value difference of £74.2 million. £24.6 million of this
difference has been derecognised through other finance
costs on redemption of the Chinatown and Carnaby bonds.
The remainder will be amortised as a charge to other finance
costs over the remaining term of the debt facilities, with a
£5.2 million charge being recorded in the year. At 31 December
2023 the unamortised balance of the fair value adjustment was
£44.4 million, equivalent to 2.4 pence per share in EPRA NTA.
Consideration issued on completion of the merger was in the
form of 3.356 Capco shares for each Shaftesbury share, with
a total of 1,096 million shares being issued (including 128.4
million shares issued to a Capco-controlled entity in respect of
secured Shaftesbury shares previously held as collateral for the
exchangeable bonds). The Shaftesbury Capital share price was
trading at a 32 per cent discount to EPRA NTA on 6 March 2023,
which in turn results in the deemed value of the consideration
being at a discount to the fair value of Shaftesbury’s net assets
on completion. This discount, referred to under IFRS as a
‘bargain purchase’ gain, amounted to £805.5 million and has
been recognised under the IFRS 3 completion accounting in the
consolidated income statement.
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51
Strategic Report | Financial review
Prior to the merger, Capco owned 25.2 per cent of Shaftesbury
shares with the investment held as a financial asset at fair
value through profit and loss. The investment was revalued on
3 March 2023 based on the closing share price of 421.6 pence
resulting in a fair value gain of £52 million during the period.
Following the merger, Shaftesbury is fully consolidated with
no separate investment held.
Accounting policies have been aligned following the merger.
As a result, tenant lease incentives and deferred letting fees,
which were previously amortised to lease expiry within Capco,
have been amended to be amortised on a straight-line basis
to the earlier of the lease break date and expiry. This change
has led to a £5.1 million reduction in net rental income in the
current year with a corresponding reduction in other receivables.
As tenant lease incentives and deferred letting fee balances
are deducted from the market value of investment property to
calculate the portfolio carrying value, this adjustment is also
reflected through investment property carrying value and the
revaluation movement, and consequently it does not impact
net asset value or profit for the year.
In addition, for legacy Capco, letting fees deferred on the balance
sheet and amortised to property costs on a straight-line basis
had not been previously deducted from the market value of
investment property. Since the related leases are included in
the valuation, the investment property carrying value has been
reduced by £4.1 million, being the balance of deferred letting fees
carried on the balance sheet at 1 January 2023. This adjustment
is included within the valuation movement for the year.
Alternative performance measures
As is usual practice in the real estate sector, alternative
performance measures (“APMs”) are presented for certain
indicators, including earnings, earnings per share and EPRA
net tangible assets, making adjustments set out by EPRA in its
Best Practice Recommendations. These recommendations are
designed to make the financial statements of public real estate
companies more comparable across Europe, enhancing the
transparency, comparability and coherence of the sector.
One of the key performance measures which the Group uses is
underlying earnings. The underlying earnings measure reflects the
underlying financial performance of the Group’s core West End
property rental business and is a relevant metric in determining
dividends. The measure aligns with the main principles of EPRA
earnings which excludes valuation movements on the wholly-
owned, joint venture and associate properties, fair value changes
of financial instruments and listed investments, cost of early close
out of debt, gain on bargain purchase and IFRS 3 merger-related
transaction costs. In calculating underlying earnings, additional
adjustments are made to exclude items considered to be non-
recurring or significant by virtue of size and nature. Consistent
in the calculation for both years is the removal of the financial
performance of the Lillie Square joint venture, associated tax
adjustments and the interest receivable on the loan issued to
the joint venture by the Group. Lillie Square is not considered
to be a core part of the operations of the Group and therefore
its results are not included in underlying earnings. The fair value
movement of the option component of the exchangeable bond is
also adjusted from underlying earnings as such movements do not
reflect the true nature of the performance of the Group.
Following the completion of the all-share merger on 6 March
2023, the following new adjustments have been made to
underlying earnings:
― A fair value exercise was performed on the Shaftesbury
balance sheet, with the debt (including an adjustment to the
investment in Longmartin arising from the fair value adjustment
of the underlying debt in the associate) adjusted to be held at
a fair value of £945.6 million compared to the nominal value of
£1,019.8 million. The balance of the fair value adjustments will
be amortised to other finance costs over the remaining term of
the debt facilities. In the current year, EPRA earnings has been
adjusted by £24.6 million, to reflect the accelerated unwind
of the fair value adjustment following the early redemption of
the Chinatown and Carnaby bonds in April 2023. The current
year amortisation of the fair value adjustment for the other
debt facilities of £5.2 million has been adjusted from underlying
earnings within other finance costs.
― £8.7 million of merger-related integration and other non-
underlying costs have been incurred. These costs are non-
recurring as they relate to significant transactions outside the
core operations of the Group.
― A £5.1 million reduction to gross profit has been reported
as a result of the alignment of accounting policies following
the merger. Details are set out in note 1 ‘Principal accounting
policies’ under ‘Changes in accounting policies’. The alignment
was considered immaterial and not adjusted retrospectively.
The cumulative impact as at 1 January 2023 was adjusted
against gross profit and as such has been adjusted from
underlying earnings to reflect the true performance of the
business for the current year.
Further details on APMs used, including details on pro forma
information, and how they reconcile to IFRS, are set out on page 214.
December 2023 Annualised Gross Income to ERV Bridge; reversion £44.1m (23%)
260
220
180
140
100
£192.8m
L-f-L
+10.4%
December 23
annualised
gross income
£17.3m
£10.9m
£13.9m
£2.0m
Contracted
Realised on expiry
of rent-free periods,
and contractual rent
increases
EPRA vacancy
Of which £6.2m
is under offer,
resulting in available
to let vacancy of
2.1%
Under
refurbishment
Realised on
completion and
letting of schemes
in progress
Net under
rented
£236.9m
%
3
2
L-f-L
+6.9%
December 23
ERV
Financial Performance
Summary income statement
The 2023 summary income statement represents the standalone
performance of Capco for the period to 6 March 2023 and that
of the combined Group from that date to 31 December 2023.
The comparative information for 2022 relates to the previously
reported results of Capco.
Gross profit
Rent receivable
Straight lining of tenant lease incentives1
Service charge income
Revenue
(Provision for)/reversal of expected credit loss
Gross profit
2023
£m
141.9
2022
£m
57.3
Property expenses1
Service charge expenses
Impairment of tenant lease incentives
Loss on revaluation and profit on sale of investment
property
(65.0)
(0.8)
Gross profit
2023
£m
171.9
3.9
19.3
2022
£m
61.5
6.3
6.3
195.1
74.1
(2.0)
(31.1)
(19.3)
(0.8)
1.6
(10.2)
(6.3)
(1.9)
141.9
57.3
1. 2023 includes £5.1 million reduction for the change in accounting policy to
adjust the amortisation period for tenant lease incentives and deferred letting
fees. £4.1 million adjustment is recorded through straight lining of tenant lease
incentives and £1.0 million in property expenses.
Rent receivable income has increased by 13.2 per cent like-
for-like compared with December 2022 reflecting the positive
letting activity across the portfolio.
Straight lining of tenant lease incentives, after a non-cash
charge of £4.1 million reflecting the change in accounting policy
noted above, has increased revenue by £3.9 million in the
year. Excluding the change in accounting policy, the impact of
straight lining tenant lease incentives would have increased
income by £8.0 million, reflecting the large volume of new
leases signed in the year.
Reflecting the normalisation of cash collection levels, as at
31 December 2023 the balance sheet provision for expected
credit losses for rent receivable was £4.8 million representing
26 per cent of the rent receivable balance. As at 31 December
2022 the legacy Capco provision was £4.0 million representing
33 per cent of the rent receivable balance.
Change in fair value of listed equity investment
Other income
Administration expenses1
Net finance costs2
Profit from joint ventures and associates
Taxation
Other3
Gain on bargain purchase
Profit/(loss) for the year
52.0
2.7
(83.8)
(51.9)
0.2
(0.2)
(51.0)
(55.1)
805.5
750.4
(239.5)
13.5
(40.6)
(24.6)
–
(6.0)
28.9
(211.8)
–
(211.8)
Basic earnings/(loss) per share
45.5p
(24.9)p
EPRA earnings4
EPRA earnings per share4
Underlying earnings4
Underlying earnings per share4
45.0
2.7p
60.4
3.7p
57.3
6.7p
18.6
2.2
Weighted average number of shares5
1,648.9m 851.3m
1. Administration expenses include £44.5 million of non-underlying costs
(2022: £14.6 million) substantially related to merger-related transaction
and integration costs, which are considered non-recurring in nature.
2. Excludes other finance income and costs and change in fair value of derivative
financial instruments (included in “Other” above).
3. Includes impairment of other receivables, other finance income and costs
including the change in fair value of derivatives and amortisation of merger
adjustments for the fair value of Shaftesbury debt adjustment on merger.
4. Further details regarding EPRA and Underlying earnings are disclosed in note 3
“Performance measures”.
5. In total, 1,953.2 million shares are in issue as at 31 December 2023.
Following the issuance of 1,095.6 million shares on 6 March 2023, the weighted
average number of shares for the 12 months ended 31 December 2023 is
1,648.9 million. The weighted average number of shares excludes 128.4 million
own shares held as collateral for the exchangeable bond and 3.1 million shares
held by the Group’s approved Employee Benefit Trust, both of which are
included in the total number of shares in issue of 1,953.2 million.
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Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
53
Strategic Report | Financial review
Loss on revaluation and profit on sale
of investment property
The market valuation of the wholly-owned portfolio has
decreased by 0.8 per cent like-for-like between December
2022 (pro forma) and December 2023 to £4,795.3 million.
ERV increased by 6.9 per cent (like-for-like) to £236.9 million
and the equivalent yield was 4.34 per cent, reflecting outward
movement of 26 basis points. The equivalent yield on the
commercial portfolio (excluding residential assets) was
approximately 4.58 per cent.
The loss on revaluation of £68.5 million recorded in the income
statement, and revaluation gain of £1.8 million recorded in the
statement of comprehensive income, is based on carrying value
of the property portfolio after adjustments for lease incentives and
capital expenditure and takes into account valuation movements
on the Shaftesbury investment property between the fair value on
completion of the merger and the valuation at 31 December 2023.
Seven properties have been disposed during the year for gross
proceeds of £88.1 million. Based on the opening book value and
sale costs, overall profit of £3.5 million has been recognised.
Other income
Dividend income of £2.6 million was received from the 25.2
per cent shareholding in Shaftesbury on 15 February 2023 in
relation to the final quarter of 2022.
Administration expenses
Depreciation
Other administration expenses
Underlying administration expenses
2023
£m
0.4
38.9
39.3
2022
£m
0.2
25.8
26.0
Merger-related transaction costs
35.8
14.6
Merger-related integration and non-underlying
administrative expenses
Administration expenses
8.7
83.8
–
40.6
Underlying administration expenses of £39.3 million, is
considerably below the combined previously reported
administrative expenses by each separate company, prior
to the merger.
In addition to underlying administration expenses of £39.3 million,
merger-related transaction costs of £35.8 million have been
incurred during the year, with the majority related to successful
completion of the merger.
One-off merger-related integration and other costs of
£8.7 million have been incurred. Delivering recurring cost
synergies and other merger benefits continues to be a priority
for the Group with total annualised cost savings expected to be
over £16 million, which represents significant progress ahead
of the phasing included in the merger documentation (which set
out a run rate of £12.0 million within two years, of which £6.0
million would be achieved within a year of completion).
Over the medium-term the Group is targeting an improvement
in the EPRA cost ratio towards 30 per cent from its current
level of 39.9 per cent, driven by growth in rental income and
rigorous management of irrecoverable property costs and
administration expenses.
Net finance costs
Following the merger, the £576 million loan facility was drawn
in full in April 2023 to fund the redemption of the £575 million
Chinatown and Carnaby bonds. In August 2023, a £200 million
10-year loan facility, secured against a portfolio of assets within
the Carnaby portfolio, was drawn and used to repay part of the
£576 million loan facility. The remainder was repaid in December
2023 using Group cash and the proceeds of the new £350 million
unsecured loan facility.
Net finance costs of £51.9 million include interest on the additional
£385 million of fixed rate debt secured on Shaftesbury assets
acquired on completion of the merger.
Finance income increased by £13.0 million to £15.6 million during
the year, comprising £6.3 million interest earned on cash held
on deposit and £9.3 million in relation to interest rate hedging
arrangements. Protection is in place in relation to the interest rate
exposure on all of the Group’s drawn variable rate debt until the
end of 2025 through caps and collars. The average cash balance
held through the year was approximately £135 million.
Profit from joint ventures and associates
Our share of Longmartin’s post-tax profit was £0.2 million for
the period 6 March to 31 December 2023. Our share of the
revaluation deficit was £1.0 million. Excluding the revaluation
and fair value adjustment on debt and including the £0.4 million
interest received on the interest-bearing loan provided to the
associate, our share of underlying earnings from Longmartin was
£2.1 million. £1.5 million dividends were received during 2023.
54
Shaftesbury Capital PLC | 2023 Annual Report
Taxation
The Group continues to satisfy the requirements to qualify for
REIT status. Therefore, as its income is substantially derived from
qualifying property rental business activities within the REIT
regime, the majority of its income is exempt from tax. There is
a tax charge of £0.2 million in the year (2022: £nil), relating to
non-REIT activity, mainly arising in respect of finance income.
Dividends
The Board has declared a final dividend of 1.65 pence per
share, bringing the total dividend to 3.15 pence per share,
reflecting progression in underlying earnings and cash generation.
The total gross dividend payable is £32.2 million of which £2.1
million relates to the Group entity which holds 128.4 million
shares as security under the terms of the exchangeable bonds.
The entity has provided an undertaking not to exercise its voting
rights in respect of such ordinary shares but will receive the
declared dividend, the majority of which should subsequently
be retained by the Group following the dividend threshold test
as set out in the exchangeable bond conditions. In addition,
the dividend will not be paid in relation to the 3.1 million
shares held by the Group’s approved Employee Benefit Trust.
The dividend is to be paid 0.65 pence as a PID and 1.0 pence
as a non-PID, on 31 May 2024 to shareholders on the register
at 26 April 2024.
During the first half, in respect of the period pre-merger,
Capco paid a second interim dividend of 1.7 pence per
Capco share and Shaftesbury paid a dividend of 2.7 pence
per Shaftesbury share to their respective shareholders.
Summary balance sheet
The 31 December 2022 balance sheet reflects the Capco position only. The pro forma balance sheet has been included in order to
provide additional information for comparative purposes.
Property portfolio2
Investment in joint ventures and associates
Financial assets at fair value
Net debt3
Other assets and liabilities
Net assets
EPRA net tangible assets
EPRA net tangible assets per share (pence)
Adjusted, diluted number of shares4
31 December
2023
£m
4,760.4
83.4
-
30 June
2023
£m
4,865.2
84.4
–
Pro forma1
31 December
2022
£m
31 December
2022
£m
4,829.2
1,715.1
86.8
–
(1,499.1)
(1,553.5)
(1,488.2)
135.5
3,480.2
3,479.4
190.3p
157.6
3,553.7
3,541.3
193.8p
98.6
3,526.4
3,526.4
192.8p
1,828.8m
1,827.2m
1,828.8m
0.2
356.9
(633.5)
122.9
1,561.6
1,552.2
182.1p
852.3m
1. Pro forma information is explained in further detail on page 215.
2. 31 December 2023 includes £20.2 million accounted for as owner-occupied property.
3. Net debt based on nominal value of debt drawn less cash, excluding tenant deposits of £14.5 million (30 June 2023: £14.4 million; 31 December 2022
and pro forma: £13.4 million).
4. Number of shares as at pro forma 31 December 2022, 30 June 2023 and 31 December 2023 excludes 128.4 million shares held as collateral for the exchangeable
bond and 3.1 million within an approved Employee Benefit Trust. Total share capital in issuance, including these components, was 1,953.2 million shares as at 30 June
and 31 December 2023.
EPRA NTA
The EPRA NTA movement reflects the effect of merger completion and the portfolio valuation movement. As referred to earlier,
through the completion accounting, the Shaftesbury debt, including the debt in relation to our share of the Longmartin investment,
which had an overall nominal value of £444.8 million, was fair valued and was held at £400.4 million as at 31 December 2023.
This difference of £44.4 million, or 2.4 pence in terms of EPRA NTA per share, will reverse as the balance sheet value of the debt
accretes to nominal value over the remaining term of the debt. The impact of this unwind is excluded from underlying earnings.
EPRA net tangible assets per share +4.5% to 190.3 pence
200p
195p
190p
185p
180p
182.1
December
2022
2.4
3.3
(2.4)
10.9
(3.6)
0.2
(2.3)
(0.3)
190.3
Merger
impact
FV of debt
Revaluation
Profit on sale
of property
Underlying
earnings
Non-underlying
costs
Dividend
Other
December
2023
Shaftesbury Capital PLC | 2023 Annual Report
55
Strategic Report | Financial review
Property portfolio
The carrying value of the wholly-owned portfolio as at 31
December 2023 is £4,760.4 million, including £20.2 million
reflected as owner occupied in the year. During the year,
seven properties have been sold with an opening carrying
value of £83.2 million for gross proceeds of £88.1 million.
In 2023 the Group acquired the remaining interest in the
Royal Opera House Arcade and a long leasehold residential
unit in Neals Yard was purchased in September 2023.
Subsequent capital expenditure during the year was £35.1 million.
The valuation of the wholly-owned property portfolio of
£4,795.3 million was 0.8 per cent lower on a like-for-like
basis compared with the December 2022 pro forma position
of £4,857.8 million. ERV increased across all uses by 6.9 per
cent overall (like-for-like) to £236.9 million and the equivalent
yield was 4.34 per cent, reflecting 26 basis points of outward
movement over the year. The MSCI Capital Return for the year
was –5.6 per cent.
Total property return for the year was 2.2 per cent. The MSCI
Total Return Index recorded negative performance of 0.1 per cent
reduction for the year resulting in 2.3 per cent out performance.
Investment in joint ventures and
associates
The figures below in relation to the Longmartin and Lillie Square
investments represent our 50 per cent share.
Longmartin
At 31 December 2023, Longmartin’s long leasehold property
was valued at £158.8 million (Dec 2022: £160.3 million). After
allowing for capital expenditure, the valuation decrease was 1.3
per cent. ERVs increased by 9.4 per cent and at 31 December
2023, the equivalent yield was 4.86 per cent, an increase of 38
basis points over the year (Dec 2022: 4.48 per cent).
Longmartin has a £60.0 million fixed-rate term loan maturing
in 2026. As at 31 December 2023, net debt, based on nominal
value, was £58.1 million resulting in LTV of 36.6 per cent.
Lillie Square
The property valuation as at 31 December 2023 was £65.3
million, a 10.3 per cent like-for-like decline against the 31
December 2022 valuation of £77.2 million. In total, 355 Phase
1 and 2 units have been sold. 65 units are available and 32
units have been leased on a short-term basis. The sale of 4
units completed during the year representing £3.4 million gross
proceeds. Our share of net cash in the joint venture was £7.9
million and there is no external debt.
Debt and gearing
The Group maintains a strong financial position, with diversified
sources of funding, significant headroom against debt covenants,
access to liquidity, modest capital commitments, substantial
unencumbered asset value and finance costs are protected
against interest rate movements until December 2025.
The Group’s cash and undrawn committed facilities as at 31
December 2023 were £485.7 million (pro forma: £521.6 million).
31
December
2023
£m
30 June
2023
£m
Pro forma1
31 December
2022
£m
31
December
2022
£m
Cash and cash equivalents2
185.7
157.3
221.6
116.5
Undrawn committed
facilities
Cash and undrawn
committed facilities
300.0
300.0
300.0
300.0
485.7
457.3
521.6
416.5
Commitments
(24.8)
(22.8)
(35.6)
(1.7)
Available resources
460.9
434.5
486.0
414.8
1. Pro forma information is explained in further detail on page 219.
2. Excludes tenant deposits of £14.5 million (30 June 2023: £14.4 million; Pro
forma and 31 December 2022: £13.4 million).
As at 31 December 2023, the Group had capital commitments
of £24.8 million.
The gearing measure most widely used in the industry is loan-
to-value (“LTV”) which at 31 December 2023 was 31.3 per cent.
This is comfortably within the Group’s limit of no more than 40
per cent. EPRA LTV was 30.9 per cent.
31
December
2023
£m
30 June
2023
£m
Pro forma1
31 December
2022
£m
31
December
2022
£m
Cash and cash equivalents
185.7
157.3
221.6
Debt at nominal value
(1,684.8)
(1,710.8)
(1,709.8)
Net debt
(1,499.1)
(1,553.5)
(1,488.2)
Loan-to-value
31.3%
31.7%
30.6%
EPRA loan-to-value
30.9%
30.8%
Interest cover
212.7% 199.5%
Weighted average debt
maturity – drawn facilities
5.0
years
4.2
years
Weighted average cost of
debt – gross2
Weighted average cost of
debt – net
Drawn debt with interest
rate protection3
4.2%
4.3%
3.4%
3.4%
100%
100%
n/a
100%
1. Pro forma information is explained in further detail on page 215.
2. As at 31 December 2023 the weighted average cost of debt reduces to an
effective running cash cost of 3.4 per cent taking account of interest on cash
deposits and interest rate caps.
3. Taking account of interest on cash deposits and interest rate caps and collars.
116.5
(750.0)
(633.5)
36.3%
28.0%
182.1%
4.5
years
2.7%
1.5%
n/a
n/a
n/a
n/a
n/a
At 31 December 2023, Group net debt was £1.5 billion.
During the year, £550 million of debt was raised, with the
proceeds being used towards repayment of the £576 million
loan facility drawn on completion of the merger to fund the
redemption of the £575 million Carnaby and Chinatown bonds.
In August 2023, a £200 million 10-year loan facility, secured
against a portfolio of assets within the Carnaby portfolio,
was agreed with Aviva Investors. The facility sits alongside
the existing secured term loans with Aviva of £130 million
and £120 million maturing in 2030 and 2035 respectively.
The annual cash interest rate in respect of the overall amount
of £450 million of secured term loans with Aviva Investors is
4.7 per cent.
In December 2023, a £350 million unsecured loan agreement
comprising a term loan of £200 million and revolving credit
facility of £150 million was signed. The agreement has an initial
maturity of three years, with the option to extend the term by a
further two periods of one year each, subject to lender approval.
The facility includes a £125 million uncommitted accordion
feature which may allow the Company to increase the total
revolving facility commitments.
Following the refinancing activity in the year, the weighted average
maturity of the Company’s drawn debt has been extended to
over 5 years. The current weighted average cost of debt is 4.2
per cent, which reduces taking into account interest income
on cash deposits and the benefit of interest rate hedging to an
effective cash cost of 3.4 per cent.
All of the Group’s drawn debt is at fixed rates or currently has
interest rate protection in place until the end of 2025. Interest
rate collars were already in place for £200 million of notional
value through to December 2024, capped at 1.23 per cent.
Additional interest rate hedging was put into place in April 2023,
capping SONIA exposure at 3.75 per cent for a further £300
million of notional value for 2023 and £150 million of notional
value for 2024, at a total cost of £3.4 million (resulting in £500
million of hedging for 2023 at an effective 2.7 per cent and £350
million for 2024 at an effective 2.3 per cent). In December 2023,
further hedging was put in place for £250 million of notional
value of SONIA exposure for 2025, at a cost of £1.6 million, which
provides for a cap of 3.0 per cent and a floor of 2.0 per cent.
Cash Flows
Movement in cash flows
Cash, excluding tenant deposits, at 31 December 2022
Cash acquired on merger
Operating inflow
Investing inflow
Financing outflow
Dividends paid
Non-underlying
Cash, excluding tenant deposits, at 31 December 2023
£m
116.5
118.1
234.6
63.3
36.4
(37.8)
(41.9)
(68.9)
185.7
Secured
term loans
£1.6bn
Asset value
– £585m term loans
Shaftesbury
Capital PLC
Covent Garden
unsecured group
£1.7bn
Asset value
31%
EPRA LTV1
£486m
Liquidity1
5 years
Weighted average
maturity (drawn)
>2.0x
Group ICR
– £275m exchangeable bonds
– £350m senior unsecured
loan facility
– £475m private placements
– £300m undrawn bank facility
4.2%
3.4%
Weighted average
cost of debt2
100%
Protection against current
floating rate exposure
Unencumbered
assets
£1.5bn
Asset value
Note: Excludes Longmartin (which has £60 million of term debt, our share) and Lillie Square JV (£7.9 million net cash).
1. Including year-end cash of £185.7 million
2. Current weighted average cash cost of debt is 4.2 per cent and 3.4 per cent after taking account of interest income or cash deposits and the benefit of interest rate
caps and collars.
56
Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
57
Strategic Report | Financial review
350
300
250
200
150
100
50
0
36.4
(37.8)
63.3
(41.9)
300.0
Total liquidity £485.7m
Cash
acquired
on merger
118.1
116.5
(68.9)
185.7
Opening
cash
Underlying
operating
cash inflows
Investing inflow
Financing outflow
Dividend
Non-underlying
costs
Closing cash
Undrawn
RCF
Taking into account cash acquired as part of the merger,
the overall balance of cash decreased by £48.9 million to
£185.7 million as at 31 December 2023. This is largely due to:
Operating cash inflows of £63.3 million reflecting growing
net rental income and continuing positive cash collections,
partly offset by administrative and finance costs.
Investing cash inflows of £36.4 million, included £88.1 million
gross proceeds from the sale of seven properties offset by
£33.8 million capital expenditure and £17.4 million for the
Royal Opera House Arcade lease regear and long leasehold
residential unit. £4.2 million has been received from the
Longmartin investment in the year comprising a dividend of
£1.5 million and £2.7 million loan repayment.
Of the £37.8 million financing outflow, £25 million relates to
the net movement in facilities drawn and repaid following the
£550 million raised in the year to fund the redemption of the
£575 million Carnaby and Chinatown bonds. £7.8 million of costs
have been incurred on facility arrangement fees, following the
refinancing activities during the year. The remaining £5.0 million
movement reflects payments in relation to the additional
interest rate hedging (£3.4 million in April 2023 and £1.6 million
in December 2023).
Total dividends paid in the year excludes the £1.9 million
paid to the Group entity which holds 128.4 million shares
as security under the terms of the exchangeable bonds.
Following the dividend threshold test, as set out in the
exchangeable bond conditions, the full dividend was
subsequently retained by the Group.
Non-underlying movements represent payment of merger-related
transaction and integration costs. Certain merger-related
transaction costs were included in the Shaftesbury acquisition
balance sheet but have been paid after the merger date and,
therefore, reflect the difference between the costs included
in the income statement of £44.5 million and the statement
of cash flows.
Going concern
Further information on the going concern assessment is set
out in note 1 ‘Principal accounting policies’.
The Company has a strong balance sheet with EPRA loan-to-
value of 30.9 per cent, group interest cover of over two times
and access to cash and undrawn facilities of £485.7 million
as at 31 December 2023. There remains sufficient liquidity
and debt covenant headroom even in a downside “severe but
plausible” scenario.
There continues to be a reasonable expectation that the Group
will have adequate resources to meet both on-going and future
commitments for at least 12 months from the date of signing
these financial statements. Accordingly, the Directors consider
it appropriate to adopt the going concern basis of accounting
in preparing the 2023 Annual Report.
Situl Jobanputra
Chief Financial Officer
28 February 2024
58
Shaftesbury Capital PLC | 2023 Annual Report
Effective
risk management
Risk management
The Board has overall responsibility for Group risk management.
It determines its risk appetite and reviews principal risks
and uncertainties regularly, together with the actions taken
to mitigate them. The Board has delegated responsibility for
the review of the adequacy and effectiveness of the Group’s
internal control framework to the Audit Committee.
Risk is a standing agenda item at management meetings.
This gives rise to a more risk-aware culture and consistency in
decision-making across the organisation in line with the corporate
strategy and risk appetite. All corporate decision-making takes
risk into account, in a measured way, while continuing to drive
an entrepreneurial culture.
The Executive Committee is responsible for the day-to-day
commercial and operational activity across the Group and is,
therefore, responsible for the management of business risk.
The Executive Risk Committee, comprising the Chief Executive,
Chief Financial Officer, members of the Executive Committee,
General Counsel, Joint Group Financial Controllers, Director
of Sustainability and Technology and Head of Sustainability,
is the executive level management forum for the review
and discussion of risks, controls and mitigation measures.
The corporate and business division risks are reviewed on a
regular basis by the Executive Risk Committee, so that trends
and emerging risks can be identified and reported to the Board.
Senior management from each part of the business identify
and manage the risks for their area or function on a day-to-day
basis and maintain a risk register. The severity of each risk
is assessed through a combination of each risk’s likelihood
of an adverse outcome and its impact. In assessing impact,
consideration is given to financial, reputational and regulatory
factors, and risk mitigation plans are established. A full risk
review is undertaken annually in which the risk registers are
aggregated and reviewed by the Executive Risk Committee.
The Directors confirm that they have completed a robust
assessment of the principal and emerging risks faced by the
business, assisted by the work performed by the Executive
Risk Committee.
Oversight,
assessment and
mitigation at a
Group level
Governance
Board
– Sets risk culture
– Determines risk appetite
– Reviews principal and emerging risks
Oversight
Audit Committee
– Monitors risk exposure
and appetite
– Reviews the adequacy
and effectiveness of
the risk management
framework and the
internal controls systems
– Approves the assurance
programme
Executive Risk
Committee
– Co-ordinates and
develops risk
management process
– Reviews and assesses
risk register
– Considers principal
and emerging risks and
mitigating actions
– Monitors risks and
response plans
– Assesses control
environment and
effectiveness of controls
Executive Committee
– Oversees day-to-
day monitoring and
management of risk
Ownership
Senior management
– Oversee day-to-day management of risk, including identification and response
– Assist Executive Risk Committee with identification of principal and emerging risks
– Design and implementation of controls; ensure key controls are operating and are effective
– Brief Executive Risk Committee on key issues that have arisen
Top
Down
Bottom
up
Identification,
assessment and
mitigation at an
operational level
Shaftesbury Capital PLC | 2023 Annual Report
59
Strategic Report | Principal risks and uncertainties
Risk appetite statement
The Group risk appetite statement is designed to set the right
tone at the top for the Group and support decision-making at
a strategic level by the Board and the Executive Committee.
This statement provides guiding principles to support decision-
making at both a Board and senior management level.
The Group’s risk appetite statement is reviewed and updated
by the Board at appropriate intervals and, in any event, on an
annual basis. The Group’s risk appetite statement has been
communicated to senior management who are responsible
for incorporating the identified principles in decision-making.
The Group’s risk appetite statement is as follows:
“We invest to create thriving destinations in London’s West
End where people enjoy visiting, working and living. We use
our expertise in property investment and our commitment to
a strong balance sheet to take commercial risks in a measured
way, so that we are able to deliver sustainable growth and
long-term returns for our shareholders.
We are risk averse in relation to the impact of our business
on the environment and on the health and safety of our
people and the public, and it is a key priority for us that our
business operates in compliance with laws, regulations and
our contractual commitments.”
Investing in one location presents an inherent geographic
concentration risk and there are certain external factors
which the Group cannot control. However, in executing the
Group’s strategy, we seek to minimise exposure to operational,
reputation and compliance risks, recognising that our appetite
to risk varies across different elements of the strategy,
as shown in the diagram below. Recognising that risk appetite
is not an ”absolute”, the diagram below shows an indicative
range, reflecting that the Group may move higher or lower
on the risk curve, as circumstances dictate.
Assessing risk
Risks are considered in terms of the likelihood of occurrence
and their potential impact on the business. In assessing impact,
a number of criteria are considered, including the effect on our
strategic objectives, operational or financial matters, our reputation,
sustainability, stakeholder relationships, health and safety and
regulatory issues. Risks are assessed on both gross (assuming
no controls are in place) and residual (after mitigation) bases.
To the extent that significant risks, failings or control
weaknesses arise, appropriate action is taken to rectify the
issue and implement controls to mitigate further occurrences.
Such occurrences are reported to the Audit Committee.
Risk Aware
Risk Neutral
Risk Averse
The Group’s processes and procedures to identify, assess,
and manage its principal risks and uncertainties were in place
throughout the year and remained in place up to the date of
the approval of the 2023 Annual Report.
Internal controls
The main elements of the Group’s internal control framework
are set out below:
― Clear remit, terms of reference and schedule of matters
for the Board and its Committees
― Close involvement of the Executive Committee in the
day-to-day operations of the business, with regular
meetings with senior management
― Delegated authority limits
― Daily monitoring of risks and controls by management
― Formal assessment by the Executive Risk Committee of
strategic and emerging risks and the related controls or
mitigations, with reporting to the Audit Committee
― Regular Board updates on operations, IT systems
and cyber security
― Transparent tax strategy, published on the Group’s
website, which sets out the approach to tax risk
management and governance
― Whistleblowing policy and hotline procedures, where
employees and third parties may raise any matters
of concern confidentially, are reviewed by the Audit
Committee annually
Specific controls relating to financial reporting and
consolidation process include:
― Appropriately staffed management structure, with clear
lines of responsibility and accountability
― A comprehensive budgeting and review system
― Board and Audit Committee updates from the Chief
Financial Officer and Joint Group Financial Controllers,
which include forecasts, performance against budget
and financial covenants
― Formal reviews of the effectiveness of financial, operational
and compliance controls by management and external
advisers are reported to the Audit Committee
― BDO LLP (“BDO”), appointed as internal auditor of the
Group, conducts regular audits of the Group’s control
procedures and reports its findings to the Audit Committee.
Economic &
political
Portfolio
Operational
resilience
Leasing &
asset management
People
Climate
change
Risk appetite
Risk Aware: The Group is willing to take greater than normal risks
Risk Averse: The Group is cautious and takes as little risk as possible
Risk Neutral: The Group takes a balanced approach to risk taking
Compliance
with laws &
regulations
Risk outlook
During 2023, there has been strong operational performance across
the portfolio, reflecting the benefits of the Group’s active asset
management, together with the exceptional qualities and long-
term resilience of the West End. Strong leasing demand continued
across all uses, leading to high occupancy levels and strong rent
collection. The long-term impact of the pandemic alongside
broader macroeconomic factors, in particular evolving inflationary
pressures and interest rates, on the future demand for, and use of,
lettable space, evolution of consumer behaviour and travel patterns
remain a consideration and the Board continues to monitor this.
Despite the recovery in the operating environment and trading
conditions, risk remains heightened, reflecting the current
macroeconomic and geopolitical backdrop, manifesting in,
amongst other things, inflation and increased borrowing rates which
may have an impact on property valuations, availability and cost of
funding, our customers’ profitability and consumer behaviour.
Many of the Group’s customers are exposed to the changes
and challenges facing the retail and hospitality sectors,
including macroeconomic factors, such as availability and cost
of credit for customers and their businesses, the potential for
the level of consumer spending to be impacted by cost-of-living
pressures, business and consumer confidence, inflation rates,
energy costs, supply chain disruption, labour shortages and
other operational costs.
If current global or UK macroeconomic conditions continue
to deteriorate, or there is a further increase in geopolitical
uncertainty, this could impact UK real estate markets,
resulting in downward pressure on the valuation of the
Group’s properties and gross rental income.
The Group’s operations may be adversely affected if it fails to
comply with climate and environmental regulation or its own
environmental, social or governance standards. Operations
may also be adversely affected by climate and environment
related risks, which could lead to significant costs to mitigate
environmental impacts.
Following completion of the merger, operational and business risks
were assessed. These were aligned across both businesses;
however, the principal risks have been refined following the merger.
Performance of the Group is dependent in part on its ability to
deliver the benefits of the merger. There has been very good
progress through the year, and further activity will continue over
the coming years as we work towards an effective and efficient
organisational structure and cost base.
Emerging risks
The Group monitors emerging risks to identify and assess
those risks that may potentially impact upon its strategic
plans. These risks are circumstances or trends which are often
evolving rapidly which could significantly impact on the Group’s
financial strength, competitive position or reputation within the
next three years or over the longer term. Generally, the impact
and probability of occurrence are not yet fully understood and,
consequently, necessary mitigations have not yet fully evolved.
The Group conducts a horizon scanning exercise to identify
potential risks and emerging trends which may be impactful
in the future. Based on this exercise, the most relevant
emerging risks and opportunities are assessed to establish
relevance and identify any additional remediation required.
The prioritised emerging risks are further reviewed and
validated by senior management to gain a better understanding
of their impact and to develop strategies to address them.
A non-exhaustive list of emerging risks is outlined below.
Emerging risks with a one-to-three-year time horizon include:
― UK political uncertainty and evolving geopolitical conditions;
― UK corporate reform and landlord/tenant legislation changes;
― Building Safety Act and changes to UK property valuation
methodologies and practices;
― Green energy and sustainability priorities; and
― Disruptive technological advancements, which may include
areas such as artificial intelligence, blockchain and metaverse.
Emerging risks with a longer-term horizon include:
― Changes in social dynamics, demographic shifts and
trends in space usage, urbanisation and consumption
and travel patterns;
― Longer-term climate change impacts;
― Consumer behaviour;
― Impact of digital currencies on consumer behaviour; and
― Residential rent control and regulatory tax changes.
Principal risks and uncertainties
The Group’s principal risks and uncertainties, which are set out
on the following pages, are reflective of where the Board has
invested time during the year. Following a detailed review of the
principal risks post-merger, certain risks have been disaggregated
in the current year to clearly align the mitigating actions to the
respective risks. This is reflected below. These principal risks are
not exhaustive. The Group monitors a number of additional risks
and adjusts those considered ‘principal’ as the risk profile of the
business changes. See also the risks inherent in the compilation of
financial information, as disclosed in note 1 ‘Principal Accounting
Policies’ within ‘Critical accounting judgements and key sources
of estimation and uncertainty’.
Change in
the year
Principal risks overview
2023 risk
Economic and political1
Portfolio1
Operational resilience1
Leasing and asset management
People
Climate change
Compliance with law and regulations
1. These risks were previously reported as one risk, “Economic, political
and operating conditions” in 2022.
Key
Increase
Stable
Decrease
Strategic priorities
1
3
Customer at the heart
of the business
Disciplined financial
management
2
4
Creative and active
approach
Sustainable and
community-minded
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61
Strategic Report | Principal risks and uncertainties
Principal risks and uncertainties continued
Economic and political
Context and actions taken:
The Group focuses on prime assets in the West End of London which
historically have proved to be economically resilient.
The Group has had a long-term focus on maintaining a strong balance
sheet, with sufficient liquidity, to ensure it is able to withstand market
volatility and take advantage of opportunities. During the year, the Group
raised £550 million of debt, with proceeds being used to repay the
£576 million loan facility drawn post completion of the merger.
Extensive forecasting, stress testing and modelling of various scenarios
has been undertaken, including sensitivities arising from the current
macroeconomic environment, to help plan for future impacts on the business.
Funding, debt and treasury metrics are monitored on a continual basis
with a focus on preserving liquidity and capital.
A downside scenario has been analysed in connection with the going
concern assessment, details of which are set out in note 1 ‘Principal
Accounting Policies’ within ‘Going concern’. The financial statements
have been prepared on a going concern basis.
We remain in close dialogue with local authorities to understand future plans
and work constructively to position the estate in the best possible manner.
See Chief Executive’s statement on page 10 for further information.
Context and actions taken:
The Group focuses on prime assets in the West End of London primarily
in the retail and hospitality sector. The value of control over areas brings
the ability to curate and drive growth over the long term. We actively
promote our areas to drive footfall and curate areas to maintain places
that are popular.
Sustained customer demand has led to low vacancy levels. Strong footfall
and spend improving, with customer sales on average in excess of 2019 levels.
Through regular dialogue with potential and current customers and regular
assessments of the market, we are able to better understand market
demand and reconfigure space as appropriate.
See Portfolio and operating review on page 18 for further information.
― Impact of ‘higher for longer’ interest rates and lack of availability
or increased cost of debt or equity funding
― Inflationary pressures on operating costs, including energy and the
cost-of-living crisis
― Adverse impact on business and consumer confidence, increased
material costs, prolonged supply chains and reduced labour supply
― Decline in real estate valuations due to macroeconomic conditions
― Persistent significant discount in the share price relative to EPRA NTA
― Uncertain political climate and/or changes to legislation and policies
Impact on strategy
― Reduced property return
― Reduced rental income and/or capital values as customers could
suffer staff shortages, increased costs, longer lead times and
lower availability of inventory
― Higher operating and finance costs
― Reduced financial and operational flexibility
Mitigation
― Maintain appropriate liquidity to cover commitments
― Target longer and staggered debt maturities, and diversified
sources of funding
― Early refinancing of debt maturities
― Covenant headroom monitored and stress tested
― Fixed rate financing and derivative contracts to provide interest
rate protection
― Monitoring proposals and emerging policy and legislation,
with industry lobbying where appropriate
― Engagement with key stakeholders and local authorities
Portfolio
― Inability of the Group to adopt the appropriate strategy or to
react to changing market conditions or changing consumer
behaviour (including, but not limited to, structural changes in
the office and retail sectors)
― Portfolio concentration
― Volatility in the investment market
Impact on strategy
― Inability to deliver business plan or a structural change to
the business plan impacting returns or capital values
Mitigation
― Focus on prime assets, locations and uses where, in normal
conditions, there is a structural imbalance between availability
of space and demand
― Establish asset clusters to provide the opportunity to drive long-
term growth and returns
― Regular assessment of investment market conditions including
bi-annual external valuations
― Regular strategic analysis with focus on creating mixed-use
destinations and residential districts with unique attributes
― Reconfigure and repurpose space to respond to, and anticipate,
changing customer demand
Key
Increase
Stable
Decrease
Strategic priorities
1
Customer at the heart
of the business
2
Creative asset
management
3
Strategic investment
and capital allocation
4
Strategic
partnerships
Context and actions taken
Whilst being invested in one area is a risk, the Group’s ownership in prime
West End real estate is also a strength and an opportunity, providing control
and allowing curation of the area to maintain places that are popular.
Given the high-profile nature of the Group’s assets, the risk of an external
event is inevitably heightened. It is therefore important that the Group
maintains recommended levels of insurance and implements effective
security and health and safety policies.
Business continuity plans for both employees and service providers,
including introduction of external resources, if required, and other
policies have been reviewed together with HR policies, technology and
communication where appropriate. IT security systems that support data
security and disaster recovery are in place.
Cyber security and its impact on data and IT infrastructure, including
both widespread risks such as state-sponsored cyber-attacks and those
targeted directly at our systems and data continues to be a key focus,
especially during this year as we integrated systems and processes.
This was led by the Integration Committee, with support from external
advisers, including specialist consultants, to ensure appropriate controls
and security protocols are in place. Employees are provided with regular
cyber security and phishing training.
See Our strategy and business model on page 14 for further information.
The Group takes measured risks by using its expertise in place-making and
creative and active asset management to deliver long-term value through
rental growth and attracting new customers. During 2023, leasing activity
remained strong, with high occupancy levels reflecting the strength of
demand for prime central London real estate.
The impact on customer demand and supply chains as well as inflationary
pressures is kept under review.
The Group looks for opportunities to create or enhance value in the
portfolio through the planning process, cognisant of the risks but using
our experience and skill to deliver our objectives.
The Group has a focused leasing and marketing strategy, ensuring the
business is well-positioned. The Group regularly engages with suppliers
to understand their ability to meet our requirements and standards.
See Portfolio and operating review on page 18 for further information.
Operational resilience
― Misconduct or poor operational or sustainability standards
― Poor performance from one of the Group’s third-party advisers
― Inability to effectively integrate people, systems and processes
― Catastrophic event such as a terrorist attack, natural disaster,
health pandemic or cyber security crime
Impact on strategy
― Reduced rental income, higher operating costs, and/or reduced
capital values
― Reduced financial and operational flexibility
― Diminishing London’s status
― Business disruption or damage to property
― Reputational damage
Mitigation
― Supplier procurement policy and regular monitoring of
external advisers
― Engagement with key stakeholders and local authorities
― Building reinstatement, loss of rent and terrorist insurance
― Detailed business continuity and crisis communication
plans in place
― On-site security and cyber security in place
― Health and safety policies and procedures
― Close liaison with police, National Counter Terrorism Security
Office (NaCTSO) and local authorities
Leasing and asset management
― Inability to achieve target rents or to attract target customers due
to market conditions
― Competition from other locations/formats
― Unfavourable planning/licensing policy, legislation or action
impacting on the ability to secure approvals or consents
Impact on strategy
― Decline in customer demand for the Group’s properties
― Reduced income and increased vacancy
― Reduced return on investment and development property
Mitigation
― High quality customer mix
― Strategic focus on creating mixed-use destinations with
unique attributes
― Engagement with local and national authorities
― Pre-application and consultation with key stakeholders
and landowners
― Regular assessment of market conditions and development strategy
― Business strategy based on long-term returns
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63
Compliance with law and regulations
Context and actions taken
Compliance with law and regulations, including health and safety, remains
a key priority for the Board.
Protocols are in place and communicated across the various stakeholder
groups to ensure everyone is aware of new legislation and requirements.
The health and safety of our people and the public is a key priority.
The Group works closely with its stakeholders to mitigate health
and safety risks.
We remain in communication with HMRC regarding our REIT status,
the Group’s ability to comply with the requirements and the approach
which HMRC will take in relation to any breach of the REIT conditions.
See Corporate Governance on page 94 for further information.
― Breach of legislation, regulation or contract
― Inability to monitor or anticipate legal or regulatory changes,
including potential changes to the Landlord and Tenant Act
or other associated reforms
― Accidents causing loss of life or very serious injury to employees,
contractors, customers and visitors to the Group’s properties;
or near misses of the same
― Exit from REIT regime due to non-compliance with REIT
requirements
Impact on strategy
― Prosecution for non-compliance with legislation
― Litigation or fines, reputational damage
― Distraction of management
Mitigation
― Appointment of external advisers to monitor changes in law
or regulation
― Members of staff attend external briefings to remain cognisant of
legislative and regulatory changes
― Health and safety procedures, training and governance across
the Group
― Appointment of reputable contractors
― Adequate insurance held to cover the risks inherent in property
ownership and construction projects
Strategic Report | Principal risks and uncertainties
Principal risks and uncertainties continued
People
― Inability to retain, integrate and recruit the right people and
develop leadership skills within the business
― Key person risk as the Group has a relatively limited headcount
Impact on strategy
― Inability to execute strategy and business plan
― Constrained growth, lost opportunities
― Pressure on corporate costs
Mitigation
― Succession planning, performance evaluations, training
and development
― Long-term and competitive incentive rewards
― Flexible and modern working practices
Context and actions taken
The success of the business is down to a dedicated team of skilled and
talented individuals working collaboratively together. The health and
well-being of our people is of the utmost importance including the ability
to create a culture and environment that allows each person to grow,
develop and perform to the best of their abilities.
There remains a risk of illness or absence across employees, management
or service providers which would disrupt the day-to-day activities of
the Group’s business and running of the estate. Team communication
strategies have been implemented to ensure managers can adequately
supervise and support employees working from home.
Recruiting and on-boarding policies have been adjusted where necessary
to ensure that the business is able to continue to attract, develop and
retain the best possible resources.
We continue to monitor closely employees’ mental and physical well-being
and the health and safety of our employees and service providers remains
a top priority with regular seminars and webinars from external experts.
See People and culture on page 46 for further information.
Climate change
Context and actions taken
The Group believes in taking a responsible and forward-looking approach
to environmental issues and the principles of sustainability. The Group
recognises the urgent responsibility to tackle climate change and this is
reflected in its 2030 Net Zero Carbon target. As a long-term steward of
the West End, the Group understands the benefits of a strong track record
of restoring and celebrating the heritage of the area through considered
refurbishments and developments.
Following the merger, the Group re-committed its Net Zero Carbon
Pathway, confirming the scope, and taking into account minor differences
in pre-merger approaches, enhancements to best practice and changes in
regulation. The Group has made material progress in the decarbonisation
of the portfolio, as reported in November. With seven years remaining
until end of 2030, we are at a critical point for action and will continue
our efforts in 2024 to reduce greenhouse gas emissions in our buildings
and operations. This requires more innovative and sustainable ways of
working, and includes our supply chain partners across development and
operational disciplines, our customers, as well as our corporate actions.
See TCFD report on page 66 and the Net Zero Carbon Pathway on our
website: https://www.shaftesburycapital.com/en/responsibility/
environment/net-zero-carbon-pathway.html.
― Physical impact on our assets from rising temperatures or other
extreme climate-related event such as flooding
― Transitional challenge of increasing and more onerous compliance
and reporting requirements, as well as retrofitting, insuring or leasing
our assets in a heritage environment on an appropriate whole life
carbon basis
― Inability to keep pace with customer and consumer demand for
proactive action to manage and mitigate climate-related risk
Impact on strategy
― Reduced income, capital values or business disruption
― Increased operating costs to meet reporting and target metrics
and compliance
― Increased capital costs of retrofitting, or inability to resolve
listed building or planning challenges, leads to buildings
becoming carbon stranded
― Reduced income through lower rents and longer void periods due
to reduced customer demand
Mitigation
― Company manages climate-related risks and opportunities
and sustainability team in place
― Net Zero Carbon commitment by 2030 backed by Net Zero
Carbon Pathway, re-committed post-merger. For more detail on
the mitigation measures in place for climate risk, please refer to
the Group’s TCFD disclosures in the 2023 Annual Report as well
as the Group’s Net Zero Carbon Pathway
― Active management plan with external reporting via recognised
indices and benchmarks, including EPRA, CDP, MSCI and GRESB
― Continued engagement with stakeholders in order to preserve
heritage buildings, while enhancing environmental performance
― Pro-active customer and consumer engagement programme
and setting of appropriate climate-related targets on both
development and operations
Key
Increase
Stable
Decrease
Strategic priorities
1
Customer at the heart
of the business
2
Creative asset
management
3
Strategic investment
and capital allocation
4
Strategic
partnerships
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65
Strategic Report
Task Force on Climate-related
Financial Disclosures (“TCFD”)
This is the first TCFD response for Shaftesbury Capital as
a combined company. This disclosure is consistent with all
eleven recommendations of TCFD and includes a summary
of risks and opportunities with all information required by the
listing rules, and the TCFD Annex all sector guidance and the
supplemental guidance for material and buildings. A separate
TCFD report on our website at https://www.shaftesburycapital.
com/en/responsibility/policies-and-reports.html presents
supplementary detail and a fuller explanation of the process,
risks and opportunities.
We are committed to strengthening our approach to addressing
climate-related risks and opportunities. Under the oversight of the
Group’s Board level Environment, Sustainability, Community (“ESC”)
Committee during 2023, we have continued to embed the TCFD
recommendations into all our relevant practices. Going forward,
climate risk and opportunity will be considered by the Audit
Committee on behalf of the Board with day-to-day management
through the Executive Committee. We outline our approach to
identifying and managing climate change related issues, addressing
both risks and opportunities relating to climate change.
The merger has not changed the geographical concentration
of our portfolio in the West End, and the combined business
remains subject solely to the UK regulatory framework.
Therefore, following due consideration, the physical and transitional
climate risks and opportunities remain materially consistent
with those identified previously by Shaftesbury and Capco.
The quantitative assessment of physical risk continues to rely
on the scenario analysis undertaken using the GRESB Munich RE
tool and aligns with CRREM scenarios. Shaftesbury Capital also
has embedded processes designed to understand how changes
in the regulatory environment may affect transition risk, using the
pre-existing Shaftesbury qualitative analysis, which have continued
to monitor relevant UK regulatory changes which could adjust our
qualitative view of transition risk. There have been no material
changes in either physical or transition risk.
During 2023, we re-confirmed our commitment to a comprehensive,
1.5°C aligned Net Zero Carbon 2030 target (Scope 1, 2 and
Scope 3 relevant to the Real Estate industry) and published our
first combined pathway which sets out the detail of the scope
and boundaries of our commitment. This shows that the actions
taken to mitigate our climate risk up to the date of publication
had reduced GHG emissions by c. 15 per cent, exceeding the rate
required to keep within a 1.5°C pathway. In 2023, we report a
45 per cent reduction on our published baseline driven primarily
by embodied carbon movements. As set out in our Net Zero
Carbon Pathway, we will update our published baseline during
2024. The Scope 1 and 2 carbon reduction targets set out by
the pre-merger companies had been validated by the Science
Based Targets initiative (“SBTi”) and during 2024 we will seek
to re-validate these targets for Shaftesbury Capital. For more
information on our 2024 priorities, please see the sustainability
report on pages 78 to 91.
Governance
Describe the
Board’s oversight of
climate-related risks
and opportunities
The Board has ultimate oversight and responsibility for the management of climate-related risks and
opportunities, overseeing the Group’s ESC Strategy and performance against its 2030 Net Zero Carbon
target. Recognising the strategic importance of these matters to the business, the Board supports the
Group’s climate-related initiatives and their reflection in our values.
During the year, following recommendation from the Board ESC Committee (which comprises Executive and
Non-executive Directors), the Board approved our combined Net Zero Carbon target and selection of the ESG
related risks and opportunities, including those related to climate change. Both the Chief Executive and the
Chair of the Board ESC Committee have relevant climate change and ESG experience. Further climate change
and real estate expertise is provided to the Committee by our sustainability team.
Consideration of climate-related risk is integrated into the Group’s risk management process overseen by the
Executive Risk Committee. In line with the process set out on page 59, consideration of climate-related risks
and opportunities are integrated into the Group’s risk management process, overseen by the Executive Risk
Committee and these are monitored quarterly, and reported to the Board.
In 2023, the Audit Committee considered the reporting of climate-related risk and opportunities including the
financial year-end Greenhouse Gas reporting and environmental data disclosures as well as this TCFD report.
Each of the Executive Directors has ESG objectives under the annual bonus plan.
Following the publication of our updated combined Net Zero Carbon pathway and the embedding of
the sustainability team into the real estate investment management team, at our February 2024 Board
meeting, the Board have agreed that, from the date of this report, ongoing oversight of ESC matters
(including consideration of climate related risks and opportunities and implementation of the Group’s
sustainability strategy and net zero pathway) should be a matter for consideration by the whole Board
with Ian Hawksworth as Chief Executive having overall responsibility.
More information on the Board ESC Committee, the Audit Committee, the Executive Risk Committee and ESC Management Committee,
including the frequency of their meetings, can be found on pages 104 to 126.
Describe
management’s role
in assessing and
managing climate-
related risks and
opportunities
Strategy
Describe the
climate-related
risks and
opportunities the
organisation has
identified over the
short, medium and
long-term
During the year, the ESC Board Committee was supported by the ESC Management Committee, chaired
by either the Chief Executive or Chief Operating Officer. The ESC Management Committee met at regular
intervals and included representatives from across the organisation. The ESC Management Committee was
responsible for monitoring the delivery of the Company’s ESC Strategy, review of climate related risks and
associated mitigating actions and ensuring progress towards becoming a Net Zero Carbon business by 2030.
Following the embedding of sustainability within the Real estate investment management team, from
January 2024, the Executive Committee has responsibility for reporting of ESC matters to the Board.
Climate-related risks are considered by the Executive Risk Committee, as part of the Group’s risk
management process as further set out on pages 59 to 61, based on assessments submitted by the
business units and the corporate sustainability leads.
All employees have ESG targets as part of their annual bonus objectives, which include climate-related
targets where appropriate.
Further details on the matters considered by the Board ESC Committee and the frequency of its meetings can be found
on pages 125 and 126.
In identifying and assessing the potential climate-related risks and opportunities that may impact the
business, the following time horizons are considered, as these allow for appropriate financial planning
to execute strategies to address climate-related risks and action for opportunities.
Short-term: 0 – 3 years
Medium-term: 3 – 10 years
Long-term: 10 – 30 years
The time horizons defined are influenced by the rolling timing of lease events across the estate and support
our financial planning and budgeting cycle.
Further details surrounding risk and the Group’s risk appetite can be found on pages 59 to 65.
Our assets are wholly located in a relatively small geographical area from the perspective of climate risk,
and under a single regulatory jurisdiction. This limits the scope of physical and transition risks that we face,
however it may increase our exposure to a single event.
Physical risk
Our appraisal of risk has been informed by a high-level qualitative scenario analysis, undertaken in 2021,
by Shaftesbury PLC and a quantitative climate risk scenario analysis using the GRESB tool undertaken
by Capco in 2022 as described below and more fully in the TCFD report on our website at https://www.
shaftesburycapital.com/en/responsibility/policies-and-reports.html:
― a qualitative approach used by Shaftesbury PLC. This considered a “low” (better than 2°C) and “high”
(4°C) UK emissions pathway and considered three scenarios namely “balanced”, “tailwinds” and
“headwinds” and short (0-1 year), medium (1-5 years) and long-term (5-10 years) time horizons
― a quantitative physical risk assessment on 10 individual assets using the geospatial modelling,
the Munich RE GRESB data model and three different pathways (less than 2°C, 2.4°C and 4.3°C)
The Group has determined that there has been no year-on-year material change in physical risk exposure,
UK legislation or customer behaviour. The similarities in the pre-merger portfolios in respect of location,
mixed-use, and heritage nature also mean that previous scenario analysis continues to sufficiently inform
our identification and understanding of relevant material risks and opportunities.
To deepen our understanding of the impact of this physical risk, during 2023, we have undertaken
additional detailed CRREM analysis covering c. 14 per cent of the portfolio by area. This work confirms
our reported climate-related risks and opportunities and enhances our confidence in our approach. It also
supports the estimates included in our financial planning, in particular in relation to the estimated sums
required to implement mitigating actions, and the definition of appropriate KPIs and metrics as shown in the
table on pages 71 to 74, and set out more fully on our website at https://www.shaftesburycapital.com/en/
responsibility/policies-and-reports.html.
The most significant physical risks arising in the medium and long-term remain: flood risk and extreme
weather, including the impact of severe heat events in central London. We also recognise the risks
of indirect physical impacts, such as damage to the London transport network that would inhibit the
operations of our customers and visitors.
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Strategic Report | Task Force on Climate-related Financial Disclosures
Describe the
climate-related
risks and
opportunities the
organisation has
identified over the
short, medium and
long-term
Continued
Transition risk
There are no year-on-year changes to the most significant transition risks which arise from:
i. short-term risks relating to existing and emerging regulation including EPC and enhanced disclosures;
ii. medium-term transition risk through customer demand for more sustainable assets faster than these
can be delivered; and
iii. medium and long-term transition risk from inability to upgrade heritage buildings due to policy or
building configuration.
We currently estimate a capital expenditure of approximately £30-35m to 2030 (10 per cent of current
annual capital expenditure) to achieve energy efficiency improvement required for expected changes
to Minimum Energy Efficiency Standards (“MEES”) regulation and which also contribute to meeting our
decarbonisation targets. Our refurbishment scope already mandates a minimum Energy Performance
Certificate (“EPC”) rating in line with proposed MEES regulations, therefore these sums are already included
in our capital expenditure budgets for business planning. While this figure remains an estimate, it is informed by
the detailed CRREM aligned audits and takes into account our progress to date with c. 56 per cent of the
commercial portfolio ERV now holding an EPC rating of A-B.
Beyond the regulatory MEES (EPC) requirements, our CRREM aligned energy efficiency analysis to date
demonstrates that our portfolio can be upgraded to meet our net zero commitments and we continue
to expand the use of CRREM to refine the estimate of these costs. However, the analysis to date gives
confidence that there is no requirement to change our long-term investment strategy, in terms of either
building stock or location. In addition to the ranged estimates in this report, we will continue to publish
anticipated costs identified through the CRREM exercise in future TCFD reporting.
Climate-related opportunities
Climate-related opportunities principally arise in the short-term from:
i. improved ability to attract and retain customers in energy efficient buildings; and
ii. consequent reduced energy costs and associated emissions
Medium-term opportunity arises through demonstrating whole life carbon benefit of heritage stock and the
ability to leverage our expertise in the de-carbonisation of heritage buildings.
The summarised risks and opportunities are set out in the table on pages 71 to 74 along with associated
timelines, mitigations, business impact and metrics.
Further detail on our climate-related transitional and physical risks and opportunities can be found in the tables on pages 71 to 74
and in our TCFD report on our website at https://www.shaftesburycapital.com/en/responsibility/policies-and-reports.html .
Describe the
impact of climate-
related risks and
opportunities on
the organisation’s
businesses,
strategy and
financial planning
The impact of climate change on the whole business is considered by the Board both through our
approach to risk management and wider organisational strategic planning. The financial effects of the
risks and opportunities identified were not specifically quantified at the time of our scenario analysis.
However, our internally developed sustainable development tool ensures that climate-risk specific
improvements and mitigations are scoped into our existing capital expenditure refurbishment budget.
The detailed energy audits completed to date using the CRREM tool on c. 14 per cent of the portfolio
by area support this analysis. We intend to extend this exercise during the first half of 2024 as part of
meeting our statutory Energy Savings Opportunity Scheme (“ESOS”) regulatory requirement.
Our understanding of current climate-related risks and opportunities does not indicate a material impact
on our financial performance or financial position in the short to medium-term, either through an inability
to generate income or through a negative impact on the underlying value of the portfolio. In this context,
material impact is defined by reference to both individual asset value and by reference to overall portfolio
value, for example the cost of MEES compliance is noted at c. £30-35m over 7 years, approximately 10 per
cent of our annual refurbishment capital expenditure of 1 per cent of portfolio value.
We are committed to long-term low-carbon investment in our assets, focusing on repurposing and
refurbishment, rather than demolition and rebuilding. This maintains the heritage nature of our destinations,
improves energy efficiency and minimises embodied carbon emissions associated with new development.
It will also reduce the potential future liability associated with carbon offsetting and provides ancillary
benefits in improved air quality.
Describe the
impact of climate-
related risks and
opportunities on
the organisation’s
businesses,
strategy and
financial planning
Continued
Our investment strategy aims to continuously improve the overall energy efficiency and climate resilience
of our portfolio through our refurbishment programme. We currently spend approximately 0.1 per cent
of portfolio value per year on energy efficiency upgrades. This enables us to adequately manage risks
relating to proposed legislative changes such as MEES, which are material to the evolving needs of our
customers and stakeholders. On this basis we currently expect to incur approximately £30-35m by 2030
to achieve energy efficiency improvements required for expected changes to MEES regulation and which
also contribute to meeting our decarbonisation targets. These sums are not incremental as they are already
included in our capital expenditure budgets. We continue to refine our estimate of the incremental costs of
delivering changes required to ensure assets are within a CRREM aligned 1.5°C Net Zero Carbon pathway.
As we increase our CRREM coverage and confidence, we will include these in our targets and metrics.
This year we have published a combined Net Zero Carbon Pathway, which sets out how we will deliver
on our Net Zero Carbon commitment by 2030. Our 2023 Net Zero Carbon Pathway combines the baselines
published by both businesses pre-merger. To date, we have reported a reduction of in-scope carbon
emissions by 15 per cent against the combined baseline, which aligns with a 1.5°C trajectory. In 2023,
we report a 45 per cent reduction on our published baseline driven primarily by embodied carbon
movements. A re-baselining exercise will be undertaken in 2024, based on the first combined year of
data for the year ended 31 December 2023. We define Net Zero Carbon as being when there is a balance
between the amount of GHG emissions produced and the amount removed from the atmosphere.
The Group sets a minimum EPC rating of B in its commercial refurbishment programmes. The initial CRREM
analysis also shows that our investment in asset refurbishment presents opportunities as lower operational
costs may result in improved commercial terms, reduced void periods and improved investment yields as
assets meet customer and investor requirements.
In our supply chain, we continue to prioritise partners and products which demonstrate high ethical and
environmental standards. Our design scope prioritises climate resilience and adaptation for example in
creating flash flooding capacity using water attenuation tanks. We continue to work with industry bodies
and technology partners to invest in research and development to trial technologies which support our goals.
As part of our Net Zero Carbon update in 2024, we will consider targets beyond 2030 to respond to
longer-term risks and opportunities.
We are committed to investing for the long term in the West End of London, continually improving our
portfolio to deliver efficient and resilient buildings. We do not expect that the climate related issues
identified will necessitate a significant change to our strategy, either asset classes or geographical location,
in the short or medium term.
We consider our mitigation actions to be effective and that the business should be resilient to the impacts
of climate change that have been identified.
Our climate change strategy is informed by a broad range of potential climate scenarios which improves
the resilience of our decision making. The careful consideration of investments, ongoing improvement of
our assets and the Net Zero Carbon target will protect our long-term strategy from significant climate risk.
Setting an ambitious Net Zero Carbon target aligned with a 1.5°C pathway puts our strategy in line with the
latest climate science, and reduces the risk that we will need to recalibrate our targets. We have clearly
set out the level of decarbonisation required by 2030, so that the business can make resilient long-term
decisions and individuals across the business and supply chain are aware of our commitments.
Our combined qualitative and quantitative scenario analysis allows us to identify the core areas for
focused action to reduce emissions and enhance the long-term resilience of the portfolio. We will continue
to review and update the scenario analysis as appropriate.
In addition to the scenario analysis described above, Shaftesbury Capital has completed CRREM aligned
detailed Net Zero energy audits during 2023, and is expanding their use during 2024. The findings identified
both interventions and estimated related costs. Some of these interventions can be implemented with our
customers in situ. Others would need to be undertaken when properties are vacant. Our CRREM aligned
analysis undertaken to date has helped refine our estimate of costs and related operational and carbon
savings associated with our refurbishment programmes. We are committed to transparency around this
as we develop this data further.
Describe the
resilience of the
organisation’s
strategy, taking
into consideration
different climate-
related scenarios,
including a
2°C or lower
scenario
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Strategic Report | Task Force on Climate-related Financial Disclosures
Describe the
organisation’s
processes for
identifying and
assessing climate-
related risk
Our process of identifying and assessing climate-related risks uses the same methodology as all business
risks and these risks are incorporated into the Group’s principal risks.
Climate-related risk has been identified as a principal risk. To assess the relative significance of the
principal risks (which are detailed on pages 61 to 65), each has been assigned a likelihood and impact
score from which a risk ranking is allocated. More information about the process for assessing the size
and scope of risks can be found on page 60.
Detail can also be found on the whether the risk is increasing, decreasing or stable, which is a useful
mechanism for risk prioritisation.
Please see page 61 in the Effective Risk Management section for risk definitions.
Describe the
organisation’s
processes for
managing climate-
related risk
We have an Executive Risk Committee, comprising the Executive Directors, members of the Executive
Committee, General Counsel, Joint Group Financial Controllers, Director of Sustainability and Technology
and Head of Sustainability, which is the executive level management forum for the review and discussion
of risks, controls and mitigation measures. Senior management from each business function identify
and manage risks for their division and complete and maintain a risk register. Climate-related risks and
opportunities are presented to the Board.
Please refer to the summary table on pages 71 to 74 and to our TCFD report on our website at
https://www.shaftesburycapital.com/en/responsibility/policies-and-reports.html.
A detailed breakdown of Scope 1, Scope 2 and Scope 3 GHG emissions is disclosed on page 87, and the
methodology for the calculations can be found on page 230. In line with Streamlined Energy and Carbon
Reporting (“SECR”) requirements, energy use and an intensity metric are disclosed on page 88.
Describe the
targets used by
the organisation to
manage climate-
related risks and
opportunities
and performance
against targets
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope
3 greenhouse
gas (“GHG”)
emissions, and the
related risks
Physical risks are managed and mitigated through our ongoing programme to improve the energy efficiency
of our buildings and our investment in increasing green space across our portfolio.
Risk summary
Risk type
Risk Description1
Timeline
We have carbon reduction targets for Scope 1 and 2 emissions and a comprehensive Net Zero Carbon
2030 target, which will be the foundation of our carbon emissions reduction strategy over the next seven
years. We will seek science-based target revalidation of these targets during 2024 based on the first year
of combined data for the Group.
Principal risks have been mapped to the most relevant strategic priority which can be found on pages 61 to 65.
The Board has overall responsibility for the Group’s risk management, determining risk appetite and
reviewing principal risks and uncertainties regularly, together with the actions taken to mitigate them.
Awareness of climate-related risks is integrated into the organisation via staff engagement and training.
For certain areas of responsibility, specific job-related individual training is delivered for example relating
to matters such as EPCs, gathering of data and embodied carbon calculations.
The Director and Head of Sustainability are members of the Executive Risk Committee and are responsible
for highlighting climate risks in the context of wider business risk discussions.
The Executive Risk Committee meets quarterly and reviews significant risks to the business, operational
and financial, including sustainability-related risks. A risk report is produced by the Executive Risk Committee
and is submitted to the Board, this is not publicly available. Principal risks are disclosed in the Interim
Results and Annual Report.
Describe how
processes for
identifying,
assessing and
managing climate-
related risks are
integrated into
the organisation’s
overall risk
management
Metrics and targets
Key metrics used to assess climate-related risk and progress against our Net Zero Carbon targets are
set out in the summary risks and opportunities table on pages 71 to 74 and more fully described on
our website at https://www.shaftesburycapital.com/en/responsibility/policies-and-reports.html.
Disclose the
metrics used by
the organisation
to assess climate-
related risks and
opportunities
in line with its
strategy and risk
management
process
Physical
Medium-
term
Long-
term
Chronic long-term
climate change, flood risk
and extreme weather
including:
― hotter summers g higher
costs to maintain indoor
temperatures
― localised flooding and
storms g cost and time
associated with building
design and retrofit
for increased rainfall
resilience
― disruption to local
energy and transport
network from extreme
weather, in particular
combining a flood with
a possible failure of the
Thames Barrier
Impact on business
strategy & financial
planning
― Inclusion of mitigations
in our refurbishment
scope. These are included
at design stage and
consequently do not result
in material additional capital
expenditure requirements.
― CRREM aligned Net
Zero energy audits
being undertaken on a
representative sample
of buildings across
the portfolio to inform
mitigation design now
and at next lease event.
Costs are scoped into
refurbishment budgets.
― These requirements are
supported by the planning
framework in central
London where we operate
which generally requires
that these risks are
considered. Therefore, the
incremental costs above
planning considerations
are modest.
― We will formally update our
asset exposure to physical
climate risk at least every
two years based on latest
science-based scenarios
and modelling. The costs
of this exercise are modest
and are incurred through
administration costs.
Mitigation
― scenario analysis
indicates medium
exposure to drought-
related risk and
low exposure to
fire weather and
heat stress and
precipitation risks
― assets not located
in coastal or fluvial
flood risk areas,
risk limited to flash
flooding
― refurbishment
scope considers
the following to
mitigate risk and
enhance future asset
resilience:
― reduced water
demand and
efficiency measures
― design measures to
prevent overheating
― incorporation of
sustainable urban
drainage features
― inclusion of these
actions into our
adaptation activities
in our combined
Net Zero Carbon
Pathway
Metrics &
Targets2
― continued
reduction in
GHG intensity
from building
energy use
(2024, 2027 and
2030 operational
intensity targets
in our Net Zero
Carbon pathway)
― reduce absolute
water use
through efficiency
and harvesting
by 3 per cent per
annum
― biodiversity
increase target
being developed
― operational
carbon reduction
(60 per cent by
2030 with interim
intensity targets)
― embodied carbon
reduction target
(50 per cent by
2030 with interim
intensity targets)
― removal of all gas
boilers (under our
control) by 2030
― 100 per cent
renewable energy
procurement
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71
1. Supplementary detailed explanation of our risks and opportunities is on our website at https://www.shaftesburycapital.com/en/responsibility/policies-and-reports.html
2. Shaftesbury Capital has set metrics against all risks and opportunities. For some of these, targets are being refined and we will disclose these in due course.
Strategic Report | Task Force on Climate-related Financial Disclosures
Risk type
Risk Description1
Timeline
Transition
Policy risk from emerging
regulation:
Short-
term
Medium-
term
― enhanced GHG
emissions reporting
― evolving real estate
specific regulations,
such as Minimum
Energy Efficiency
Standards (“MEES”)
― potential conflict
between heritage
requirements and
energy efficiency
― improvement required
beyond MEES
requirements
― potential impact
of nature-related
regulation including
the Environment Act
requirements on
Biodiversity Net Gain
and the Task Force
on Nature-related
Financial Disclosures
Transition Market risk of changes in
market trends:
Medium-
term
― customers seeking
assets with greater
sustainability
credentials may
reduce revenues if
requirements cannot
be met
― less sustainable
buildings may not
meet debt or equity
market requirements
resulting in reduced
access to capital
Impact on business
strategy & financial
planning
― new regulatory data
requirements, which may
not be available, result in
increased cost or longer
void periods
― unexpected new regulation
results in longer planning
or refurbishment period
― increased costs to
analyse and meet
new requirements
― inability to meet
nature requirements
results in financial or
reputational loss
― proactive approach
to EPC and MEES
management
― detailed existing
GHG reporting
which goes beyond
current statutory
requirements,
including all Scope 3
― CRREM exercise
completed to date
on 14 per cent of
assets and being
expanded during
H1 2024
― committed
programme to
enhance data
collection with
timelines included
in our Net Zero
Carbon pathway
― regular review
and internal
reporting of
upcoming climate
regulation and
updates from
professional
advisers
reporting of asset
EPC performance
with detailed
EPC targets by
ERV in our Net
Zero Carbon
Pathway (2030
– commercial
100 per cent B
or above and
residential 100 per
cent C or above)
― enhanced data
coverage and
accuracy targets
and accelerated
timeline as set out
in the Net Zero
Carbon pathway
― monitoring and
reporting of
biodiversity
coverage and
annual increase
― regular formal
review of
regulatory
requirements and
internal reporting
at least twice a
year
― failure to meet market
expectations would
result in loss of asset
value, rental income,
prolonged void period.
Therefore, impact on
financial planning is to
include as standard in
our refurbishment scopes
appropriate sustainability,
energy efficiency and
other credentials including
BREEAM3
― no yield adjustments are
currently included in our
business planning, but
our viability assessment
includes the impact of
potential yield movements
howsoever caused
― regular monitoring
― reporting of
of industry research
(for example CBRE
Sustainability Index)
― use of internally
proportion of
buildings by area
with sustainability
credentials
― aim to achieve
BREEAM rating
on all relevant
refurbishments
developed
Sustainable
Development tool
to ensure that each
refurbishment
maximises its
ability to achieve
sustainability
credentials
― continued budget
allocation to
research and
innovation using
proptech and
behavioural
innovation to ensure
assets are best
placed to meet
market needs
Mitigation
Metrics & Targets2
Risk type
Risk Description1
Timeline
― continued
Transition Asset Specific risk:
Medium-
term
Long-
term
― evolving risk in
relation to the potential
conflict between
heritage buildings and
energy efficiency
― heritage restrictions
impede energy efficiency
measures resulting in
market risks above
― adoption of fossil fuel
removal and technologies
is constrained by
electrical supply capacity
to our buildings
Impact on business
strategy & financial
planning
― consideration of technology
appropriate to heritage
buildings (for example PV
tiles)
― drive behavioural change
to use buildings as
designed and maximise
benefits
― working group to
scope and implement
commercial electric
cooking and fossil fuel
removal
― estate modelling to
understand timing and
quantum of electrical
capacity constraints
Mitigation
Metrics &
Targets2
― participation
― tracking of
EPC and asset
performance
includes listed
status, listed
units not scoped
out of 2030 EPC
targets
― proportion of
gas (fossil fuel)
boilers both
in our and our
customer demise
is tracked and
performance
managed through
the REIM and
managing agent
teams
in appropriate
industry research
and lobbying on the
balance between
heritage and energy
efficiency
― research and
inclusion of
scalable heritage
appropriate energy
efficiency measures
in our internal
refurbishment
scoping tool
― inclusion of heritage
and listed buildings
in our detailed
CRREM exercise
to determine
costs, returns and
understand related
planning risk
Opportunities summary
Opportunity
type
Opportunity Description1
Timeline
Transition
Revenue:
― sustainably certified
and energy efficiency
enhanced buildings
lead to better rents
and capital values
Short-
term
Impact on business
strategy & financial
planning
― potential to reduce
budget void periods and
improve investment yields
for assets with higher
energy efficiency and
sustainability credentials.
Note that this is not
yet applied in forward
business planning
Actions to leverage
opportunity
Metrics &
Targets2
― percentage of
projects (major
refurbishments)
to achieve
certification
― monitoring
of rent per
square foot
pricing across
different
asset uses by
sustainability
rating
― continue to increase
EPC ratings and
building certification
coverage
― track and evidence
rent, incentive
package and void
differences across
central London
to support any
changes in pricing
and incorporate
into budget and
forecasting as trends
emerge
― provide evidence
to valuers
1. Supplementary detailed explanation of our risks and opportunities is on our website at https://www.shaftesburycapital.com/en/responsibility/policies-and-reports.html
2. Shaftesbury Capital has set metrics against all risks and opportunities. For some of these, targets are being refined and we will disclose these in due course
1. Supplementary detailed explanation of our risks and opportunities is on our website at https://www.shaftesburycapital.com/en/responsibility/policies-and-reports.html
2. Shaftesbury Capital has set metrics against all risks and opportunities. For some of these, targets are being refined and we will disclose these in due course
3. Building Research Establishment Environmental Assessment Methodology
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Opportunity
type
Opportunity
Description1
Timeline
Impact on business
strategy & financial
planning
Actions to leverage
opportunity
Metrics &
Targets2
Physical /
Transition
Short-
term
Market/Technology:
― lower energy costs and
emissions from more
energy-efficient buildings
through existing and
new technology
― reduced emissions
and low embodied
and operation carbon
increase portfolio
attractiveness to
customers
― improved technology
enables use of onsite
energy generation,
supporting our use and
freeing up constrained
electrical grid capacity
Medium-
term
Transition
Reputational:
― demonstrate whole
life carbon benefit of
heritage stock and lead
in energy performance
of heritage buildings
― increased recognition
of carbon benefit
of retention and
refurbishment increases
value and attractiveness
of our assets to
customers, purchasers
and investors
― increased exploration
and apportionment
of budgetary sums to
research into low energy
clean tech (up to £1
million per annum)
― demonstration of lower
embodied carbon and
operational energy use
and costs in the leasing
market allows increased
competitive tension
in leasing process for
prospective customers
― self-generated renewable
energy and increased
energy efficiency help
create headroom
when modelling estate
electricity requirements
― regular market
― annual
review of available
low energy climate
tech
investment in
new tech
― proportion of
pilots included
in standard
refurbishment
scope
― proportion of
self-generated
renewable power
(to increase
year-on-year by
5 per cent
― systematic pilots
of new technology
and processes to
ensure scalable
and inclusion
in standard
refurbishment
scopes where
applicable
― estate wide review
of renewable
energy generation
capability to identify
opportunities that
free grid capacity
― internal and external
― whole-life carbon
communication strategy
to demonstrate the whole
life carbon benefits of
heritage buildings
― whole-life carbon
assessments on relevant
refurbishment projects of
sufficient scale
― engage with heritage
organisations, local
authorities and industry
bodies to champion the
whole life carbon benefits
of energy efficient
heritage buildings
assessments
― internal and
external
communications
including
stakeholder
engagement across
customers, local
authorities and
investors
― identification
of acquisition
opportunities
which may offer
enhanced returns
based on our ability
to complete low
cost, low carbon
refurbishments
― proportion
of whole
life carbon
assessments
undertaken
― ability to
accurately
benchmark and
forecast whole
life carbon for
smaller projects
― increase
engagement
with industry
and heritage
bodies year-on-
year
1. Supplementary detailed explanation of our risks and opportunities is on our website at https://www.shaftesburycapital.com/en/responsibility/policies-and-reports.html
2. Shaftesbury Capital has set metrics against all risks and opportunities. For some of these, targets are being refined and we will disclose these in due course
Viability statement
The Directors have assessed the viability of the Group over
the three-year period to December 2026. In view of the
primary focus within the business planning process on the
first three years, the Directors have determined that this
remains an appropriate period over which to provide the
viability statement. The viability assessment takes into account
the Group’s current position and business plan projections,
group financial forecasts and the potential impact of the
principal risks set out on pages 59 to 65.
Assessment
In making the assessment, the Directors have taken account
of the Group’s resilient financial position, access to substantial
liquidity, the Group’s ability to raise new finance, and the low level
of capital commitments together with the flexibility of future
expenditure. The Directors confirm that they have no reason to
expect a material change in the Group’s viability immediately
following the end of the three-year assessment period.
Footfall across the West End is strong, particularly in the
Group’s portfolio which continues to attract target brands and
concepts. Occupancy levels are high across the portfolio and
trading activity is positive with customer sales up 10 per cent
year on year.
There is strong leasing demand across all uses, delivering
rental growth. There continues to be macroeconomic and
political uncertainty, including as to the prospects for interest
rates and inflation as well as geopolitical risks. The West End
and the Group’s unique portfolio of prime investments are
not completely insulated, however, they have demonstrated
remarkable resilience.
As at 31 December 2023, the Group had net debt of £1.5
billion, an EPRA LTV ratio of 31 per cent and Group interest
cover of 2 times. The Group is projected to have sufficient cash
reserves and undrawn facilities to meet debt maturities during
the viability period. Drawn debt is at fixed rates or currently
has interest rate protection in place. Interest rate hedging
is in place which caps SONIA exposure at an average of 2.3
per cent on £350 million of notional value to December 2024
and 3.0 per cent on £250 million for 2025. Further hedging
arrangements will be put in place as appropriate.
The business plan considers the Group’s profits, cash flows,
capital commitments, financial resources, funding requirements,
debt covenants and other key financial risks. All of the Group’s
risks could have an impact on viability. Climate change
is considered by the Directors to be an urgent issue and
investment will be required to enhance the environmental
performance and to meet the commitment to achieve Net Zero
Carbon by 2030, but the costs anticipated within the viability
period are not expected to be significant. The impact of climate
change risks within the viability assessment period is expected
to be limited. Interruptions to trade from severe weather events
are possible but would likely be consistent with the impact
considered in the severe but plausible downside assumptions.
The Directors consider the key principal risks that could impact
the viability of the Group to be:
― Portfolio
― Political and economic
― Operational resilience; and
― Leasing and asset management.
The Directors placed particular emphasis on those risks which
could result in reduced income and valuations or a shortfall
in liquidity. Sensitivity analysis was carried out which involved
flexing a number of downside assumptions to consider
alternative macroeconomic conditions and the impact of these
principal risks both individually and in combination.
Downside scenario
The Directors have assessed the impact of a potential
downside scenario which reflects an economic downturn
and incorporates the following assumptions:
― A reduction in forecast net rental income of approximately
20 per cent over the three year period;
― Elevated SONIA rates in excess of current market
expectations during the three year period; and
― A decline in property valuations of approximately 20 per
cent compared to the 31 December 2023 valuation with
outward yield movement of a further 100 basis points.
Liquidity
As at 31 December 2023, the group has cash reserves of
£186 million and undrawn facilities of £300 million. The Group’s
debt matures between August 2024 and 2037. Debt maturities
during the viability assessment period are:
― £95 million private placement loan notes mature in the
second half of 2024 and are expected to be funded through
cash reserves and undrawn facilities.
― £162.5 million of private placement loan notes, £300 million
revolving credit facility (currently undrawn) and £275 million
exchangeable bond mature in 2026 and are assumed to be
refinanced at terms reflecting current market conditions.
― The £350 million unsecured loan facility matures in 2026
and has two one-year extension options available subject
to lender consent.
Whilst the Board considers that financing risk is an important
factor in assessing the viability of the Group, it has assumed
that, even in the Directors’ downside scenario, replacement
financing could be put in place for debt maturities as
demonstrated through the early refinancing in 2023 of the
£576 million unsecured loan which was put in place at the
time of the merger.
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Strategic Report | Viability Statement
Covenant compliance
The downside analysis was carried out to evaluate the potential
impact of certain principal risks materialising, in particular to
stress test the Group’s financing covenants. Under the downside
scenario, the Group is expected to remain in compliance with
the loan-to-value and interest cover covenants of its individual
financing arrangements.
In addition to considering a downside scenario, reverse stress
testing has also been undertaken by the Directors, which
indicates that the Group could withstand a decrease of 38 per
cent in income and valuations, before reaching the limit on its
debt financial covenants.
Conclusion
Based on this assessment, the Directors have a reasonable
expectation that the Group will be able to continue in operation
and meet their liabilities as they fall due over the viability
period to December 2026.
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Berwick Street Strategic Report | ESC strategy introduction and progress
Non-financial and sustainability information statement
As Shaftesbury Capital has fewer than 500 employees, it is not required to comply with the Non-Financial Reporting requirements
contained within the Companies Act 2006. However, due to our commitment to promoting transparency in reporting and business
practices, further information is provided in the table below on a voluntary basis, to help stakeholders understand our position on
key non-financial and sustainability matters.
You can find policies on our website: https://www.shaftesburycapital.com
Topics
Key policies and standards1,2
Additional information
– Environmental Policy
– Environment, Sustainability and Community (“ESC”) Strategy
– Net Zero Carbon Pathway
– Sustainability Development and Refurbishment Requirements
– Sustainable Timber Procurement Policy
– Supply Chain Policy and Supplier Code of Conduct
– EPRA Sustainability Best Practice Reporting Recommendations Report
For more on sustainability and environmental matters: see
pages 80 to 88
For more on greenhouse gas emissions: see pages 87 and
88 and page 230.
Responsibility section of our website:
https://www.shaftesburycapital.com/en/responsibility.html
– Task Force on Climate-related Financial Disclosures (“TCFD”)
For more on action on climate change: see pages 80 to 88
Environmental
matters
Climate related
financial
disclosures
Employees
– Our purpose-led strategy and business model
– People Policy
– Anti-Harassment and Bullying Policy
– Directors’ Remuneration Policy
– Health and Safety Policy Statement
– Business Code of Practice
– Board Diversity and Inclusion Policy
– Equal Opportunities and Diversity Policy
– Transinclusion Policy
Human rights
– People Policy
– ESC Strategy
– Modern Slavery and Human Trafficking Statement
– Business Code of Practice
Social matters
– ESC Strategy
– Community Policy
– Financial Crime Policy
– Whistleblowing Policy
– Tax Strategy
– Business Code of Practice
– Conflicts of Interest Policy
– Expenses Policy
– Anti-money Laundering Policy
– Gifts and Hospitality Policy
– Supply Chain Policy and Supplier Code of Conduct
– Share Dealing Policy
Anti-bribery
and corruption
Business model
Principal
risks and
uncertainties
Non-financial
key performance
indicators
1. Policies and further information can be found on the website: https://www.shaftesburycapital.com.
2. Certain policies and internal guidelines are not published externally.
Responsibility section of our website: https://www.
shaftesburycapital.com/en/responsibility.html
For more on people and culture: see page 46 and 47
For more on diversity see page 116 and 117
For more on remuneration: see pages127 to 129
People section of our website: https://www.
shaftesburycapital.com/en/responsibility/people.html
How we behave section of our website: https://www.
shaftesburycapital.com/en/about-us/corporate-
governance/how-we-behave.html
For more on modern slavery and how we behave: see pages
84, 100 and 111
Modern Slavery Statement on our website: https://www.
shaftesburycapital.com/en/index.html
For more on our stakeholder engagement: see pages
40 to 45
For more on our ESC Strategy: see pages 80 and 81
For more on the local community: see pages 89 to 91
Responsibility section of our website: https://www.
shaftesburycapital.com/en/responsibility.html
Community section of our website: https://www.
shaftesburycapital.com/en/responsibility/community.html
For our Audit Committee report: see page 123
For more on how we behave: see page 110
For more on conflicts of interests: see page 110
How we behave section of our website: https://www.
shaftesburycapital.com/en/about-us/corporate-
governance/how-we-behave.html
Modern Slavery Statement on our website: https://www.
shaftesburycapital.com/en/index.html
For more on our purpose-led strategy and business model:
see pages 14 and 15
For more on our principal risks and uncertainties:
see pages 61 to 65
For our viability statement: see pages 75 and 76
For more on non-financial key performance indicators:
see page 17
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77
Sustainability
80 Our Environment, Sustainability and
Community (“ESC”) approach
83
84
85
89
Leadership in heritage places
Embedding sustainability in our business
Tackling climate change
Supporting our local communities
Sustainability in
our destinations
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79
Strategic Report
Our ESC Strategy approach
and progress
Our Environment, Sustainability and Community (“ESC”) Strategy is fundamental
to our business, delivering value for stakeholders through our long-term
approach and responsible stewardship of our destinations.
Our ESC Strategy, developed in 2020 underpins our approach to sustainability,
reflecting the issues that are most material to our business and our stakeholders.
We have identified the UN Sustainable Development Goals (“SDGs”) that are most
applicable to our business and mapped these against our strategy.
In 2023 our sustainability activity has become more focused on delivery of our
strategic goals as set out below:
Key themes
SDG alignment
Selection of projects to deliver our sustainability strategy
Seven Dials: Friday Lunch Club
Seven Dials: Smart Works
Covent Garden: Grid Edge
On Fridays, Shaftesbury Capital employees
have volunteered at the Covent Garden
Community Centre Lunch Club for local
people aged over 55.
In 2023, we provided two retail spaces to
Smart Works, a charity that offers a range of
employment support including CV advice,
interview preparation and a bespoke service
providing women with quality professional
clothing for interviews and the workplace.
See page 44 for more
In collaboration with a building
optimisation technology company called
Grid Edge, our Building Management
System (“BMS”) partners, and our
customers, our successful pilot has
optimised building performance and
identified significant annualised energy and
carbon reductions. The installation cost
has already been covered by operational
savings, and we are actively rolling this out
to similar buildings.
See page 83 for more
Covent Garden: Water
Working with our estate facilities manager,
OCS, we have replaced chemical cleaning
products on the Covent Garden estate
with a pioneering product that uses Ozone
injected into water. This saves 4,000 single
use bottles a year and therefore no chemical
cleaning products enter the watercourse
through our cleaning activities.
Sustainably adding
value and tackling
climate change
Future-proofing our
heritage properties
Creating sustainable and
healthy places
Net Zero Carbon by 2030
See page 85 for more
Heritage leadership
See page 83 for more
Air Quality
See page 83 for more
Biodiversity
See page 83 for more
Supporting local
communities and
our people
Behaving as a good
neighbour
Promoting diversity,
talent development and
creativity across our team
Community investment
See page 89 for more
Stakeholder engagement
See page 42 for more
Supporting our people
See page 46 for more
Health & Safety
See page 92 for more
Underpinned by
Our values
Innovation
Good governance
Chinatown:
Food waste
recycling
In 2023, we extended the
Chinatown food waste
initiative which increased
recycled food tonnage
by 50 per cent. The food
waste is collected daily
and then through a
process of anaerobic
digestion is converted
into bio-fertiliser,
electricity and heat used
as district/commercial
and industrial heating.
Soho: Berwick Street
Pop-ups
Carnaby: 5-7 Carnaby
Street Green Wall
Covent Garden:
Photovoltaic (“PV”) tiles
As part of the activation of
Berwick Street we supported
several pop-up stores,
including space for tailors
‘A State of Nature’, plastics
upcycling and creative
agency, ‘Are you Mad’ and the
‘Museum of Youth Culture’.
As part of the refurbishment
and redevelopment of 5-7
Carnaby Street we introduced
a permanent 200m2 living wall
which comprises a variety
of specially selected plants
that change colour with the
seasons.
See page 87 for more
PV tiles were installed within the
conservation area on King Street.
The tiles differ from PV panels and
are suitable for heritage buildings as
they are visually indistinguishable from
slates and require less maintenance
than PV panels. The tiles have so
far contributed to a 12 per cent
reduction in energy use for the
common parts of the building.
See page 83 for more
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81
Map is for indicative purposes only Strategic Report | Sustainability
Our aim is to be considered the destination of choice for sustainability-
focused customers, suppliers and partners in the West End.
Building on the well-aligned approaches to sustainability
taken by Capco and Shaftesbury, which reflected similar
challenges and opportunities across the portfolios, this year
we re-committed to a comprehensive 2030 Net Zero Carbon
target and set an aim to be recognised as a leader in the
sustainable development of heritage buildings. As a long-term
investor in our destinations, we continue to partner with
community organisations to tackle the issues that are most
important to our local communities in particular the challenges
faced by young and disadvantaged people. This is set out in
more detail in the community investment report on page 89.
Our approach to the long-term sustainable management of our
destinations is based on extending the useful life of our heritage
buildings through refurbishment, rather than demolition and
redevelopment. This reconfiguration and repurposing of our spaces
enables us to protect the unique heritage of our portfolio whilst
improving energy efficiency and continuing to meet the evolving
needs of our customers. Future-proofing our buildings protects
the West End’s heritage, leading to increased demand, long-
term value and improved operational efficiency.
One benefit of our heritage buildings is that they are a significant
long-term store of carbon. To maximise this, we focus on reducing
future operational carbon by improving energy efficiency and
minimising embodied carbon emissions. Embodied carbon
associated with repurposing and refurbishment of buildings
is minimised through the retention and re-use of structure,
façade and materials.
Following the merger, we have considered which areas of
sustainability are most material to our business and these
are set out on page 80. In 2024 we intend to undertake more
detailed materiality analysis specific to the priorities on page 80
in order to make the most efficient progress.
2023 achievements
During the year we have made significant progress in the
delivery of our ESC Strategy, achieving ongoing improvements
to the energy efficiency of our portfolio, and continuing to
support our local communities.
Following the merger, we have reconfirmed our sustainability
aspirations, clarified our key targets and continued to embed
process into our business operations.
― Publication of a combined 2030 Net Zero
Carbon Pathway
― Reporting our Scope 3 data from across the portfolio.
― Improvement in EPC rating A-C to 80% of ERV
― Completed second phase of Carbon Risk Real Estate
Monitor (CRREM) analysis, building on the analysis
undertaken in previous years
― 6% reduction in Scope 1 and 2 emissions compared
to previous reporting years
― 11% increase in biodiverse green space, primarily
due to the addition of the green wall installed at 5-7
Carnaby Street
― 100% diversion of operational waste from landfill
― 37% recycling rate for operational waste
― Community investment of cash, time and in-kind of £1.3m
― 335 hours of employee volunteering undertaken in
company time
Leadership in heritage places
We recognise the important role that the sustainable
refurbishment of heritage buildings plays in achieving our
sustainability aspirations. It is estimated that 80 per cent
of buildings that will exist in 2050 are already built and the
responsible retrofit of these buildings will be critical to meeting
long-term national Net Zero Carbon goals.
Due to the heritage nature of our portfolio, which is located
in conservation areas, and c.27 per cent of which is listed,
we continue to improve the sustainability performance of our
building stock whilst protecting the unique heritage and abiding
by planning requirements. Through the careful application
of low-cost and low-carbon interventions, we deliver energy
efficiency improvements, as demonstrated by our success to
date in improving energy efficiency and EPC ratings.
Our activities to tackle climate change also deliver a number
of benefits for our stakeholders. These include the air quality
benefits of electrifying heating and cooking, as well as reducing
traffic through pedestrianisation, and fewer vehicles delivering
lower material volumes due to material re-use in refurbishment.
In addition to implementing relevant initiatives set out on page
81 more widely across the portfolio, we actively seek further
opportunities to pilot and implement new scalable technology
or operating practices which deliver carbon reduction. We will also
share lessons learned externally to support the low carbon
Raising awareness through collaboration
Working with recycling brand Are You Mad, a new
summer installation made from recycled plastic was
launched on Carnaby Street and Newburgh Street, as part
of the wider summer campaign ‘Carnaby in Colour’.
The temporary art was formed of three hand and heart
shaped arches made using waste plastic sourced from
local shops and restaurants and the wider district.
The installation took four weeks of collecting waste
plastic, 16 days of sheet pressing and a team of 13
people to create the finished materials. A total of 684 kg
recycled plastic waste was used in the process ranging
from bakery crates and buckets to food palettes and
unwanted shop decorations. This is part of a longer-term
collaboration with Are You Mad to raise awareness about
plastic waste. Are You Mad first opened a pop-up store
on Carnaby Street in 2022, and moved to larger premises
in Berwick Street, collecting plastic waste and turning it
into a wide range of useful products for sale.
transition across the industry and demonstrate leadership in
this space, for example our recent contribution to the UK Green
Building Council (“UKGBC”) commercial retrofit project.
Creating healthy and biodiverse
destinations
As a responsible steward of our destinations, our impact
extends beyond our buildings, and we continue to enhance
the public realm within and around our portfolio. We strive to
create healthy, welcoming and thriving locations in the West
End where people enjoy visiting, working and living.
Shaftesbury Capital has supported London air quality
monitoring for seven years through our partnership with
Imperial College London. In 2022, we enhanced this work by
installing smaller, more modern air quality monitors in Covent
Garden. These have now been connected to the adjacent Seven
Dials network. This monitoring has enhanced our understanding
of factors affecting air quality which can be used to support our
public realm and refurbishment scheme designs.
We remain active members of the Wild West End (“WWE”)
partnership, actively looking to increase biodiversity across
our estate following the WWE principles and prioritising
pollinators and native species. Aside from the benefit to nature,
green spaces play an important part in adapting to climate
change through the reduction in urban heat and supporting
well-being. This year we have installed a major green wall
on a scheme at 5-7 Carnaby Street, contributing towards an
overall increase in green space of 11 per cent across the whole
portfolio. We continue to look for opportunities to increase
both the quantity and quality of biodiverse green space.
Driving innovation through collaboration
We are committed to the use of innovative solutions, including
both new technologies and processes. In addition to CRREM
asset analysis at scale, we collaborate with both suppliers
and customers to maximise the benefit of using smart
technology, such as Grid Edge, to identify improvements
to the management of buildings that can lead to significant
energy efficiency improvements with minimal expenditure.
We continue to install “smart” utility meters, and we now have
c.19 per cent coverage of landlord areas by volume, and will
instruct all landlord meters by the end of 2024. Improving the
data that we collect from our buildings will increase our carbon
data transparency and enable us to make faster and better
informed decisions on building management and refurbishment.
We have successfully trialled photovoltaic roof tiles in King
Street. These tiles can be used on heritage buildings where
planning restrictions may not permit traditional photovoltaic
panels. This has the potential to increase our renewable energy
generation without a negative impact on heritage. The tiles have
contributed to a 12 per cent drop in energy use in the common
parts of the building to date. We will continue to monitor the
outcome and will share lessons learnt to help promote the
uptake of this technology and explore further opportunities
on our portfolio.
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Estate greening Strategic Report | Sustainability
Embedding sustainability in our
business
We have robust governance processes to ensure that
sustainability continues to be considered in major strategic
and operational decisions. Sustainability is at the heart of our
values, and we are committed to delivering the change that is
required to achieve our sustainability aspirations. During 2023,
this took the form of a Board ESC Committee which maintained
oversight of our strategy, and a management level committee
through which senior managers from multiple disciplines
across the business were able to collaborate and contribute
to a range of sustainability activities. Following the publication
of our updated combined Net Zero Carbon pathway and
responsibility for our sustainability processes being integrated
into our Real Estate Investment Management (“REIM”) team, at
our February 2024 Board meeting, it was agreed that, from the
date of this report, ongoing oversight of ESC should be a matter
for consideration by the whole Board with Ian Hawksworth
as Chief Executive having overall responsibility. This includes
consideration of climate related risks and opportunities
and implementation of the Group’s sustainability strategy
and Net Zero Carbon pathway. Day-to-day oversight will be
undertaken by members of the Executive Committee and the
senior management team, with regular reporting to the Board.
Our sustainability team will continue to be responsible for
recommending the strategic direction, focusing the business
on key areas and our measuring and reporting processes.
We have a range of policies and procedures that underpin
our ESC Strategy which can be found on our corporate
website and are set out in our Non-Financial and Sustainability
Statement on page 77.
During the year we established a Community Investment
Forum (“CIF”), comprising employees from across the business.
The CIF provides oversight of our community investment
and considers applications to our Community Fund in line
with our corporate aspirations and values. This ensures that
we continue to partner with local charities and not-for-profit
organisations that align with our social sustainability goals,
using their skills and knowledge to maximise the positive
impact that we can make.
Industry collaboration
We continue to actively participate in a range of industry
groups, to share experiences and promote the adoption of
best practice for sustainable real estate. Principal industry
memberships include the UK Green Building Council (“UKGBC”),
Better Buildings Partnership, British Property Federation
and the Westminster Property Association. During 2023, we
sponsored, contributed to, and actively promoted the recently
published UKGBC study on commercial retrofit. The study
found that building optimisation and light retrofit can reduce
operational energy use by more than 35 per cent, which
aligns with our own experience to date. We are signatories
to Westminster City Council’s Sustainable City Charter and
support their efforts to decarbonise the city.
We also work with stakeholders as part of the Westminster
Zero Emissions Group, and actively collaborate with suppliers,
including Veolia, on waste treatment and innovators such as
Grid Edge on building optimisation.
Industry recognition and standards
We participate in a range of external benchmarks and indices
to provide independent verification of our sustainability
progress and help us to identify improvement opportunities.
During 2023, we are proud to have increased our CDP rating
to A – putting us in the leadership category and reflecting the
additional work done to improve our climate risk management
and reporting. We achieved our fifth consecutive Gold award
for reporting in line with the EPRA sBPR, as well as an 9 per
cent improvement in our GRESB rating to 74, and maintained
two GRESB green stars.
Modern slavery and human rights
We have policies in place which address human rights,
modern slavery, and the ethical conduct of our business.
During the year we undertook a desk-top risk assessment for
modern slavery and all employees were required to complete
an online training programme. Our Modern Slavery Statement,
updated in February 2024, is available on our website at
https://www.shaftesburycapital.com/en/index.html. All employees
working on our estate are paid at least the London living wage,
where appropriate.
Our 2024 actions
As we continue to focus on the delivery of our strategy in 2024,
we will focus on:
― Improving communications with our customers to promote
low-carbon behaviours and reduce energy consumption in
our customers demises
― Updating our Net Zero Carbon pathway, see page 85, and
seek revalidation from the Science Based Targets initiative
(SBTi ) for our decarbonisation targets
― Completing CRREM energy efficiency audits on a sample of
our portfolio and use the results to build estate wide plans
― Promoting the continued electrification of buildings
― Integrating sustainability into the Real Estate Investment
Management team, including targets for refurbishments and
collection of embodied carbon data
― Undertaking further materiality analysis specific to our
focus areas
― Continuing to improve our understanding of climate change
risk to the business
― Investigating opportunities relating to sustainability-linked
financing
― Increasing our EPC commercial A-B coverage by at least
10 per cent from the current 56 per cent, increasing our
A-C coverage across commercial and residential from
80 per cent to 85 per cent and striving to go further.
― Reducing our like-for-like energy Scope 1 and 2 consumption
by 5 per cent
― Reducing our water consumption by 3 per cent
Tackling climate change
We recognise our urgent responsibility as an owner of physical assets to reduce
carbon emissions, whilst ensuring that we effectively manage climate change
risks and opportunities by adapting buildings to mitigate its negative effects and
delivering a fair transition to a low-carbon future.
Carbon reduction performance
Our reported emissions reflect the combined business and
are therefore significantly higher than emissions reported in
Capco’s 2022 Annual Report. We report our Scope 1 and
2 emissions against a combined baseline and most recent
published numbers, further like-for-like detail will be included
in our Sustainability Data Report, which will be issued by the
end of April 2024.
We continue to purchase electricity from renewable tariffs
across our landlord-controlled portfolio. Excluding the benefit
of purchasing zero carbon electricity, and instead using
standard UK carbon factors, we have still seen our Scope 1
and 2 greenhouse gas (“GHG”) emissions decrease by 6 per
cent from the previous financial year reporting. This is primarily
due to continued improvement to the energy efficiency of our
buildings. Our CRREM analysis completed to date, highlights
the importance to achieving our Net Zero Carbon targets of
phasing out the use of fossil fuels in our buildings. We continue
to electrify heating and cooking across the estate to maximise
the value of grid decarbonisation to our portfolio.
Our direct energy consumption (Scope 1 and 2) remains relatively
small as it only encompasses the common areas of our buildings
and refurbishment projects. Therefore, we are continuing to
improve data collection relating to scope three emissions,
especially with regards to customer energy consumption, and
supplier purchased goods and services. We are still reliant on
estimation for some of our Scope 3 emissions which are based
on industry best practice estimation methods and verified as
described in our GHG methodology on page 230.
We are reporting Scope 3 emissions for the legacy
Shaftesbury destinations within the portfolio for the first time,
and therefore cannot make like-for-like comparisons with
previous reported emissions.
Our priority is always to deliver improvement in energy
efficiency before relying on carbon offsetting or carbon removal
to achieve our Net Zero Carbon target. More information on
the actions that we are, and will be, taking to reduce carbon
emissions across our business is set out in our Net Zero Carbon
Pathway, including key milestones.
A summary of our climate change risks and opportunities
is set out in our TCFD aligned report on pages 66 to 74,
supplementary detail and explanation is included in a longer
version of the TCFD report which can be found on our
corporate website at https://www.shaftesburycapital.com/en/
responsibility/policies-and-reports.html.
Our buildings represent long-term stores of embodied carbon,
many of which pre-date mass industrialisation. We remain focused
on protecting the heritage of our places, whilst making low
carbon interventions to improve energy efficiency and increase
resilience to the climate change impacts that we have identified.
Considering the whole life carbon emissions of a building
demonstrates the importance of embodied carbon and the
relative benefit of our approach, under which repurposing and
refurbishment through low-carbon retrofit is used, instead of
demolition and reconstruction.
In addition to investment in our buildings, we continue to add
to the quantity and quality of our green spaces to help mitigate
some of the impacts of climate change.
2030 Net Zero Carbon commitment
We have set a comprehensive 2030 Net Zero Carbon target
for Scope 1, 2 and relevant 3 emissions. In doing so, we will
reduce our emissions at a rate at least in line with a 1.5°C
pathway. Our commitment is first to reduce greenhouse gas
emissions from our buildings and operations as far as possible
in a way that recognises the needs of our heritage portfolio and
stakeholders, and only then to offset any residual emissions.
Our commitment to achieve Net Zero Carbon by 2030 includes:
― 50% embodied carbon reduction1
― 60% operational carbon reduction
― Prioritising innovation and renewables
― Enhancing climate adaptation
― Offsetting residual carbon emission
During 2024 we will seek re-validation of our carbon reduction
targets from the SBTi and set an updated baseline for our
pathway using a full year of emissions data for the combined
business from 2023.
Full details are set out in our Net Zero Carbon pathway
published on our website at https://www.shaftesburycapital.
com/en/responsibility/environment/net-zero-carbon-pathway.
html. Going forward, we will publish annual updates on our
progress against our pathway.
1. Relates primarily to our refurbishment programme, see glossary
for Embodied Carbon definition.
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85
5-7 Carnaby Street
As part of the refurbishment and
redevelopment of 5-7 Carnaby Street we
introduced a permanent 200m2 living wall
to the front elevation of floors 1-4 and to
the façades of the rear extensions. The living
wall, which comprises a variety of specially
selected plants that change colour with
the seasons, improves the aesthetics of the
building and helps to improve air quality by
trapping particulate matter. The wall uses
a unique system of membrane pockets
to enable root growth helping the plants
mature and thrive in the future.
Net Zero Carbon focus areas for 2024
In our published Net Zero Carbon pathway, we have committed to
milestone actions, including the following targets for the next year:
― To publish an updated consolidated 2023 baseline for
our Net Zero Carbon target to reflect the combined
business and improvements in the quality of the
Scope 3 data collected
― Continue to improve our Scope 3 data, reducing the
proportion of estimation required
― Revalidate our carbon reduction target with the Science
Based Targets initiative (SBTi)
― Continue to prioritise the removal of fossil fuel and
electrification of buildings, particularly cooking, which has
been identified as an important contributor to the overall
decarbonisation of our buildings
― Update and publish our carbon offsetting approach, in this
context, we have paused any previous offsetting of Scope 1
and Scope 2 emissions which was undertaken by Capco only
CRREM
We have undertaken detailed energy efficiency audits in line
with CRREM on a sample of our buildings. This initial analysis,
covering approximately 14 per cent of the portfolio by area,
has indicated that there are a number of actions we can take
to improve the energy efficiency of our buildings. It is our
intention to complete a further phase of CRREM analysis
to increase our knowledge and improve the budgeting and
reporting of the costs required to deliver our 2030 Net Zero
Carbon Commitment.
Strategic Report | Sustainability
Embodied carbon
A significant proportion (18 per cent) of our carbon emission
arises through the embodied carbon inherent in the services
and materials used in our refurbishments. We continue to improve
embodied carbon data collected for all refurbishment projects
with a value in excess of £250,000 to enable better analysis
of our impact and identify ways in which we can make further
reductions. We use Department for Environment, Food & Rural
Affairs (“DEFRA”) multipliers below this level. Our analysis to date
indicates that, where we have actual data, our carbon use per
square metre (carbon intensity) is below the DEFRA industry
benchmarks for embodied carbon and we will continue to both
target further reductions and methodology improvements.
Our embodied carbon emissions are directly correlated with
the volume of refurbishment and development operations
undertaken in a year. In 2023 we continued to calculate this
using a blend of actual data and applying DEFRA benchmarks
to expenditure. During the year we have increased the volume
of projects covered by actual embodied carbon reporting to
43 per cent of expenditure. This contributed just 18 per cent
of our total calculated embodied carbon, demonstrating that
a typical refurbishment project has materially lower embodied
carbon than the DEFRA benchmark.
Energy efficiency ratings of
our buildings
Our rolling programme of energy efficient refurbishments
delivers incremental energy performance benefits. In addition
to carbon reduction, this reduces customer utility costs and is
reflected in our ongoing improvement in EPC ratings. The ERV
of our buildings with an EPC rating A-C is now included in our
non-financial KPIs on page 17.
80 per cent of properties are EPC grade A to C by ERV,
representing a 12 per cent increase from the prior year.
Approximately 1.6 per cent of portfolio ERV does not require
an EPC. This primarily relates to outdoor space, basement space
where there is no heating or cooling, long-lease residential
property outside the scope of MEES, or demises such as sub-
stations. A further 5.9 per cent of ERV is currently undergoing
refurbishment. When considered by ERV 51 per cent of the
portfolio is A-B, rising to 56 per cent for commercial property.
As part of the ongoing refurbishment programme, we continue
to undertake works to improve EPC ratings as demises become
vacant, and work with occupiers to meet the requirements
of the MEES regulations. All new commercial refurbishments
target EPC B to ensure that we are prepared for expected
changes to the MEES regulation. As at 31 December 2023,
£13.9m of ERV is being refurbished and is expected to achieve
EPC B or above for commercial and EPC C for residential.
2023 Carbon footprint (tCO2e)
Scope 1: Landlord Gas1 1.41%
Scope 1: Landlord Refrigerant Gas & Fuel 0.06%
Scope 2: Landlord Electricity1 2.79%
Scope 3: Capital Goods 17.66%
Scope 3: Purchased Goods & Services 27.67%
Scope 3: Tenant Operations 48.75%
Scope 3: Business Travel 0.13%
Scope 3: Waste 0.25%
Scope 3: Employee Commuting 0.08%
Scope 3: Transmission & Distribution 1.14%
Scope 3: Water usage 0.05%
1. Includes common parts, shared services and voids
45%
Carbon
footprint
reduction on
published
2019 baseline
31%
Reduction in
Scope 1 &
2 emissions
on published
2019 baseline
35%
of area reports
actual Scope
3 customer
emissions
Energy Performance Certificates (EPC) by ERV
2030
Net Zero
Carbon
commitment
80%
Portfolio rated
EPC A-C
48.5%
3.8%
2.8%
16.2%
28.7%
Grade A
Grade B
Grade C
Grade D
Grade E-G
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87
Supporting our local communities
As a responsible, long-term investor in our destinations, we are committed to
supporting our local community.
We contribute to a range of causes with a particular
emphasis on creating opportunities for local young people,
homelessness, and food hardship.
Our destinations are integral to our local communities,
providing a catalyst for long-term economic benefits.
Aside from cash donations, we contribute space in the form
of reduced rent and our employees' time through volunteering
activities with local organisations.
In 2023, the value of our contributions totalled more than
£1.3 million. This is set out below and detailed in our
Sustainability Data Report, available on our website at https://
www.shaftesburycapital.com/en/responsibility/policies-and-
reports.html, by the end of April 2024.
Our approach to community investment
We remain focused on working with local organisations
to tackle issues that align with our purpose and make a
meaningful difference to our local community.
We work with a range of partners including not-for-profit
organisations, charities, educational establishments, and other local
community groups. By working with local organisations, we can
build long-term relationships that maximise the value generated
for the local community from our own resources and influence.
We have a Community Investment Forum (“CIF”) which is
responsible for overseeing our programme of community
investment in line with our focus areas. The CIF comprises
employees from across the business and is chaired by our
Head of Sustainability. It enables us to review our community
investments and consider applications to our grants
programme in a fair and consistent manner.
We take a holistic approach to our local community support
which includes financial contributions to local grass-roots
organisations and the implementation of programmes to support
young people in our operations. More widely, we have also
made in-kind donations to charities through provision of short and
long-term commercial space, and time given by our employees.
Strategic Report | ESC
Greenhouse Gas emissions including
Streamlined Energy and Carbon Reporting
(“SECR”)
Shaftesbury Capital has engaged Carbon Footprint Limited to provide
independent verification of the calculation of 2023 GHG emissions assertion
data, in accordance with the industry recognised standard ISO 14064-3.
Our absolute Scope 1 and Scope 2 emissions have increased since 2022,
reflecting the inclusion of the Shaftesbury portfolio. When considered on an intensity
basis, and including comparative reported data for both Shaftesbury and Capco,
intensity has decreased by 5 per cent.
Overall, Scope 1 and 2 emissions are down 31 per cent compared to our reported
2019 baseline. Our 2023 verification process included a review of our Scope 3
emissions across the whole portfolio. Scope 3 emissions were not reported by
Shaftesbury PLC in 2022 so a year-on-year like-for-like comparison is not presented.
Total Scope 1 and 2 GHG
emissions (location-based method1,3)
Total Scope 2 GHG emissions
(market-based method2,3)
2000
2000
100
100
6
8
1
1
,
1500
1500
e
2
O
C
t
1000
e
2
O
C
t
1000
500
6
2
6
500
6
8
1
1
,
7
3
5
6
2
6
2
6
5
80
60
40
e
2
7
O
3
C
5
t
2
6
5
20
0
0
0
4
8
80
4
8
e
2
O
C
t
60
40
20
0
1
3
1
3
2023
2022
2023
2022
2023
2022
2023
2022
Scope 1
Scope 1
Scope 2
Scope 2
Intensity measure: Tonnes
of CO2e per ‘000 sq ft3
Total Scope 1 and 2 energy
consumption (MWh)2
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
8
3
0
.
0
2
0
.
0.8
8
3
0
.
0.7
0
4
0
.
0.6
0.5
0.4
0.3
0.2
0.1
0.0
8
3
0
.
0
2
0
.
2023
2022
2023
10,000
8
3
0
.
8,000
6,000
0
4
4,000
0
.
10,000
4
8
9
8
,
8,000
4
8
9
8
,
6,000
7
4
8
5
,
4,000
7
4
8
5
,
2,000
2,000
8
8
2
.
5
1
4
.
8
8
2
.
0
2022
2023
0
2022
2023
5
1
4
.
2022
Scope 1
Scope 2
Scope 1
Scope 2
Total
energy use
Intensity measure
Total
energy use
(MWh per '000 sq ft)
Intensity measure
(MWh per '000 sq ft)
1. The location-based method reports emissions as tonnes of carbon dioxide equivalent (tCO2e). 100
per cent of the emissions stated are UK-based. Details of what is included in Scope 1 and Scope 2
emissions can be found on page 230.
2. The market-based method reports emissions as tonnes of carbon dioxide (tCO2e). 100 per cent of the
emissions stated are UK-based. Details of what is included in Scope 1 and Scope 2 emissions can be
found on page 230.
3. The 2022 comparative information relates to Capco pre-merger.
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89
Apple Market ChallengePedestrianised environment
Strategic Report | Sustainability
Education and employment
This year we have continued our scholarship programme
with the University of Westminster. Now entering its third year,
the programme funds tuition fees, provides a bursary and
paid work experience for a local person studying Real Estate
at the university.
We also support the Reading Real Estate Foundation, including
offers of work experience. During the summer we hosted
a Masters student from University College London who
undertook an analysis of the impact of different approaches to
installing green walls on the internal environment of a building.
We have continued our support for the Young Westminster
and Young Camden Foundations work with local young people,
including funding towards their Brighter Futures Fund and
Heads Up! Mental Health Fund respectively. This year we have
committed to supporting the Young Westminster Foundation
“Mastering My Future” programme for another three years.
More details of our diversity, equality and inclusion activities
can be found on page 47.
We are sponsors of the Donmar Warehouse, a not-for-profit
theatre located in Seven Dials that provides opportunities
for young people to gain confidence through a range of
creative programmes.
For younger children, we continued to sponsor the Soho Parish
Primary School Food Feast and the Apple Market Challenge,
through which pupils from local schools present ideas for
innovative new products that could be sold from the Apple
Market in Covent Garden. The challenge has engaged more
than 7,000 children since inception.
For the second consecutive year, we have supported the Soho
Kids Christmas Lights, an award-winning initiative under which
Christmas lights designed by children from Soho Parish Primary
School are installed across Soho, providing an opportunity for
pupils to showcase their creative talent.
Tackling homelessness
Homelessness remains a challenge to some of the most
vulnerable people in our local community. We have continued to
A breakdown of our support is included below.
support The Connection at St-Martin-in-the Fields by providing
funding to The Connection’s Street Engagement Team in 2023.
This year we supported the Single Homeless Project, a charity
that supports 10,000 people each year by providing a range
of services including hostels and employability programmes.
26 employees volunteered with the charity this year at one
of their local hostels to redecorate the premises and support
clients through preparing and serving meals. We have also
made a financial contribution through our grants programme
to support the charity’s employability programme in 2023.
We continued our partnership with The House of St Barnabas in
Soho which ran an employability programme for people that have
experienced homelessness through their private members club.
Community support
Throughout our destinations we continue to contribute to
a range of activities and organisations such as the Chinese
Community Centre, West End Community Trust, Samaritans
and Covent Garden Community Centre.
This year we have continued to provide funds to support the
Covent Garden Community Centre Friday Lunch Club for local
residents aged over 55. In addition to funding, since February
2023, 29 employees have volunteered to help serve lunch.
We have a long-term relationship with veterans’ charities,
supporting blind veterans in Westminster and have arranged
Remembrance Day events in Covent Garden for a number of years.
Community grants fund
In addition to our ongoing strategic partnerships, we have
established a grants fund that offers local charities, organisations,
and groups the opportunity to apply for funding towards the
cost of projects that align with our community investment
focus areas. All applications are considered by our Community
Investment Forum. Projects that received funding in 2023
included the refurbishment of bathrooms at UK Homeless
charity Depaul, a specialist mental health space supporting
homeless and vulnerable young people aged 16-25, and
Christmas lunches for local people at the Covent Garden
Community Centre. In total we provided over £87,000 funding
How: £1.4m
5%
What: £1.3m*
34%
3%
Cash
Time
In-kind
Management
71%
58%
14%
10%
5%
Education and
employment
Tackling
homelessness
Food hardship
Community
support
from our grants fund, in addition to £389,000 of cash donated
to our partner organisations. We have also supported the
Abbey Centre and the North Paddington Food Bank which
provide much needed support for local people.
In-kind space
We have continued our successful ‘pop-up’ programme,
providing free or subsidised space to charities and small
businesses in some of our world-class locations.
This year we have provided space for charities and charitable
events up to a value of £807,000. Highlights included our ongoing
partnership with refugee charity ‘Choose Love’ in Carnaby,
the Tusk Gorilla Sculpture Trail in Covent Garden and Smart
Works, a charity which supports women into employment.
Volunteering and employee engagement
We encourage employees to volunteer with our charity
partners and during 2023 our employees have completed more
than 335 hours of volunteering in Company time, supporting
projects such as the Covent Garden Community Centre Friday
lunch club and the Single Homeless Project.
We also have an employee matched funding programme
and encourage our employees to take part in volunteering
events for charities that are close to their own hearts.
Going forward
― Development of strategic partnerships with our key community
partners to provide certainly over our longer term
― Support our employees to increase participation in
volunteering activities with our community partners.
Young Westminster Foundation
Young Westminster Foundation brings together local
business and funders, including Westminster City
Council, to increase long-term funding for youth clubs
and organisations in Westminster. Members of Young
Westminster Foundation range from large youth clubs
to smaller grassroots organisations; local organisations
all driven by their passion to provide the best services,
opportunities and support for local young people.
We have a long term strategic partnership with the Young
Westminster Foundation, which includes providing financial
support to their Westminster Brighter Futures Fund.
Established in 2019, the Brighter Futures Fund enables
youth clubs and organisations within Westminster to
apply for funding to deliver projects and programmes that
benefit local children and young people. One beneficiary
to receive funding in 2023 included the Caxton Youth
Organisation, a specialist youth club who break barriers
and empower learning for young people with disabilities.
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91
*Excludes management time
Choose Love, Carnaby Street Strategic Report
Health, safety, security and
well-being
Ensuring the highest standards of health, safety, security and well-being are
at the forefront of all our activities and operations.
2023 Achievements
― Completion of formal, independently accredited health & safety
training programmes by the senior management team and
other key employees.
― Implementation of a standardised health & safety online
compliance platform across our portfolio, to provide
enhanced management and reporting functionality.
― Recruited a Head of Health and Safety, to ensure our high
health & safety standards are maintained across our portfolio.
― Following an extensive review of our portfolio, all higher-risk
residential buildings as defined by the Building Safety Act
2022 were registered ahead of the October 2023 deadline.
During the year, we formally reviewed our health & safety
governance and reporting framework, which includes the
Occupational Health & Safety Management System (“OH&SMS”),
to ensure that it remained appropriate for the enlarged
portfolio. Following this, an independent third-party review was
commissioned, and findings will be implemented during 2024.
Ensuring our standards are met
We focus on visible health & safety leadership, and use formal
and informal Director and senior management tours and the onsite
presence of our teams, to monitor health & safety across our
destinations. This is supported by regular detailed health &
safety inspections.
We closely monitor health & safety performance across
our portfolio. During 2023, a standardised health & safety
online compliance platform was introduced across all
our destinations, to provide enhanced management and
reporting functionality.
We are members of the Considerate Constructors Scheme (“CCS”)
Client Partnership and the Construction Clients Leadership
Group. Our pre-tender documentation for contractors
includes enhanced health, safety and well-being standards and
compliance is monitored by site and project managers.
We work collaboratively with key suppliers to ensure that the
high standards we require are implemented by those working
on our behalf.
Safety and security
The safety of those who visit and enjoy our destinations
is fundamental. We have a flexible security strategy which
enables us to respond quickly to changing demands across
our portfolio, to ensure that the appropriate security provision
is maintained and scaled up when needed.
2024 Commitments
― Continue to achieve the highest standards of health, safety,
security and well-being in all our activities, our buildings,
our projects and our offices.
― Implementing the opportunities for improvement identified
as part of the formal review of the health & safety governance
and reporting framework, commissioned in 2023.
― Completing the Building Safety Case Reports required for our
registered higher-risk residential buildings. Submitting such
reports to the Building Safety Regulator on request.
Governance
The Board maintains overall responsibility for our health & safety
strategy and its delivery and leads a health & safety-aware culture,
which is embedded throughout the Company. This ensures that
health, safety and security is at the forefront of all decision-
making across our portfolio and is fully embedded in the
actions we take.
Our Health & Safety Committee, chaired by the General Counsel
and attended by the Chief Executive, oversees our approach
to the health & safety strategy and statutory compliance.
The Health & Safety Committee is supported by Health &
Safety Leadership Teams ("HSLTs"), which cover specific business
areas and meet regularly to ensure that our health & safety
commitments are met at operational level. The HSLTs report
to the Health & Safety Committee, which in turn reports to the
Board. Health & safety is reported upon and considered at
each formal Board meeting.
Fire Safety Act and Building Safety Act
We are implementing the requirements of the Fire Safety Act
2021 and the Building Safety Act 2022 and continue to monitor
the related programme of secondary legislation as it is issued.
Training
We provide training to our employees to ensure our strong
health & safety culture remains embedded within the Company.
Structured Health & Safety Institution of Occupational Safety
and Health (“IOSH”) Leading Safely and Managing Safely training
programmes were completed by appropriate senior team
members and employees during 2023.
Reporting
In 2023 there were no serious accidents, no cases of
occupational disease and no work-related incidents reportable
to any statutory authorities arising out of our and our
suppliers’ activities at our buildings, our projects and our offices.
In addition, no significant security incidents occurred.
The sections of the Annual Report which make up
the Strategic Report are set out on the inside cover.
The Strategic Report has been approved for issue by
the Board of Directors on 28 February 2024.
On behalf of the Board
Ian Hawksworth
Chief Executive
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Covent Garden decoration install Corporate Governance
Strong
governance
oversight
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Corporate Governance
Board of Directors
Key
Audit Committee
Board ESC Committee
Nomination Committee
Remuneration Committee
Committee Chair
Jonathan Nicholls
Chairman
Ian Hawksworth
Chief Executive
Executive Committee member
Situl Jobanputra
Chief Financial Officer
Executive Committee member
Jonathan is responsible for the leadership of
the Board, ensuring its effectiveness and setting
its agenda.
Skills, experience and contribution
Jonathan joined the Shaftesbury Capital Board
in March 2023 following the merger between
Shaftesbury and Capco. Prior to the merger,
Jonathan was Chairman of Shaftesbury, having
joined in 2016.
Jonathan has over 26 years’ experience of
public company boards and their operations
and was previously Non-executive Director
and Chair of the Audit Committee of Great
Portland Estates plc, SIG plc and DS Smith plc.
He was also Senior Independent Director of
Great Portland Estates plc and DS Smith plc.
Prior to this, Jonathan was finance director of
Hanson plc and of Old Mutual plc. Jonathan has
over 20 years of experience in the property sector
and is a member of the Institute of Chartered
Accountants in England and Wales and a fellow
of the Association of Corporate Treasurers.
Jonathan’s considerable commercial and
Board experience and his objective judgement
enable him to provide constructive leadership,
challenge and support to the Board and wider
business for the benefit of all stakeholders.
External Appointments:
Chairman of Ibstock plc
Year of first appointment:
2023
Ian leads Shaftesbury Capital, shapes its
strategy and drives its performance.
Skills, experience and contribution
Ian has over 37 years’ experience in global
real estate investment, development, asset
and corporate management, and extensive
experience and knowledge of the London
property market, having previously been Chief
Executive of Capco since its inception in 2010.
Ian leads Shaftesbury Capital, shaping strategy
and driving performance. Ian was previously
Executive Director of Hongkong Land Ltd and
Liberty International PLC. Ian is a Chartered
Surveyor and a member of leading international
industry bodies.
Ian’s ability to shape strategy and drive
expansion and performance alongside his
extensive knowledge of the global real estate
industry is invaluable to the Company. Ian's in-
depth knowledge of the Company and the sector
enables him to provide broad leadership of the
business internally and externally, including
design and implementation of the Company’s
strategy and business plans and their
communication to a wide range of stakeholders.
Ian also ensures that the Company's purpose
and values are embedded across the business
and are reflected in the Company's culture.
External Appointments:
Non-executive Director of Chancerygate Limited
Year of first appointment:
2010
Situl leads Shaftesbury Capital’s finance
function and works closely with the Chief
Executive on strategy, capital allocation,
investment and key transactions.
Skills, experience and contribution
Situl joined the Company in 2014 and undertook
a number of senior roles across the business
before being appointed Chief Financial Officer
in 2017.
He is an experienced corporate financier, having
previously worked in mergers and acquisitions,
equity capital markets, corporate broking and
real estate investment banking, including 13
years at Deutsche Bank.
Situl’s significant relevant experience of corporate
finance, capital markets, investment, real estate,
stakeholder engagement, and commercial and
financial management are key to his finance role
and the development and implementation of the
Group’s strategy, working with the Chief Executive.
External Appointments:
Non-executive Director of WH Smith PLC (with
effect from 1 March 2024).
Year of first appointment:
2017
Richard Akers
Senior Independent Non-executive
Director and Independent
Non-executive Director
Richard joined the Shaftesbury Capital Board
in March 2023 as Senior Independent Director
following the merger between Shaftesbury
and Capco. Prior to the merger, Richard was
Senior Independent Director and Chair of
the Sustainability Committee at Shaftesbury,
having joined in 2017. Richard was previously
Non-executive Director, Senior Independent
Director and Chairman of the Remuneration,
Safety, Health and Environmental Committees
of Barratt Developments PLC, Non-executive
Director of Unite Group PLC and a fellow of the
Royal Institution of Chartered Surveyors. Prior
to this, Richard was a senior executive of Land
Securities Group PLC from 1995 and joined the
main board in 2005 as managing director of the
retail portfolio until 2014.
Skills, experience and contribution
Richard’s extensive property roles and experience,
alongside his operational skillset, which includes
remuneration, sustainability, environmental
and health and safety matters, enable him to
provide essential input into Board and Committee
discussions and decisions and effectively Chair the
Company’s Remuneration Committee.
External Appointments:
Chairman of Redrow plc
Year of first appointment:
2023
Ruth Anderson
Independent Non-executive Director
Charlotte Boyle
Independent Non-executive Director
Ruth joined the Shaftesbury Capital Board in
March 2023 following the merger between
Shaftesbury and Capco. Prior to the merger,
Ruth was independent Non-executive Director
and Chair of the Audit Committee at Shaftesbury,
having joined in 2020. Ruth is an Independent
Non-Executive of EY’s UK Public Interest Board,
Chair of the UK Audit Board, and a member of
the Audit Remuneration Committee. Ruth was
previously Non-executive Director and Chair
of the Audit Committee at Ocado Group plc,
Travis Perkins plc, Coats Group plc and the
Royal Parks. Ruth has over 30 years’ experience
advising UK and global businesses and was with
KPMG for 33 years, where she was a partner
for 20 years and a member of the UK board for
six years. Ruth is a member of the Institute of
Chartered Accountants in England and Wales.
Skills, experience and contribution
Ruth has over 30 years’ experience advising UK
and global businesses. This knowledge, together
with over 10 years’ experience on public company
boards enables Ruth to provide valuable input and
challenge in Board and Committee discussions and
effectively Chair the Company’s Audit Committee.
External Appointments:
Independent Non-Executive of EY’s UK Public
Interest Board, Chair of the UK Audit Board, and
a member of the Audit Remuneration Committee.
Year of first appointment:
2023
Charlotte joined the Capco Board in 2017 as
an independent Non-executive Director and
was Chair of Capco’s Board ESC Committee.
Charlotte spent 14 years at The Zygos Partnership,
an international search and board advisory
firm, including nine years as a partner, where
she led the real estate practice. Prior to
this, Charlotte worked for Goldman Sachs
International and Egon Zehnder International.
Charlotte is a Non-executive Director of Coca-
Cola HBC AG and Thatchers Cider Company
Limited, a Non-executive adviser to Knight
Frank LLP, and a Trustee of Alfanar, the venture
philanthropy organisation. Charlotte is also
Chair of UK for UNHCR.
Skills, experience and contribution
Charlotte’s previous executive roles and her
experience as a Non-executive Director enable
her to provide valuable insight to a wide range
of Board and Committee matters, particularly
those with a focus on people, the environment
and sustainability. Up to the date of this report,
Charlotte chaired Shaftesbury Capital’s ESC
Committee, which monitored the integration of the
ESC strategy and the Net Zero Carbon Pathway.
Charlotte is the Non-executive Director designated
to update the Board on employee views, and
attends the employee engagement forum.
External Appointments:
Chair, UK for UNHCR. Non-executive Director
of Coca-Cola HBC AG and Thatchers Cider
Company Limited. Non-executive adviser to
Knight Frank LLP, and a Trustee of Alfanar.
Year of first appointment:
2017
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Overview – Governance
Leadership and purpose
An overview of how the Board monitors purpose and
culture, its key activities throughout the year and its
governance framework
Audit, risks and internal controls
Explains the role of the Audit Committee in overseeing
the integrity of the financial statements and our risk
management and internal control systems
― Chairman’s introduction
― Audit Committee Report
― How the Board monitors culture and employee engagement
― The role of the Board and its Committees
See more on our approach to audit, risks and internal controls
on pages 119 to 124
― Principal Board activities
― S172(1) statement
― Conflicts of interest
― How we behave
― Relations with shareholders
― Shareholders’ and stakeholders’ views
― Corporate website
― Annual General Meeting
― Independence and effectiveness
Oversight of sustainability
Explains the role of the ESC Committee in monitoring
our progress against our ESC strategy and net zero
carbon commitment
― ESC Committee Report
See more about our approach to leadership and purpose
on pages 100 to 113
See more on our approach to sustainability
on pages 125 and 126
Division of responsibilities
Describes the roles of the Directors and review of
Director independence
― Roles and responsibilities of the Directors
― Independence and effectiveness
See more on our approach to division of responsibilities
on pages 104 and 112
Remuneration
Outlines our remuneration policies which support our
strategy and promote the long-term sustainable success
of the business
― Directors’ remuneration report
― Directors’ Remuneration Policy
― Annual remuneration report
See more on our approach to remuneration on pages 127 to 152
Composition, succession and
evaluation
Sets out our consideration of Board composition,
succession planning and the Board evaluation
― Board diversity
― Board skills
― Board tenure
― Nomination Committee Report
― Director induction and development
― 2023 Board evaluation process
See more on our approach to composition, succession and
evaluation on pages 114 to 118
Compliance with the UK
Corporate Governance Code 2018
(the “2018 Code”)
The Board considers it has complied in full with the
2018 Code throughout the year ending 31 December
2023. The governance report on pages 94 to 152 sets
out how the Company has complied with the principles
and provisions within the 2018 Code.
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Covent Garden Piazza Corporate Governance
Leadership and
purpose
Chairman’s introduction
Our purpose, values, good governance, high standards
and the strength of our team, underpin the way in
which our business is managed to promote the long-
term success of the Group.
Dear shareholder
I am delighted to be writing to you as your new Chairman and
pleased to introduce our Corporate Governance report for the
year ended 31 December 2023.
Delivering strong performance
We have had an excellent start as Shaftesbury Capital delivering
strong operational performance, with growth in cash rents and
ERV. Total shareholder return for 2023 was 33 per cent on the
LSE and 52 per cent on the JSE. Cost savings are above our
initial ambitions, and we are pleased to have completed the
early refinancing of near-term debt maturities, highlighting the
attractiveness of our exceptional portfolio and resulting in a
strong balance sheet, with access to significant liquidity.
We are very proud of the energy and enthusiasm shown by the
team, now all based in our Covent Garden office. Our strategy
is to deliver long-term cash income and asset value growth
from our unique portfolio of properties through investment,
curation and responsible stewardship, benefiting all stakeholders
and contributing to the success of the West End. Our newly
formed Executive Committee made up of Ian Hawksworth, Situl
Jobanputra, Michelle McGrath and Andrew Price and reporting
to the Board, is working well, implementing our strategy and
providing strong oversight of our day-to-day operations. With
our ambitious and talented team, the business is well-positioned
to deliver on our medium-term rental growth, property and total
accounting return targets. We have re-committed to meet our
important sustainability objectives as the leading central London
mixed-use REIT. As we move beyond the initial stage of integration,
we continue to target efficiencies and additional opportunities to
reduce our cost ratio over the medium-term.
A key focus for the Board this year has been the embedding
and monitoring of our culture, ensuring a collaborative
environment where people are inspired to give their best
to contribute to the Company’s success. As part of this,
in collaboration with our senior leadership team we have
updated our purpose and values and rolled these out across
the business. These important commitments form the basis
of how we operate and are fundamental to our culture.
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Jonathan Nicholls
Chairman
Board changes and succession planning
As Henry Staunton outlined in his letter last year, on completion
of the merger, Henry and Jonathan Lane stepped down from the
Board, and I would like to thank them both for their valued efforts
over the years and Henry for his experienced Chairmanship.
Michelle McGrath, who also stepped down from the Board on
the merger, is a key member of our Executive Committee and
regularly attends our Board meetings.
To ensure a more efficient and cost effective Board structure,
following the departure of Chris Ward our Chief Operating
Officer in December 2023, which resulted in a reduced
Executive team, Non-executive Directors Anthony Steains,
Jennelle Tilling and Helena Coles stepped down from the
Board with effect from 31 January 2024. Senior Independent
Director Richard Akers became Chair of the Remuneration
Committee from 1 January 2024.
On behalf of the Board, I would like to thank Chris for his
enormous contribution over the years to creating London's leading
central London mixed-use REIT. I would also like to thank Anthony,
Jennelle and Helena for their significant contribution to our
historic Boards, the merger and subsequent successful integration.
Succession planning is an important part of our governance
processes. Looking forward, the Nomination Committee
is continuing to develop and monitor succession plans both
at Board and senior management level.
Board evaluation
This year, as both Capco and Shaftesbury had last undertaken
external reviews in 2020, it was agreed that an external Board
evaluation should be undertaken in November 2023, and I am
pleased to report it was recognised that good progress had
been made by both the Board and its Committees on their
respective activities. Details of the process and findings of the
review can be found on page 118.
Engaging with our shareholders
In addition to our investor relations programme led by
Ian Hawksworth and Situl Jobanputra, which included our
inaugural and well-received Investor Event in November 2023,
in advance of our 2023 AGM, Jennelle Tilling and Charlotte
Boyle offered to meet with shareholders holding in total
53 per cent of our register in respect of our remuneration
arrangements. Following a review of our Remuneration Policy led
by Jennelle in the autumn, we provided an update to, and sought
feedback from, shareholders. As part of our seeking of feedback,
I offered to meet shareholders holding in total over 55 per cent
of our register to discuss our corporate governance arrangements
and the review of our Remuneration Policy, with Richard Akers
attending meetings as appropriate. Feedback from those
communications and meetings was then shared with the Board.
The Board will consider the new reporting requirements of the
UK Corporate Governance Code published in January 2024,
during the coming year.
A team effort
On behalf of the Board, I would like to thank the whole team
for all their hard work both in the months up to the merger,
and subsequently in embracing change, adapting and being
innovative to support the successful integration of our two
businesses. The result of which has created a strong platform
from which we can further develop our relationships with, and
deliver long-term returns to, our wide range of stakeholders.
Jonathan Nicholls
Chairman
28 February 2024
Board members and meeting attendance
Number of meetings held: 101
Number of Board
meetings attended
Chairman
Jonathan Nicholls
Henry Staunton2
Executive Directors
Ian Hawksworth
Situl Jobanputra
Chris Ward
Michelle McGrath2
Non-executive Directors
Richard Akers
Ruth Anderson
Charlotte Boyle
Helena Coles
Jennelle Tilling
Anthony Steains
Jonathan Lane2
6/6
4/4
10/10
10/10
6/6
4/4
6/6
6/6
10/10
6/6
6/6
10/10
4/4
1. Four Board meetings were held in 2023 prior to completion of the merger.
2. Henry Staunton and Jonathan Lane retired, and Michelle McGrath
stepped down, from the Board as a result of the merger on 6 March
2023 and could only attend a maximum of four Board meetings.
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Chinatown Corporate Governance | Leadership and purpose
The Board
The Board is collectively responsible for the long-term success
of the Company, and for its leadership, purpose, strategy,
culture, values, standards, control and management. Day-to-
day management of the Group is delegated to the Executive
Directors, subject to formal delegated authority limits; however,
certain matters have been reserved for Board approval.
These matters are reviewed annually and include Board
and Committee composition, strategy, corporate reporting,
significant funding decisions and corporate transactions, ESC
strategy, Net Zero Carbon Pathway, Modern Slavery Statement,
delegated authority limits and our dividend and tax policies.
Board composition
As at 31 December 2023, the Board comprised the Chairman,
two Executive Directors and six Non-executive Directors.
Biographies of each of the Directors on the Board at the date
of this report and their membership of the Board Committees
can be found on pages 96 and 97, and additional information
on Directors’ skills and experience is included on page 114.
The Board in 2023
The Board met formally throughout the year. Main meetings
were timed around the financial calendar, with an annual
strategy day in October, and additional meetings convened,
or communications sent as appropriate. Attendance at Board
and Committee meetings held during 2023 is shown on page
101 and in the Committee reports. Board papers are circulated
in advance of meetings, to ensure that Directors have sufficient
time to consider their content prior to the meeting. If matters
require approval at short notice, written approval is sought
from the Directors.
The Chairman and Non-executive Directors regularly spend
time at the Company’s head office, and maintain regular
contact with both the Chief Executive and members of senior
management. The Chairman meets with the Non-executive
Directors without the Executive Directors being present.
As matters that require the Board’s decision are often complex
and evolve over a period of time, informal update meetings
are held between Board meetings to allow Board members
adequate time to explore, understand and challenge matters
under consideration, and the Chief Executive provides regular
updates to Directors between meetings.
During 2023, the Board received regular updates on
performance, property portfolio, operations, finance, ESC,
people and integration from the Executive Directors and senior
management from each business area, and reports from the
General Counsel, Company Secretarial team and Committee
Chairs. The table on page 106 shows the key areas considered
by the Board during the year.
The Board establishes the Group’s:
Purpose
Our purpose is investing to create
thriving destinations in London’s
West End where people enjoy
visiting, working and living.
Values
Our values are to:
― Take a responsible, long-term view
― Act with integrity
― Take a creative approach
― Listen and collaborate
― Make a difference
Strategy
To deliver long-term income and
value growth from our unique
portfolio of properties through
investment, curation and responsible
stewardship, benefitting all
stakeholders and contributing to the
success of the West End.
Read more on pages 14 and 15.
Read more on pages 14 and 46.
Read more on pages 14 and 15.
and ensures that they are aligned with the Company’s culture
Shaftesbury Capital promotes high standards and a high performance, professional,
entrepreneurial and inclusive culture, reflective of our business strategy and values.
Read more on pages 103 and 110.
How the Board monitors culture
and employee engagement
Our purpose and values form the basis of our culture, and together are
fundamental to the way we operate. Our people are central to our culture
and critical in delivering our strategy. The Board and senior management team
recognise that culture comes from the top.
Key ways in which we have sought to embed our values
or how the Directors have monitored our culture this year
have included:
― Our Chief Executive, CFO and former COO, and members
of the Executive Committee, supported by our Head of HR,
led Company-wide meetings which were attended by the
Chairman as appropriate to provide business updates to
employees, including strategy, our updated purpose and values,
employee remuneration structures, employee development
programmes and integration progress. These meetings provided
the opportunity for employees to ask questions.
― Our Chief Executive held a series of informal breakfast
sessions with employees providing an informal forum for the
relaying of the Group’s priorities and allowing team members
to ask questions.
― The Non-executive Directors were taken on tours of the
portfolio by the asset management and leasing teams.
― Charlotte Boyle attended the inaugural Employee
Engagement Forum made up a wide range of employees
in terms of role, seniority and experience. Matters discussed
included the Company’s purpose, culture and values,
priorities and targets, integration and the new office,
team communication and ways of working.
― During the year the Chairman held 20 one-to-one sessions
with senior employees and provided feedback from the
meetings to the Non-executive Directors.
― Members of the senior leadership team join the Executive
Committee meeting monthly. Any significant informal feedback
is reported to the Board by the Executive Committee.
― The Remuneration Committee reviewed the Group’s employee
remuneration framework and proposed changes following
the merger ensuring alignment of both Executive Director and
employee remuneration with the Group’s values.
― Senior managers across the Group joined the Directors
at the October Board strategy dinner.
― Core governance policies are reviewed annually by the
Board and employees are required to complete a variety of
e-learning modules on a regular basis. Completion levels are
reported to the Board.
― Feedback from the internal and external auditors on their
interactions with operational and finance teams is provided
directly to the Audit Committee.
― Our whistleblowing policy, applicable to all employees,
encourages openness in reporting concerns with contacts
including the Audit Committee Chair. Any reports would be
investigated and reported to the Board. No reports were
made during the year.
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Discussing the 2023 Audit Plan.
Corporate Governance
The role of the Board and its
Committees during the year
The Board
Led by Jonathan Nicholls
10 meetings
– Sets Group strategy
– Oversees the alignment of the Group’s purpose, culture and
values, strategy and risk
Board activities: page 106
Division of responsibilities of Directors: page 112
– Considers the balance of interests between stakeholders
for the long-term success of the Group
– Oversees the Group’s governance
Directors’ biographies: : pages 96 and 97
Audit Committee
Ruth Anderson
ESC Committee
Charlotte Boyle
Nomination Committee
Jonathan Nicholls
Remuneration Committee
Jennelle Tilling1
– 4 meetings
– Oversees the Group’s
valuation and financial
reporting processes
– Reviews the adequacy and
effectiveness of internal
financial controls and risk
management systems,
including the need for
internal audit
– Reviews the independence
and effectiveness of the
internal and external
auditors
Audit Committee Report:
pages 119 to 124
– 4 meetings
– Oversees the
implementation of the
Company’s ESC Strategy
– Recommends changes in
ESC Strategy to the Board
ESC Committee Report: pages
125 and 126
Our future approach to ESC
oversight is explained on
page 125.
– 3 meetings
– Reviews the structure, size
and composition of the
Board
– Oversees succession
planning and development
of a diverse pipeline of
talent
– Recommends appointments
to the Board
– 8 meetings
– Determines the
remuneration policy
for Executive Directors,
Chairman and senior
employees
– Ensures the link between
culture, performance and
remuneration
– Monitors employee
remuneration and related
policies
Nomination Committee Report:
pages 115 to 118
Remuneration Committee
Report: pages 127 to 152
Executive Committee
Led by Ian Hawksworth
Meets twice a month
– Works closely with the Chief Executive and Chief Financial Officer
on implementation of business plan
– Monitors operational performance
– Reviews financial performance
– Reviews and prioritises resourcing
– Considers matters referred from below Board Committees
Executive Risk Committee
Led by Ian Hawksworth
Health & Safety Committee
Led by Alison Fisher
Disclosure Committee
Led by Situl Jobanputra
– Meets at least 4 times a year
– Reviews and monitors the Group’s
principal and emerging risks
– Oversees the effectiveness of the
Group’s risk management systems
Risk management: pages 59 and 61
Principal Risks: pages 61 to 65
Climate risk and opportunities: pages
66 and 74
– Meets at least 4 times a year
– Oversight of occupational health, safety
and well-being
– Monitors the Group’s policy and
performance against best practice for
health and safety
Health and Safety: page 92
– Meets once a month
– Monitors the status of potential
inside information in the business
– Ensures disclosure requirements
are met and that appropriate
records are maintained
Integration Committee
Led by Chris Ward2
– Meets twice a month
– Oversight of integration projects and resourcing
– Reviews and prioritises projects
– Monitors synergies
ESC Management Committee
Led by Chris Ward3
– Meets at least 4 times a year
– Recommends the ESC Strategy to the Executive Committee
– Monitors performance against Net Zero Carbon Pathway
– Approves the annual action plan
Sustainability: pages 78 to 91
1. Richard Akers became Remuneration Committee Chair from 1 January 2024.
2. Following the successful completion of the integration, this Committee has been incorporated into various operating groups.
3. Andrew Price became ESC Management Committee Chair from 1 January 2024.
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Chinatown parasols
Corporate Governance
Principal Board activities in 2023
The Board met formally ten times during the year with seven
scheduled Board meetings and three additional meetings.
A number of other matters were approved by written resolution
of the Board. At every scheduled Board meeting, the Board
receives updates from the Executive Committee, General Counsel,
the Group Company Secretary and Company Secretary on the
operating environment, portfolio activities (including stakeholder
engagement), financial performance and prospects, health and
safety, employees, legal matters and governance. The Executive
Committee members attend each meeting and employees from
across the business may be invited to join meetings to present
topical updates.
The principal focus of the additional Board meetings held this
year was the merger. The table below provides examples of
matters considered during the year.
Strategy
Merger and integration
– Regular consideration of the macro-environment.
– Adopted initial strategic priorities following completion
of the merger.
– Approved the strategy statement, business model, and plan,
including key financial measures following the annual
Board Strategy Day.
– Received updates on the level of synergies achieved.
– Prior to completion of the merger, the Capco Board considered
matters relating to its completion.
– Following completion of the merger, the Shaftesbury Capital
Board received regular updates on progress on integration
matters including operations, HR, IT, sustainability and financing.
– Received regular updates on the integration of the teams and
systems.
Finance, tax and corporate reporting
People and culture
– Approved the half-year and year-end results including
– Approved new purpose, values and culture statements
consideration of the going concern and viability statements.
recommended by the Executive Committee.
– Approved 2022 Annual Report.
– Approved the AGM and the November 2023 Investor Event
Trading Updates.
– Approved the interim annual budget and 2024 budget and
reviewed the 2024-2028 financial projections.
– Approved two new finance facilities totalling £550m to refinance
the £576m loan facility, and interest rate hedging arrangements.
– Approved the updated tax strategy.
– Approved the pre-completion second interim dividend of 1.7p
(per Capco share) in March 2023 and the 2023 interim dividend
of 1.5p in August 2023.
– Established Employee Feedback Forum attended by Charlotte
Boyle and received initial feedback from the Forum.
– Received updates from the Head of HR and Chair of the
Nomination Committee on the new employee development
programme.
– Received updates from the Chair of the Remuneration
Committee on Board and employee remuneration, including a
new employee remuneration framework.
– Received updates on the integration process including relocation
of the teams to one office, resourcing and people synergies.
Stakeholder engagement
Operations
– Reviewed the inaugural Investor Event presentation.
– Discussed the engagement with shareholders on the Company’s
Remuneration Policy by the Remuneration Committee Chair in
advance of the AGM and by the Chairman of the Board after the
year-end.
– Received updates on investment market, valuations, occupier
trading conditions, rent collection levels, leasing activities,
marketing strategy and vacancy levels.
– Approved estate business plans.
– Approved strategic capital recycling of five per cent of portfolio
– Received regular updates on investor relations activity and
value through disposal of identified assets.
matters raised by shareholders.
– Received updates on acquisitions and disposals which did not
– Considered the impact of business decisions on a wide range
require Board approval.
of stakeholders.
– Received feedback on meetings with various stakeholders.
Governance
Sustainability
– Approved revised/new corporate policies, delegations of
authority and Committee terms of reference.
– Received updates from the Chairs of the Audit, ESC,
Remuneration and Nomination Committees.
– Approved the AGM resolutions.
– Approved the 2023 Modern Slavery Statement.
– Approved the external appointments of all Directors.
– Received updates from the Chair of the ESC Committee on
the progress made on the Net Zero Carbon pathway and
sustainability integration.
– Approved Shaftesbury Capital’s updated new Net Zero
Carbon pathway.
Risk management and internal control
– Approved the Group Risk Management Policy and Framework
and the Board’s risk appetite in respect of each principal risk.
– Considered the principal and emerging risks following review
by the Executive Risk and Audit Committees and the risk
disclosures for the half-year and full-year results.
– Discussed updates on IT system integration, consolidation of
financial systems and cyber security.
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107
Monmouth Street Corporate Governance
Our S172(1) Statement
The Board confirms that during the year under review, it has acted in the way that
it considered, in good faith, would be most likely to promote the long-term success
of the Company for the benefit of its members as a whole, and in doing so has had
regard to the matters set out in section 172(1)(a) to (f) of the Companies Act 2006.
Engagement with stakeholders
The Board principally engages directly with our employees
and shareholders but is also kept apprised of the engagement
with other stakeholders through a combination of reports from
the Executive Directors, members of the Executive Committee,
senior managers, and advisers to understand the views of the
Group’s stakeholders on day-to-day operations. On pages 40 to
45, we outline the ways we have engaged with key stakeholders
and the outcomes of that engagement.
Methods used by the Board
The main methods used by the Board to perform its duties include:
― oversight of the Group’s purpose, strategy, and values,
and their alignment with our culture;
― consideration of the Group’s risk appetite, principal risks,
and mitigation;
― oversight of employee well-being and resourcing;
― dedicated section within Board approval papers sets
out the likely impact of the proposed recommendation
on relevant stakeholders;
― review of engagement undertaken by Executive Committee
members and the wider team across the business; and
― external assurance received from the auditors
and reports from brokers and advisors.
Whilst it is not always possible to meet the preferences of all
stakeholders, the Board aims to ensure that all relevant factors
are considered before a decision is taken. Some examples
of how the Board considered stakeholder interests and the
matters set out in S172(1) of the Companies Act 2006 during
2023 are set out in the tables below and on the adjacent page.
Other examples of how the Board has considered stakeholder
interests and s172(1) matters are included in how the Board
monitors culture and employee engagement on page 103.
Key matter
Integration
Employees
Shareholders
Suppliers
Customers
Board considerations
Outcomes
In its oversight of the various integration projects,
the Board balanced many factors, including
consideration of employee feedback and well-
being, costs, customer and portfolio management
service levels, supplier relationships, cyber
security and investor feedback.
During the months following the completion
of the merger, a number of significant
integration workstreams were delivered,
including relocating the two teams into one
building, restructuring the combined team,
alignment of remuneration frameworks and
integrating the IT systems, to ensure that the
two businesses came together as one, and to
deliver synergies.
The Executive Committee and members of
senior management collaborated to develop
the Company’s new purpose and value
statements, which were approved by the
Board and rolled out across the business.
Purpose, culture and values
Employees
Customers
Visitors
Suppliers
Partners
The Board agreed that Shaftesbury Capital’s
purpose and values should be updated
following completion of the merger and
that employees should ensure that these
underpinned the Company’s culture and the
way that the Group operates.
Strength of balance sheet
Shareholders
Employees
Finance providers
Partners
Suppliers
Maintaining a strong capital structure is a key
part of the Company’s strategy and early
refinancing of the loan facility was a priority
for the year.
During the year the Board approved new
finance arrangements totalling £550m to
refinance the £576m loan facility put in
place at the time of the merger.
The financial stability of the Company is
important to a wide range of the Company’s
stakeholders and the views of investors and
the negotiation of the terms available from,
and relationships with, different finance
providers were given particular consideration
in refinancing the £576m loan facility.
Key matter
Board considerations
Outcomes
Net Zero Carbon commitment
Visitors
Employees
Shareholders
Suppliers
Customers
Local Communities
Partners
Recognising that the important risk posed by
climate change requires urgent action, the
Board renewed the Company’s commitment
to becoming Net Zero Carbon by 2030.
In considering this commitment, the Board
noted the costs that would be associated with
becoming Net Zero Carbon, but recognised the
extensive benefits that would be delivered for
a wide range of stakeholders over time.
A new Net Zero Carbon pathway was
approved and published.
The Board is cognisant that achieving these
commitments will require collaboration with
various stakeholder groups over a number
of years, and will receive regular updates
on progress and stakeholder views.
(Read more on pages 82 and 125.)
S172(1) factor
Relevant disclosure
a. The likely consequences
of any decision in the
long-term
b. The interests of the
Company’s employees
c. The need to foster the
Company’s business
relationships with
suppliers, customers
and others
d. The impact of the
Company’s operations
on the community and
the environment
e. The desirability
of the Company
maintaining a reputation
for high standards of
business conduct
f. The need to act fairly
as between members
of the Company
Competitive strengths
Chief Executive’s statement
Our purpose-led strategy and business model
Portfolio and operating review
Measuring performance
Stakeholder engagement
Sustainability Report
Chairman’s introduction
Principal Board activities in 2023
Stakeholder engagement
People and culture
Diversity, equality and inclusion
Non-financial and sustainability information statement
Chairman’s introduction
How the Board monitors culture and employee engagement
Consideration of employee remuneration and related policies below
the Board
Sustainability focus areas
Modern slavery and human rights
Industry collaboration
Stakeholder engagement
Chairman’s introduction
Principal Board activities in 2023
How we behave
Stakeholder engagement
Sustainability Report
Supporting our local community
Chairman’s introduction
ESC Committee Report
Directors’ Remuneration Report
Our purpose-led strategy and business model
Stakeholder engagement
Effective risk management
Chairman’s introduction
Conflicts of interest
How we behave
Division of responsibilities
Independence and effectiveness
Relations with shareholders
Shareholders’ and stakeholders’ views
Annual Report
page numbers
8
10
14 and 15
18 to 39
16 and 17
40 to 45
78 to 91
100
106
40 to 45
46 and 47
47 and 117
77
100
103
127 to 129
80
84
84
40 to 45
100
106
110
40 to 45
78 to 91
89 to 91
100
125
127 to 129
14 and 15
40 to 45
59
100
110
110
112
113
110
111
108
Shaftesbury Capital PLC | 2023 Annual Report
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109
Corporate Governance
Conflicts of interest
The Company’s Articles of Association allow the Board to
authorise any actual or potential conflicts of interest that may
arise from Directors’ external relationships or commitments.
Any potential conflicts of interest are declared at the start
of each Board meeting and a Director who has a conflict of
interest is not counted in the quorum or entitled to vote when
the Board considers the matter in which the Director has an
interest. On an annual basis, actual and potential conflicts are
formally reviewed in respect of both the nature of Directors’
external roles and their time commitment.
The external interests of new Directors are considered as part
of the recruitment process, and, if appropriate, authorised by the
Board on appointment. Any additional external appointments,
which are subject to Board approval, are also considered by
the Board in relation to the nature of the appointment and
time commitment. This process was followed in approving
Ruth Anderson and Helena Coles’ new external appointments.
The Board considers these procedures to be working effectively.
How we behave
We aspire to the highest standards of business conduct based
on honesty, respect, integrity and transparency in everything
we do. With a relatively small team, our Board and Executive
Committee have a high degree of oversight over the Group’s
activities, policies and procedures.
While we do not have a separate human rights policy, our
expectations on human rights are set out across a number of
our policies and procedures, and we expect suppliers, as a
minimum, to adhere to all applicable human rights, employment
and health and safety legislation and comply with standards
and codes specific to their business.
We have formal compliance policies in place in relation to anti-
money laundering, anti-bribery and corruption, data protection,
gifts and hospitality, share dealing, whistleblowing and conflicts
of interest. All new employees receive training on these policies
as part of their induction process, and e-learning annual
refresher training is a requirement for all employees. A formal
compliance statement relating to these policies is also required
to be signed by employees on joining and annually thereafter.
In February 2024, we published our latest Modern Slavery Act
statement, which can be found on our website (https://www.
shaftesburycapital.com), which sets out the actions undertaken
during the year to prevent modern slavery and human
trafficking in our business and supply chain.
Our culture is open, honest and transparent, and our employees
are encouraged to speak up if they witness or suspect any
wrongdoing, or behaviour which does not align with our high
standards. Our formal whistleblowing policy, under which
employees and suppliers can report any concerns either
through our General Counsel, Company Secretary, Chair of
the Audit Committee or through an independent hotline and
online portal. Following receipt of a whistleblowing report,
we have procedures to follow to ensure that an appropriate
investigation is undertaken. This policy is reviewed by the
Audit Committee and the Board annually.
Relations with shareholders
The Board considers the views of our shareholders and contact
with potential investors to be an important aspect of corporate
governance. An extensive investor relations programme is run
by the Chief Executive and Chief Financial Officer, involving
members of the Executive Committee and the Director of
Commercial Finance and Investor Relations meeting with
investors and analysts throughout the year, including results
presentations, webcasts, road shows, one-to-one meetings,
industry conference and investor tours. In November 2023,
we also held our inaugural Investor Event where medium-term
targets were set out.
All Directors were present at the 2023 AGM where shareholders
were able to participate in person or virtually, to ask questions
and vote.
As part of our regular investor relations programme,
meetings were held with UK and overseas existing and potential
institutional investors as well as equity market analysts. The Chief
Executive, Chief Financial Officer and senior management have
undertaken tours of our portfolio, which provide existing and
potential investors the opportunity to see our destinations,
understand our management strategy and to meet our senior
leadership team.
Board and Committee meetings, key corporate events and investor engagement
during 2023
During 2023, the Chairman and Non-executive Directors
engaged with shareholders on matters including the Company’s
remuneration and governance.
2023 Investor Relations calendar
March 2023
– Results for the year ended 31
December 2022
– Completion of the merger
– Analyst presentation
– Post-completion investor roadshow
May 2023
– 2023 Remuneration Policy
June 2023
August 2023
November 2023
December 2023
engagement
– Trading Update
– Annual General Meeting
– Interim Results
– Analyst presentation and investor
roadshow
– Investor Event
– Trading Update
– Board changes
– 2023 Remuneration Policy
engagement
Shareholders’ and stakeholders’ views
The Directors receive regular updates on the Company’s
major shareholders’ and stakeholders’ views during the
year, which included feedback from a market and investor
perceptions study conducted by external advisers and Board
approval papers include a dedicated section on stakeholders.
More about the Company’s consideration of and engagement
with its stakeholders on pages 40 to 45 and in the Company’s
s172(1) statement on pages 108 and 109.
The Non-executive Directors are invited to attend the
Company’s results presentations. Retail shareholders may
raise questions through the Company Secretary’s office
either by telephone (+44 (0)20 3214 9150) or by email
(feedback@shaftesburycapital.com).
Our Non-executive Director Charlotte Boyle ensures the views
of our employees are considered by the Board, and this year
we created the Employee Engagement Forum attended by
Charlotte Boyle for employee views to be shared.
The Directors also receive regular updates from the Executive
Directors, members of the Executive Committee and Head of
HR on employee matters. This year, particular updates were
provided on employee views on the integration processes,
harmonisation of employee remuneration arrangements and
the proposed employee development framework.
Corporate website
Our corporate website (https://www.shaftesburycapital.com)
allows visitors to access Company information, annual reports,
results presentations, webcasts and our whistleblowing hotline.
The site also includes links to our destination websites and contact
details for shareholder queries.
Annual General Meeting
The 2024 Annual General Meeting of the Company will be
held on 23 May 2024. The Notice of Meeting will be issued
to shareholders at least 20 working days before the meeting,
and will also be made available on the Company’s website.
We encourage shareholders to submit any questions they
may wish to have answered by sending an email to
feedback@shaftesburycapital.com or by calling
+44 (0)20 3214 9150 and a response will be provided.
Shareholders are advised to vote in advance of the
meeting, prior to the proxy deadline.
Separate resolutions will be proposed on each issue and,
in accordance with the 2018 Code, each Director will offer
themselves for election or re-election. We publish the results
of the votes on all resolutions on our website following the
meeting. Shareholders are requested to check the Company’s
website for the latest details concerning the 2024 AGM.
January
February
To 6 March 2023
From 6 March 2023 April
May
June
July
August
September
October
November
December
Board and
Committee
Meetings
– Board
meeting
– Trading
Update
Key
corporate
events and
investor
engagement
– Board Meetings
– Audit Committee
– ESC Committee
– Nomination Committee
– Remuneration Committees
– Remuneration
Committee
– Board
meeting
– Remuneration
Committee
– Board Meeting
– Audit Committee
– ESC Committee
– 2023 Remuneration
Policy engagement
– Board meeting
– Nomination
Committee
– Remuneration
Committee
– Audit Committee
– ESC Committee
– Remuneration
Committee
– Board Meeting
– Remuneration
Committee
– Board
Strategy
Day
– Year-end results
– Year-end
results analyst
presentation
– 2022 Annual Report
– Scheme sanctioned
by Court
– Second
Supplementary
Prospectus
– Completion of
the Merger
– Name changed
to Shaftesbury
Capital PLC
– Post-completion
results roadshow
– Second 2022 Interim
cash dividend of
1.7p per share paid
– Investor
roadshow
– Redemption
of Chinatown
and Carnaby
Bonds
– Trading Update
– Annual General
Meeting
– Interim results
– New long-term
loan facility of
£200m
– 2023 Interim cash
dividend 1.5p per
share paid
– Board Meeting
– Audit Committee
– ESC Committee
– Nomination
Committee
– Remuneration
Committee
– Trading Update
– Investor Event
– Combined Net Zero
Carbon Pathway
– 2023 Remuneration
Policy engagement
– New medium-term
loan facility of £350m
– COO steps down
– Three Non-executive
Directors to step down
from 31 January 2024
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Shaftesbury Capital PLC | 2023 Annual Report
111
Independence and effectiveness
In accordance with the 2018 Code, all Directors are subject
to annual re-election, and at least half the Board, excluding
the Chairman, are independent Non-executive Directors.
The Chairman was independent on appointment.
The Board believes that it, and its Committees, have the
appropriate combination of skills, experience and knowledge to
enable them to carry out their duties effectively. The Nomination
Committee keeps the tenure of all Directors, the effectiveness of
individual Directors and Board diversity under review. The Board
considers all our Non-executive Directors to be independent
and free from any business or other relationship which could
materially interfere with the exercise of their judgement.
Our Non-executive Directors remain independent from executive
management, and they meet regularly with the Chairman to allow
them the opportunity to discuss their views privately.
The Board recognises the importance of each Director being
able to dedicate sufficient time to effectively discharge their
duties and responsibilities. The commitment expected is
considered by the Board on each Director appointment.
Where Directors undertake additional external appointments,
these are approved by the Board subject to it being satisfied
that the Director has sufficient time to carry out their
responsibilities. During the year ended 31 December 2023,
additional Board roles for which Board approval was sought
and received included the appointment of Helena Coles to
HgCapital Trust plc and Ruth Anderson as an independent non-
executive of EY’s Public Interest Board, Chair of the UK Audit
Board and a member of the Audit Remuneration Committee.
The key responsibilities of Board members are set out in the table
on page 112.
Corporate Governance
Division of responsibilities
The Board currently comprises the Non-executive Chairman,
two Executive Directors and three Independent Non-executive
Directors. There is clear division between Executive and
Non-executive responsibilities which ensures accountability
and oversight. The Board has overall responsibility of
governance throughout the Company and is supported by the
Group Company Secretary, the Company Secretary and the
General Counsel. The Chair and other Non-executive Directors
meet regularly without the Executive Directors, and at least
once a year, the Non-executive Directors meet without the Chair.
The Board delegates some of its responsibilities to the Audit,
Nomination, Remuneration and ESC Board Committees.
The work of these Committees can be found in their reports
on pages 119, 115, 127 and 125 respectively. Each of these
Committees has its own terms of reference, which are available
on our website. Each Committee assesses its effectiveness
annually as part of the evaluation process set out on page 118.
The Board also delegates operational matters to the Executive
Committee, except for certain matters reserved for the Board.
These matters are set out in the Board Schedule of Matters,
which can be accessed on our website.
The roles of Chairman, Chief Executive and Senior Independent
Director are separately held, well defined, set out in writing
and regularly reviewed by the Board. They are available
on our website.
Roles of Board members and Executive Committee
The following table sets out the key responsibilities of Board members:
Position
Chairman
Name
Responsibilities
Jonathan Nicholls Leading of the Board in the consideration, challenge, support and oversight of the
Chief Executive
Ian Hawksworth
Company’s strategy and its implementation and monitoring the Group’s risk profile.
Oversight of succession planning.
Ensuring an effective link between shareholders, other stakeholders, the Board
and management.
Development and implementation of the Company’s strategy and commercial objectives.
Oversight of the financial and operational performance of the Group and
communication with the Board, employees and other stakeholders.
Oversight of the Group’s skills, diversity, management development and succession.
Chief Financial
Officer
Non-executive
Directors
Executive
Committee
Situl Jobanputra Works closely with the Chief Executive in developing and implementing Group strategy
and overseeing capital allocation, investment and key transactions.
Providing financial leadership and development of the Company’s business and
financial strategy, and management of the Company’s capital structure.
Responsible for financial reporting, financial planning and analysis, investor relations,
treasury, tax and IT functions.
Richard Akers
Ruth Anderson
Charlotte Boyle
Ian Hawksworth
Situl Jobanputra
Michelle McGrath
Andrew Price
Constructive challenge of the Executive Directors and monitoring the delivery of the
agreed corporate strategy within the risk and control framework set by the Board.
Works closely with the Chief Executive and Chief Financial Officer on implementation
of business plan.
Monitors operational performance.
Reviews financial performance.
Reviews and prioritises resourcing.
Considers matters referred from below Board Committees.
All Directors have access to the advice and services of:
Position
Name
Responsibilities
Group Company
Secretary
Company Secretary
Desna Martin
Ruth Pavey
Advise the Board on corporate governance matters and ensure a good flow of
information within the Board and its Committees, and between senior management
and the Non-executive Directors.
General Counsel
Alison Fisher
Provides legal advice and guidance to the Board.
Reports to the Board on corporate services activities.
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Shaftesbury Capital PLC | 2023 Annual Report
113
Newburgh Street
Corporate Governance
Composition, succession and evaluation
Board composition as at 31 December 2023
Gender
Age
44%
56%
11%
22%
34%
11%
22%
Female (4)
Male (5)
45-49 (1)
50-52 (2)
55-59 (3)
60-64 (1)
65+ (2)
Ethnic Group
22%
Board Independence
78%
11%
22%
67%
Asian / Asian-British (2)
White British or other white
(including minority-white groups (7)
Chair (1)
Executive Directors (2)
Non-Executive Directors (6)
Board skills and tenure as at 28 February 2024
Board Skills
Ian Hawksworth
Situl Jobanputra
Jonathan Nicholls
Richard Akers
Ruth Anderson
Charlotte Boyle
Board tenure
Leadership
Real estate and
property
Hospitality, leisure
and retail
ESC
Corporate
finance
Accounting/
finance
Fund
management/
financial markets
Year joined
2010 2011
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
2024
YTD
Length of time (to
28 February 2024)
Chairman
Jonathan
Nicholls
2023
(Shaftesbury
PLC 2016)
Non-executive Directors
Richard
Akers
Ruth
Anderson
2023
(Shaftesbury
PLC 2017)
2023
(Shaftesbury
PLC 2020)
Charlotte
Boyle
2017
Executive Directors
Ian
Hawksworth
2010
Situl
Jobanputra
2017
114
Shaftesbury Capital PLC | 2023 Annual Report
1 year
(Shaftesbury PLC –
6 years 6 months)
1 year
(Shaftesbury PLC –
5 years 3 months)
1 year
(Shaftesbury PLC –
2 years 2 months)
6 years 5 months
14 years 1 month
7 years 2 months
Composition,
succession and
evaluation
Nomination Committee Report
Following the excellent progress on the integration
of our teams since the merger, a key focus has been
the evolution of the Board and future below Board
succession planning
Jonathan Nicholls
Chairman
Dear shareholder
On behalf of the Nomination Committee, I am pleased to
present our 2023 report.
Overview
During the year, we have focused on two main areas: Evolution
of the Board and consideration of the below Board succession
process and development of our team following completion
of the merged team integration process.
Evolution of the Board
As a result of the merger, the Board comprised three
Executive and seven Non-executive Directors. Following
delivery of a number of post-merger integration activities, in
conjunction with Chris Ward’s departure as Chief Operating
Officer in December 2023, it was concluded that, in respect of
the optimal size and efficiency of the Board, a smaller Board
would be more effective and more reflective of the Company’s
cost management ambitions. As a result of this conclusion,
Non-executive Directors Helena Coles, Anthony Steains and
Jennelle Tilling agreed to step down from the Board with effect
from 31 January 2024 and Richard Akers became Chair of the
Remuneration Committee with effect from 1 January 2024.
As a result of the recent Board changes, as at the date of
this report, 33 per cent of our Board directors are women.
Cognisant of the Listing Rules targets for the Board to comprise
at least 40 per cent women and for at least one of the roles
of Chair, Senior Independent Director, Chief Executive and
Chief Financial Officer be a held by a woman, the Committee
will include these targets in its consideration of succession
planning and the diversity, experience and skills required for
the Board. The Committee has appointed executive search
firm Russell Reynolds to assist the Committee when required.
Russell Reynolds has no connection with the Company or any
individual Director, other than to assist with the Non-executive
Director search process.
Below Board development,
talent pipeline and resourcing
As part of our oversight of the continued development of
a diverse pipeline of talent for succession below the Board,
our Head of HR reported to the whole Board on our learning
and development framework and the planned talent
development programmes across the business. In light of
the merger of the two businesses, the Committee was also
briefed on senior management succession planning.
In line with the latest Parker Review recommendations for
FTSE 350 companies, the Committee has set a target for
10 per cent of the Executive Committee and their senior
manager direct reports to identify with an ethnic minority
category by 2027 and will keep this target under review.
Jonathan Nicholls
Chair of the Nomination Committee
28 February 2024
Shaftesbury Capital PLC | 2023 Annual Report
115
Monmouth Street Corporate Governance | Composition, succession and evaluation
Nomination Committee members and attendance
Number of meetings attended (3 held1)
Jonathan Nicholls (Chair)
Richard Akers
Ruth Anderson
Charlotte Boyle
Jennelle Tilling
2/2
2/2
2/2
3/3
2/2
Helena Coles
Anthony Steains
Ian Hawksworth2
Jonathan Lane3
Henry Staunton3
2/2
3/3
1/1
1/1
1/1
1. One Nomination Committee meeting was held in 2023 prior to completion of the merger.
2. As part of the merger it was agreed that post-merger the Nomination Committee should be comprised of only Non-executive Directors and as a result Ian
Hawksworth could only attend a maximum of one meeting.
3. Jonathan Lane and Henry Staunton retired from the Board as a result of the merger on 6 March 2023 and could only attend a maximum of one meeting.
Key responsibilities
― Monitor and review structure, size and composition (including skills, knowledge, experience and diversity) of the Board
and its Committees
― Ensure that there are appropriate plans in place for the orderly and effective succession of the Board and senior leadership team
― Oversee the development of a diverse pipeline for succession
― Keep Directors’ skills, experience and independence under consideration
― Lead the process for Board appointments
― Review the time commitment expected from Directors
― Oversight of the Board evaluation process
How the Committee operates
The Nomination Committee comprises the independent Non-executive Directors. Prior to the merger, the Committee
comprised Henry Staunton, who acted as Chair of the Committee, Ian Hawksworth, Charlotte Boyle, Jonathan Lane and
Anthony Steains. On completion of the merger, Jonathan Nicholls was appointed as Chair to the Committee, Richard Akers,
Ruth Anderson, Helena Coles and Jennelle Tilling were appointed to the Committee, Jonathan Lane and Henry Staunton
retired from the Board and Committee and Ian Hawksworth stepped down from the Committee. Helena Coles, Anthony Steains
and Jennelle Tilling stepped down from the Board and Committee on 31 January 2024.
Independent executive search firms are engaged to assist us in our Executive and Non-executive succession planning and
appointment processes as appropriate.
In making recommendations to the Board on Non-executive appointments, the Nomination Committee specifically considers
the expected time commitment of the proposed Non-executive Director and other commitments they already have. Agreement
of the Board is also required before a Director may accept any additional commitments to ensure possible conflicts of interest
are identified and that Directors will continue to have sufficient time to devote to the Company’s affairs.
All Directors are subject to annual re-election, in accordance with the 2018 UK Corporate Governance Code, with the Committee
considering the skills, knowledge and level of performance of all directors to recommend to the Board their re-election.
The Committee reviews its effectiveness annually.
Diversity and inclusion
The Board recognises that diversity of experience and
perspective can bring benefits across the business.
Shaftesbury Capital’s Board Diversity and Inclusion Policy
aligns with the Committee’s aim of ensuring that the Board has
the right mix of skills and experience to deliver Shaftesbury
Capital’s strategy and reflects the Board’s view of the benefits
of diversity which promotes diversity in the broadest sense, not
just gender or ethnicity but also experience and skills.
At 31 December 2023, 44 per cent of our Board were women,
and we had two Directors from an ethnic background.
Whilst our Audit and ESC Committees are chaired by women,
our senior Board positions are held by men. The Board
considers that quotas are not appropriate in determining
its composition and has, therefore, chosen not to set formal
targets but keeps diversity under consideration in all aspects
of Board composition, including the Board Committees and
senior board positions, and is conscious of the Listing Rule
targets in making all Board appointments.
In conducting searches, the Nomination Committee works
with executive search consultants that are required to provide
a diverse selection of candidates for Board appointments
taking into account our diversity policy and the Listing Rules
targets, with selection based upon merit, objective criteria
and alignment with our values.
Below Board level, we are proud that we have a strong
representation from female employees across the business.
52 per cent of our team are female and 64 per cent of our senior
management is female. Whilst all appointments are made on
merit and based on objective criteria, we recognise that diversity
includes, but is not limited to gender, and we can do more to
promote wider diversity. Following the merger and integration
of the team, this is an area we will address in the coming year.
Initiatives we support to promote diversity, including within the
real estate sector, include:
― being a member of Real Estate Balance, and its NextGen
Committee, whose objective is to achieve a better gender
balance at board and executive management level, in the
real estate industry, by supporting the development of a
female talent pipeline across the sector; and
― being a corporate sponsor of Freehold, and a member of
AbilityRE, the BPF Diversity & Inclusion Champions network
and the Business Disability Forum.
Looking ahead, the Nomination Committee will continue to
develop and monitor succession plans both at the Board and
senior management level and keep under review both the
diversity of, and development programmes for, our talented team.
Sex or gender identity of Board and Executive Committee as at 31 December 20231
Number of Board
members
Percentage of the
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in Executive
Management
(ExCo)
Percentage
of Executive
Management
(ExCo)
Men
Women
Other categories
Not specified/prefer not to say
5
4
0
0
56%
44%
0%
0%
4
0
0
0
3
1
0
0
75%
25%
0%
0%
Ethnic background of Board and Executive Committee as at 31 December 20231
Number of Board
members
Percentage of the
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in Executive
Management
(ExCo)
Percentage
of Executive
Management
(ExCo)
White British or other White
(including minority-white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black
British
Other ethnic group, including Arab
Not specified/prefer not to say
7
0
2
0
0
0
78%
0%
22%
0%
0%
0%
3
0
1
0
0
0
1. Data self-reported against the categories set out in LR 9 Annex 2.
Gender Diversity as at 31 December 2023
3
0
1
0
0
0
75%
0%
25%
0%
0%
0%
Executive Committee (excluding
the Executive Directors)
Direct reports into
Executive Committee
All employees
50%
Male (1)
Female (1)
50%
52%
Male (11)
Female (12)
48%
36%
Male (37)
Female (66)
64%
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Corporate Governance | Composition, succession and evaluation
Director induction
and development
In addition to tours of the portfolio, subsequent to the
merger, an induction session was held for each of the
Board’s Committees to familiarise the Directors with
how the two respective companies’ Committees had
previously operated and the proposed calendar of
activities planned for the remainder of the year.
The Chairman and the Committees together ensure
that Directors keep their skills and knowledge up to
date, to allow them to fulfil their roles on the Board
and Board Committees. The General Counsel and
Company Secretarial team regularly update the
Board on legal and corporate governance matters,
and information on training opportunities and seminars
is circulated to Directors. Directors also receive
periodic briefings from external advisers, for example
in November 2023, the Audit Committee received
a specific update from PwC on ESG developments
and corporate reporting. Directors may also take
independent advice at the Company’s expense
where they feel this appropriate.
Our Board evaluation process
In accordance with the recommendations of the 2018
Code, we undertake a review of the effectiveness of
the Board’s performance and that of its Committees
and Directors every year, with an external evaluation
held at least every three years. As both Capco and
Shaftesbury had last undertaken external reviews in
2020, it was agreed that an external evaluation of the
Board, its Committees and individual directors should
be undertaken in November 2023 by Elaine Sullivan
and Lorna Parker of Manchester Square Partners
LLP (“MSP”), and reported to the Board in February
2024. Elaine Sullivan, Lorna Parker and MSP do not
have any other connection with Shaftesbury Capital
or the individual Directors. The evaluation also
considered the effectiveness of individual Directors,
with feedback given to Directors by the Chair of the
Board and feedback given to the Chairman by Richard
Akers as Senior Independent Director, at the end
of the process. In accordance with our three-year
cycle, the performance evaluation for the year ending
31 December 2024 will be internally facilitated by
Richard Akers, our Senior Independent Director.
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Shaftesbury Capital PLC | 2023 Annual Report
2023 Board evaluation
The Chairman and Group Company Secretary considered
the approach to be taken and recommended that an
external evaluation be undertaken by MSP based upon
their proposed method and approach, experience, skills,
references and any potential conflict of interest
The Nomination Committee approved the proposed timing
and overall approach
The evaluation process was tailored to Shaftesbury
Capital following discussions with the Chairman
The Company Secretarial team provided MSP with
background information/Board and Committee papers to
facilitate the review
The individual interviews with the Directors, General
Counsel, Group Company Secretary and Company
Secretary were conducted during October/November and
typically lasted for 90 minutes
MSP attended the November Board and Audit, ESC,
Nomination and Remuneration Committee meetings
The Report was shared with the Board at the February
2024 Board meeting with MSP attending
Richard Akers as Senior Independent Director met with the
Board to discuss the Chairman’s performance at the end
of the February 2024 Board meeting
Feedback from the 2023 Board evaluation
Board and Committee papers were of a high standard.
All Board members were well prepared and engaged at
Board meetings and, recognising the timing of the merger
and integration, good progress had been made in the
Board and Committee activities.
Agreed actions following the February 2024 Board
meeting included:
― Consideration of the skills required for the Board in
connection with succession planning
― Continued focus on succession and talent development
― Increased reporting on non-financial metrics
― Non-executive Directors to meet at the end of
scheduled Board meetings
Audit, risk and
internal controls
Audit Committee report
The Committee’s role is to oversee the Group’s
financial reporting, systems of risk management
and internal controls and the internal and external
audit relationships.
Ruth Anderson
Chair
Dear shareholder
On behalf of the Audit Committee, I am pleased to present our
2023 report.
The Group’s significant accounting matters and key areas
of assumptions and estimates together with how the Audit
Committee addressed them are outlined on page 121.
Following the completion of the Company’s merger with
Shaftesbury PLC, a key focus for the Committee during the
year was oversight of the completion accounting required in
respect of the transaction which was discussed in advance of
the half year results with the Group’s auditors. The merger also
brought together two finance teams and the Committee received
regular updates from the Joint Group Financial Controllers as
unified accounting systems and internal controls were put in
place. The Committee also gave consideration to the Group’s
going concern assessment and viability statement, noting the
refinancing during the year.
The valuations provided by the external valuers are a key
determinant of the Group’s EPTRA NTA, and reviewing
the valuation process, as well as considering the valuers’
independence continues to be one of the Committee’s key
responsibilities. This year the Committee ensured that we had a
good understanding of the approach taken by the valuers across
the combined portfolio. Following our review, we are satisfied that
the valuation process was robust, the valuers’ key assumptions
were appropriate and that all the external valuers remain
independent and objective.
The Committee now has oversight of the Group’s ESC reporting
and, prior to its recommendation to the Board, reviewed the
combined Group’s Task Force on Climate-related Financial
Disclosures (“TCFD”) disclosures. More information on this can
be found on page 66.
Ruth Anderson
Chair of the Audit Committee
28 February 2024
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Corporate Governance | Audit, risk and internal controls
Audit Committee members and attendance
Number of meetings attended (4 held1)
Ruth Anderson (Chair)
Richard Akers
Charlotte Boyle
Helena Coles
3/3
3/3
4/4
3/3
Jennelle Tilling
Jonathan Lane2
Anthony Steains
3/3
1/1
4/4
1. One Audit Committee meeting was held in 2023 prior to completion of the merger.
2. Jonathan Lane retired from the Board as a result of the merger on 6 March 2023 and could only attend a maximum of one meeting.
Key responsibilities
― Monitor the integrity of the Group’s financial reporting and consider significant judgements, assumptions and estimates
made by management
― Advise the Board on various statements made in the Annual Report, including those on viability, going concern, risks and
controls and whether, when read as a whole, the Annual Report and Accounts is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Company’s performance, business model and strategy
― Review the work of the external auditors, internal auditor and valuers
― Responsible for the relationship with the external auditors and consideration of their reappointment, their reports to the
Committee, performance, objectivity and independence, including the level of provision of non-audit services, and fees
― Responsible for the relationship with the internal auditor and consideration of their reappointment, their reports to the
Committee, performance, objectivity and independence
― Review of the Company’s systems of risk management and internal control, including financial, operational and
compliance controls
― Review of the Company’s whistleblowing policy and procedures
― Review of the reporting of the Group’s financial year-end Greenhouse Gas and environmental data disclosures and
the TCFD disclosures
― Oversight of cyber security processes
How the Committee operates
The Audit Committee comprises the Independent Non-executive Directors. Prior to the merger, the Committee comprised
Anthony Steains, who acted as Chair of the Committee, Charlotte Boyle and Jonathan Lane. On completion of the merger,
Ruth Anderson was appointed as Chair to the Committee, Richard Akers, Helena Coles and Jennelle Tilling were appointed
to the Committee and Jonathan Lane retired from the Board and the Committee. Helena Coles, Anthony Steains and
Jennelle Tilling stepped down from the Board and Committee on 31 January 2024.
The biographies of the Committee members, set out on page 97, demonstrate the diversity of experience of the Committee
members. Ruth Anderson, as a chartered accountant with many years of senior financial experience, satisfies the requirement
to have appropriate, recent and relevant financial experience.
During the year, at the Audit Committee Chair’s request, all or parts of meetings were attended by the Chief Financial Officer,
members of the finance team, the external auditors, the internal auditor, the valuers and external advisers. The Chairman,
Chief Executive, and other members of the senior management team were also invited to attend all or parts of meetings,
as appropriate.
The Committee Chair meets regularly with the external valuers of the wholly-owned portfolio, and the external auditors and
internal auditor without management present, to discuss any matters which they may wish to raise. Audit Committee members
are also invited to attend these meetings.
Throughout the year, the Audit Committee Chair met with the Chief Financial Officer and members of the senior management
team, as appropriate, to obtain a good understanding of key issues affecting the Group, which helped in her oversight of the
agenda and discussion at meetings.
The Committee reviews its effectiveness annually.
Significant accounting matters and key areas of assumptions
and estimate
The following were discussed at the Audit Committee this year.
Subject
Issue
How the Audit Committee addressed the issue
Accounting for the
merger with Shaftesbury
PLC and integration of
finance systems
Valuation of the Group
and its joint venture and
associate property portfolio.
Further information on
the approach taken by
the valuers in valuing the
portfolio and a sensitivity
analysis on equivalent yields
and ERV is set out in note 14
to the financial statements.
Portfolio and operating
review: pages 19 to 39.
The accounting for the merger
with Shaftesbury PLC required
management to assess the
contractual arrangements
arising from the transaction and
consider the requirements of
IFRS 3 Business Combinations to
assess the acquisition accounting.
The accounting required significant
judgements and estimates to be
made, including: decision on the
acquiring entity; assessing the
date of completion; identifying any
intangible assets acquired which
are not recorded in the Shaftesbury
PLC financial statements; fair value
assessment of the identifiable
net assets acquired; and the
presentation of the resulting gain
on bargain purchase.
Subsequent to the merger,
a number of key integration
workstreams were undertaken
including: alignment of accounting
policies; consolidation to one
general ledger and accounts
payable systems; integration of
IT systems; and aligning internal
controls across the Group.
The valuation of the property
portfolio is a key determinant of
the Group’s EPRA NTA, as well
as indirectly impacting executive
and employee remuneration.
The valuation is conducted by
independent valuers. However,
valuations are inherently subjective
and require significant estimates to
be made including, but not limited
to, market yields, ERVs and void
periods. At 31 December 2023,
the valuation of the wholly-owned
property portfolio was £4.8 billion.
The Group’s share of the property
portfolio held in the joint venture
and associate was £224.0 million.
Management provided detailed papers on accounting for
the merger in advance of each Committee meeting so that
at the meetings the Committee was able to discuss in detail
and raise questions on the accounting treatments adopted.
These included the technical elements to be taken into
account in arriving at the judgement on the acquiring entity;
also the existence, and presentation, of the gain on bargain
purchase. With additional information from the external
auditors on their work on accounting for the merger,
the Committee was satisfied that the significant judgements
and estimates were appropriate.
Following the merger, the Committee had oversight of the
integration work streams relating to financial reporting,
financial controls and integration planning, with management
providing updates on issues and timing to the Committee
at each meeting. The Committee was also able to raise
more detailed questions with the Company’s IT specialists
on systems integration. The Committee engaged internal
audit to undertake a review of integration governance,
which will report to the Committee in 2024.
The Audit Committee Chair met the valuers, without
management present, to review the 30 June and 31 December
valuations. In addition Cushman & Wakefield and CBRE,
valuers of the wholly-owed portfolio, provided detailed
papers to the Committee in advance of attending the July
and February Committee meetings, when the Committee
was able to discuss their papers and raise questions.
The Committee considered the underlying assumptions
used in the valuations and questioned the valuers on
how the changing macroeconomic and interest rate
environment had impacted the valuations. The Committee
also considered analysis and commentary by management
and an assessment by the external auditors. As a result of
these reviews, the Committee concluded that the valuers
are objective and independent, that the valuations had
been carried out appropriately, and that the disclosures
in respect of valuations were suitable for inclusion in the
Group’s financial statements.
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121
Corporate Governance | Audit, risk and internal controls
Financial Reporting
2023 Annual Report
The Executive Directors have confirmed that they were not
aware of any material misstatements in the Interim results and
Annual Report. The external auditors confirmed that they had
found no material misstatements in the course of their work.
After reviewing reports from management and, following
discussions with the external auditors and valuers, the
Committee is satisfied that:
― the processes used for determining the values of
assets and liabilities have been appropriately reviewed,
challenged and were sufficiently robust;
― the financial statements appropriately addressed the
significant assumptions and key estimates, both in respect
of the amounts reported and the disclosures;
― the Group has adopted appropriate accounting policies; and
― both the external auditors, internal auditor and valuers
remain independent and objective in their work.
Viability and going concern
The Committee considered the going concern statement in the
Interim results and Annual Report, and the viability statement
in the Annual Report.
See page 75 for more information.
Fair, balanced and understandable
The Board as a whole is responsible for determining whether
the 2023 Annual Report is fair, balanced and understandable,
and provides the information necessary for shareholders to
assess the Group’s performance, business model and strategy.
The Committee discussed a report from the Chief Financial
Officer and Joint Group Financial Controllers covering the
Annual Report.
The Committee considered whether the Annual Report,
taken as whole:
― included a clear explanation of the merger with Shaftesbury;
― explained how the macroeconomic conditions had impacted
the Group’s operations and financial statements;
― had been open and honest about the challenges,
opportunities and successes throughout the year;
― provided clear explanations of our KPIs and how they link
to our strategy and remuneration;
― explained our business model, strategy and accounting
policies simply, clearly and precisely;
― incorporated clear sign posting to additional information
where necessary;
― had a consistent tone throughout the Annual Report; and
― was in line with what had been reported and considered
by the Board throughout the year.
The Committee considered whether the Annual Report:
― was a fair, balanced and understandable assessment of
the Group’s position and prospects;
― provided the necessary information for shareholders to
assess the Group’s performance, business model and
strategy; and
― had been written in straightforward language, without
unnecessary repetition. The Committee advised the Board
that it was satisfied that the Annual Report and Accounts
was fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Group’s performance, business model and strategy.
Internal Controls and risk
management
Risk, control and assurance
The Executive Risk Committee, chaired by the Chief Executive,
evaluates the Group’s strategic and emerging risks, associated
controls and mitigating arrangements, reporting to the Board
throughout the year. The Audit Committee receives regular
updates on the Executive Risk Committee’s conclusions.
As part of its review of the control environment, the Audit
Committee considers reports from management, the work
undertaken by external advisers and feedback from the
internal and external auditors. Key control observations,
exceptions and management actions are reviewed and
discussed. The Committee reports to the Board on its review of
the Group’s systems of risk management and internal controls.
Findings from the internal audit reviews and reports from the
Chief Financial Officer and Joint Group Financial Controllers
were presented to the Committee, and, on the basis of the
results of these reports, the Committee considered the key
controls to be working effectively.
The Board will consider the new reporting requirements of the
UK Corporate Governance Code published in January 2024,
during the coming year.
See pages 59 to 61 for more information on the Company’s risk
management and internal controls.
Internal audit
BDO LLP (“BDO”) had been appointed to act as the Company’s
internal auditor prior to the merger. Shaftesbury PLC did not
have an internal audit function but appointed third parties
to provide further assurance to supplement reviews of risk
management and internal control arrangements undertaken
by management, and their reports were made available to
the external auditor. An internal audit plan for 2023 prepared
by BDO had been approved prior to the merger, and the
Committee approved a revised plan following completion of
the merger. Reviews undertaken in the year included payroll,
Lillie Square health and safety, asset management, property
management, risk management, residential leasing, data
protection and integration governance.
The Committee reviews the work and effectiveness of the
internal auditor, the internal audit plan, any matters identified
as a result of internal audits and whether recommendations
are addressed by management in a timely and appropriate way.
The Committee is satisfied that the internal auditor continues to
be independent and its services remain effective.
The internal audit partner has direct access to the Audit
Committee Chair should he wish to raise any concerns outside
formal Committee meetings.
TCFD
At the year end, the Committee reviewed the TCFD disclosures
setting out the Group’s transitional and physical risks and
opportunities relating to climate change. In particular, the
Committee reviewed the short, medium, and long-term nature
related to the risks and opportunities and considered that the
approach adopted by the Group in assessing these risks and
opportunities is appropriate and reasonable.
The TCFD report can be found on pages 66 to 74.
Cyber security
During the year, the Committee received updates in relation
to progress on the post-merger integration of IT systems,
and actions being undertaken to enhance cyber security,
including employee training and awareness.
Whistleblowing
The Committee reviews the Group’s whistleblowing policy
and procedures annually and reports on its findings to the
Board. The Group’s whistleblowing procedures include an
independent, confidential hotline through which employees
or third parties can anonymously raise a matter of concern.
Alternatively, employees or third parties can contact the
General Counsel, the Company Secretary or the Audit
Committee Chair. During the year, no whistleblowing instances
were reported.
Oversight of audit quality
External auditors
The Company has complied with the provisions of the Statutory
Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014.
The Committee has primary responsibility for overseeing the
relationship with the external auditors, which includes being
satisfied that they remain effective and independent. Under this
responsibility, the Committee reviews the performance of the
auditors and their independence annually.
PwC were first appointed as the Company’s external auditors
in 2010, and, following a competitive audit tender process,
were reappointed as external auditors in January 2020.
The audit partner has been Andrew Paynter since January
2020. At the 2023 AGM, shareholders re-appointed PwC as
the external auditors for the year ended 31 December 2023
and authorised the Audit Committee to determine the external
auditors’ remuneration.
Under current regulations, the Company is required to retender
the audit by no later than the 2030 financial year.
Following the 2022 year-end audit, the Committee assessed
the performance of the external auditors, their qualifications,
expertise, resources, independence, and the effectiveness
of the audit process including timely communication of audit
matters. This assessment was undertaken through discussions
with the Chief Financial Officer and Joint Group Financial
Controllers and consideration of the feedback provided on the
service provided by PwC during the audit. It was noted that a
new director and manager had joined the audit team and that
there had been early engagement on all key audit areas. PwC
separately also confirmed their independence and confirmed
to the Committee that:
― they have internal procedures in place to identify any
aspects of non-audit work which could compromise
their role as auditors and to ensure the objectivity of
the audit report;
― the total fees paid by the Group during the year do not
represent a material part of their firm’s fee income; and
― they consider that they have maintained audit independence
throughout the year.
In assessing PwC’s continued audit independence, the
Committee considered the level of non-audit fees. Factors
taken into account included:
― the nature of the work undertaken by PwC and consideration
of the relevant independence threats and safeguards in
place;
― all of the non-audit services provided in the year were
permissible under the UK Ethical Standard;
― all non-audit work provided by PwC to Shaftesbury prior
to the merger ceased on completion of the merger; and
― PwC did not perform any other non-audit services for the
year ended 31 December 2022 and 31 December 2023
apart from the half year review and usual assurance work
noted under Audit fees below.
The Committee considered the depth of discussions held
with the external auditors and how it had challenged the
Group on its approach to significant assumptions and
estimates. The Committee was satisfied that PwC had
sufficiently challenged the Group throughout the year and
that its relationship with PwC was one of openness and
professionalism. The external Audit Plan, including updates
on the risk assessment and areas of focus as appropriate is
revisited by the Committee at each of the meetings and the
Audit Committee Chair meets with the external audit partner
in advance of all Audit Committee meetings. Management
provides constructive feedback to the audit team during the
course of the year and the external audit partner also reports
to each Audit Committee without management present.
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123
Corporate Governance | Audit, risk and internal controls
The Committee concluded that:
― it was satisfied with PwC’s performance throughout
the year, the effectiveness of the external audit and the
interaction and communication between the auditors and
the Committee members;
― it was satisfied with the auditors’ qualifications, expertise
and resource; and
― it remained confident that PwC’s objectivity and
independence were not impaired by the provision of
non-audit services.
The Committee also considered the Financial Reporting
Council 2022/23 Audit Quality Inspection results for PwC
issued in July 2023.
Audit fees
Fees payable to the external auditors for audit and non-audit
services are set out in note 6 to the financial statements on
page 181.
The Committee’s policy is that non-audit assignments
are not awarded to the external audit firm if there is a
risk that audit independence and objectivity could be
compromised. Under our non-audit work policy, in line with
the requirements of the FRC Ethical Standard, other than in
exceptional circumstances, non audit fees should not exceed
70 per cent of the audit fees over a rolling three-year period.
The award of any non-audit assignment to the auditors in
excess of the lower of £50,000 or 15 per cent of the estimated
annual level of the auditors’ fees at that time is subject to prior
approval of the Committee. Our Board Executive Directors have
authority to approve non-audit assignments to the auditors
below this threshold.
Non-audit fees were 11 per cent of audit fees in the year ended
31 December 2023 (2022: 12 per cent) and were 27 per cent
(2022: 21 per cent) of the average audit fee for the preceding
three years. The external audit fee for the audits of the Lillie
Square and Longmartin joint ventures is £88,000 (2022: £57,000).
The Group’s 50 per cent share of this was £44,000 (2022: £29,000).
Independence and reappointment
The Committee remains satisfied with the effectiveness
of the external audit and its interaction with PwC. It also
remains confident that PwC’s objectivity and independence
are not impaired by the provision of non-audit services.
The reappointment of the external auditors is reassessed annually.
124
Shaftesbury Capital PLC | 2023 Annual Report
Oversight of
sustainability
ESC Committee report
The Committee oversaw ESC activity on
behalf of the Board and monitored progress
against our sustainability strategy and Net
Zero Carbon commitment.
Charlotte Boyle
Chair
Dear shareholder
On behalf of the ESC Committee, I am pleased to present our
2023 Report. The Committee was responsible for overseeing
the Company’s ESC activity on behalf of the Board, to ensure
delivery of the Company’s ESC activities. This included
monitoring progress against our net zero carbon target and
maintaining oversight of significant climate change related issues.
The Committee had oversight of the Group’s ESC strategy and
its implementation, and the Audit Committee has oversight of
ESC reporting. This report sets out our activities during the year.
Approval of updated ESC strategy and
Net Zero Carbon pathway
Following completion of the merger with Shaftesbury,
the Committee approved an updated ESC strategy for the
combined business under which the Company will use a
low-carbon retrofit approach to future proofing our buildings
whilst preserving their heritage. Prior to the merger each
business had made a commitment to become net zero
carbon by 2030, and we are pleased to have reconfirmed this
commitment, publishing an updated combined net zero carbon
pathway in November 2023. The Committee received regular
updates from management on the integration activities that
were required to be completed in order for a combined
pathway to be produced. Further information on our ESC
strategy and net zero commitment can be found in the
Sustainability Report on page 78 to 91.
ESC oversight
The Committee received regular updates on progress against
the updated ESC strategy, including EPC ratings, and a pilot
project using CRREM analysis to understand better how to
optimise the carbon performance of our buildings.
The Committee also received updates on the Company’s
community and charitable initiatives and matters that
had been considered by the ESC Management Committee.
Climate risk and opportunities
The Committee discussed the sustainability and climate
risks and mitigating actions considered by the Executive Risk
Committee. The Committee also reviewed the estimated cost
quantification to meet MEES targets. Our climate risk reporting
is on page 64 and our TCFD reporting is on pages 66 to 74.
Future oversight of ESC matters
Following the publication of our updated combined net zero
pathway and responsibility for our sustainability processes
being integrated into our real estate investment management
team, at our February 2024 Board meeting, it was agreed
that, from the date of this report, ongoing oversight of ESC
matters should be a matter for consideration by the whole
Board. This includes consideration of climate-related risks
and opportunities and implementation of the Group’s
sustainability strategy and net zero pathway. Our Chief
Executive will have overall responsibility, and day-to-day
oversight will be undertaken by members of the Executive
Committee and the senior management team, with regular
reporting to the Board. Our sustainability team will continue
to be responsible for recommending the strategic direction,
focusing the business on key areas and our measuring and
reporting processes.
Charlotte Boyle
Chair of the ESC Committee
28 February 2024
Shaftesbury Capital PLC | 2023 Annual Report
125
Corporate Governance | Oversight of sustainability
ESC Committee members and attendance
Number of meetings attended (4 held1)
Charlotte Boyle (Chair)
Richard Akers
Helena Coles
Anthony Steains
4/4
3/3
3/3
4/4
Ian Hawksworth
Henry Staunton
Jonathan Lane
4/4
1/12
0/13
1. One ESC Board Committee meeting was held in 2023 prior to completion of the merger.
2. Henry Staunton retired from the Board as a result of the merger on 6 March 2023 and could only attend a maximum of one meeting.
3. Jonathan Lane retired from the Board as a result of the merger on 6 March 2023. Due to an unexpected and unavoidable commitment, Jonathan was unable
to attend the meeting held prior to the merger.
Key responsibilities
― Overseeing the implementation of the Group’s sustainability strategy
― Consideration of climate related risks and opportunities identified by the business and the process by which they are identified
― Community engagement and the Group’s Community Investment Fund
― Reviewing associated policies and performance related to our net zero carbon commitments, environmental management,
energy usage, climate change issues and local community support
― Monitoring the impact of relevant sustainability, climate related legislation or regulatory requirements
― Reviewing the related statements in the Annual Report
How the Committee operates
The ESC Committee comprises two independent Non-executive Directors and the Chief Executive. The Committee currently
comprises Charlotte Boyle who acts as Chair of the Committee, Richard Akers, and Ian Hawksworth.
During the year, at the request of Charlotte Boyle, all or parts of meetings are attended by our Heads of Sustainability,
as appropriate. The Chair of the Audit Committee may also be invited to attend meetings, when appropriate.
The Committee reviews its effectiveness annually.
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Shaftesbury Capital PLC | 2023 Annual Report
Remuneration
Directors’ remuneration report
“The Committee undertook a comprehensive review
of remuneration post-merger to ensure the Policy
and its application are aligned with operational
performance and strategic progress, stakeholders’
interests and the Company’s culture”
Dear shareholder
I am pleased to present our 2023 Directors’ remuneration report.
The merger of Capco and Shaftesbury completed on 6 March
2023. In anticipation of the merger, the Capco Remuneration
Committee gave careful consideration to the impact of the
merger on remuneration at Capco. Details of the treatment of
the outstanding awards were set out in last year’s remuneration
report and summarised in the prospectus for the merger
transaction, with both the report and the transaction approved
by shareholders. These are reported again on page 144.
The 2021 and 2022 Performance Share Plan (“PSP”) awards vested
prior to completion of the merger and details of their respective
vesting outcomes were provided in last year’s remuneration
report. The value of this previously reported merger-related
remuneration, which makes up over 50 per cent of this year’s
single figure values, vested after the publication of the 2022 annual
report and is, therefore, included in this year’s reporting.
A new Directors’ Remuneration Policy was put to shareholders
for approval at the Company’s AGM in June 2023. Prior to
the merger the Capco Remuneration Committee determined
that it was appropriate to make only minimal changes to the
2020 Capco Policy to enable the Remuneration Committee
representing the combined businesses (the “Committee”)
to conduct a full review following completion of the merger.
Following completion of the merger, Jennelle Tilling, the Chair
of the former Shaftesbury Remuneration Committee and Chair
of the Shaftesbury Capital Remuneration Committee until
31 December 2023, led this review and we are grateful for the
views received from shareholders which have helped shape our
proposals. Details of our approach to remuneration in 2024 is
set out below. In addition, I also set out the matters normally
considered each year, including pay outcomes for 2023 under
the annual bonus plan and our approach to wider employee pay.
Review of remuneration across
the Company
The Remuneration Committee’s comprehensive review of senior
executive pay arrangements alongside an exercise to harmonise
pay across the two legacy businesses, incorporated the views
of each of the Executive and Non-executive Board members
and those elicited from shareholders shortly after the merger.
Richard Akers
Chair
Directors’ Remuneration Policy
The Remuneration Committee concluded that the current 2023
Policy remains appropriate and aligned with the Company’s
strategy and stakeholders for the remaining two years
of the three-year Policy period. In arriving at this conclusion,
the Committee considered the following matters.
Structure of executives’ remuneration
packages – retaining performance shares
Both legacy businesses operated the same incentive structure
comprising fixed pay, an annual bonus (with part deferred) and
annual grants of performance shares. As part of the review,
the Committee considered in depth the optimal structure –
in particular the choice between performance shares and
restricted shares – in the context of a challenging and uncertain
macroeconomic backdrop and the Board’s desire to further
enhance a high-performance, professional, inclusive and
entrepreneurial culture.
The Committee concluded that, on balance, retaining the
current pay structure for the remaining two years of the Policy
period is its preferred route. Retaining a performance-related
long-term incentive scheme aligns with our ambitions to target
efficiencies and further opportunities as we move beyond
the initial stage of post-merger integration. The Committee,
however, will continue to monitor internal and external views
on the choice of long-term incentive vehicle and will revisit this
as part of the review ahead of a Policy vote in 2026.
All permanent employees below Board level will continue to
participate in the annual bonus scheme and have the potential
to receive awards under the PSP, ensuring alignment across all
our employees.
Governance commitments – change
of control and malus and clawback
provisions
Whilst shareholders will not be asked to approve a new Policy
at the 2024 AGM, the Committee feels it is appropriate to
make additional commitments to address issues raised by
our shareholders which ensures market alignment on change
of control provisions under the PSP and robust malus and
clawback provisions to align with good practice.
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― Change of control: a minority of shareholders raised
the discretion available to the Committee to override
performance assessment on vesting for a change of control
as an area of concern. In light of this, the Committee pledges
that in the event of a change of control during the remainder
of the Policy period, any unvested PSP awards would be
performance tested at the date of the change of control.
This will be included in the next Policy for approval in 2026.
For completeness and, as previously disclosed, on the merger
unvested Capco long-term incentive awards were tested for
performance prior to determining their vesting outcomes.
― Malus and clawback: the Committee reviewed the recovery
and withholding provisions attached to Shaftesbury Capital’s
incentive schemes and will introduce the following changes
from 2024:
― Malus and clawback will apply to the cash portion of the
annual bonus (previously malus provisions applied solely
to the deferred bonus).
― The trigger events will be updated to include gross
misconduct of the participant; events which have brought
any member of the Group into material disrepute; material
misstatement in the accounts of the Company; calculations
based on errors or misleading information; and the Company
becoming insolvent or otherwise suffering a corporate
failure so that shares cease to have material value.
The changes will bring our provisions in line with prevailing
market and good practice. The changes will apply to 2024
incentives and will be implemented through amendments
to the PSP rules, grant documentation and bonus letters.
The Committee expects that clawback would be enforced
initially by the application of malus to unvested awards,
and subsequent clawback of vested awards as appropriate.
Implementation of Policy in 2024
― Salaries: For 2024, Executive Directors’ salaries will increase
by 3 per cent which is lower than the wider workforce
underlying increase of 4.3 per cent. The Committee is aware
Incentive scheme performance measures
of current sensitivities concerning salary increases and is
comfortable that this increase is warranted in light of the
increased scope of their roles, the significant achievements
in harmonising the two businesses post-merger, and in the
context of it being lower than the increase provided to the
wider workforce.
― Incentives: Executive Directors’ incentive opportunities for 2024
will remain unchanged. The annual bonus opportunity will be
150 per cent of salary and it is intended that conditional PSP
awards will be granted at 300 per cent of salary, in line with
the current Policy.
The Committee has chosen metrics and weightings which
support the medium-term growth objectives of the business
and provide an appropriate balance between input and output
metrics, financial and sustainability goals, and absolute and
relative measurement. The measures support the specific
priorities set out at the November 2023 Investor Event.
As a consequence of combining two businesses, further work
is required in 2024 to re-validate our science-based targets for
sustainability and determine an appropriate baseline. Once
completed, the Committee will consider if and how a carbon
metric might feature in future long-term incentive grants.
Employees
The Committee is provided with updates on remuneration
decisions taken for the wider employee population. During the
year, this included a briefing on the below Executive Committee
remuneration strategy and structure implemented with effect
from 1 July 2023. The Committee takes its decisions with the
wider employee population in mind and is aware of the impact
of decisions taken on the Company as a whole.
The remuneration structure for Shaftesbury Capital’s
employees broadly aligns with that of the Executive Directors,
with employees being eligible for a discretionary bonus and
PSP awards, as well as salary, pension and employee benefits.
In addition to Executive Director reports to the Board, during
the year the Chairman met with 20 employees to discuss the
2024 Annual bonus
2024 PSP
EPRA Net tangible assets (NTA) per share (25%)
― A key measure driving the long-term potential of our assets.
Earnings per share (EPS) (30%)
― Rewards value growth in net rental income as well as managing costs.
Upweighted from 25% in 2023 to reflect the importance of delivering
income growth, cost savings and operating efficiencies.
Relative Total Property Return (TPR) (20%)
― Rewards the additional value created by management over and above any
changes in value from tracking the property market as a whole, as measured
by the widely-used MSCI Total Return All Property Index.
Non-financial (Corporate and sustainability) (25%)
― Bespoke, tailored strategic objectives for each Director and the delivery of
common sustainability goals.
The Committee retains discretion under the annual bonus to amend the
payout to ensure it appropriately reflects underlying performance.
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Relative Total Shareholder Return (TSR)
(50%)
― Measured relative to real estate sector
peers and reflects the total returns delivered
to shareholders.
Total Accounting Return (TAR) (50%)
― Rewards growth in EPRA NTA and dividends
paid to shareholders to the extent returns
exceed real estate sector peers.
The Committee retains the ability under the
Policy to exercise downward discretion under
the PSP when determining the proportion of
an award that vests.
integration of the businesses and updated the Non-executive
Directors on feedback received. Our employee engagement
forum, attended by Charlotte Boyle, also provides feedback to
the Board. On its launch to the business, employees received
a presentation on the new remuneration structure, including
its alignment with the Executive Directors. Key elements of
employee remuneration for 2024 include:
― Salary increases which took place with effect from
1 January 2024 are c. 4.3 per cent on average
― Promotional salary increases will be on top of these
inflationary increases and have regard to market levels for
the new roles
― All permanent employees participate in the annual bonus
scheme and will receive annual bonuses in respect of 2023
performance based on the financial targets (in line with those
for the Executive Directors) and non-financial objectives.
― Reflecting our inclusive culture and our desire to align all
employees with long-term goals, all permanent employees
received PSP awards in 2023 based on the same measures
as the Executive Directors
― All permanent employees will be eligible to receive annual
bonuses and PSP awards in 2024
― The employer pension contribution rate of 17.5 per cent of
salary applies to all employees
Chairman and NED fees
Jonathan Nicholls became Chairman of the merged business
in March 2023 and his fee was set at the same level as his
predecessor, which had not been increased since May 2020.
The Committee has set his fee at £310,000 which takes into
account his significant time commitment, market rates and his
experience. The Board, excluding the Non-executives, have sought
to harmonise Non-executive Director fees and the changes are set
out in the Annual Report on Remuneration on page 149.
Performance measurement in 2023
and annual bonus outcomes
We have had an excellent start as a newly merged company.
The team has come together to deliver a strong performance with
growth in annualised rent and ERV, a strong pipeline of demand
and significant cost savings across the business. Despite the
challenging macroeconomic backdrop, management’s actions in
ensuring the resilience of our exceptional portfolio also helped
negate the widening of yields in relation to our valuation. These
actions resulted in our 2023 annual bonus underlying EPS and
TPR targets being met in full. EPRA net tangible assets per share,
largely affected by the widening of yields, was between threshold
and target resulting in a 40 per cent payout against this metric.
Altogether, our performance against the financial measures
delivered 80 per cent of the 75 per cent bonus opportunity
allocated to these three financial measures.
Alongside delivering a strong performance, our team have
worked tirelessly pre and post-merger to undertake a range
of workstreams including revisiting of the Group’s purpose
and values, the effective integration of the two businesses
encompassing the integration of the two teams and underlying
processes and relocation to one office, the rotation of assets,
the early refinancing of the £576 million unsecured loan arranged
at time of the merger, and ensuring our continued commitment
to sustainability with our updated Net Zero Carbon Pathway.
The non-financial targets for the Executive Directors were
assessed at between 90 and 100 per cent of the 25 per cent
opportunity allocated to these measures, reflecting each of
the Executive Directors’ efforts for the periods they were on
the Board in achieving their strategic, financial, integration,
operational and ESC objectives. The progress we have made
this year means the business is now well positioned to deliver
on the longer-term and broader benefits of the merger.
The Committee believes the annual bonus outcome for 2023
is a fair reflection of the strong performance during the year.
No discretion was used in determining the formulaic outcomes.
There were no PSP awards capable of vesting based on
performance for the year ending 31 December 2023. The first
PSP award for the combined business was granted in 2023 and
these will vest in 2026 subject to performance for the year
ending 31 December 2025.
Executive Director changes in the year
After 12 years with the business, Chris Ward, Chief Operating
Officer of the Company and formerly the Chief Financial Officer
of Shaftesbury PLC, stepped down from the Board and left the
Company on 22 December 2023. Chris has been treated as a
good leaver by the Committee and will receive a pro-rated bonus
for 2023, part of which will be deferred in shares for three years.
He received PSP awards in 2023 and these will vest in 2026
subject to the achievement of performance conditions and a
pro-rata time reduction. Vested awards will be subject to a further
two-year holding period. Chris had a 12-month notice period and
in line with our Policy and his service agreement, he will receive
monthly payments comprising salary, benefits and pension for the
unexpired notice period.
After three years on the Board, in connection with the merger
with Shaftesbury PLC, Michelle McGrath stepped down as
an Executive Director and joined the Executive Committee
of the Company with effect from completion of the merger
on 6 March 2023. Michelle’s remuneration for the period she
served on the Board, including her PSP awards which vested
prior to completion of the merger and pro-rated bonus for
2023 are disclosed in this report. As an employee, Michelle
continues to receive her base salary, pension and benefits
and participates in the Company’s incentive arrangements.
Conclusion
As explained within this report, the Committee has determined
the current Policy remains fit for purpose but that certain
commitments should be made to address issues raised by
some shareholders to ensure market alignment. I would like
to thank shareholders that participated in the consultation
exercise, and we hope that you will continue to support our
approach to remuneration and the resolution to approve the
remuneration report which will be tabled at the 2024 AGM.
If you have any questions on this report, please feel free to
direct them to me via the Group Company Secretary.
Richard Akers
Chair
28 February 2024
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Remuneration Committee members and attendance
Number of meetings attended (8 held1)
Richard Akers (Chair)
Ruth Anderson
Charlotte Boyle
Helena Coles
6/6
6/6
8/8
6/6
Jennelle Tilling
Jonathan Lane2
Anthony Steains
Henry Staunton2
6/6
2/2
8/8
2/2
1. Two Remuneration Committee meetings were held in 2023 prior to completion of the merger.
2.
Jonathan Lane and Henry Staunton retired from the Board as a result of the merger on 6 March 2023 and could only attend a maximum of two meetings.
Key responsibilities
― Determine the Remuneration Policy for Executive Directors, and the remuneration framework for senior management
― Monitor the appropriateness of the Remuneration Policy
― Ensure the Executive Directors are remunerated fairly and responsibly, aligned to the long-term interests of the Company
― Set the remuneration of the Chairman, Executive Committee and designated senior management, including the Group
Company Secretary
― Keep under review employee remuneration, related policies and alignment of incentives and rewards with the Company’s
culture and values
― Consider the appropriateness of the Directors’ remuneration framework compared with arrangement for other employees
― Review and approve the performance targets and outcomes (using discretion where appropriate) for the annual bonus
scheme and PSP
― Ensure that the remuneration report and disclosures are easy to read and understandable
― The appointment of, and relationship with, the Company’s remuneration adviser
How the Committee operates
The Remuneration Committee comprises the Independent Non-executive Directors. Prior to the merger, the Committee
comprised Jonathan Lane, who acted as Chairman of the Committee, Charlotte Boyle, Anthony Steains and Henry Staunton.
On completion of the merger, Jennelle Tilling was appointed as Chair to the Committee and Richard Akers, Ruth Anderson and
Helena Coles were appointed to the Committee. Jonathan Lane and Henry Staunton retired from the Board and the Committee
upon completion of the merger. On 1 January 2024, Richard Akers was appointed as Chairman of the Committee and Helena
Coles, Anthony Steains and Jennelle Tilling stepped down from the Board and Committee on 31 January 2024.
Korn Ferry, appointed by the Committee in 2020 following a competitive process, advised the Board for the first nine months
of the year. FIT Remuneration Consultants LLP, an independent remuneration consultancy was engaged by the Committee in
September 2023 following a tender process and, as instructed by the Committee, supported the Committee’s review of the
Company’s Remuneration Policy and provided advice on the remuneration of the Executive Directors, together with regular
market and good practice updates.
The Company’s remuneration advisers attend all or part of the Committee meetings as appropriate. In addition, some
meetings, or parts of the meetings are attended by the Chief Executive, the Chief Financial Officer, Group Company Secretary,
Company Secretary and the Company’s Head of HR in relation to employee remuneration and related policies. No executive
participates in discussions or decisions regarding their own remuneration.
The Committee reviews its effectiveness annually.
Supporting clarity, simplicity, proportionality, and predictability and ensuring risk mitigation
and alignment to culture
The table below explains how both the current Remuneration Policy, and the Committee’s practice in applying the Policy over the
year under review, address the factors set out in Provision 40 of the 2018 UK Corporate Governance Code:
Clarity
Simplicity
Risk
― Clarity and transparency is achieved
through a combination of explanations
for decisions taken and disclosure of
the nature and weighting of annual
bonus and PSP performance measures.
― The Remuneration Policy and its
implementation look to support the wider
Shaftesbury Capital business strategy.
― Achieved by Executive Directors’
remuneration being composed
of a limited number of elements
designed to balance the retention and
incentivisation of Executive Directors
with the delivery of strategy and
shareholder returns.
― Executive Director remuneration is
composed of four elements: base
salary, pension and other benefits,
annual bonus and PSP.
― A range of features of Executive
Directors’ remuneration assist in
mitigating the risks of excessive rewards
and inappropriate behaviour.
― Executive Directors are expected to
build a material shareholding which
must be maintained for a period
following departure, which aligns
them with the long-term interests of
Shaftesbury Capital.
Predictability
Proportionality
Alignment to culture
― Some of the same features of Executive
Directors’ remuneration arrangements
that mitigate risk also ensure that
outcomes are within a predictable range.
― Shareholders are provided with
potential values which can be awarded
to Executive Directors under the annual
bonus and PSP.
― Achieved through strong links between
Executive Directors’ remuneration and
corporate performance.
― Achieved through strong links between
Executive Directors’ remuneration and
Shaftesbury Capital’s values:
― Take a responsible long-term view
― Act with integrity
― Take a creative approach
― Listen and collaborate
― Make a difference
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1. Directors’ Remuneration Policy
This section of the Directors’ Remuneration Report sets out Shaftesbury Capital’s Directors’ Remuneration Policy which took effect
following the 2023 AGM on 15 June 2023, when it was approved by shareholders. The Remuneration Policy can also be found
on our website: https://www.shaftesburycapital.com/en/about-us/corporate-governance/remuneration-policy.html. Details of
actual remuneration paid, share awards made, and the approach to remuneration for 2023 are set out within the Annual Report
on Remuneration, which starts on page 140. While the 2023 shareholder-approved Policy will continue to apply in 2024, certain
pledges have been made in how the Policy will be operated and these are set out in the Remuneration Committee Chair’s letter.
1.1 Remuneration policy
The key objectives of the Company’s Remuneration Policy are to:
― Strongly align executive and shareholder interests
― Underpin an effective pay-for-performance culture
― Support the retention, motivation and recruitment of talented people who are commercially astute
― Encourage executives to acquire and retain significant holdings of Shaftesbury Capital shares
The Committee aims to achieve an appropriate balance between fixed and variable remuneration, and between variable remuneration
based on short-term and longer-term performance. Fixed remuneration includes base salary, benefits and pension. Variable remuneration
includes an annual bonus, of which part is deferred in shares, and awards under the Performance Share Plan (“PSP”).
The Remuneration Policy is aligned to the strategy and nature of the Company, and reflects the importance of total return and the
long-term nature of Shaftesbury Capital’s business, rewarding the Executive Directors for delivering strong performance against the
Company’s key performance indicators (“KPIs”).
In order to avoid any conflict of interest, remuneration is managed through well-defined processes ensuring that no individual is
involved in the decision-making process related to their own remuneration. In particular, the remuneration of all Executive Directors
is set and approved by the Committee; none of the Executive Directors are involved in the determination of their own remuneration
arrangements.
Each year, with the support of external advisers, the Committee undertakes a review of the remuneration of the Executive Directors.
It has oversight of the remuneration of the senior managers immediately below Board level, and the Company Secretary. It
considers the responsibilities, experience and performance of the Executive Directors and pay across the Group.
The Policy was approved by shareholders at the 2023 AGM and applies to incentive awards with performance periods beginning on
1 January 2023. Payments to Directors can only be made if they are consistent with a shareholder approved Policy or amendment
to the Policy.
Details of each element of remuneration, its operation, purpose, link to strategy and performance metrics are set out in this section.
1.2 Executive Director policy table
The table below summarises each of the components of the remuneration package for the Executive Directors:
Purpose and link
to strategy
Base salary
To provide an
appropriately
competitive base
salary, whilst placing
emphasis on the
performance-
related elements
of remuneration.
The Committee
believes base salary
for high-performing
experienced Executive
Directors should be at
least median.
Operation
Maximum opportunity
Performance metrics
The Committee considers
individual and Company
performance when setting
base salary, as well as the
general increase awarded
other employees
Base salaries are normally reviewed on an
annual basis, with any increase normally taking
effect from 1 April. The Committee reviews base
salaries with reference to:
Base salary increases will be applied in line with
the outcome of the review and will normally be in
line with increases awarded to other employees.
– Other property companies (including the
constituents of the long-term incentive plan’s
comparator group)
– UK companies of a similar size
– Each Executive Director’s performance and
contribution during the year
– Scope of each Executive Director’s
responsibilities
– Changes to the remuneration and overall
conditions of other employees
When reviewing base salaries, the Committee
is mindful of the gearing effect that increases
in base salary will have on the potential total
remuneration of the Executive Directors.
However, the Committee may make additional
adjustments in certain circumstances to
reflect, for example, an increase in scope or
responsibility, development in role, to address
an increase in size or complexity of the
business, to address a gap in market positioning
and/or to reward the long-term performance
of an individual. For the purposes of stating
a maximum as required by the remuneration
regulations, no increase will be applied to an
Executive Director’s base salary if the resulting
base salary would be above the upper quartile
base salary for CEOs at companies in the
FTSE 350.
Benefits
To be appropriately
competitive with
those offered
at comparator
companies.
Benefits will be in line with those offered to
some or all employees and may include private
dental and health care, life insurance, personal
accident cover, travel insurance, income
protection, and a car allowance, which may
be paid in cash.
Directors may participate in flexible benefit
arrangements offered to other employees,
including the ability to buy or sell annual leave.
Directors may receive seasonal gifts and a gift
on leaving the Board (including payment of any
tax thereon), in appropriate circumstances.
Other benefits may be introduced from time
to time to ensure the benefits package is
appropriately competitive and reflects individual
circumstances. For example, Directors may be
offered relocation and/or expatriate benefits
should a Director be required to relocate as a
result of emerging business requirements.
Shaftesbury Capital offers a defined contribution
pension scheme.
Executive Directors may elect to be paid some
or all of their entitlement in cash.
Pension
To be appropriately
competitive with that
offered by comparator
companies.
N/A
Set at a level which the Committee considers
appropriate in light of relevant market practice
for the role and individual circumstances. The
cost of all benefits will not normally exceed 10
per cent of base salary, with the exception of
any future expatriate and/or relocation benefits,
which would be disclosed in the Annual Report
on Remuneration. Any reasonable business-
related expenses (including tax thereon) can be
reimbursed if determined to be a taxable benefit.
The maximum contribution for any Executive
Director will be in line with the level available
for other employees at any given time (which is
currently 17.5 per cent of salary).
N/A
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Maximum opportunity
Performance metrics
1.3 Notes to the policy table performance measurement selection
Corporate Governance | Remuneration
Purpose and link
to strategy
Annual bonus
To incentivise and
reward performance.
The Committee
selects performance
measures and targets
each year to reinforce
the strategic business
priorities for the year.
The deferral into
shares of 40% of
any annual bonus is
designed to further
align executives
with shareholders’
interests.
Performance Share
Plan ‘PSP’
To incentivise and
reward long-term
outperformance, and
help retain Executive
Directors over the
longer-term.
The annual bonus arrangements are reviewed
at the start of each financial year to ensure
performance measures and weightings are
appropriate and support the business strategy.
The Committee reviews performance against the
annual bonus targets but has the ability to take
into account broader factors and, subject to the
150 per cent of salary maximum, may exercise
two-way discretion to ensure that the annual
bonus awarded properly reflects the performance
of the Company and each Director.
The rationale for award of bonuses will be
explained in the Directors’ Remuneration Report.
Bonus may be deferred in Shaftesbury Capital
shares or nil-cost options for three years under
the Performance Share Plan without further
performance conditions but subject to risk of
forfeiture should an Executive Director leave the
Company in certain circumstances.
Directors may be entitled to be paid dividend
equivalents on deferred bonus. Deferred bonus
is subject to malus as described in the notes to
this table.
Executive Directors are eligible to receive
awards of shares under the PSP, which may be
made as awards of shares or nil-cost options,
at the discretion of the Committee.
In assessing the outcome of the performance
conditions, the Committee must satisfy itself
that the figures are a genuine reflection of
underlying financial performance, and may
exercise downward discretion when determining
the proportion of an award that will vest.
Dividend equivalents may be paid. The Committee
has the discretion in certain circumstances to
grant and/or settle an award in cash. In practice
this will only be used in exceptional circumstances
for Executive Directors.
PSP awards are subject to malus and clawback
as described in the notes to this table.
The maximum bonus opportunity for Executive
Directors is 150 per cent of annual salary
with a bonus of 75 per cent of salary payable
for achieving target levels of performance.
No bonus is payable for below threshold
performance. The payment for threshold
performance will not exceed 10 per cent of
maximum. Awards are made on a straight-line
basis for performance between threshold and
target, and on a separate straight-line basis for
performance between target and maximum.
Executives’ performance
is measured relative to
challenging one-year targets
in key financial, operational
and strategic measures.
The measures selected and
their weightings may vary
each year according to the
strategic priorities. At least
75 per cent of the bonus
will be measured against
financial performance.
The maximum grants which may be made to
participants as awards or nil-cost options are
300 per cent of salary.
25 per cent of an award vests for threshold
performance, with full vesting taking place for
equalling or exceeding maximum performance
conditions and straight-line vesting between
threshold and maximum.
PSP awards usually vest
on the third anniversary of
the date of grant, and are
subject to a two-year post-
vesting holding period.
The vesting of awards is
usually subject to continued
employment and the
Company’s performance
over a three-year
performance period.
It is intended that the
performance measures
that will apply to the
2023 awards will be split
equally between relative
Total Return and relative
Total Shareholder Return
metrics vs. FTSE 350
REITs. The performance
measures, weightings and
targets which apply to the
PSP are reviewed by the
Committee annually and,
subject to consultation
with shareholders, the
Committee has discretion
to make changes to the
measures, the weightings
and/or the comparator
group for future awards
to ensure that they remain
relevant to the Company
strategy and are suitably
stretching.
All employee share
schemes
The Company does not currently operate any
all employee share schemes. However, if such a
scheme were introduced the Executive Directors
would be able to participate on the same terms
as other employees.
In line with HMRC-approved limits.
Annual bonus scheme
Executive Directors may earn bonuses depending on the Company’s financial performance and performance against individual
performance targets designed to deliver strategic goals. The current structure of the annual bonus performance conditions is
illustrated within the Annual Report on Remuneration on page 148. The financial performance measures and the importance of each
are set out in the table below. The Remuneration Committee has discretion to change the performance conditions in the annual
bonus, but within the bounds set out in the Remuneration Policy Table.
The annual financial performance measures and targets are set by the Committee usually in the first quarter of each year following
an analysis of external and internal expectations compiled by the Committee’s independent adviser. The Committee sets targets it
believes to be appropriately stretching, but achievable.
Why are the current annual bonus performance measures appropriate for Shaftesbury Capital?
Measure
Reason
EPRA Net Tangible Assets
per share (NTA)
Underlying Earnings per
share
Relative Total Property
Return
Considered by the Committee to be an important driver of value creation for Shaftesbury Capital.
Rewards value growth in net rental income as well as the management of administration, financing and other costs.
Rewards the additional portfolio value created by management over and above any changes in value from tracking the
property market as a whole, as measured by the MSCI Total Return All Property Index, an external benchmark widely used in
the property industry.
Long-term incentives
The performance conditions for the PSP currently comprise two measures:
― Three-year relative Total Return (TR, growth in NTA plus dividends)
― Three-year relative Total Shareholder Return (TSR, increase in price of an ordinary share plus dividends)
The Committee believes that these two measures are currently the most appropriate measures of long-term success for Shaftesbury
Capital as long-term relative performance provides an appropriately objective and relevant measure of Shaftesbury Capital’s
success, which is strongly aligned with shareholders’ interests.
The Committee believes that NTA growth is an important internal measure of success for Shaftesbury Capital at this time.
Accordingly, the Committee considered it appropriate to reward NTA performance in both the short- and long-term incentive
arrangements, with a one-year absolute NTA target being used in respect of the annual bonus arrangements and three-year relative
NTA (as the main component of three-year Total Return) being used in respect of the long-term incentives.
A significant element of the Company’s NTA is the value of properties which are based on independent external valuations carried
out in accordance with RICS Valuation Professional Standards.
Relative TSR helps align the interests of Executive Directors with shareholders by incentivising share price growth and, in the
Committee’s view, provides an objective measure of the Company’s long-term success.
The current long-term incentive performance conditions are summarised within the Annual Report on Remuneration on page 149.
Performance is measured relative to a bespoke comparator group of property companies and Shaftesbury Capital.
In order for any awards to vest, the Committee must also satisfy itself that the TR and TSR figures are a genuine reflection of
underlying financial performance. In assessing the extent to which the performance conditions have been met, the Committee
consults with its independent remuneration adviser. The calculation of the returns is also reviewed by the Company’s auditors as
appropriate. The performance targets are set by the Committee following an analysis of internal and external expectations, and are
believed to be appropriately stretching.
For future awards, the Remuneration Committee has discretion to change the performance measures and weightings. However,
any such changes would only be made after consulting with shareholders.
Discretions
Under the annual bonus scheme and the PSP, the Company has the standard discretions to take appropriate action in the event
of unforeseen events which affect the schemes, such as a variation in share capital, as well as terminations and on a change in
control, as described in the Policy. The Committee does not intend to make adjustments to the methods by which it measures the
performance conditions. However, it reserves the discretion to make adjustments in very exceptional circumstances. Shareholders
would be given details of any exercise of discretion.
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Payments resulting from existing arrangements
The Committee may make any remuneration payments and payments for loss of office (including exercising any discretions it has
relating to such payments) even though they are not in line with the Policy set out in this report. This will apply where the entitlement
to the payment arose:
(i) before the 2014 AGM; (ii) at a time when the relevant individual was not a Director of the Company and, in the opinion of the Committee,
the payment was not in consideration for the individual becoming a Director of the Company; or (iii) under a remuneration policy previously
approved by the Company’s shareholders. For these purposes entitlements arising under the Company’s previous remuneration policies
(as approved by shareholders at the 2014, 2017 and 2020 AGMs) will be incorporated into this Policy, ‘payments’ includes the Committee
satisfying awards of variable remuneration, and an entitlement under an award over shares arises at the time the award is granted.
Malus and clawback
Awards granted under the long-term incentive arrangements are subject to malus and clawback until the end of the respective
holding periods. Deferred bonus awards are subject to malus prior to vesting. Reasons for applying malus and clawback include:
in the event of gross misconduct of a Director which is considered to have had a material detrimental impact on the business or
any member of the Group or to have brought the business of any such company into significant disrepute, in the event of a material
misstatement in the audited accounts of the Company for a period that was wholly or partly before the end of the financial year
by reference to which any performance condition was assessed, or in the event that the assessment of the satisfaction of any
performance condition was based on error or inaccurate or misleading information. In the latter two scenarios, this would be to the
extent an overpayment resulted. The application of any malus or clawback is at the discretion of the Remuneration Committee.
Remuneration of employees below the Board
No element of remuneration is operated solely for Executive Directors. Shaftesbury Capital employees below the Board receive
base salary, benefits, pension, annual bonus, and some participate in the PSP. However, there are some differences in operation
as set out below:
― In exceptional circumstances, such as recruitment, long-term incentive awards may be granted without performance conditions
to participants below the Board
― Employees below the Board are not subject to any minimum shareholding requirement
― Incentive awards granted to employees below the Board may not be subject to holding periods, clawback or malus
Shareholding requirements
Other
The Chief Executive is required to achieve a shareholding in the Company equivalent to 300 per cent of base salary and the other
Executive Directors appointed to the Board are required to achieve a shareholding in the Company equivalent to 200 per cent of
base salary, to be achieved normally within five years by retaining at least 50 per cent of any vested share awards (net of tax and
NIC). There is a two-year post-cessation shareholding requirement of 200 per cent of salary for all Executive Directors, capturing
annual bonus awards made from 1 January 2022 (in respect of 2021) and all Performance Share Plan awards made from 1 January
2021. The current shareholdings of the Executive Directors are also set out on page 147.
1.4 Performance Scenario charts
The potential reward opportunities illustrated in Figure 1 are based on the Policy which will apply in 2024 and provide estimates of
the potential future reward opportunity for each of the two current Executive Directors, and the potential split between the different
elements of remuneration under three different performance scenarios: ‘Below Threshold’, ‘Target’ and ‘Maximum’.
The Below Threshold scenario includes base salary, pension and benefits (fixed pay). No annual bonus or PSP elements are included
(variable pay). The Target scenario includes fixed pay, on-target bonus (50 per cent of opportunity) and threshold vesting of PSP
awards. The Maximum scenario includes fixed pay, maximum bonus and full vesting of PSP awards. For variable pay, the amounts
illustrated are the normal maximum opportunities. The Maximum scenarios also include an illustration of the amount that would be
payable under the PSP elements if there was share price appreciation of 50 per cent between the date of award and the date of vesting.
It should be noted that the PSP awards granted in a year do not normally vest until the third anniversary of the date of grant and are
subject to a two-year post-vesting holding period. The projected values of long-term incentives shown here exclude the impact of
share price movement and dividends (other than where 50 per cent share price appreciation is assumed).
Figure 1
Ian Hawksworth, Chief Executive (£000)
Situl Jobanputra, Chief Financial Officer (£000)
Below Threshold
100%
£918
Below Threshold
100%
£657
On Target
45%
27% 27%
£2,038
On Target
45%
28%
27%
£1,460
Max
21%
Max with growth
17%
26%
21%
52%
£4,279
Max
21%
26%
52%
£3,067
41%
21%
£5,399
Max with growth
17%
21%
41%
21%
£3,871
Total Fixed Remuneration
Annual Bonus
LTIP
Share price growth
1.5 Approach to Recruitment Remuneration
When hiring or appointing a new Executive Director, which includes appointing an individual who is not an Executive Director but
who still falls within this Policy, the Committee may make use of any of the existing components of remuneration, as follows:
Element of remuneration
Policy on recruitment
Maximum opportunity
Performance Share Plan
New Executive Directors will be eligible to participate in the long-term
incentive scheme set out in the Remuneration Policy Table.
Salary
Pension
Benefits
Annual bonus
Consistent with the Policy
Table limit
Consistent with the Policy
Table limit
150 per cent of salary,
consistent with Policy Table.
300 per cent of salary,
consistent with Policy
Table.
Based on scope and nature of responsibilities of the proposed role;
the candidate’s experience; implications for total remuneration
positioning vs market pay levels for comparable roles; internal
relativities; and the candidate’s current salary.
N/A
A new Director may be appointed at a salary which is less than the
prevailing market rate but increased over a period to the desired
positioning subject to satisfactory performance.
A contribution in line with the level available for other employees
at any given time (currently 17.5 per cent of salary) may be offered,
consistent with policy.
Appropriate benefits will be provided, which may include the
continuation of benefits received in a previous role.
Executive Directors will be eligible to participate in the annual bonus
scheme on the same basis as existing Executive Directors, pro-rated
for proportion of year served.
Depending on the timing of the appointment, the Committee may
deem it appropriate to set different annual bonus performance
conditions from the current Executive Directors in the first
performance year of appointment.
A PSP award can be made shortly following an appointment (assuming
the Company is not in a prohibited period).
In determining appropriate remuneration for new Executive Directors,
the Committee will take into consideration all relevant factors
(including quantum, the nature of remuneration and where the
candidate was recruited from), to ensure that arrangements are in the
best interests of Shaftesbury Capital and its shareholders.
Remuneration, which may be outside the usual policy limits, may include:
― An award made in respect of a new appointment to ‘buy out’
existing incentive awards forfeited on leaving a previous employer.
In such cases the compensatory award would typically be a like-
for-like award with similar time to vesting, performance conditions
and likelihood of those conditions being met. The fair value of the
compensatory award would not be greater than the awards being
replaced. To facilitate such a buyout, the Committee may use an
award under a different structure or an additional award under the PSP
― A relocation package, should this be required
― For an overseas appointment, the Committee will have discretion
to offer cost-effective benefits and pension provisions which reflect
local market practice and relevant legislation
― In the event that an employee is promoted to the Board, the
Company would honour any existing contractual arrangements
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1.6 Service contracts and exit payment policy
The service contracts of Executive Directors are approved by the Remuneration Committee and are one-year rolling contracts.
The commencement dates of the current contracts are shown below. The service contracts may be terminated by either party
giving one year’s notice to the other. It is the Company’s policy that payments in lieu of notice should not exceed the Director’s
current salary and benefits (including pension contributions) for the notice period. The service contracts may be viewed at the
Company’s registered office.
The Committee will be entitled to enter into a settlement agreement with a Director, and may pay a Director’s legal fees in relation
to any settlement agreement. The Committee may make additional incidental payments, which are not material in quantum, to a
departing Director on exit, if appropriate, for example in settlement of disputes or to pay other incidental sums in connection with
the exit. The Committee may pay what it feels are reasonable outplacement fees where considered appropriate.
When considering exit payments, the Committee reviews all potential incentive outcomes, having regard to the reason for leaving
and the Director’s performance. The payment of any annual bonus is subject to the discretion of the Committee, and both the cash
and deferred share elements of an annual bonus would normally be payable at the normal payment date. Any deferred share
element could be paid in cash. Any outstanding deferred bonus may be released or paid in cash, subject to clawback for a period
of three years from the date of grant.
Ian Hawksworth
Situl Jobanputra
17 May 2010
1 January 2017
12 months
12 months
Commencement date
Notice period
An individual would generally be considered a ‘good leaver’ if they left the Group’s employment for reasons including injury,
ill-health, disability approved by the Committee, redundancy, retirement with the agreement of the employing company, the
employing company ceasing to be a member of the group, the transfer of the undertaking or part of the undertaking in which the
Director works to a person which is not a member of the Group, or in any other circumstances at the discretion of the Committee.
The table below summarises how PSP awards are typically treated in specific leaver circumstances, with the final treatment
remaining subject to the Committee’s discretion. For example, an individual may be considered a ‘good leaver’ for any other
reason at the absolute discretion of the Committee, and the vesting of awards may be reduced for ‘good leavers’.
Timing of vesting
Treatment of awards
Benefits
To be appropriately competitive
with those offered at comparator
companies
Normal vesting date, although the Committee has discretion
to accelerate
Awards are normally pro-rated for time and remain subject to
outstanding performance conditions. Where vesting is accelerated,
the Committee will determine the extent to which the performance
conditions had been satisfied at the date of leaving. The holding
period would continue to apply.
Awards will normally be pro-rated for time and remain subject to
performance conditions.
However, the Committee has discretion to allow awards to vest in
full in such circumstances if it deems this to be fair and reasonable.
The holding period would cease to apply.
Reason for
leaving
Good leaver
Change of
control
Immediately
Any other
reason
Awards lapse
There are no obligations on the Company contained within the existing Directors’ service contracts which would give rise to
payments not disclosed in this report.
The service contracts of any future-appointed Directors will provide for mitigation in the event of termination.
1.7 Non-executive Director policy table
The Non-executive Directors do not have service contracts but instead have letters of appointment. The letters of appointment of
the Non-executive Directors are reviewed by the Board annually and contain a one-month notice period. The Chairman’s letter of
appointment contains a three-month notice period. The letters of appointment may be viewed at the Company’s registered office.
Non-executive Directors seeking re-election at 2024 AGM: dates of appointment and unexpired terms
Date of appointment
Unexpired term as at
31 December 2023
Jonathan Nicholls
Richard Akers
Ruth Anderson
Charlotte Boyle
6 March 2023
6 March 2023
6 March 2023
1 October 2017
6 months
6 months
6 months
6 months
The table below summarises each of the components of the remuneration package for the Non-executive Directors (including the
Chairman). The Non-executive Directors do not receive any pension, bonus or long-term incentive benefits from the Company.
This policy also applies to the recruitment of new Non-executive Directors.
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Fee
To recruit and retain appropriately
qualified Non-executive Directors
The Chairman and Non-executive Director fees
are reviewed on an annual basis, with any increase
taking effect from 1 May.
N/A
Non-executive Director fees
may include a basic fee
and Committee/SID fees
as disclosed in the Annual
Report on Remuneration.
These are set at a level that
is considered appropriately
competitive in light of market
practice, and will not exceed
the aggregate fees permitted
by the Company’s Articles of
Association.
N/A
The maximum value of
the benefits provided to
Non-executive Directors will
be the cost of purchasing
them in the market.
The Board and Committee review fees with
reference to:
– Other property companies
– UK companies of a similar size
– The time that Non-executive Directors are
required to devote to the role
In exceptional circumstances, if there is a
temporary yet material increase in the time
commitments for Non-executive Directors, the
Board may pay extra fees on a pro-rata basis to
recognise the additional workload.
The Chairman’s benefits include private healthcare
and personal accident and travel insurance.
Other Non-executive Directors will be covered by
the Company’s travel insurance policy should they
be required to travel on Company business.
Any reasonable business-related expenses can be
reimbursed (including tax thereon if determined to
be a taxable benefit).
Directors may receive seasonal gifts and a gift on
leaving the Board (including payment of any tax
thereon), in appropriate circumstances.
1.8 External directorships
The Company’s policy is to encourage each Executive Director to take up one or more non-executive directorships, subject to Board
approval. Fees received for serving as a non-executive director of a company outside the Shaftesbury Capital Group are retained by
the Executive Director.
1.9 Consideration of conditions elsewhere in the Company
When setting Executive Director pay the Committee considers the remuneration and overall conditions of all employees. As Shaftesbury
Capital has a relatively small workforce, the Committee does not consult with employees when deciding Remuneration Policy, but it
receives regular updates from the Head of HR on salary increases, bonus and share awards made to Group employees and is aware
of how the remuneration of Directors compares with that of other employees. For example, salary increases are generally no higher
than increases awarded to other employees, which are set with reference to market data.
1.10 Consideration of shareholder views
It is the Committee’s policy to engage with major shareholders as appropriate. For example, prior to finalising any major changes
to its executive Remuneration Policy. Shareholder feedback on the previous Remuneration Policy and investor guidelines were
considered by the Committee when preparing the Remuneration Policy, and a number of best practice measures were incorporated.
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2. Annual report on remuneration
This section of the Directors’ Remuneration report explains how Shaftesbury Capital’s current Directors’ Remuneration Policy
has been implemented during the year. The report is made up of the following parts:
Subject
Pay outcomes for 2023
Directors’ share ownership
and share interests
Issue
2.1 Single figure of total remuneration
2.2 Annual bonus outcomes for 2023
2.3 Long-term incentive outcomes for performance ending in 2023
2.4 Payments for loss of office
2.5 Payments to previous Directors
2.6 PSP and deferred bonus awards granted in 2023
2.7 Outstanding PSP and deferred bonus awards
2.8 Statement of Directors’ shareholding and share interests
Implementation of the Policy in 2024
2.9 Implementation of the Policy in 2024
Pay comparison
2.10 Percentage change in Directors’ remuneration versus employee pay
2.11 Chief Executive pay ratio
2.12 Chief Executive single figure of total remuneration history and TSR performance
2.13 Relative importance of the spend on pay
Remuneration Committee membership,
governance and voting
2.14 Independent adviser to the Remuneration Committee
2.15 Shareholder voting
Pay Outcomes For 2023
2.1 Single total figure of remuneration
What is included in the 2023 single figure?
― The salary or fees paid in the year for the period of qualifying service
― The value of any benefits, on a gross of tax basis, where applicable
― The 2023 annual bonus awarded for the year – including both cash and the deferred element
― The value of the 2021 and 2022 long-term incentive awards that vested in connection with the merger. Details of the
treatment of these awards were set out in last year’s remuneration report and summarised in the prospectus for the merger
transaction, with both the report and the transaction approved by shareholders
― The cash value of any pension contribution or allowance in lieu
The figures below illustrate the contribution that each element of the Executive Directors’ remuneration made to the single
figure disclosures.
Composition of 2023 single figures (%)1
Composition of 2022 single figures (%)
Ian Hawksworth
Ian Hawksworth
Salary 19.3%
Taxable Benefits 1.1%
Pension 3.4%
Bonus 24.1%
PSP 52.1%
Salary 30.5%
Taxable Benefits 1.4%
Pension 5.5%
Bonus 46.3%
PSP 16.3%
Situl Jobanputra
Situl Jobanputra
Salary 19.8%
Taxable Benefits 1.1%
Pension 3.5%
Bonus 25.4%
PSP 50.2%
Salary 30.5%
Taxable Benefits 1.4%
Pension 5.5%
Bonus 46.3%
PSP 16.3%
Chris Ward
Michelle McGrath
Salary 40.2%
Taxable Benefits 2.7%
Pension 6.2%
Bonus 50.9%
PSP 0%
Salary 31.3%
Taxable Benefits 1.6%
Pension 5.3%
Bonus 47.9%
PSP 13.9%
Michelle McGrath
Salary 5.3%
Taxable Benefits 0.4%
Pension 1.0%
Bonus 8.1%
PSP 85.2%
1. As reported in last year’s remuneration report and summarised in the prospectus for the merger transaction, with both the report and the transaction approved by
shareholders, the 2021 and 2022 PSP awards vested prior to completion of the merger on 6 March 2023 and must therefore be included in the 2023 single figure.
The figures are based on the share price on the date of vesting (124.5 pence). The prior year 2022 figures comprise the value on maturity of the 2020 PSP awards.
In last year’s report, these awards were calculated using the average share price over the period 1 October to 31 December 2022 of 104.83 pence and, this year,
the figures have been updated using the price on the date of vesting (124.5 pence). Michelle McGrath stepped down as a Director on 6 March 2023 and remains an
employee of the Group. Her fixed pay and annual bonus reflect the period she was in role as an Executive Director and the value of her 2021 and 2022 PSP awards,
which vested prior to completion of the merger, has been shown in the 2023 PSP vesting column.
The table below shows the single total figure of remuneration for each Director in 2023 and 2022. The charts on page 140 illustrate
the contribution that each element of remuneration made to the total remuneration of the Executive Directors.
Single figure of remuneration 2023 and 2022 (Audited)
Executive Directors
Base salary
£’000
Taxable
benefits1
£’000
Pension related
benefits2
£’000
Annual
bonus3
£’000
PSP
vesting4,6
£’000
Total
£’000
Total fixed
remuneration
£’000
Total variable
remuneration
£’000
Total
excluding
PSP 4,6
£’000
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
Current Executive
Directors
Ian Hawksworth5
Situl Jobanputra5
Former Executive
Directors
Chris Ward6
719
509
664
441
419
-
Michelle McGrath7
67
368
41
28
28
5
31
20
-
19
126
120
897 1,007 1,940
355 3,723 2,121
89
80
653
669 1,288
235 2,567 1,408
886
626
815 2,837 1,306
541 1,941
867
1,783
1,279
64
12
-
62
529
101
-
-
- 1,040
-
511
-
529
-
563 1,066
164 1,251 1,150
84
449 1,167
701
-
185
1. Comprises medical insurance, permanent health insurance, life assurance, travel insurance and car allowance and/or benefit in kind value of company car, where
applicable.
2. Comprises payments in lieu of pension contributions to each of the Executive Directors and contributions to defined contribution plans by Chris Ward of £7,833 and
by Michelle McGrath of £11,695. No Director participated in a defined benefit pension scheme.
3. Part of the annual bonus earned is deferred in Shaftesbury Capital shares or nil-cost options for three years, subject to forfeiture should the Executive Director leave
the Company. For 2023 and 2022, 40 per cent of the bonus will be/was deferred in shares.
4. As reported in last year’s remuneration report and summarised in the prospectus for the merger transaction, with both the report and the transaction approved by
shareholders, the 2021 and 2022 PSP awards vested after the publication of the 2022 Annual Report and prior to completion of the merger on 6 March 2023 and
must therefore be included in the 2023 single figure. The figures are based on the share price on the date of vesting (124.5 pence). For those Directors who were on the
Board prior to completion of the merger, total remuneration for 2023 excluding these amounts has also been shown. The prior year 2022 figures include the value on
maturity of the 2020 PSP awards. In last year’s report, these awards were calculated using the average share price over the period 1 October to 31 December 2022 of
104.83 pence and, this year, the figures have been updated using the price on the date of vesting (124.5 pence). Dividend equivalents have been included for all vested
awards, calculated using the same price, on a reinvestment basis.
5. As reported in last year’s remuneration report and summarised in the merger prospectus, the post-merger salaries for the Executive Directors reflect the increased
scope of their roles given the larger combined business (c.£4.9 billion of properties) and included inflationary increases of 4 per cent. Annual inflationary increases for
Capco employees were between c.5 per cent and 7 per cent.
6. Chris Ward joined the Board as Chief Operating Officer on 6 March 2023 and stepped down from the Board and left the Company on 22 December 2023. His
remuneration reflects the period he was a Director of the Board and does not include the value of any Shaftesbury PLC shares which vested in connection with the
merger.
7. Michelle McGrath stepped down as a Director on 6 March 2023 and remains an employee of the Group. Her fixed pay and annual bonus reflect the period she was
in role as an Executive Director and the value of her 2021 and 2022 PSP awards, which vested prior to completion of the merger, has been shown in the 2023 PSP
vesting column.
Chairman and Non-executive Directors
Current Non-executive
Directors
Jonathan Nicholls1
Richard Akers1
Ruth Anderson1
Charlotte Boyle2
Helena Coles1
Anthony Steains2
Jennelle Tilling1
Former Non-executive
Directors3
Henry Staunton2
Jonathan Lane2
Fees
£’000
2023
250
79
77
131
68
123
77
101
75
Taxable benefits4
£’000
Total Remuneration
£’000
2022
2023
2022
2023
2022
-
-
-
85
-
98
-
284
85
4
-
-
-
-
49
2
2
-
-
-
-
-
-
37
-
20
-
254
79
77
131
68
172
79
103
75
-
-
-
85
-
135
-
304
85
1. Jonathan Nicholls, Richard Akers, Ruth Anderson, Jennelle Tilling and Helena Coles were appointed to the Board on 6 March 2023.
2.
In recognition of the increased workload placed on Non-executive Directors in completing the merger, additional one-off payments were made as follows: Henry
Staunton £49,500, Charlotte Boyle £38,000, Jonathan Lane £59,500, and Anthony Steains £38,000. These amounts were based on a conservative estimate of the
additional time committed to the Company’s affairs on a temporary basis.
3. Henry Staunton and Jonathan Lane stepped down from the Board on 6 March 2023.
4. Comprises medical insurance and travel expenses relating to Board meeting attendance where these are taxable or would be if the Director were resident in the UK
for tax purposes. Where applicable, the Company pays the tax payable on Non-executive Director expenses as they are incurred in the fulfilment of Directors’ duties.
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2.2 Annual bonus outcomes for 2023 (Audited)
Opportunity
Executive Directors had the opportunity to earn bonuses of up to 150 per cent of salary for performance in 2023. 40 per cent of the
total amount of any bonus earned is deferred in Shaftesbury Capital shares or nil-cost options for three years, subject to forfeiture
should the Executive Director leave the Company.
Performance measures and targets
Bonuses for the year ended 31 December 2023 were based 75 per cent on financial performance, and 25 per cent on individual
performance.
Financial measures: The 2023 bonus included three financial measures each with a 25% weighting:
― EPRA Net Tangible Assets per share (25%)
― Underlying Earnings per Share (25%)
― Relative Total Property Return (25%)
Non-financial measures: The Committee assessed individual performance against a set of non-financial objectives which align with
the Company’s objectives outlined on page 14 and 15 of the Annual Report. A summary of the achievement of the Directors’ non-
financial objectives is set out on pages 142 and 143.
Outcome of 2023 annual bonus performance measures (Audited)
The performance targets that applied in respect of the year ended 31 December 2023 and the Company’s performance against
them are set out below.
Performance measure
Weighting
Target range
Actual
performance
% of bonus
opportunity awarded
(out of 100%)
Net Tangible Assets per share
Underlying Earnings per Share
Relative Total Property Return
Non-financial objectives
Threshold
(10% payout)
Target
(50% payout)
Maximum
(100% payout)
25%
25%
25%
185.0p
3.2p
192.0p
3.3p
205.0p
3.5p
190.3p
3.7p
Equal to MSCI
Total Return All
Property Index
Out-
performance of
0.5%
Out-
performance of
1.5%
2.3% Out-
performance
25% Disclosure of objectives and their achievement is set out underneath this table
40%
100%
100%
90-100%
Total bonus
82.5-85.0%
The Company’s performance against the financial performance targets set for the year ended 31 December 2023 exceeded
the maximum performance target for TPR and underlying EPS, and EPRA NTA performance was between threshold and target.
Accordingly, 80 per cent of maximum becomes payable to the Executive Directors in respect of the financial performance measures.
No discretion was applied by the Committee in making these awards.
The Committee set clear non-financial measures for each Executive Director and after the year end, the Committee considered the
performance of each Executive Director, including Chris Ward and Michelle McGrath, against the non-financial targets set for 2023.
The assessment of performance against these objectives is as follows:
Corporate
― Successful completion of the merger of Capco and Shaftesbury, including navigation of extended regulatory processes
― Delivered extensive investor relations programme to establish Shaftesbury Capital as a leading central London mixed-use REIT.
This included results presentation, webcasts, roadshows, industry conferences and portfolio tours, as well as the Company’s
inaugural Investor Event which set out medium-term priorities and targets
― Ensured robust cross-business risk management process
― Integration of two businesses with appropriate structure and responsibilities amongst the Executive team to deliver on strategy
Financial
― Refinancing of the loan facility put in place at the time of the merger, including a new £200m long-term secured loan facility
and £350m medium-term senior unsecured loan, managing near-term maturities
― Obtained lender consent to exercise the second extension of the Covent Garden revolving credit facility, enhancing liquidity
and extending the maturity profile
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― Managed debt covenant and liquidity position effectively
― Additional interest rate hedging put in place providing interest rate protection on variable debt until the end of 2025
― Total annualised recurring cost savings are expected to be over £16 million, which is well ahead of the initial target of £12 million
two years post-merger completion
― Delivered 10.4 per cent growth in annualised gross income, resulting in a progressive dividend
― Successful detailed business risk review process with HMRC to maintain “low risk” rating
Commercial/Transactions/Integration
― Generated excellent leasing demand delivering 6.9 per cent ERV growth across the portfolio
― 526 leasing transactions were completed, representing £37.0 million of rent, ten per cent ahead of 31 December 2022 ERV and
introducing 68 new retail and hospitality brands and concepts
― Refurbishments with an ERV of £10.6 million completed during the year, of which £9.0 million is contracted or under offer
― High occupancy maintained across the portfolio with only 2.1 per cent or ERV available to let
― Completed portfolio review, identifying five per cent of the portfolio value for asset rotation
― £145 million of asset disposals completed to date, 8 per cent ahead of valuation
― Integration of financial and management reporting, including the post-merger migration to a single accounting platform
― Transition to a single IT infrastructure with enhanced employee cyber security awareness
People/ESC/Organisational
― Developed and launched an updated Company purpose, culture and values
― Motivated the team throughout a period of significant change delivering excellent performance against strategy
― Established new employee remuneration structure, ensuring alignment with Executive Directors
― Provided regular communication on post-merger integration, including Chief Executive employee meetings and senior team
leadership meetings
― Designed and launched employee development framework
― Established strong and open working relationship with the new Board
― Delivered a new ESC strategy, reconfirmed the Company’s commitment to achieving Net Zero Carbon by 2030, and published a
new combined Net Zero Carbon pathway
― Championed ESC initiatives across the business, including the creation of the Community Investment Fund
― Successfully relocated to one head office in Covent Garden
The Committee concluded that each of Executive Directors had performed very strongly over the course of the year, including
successfully completing the merger, leading the business, implementing post-merger integration and identifying and delivering
synergies. The Executive Directors ensured that despite the impact of the merger, the team delivered excellent performance, with
ERV growth of 7 per cent and maintaining high occupancy rates. The loan facility put in place at the time of the merger has been
refinanced ahead of maturity with hedging arrangements put in place. Alongside this, the Executive Directors have focused on
employee well-being following completion of the merger, clearly communicating the business’ new purpose, culture and values and
ensuring that these are embedded across the business. The Executive Directors have also ensured that the Company continues to
focus on its ESC priorities, developing an updated ESC strategy and reconfirming the Company’s commitment to achieving Net Zero
Carbon by 2030. This performance means that each Executive Director has been awarded a bonus in respect of the non-financial
target element (under which up to 37.5 per cent of salary is payable).
Ian Hawksworth
Situl Jobanputra
Chris Ward
Area of focus
Corporate
10.00/10.00
7.50/7.50
3.75/3.75
Financial
2.25/2.50
6.00/6.25
5.00/5.00
Commercial/
Transactions/Integration
People/ESC/Positive
impact
2.25/2.50
4.75/5.00
3.75/5.00
8.00/10.00
5.50/6.25
11.25/11.25
Total
22.50/25.00
23.75/25.00
23.75/25.00
Michelle McGrath stepped down from the Board on 6 March 2023. The Remuneration Committee at the time of the merger assessed
Michelle’s performance and recommended that she be awarded 100% for the non-financial element of the 2023 annual bonus, which
included work in respect of the merger including the CMA process, leading on pre-completion integration planning, driving rents and
effective cost and capital expenditure management at Covent Garden, high-quality reporting to the Board and supporting the team in
advance of the merger. Michelle’s annual bonus as a Director was pro-rated for the proportion of the year served on the Board.
The financial and non-financial outcomes have resulted in bonuses of between 82.5% and 85.0% of maximum for 2023, pro-rated for time
where applicable. The Committee believes this is a fair reflection of the overall performance of the executive team during the year.
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Shaftesbury Capital PLC | 2023 Annual Report Corporate Governance | Remuneration
Summary of Executive Directors’ annual bonuses (Audited)
Executive Director
Ian Hawksworth
Situl Jobanputra
Chris Ward1
Michelle McGrath1
Cash
60%
Deferred shares
40%
£538,313
£391,950
£317,480
£60,362
£358,875
£261,300
£211,653
£40,241
Total
£897,188
£653,250
£529,133
£100,603
1.
Bonuses relate to time served on the Board. For Michelle McGrath: 1 January to 6 March 2023. For Chris Ward: 6 March to 22 December 2023.
2.3 Long-term incentive outcomes for 2023 (Audited)
As set out in detail in last year’s report, and provided here for completeness, on the merger the Capco and Shaftesbury businesses
were combined through Capco issuing shares to Shaftesbury shareholders in exchange for shares in Shaftesbury. In agreeing the
structure of the merger, the Capco and Shaftesbury Boards determined that this structure was in the best interests of shareholders
as opposed to Shaftesbury, the larger company, issuing its shares to acquire Capco. As the Capco Performance Share Plan (“PSP”)
rules permitted the Committee to treat the merger as equivalent to a takeover, and the Committee sought to create equality of
treatment for all employees, the Committee determined that the outstanding PSP awards should vest.
The Committee considered the extent to which the Capco share awards should be permitted to vest, having regard to any
performance conditions and employment requirements attached to those awards. The Capco Remuneration Committee and the
Shaftesbury Remuneration Committee were requested by financial advisers to make these assessments at the time that the ratio
of Capco to Shaftesbury shares for the all-share merger was calculated, to ensure that as accurate a ratio as was possible could
be determined, and that one group of shareholders was not disadvantaged over the other.
The Committee assessed the relative Total Shareholder Return and relative Total Return performance conditions attaching to
the 2021 and 2022 PSP awards having regard to the relative TSR ranking shortly before the time it made its decision and analysts’
projections at that time for the Total Return of the peer companies for the end of each of the three-year performance periods.
It then reflected on the fact that reducing the PSP awards for early vesting would permanently deprive the recipients of some of the
shares they had expected to receive if they had remained with Capco until the end of each three-year performance period, as the
PSP Rules did not permit the granting of replacement awards to compensate for these lost share awards.
Finally, the Committee reflected on whether the resultant level of vesting was reasonable and appropriate in the circumstances,
considering all of Capco’s stakeholders. The outcome of the Capco Committee’s deliberations was that on completion of the
merger, the 2021 PSP award should vest at 63 per cent (between median threshold and upper quartile full vesting) and the 2022
PSP award top quartile full vesting but scaled back by a third to 66.7 per cent to reflect its early vesting date, and the performance
conditions applying to these awards were determined at these levels to reflect this assessment. These vesting percentages and the
25 per cent vesting of the 2020 award were set out in last year’s remuneration report and summarised in the prospectus for the
merger transaction, with both the report and the transaction approved by shareholders. The overall vesting of the 2020, 2021 and
2022 awards resulted in approximately 53 per cent of the aggregate number of share awards vesting. To reflect the early vesting
of these awards, the Capco Executive Directors agreed to retain half of the post-tax value of shares that vested from these three
awards for a period of two years. Chris Ward also agreed to retain half of the post-tax value of his Shaftesbury LTIP awards that
vested as a result of the merger.
2021 awards (disclosed in 2023 single figure)
Number of
awards granted
Performance
assessment
Value of shares
at vesting1
(£)
Dividend
equivalents2
(£)
Value of vested
awards (single figure)
(£)
Impact of share price
growth/(reduction)
(£)
Ian Hawksworth
Situl Jobanputra
Michelle McGrath
1,143,129
759,109
616,218
63% of
maximum
896,613
595,406
483,330
14,898
9,893
8,031
911,511
605,299
491,361
(312,986)
(207,842)
(168,719)
1. The value of awards at vesting is based on a share price of 124.5 pence.
2. Dividend equivalents have been calculated, using the price above, on a reinvestment basis.
2022 awards (disclosed in 2023 single figure)
Ian Hawksworth
Situl Jobanputra
Michelle McGrath
Number of
awards granted
Performance
assessment
1,221,945
811,597
682,397
100% based on
performance and
pro-rated down to
66.7%
Value of shares
at vesting1
(£)
Dividend
equivalents2
(£)
Value of vested
awards (single figure)
(£)
Impact of share price
growth/(reduction)
(£)
1,014,721
673,962
566,671
13,816
9,176
7,715
1,028,537
683,138
574,387
(328,949)
(218,483)
(183,702)
1. The value of awards at vesting is based on a share price of 124.5 pence.
2. Dividend equivalents have been calculated, using the price above, on a reinvestment basis.
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Shaftesbury Capital PLC | 2023 Annual Report
2.4 Payments for loss of office (Audited)
Four Directors stepped down from the Board during the year and three Directors have stepped down since 31 December 2023.
Michelle McGrath
In connection with the merger with Shaftesbury PLC, Michelle McGrath stepped down as an Executive Director and joined the
Executive Committee of the Company with effect from completion of the merger on 6 March 2023. Michelle continues to receive her
contractual salary, pension and benefits and participates in the Company’s incentive arrangements.
Michelle’s bonus for the period of qualifying services as an Executive Director of the Company for the financial year ended 31
December 2023 is set out in the single figure table and associated disclosures. Michelle had interests in the 2021 and 2022 PSP
awards which have vested and have also been disclosed in the single figure table.
A contribution of £1,680 plus VAT was made in respect of fees incurred for legal advice regarding her arrangements on stepping down as an
Executive Director of the Company. Other than the amounts disclosed above, Michelle is not eligible for any other loss of office payments.
Chris Ward
Chris Ward stepped down from the Board and ceased to be an employee on 22 December 2023.
In accordance with the Company’s Directors’ Remuneration Policy the payments and benefits have been paid or will be payable to
Chris following his cessation:
― A sum of £677,757 by way of payment in lieu of salary and certain contractual benefits (including pension, car allowance, life insurance,
health insurance, death in service pension and travel insurance) in respect of his 12 month notice period (commencing on 12 December
2023), to be paid in monthly instalments. He shall also be paid £20,000 in lieu of his accrued but untaken holiday.
― Chris held 1,381,753 nil-cost options under the Company’s Performance Share Plan 2017 (“PSP 2017”) which were granted to
him on 23 March 2023. As a good leaver, these awards have been pro-rated to reflect the proportion of the performance period
completed, and remain subject to the applicable performance conditions. Vested awards will accrue dividend equivalents and a
two-year post vesting holding period will apply.
― Chris will honour the commitments he made to hold a proportion of the Company shares which he received in exchange for
shares which vested under his legacy Shaftesbury PLC share awards in connection with the merger.
― 10,913 Sharesave options became exercisable for a period of six months from cessation, following which they will lapse if not exercised.
― £5,838 excluding VAT was paid directly to third-party service providers in respect of fees incurred for legal advice on stepping
down as an Executive Director of the Company.
Henry Staunton
Henry Staunton retired from his role as Chairman and Non-executive Director of the Company with effect from completion of the
merger with Shaftesbury PLC on 6 March 2023. Henry received his annual fee for his Chairman role on a pro-rata basis to the date
of his retirement, together with an additional fee of £71,000 in lieu of the fee during his three-month notice period and an additional
fee (as disclosed in the single figure table) to recognise the material increase in the time that Henry dedicated to his role as Chairman
and Non-executive Director over the period to completion of the merger with Shaftesbury PLC. Henry continued to remain in the
Company's private medical scheme for a period of three months following his retirement (being the length of his notice period) at a cost of
£4,683. No further remuneration payment will be made by the Company to Henry nor will any payment for loss of office be made.
Jonathan Lane
Jonathan Lane retired as a Non-executive Director of the Company with effect from completion of the merger with Shaftesbury PLC on
6 March 2023. Jonathan received his annual Non-executive Director fee on a pro-rata basis to the date of his retirement, together with
an additional fee of £7,067 during his one-month notice period and an additional fee (as disclosed in the single figure table) to recognise
the material increase in the time that Jonathan dedicated to his role as a Non-executive Director over the period to completion of the
merger with Shaftesbury PLC. No further remuneration payments will be made by the Company to Jonathan nor will any payment for
loss of office be made.
2.5 Payments to previous Directors (Audited)
No payments to previous Directors in respect of relevant services were made during 2023.
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Directors’ Share Ownership and Share Interests
2.6 PSP and deferred bonus awards granted in 2023 (Audited)
2023 PSP awards
On 23 March 2023, the following PSP awards, structured as nil-cost options were granted to Executive Directors:
Ian Hawksworth
Situl Jobanputra
Chris Ward
PSP – nil cost
options
Scheme
Market price
on date of grant1
Basis of award
Number
of awards
Face value
of awards
1,926,483
£2,175,000
Percentage
vesting at
threshold2
Performance
period end3
31 December
2025
112.9p
300% of salary
1,381,753
£1,560,000
25%
1,381,753
£1,560,000
1. The awards were granted at a price of 112.9p being the three-day average share price prior to grant.
2. Threshold vesting under each performance condition.
3. The performance period runs from 1 January 2023 to 31 December 2025.
The awards will become exercisable on 23 March 2026 and are subject to two performance criteria, each with a 50% weighting:
Relative TSR v FTSE350 REITs (50%)
Relative Total Accounting Return v FTSE350 REITs (50%)
Threshold (25%)
Median
Median
Maximum (100%)
Upper Quartile
Upper Quartile
The Remuneration Committee retains the ability to exercise downward discretion when determining the vesting of the awards.
Deferred bonus awards
On 23 March 2023, deferred bonus awards were granted to the Chief Executive and Chief Financial Officer. These awards represent
the deferred element of the annual bonus awarded in respect of 2022 reported within the Company’s 2022 Annual Report.
Ian Hawksworth
Situl Jobanputra
Deferred bonuses – nil
cost options
112.9p
Scheme
Market price
on date of grant1
Basis of award
40% of 2022
annual bonus
Number
of awards
356,864
237,023
Face value
of awards
£402,899
£267,599
1. The awards were granted at a price of 112.9p being the three-day average share price prior to grant.
2.7 Outstanding PSP and deferred bonuses (Audited)
Outstanding awards made under PSP
a) Annual PSP awards1,2
Year granted
Option price
(pence) if any
Held at 1
January 2023
Granted during
the year
Exercised
during the year3
Lapsed during
the year
Held at 31
December 2023
Ian Hawksworth
Situl Jobanputra
Michelle McGrath
Chris Ward4
Total
2020
2021
2022
2023
2020
2021
2022
2023
2020
2021
2022
2023
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
1,112,490
1,143,129
1,221,945
-
-
-
-
1,926,483
738,763
759,109
811,597
-
-
-
-
1,381,753
514,030
616,218
682,397
-
-
-
-
1,381,753
278,122
720,171
815,037
-
184,690
478,238
541,335
-
128,507
388,217
455,158
-
Exercisable
during or
between
-
-
-
834,368
422,958
406,908
-
-
-
-
1,926,483
2026-2033
554,073
280,871
270,262
-
-
-
-
-
-
-
1,381,753
2026-2033
385,523
228,001
227,239
932,936
-
-
-
-
-
-
448,817
2026-2033
7,599,678
4,689,989
3,989,475
4,543,139
3,757,053
1. Subject to performance conditions that apply to awards made under the PSP as set out on page 149.
2. Subject to a two-year post-vesting holding period.
3. The share price on exercise was 124.5p.
4. Holdings as at 22 December 2023, being that date Chris Ward stepped down from the Board. Chris Ward also holds an option to acquire up to 10,913 Company
shares at an exercise price of 137.38p per share under the legacy Shaftesbury PLC Sharesave Scheme. In accordance with the scheme rules, this Sharesave option
became exercisable (to the extent of the accrued savings under the related savings contract as at the date of exercise) for six months from 22 December 2023,
following which it will lapse if not exercised.
b) Deferred bonus awards
Year granted
Option price
(pence) if any
Held at 1
January 2023
Granted during
the year
Exercised
during the year1
Lapsed during
the year
Held at 31
December 2023
Ian Hawksworth
Situl Jobanputra
Michelle McGrath
Total
2020
2022
2023
2018
2019
2020
2022
2023
2022
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
192,450
171,782
-
-
-
356,864
58,289
28,986
124,161
114,074
-
-
-
-
-
237,023
92,601
782,343
-
593,887
192,450
171,782
-
58,289
28,986
124,161
114,074
-
92,601
782,343
1. The share price on exercise was 124.5p per share.
-
-
-
-
-
-
-
-
-
-
Exercisable
during or
between
-
-
-
-
356,864
2026-2033
-
-
-
-
-
-
-
-
237,023
2026-2033
-
593,887
-
2.8 Statement of Directors’ shareholding and share interests (Audited)
(a) Directors’ shareholdings
The beneficial interests in the shares of the Company for each Director who served during the 2023 financial year as at the later
of cessation of being a Director and 31 December 2023 (which are unchanged as at 28 February 2024, being a date not more than
one month before the date of the notice of Annual General Meeting) are set out in the table below. The Chief Executive is required
to achieve a shareholding in the Company equivalent to 300 per cent of salary and the Chief Financial Officer is required to achieve
a shareholding in the Company equivalent to 200 per cent of base salary, to be achieved by retaining at least 50 per cent of any
vested share awards (net of tax).
There is a post-cessation shareholding requirement of 200 per cent of salary for all Executive Directors, capturing vested annual
bonus awards made from 1 January 2022 (in respect of 2021) and all Performance Share Plan awards made from 1 January 2021.
The current shareholdings of the Executive Directors, and their value based on a share price of 138.1 pence, being the price of
a Shaftesbury Capital PLC share on 29 December 2023 (being the last day for trading during the year), are illustrated in the table
below. The shares which are included in these holdings are those held beneficially by the Director, their spouse or dependant family
members, shares held within ISAs, PEPs or pensions, shares that are subject to a pre-vesting holding period, such as deferred bonus,
and vested but unexercised awards. The latter three categories are included on a net of tax basis.
Directors’ shareholdings (including connected
persons) – 2023 and 2022 (Audited)
Value of Executive Director shareholdings and share
interests as at 31 December 2023 (Audited)
Ian Hawksworth
Situl Jobanputra
447%
275%
Actual holding as a % of base salary
Shareholding guideline
Deferred bonus (net of tax) as a % of salary
Executive Director
Ian Hawksworth1
Situl Jobanputra1
Non-executive Director
Jonathan Nicholls
Richard Akers
Jennelle Tilling
Ruth Anderson
Helena Coles
Charlotte Boyle
Anthony Steains
Former Director2
Henry Staunton
Michelle McGrath
Jonathan Lane
Chris Ward
2023
Number
2,156,735
910,779
192,970
133,550
41,950
16,780
20,136
15,052
–
350,000
604,175
500,000
1,174,106
2022
Number
1,002,628
100,000
–
–
–
–
–
15,052
–
350,000
40,000
450,000
–
1. Excludes deferred bonus awards.
2. Henry Staunton, Jonathan Lane and Michelle McGrath stepped down from the
Board on 6 March 2023 in connection with the merger. Chris Ward stepped
down from the Board on 22 December 2023. Their shareholdings are based
on the shares held at the date of ceasing to be a director of the Company.
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Shaftesbury Capital PLC | 2023 Annual Report Corporate Governance | Remuneration
(b) Directors’ share interests (Audited)
Details of Executive Directors’ share scheme interests, including information on share awards that were exercised or vested during
the year, are set out in the tables on pages 146 to 148.
(i) Summary of Executive Directors’ interests in shares and share schemes
Executive Director
Ian Hawksworth
Situl Jobanputra
Chris Ward1
Michelle McGrath1
Total
Shares held
2,156,735
910,779
1,174,106
604,175
4,845,795
Nil-cost option awards
in respect of deferred
bonus
Awards no longer
subject to performance
conditions
Nil-cost option awards,
subject to performance
conditions
356,864
237,023
-
-
593,887
-
-
-
-
-
1,926,483
1,381,753
448,817
-
3,757,053
Total
4,440,082
2,529,555
1,622,923
604,175
9,196,735
1. The shareholdings and awards held by Michelle McGrath and Chris Ward are stated as at 6 March 2023 and 22 December 2023 respectively, being the dates they
stepped down from the Board. The Executive Directors at the end of the financial year have a total interest in 6,969,637 shares and awards.
The market price of Shaftesbury Capital PLC shares on 29 December 2023 (being the last day for trading during the year) was
138.1 pence and during the year the price varied between 102.5 pence and 139.2 pence.
2.9 Implementation of the Policy in 2024
Salary
As disclosed in the prospectus and in last year’s remuneration report, reflecting the increased scope that the roles of the Chief
Executive and Chief Financial Officer would be performing in the merged company, Ian Hawksworth and Situl Jobanputra’s salaries
were set at £725,000 and £520,000 respectively on completion of the merger. For 2024, effective from 1 January, the Chief Executive and
Chief Financial Officer received an increase of 3 per cent which compares to a wider workforce increase of 4.3 per cent.
The salaries for the Executive Directors are set out in the table below:
Executive Director salaries – 2023 and 2024
Ian Hawksworth
Situl Jobanputra
Pension and benefits
2024
£747,000
£536,000
2023
Per cent increase
£725,000
£520,000
3.0
3.0
Executive Directors receive a pension contribution of 17.5 per cent of salary which is aligned with the workforce contribution rate
and benefits as described in the Remuneration Policy on page 133.
Annual bonus
Opportunity
The annual bonus opportunity will remain unchanged for 2024 at 150 per cent of salary with 40 per cent of any bonus awarded to be
deferred into shares for three years.
Performance conditions
For 2024, the three financial measures will remain unchanged from previous years. The Committee considers EPRA NTA per share,
EPS and Total Property Return to be well aligned with shareholders. However, for 2024, the weightings have been amended slightly
to reflect the increased focus on cost management and earnings in 2024.
Performance conditions
Weighting
Description
EPRA Net Tangible Assets per share
25/75
A key measure driving the long-term potential of our assets
Underlying Earnings per Share
30/75
Relative Total Property Return
20/75
Rewards value growth in net rental income as well as managing costs.
Upweighted to reflect the importance of delivering cost savings and
operating efficiencies
Rewards the additional portfolio value created by management over and
above any changes in value from tracking the property market as a whole,
as measured by the widely-used MSCI Total Return All Property Index
The remaining 25% of the bonus will be based on corporate and sustainability objectives.
The TPR target is included in the Company’s KPIs on page 16. The KPIs are in part dependent upon the occurrence of certain
discrete events. Therefore, whilst the outperformance targets that apply to the long-term incentives are disclosed, the Board has
decided that as the Group operates in specific locations within the competitive central London property market, prospective
disclosure of specific short-term NTA and EPS targets, or non-financial performance targets, would provide a level of information
to counterparties that could prejudice the Company’s commercial interests. The Committee will publish the performance targets
retrospectively once they have ceased to be commercially sensitive, which is expected to be when the bonus amounts are
determined.
Further information on the Company’s KPIs can be found on pages 16 and 17.
Performance Share Plan
PSP awards of 300 per cent of 2024 salary will be made to each Executive Director as awards of nil-cost options. The performance
conditions and comparator group that will apply to these awards, and all outstanding awards, are set out in the tables below.
Performance conditions for PSP awards
TAR v FTSE 350 REITs (50 per cent)
TSR v FTSE 350 REITs (50 per cent)
Threshold (25%)
Median
Median
Use of market purchased shares
Maximum (100%)
Upper Quartile
Upper Quartile
The rules of the Performance Share Plan provide the Board with flexibility on whether the shares awarded will ultimately be delivered
by issuing new equity, or purchasing shares on the stock market. In deciding whether to issue or purchase shares the Board will
consider a number of factors with a view to minimising dilution of shareholders’ interests; these include whether and by how
much the shares are trading at a discount/premium to Net Tangible Assets, Group liquidity and market outlook. If there is sufficient
liquidity and shares are trading at a discount to Net Tangible Assets then it is expected that shares would be purchased rather than
issued. It is confirmed that the share awards made in 2023 are expected to be settled using shares purchased in the market. Due to
the exceptional circumstances of the merger, it was not possible for the Company’s Employee Benefit Trust to acquire market
purchased shares to satisfy the awards that vested prior to completion. Newly issued shares representing c. 0.3 per cent of the
post-completion share capital were therefore used to satisfy these awards.
Chairman and Non-executive Director remuneration
The Committee reviews the Chairman’s fee and the remuneration of the Non-executive Directors is considered by the Chairman
and the Chief Executive. The fees paid to the Chairman and Non-executive Directors are reviewed annually, although fees may not
be increased every year. Jonathan Nicholls’ fee as Chairman was set at the same level as his predecessor at £284,000 (which was
not increased since 1 May 2020). The Committee has reviewed this fee and set the fee at £310,000 with effect from 1 May 2023,
which reflects the increased size and scale of the Group post-merger and Jonathan’s time commitment in fulfilling the role.
The Board (excluding the Non-executives) reviewed Non-executive Director fee levels during the year which were last reviewed in
May 2020 and taking into account market data, the following fees were agreed with effect from 1 May 2023:
― Fees for the Non-executive Directors were increased from £55,000 to £65,000 per annum.
― Supplementary fees for chairing the Audit and Remuneration Committee of £20,000 per annum each and ESC Committee of
£17,000 per annum (increased from £16,300 per annum). The Chairman does not receive an additional fee for chairing the
Nomination Committee.
― Membership fee changed from being capped at two Committees (Audit, Remuneration and ESC) at £7,000 each and Nomination
Committee at £6,200 to a reduced membership fee of £5,000, with no cap on the number of Committees.
― The supplementary fee for the role of Senior Independent Director is unchanged at £13,400 per annum.
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Pay Comparison
2.10 Percentage change in Directors’ remuneration versus employee pay
The table below shows the year-on-year percentage change in the remuneration for the years ended 31 December 2023,
31 December 2022, 31 December 2021 and 31 December 2020 of each Director compared with the average percentage change in
remuneration for a comparator group of Shaftesbury Capital employees.
2.12 Chief Executive single figure of total remuneration history and TSR performance
The graph below shows the total shareholder return at 31 December 2023 of £100 invested in Capital & Counties Properties PLC
(now Shaftesbury Capital PLC) on 1 January 2014, compared with the FTSE 350 Real Estate Index. The Committee considers this
benchmark to be the most relevant benchmark for the Company’s performance.
The table below the graph shows, for each financial year, information on the remuneration of Ian Hawksworth, who has been Chief
Executive since 2010.
Salary/Fees (% change)
Benefits (% change)
Annual bonus (% change)
20231
2022
2021
2020
20232
2022
2021
2020
2023
2022
2021
2020
Total shareholder return
Executive Directors
Ian Hawksworth
Situl Jobanputra
Non-executive Directors3
Jonathan Nicholls
Richard Akers
Ruth Anderson
Charlotte Boyle4
Helena Coles
Anthony Steains4
Jennelle Tilling
Average employee5
8.28
15.42
N/A
N/A
N/A
54.12
N/A
25.51
N/A
13.23
3.75
3.76
N/A
N/A
N/A
–
N/A
0.79
1.67
N/A
N/A
N/A
1.19
N/A
2.92
7.18
N/A
N/A
N/A
1.20
N/A
–
11.36
35.28
32.43
N/A
10.3
N/A
4.63
N/A
4.94
N/A
13.13
32.26
10.71
40.00
–16.67
7.69
–4.00
–
-10.92
4.17
-2.39
42.23
42.34
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
–100.00
–80.49
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
–100
–100
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2.95
30.51
12.34
33.63
20.99
54.18
–69.47
1. Changes in Executive Directors’ salaries reflect the increased scope of roles following completion of the merger.
2. Changes in Executive Directors’ benefits reflect inclusion of permanent health insurance and life insurance in the 2023 figure in addition to increased cost of health
insurance. Due to the relatively small values of these amounts, small absolute increases can result in large percentage changes.
3. Percentage changes cannot be calculated for those Non-executive Directors who joined the Board on completion of the merger.
4. Fee increases are due to the additional one-off payments made in recognition of the additional workload placed on Non-executive Directors in completing the merger.
The increase in Anthony Steains’ benefits reflects travel to attend additional Board meetings.
5. As Shaftesbury Capital PLC has no direct employees, information for Group employees has been disclosed on a voluntary basis. To allow a meaningful comparison,
the analysis for employees is based on a consistent group of individuals for each comparison, being those employed by the Group at both 1 January and 31
December of each period, and has been calculated on a full-time equivalent basis. The Directors are excluded from the employee figures.
2.11 Chief Executive pay ratio
As Shaftesbury Capital has fewer than 250 employees, it is not legally required to report pay ratios. However, the ratios below are
disclosed on a voluntary basis.
The table below sets out the Chief Executive’s remuneration compared with the 25th, median and 75th percentile employee within
the employee reference group as at 31 December 2023. Option A as defined in the Companies (Miscellaneous Reporting) Regulations
2018 was used to calculate the ratios, as this calculation methodology was considered to be the most accurate method. For 2023, the
employees included in the calculation are those employed by the Group at year end, on a full-time equivalent basis, and excluding
Shaftesbury PLC employees who joined in the year. The remuneration figures for employees other than Executive Directors have
been calculated using salaries payable from the April of the relevant year. The figure for Executive Directors’ remuneration is the
single figure of remuneration for each financial year.
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
Year
2023
2022
2021
2020
Option A
Option A
Option A
Option A
43.6:1
31.0:1
23.9:1
14.4:1
The remuneration used to calculate the 2023 pay ratios is set out below.
Base salary
Total remuneration
Chief Executive
£000
25th percentile
£000
719
3,723
51
85
26.5:1
17.3:1
14.2:1
7.9:1
Median
£000
78
141
14.1:1
10.9:1
9.5:1
6.0:1
75th percentile
£000
124
264
200
150
100
50
0
31 Dec
2013
31 Dec
2014
31 Dec
2015
31 Dec
2016
31 Dec
2017
31 Dec
2018
31 Dec
2019
31 Dec
2020
31 Dec
2021
31 Dec
2022
31 Dec
2023
FTSE 350 Real Estate Index
Shaftesbury Capital
Financial year
Single figure £’000
Annual bonus % of max
MSP vesting % of max
PSP vesting % of max
2014
3,396
96.73
93.1
93.1
2015
3,275
91.25
40 or 801
60
2016
918
21.25
0
0
2017
1,307
61.60
0
0
2018
991
23.75
0
0
2019
1,566
83.33
N/A
0
2020
813
0
N/A
0
2021
1,510
73.75
N/A
0
2022
2,121
100.00
N/A
20232
3,723
82.50
N/A
25
63 and 66.72
1. Depending on the award. Please refer to 2015 Annual Report for more information.
2. PSP vesting based for the 2021 and 2022 PSP awards. Note that awards were also subject to pro-rating for time.
2.13 Relative importance of the spend on pay
The bar graphs below illustrate dividends paid and total employee pay expenditure (this includes pension, variable pay, and
national insurance) for the financial years ended 31 December 2022 and 31 December 2023, and the year-on-year change in each.
The disclosure is based solely on Capco/Shaftesbury Capital pre- and post-merger and does not take into account Shaftesbury’s
dividends and employee spend. The aforementioned measures are those prescribed by the remuneration disclosure regulations;
however, they do not reflect Shaftesbury Capital’s KPIs, which are explained on pages 16 and 17. Accordingly, bar graphs showing
Shaftesbury Capital’s one-year TPR and TAR are also included.
Total property
return (%)
Dividends (£m)1
Total accounting
return (%)
Employee costs (£m)
2023
2022
2.2
2023
43.8
2023
5.8
2023
25.1
2.8
2022
15.3
-13.6
2022
2022
17.7
1. £1.9 million of the total dividend paid during 2023 was retained by a Group controlled entity following the dividend threshold test as set out in the
exchangeable bond conditions.
Due to the relative weighting of variable remuneration for the Executive Directors, the pay ratios will be significantly smaller in years
when PSP awards do not vest. In addition, due to the Group’s relatively small number of employees, the ratios calculated may vary
between years as a result of employees joining or leaving the Company.
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Remuneration Committee adviser and voting
2.14 Independent adviser to the Remuneration Committee
During the year, the Committee undertook a competitive tender exercise and appointed FIT Remuneration Consultants LLP (‘FIT’)
as its independent remuneration adviser. Prior to FIT, the Committee was advised by Korn Ferry, During the year, the Committee
received advice on matters including a review of the Directors’ remuneration policy, including remuneration structure, incentive
design, the choice of incentive measures and target setting from its advisers. FIT and Korn Ferry are both members of the Remuneration
Consultants Group and each adheres to its code of conduct. The Committee has received confirmation of independence from
both FIT and Korn Ferry, and is satisfied that the advice received was objective and independent. In addition to advice provided
to the Committee, Korn Ferry provided share award valuation services, and FIT provided share award valuation and share plan
implementation services to the Company. During 2023, the Company was charged a total of £64,190 by FIT and £63,060
by Korn Ferry in respect of advice to the Committee. Fees were charged on a time spent basis.
2.15 Shareholder voting
The table below shows the results of the advisory vote on the 2022 Directors’ Remuneration Report at the 2023 AGM and the
binding vote on the current Remuneration Policy at the 2023 AGM.
Voting on Remuneration Policy and Remuneration Report at the 2023 AGM
Year
Votes for
2023
Approval of Remuneration Report
1,312,086,833
2023
Approval of Remuneration Policy
1,279,525,790
% for
91.45
89.18
Votes against
% against
Total votes cast
122,652,343
155,218,849
8.55
10.82
1,434,739,176
1,434,744,639
Votes withheld
(abstentions)
10,796,253
10,790,790
This Remuneration report has been approved for issue by the Board of Directors on 28 February 2024.
Richard Akers
Chair of the Remuneration Committee
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Directors’ report
The Directors present their Annual
Report and the audited consolidated
financial statements for the year ended
31 December 2023.
Additional disclosures
Certain Directors’ Report disclosures, including a number of
those required under the Companies Act 2006, Schedule 7,
Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations (as amended), the Listing Rules and
Disclosure and Transparency Rules, have been incorporated
into this Directors’ Report by reference and can be found within
the following sections of the Annual Report:
Strategic Report (which includes information on likely future
developments for the business) including:
Chief Executive’s statement
Purpose-led strategy and business model
Key performance indicators
Portfolio and operating review
Stakeholder engagement
People and culture
Financial review
Effective risk management
Principal risks and uncertainties
Task Force on Climate-related Financial Disclosures
Viability statement
Sustainability (which includes information on the Group’s
environmental and sustainability, and community matters,
the Group’s required disclosures on greenhouse gas
emissions, energy consumption and energy efficiency activities)
Section 172(1) statement
Non pre-emptive issue of equity
Interests in significant contracts
Page
Inside
cover
10
14
16
18
40
46
48
59
61
66
75
78
108
201
203
Company status and listings
With effect from 6 March 2023, on completion of the merger
with Shaftesbury, the Company changed its name from Capital
& Counties Properties PLC to Shaftesbury Capital PLC. The
Company has a primary and premium listing on the London
Stock Exchange main market and a secondary listing on the
Johannesburg Stock Exchange. For the purposes of its listing
on the Johannesburg Stock Exchange, the Company maintains
an overseas branch register in South Africa. The Company’s
secured exchangeable bonds due 2026 are listed on the
Frankfurt Stock Exchange.
Directors
The Directors of the Company who held office during the year and
up to the date of signing the financial statements were as follows:
Chairman:
Jonathan Nicholls
Executive Directors:
Non-executive Directors:
Ian Hawksworth
Situl Jobanputra
Richard Akers
Ruth Anderson
Charlotte Boyle
Biographies of each current Director can be found on
pages 96 and 97.
Details of current Directors, and other Directors who served
during the year and prior to the date of signing the financial
statements alongside details of each Director’s interests in the
Company’s shares are set out in the Directors’ Remuneration
Report which is incorporated by reference to this report and
can be found on pages 127 to 152.
The powers of the Directors are determined by UK legislation
and the Company’s Articles of Association, together with any
specific authorities that shareholders may approve from time
to time.
The rules governing the appointment and replacement
of Directors are contained in the Company’s Articles and
UK legislation. In compliance with the 2018 UK Corporate
Governance Code, all the current Directors will retire from
office and will offer themselves for re-election at the 2024
Annual General Meeting.
Compensation for loss of office
The Company does not have any agreements with any Executive
Director or employee that would provide compensation for loss
of office or employment resulting from a takeover, except that
provisions of the Company share schemes may cause share
options and awards to vest on a takeover.
Directors’ conflicts of interest
The Company has procedures in place for the management
of conflicts of interest. Should a Director become aware that
they, or a connected party, have an interest in an existing or
proposed transaction with the Group, they should notify the
Company Secretary before the next meeting or at the meeting.
Directors have a continuing obligation to notify any changes to
their potential conflicts.
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Directors’ indemnities and insurance
In accordance with the Company’s Articles of Association,
the Company has indemnified the Directors to the full extent
allowed by law. The Company maintains Directors’ and
Officers’ liability insurance, which is reviewed annually.
Articles of Association
Changes to the Articles of Association must be approved by
shareholders in accordance with the Companies Act 2006 and
the requirements of the 2018 UK Corporate Governance Code.
Dividends
The Directors have proposed the following dividends:
Interim dividend paid on
18 September 2023
Proposed final dividend
to be paid on 31 May 2024
1.5p per ordinary share
1.65p per ordinary share
Total dividend for 2023
3.15p per ordinary share
The proposed final dividend (of which 0.65 pence will be paid as a
Property Income Distribution (“PID”) and 1.0 pence will be paid as
an ordinary dividend) will be paid on 31 May 2024 to shareholders
whose names are on the register on 26 April 2024. The interim
dividend was paid wholly as an ordinary dividend.
Capital structure
Details of the Company’s issued ordinary share capital,
including details of movements in the issued share capital
during the year, and authorities to issue or repurchase shares
are shown below and in note 27 to the financial statements on
page 201. Each share carries the right to one vote at general
meetings of the Company. The Company was granted authority
at the 2023 AGM to make market purchases of its own ordinary
shares. This authority will expire at the conclusion of the 2024
AGM, or, if earlier, on 15 September 2024, and a resolution will
be proposed to seek further authority. No ordinary shares were
purchased under this authority during the year or in the period
from 1 January 2024 to 28 February 2024.
At 28 February 2024, the Company had an unexpired authority
to repurchase shares up to a maximum of 182,481,970 shares
with a nominal value of £45.6 million, and the Directors had an
unexpired authority to allot up to a maximum of 1,216,546,468
shares with a nominal value of £304.1 million of which
608,273,234 shares with a nominal value of £152.1 million can
only be allotted pursuant to a rights issue.
There are no specific restrictions on the transfer of shares
beyond those standard provisions set out in the Articles of
Association. No shareholder holds shares carrying special
rights with regard to control of the Company.
Use of financial instruments
Information on financial risk management objectives and
policies, including hedging policies, and exposure of the
Company in relation to the use of financial instruments,
can be found in note 25 on pages 195 to 200.
Change of control provisions
There are a number of agreements which (should consent not
be obtained from the counterparty to a change of control)
alter or terminate upon a change of control of the Company.
The £350 million Shaftesbury Capital facility, the Covent
Garden £300 million facility and £475 million loan notes, the
£450 million Shaftesbury AV Limited facility, and the £134.75
million Shaftesbury CL Limited facility contain provisions
requiring outstanding facilities to be repaid on a change of
control. The £275 million exchangeable bonds (due to be repaid
in 2026) provide bondholders the right of early redemption on
a change of control, subject to certain exceptions.
The Longmartin investment and Lillie Square development
joint venture both contain provisions which are triggered by a
change of control. The Performance Share Plan (“PSP”) includes
provisions relating to the treatment of awards in the event of a
change of control.
Substantial shareholdings
The significant holdings of voting rights in the share capital of
the Company notified to the Financial Conduct Authority and
disclosed in accordance with Disclosure and Transparency
Rule 5, as at 28 February 2024, being a date not more than one
month before the date of the Notice of Annual General Meeting,
are shown in the table below.
Substantial shareholdings, disclosed as at 28 February 2024
Holder
Norges Bank
BlackRock, Inc.
Shares held at time of
last notification
Percentage held at time
of last notification1
Nature of holding
Date of last DTR 5
notification
459,649,804
109,083,558
23.53%
5.58%
Direct interest
8 March 2023
Indirect interest
11 January 2024
1. Notified holdings are calculated with reference to the total issued share capital on the date the threshold was reached. This figure includes 128,350,793 ordinary
shares held as security by a Group entity under the terms of the £275 million exchangeable bond and while held by a Group entity will not vote.
Corporate governance statement
The information fulfilling the requirements of the corporate
governance statement, including the requisite disclosures in
relation to diversity, can be found on pages 94 to 152, which
should be deemed to be incorporated within this Directors’
Report, and in the share capital note on page 201. Application
of the Principles of the UK Corporate Governance Code 2018
(the “2018 Code”) can be found on pages 94 to 152. Full details
of the 2018 Code can be found on the Financial Reporting
Council’s website at https://www.frc.org.uk.
Employees
Information on Group employees, and engagement with
employees during the year, can be found on pages 42 and 43,
46 and 47 and in note 6 on page 180.
Engagement with stakeholders
Information on the ways in which the Directors have regard
to the need to foster the Company’s business relationships
with stakeholders, including suppliers, customers and others,
and the effect of that regard on principal decisions taken
by the Company is set out in our Stakeholder engagement
section on pages 40 to 45 and 108 and 109 of this report.
Political donations
The Company did not make any political donations during the
year (2022: nil).
The environment
Details of the Group’s Environment, Sustainability and
Community (“ESC”) Strategy and its aims and activities are set
out on pages 78 to 91, and further information is available on
the Company’s website at: https://www.shaftesburycapital.
com/en/responsibility/our-approach.html
Going concern
As set out on page 58, the Directors have a reasonable
expectation that the Company and the Group will have adequate
resources to meet both ongoing and future commitments over
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 the Annual Report.
Disclosure to auditors
So far as the Directors are aware, there is no relevant audit
information of which the auditors are unaware and each
Director has taken all steps that he or she ought to have taken
as a Director, in order to make himself or herself aware of any
relevant audit information, and to establish that the auditors
are aware of that information. This confirmation is given in
accordance with section 418 of the Companies Act 2006.
Independent auditors
The Board has recommended that PricewaterhouseCoopers
LLP, who have indicated their willingness to continue in office,
be reappointed as the Company’s independent auditors and
a resolution seeking PwC’s reappointment will be proposed
at the forthcoming Annual General Meeting. The external
audit contract was last put out to competitive tender in 2019.
Under current regulations, the Company is required to retender
the external audit contract by no later than the 2030 financial year.
Events after the reporting period
Details of events after the reporting period can be found in
note 34 of the financial statements on page 206.
Annual General Meeting
The 2024 Annual General Meeting of the Company will be held
on 23 May 2024. The Notice of Meeting will contain the specific
details, and, together with an explanation of the business to
be dealt with at the meeting, will be included as a separate
document sent to shareholders via electronic or hard copy
means dependent on their election. The Notice of Meeting will
be issued to shareholders at least 20 working days before the
meeting, and will also be made available on the Company’s
website. Shareholders are requested to check the Company’s
website for the latest details concerning the 2024 AGM.
By Order of the Board.
Desna Martin
Group Company Secretary
28 February 2024
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Shaftesbury Capital PLC | 2023 Annual Report Financial statements
Directors’ responsibilities
Statement of Directors’ responsibilities
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 the Company financial statements in accordance with UK-adopted international accounting standards.
Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing the
financial statements, the Directors are required to:
– select suitable accounting policies and then apply them consistently;
– state whether applicable UK-adopted international accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
– make judgements and accounting estimates that are reasonable and prudent; and
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company
will continue in business.
The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and
enable them to ensure that the financial statements and the Directors’ remuneration report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report, 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 Corporate 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 UK-adopted international
accounting standards, give a true and fair view of the assets, liabilities and financial position of the Group and Company,
and of the profit of the Group; and
the Strategic report includes a fair review of the development and performance of the business and the position of the
Group and Company, together with a description of the principal risks and uncertainties that it faces.
In the case of each director in office at the date the Directors Report is approved:
– so far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s auditors are
–
unaware; and
they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant
audit information and to establish that the Group’s and Company’s auditors are aware of that information.
The financial statements on pages 165 to 226 were approved by the Board of Directors on 28 February 2024 and signed on its
behalf by:
Ian Hawksworth
Chief Executive
Situl Jobanputra
Chief Financial Officer
28 February 2024
Independent auditors’ report
to the members of Shaftesbury
Capital PLC
Report on the audit of the financial statements
Opinion
In our opinion, Shaftesbury Capital 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 2023 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 UK-adopted international accounting standards as applied in accordance
with the provisions 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, which comprise: the Consolidated and Company
balance sheets as at 31 December 2023; the Consolidated income statement, the Consolidated statement of comprehensive
income, the Consolidated and Company statements of changes in equity and the Consolidated and Company statements of
cash flows 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)“) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided.
Other than those disclosed in Note 6 (c), we have provided no non-audit services to the Company or its controlled undertakings
in the period under audit.
Our audit approach
Overview
Audit scope
– We audited the complete financial information of the Group, which comprises the West End property
portfolio and the Group’s share of joint ventures and associates
Key audit matters – Valuation of investment property (Group)
– Valuation of the acquired assets and liabilities of Shaftesbury PLC (Group)
– Valuation of investment in Group companies and amounts owed by subsidiaries (Company)
Materiality
– Overall Group materiality: £52.1 million (2022: £23.5 million) based on 1 per cent of total assets
– Overall Company materiality: £37.4 million (2022: £23.1 million) based on 1 per cent of total assets
– Performance materiality: £39.1 million (2022: £17.6 million) (Group) and £28.1 million (2022: £17.3 million) (Company)
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
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www.shaftesburycapital.com
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Financial statements | Independent auditors’ report
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Valuation of the acquired assets and liabilities of Shaftesbury PLC is a new key audit matter this year. Application of the IFRS
Interpretations Committee Agenda Decision in relation to lessor forgiveness of lease payments was a key audit matter last year due
to it being a revised accounting policy application, and is no longer included. 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 property (Group)
Refer to the Audit Committee report and notes 1, 7, and 14 of the
financial statements.
The valuation of the Group’s investment property is the key component
of the net asset value. The result of the revaluation this year was a loss of
£68.5 million (2022: £0.8 million loss) as set out in notes 7 and 14, which is
accounted for within ‘Loss on revaluation and sale of investment property’ in
the Group’s Consolidated income statement.
The Group engages third party real estate valuation experts (“third party
valuers”) to support them with determining the fair value of the Group’s
properties. These valuers were engaged to perform valuations in
accordance with the Royal Institution of Chartered Surveyors Valuation –
Professional Standards (“RICS“).
The Group’s property portfolio comprises mixed use investment property
(including retail, food and beverage, office and residential) in London’s West
End, and these properties are not uniform in nature. There are a number
of different assumptions made by the Group’s third party valuers, CBRE (for
the Covent Garden properties) and Cushman & Wakefield (for the remainder
of the West End wholly-owned property portfolio), in determining fair value.
The assumptions on which the property values are based are influenced
by tenure and tenancy details, prevailing market yields and the estimated
rental values for each property. Macroeconomic factors and uncertain
market conditions also impact the valuation of investment property.
In addition, the valuation of the investment property is particularly subjective
given the current macroeconomic conditions. There is also growing scrutiny
on the valuation of assets given the potential impacts of climate change.
Accordingly we identified this area as a key audit matter. The focus of our
work was on the Investment property financial statement line item, but we
also perform similar procedures over property assets held as owner
occupied and within joint ventures and associates.
Assessing the third party valuers’ expertise and objectivity
We assessed the competence and capabilities of the valuers and verified
their qualifications. The valuers are reputable and established real estate
valuation firms. We also assessed their independence by discussing the
scope of their work and reviewing the terms of their engagement for unusual
terms or fee arrangements. Based on this work, we are satisfied that the
valuers were independent and competent and the scope of their work was
appropriate.
We engaged our own auditors’ real estate valuation experts who are qualified
chartered surveyors with relevant market knowledge to support our audit
procedures. This included reading the external valuation reports prepared
by CBRE, Cushman & Wakefield, and the other valuers engaged to undertake
property valuations for the Group’s joint ventures and associates. Our audit
experts also attended meetings with the third party valuers to discuss and
challenge assumptions applied, supporting the audit team with identifying
where additional audit evidence was required. Our audit experts also
confirmed that the valuation approaches applied by the third party valuers
were in accordance with the RICS standards and in accordance with IFRS 13,
and therefore suitable for use in determining the fair value of investment
property for the purpose of the financial statements.
Data provided to the third party valuers
For investment properties the key data that management provides to
the third party valuers is tenancy schedules. These contain information
for each property of leases, square footages, use and other details. We
tested a sample of this data to ensure it was complete and accurate.
Assumptions and estimates used by the third party valuers
With the assistance of our own valuation experts, we met with the third party
valuers independently of management and gained an understanding of the
valuation methods and assumptions used. The nature of assumptions used
varied across the portfolio depending on the nature of each property, but
they included estimated investment yields and rental values, and factored in
void rates and rent free periods.
We utilised independent sources of information to develop our own ranges
of the expected yields and capital value movements for each property
in the portfolio, based on their individual uses and locations. This allowed us
to identify assumptions and property capital value movements outside of our
expected range, and therefore focus our audit challenge on understanding
the reasons for these (from third party valuers and management) and
obtaining further audit evidence. For the Group’s
largest properties (by capital value) we also made specific enquiries
of the third party valuers on the basis for key assumptions and obtained
audit evidence to support these.
Key audit matter
How our audit addressed the key audit matter
Valuation of investment property (Group) continued
Valuation of the acquired assets and liabilities of Shaftesbury PLC (Group)
Refer to the Audit Committee report and notes 1 and 13 of the
financial statements.
On 6 March 2023, Capital & Counties Properties PLC (now Shaftesbury
Capital PLC) and Shaftesbury PLC merged, executed by the issue of
shares in Shaftesbury Capital PLC to Shaftesbury shareholders.
The combination of the two businesses was deemed to be a business
combination in accordance with IFRS 3, and required management to
make judgements in relation to determining the ‘acquirer’ and measuring the
assets and liabilities acquired at fair value on acquisition date.
For the purposes of the merger, Shaftesbury Capital PLC was determined to be
the acquirer. The assets and liabilities of Shaftesbury PLC were therefore
measured at fair value on the acquisition date. The fair value of the
consideration paid (being shares issued) was less than the fair value of the
acquired assets and liabilities, resulting in a gain on bargain purchase of £805.5
million which is recognised in the Group’s consolidated income statement.
Due to the judgements involved and fair value estimates required as part
of the acquisition accounting, we identified this area as a key audit matter.
Assumptions and estimates used by the third party valuers continued
We then evaluated whether, based on these procedures together with
our experience in this sector, the estimate or assumptions applied were
reasonable. We considered the reasonableness of assumptions that are not
so readily comparable with published benchmarks, in particular ERV where,
for a sample of individual properties, we specifically challenged
the third party valuers to support their individual ERV assumptions with
reference to available evidence and in the context of the impact of
macroeconomic uncertainties and trends.
It was evident from our interaction with the external valuers, and from our
review of the valuation reports, that close attention had been paid to each
property’s individual characteristics at a detailed, tenant by tenant level,
as well as considering specific factors such as the latest leasing and sale
activity, the desirability of the asset and the extent to which macroeconomic
factors impacted or not on the asset.
Our testing evidenced that the estimates and assumptions used were
reasonable in the context of the Group’s property portfolio and location, and
reflected the circumstances of the market at the time of the valuation.
We also challenged the third party valuers and management on the extent to
which the potential impact of climate change had been appropriately
factored into the valuation of investment properties. This included
corroborating management’s views that the cost of climate change
predominantly manifests in the planned capital expenditure assumptions. We
also corroborated that the valuers had had access to other studies
management had commissioned on the physical risks of climate change and
obtained their views on the extent to which these impacted current
valuations. Our auditors’ experts supported our understanding and own
independent views and we concluded climate change impacts had been
properly factored into the valuation assumptions.
We have not identified any issues from our audit procedures performed and
the evidence we obtained.
Determining the acquirer
Management prepared an analysis of the key factors assessed in determining
the acquirer for IFRS 3 purposes. This included consideration of the relative
size of both groups, whether either party would be paying
a premium or receiving a discount to acquire the other, board and
management composition at the merger date, and consideration of the fact
that Capital & Counties Properties PLC held a 25.2% existing shareholding in
Shaftesbury PLC. Capital & Counties Properties PLC was also the party that
issued its shares to Shaftesbury PLC shareholders in executing the merger
transaction. We considered each aspect of the analysis and corroborated
this to supporting audit evidence and our knowledge of
the transaction. We also took account of post-merger factors to ensure
these remained consistent with management’s judgement. We concluded that
the determined acquirer was appropriate and that the key factors
considered by management in making this judgement were disclosed
appropriately within note 1 of the financial statements.
Fair value measurement of assets and liabilities
We evaluated management’s assessment of the fair values of the acquired
assets and liabilities. The material estimates were in relation to investment
properties (which are measured at fair value in the underlying books and
records of Shaftesbury PLC) and fixed rate debt arrangements. We focused our
audit effort on these material fair value estimates, and our work included:
– Investment properties – our audit procedures conducted as at the
acquisition date were largely consistent with those set out above in
the investment properties key audit matter.
– Debt – we utilised our own valuation specialists to support our audit work
over the fair value adjustments. This included understanding
management’s method for determining the adjustments and benchmarking
Level 2 assumptions used in the calculation of fair value.
In addition to the above, we also tested other fair value adjustments
to supporting audit evidence, and we considered whether all material
adjustments had been identified and made with regard to our audit
knowledge and testing of the opening balance sheet acquired.
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Key audit matter
How our audit addressed the key audit matter
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Valuation of the acquired assets and liabilities of Shaftesbury PLC
(Group) continued
Valuation of investment in Group companies and amounts owed by
subsidiaries (Company)
Refer to notes II and III of the financial statements.
The Company holds investments in Group companies of £2,129.4 million
(2022: £516.4 million), and amounts owed by subsidiaries of £1,613.6
million (2022: £1,795.8 million).
The impairment assessment of the Company’s investments in subsidiaries
and determination of any expected credit loss allowance in respect of
amounts owed by subsidiaries is performed on an annual basis.
Management’s current year assessment concluded that the carrying
value of investments was supported by the net assets of the underlying
subsidiaries. An expected credit loss of £96.9 million was recognised
in relation to the intercompany loan amounts owed by subsidiaries.
This area was identified as a key audit matter given the materiality of
these balances.
How we tailored the audit scope
Other considerations
As part of our audit procedures we also performed testing of other
balances within the opening balance sheet acquired and the transaction
costs incurred, and verified the alignment of accounting policies between
the two businesses.
We evaluated the audit evidence we had obtained and the resulting gain on
bargain purchase in the Group’s consolidated income statement which we
consider has been appropriately explained in the disclosures in note 13.
We have not identified any issues from our audit procedures performed
and the evidence we obtained.
We assessed the accounting policies for investments and amounts owed
by subsidiaries to ensure these were compliant with UK-adopted
international accounting standards. We verified that the methodology
used by management in arriving at the carrying value of each subsidiary,
and the expected credit loss for amounts owed by subsidiaries, was
compliant with UK-adopted international accounting standards.
We obtained management’s impairment assessments and validated that
input data used was consistent with the Group financial statements and
underlying subsidiary carrying values.
For investments in Group companies there was no evidence of impairment
indicators. For amounts owed by subsidiaries, management’s expected
credit loss allowance takes into account a number of factors, including
the underlying property assets held by the Group.
Based on our audit procedures and the evidence we obtained, we
concluded that no further impairments were required in relation to
the investments in Group companies or amounts owed by subsidiaries.
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.
On 6 March 2023, the Group merged with Shaftesbury PLC and since that date the integration of the two businesses has
continued. The Group engagement team has audited the whole combined group centrally, including the Group’s share of
joint ventures and associates.
The impact of climate risk on our audit
We also read the disclosures included in the Strategic report in relation to climate change, explaining the governance processes
in place to assess climate risk and additional reporting requirements. The Group has made commitments to a Net Zero Carbon
Pathway by 2030. A detailed description of the commitments and targets to achieve these is set out in the Strategic report.
As part of our audit we made enquiries of management to understand the process adopted to assess the potential impacts of
climate risks on the Group’s financial statements. The key area of the financial statements where management evaluated that
climate risk has a potential significant impact is in relation to the valuation of investment properties (see note 14 of the Group
financial statements). We also considered this an area which may be potentially materially impacted by climate risk and
consequently we focused our audit work in this area. Further details of our audit work performed is set out in the key audit
matters section of this report, ‘Valuation of investment property (Group)’.
We also considered the disclosures in relation to climate change in the financial statements and whether these were consistent
with the information included in the Strategic report, including the Task Force on Climate-related Financial Disclosures (TCFD).
Our procedures did not identify any material issues in the context of our audit of the financial statements as a whole, and as set
out in the key audit matters section of this report, ‘Valuation of investment property (Group)’.
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.
Overall materiality
£52.1 million (2022: £23.5 million)
How we determined it
1 per cent of total assets
Financial statements – Group
Financial statements – Company
£37.4 million (2022: £23.1 million)
1 per cent of total assets
Rationale for benchmark applied The key measure of the Group’s performance is the valuation
of investment property and the balance sheet as a whole. On
this basis, and consistent with the prior year, we set an overall
Group materiality level based on total assets.
The Company is predominantly an investment holding
Company and therefore total assets is deemed the
most appropriate benchmark.
In addition to overall Group materiality, specific materialities were also applied to certain areas of the Consolidated income
statement and related working capital balances. Our specific materialities were aligned with the metrics in the Annual Report
and Group financial statements that we believe are of particular interest to the members and we determined those metrics to be
gross profit and gross finance costs. In order to reflect their specific characteristics, we applied materiality levels of 5 per cent of
the current year gross profit (2022: 5 per cent) and 5 per cent of current year gross finance costs (2022: 5 per cent).
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% (2022: 75%) of overall materiality, amounting to £39.1 million
(2022: £17.6 million) for the Group financial statements and £28.1 million (2022: £17.3 million) for the Company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £2.6 million
(Group audit) (2022: £1.2 million) and £1.9 million (Company audit) (2022: £1.2 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:
– Obtaining management’s analysis of the going concern of the Group and Company and supporting cash flow forecasts and
covenant compliance calculations. Management prepared forecasts for a base case, severe but plausible downside case,
and reverse stress testing;
– Understanding and assessing the reasonableness of the key assumptions used in the cash flow forecasts, including assessing
whether we considered the downside sensitivities to be appropriately severe, the availability of committed finance and
covenant compliance during the forecast period;
– Corroborating key assumptions in the cash flow forecasts (e.g. Investment property valuation, rental income and finance costs)
to other evidence including external research and historical performance, and ensuring this was consistent with our audit work
in these and other areas;
– Evaluating the audit evidence we obtained and that management’s conclusions were supportable; and
– Reviewing the disclosures in the financial statements relating to the going concern basis of preparation, and evaluating
that these provided an explanation of the Directors’ assessment that was consistent with the audit evidence we obtained.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and
the Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
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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 2023 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 that describe those principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or mitigated;
– The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s
ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
– The Directors’ explanation as to their assessment of the Group‘s and Company’s prospects, the period this assessment covers
and why the period is appropriate; and
– The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term viability of the Group and Company was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements and our knowledge and understanding of the Group and
Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during
the audit:
– The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the Group’s and Company’s position, performance, business
model and strategy;
– The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
– The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative
but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to those governed by the Financial Conduct Authority, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact
on the financial statements such as the Companies Act 2006 and compliance with UK income tax rules, specifically compliance
with the Real Estate Investment Trust (REIT) status section 1158 of the Corporation Tax Act 2010. 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 the posting of inappropriate journal entries to revenue primarily, and
management bias in accounting estimates and judgemental areas of the financial statements particularly in relation to the
estimation of the fair value of investment property (and other property portfolio assets) and the fair value of acquired assets
and liabilities. Audit procedures performed by the engagement team included:
– Enquiries with management and parties outside of the finance function, including the Group’s internal auditors, regarding
any known or suspected instances of non compliance with laws and regulations and fraud;
– Evaluation of management’s controls designed to prevent and detect irregularities;
– Evaluation of audit evidence obtained to support the Group’s compliance with the Real Estate Investment Trust (REIT) status
section 1158 of the Corporation Tax Act 2010, including considering the impact of accounting policy changes on the REIT
compliance tests;
– Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation
to the valuation of investment property and the fair value of the acquired assets and liabilities of Shaftesbury PLC (see key audit
matters set out earlier in this report);
Identifying and testing journal entries, in particular any journal entries posted to revenue with unusual account combinations; and
–
– Reviewing the whistleblowing log and relevant minutes of meetings, including those of the Board and Audit Committee.
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There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not obtained all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received
from branches not visited by us; or
– certain disclosures of directors’ remuneration specified by law are not made; or
–
the Company financial statements and the part of the 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 3 June 2010 to audit the financial
statements for the year ended 31 December 2010 and subsequent financial periods. The period of total uninterrupted engagement
is 14 years, covering the years ended 31 December 2010 to 31 December 2023.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial
Conduct Authority in accordance with the ESEF Regulatory Technical Standard (“ESEF RTS”). This auditors’ report provides no
assurance over whether the annual financial report will be prepared using the single electronic format specified in the ESEF RTS.
Andrew Paynter (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
28 February 2024
Consolidated income statement
For the year ended 31 December 2023
Revenue
Costs1
Gross profit
Other income
Administration expenses
Loss on revaluation and profit on sale of investment property
Change in value of investments and other receivables
Change in fair value of financial assets through profit or loss
Operating profit/(loss)
Finance income
Finance costs
Other finance income
Other finance costs
Change in fair value of derivative financial instruments
Net finance (costs)/income
Profit from joint ventures and associates
Gain on bargain purchase
Profit/(loss) before tax
Taxation
Profit/(loss) for the year
Earnings/(loss) per share
Basic earnings/(loss) per share
Dilutive earnings/(loss) per share
1. Included in costs is £2.0 million provision (2022: £1.6 million reversal) of expected credit loss in relation to rent receivables.
Consolidated statement of
comprehensive income
For the year ended 31 December 2023
Profit/(loss) for the year
Other comprehensive income
Items that will not be reclassified to profit or loss:
Revaluation gain on owner-occupied property
Total comprehensive income/(expense) for the year
Note
4
4
4
5
6
7
8
17
9
10
9
10
18
16
13
11
3
3
2023
£m
195.1
(53.2)
141.9
2.7
(83.8)
(65.0)
(12.5)
52.0
35.3
15.6
(67.5)
4.1
(31.3)
(11.3)
(90.4)
0.2
805.5
750.6
(0.2)
750.4
2022
£m
74.1
(16.8)
57.3
13.5
(40.6)
(0.8)
(7.9)
(239.5)
(218.0)
2.6
(27.2)
3.5
(6.5)
39.8
12.2
–
–
(205.8)
(6.0)
(211.8)
45.5p
45.3p
(24.9)p
(24.9)p
Note
2023
£m
750.4
2022
£m
(211.8)
15
1.8
752.2
−
(211.8)
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Financial statements
Consolidated balance sheet
As at 31 December 2023
Non-current assets
Investment property
Property, plant and equipment
Investments in joint ventures and associates
Financial assets at fair value through profit or loss
Derivative financial instruments
Trade and other receivables
Current assets
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total assets
Non-current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Current liabilities
Borrowings
Lease liabilities
Tax liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Share capital
Other components of equity
Total equity
Note
2023
£m
2022
£m
14
15
16
17
18
19
19
18
20
22
23
18
22
23
21
4,740.2
24.0
83.4
–
1.4
116.1
4,965.1
42.7
8.3
200.2
251.2
1,715.1
0.6
0.2
356.9
12.1
115.6
2,200.5
20.8
–
129.9
150.7
5,216.3
2,351.2
(1,534.8)
(2.7)
(7.2)
(1,544.7)
(94.9)
(0.3)
(0.2)
(96.0)
(191.4)
(738.3)
(5.4)
(3.3)
(747.0)
–
(0.7)
–
(41.9)
(42.6)
(1,736.1)
(789.6)
3,480.2
1,561.6
27
488.2
2,992.0
3,480.2
212.8
1,348.8
1,561.6
These consolidated financial statements on pages 165 to 206 have been approved for issue by the Board of Directors on
28 February 2024 and signed on its behalf by:
Ian Hawksworth
Chief Executive
Situl Jobanputra
Chief Financial Officer
Consolidated statement of
changes in equity
For the year ended 31 December 2023
Merger
Reserve2
£m
Share-based
payment
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
equity
£m
Share
capital
£m
Share
premium
£m
Note
Own
shares1
£m
At 1 January 2022
Loss and total comprehensive expense for the year
Ordinary shares issued
Share buyback
Dividends
Realisation of share-based payment
reserve on issue of shares
Fair value of share-based payment
Realisation of cash flow hedge
Balance at 31 December 2022
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Completion of all-share merger3
Dividends4
Issue of shares and realisation of share-based payment
reserve on issue of employee share options5
Fair value of share-based payment
Realisation of cash flow hedge
Balance at 31 December 2023
212.8
–
0.4
(0.4)
–
27
27
12
–
–
–
212.8
–
–
–
13 273.9
–
12
27
1.5
–
–
488.2
232.5
–
–
–
–
–
–
–
232.5
–
–
–
–
–
–
–
–
232.5
–
–
–
–
–
–
–
–
–
–
–
–
(32.1)
–
(0.8)
–
–
(32.9)
Capital
Redemption
Reserve
£m
1.5
–
(0.4)
0.4
–
–
–
–
1.5
–
–
–
–
–
293.7
–
–
–
–
–
–
–
293.7
–
–
–
962.3
–
–
–
–
–
–
–
1.5 1,256.0
7.7
–
–
–
–
(0.2)
2.3
–
9.8
–
–
–
–
–
(9.8)
1.3
–
1.3
(0.3) 1,038.9 1,786.8
(211.8)
(211.8)
1.7
1.7
(1.7)
(1.7)
(15.3)
(15.3)
–
–
–
–
–
–
(0.1)
(0.4)
–
–
–
–
–
(0.1)
–
–
(0.3)
2.3
(0.1)
811.7 1,561.6
750.4
750.4
1.8
1.8
752.2
752.2
– 1,204.1
(41.9)
(41.9)
2.8
–
1.3
–
0.1
0.1
(0.3) 1,533.9 3,480.2
11.9
–
–
1. Represents the nominal value of 128,350,793 shares issued to a controlled entity in respect of secured shares previously held as collateral for the exchangeable bonds and
3,146,886 shares held by the Group’s Employee Benefit Trust in respect of employee share awards.
2. Represents non-qualifying consideration received by the Group following the share placing in May 2014 and previous share placements. Current year amount represents
non-qualifying consideration received following the all-share merger with Shaftesbury completed on 6 March 2023. The amounts taken to the merger reserve do not currently
meet the criteria for qualifying consideration and therefore will not form part of distributable reserves as they form part of linked transactions.
3. Represents share capital issued and non-qualifying consideration received following the all-share merger with Shaftesbury completed on 6 March 2023.
4. Excludes £1.9 million dividend paid to a controlled entity, Capco Investment London (No.7) Scottish Limited Partnership, in respect of 128,350,793 shares held as collateral
for the exchangeable bonds. The entity has provided an undertaking not to exercise its voting rights in respect of such ordinary shares but will receive the declared dividend,
all of which was retained by the Group following the dividend threshold test as set out in the exchangeable bond conditions.
5. Represents the issue of 6,170,629 new shares and subsequent realisation of the outstanding share-based payment reserve on the close out of the Capco share scheme prior
to completion of the all-share merger. Following the vesting, 3,146,886 shares were purchased by the Group’s Employee Benefit Trust.
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Financial statements
Consolidated statement of
cash flows
For the year ended 31 December 2023
Cash flows from operating activities
Cash generated from operations
Finance costs paid
Interest received
Tax received
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Purchase and development of property
Purchase of fixed assets
Sale of property
Cash acquired in a business combination
Dividends received from associates
Loans to joint ventures and associates repaid
Net cash inflow from investing activities
Cash flows from financing activities
Issue of shares
Share buyback
Borrowings repaid
Borrowings drawn
Acquisition of derivative financial instruments
Cash dividends paid
Net cash outflow from financing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Note
30
12
20
2023
£m
29.8
(59.5)
16.1
–
(13.6)
(51.2)
(3.4)
88.1
118.1
1.5
2.7
155.8
–
–
(1,151.0)
1,126.0
(5.0)
(41.9)
(71.9)
70.3
129.9
200.2
2022
£m
33.5
(29.7)
2.7
0.5
7.0
(11.1)
–
–
–
–
18.2
7.1
1.7
(1.7)
(200.0)
–
–
(15.3)
(215.3)
(201.2)
331.1
129.9
Notes to the financial statements
For the year ended 31 December 2023
1 Principal accounting policies
General information
Shaftesbury Capital PLC (formerly Capital & Counties Properties PLC) (the “Company“) was incorporated and registered in England
and Wales and domiciled in the United Kingdom on 3 February 2010 under the Companies Act 2006 as a public company limited by
shares, registration number 7145051. The registered office of the Company is Regal House, 14 James Street, London, WC2E 8BU,
United Kingdom. The principal activity of the Company is to act as the ultimate parent company of Shaftesbury Capital PLC Group
(the “Group“), whose principal activity is the investment and management of property.
Following the all-share merger on 6 March 2023 of Capital & Counties Properties PLC (“Capco”) with Shaftesbury to form
Shaftesbury Capital, the Group’s assets principally comprise investment property within the West End of London, including
Covent Garden, Chinatown, Carnaby, Soho and Fitzrovia.
Basis of preparation
The Group’s consolidated financial statements are prepared in accordance with United Kingdom-adopted international accounting
standards (“UK-adopted IFRS” or “IFRS”), and the applicable legal requirements of the Companies Act 2006.
The consolidated financial statements have been prepared on a going concern basis under the historical cost convention as modified
for the revaluation of property, derivative financial instruments and equity investments held at fair value through profit or loss.
All income, expenses and cash flows are generated from continuing operations and there is no material seasonal impact on the
Group’s financial performance.
The Directors have taken advantage of the exemption offered by section 408 of the Companies Act 2006 not to present a separate
income statement or statement of comprehensive income for the Company. The financial statements of the Company are set out
on pages 165 to 213.
Going concern
The Directors have considered the appropriateness of adopting the going concern basis in preparing the financial statements. The
Group’s going concern assessment covers the period to 30 June 2025 (the “going concern period”), being at least 12 months from
the date of authorisation of these consolidated financial statements.
Footfall across the West End is strong, particularly in our portfolio. There are high occupancy levels across the portfolio and
trading activity is positive with customer sales up 10 per cent year on year.
The West End continues to attract target brands and concepts. There is strong leasing demand across all uses delivering rental
growth. There continues to be macroeconomic and political uncertainty, including as to the prospects for interest rates and
inflation as well as geopolitical risks. The West End and the Group’s unique portfolio of prime investments are not completely
insulated, however they have demonstrated remarkable resilience.
The Group maintains a strong balance sheet with a focus on resilience, flexibility and efficiency. There is significant headroom
against debt covenants and access to significant liquidity, £486 million as at 31 December 2023. In preparing the assessment of
going concern, the Directors have considered projections of the Group’s liquidity, committed capital expenditure, income, costs,
cash flows and debt covenants.
The Directors have assessed a base case and a “severe but plausible” downside scenario.
As at the year end, the Group had net debt of £1.5 billion, an EPRA LTV ratio of 31 per cent and Group interest cover of 2.1 times.
The Group is projected to have sufficient cash reserves and undrawn facilities to meet debt maturities during the going concern
period. Drawn debt is at fixed rates or currently has interest rate protection in place. Interest rate hedging is in place which caps
SONIA exposure at an average of 2.3 per cent on £350 million of notional value to December 2024 and 3.0 per cent on £250 million
for 12 months to December 2025.
The Group’s debt matures between August 2024 and 2037. Debt maturities during the going concern assessment period relate
to the £95 million of private placement loan notes maturing in the second half of 2024, which are expected to be funded through
cash reserves and undrawn facilities.
The Group’s financial resources are expected to be sufficient to cover its commitments over the going concern period.
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Financial statements | Notes to the financial statements
Relative to the Group’s base case forecast, the severe but plausible downside scenario includes the following key assumptions:
– Substantial reduction in forecast rental income due to a combination of extended voids and tenant failures;
– Elevated SONIA rates in excess of current market expectations; and
– Declines in rental values, along with a widening of valuation yields, resulting in reduced asset values.
The near-term impact of climate change risks within the going concern period have been considered in the severe but plausible
downside scenario and are expected to be immaterial.
Under the severe but plausible downside scenario, the Group is expected to remain in compliance with the loan-to-value and
interest cover covenants of its individual financing arrangements.
In addition to considering a severe but plausible downside scenario, the Board has also undertaken reverse stress testing,
which indicates that the Group could withstand a decrease of 38 per cent in income and valuations, before breaching its debt
financial covenants.
Based on their analysis, the Directors are satisfied that there is a reasonable expectation that the Group will be able to meet its
ongoing and future commitments for at least 12 months from the date of approval of the financial statements and have therefore
resolved that the Group’s financial statements be prepared on a going concern basis.
Critical accounting judgements and key sources of estimation and uncertainty
The preparation of consolidated financial statements in accordance with IFRS requires the Directors to make judgements,
estimates and assumptions that affect the reported amounts of assets, liabilities, equity, income and expenses from sources
not readily apparent. Although these estimates and assumptions are based on management’s best knowledge of the amount,
historical experiences and other factors, actual results ultimately may differ from those 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.
1 Principal accounting policies continued
New accounting policies
In the current year, the Group has applied the below amendments to IFRS Standards and Interpretations issued by the International
Accounting Standards Board that are effective for annual periods that begin on or after 1 January 2023. Their adoption has not had
any material impact on the disclosures or on the amounts reported in these consolidated financial statements.
–
–
–
–
–
–
IAS 1 ‘Presentation of Financial Statements’ and IFRS Practice Statement 2 (amendment) (Disclosure of Accounting Policies)
IAS 8 ‘Accounting Policies, Changes in Accounting Estimates, and Errors’ (amendment) (Definition of Accounting Estimates)
IAS 12 ‘Income Taxes’ (amendment) (Deferred Tax related to Assets and Liabilities arising from a Single Transaction)
IFRS 10 ‘Consolidated Financial Statements’ and IAS 28 ‘Investments in Associates and Joint Ventures’ (amendment) (Sale
or contribution of assets between an investor and its associate or joint venture)
IFRS 17 ‘Insurance contracts’
International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12)
At the date of approval of the consolidated financial statements the following standards and interpretations which have not been
applied in these consolidated financial statements were in issue but not effective, and in some cases have not been adopted for
use under UK-adopted international accounting standards:
–
–
–
–
IAS 1 ‘Presentation of Financial Statements’ (amendment) (Classification of Liabilities as Current or Non-Current)
IAS 1 ‘Presentation of Financial Statements’ (amendment) (Non-current Liabilities with Covenants)
IAS 7 and IFRS 7 ‘Statement of Cash Flows and Financial Instrument Disclosure’ (amendment) (Supplier Finance Arrangements)
IFRS 16 ‘Leases’ (amendment) (Lease liability in a sale and leaseback)
The Group has assessed the impact of these new standards and interpretations and does not anticipate any material impact on
the consolidated financial statements.
The most significant area of estimation uncertainty is in respect of the valuation of the property portfolio, including the merger
date valuation of the investment properties acquired in the business combination, where external valuations are obtained.
Changes in accounting policies
The fair value of the Group’s investment and trading property (trading property included within the Lillie Square joint venture) at
31 December 2023 was determined by independent, appropriately qualified external valuers CBRE and Cushman & Wakefield
for the wholly-owned property portfolio, JLL for the Lillie Square joint venture and Knight Frank for the Longmartin associate.
The valuations conform to the Royal Institution of Chartered Surveyors (“RICS”) Valuation Professional Standards.
As various inputs used in the valuation calculations are based on assumptions, property valuations are inherently subjective and
subject to a degree of estimation uncertainty. The Group’s external valuers have made a number of assumptions including, but
not limited to, market yields, ERVs and void periods. These assumptions are in accordance with the RICS Valuation Professional
Standards, however, if any prove to be incorrect, it may mean that the value of the Group’s properties differs from their valuation
reported in the financial statements, which could have a material effect on the Group’s financial position. The key unobservable
inputs used in the valuation models are those in respect of equivalent yields and ERV, which are summarised on page 223. Further
information on the approach taken by the valuers in valuing the property portfolio and a sensitivity analysis on equivalent yields
and ERV, which are the most significant assumptions impacting the fair values, is set out in note 14 to the financial statements.
Other areas of estimation in the financial statements (which are not considered critical) include REIT compliance, the impairment
of and expected credit loss allowance on trade receivables, share-based payments and the fair value estimation of the remaining
assets acquired, and liabilities assumed in the business combination and the likelihood of contingent liabilities resulting in future
liabilities for the Group.
The significant judgement in the preparation of these financial statements included determining the accounting acquirer in the
business combination. As set out in IFRS 3 ‘Business Combinations’, one of the combining entities is required to be identified as
the acquirer and one as the acquiree. In a business combination effected primarily by exchanging equity interests, the acquirer
is usually the entity that issues its equity interests. The pertinent facts and circumstances of the merger have been reviewed and
considered by management and it is the Directors’ view that although on completion, Shaftesbury shareholders (excluding the
existing Capco shareholding in Shaftesbury) owned approximately 53 per cent of the combined Group, having regard to a number
of factors, Capco was the acquirer for IFRS 3 accounting purposes. The transaction, whilst implemented through an offer, was
effectively structured as a merger with the economic terms having regard to relative NTAs and market capitalisations.
Upon merger Capco was the entity issuing its equity interests and already held a 25.2 per cent shareholding in Shaftesbury held since
2020. The balance of the Board, Executive Directors and Executive Committee in the combined Group was also assessed. Following
completion of the merger in March 2023 the Board comprised six Shaftesbury and four Capco directors. The three Executive Directors
comprised two Capco directors, the Chief Executive and Chief Financial Officer, and one Shaftesbury director, the Chief Operating
Officer. Following completion of the merger, an Executive Committee, comprising three Capco and two Shaftesbury leadership team
members, was established and was responsible for the day-to-day management and operation of the Group. In December 2023 the
Chief Operating Officer stepped down from the Board and left the Company, as did three Non-executive Directors in January 2024.
Following these departures, the Board now includes two Executive Directors being the Chief Executive and Chief Financial Officer,
both former Capco directors. The Executive Committee now comprises three Capco and one Shaftesbury leadership team members,
and continues to be responsible for the day-to-day management and operation of the Group.
Following the merger an alignment of accounting policies has been conducted leading to the following amendments:
Adjustment to investment property for deferred letting fees
Previously in the Capco (now Shaftesbury Capital) financial statements the Group accounted for deferred letting fees in the
consolidated balance sheet and amortised to property costs on a straight-line basis over the lease term without a corresponding
deduction from the market value of investment property due to this not being material. Deferred letting fees are considered initial
direct costs and are deducted from the market value of investment property to calculate the carrying value. A £4.1 million
adjustment has been made, reflecting the balance as at 1 January 2023, as a deduction from investment property and there
is a corresponding revaluation loss. The adjustment is not material and therefore has not been applied retrospectively.
Tenant lease incentives and deferred letting fees – change in lease term
Under IFRS 16 ‘Leases’ the lease term is defined as the non-cancellable period of a lease, together with both periods covered
by an option to extend or terminate the lease if the lessee is reasonably certain to exercise that option.
Previously, in the Capco (now Shaftesbury Capital) financial statements, the Group amortised tenant lease incentives and deferred
letting fees on a straight-line basis over the lease term to lease expiry as the assumption was that lessees were reasonably certain
not to exercise their option at break date. This has been amended such that all lease incentives are amortised over the non-
cancellable period of the lease.
The comparative financial information has not been restated to reflect this change in accounting policy as the adjustment is not
material and would have no impact on net assets nor profit for the period and has instead been adjusted prospectively. As a result,
the straight-lining of lease incentives has been reduced by £4.1 million and deferred letting fees have been reduced by £1.0 million
in the consolidated income statement, with a reduction of £5.1 million within other receivables in the consolidated balance sheet.
As tenant lease incentives and deferred letting fees are deducted from the market value of investment property to reach the
carrying value, the adjustment is also reflected through investment property on the consolidated balance sheet and revaluation
of investment property in the consolidated income statement.
A summary of the Group’s principal accounting policies, which have been applied consistently across the Group, is set out on the
following pages.
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Financial statements | Notes to the financial statements
Basis of consolidation
These consolidated financial statements include the consolidation of the following limited partnerships: Capital & Counties CGP
and Innova Investment Group Holdings LP. The members of these qualifying partnerships have taken advantage of exemptions
available in Statutory Instrument 2008/569 and therefore will not produce consolidated financial statements at the partnership
level or submit such annual reports to Companies House.
The consolidated financial statements are prepared in British pounds sterling, which is also determined to be the functional
currency of the Company.
Subsidiaries
Subsidiaries are fully consolidated from the date on which the Group has control, is exposed, or has rights to variable returns
from its involvement with an entity and has the ability to affect those returns through its power over an entity. Subsidiaries cease
to be consolidated from the date this control is lost.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method (at the point the Group gains control over a business
as defined by IFRS 3 ‘Business Combinations’).
The cost of an acquisition is measured as the aggregate of the consideration transferred, which includes the cash paid and the aggregate
of the fair values, at the date of exchange, of other assets transferred, liabilities incurred or assumed, and equity instruments issued by
the Group in exchange for control of the acquiree, and the amount of any non-controlling interests in the acquiree.
Acquisition-related costs are expensed as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities that
meet the conditions for recognition under IFRS 3 Business Combinations are recognised at their fair value at the acquisition date.
Goodwill represents the excess of the cost of acquisition of a business combination over the fair value of the identifiable net assets
of the business acquired at the date of acquisition. In the case that the fair value of the identifiable net assets acquired is greater
than the total consideration paid, negative goodwill arises on the acquisition. The negative goodwill is recognised as a gain on
bargain purchase in the consolidated income statement.
Joint ventures and associates
Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement.
Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case
where the Group holds between 20% and 50% of the voting rights.
When joint control is no longer demonstrated, but significant influence is, a previously accounted for joint venture is accounted
for as an associate.
Investments in joint ventures and associates are accounted for using the equity method. On initial recognition the investment is
recognised at cost, and the carrying amount is subsequently increased or decreased to recognise the Group’s share of the profit
or loss of the joint venture or associate after the date of acquisition.
The Group’s investments in joint ventures or associates are presented separately on the consolidated balance sheet and the
Group’s share of the joint ventures or associates’ post-tax profit or loss for the period is also presented separately in the
consolidated income statement.
Where there is an indication that the Group’s investment in a joint venture or associate may be impaired, the Group evaluates the
recoverable amount of its investment, being the higher of the joint venture or associate’s fair value less costs to sell and value in
use. If the recoverable amount is lower than the carrying value an impairment loss is recognised in the consolidated statement of
comprehensive income.
If the Group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the
Group does not recognise further losses, unless it has legal or constructive obligations to make payments on behalf of the joint
venture or associate.
Dividends received or receivable from joint ventures or associates are recognised as a reduction in the carrying amount of
the investment.
1 Principal accounting policies continued
Revenue recognition
Rental receivable arises from operating leases granted to tenants and is recognised as revenue on a straight-line basis over the
lease term.
Tenant lease incentive payments, and in certain instances surrender premium payments which are directly linked to new leases,
are amortised on a straight-line basis over the non-cancellable period of the lease, being the earlier of its expiry date or the date
of the first break option as a reduction in net rental income. Surrender premiums received for early termination of leases are
reflected in gross profit.
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. On entering into a lease
modification any initial direct costs associated with the lease, including surrender premia previously paid, are derecognised
through costs in the year.
When a concession is provided for rent receivables past due the concession is accounted for as an impairment through the
expected credit loss model in accordance with IFRS 9.
Contingent rents, being those lease payments that are not fixed at the inception of a lease, for example increases arising on
rent reviews and turnover rent, are recorded as income in the periods in which they are earned.
Service charge income in the ordinary course of business is recorded as income over time in the year in which the services
are provided. As the Group acts as a principal, service charge income and costs are shown gross in the financial statements.
Where revenue is obtained by the sale of property, it is recognised when the buyer obtains control of the property. This will
normally take place on legal completion.
Other income
Other income includes management fees charged to joint ventures and associates for services associated with the management of
properties and other general expenses as defined by management agreements. These fees are recognised over time, using time elapsed
as the input method which measures the benefit simultaneously received and consumed by the customer, over the period the services
are provided.
Dividend income is included in other income and recognised when the right to receive payment is established.
Income taxes
Current tax is the amount payable on the taxable income for the year and any adjustment in respect of prior years. It is calculated
using rates that have been enacted or substantially enacted by the balance sheet date.
Deferred tax is provided for using the balance sheet liability method on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the tax bases of those assets and liabilities. However, temporary
differences are not recognised to the extent that they arise from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and at the time of the transaction, affects neither accounting nor taxable profit
or loss (except leases); or are associated with investments in subsidiaries, joint ventures and associates where the timing of the
reversal of the temporary difference can be controlled by the parent, venture or investor, respectively, and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred tax is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that management believes it is probable that future taxable profit will be
available against which the deferred tax assets can be recovered. Deferred tax assets and liabilities are only offset when there is a
legally enforceable right to offset current tax assets and liabilities and when the deferred tax assets and liabilities relate to income
taxes levied by the same tax authority on either the same taxable group or different taxable entities where there is an intention to
settle balances on a net basis.
Tax is included in the consolidated income statement except when it relates to items recognised directly in equity, in which case
the related tax is also recognised directly in equity.
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Financial statements | Notes to the financial statements
Share-based payment
The Group administers a long-term incentive plan and a legacy Sharesave scheme (SAYE). The cost of granting share options
and other share-based remuneration to employees and Directors is recognised through the consolidated income statement with
reference to the fair value of the instrument at the date of grant.
The cost of granting share options to employees is charged to the consolidated income statement over the vesting period of
the options with a corresponding increase in equity. An option pricing model is used in calculating the fair value of the long-term
incentive plan, applying assumptions around expected yields, forfeiture rates, exercise price and volatility.
The fair value of the Sharesave scheme is calculated using a modified binomial pricing model.
Upon eventual exercise, a reserves transfer occurs with no further charge reflected in the consolidated income statement.
Own shares held in connection with employee share plans and other share-based payment arrangements are treated as treasury
shares and deducted from equity.
Investment property
Investment property is owned or leased by the Group and held for long-term rental income and capital appreciation.
The Group has chosen to use the fair value model. Property and any related obligations are initially recognised when the significant
risks and rewards attached to the property have transferred to the Group. Payments made in respect of the future acquisition of
investment property are initially recognised as prepayments until the recognition criteria outlined above have been met. Investment
property is recorded at cost and subsequently revalued at the balance sheet date to fair value as determined by professionally
qualified external valuers on the basis of market value.
The fair value of property is arrived at by adjusting the market value as above for directly attributable tenant lease incentives,
deferred letting fees and fixed head leases.
Property held under leases is stated gross of the recognised lease liability.
The valuation is based upon assumptions as outlined within the property portfolio note. These assumptions conform to the RICS
Valuation Professional Standards.
When the Group redevelops a property for continued future use, that property is classified as investment property during the
redevelopment period and continues to be measured at fair value. Gains or losses arising from changes in the fair value of
investment property are recognised in the consolidated income statement in the period in which they arise. Depreciation is
not provided in respect of investment property including plant and equipment integral to such investment property. Investment
properties cease to be recognised as investment property when they have been disposed of or when they cease to be held for
the purpose of generating rental income or for capital appreciation.
Disposals are recognised on completion. Gains or losses arising are recognised in the consolidated income statement. The
gain on disposal is determined as the difference between the net sales proceeds and the carrying amount of the asset at the
commencement of the accounting period, plus capital expenditure in the period.
When the use of a property changes from trading property to investment property, the property is transferred at fair value with
any resulting gain or loss recognised in the consolidated income statement.
Trading property
Trading property comprises those properties that in the Directors’ view are not held for long-term rental income or capital appreciation
and are expected to be disposed of within one year of the balance sheet date or to be developed with the intention to sell.
Such property is constructed, acquired, or if transferred from investment and development property, transferred at fair value which is
deemed to represent cost. Subsequently trading property is carried at the lower of cost and net realisable value. Net realisable value is
the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling costs. This approximates
market value as determined by professionally qualified external valuers at the balance sheet date. Details of the valuation methodology
are set out in note 14 ‘Property Portfolio’.
The amount of any write down of trading property to market value is recognised as an expense in the period the write down
occurs. Should a valuation uplift occur in a subsequent period, the amount of any reversal shall be recognised as a reduction
in the previous write down in the period in which the uplift occurs. This may not exceed the property’s cost.
The sale of trading property is recognised as revenue when the buyer obtains control of the property. Total costs incurred in
respect of trading property are recognised simultaneously as an expense.
1 Principal accounting policies continued
Owner-occupied property
Owner-occupied property comprises property held for use in the production or supply of goods or services or for administrative
purposes. Investment property is transferred to owner-occupied on commencement of entering into a lease for material elements
of the property. The property is transferred and subsequently carried at market value, which is determined in the same manner
as investment property. Revaluation gains are recognised in equity. A revaluation loss will reverse any previous revaluation gain
recorded in equity with the residual recognised in profit or loss.
Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract.
As a lessee the Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and
short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.
As a lessor the Group classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it transfers
substantially all the risk and rewards incidental to ownership of the underlying asset, and classified as an operating lease if it
does not. The Group accounts for a modification to an operating lease 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.
Investments and other financial assets
On initial recognition, a financial asset is classified as either measured at amortised cost, fair value through other comprehensive
income, or fair value through profit or loss.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for
managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period
following the change in the business model.
For assets measured at fair value through profit or loss, gains and losses will be recorded in profit or loss.
Purchases and sales of financial assets are recognised on trade date, being the date on which the Group commits to purchase
or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired
or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in the consolidated statement of comprehensive income.
Financial assets at fair value through profit or loss comprise listed equity investments and included the Group’s investment in
Shaftesbury till the date of the all-share merger. The Group subsequently measures all equity investments at fair value. Changes
in the fair value of financial assets at fair value through profit or loss are recognised in other gains or losses in the consolidated
income statement.
Financial assets at amortised costs include amounts receivable from joint ventures and associates.
Derivative financial instruments
The Group uses non-traded derivative financial instruments to manage exposure to interest rate risk. They are initially recognised
on the trade date at fair value and subsequently remeasured at fair value based on market price. The method of recognising the
resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item
being hedged. Instruments that have not been designated as qualifying for hedge accounting are classified as fair value through
profit and loss. Changes in the fair value of these instruments are split into interest (calculated as the accrued and realised cash
flows) and other changes in fair value. Interest is recognised in finance income or costs and changes in fair value are recognised
in change in fair value of financial instruments in the consolidated income statement.
Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost. The methodology
for assessment of impairment is defined in the following paragraph.
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Financial statements | Notes to the financial statements
Impairment of financial assets
The Group applies the IFRS 9 expected credit loss model in order to calculate a lifetime expected loss allowance for all financial
assets. To measure the expected credit loss, receivables are reviewed on an individual contract basis. The expected loss rates
are based on forward-looking information as well as historical evidence of collection.
For rent receivables, all tenants are allocated a risk rating, as determined by management, and provided a rating of maximum, high,
medium and low risk. The classification is developed by taking into consideration information on the tenant’s credit rating, current
financial position, historical trading performance, historical default rate and the operational performance of the business. In
assessing the provision the Group identifies risk factors associated by sector (food and beverage, retail, hospitality, office and
residential) and the type of rent receivable outstanding (rent arrears, service charge, other). In determining the provision on a
tenant by tenant basis, the Group considers both recent payment history and future expectations of the tenant’s ability to pay
or possible default in order to recognise an expected credit loss allowance. Based on sector and rent receivable type a provision
is provided in addition to a full provision for maximum risk tenants or tenants with significant financial issues.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the original impairment was recognised, the impairment reversal is recognised in the consolidated statement of
comprehensive income on a basis consistent with the original charge.
Tenant lease incentives are impaired based on an assessment of tenant affordability.
For amounts receivable from joint ventures and associates, impairment is assessed by comparing the carrying amount of the
loans and receivables to the discounted present value of the estimated future cash flows from the joint ventures and associates.
Cash and cash equivalents
Cash and cash equivalents are recognised at fair value. Cash and cash equivalents comprise cash on hand, deposits held at call
with financial institutions, certain tenant deposits and other short-term highly liquid investments with original maturities of three
months or less.
Tenant deposits held against tenants’ rent payment obligations in bank accounts administered by the Group are classified as cash
and cash equivalents. Tenant deposits held against tenants’ rent payment obligations in bank accounts administered by the Group’s
managing agent are not included within the consolidated balance sheet.
The Group holds cash on deposit as security for certain secured term loans and secured bank facilities, and where there are
certain conditions restricting their use. Cash held on deposit which has conditions restricting its use and is not available on
demand, liquid or readily convertible, is classified within other receivables.
Trade and other payables
Trade payables are obligations for goods or services acquired in the ordinary course of business. Trade and other payables are
recognised at fair value and subsequently measured at amortised cost until settled.
Borrowings
Borrowings comprise bank loans, secured loan facilities, loan notes and compound financial instruments.
Bank loans, secured loan facilities and loan notes are ordinarily recognised initially at their net proceeds as an approximation of
fair value. If the transaction price is not an approximation of fair value at initial recognition, the Group determines the fair value as
evidenced by a quoted price in an active market for an identical instrument or based on a valuation technique that uses data from
observable markets. Bank loans and loan notes are subsequently carried at amortised cost. Any transaction costs, premiums or
discounts are capitalised and recognised over the contractual life of the loan using the effective interest rate method, or on a
straight-line basis where it is impractical to do so.
In the event of early repayment, transaction costs, premia or discounts paid and unamortised costs are recognised immediately
in the consolidated income statement.
Compound financial instruments issued by the Group comprise exchangeable bonds that are convertible into shares. The
exchangeable bonds were bifurcated into a liability and embedded derivative option component on initial recognition. The carrying
value of the liability at initial recognition is the difference between the fair value of the entire instrument as a whole and the embedded
derivative’s fair value. Any directly attributable transaction costs are allocated to each component in proportion to their initial carrying
amounts. The issue costs apportioned to the embedded derivative are recognised immediately in the consolidated income statement.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using
the effective interest method. Any transaction costs apportioned to the liability are included in the carrying amount and recognised
over the contractual life of the liability using the effective interest rate method.
When a facility has been modified an assessment of modification and extinguishment is performed reviewing both quantitative and
qualitative factors.
Interest related to the financial liability is recognised in the consolidated income statement. The embedded derivative is measured
at fair value with the fair value adjustment accounted for in the consolidated income statement.
1 Principal accounting policies continued
Pensions
The costs of the defined contribution scheme and the Group’s personal pension plans are charged against profits or losses in the
year in which they are incurred.
Contingent liabilities and capital commitments
Contingent liabilities are disclosed where there are present or possible obligations arising from past events, but the economic
impact is uncertain in timing, occurrence or amount. A description of the nature and, where possible, an estimate of the financial
effect of contingent liabilities are disclosed.
Capital commitments are disclosed when the Group has a contractual future obligation which has not been provided for at the
balance sheet date. Amounts are only provided for where such obligations are onerous.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised
as a deduction from equity, net of any tax effects.
2 Segmental reporting
IFRS 8 requires operating segments to be reported in a manner consistent with the internal financial reporting reviewed by the chief
operating decision maker. The chief operating decision maker of the Group is the Executive Committee. The Executive Committee
is responsible for regularly reviewing the Group’s internal reporting in order to assess performance and for allocation of resources,
and consists of the Chief Executive, Chief Financial Officer and the two Executive Directors.
Previously, the Group determined the operating segments to be organised into the following divisions:
– Covent Garden;
– Other, which comprised the Shaftesbury Investment, the Group interest in Innova and other head office companies and
investments; and
– Lillie Square, which represents the Group’s interests in the Lillie Square joint venture and a number of smaller properties in the
adjacent area.
Following the merger, the information reviewed by the Executive Committee is prepared on a basis consistent with these financial
statements. That is, the information is provided and monitored at a Group level and includes the IFRS reported results, EPRA and
underlying measures (previously the information provided was on a Group share basis). The management information previously
presented for the Lillie Square and Other segments is no longer separately reported to the Executive Committee, as it makes up
a small proportion of the combined Group post-merger, or in the case of the Shaftesbury Investment which is no longer in place.
These former segments no longer meet the requirements under IFRS 8 to be separately reported.
In assessing the identification of operating segments, the Group considers the activities of the chief operating decision maker
including decision making authorities for allocation of resources and the information they regularly receive. This consideration
also factors that performance measures are set and only monitored at a single Group level. The Annual Report includes additional
operational information on the property portfolio grouped by village and use. This information is used within certain levels of the
business and is also considered useful for readers of the Annual Report, but is not used by the chief operating decision maker for
monitoring performance or the allocation of resources.
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Financial statements | Notes to the financial statements
3 Performance measures
The Group has applied the European Securities and Markets Authority guidelines on alternative performance measures (“APMs”) in
these annual results. An APM is a financial measure of historical or future financial performance, position or cash flow of the Group
which is not a measure defined or specified in IFRS. Details of all APMs used by the Group are set out in the APM section on page 214.
As is usual practice in the sector, the Group presents APMs for certain indicators, including earnings, earnings per share and
net tangible assets, making adjustments as set out by EPRA in its Best Practice Recommendations. These recommendations
are designed to make the financial statements of public real estate companies more comparable across Europe, enhancing
the transparency, comparability and coherence of the sector.
One of the key performance measures which the Group uses is underlying earnings. The underlying earnings measure reflects
the underlying financial performance of the Group’s core West End property rental business and is used for the calculation
of dividends. The measure aligns with the main principles of EPRA earnings which excludes valuation movements on the wholly-
owned, joint venture and associate properties, fair value changes of financial instruments and listed investments, cost of early
close out of debt, gain on bargain purchase and IFRS 3 merger-related transaction costs.
In calculating underlying earnings, additional adjustments are made to exclude items considered to be non-recurring or significant
by virtue of size and nature. Consistent in the calculation for both years is the removal of the financial performance of the Lillie
Square joint venture, associated tax adjustments and the interest receivable on the loan issued to the joint venture by the Group.
Lillie Square is not a core part of the operations of the Group and therefore its results are not included in underlying earnings.
The fair value movement of the option component of the exchangeable bond is also adjusted from underlying earnings as such
fair value movements do not reflect the true nature of the performance of the Group.
Following the completion of the all-share merger on 6 March 2023, the following new adjustments have been made to
underlying earnings:
– A fair value exercise was performed on the Shaftesbury balance sheet, with the debt (including an adjustment to the investment
in Longmartin arising from the fair value adjustment of the underlying debt in the associate) adjusted to be held at a fair value of
£945.6 million compared to the nominal value of £1,019.8 million. The fair value adjustments will be amortised to other finance
costs over the remaining term of the debt facilities. In the current year, EPRA earnings has been adjusted by £24.6 million, to
reflect the accelerated unwind of the fair value adjustment following the early redemption of the Chinatown and Carnaby
Bonds in April 2023. The current year amortisation of the fair value adjustment for the other debt facilities of £5.2 million
has been adjusted from underlying earnings within other finance costs.
– £8.7 million of merger-related integration and other non-underlying administrative expenses have been incurred. These
costs are non-recurring as they relate to significant transactions outside the core operations of the Group.
– A £5.1 million reduction to gross profit has been reported as a result of the alignment of accounting policies following the
merger. Details are set out in note 1 ‘Changes in accounting policies’. The alignment was considered immaterial and therefore
no retrospective adjustment has been made and the cumulative impact as at 1 January 2023 was adjusted against gross profit
in the current year. This impact has been adjusted from underlying earnings to reflect the true performance of the business for
the current year.
A summary of the number of shares, on a basic and diluted basis, in issue at the year end, and on a weighted average basis for the
year, is set out in the table below:
Number of shares
Ordinary shares
Own shares – employee benefit trust
Own shares – collateral for exchangeable bond
Number of shares – basic2
Dilutive effect of contingently issuable share option awards3
Dilutive effect of contingently issuable deferred share awards3
Number of shares – diluted4
2023
Weighted
average
million
1,757.0
(2.6)
(105.5)
1,648.9
6.5
0.6
1,656.0
2023
In issue
million1
1,953.2
(3.1)
(128.4)
1,821.7
6.5
0.6
1,828.8
2022
Weighted
average
million
851.3
−
–
851.3
0.8
–
852.1
2022
In issue
million
851.5
–
–
851.5
0.8
–
852.3
1. The settlement of share options under the employee benefit scheme prior to the merger, and the all-share merger completing on 6 March 2023, resulted in 1,101.7 million
shares issued in the year.
2. Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share.
3. Further information on these potential ordinary shares can be found in note 32 ‘Share-based payments’.
4. Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings and net assets per share.
3 Performance measures continued
Earnings per share – IFRS
Basic earnings/(loss)
Basic earnings/(loss) per share (pence)
Diluted earnings/(loss) per share (pence)
Earnings per share – EPRA and Underlying earnings
Basic earnings/(loss)
EPRA Group adjustments:
Loss on revaluation and profit on sale of investment property
Change in value of investments and other receivables
Change in fair value of financial assets at fair value through profit or loss
Change in fair value of financial instruments – interest rate derivatives
Gain on bargain purchase
Accelerated unwind of unamortised finance costs and interest on early close out of debt1
Merger-related transaction costs
Deferred tax adjustments
EPRA joint venture and associate adjustments:
Profit on sale and transfer of trading property
Loss on revaluation of investment property
Write down of trading property
Deferred tax adjustment
EPRA earnings
EPRA earnings per share (pence)
Underlying earnings adjustments:
Impact of change in accounting policy on gross profit
Other finance costs2
Merger-related integration and other non-underlying administration costs
Change in fair value financial instruments – exchangeable bond option
Taxation
Joint venture adjustment – Lillie Square3
Other
Underlying earnings
Underlying earnings per share (pence)
2023
£m
750.4
45.5p
45.3p
2023
£m
750.4
65.0
12.5
(52.0)
7.4
(805.5)
26.8
35.8
(0.1)
(5.1)
3.3
6.6
(0.1)
45.0
2.7
5.1
5.2
8.7
3.9
–
(7.5)
–
60.4
3.7
2022
£m
(211.8)
(24.9)p
(24.9)p
2022
£m
(211.8)
0.8
7.9
239.5
(11.0)
–
6.0
14.6
(0.1)
–
(0.9)
12.3
–
57.3
6.7
–
0.5
–
(28.8)
4.7
(14.9)
(0.2)
18.6
2.2
Note
7
8
17
18
13
10
6
1
6
18
1. On early redemption of the Carnaby and Chinatown bonds in April 2023 the unamortised fair value adjustment of £24.6 million that arose on completion of the merger was
accelerated. In addition, the unamortised costs on the loan facility of £2.2 million was accelerated on early repayment during the year. The prior year adjustment relates to
the non-recurring costs in connection with the early repayment of £75 million of private placement notes and the repayment of the £125 million secured loan.
2. Includes the unwind of the fair value adjustments on the remaining debt facilities acquired on merger (including the fair value unwind of our share of the Longmartin debt
of £0.7 million). £4.5 million is recorded through other finance costs included in note 10 ‘Finance costs’ and £0.6 million within the profit from Longmartin as per note 16
‘Investments in joint ventures and associates’. The prior year adjustment related to the cost of entering the loan facility during the prior year.
3. The Lillie Square joint venture is not considered part of the core underlying business of the Group and therefore its results are excluded from underlying earnings.
The adjustment includes £3.7 million (2022: £3.5 million) interest receivable by the Group on the interest-bearing loans issued to the joint venture and £3.8 million
(2022: £11.4 million) of adjustments made to EPRA earnings for profit on sale and transfer of trading property, loss on revaluation of investment property and write
down of trading property.
Net assets per share
IFRS total equity1
Unrecognised surplus on trading property – joint venture
Fair value of financial instruments – interest rate derivatives2
Fair value adjustment of exchangeable bond3
Real Estate Transfer Tax
Excess fair value of debt over carrying value4
Deferred tax adjustments
NAV
NAV per share (pence)
2023
2022
EPRA NRV
£m
EPRA NTA
£m
EPRA NDV
£m
EPRA NRV
£m
EPRA NTA
£m
EPRA NDV
£m
3,480.2
1.7
(9.7)
2.0
332.2
–
5.2
3,811.6
208.4p
3,480.2
1.7
(9.7)
2.0
–
–
5.2
3,479.4
190.3p
3,480.2
1.7
–
–
–
29.8
–
3,511.7
192.0p
1,561.6
7.1
(12.1)
(4.8)
116.0
–
0.4
1,668.2
195.7p
1,561.6
7.1
(12.1)
(4.8)
–
–
0.4
1,552.2
182.1p
1,561.6
7.1
–
–
–
121.4
–
1,690.1
198.3p
1. IFRS total equity of 190.3 pence per share (2022: 183.2 pence per share).
2. This relates to the fair value of interest rate derivatives. Further details are disclosed within note 18 ‘Derivative financial instruments’.
3. Adjustment to remove the exchangeable bond option fair value and include the exchangeable bond liability at nominal value of £275 million.
4. Excludes fair value of exchangeable bond option component included under derivative liabilities as disclosed in note 18 ‘Derivative financial instruments’.
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Financial statements | Notes to the financial statements
3 Performance measures continued
Headline earnings per share
Headline earnings per share is calculated in accordance with Circular 1/2023 issued by the South African Institute of Chartered
Accountants, a requirement of the Group’s Johannesburg Stock Exchange secondary listing. This measure is not a requirement of IFRS.
Basic earnings/(loss)
Group adjustments:
Gain on bargain purchase
Loss on revaluation and profit on sale of investment property
Headline earnings/(loss)
Basic headline earnings/(loss) per share (pence)
Diluted headline earnings/(loss) per share (pence)1
1. Further information on these potential ordinary shares can be found in note 32 ‘Share-based payments’.
4 Gross profit
All revenue has been generated from operations within the United Kingdom.
Rental receivable
Straight-lining of tenant lease incentives1
Service charge income
Revenue
(Provision for)/reversal of expected credit loss
Property expenses1
Service charge expenses
Impairment of tenant lease incentives
Costs
Gross profit
2023
£m
750.4
(805.5)
65.0
9.9
0.6p
0.6p
2022
£m
(211.8)
–
0.8
(211.0)
(24.8)p
(24.8)p
2023
£m
171.9
3.9
19.3
195.1
(2.0)
(31.1)
(19.3)
(0.8)
(53.2)
2022
£m
61.5
6.3
6.3
74.1
1.6
(10.2)
(6.3)
(1.9)
(16.8)
141.9
57.3
1. Included in the current period charge is £5.1 million relating to the alignment of accounting policies on completion of the merger. £4.1 million of the adjustment is
recognised through the straight lining of tenant lease incentives and £1.0 million in property expenses. Details of the change in accounting policy is set out in note 1
‘Changes in accounting policies’.
5 Other income
Dividend income1
Management fee income
Other income
1. Dividend income earned from the Group’s investment in Shaftesbury prior to the all-share merger.
6 Administration expenses
Depreciation
Employee costs
Head office administration expenses
Merger-related transaction costs1
Merger-related integration costs1
Non-underlying administration expenses
Administration expenses
2023
£m
2.6
0.1
2.7
2023
£m
0.4
25.1
13.8
35.8
7.9
0.8
83.8
2022
£m
13.5
–
13.5
2022
£m
0.2
17.7
8.1
14.6
–
–
40.6
1. Costs relate to transaction fees and expenses in respect of the merger and subsequent costs of integrating the combined business. Details of transaction costs are set
out in note 13 ‘Gain on bargain purchase’.
6 Administration expenses continued
(a) Employee costs (including Executive Directors)
Wages and salaries
Social security costs
Other pension costs
Share-based payment1
Employee costs
Note
32
2023
£m
19.9
2.6
1.5
1.1
25.1
2022
£m
12.4
2.0
0.9
2.4
17.7
1. Includes £0.1 million credit (2022: £0.1 million charge) for national insurance on share options due to changes in vesting and forfeiture assumptions. Details of the share option
schemes, and principal assumptions made at the last grant and measurement dates are set out in note 32 ‘Share-based payments’.
Share-based payment charges are calculated based on the expected fair value of share awards as calculated using the
Black-Scholes option pricing model. Details of the share option schemes, and principal assumptions made at the last grant
and measurement dates are set out in note 32 ‘Share-based payments’.
(b) Employee numbers
Average monthly number of people (including Executive Directors) employed
Total average headcount
2023
105
2022
67
The details of individual Directors’ remuneration and pension benefits as set out in the tables contained in the Directors’
remuneration report on pages 127 to 152 form part of these consolidated financial statements.
(c) Auditors’ remuneration
Remuneration to the principal auditors in respect of audit fees:
Company and Group consolidated financial statements
Audit of the financial statements of the Company’s subsidiaries
Audit of the financial statements of the Company’s joint ventures and associates
Fees related to the audit of the Company, subsidiaries, joint ventures and associates
Audit related assurance services including interim review
Total fees for audit and audit related services
2023
£m
2022
£m
1.1
0.2
0.1
1.4
0.2
1.6
0.5
0.2
–
0.7
0.1
0.8
The Group’s auditors, PricewaterhouseCoopers LLP, have engaged on assignments in addition to their audit engagement duties
where their expertise and experience of the Group are important. 2023 non-audit fees, including the interim review, represented
11.0 per cent of the total audit fee (2022: 12.0 per cent). Further details on the Audit Committee’s non-audit services policy can
be found on page 124.
7 Loss on revaluation and profit on sale of investment property
Loss on revaluation of investment property
Profit on sale of investment property
Loss on revaluation and profit on sale of investment property
2023
£m
(68.5)
3.5
(65.0)
2022
£m
(0.8)
–
(0.8)
180
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Financial statements | Notes to the financial statements
8 Change in value of investments and other receivables
The change in value of investments and other receivables relates to amounts receivable from the Lillie Square joint venture.
The investment and other receivables in Lillie Square consist of the equity investment, interest bearing loans and a working
capital facility.
Due to the joint venture being in a net liability position, and incurring losses in the year, the equity investment is held at nil (2022: nil).
As at the balance sheet date, prior to impairment, the Group held an interest-bearing loan at £90.1 million (2022: £86.4 million) and
working capital facility of £29.0 million (2022: £28.2 million).
As required by IFRS 9, an impairment assessment was performed comparing the carrying amount of the interest-bearing loans
and working capital facility to the present value of the estimated future cash flows from the joint venture.
The key assumptions made in the impairment assessment were the expected cash flows to be generated over the project life
and the timing thereof. In terms of IFRS 9 requirements the Group applied a discount rate of 4.25 per cent (being the effective
interest rate on the loan to the joint venture) to the cash flows which are in line with the strategic plan of the joint venture.
As a result, the Group has booked an impairment of £12.5 million during 2023 leading to a cumulative impairment of £43.1 million
(2022: £30.6 million cumulative impairment). The cumulative impairment takes into consideration the losses from the joint venture.
Factoring in the impairment, the interest-bearing loan is held at a net book value of £76.0 million (2022: £84.0 million) and working
capital facility at nil (2022: nil). The balances are included within Trade and other receivables at the balance sheet date. Further
details are set out in note 19 ‘Trade and other receivables’.
9 Finance income
Finance income:
On deposits and current accounts
On interest rate derivatives
Finance income
Other finance income:
On loans to joint ventures and associates
Other finance income
10 Finance costs
On bank facilities and loan notes
On exchangeable bonds1
On mortgage bonds2
On secured loans
On obligations under lease liabilities
Finance costs
Other finance costs:
Non-underlying finance charges3
Other finance costs
2023
£m
6.3
9.3
15.6
4.1
4.1
2023
£m
40.3
8.4
1.8
16.5
0.5
67.5
31.3
31.3
2022
£m
1.4
1.2
2.6
3.5
3.5
2022
£m
18.2
8.3
–
–
0.7
27.2
6.5
6.5
1. On 30 November 2020 the Group issued £275 million of secured exchangeable bonds maturing in March 2026. The notes were originally exchangeable into cash or ordinary
shares of Shaftesbury but following the all-share merger are convertible into Shaftesbury Capital shares. The net proceeds received from the issue of the exchangeable bonds
have been split between the financial liability element and an option component. The debt component is accounted for at amortised cost and, after taking into account
transaction costs, accrues interest at an effective interest rate of 3.1 per cent, of which 2 per cent (£5.5 million) represents the cash coupon on the bond.
2. Interest incurred on the £575 million Chinatown and Carnaby bonds from 6 March 2023 up to their redemption in April 2023.
3. Non-underlying finance charges have been excluded from the calculation of underlying earnings as these are non-recurring costs and do not represent the underlying
performance of the business. The current year charge relates to the unwind of the fair value adjustment of the debt on completion of the merger as discussed in note 13 ‘Gain
on bargain purchase’. It is comprised of £24.6 million for the unwind on the early redemption of the Chinatown and Carnaby bonds and £4.5 million on the remaining facilities.
The current year amount further includes £2.2 million accelerated amortisation on the early settlement of the loan facility during the year. In the prior year the costs were in
connection with the early repayment of £75.0 million of private placement notes, the repayment of the £125.0 million secured loan and the cost of entering the loan facility.
11 Taxation
Current income tax:
Current income tax charge
Current tax on profits
Deferred income tax:
On accelerated capital allowances
On Group losses
On other temporary differences
Deferred tax on profits
Total taxation charge in the consolidated income statement
2023
£m
2022
£m
0.2
0.2
0.1
(1.4)
1.3
–
0.2
–
–
0.1
4.7
1.2
6.0
6.0
Factors affecting the tax charge for the year
The tax charge for the year is £0.2 million (2022: £6.0 million) against a profit before tax of £750.6 million (2022: £205.8 million loss).
A reconciliation against the standard rate of corporation tax in the United Kingdom (“UK”) is set out below:
Profit/(loss) before tax
Profit/(loss) on ordinary activities multiplied by the standard rate in the UK of 23.5% (2022: 19%)
Revaluation losses attributable to REIT business
Expenses disallowed
Non-taxable items
Non-taxable items: Gain on bargain purchase
REIT tax-exempt rental profits
Share of partnership loss
Other temporary differences not provided
Utilisation of losses not recognised for deferred tax
Unwind deferred tax on prior period group losses
Total taxation charge in the consolidated income statement
2023
£m
750.6
176.4
3.9
18.4
(0.2)
(189.3)
(6.5)
(1.0)
(0.1)
(1.4)
–
0.2
2022
£m
(205.8)
(39.1)
45.6
3.9
(0.2)
–
(8.3)
(0.6)
–
–
4.7
6.0
As a UK REIT, the Group is exempt from UK corporation tax on income and gains from qualifying activities. Non-qualifying activities
are subject to UK corporation tax.
The main corporation tax rate increased from 19 to 25 per cent with effect from 1 April 2023. As a result of this change in tax rate,
a blended rate of 23.5 per cent will be applicable to the Group for the year ending 31 December 2023.
Pillar Two legislation was substantively enacted in the UK on 20 June 2023 in Finance (No. 2) Act 2023. As the legislation will be
effective for the Group’s financial year beginning 1 January 2024 the Group has performed an assessment of its potential exposure
to Pillar Two income taxes. Based on an assessment of the most recent information available regarding the financial performance
of the constituent entities in the Group, we do not expect to be within the scope of Pillar Two legislation. Although, the current
year’s consolidated revenue (“revenue”) inclusive of the gain on bargain purchase of £805.5 million (2022: nil) exceeds the revenue
threshold, this is an exceptional item recognised as a result of the merger and is non-recurring. In the normal course of business,
the Group’s revenue is not expected to exceed the revenue threshold for at least two out of the last four years. We will continue
to monitor the Group’s revenue against the threshold to assess the applicability of the Pillar Two legislation to the Group.
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Financial statements | Notes to the financial statements
12 Dividends
Group and Company
Ordinary shares
For the year ended 31 December 2021:
Final dividend of 1.0 pence per share
For the year ended 31 December 2022:
First interim dividend of 0.8 pence per share
Second interim dividend of 1.7 pence per share
For the year ended 31 December 2023:
Interim cash dividend of 1.5 pence per share
Dividend expense1
PID
Non-PID
Pence per share
0.5
0.8
0.7
–
0.5
–
1.0
1.5
Date paid
8 July 2022
19 Sept 2022 (SA) and 20 Sept 2022 (UK)
20 March 2023
18 September 2023
2023
£m
–
–
14.5
29.3
43.8
2022
£m
8.5
6.8
–
–
15.3
1. Includes £1.9 million paid to a controlled entity, Capco Investment London (No.7) Scottish Limited Partnership, in respect of 128,350,793 shares held as collateral for the
exchangeable bonds. The entity has provided an undertaking not to exercise its voting rights in respect of such ordinary shares but will receive the declared dividend, all of
which was retained by the Group following calculation of the dividend threshold test as set out in the exchangeable bond conditions. The Groups dividend expense recorded
in the consolidated statement of cash flows is £41.9 million.
As a UK REIT, Shaftesbury Capital must distribute at least 90 per cent of the Group’s income profits from its tax-exempt property
rental business, and 100 per cent of the Group’s UK REIT investment profits, by way of a PID.
These distributions can be subject to withholding tax at 20 per cent. Dividends from profits of the Group’s taxable residual business
are ordinary dividends and will be taxed as an ordinary dividend.
On 28 February 2024, the Directors proposed a final cash dividend of 1.65 pence per ordinary share (of which 0.65 pence per
ordinary share will be paid as a PID and 1.0 pence per ordinary share as a non-PID), bringing the total dividend for 2023 to
3.15 pence per ordinary share. The proposed 2023 final cash dividend is subject to approval at Shaftesbury Capital’s Annual
General Meeting, to be held on 23 May 2024. If approved, the final cash dividend will be paid on 31 May 2024 to all shareholders
on the register on 26 April 2024.
13 Gain on bargain purchase
The all-share merger between Capco and Shaftesbury completed on 6 March 2023, with the Company being renamed to
Shaftesbury Capital PLC on this date. The merger brought together two real estate companies, with properties mainly located
in the West End, to create the leading central London mixed-use REIT.
Prior to the all-share merger, Capco held a 25.2 per cent shareholding in Shaftesbury which was accounted for at fair value through
profit and loss. On the completion date, the fair value of Shaftesbury shares was 421.6 pence per share and Capco’s 25.2 per cent
interest, consisting of 96,971,003 Shaftesbury shares, was valued at £408.8 million. Of this shareholding, 38,245,171 shares were
held as collateral in respect of the £275 million exchangeable bonds, issued in 2020.
Upon the merger becoming effective, Shaftesbury Shareholders received 3.356 Shaftesbury Capital shares for each Shaftesbury
share held, totalling 1,095,549,228 shares (including 128,350,793 shares issued to a Capco controlled entity in respect of secured
shares previously held as collateral for the exchangeable bonds).
The table below sets out the fair values of the identifiable net assets acquired, and consideration transferred on the completion
date. As the fair value of the identifiable net assets acquired was greater than the total consideration paid, due to the Shaftesbury
Capital share price trading at a 32 per cent discount to the last reported net asset value, and as a result of the exchange ratio
referred to above, a gain on bargain purchase has been recognised in the consolidated income statement for the year.
Book value as at
6 March 2023
£m
Fair value
adjustments1
£m
Fair value as at
6 March 2023
£m
Assets
Investment property2
Investment in associate2
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents3
Total assets
Liabilities
Borrowings
Trade and other payables
Total liabilities
Net assets acquired
Fair value of net assets acquired
Consideration transferred:
Issue of 1,095,549,228 ordinary share of 25 pence per share4
Shares previously held by Capco
Consideration: fair value of shares issued
Fair value of shares previously held
Fair value of consideration and shares previously held
Gain on bargain purchase
Merger-related transaction costs5
Total gain on business combination recognised in the consolidated income statement
3,099.0
82.3
0.2
72.0
118.1
3,371.6
(954.0)
(66.6)
(1,020.6)
2,351.0
42.0
2.4
–
(42.0)
–
2.4
65.0
–
65.0
3,141.0
84.7
0.2
30.0
118.1
3,374.0
(889.0)
(66.6)
(955.6)
2,418.4
1,363.9
(159.8)
1,204.1
408.8
1,612.9
805.5
(35.8)
769.7
1. Details of completion date fair value adjustments required under IFRS 3 are set out in the paragraphs below.
2. Investment property, including the Group’s share of investment property held within the Longmartin investment in associate, was externally valued and reported at market
value on the merger date.
3. No cash consideration was paid on completion of the transaction. The cash acquired on completion of the merger, as included within the consolidated statement of cash
flows represents the cash held by Shaftesbury on 6 March 2023.
4. The calculation of consideration transferred is based on the Capco closing share price of 124.5 pence per share on 3 March 2023. Shaftesbury shares, excluding the
25.2 per cent shareholding previously held by Capco, were exchanged for Capco shares at a ratio of 3.356 shares per Shaftesbury share.
5. Merger-related transaction costs of £35.8 million (2022: £14.6 million) incurred in connection with the all-share merger have been recorded within administration expenses
in the consolidated income statement.
Details of completion date fair value adjustments required under IFRS 3:
–
–
Investment properties and trade and other receivables – The carrying value of investment properties and trade and other
receivables has been adjusted to derecognise £42.0 million of tenant lease incentives and deferred letting fees held prior
to completion of the merger.
Investment in associate – The fair value of the investment in associate includes investment property and borrowings at fair
value. The Group’s £60.0 million (our share) fixed rate debt held in the associate, was fair valued at £56.6 million, resulting
in a £3.4 million fair value adjustment of the debt due to the current interest rate environment. An offsetting tax adjustment
of £0.8 million was recognised on this fair value adjustment. Capitalised issue costs associated with the debt of £0.2 million
(our share) were derecognised on completion and the fair value of the debt and corresponding deferred tax adjustment will
be amortised over the remaining term of the debt facility.
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Financial statements | Notes to the financial statements
13 Gain on bargain purchase continued
– Borrowings – Fixed rate debt with a nominal value of £959.8 million was fair valued at £889.0 million, a £70.8 million difference
due to the current interest rate environment. The fair value adjustment is offset by £5.8 million of capitalised issue costs
associated with the debt which were derecognised on completion. The fair value adjustment will be amortised to other finance
costs over the remaining term of the debt facilities. Following completion of the merger and the redemption of the Carnaby
and Chinatown bonds in April 2023, £24.6 million of the amortisation of the fair value adjustment relating to the bonds was
accelerated and recognised in other finance costs in the period. £41.7 million of the £70.8 million (wholly-owned) adjustment
remains at 31 December 2023, which will be amortised over the remaining term of the debt facilities.
14 Property Portfolio continued
Market value of property portfolio
Market value of investment property
Market value of owner-occupied property
Market value of wholly-owned property portfolio
The revenue and loss before tax of the Shaftesbury Group are set out in the table below.
Revaluation (loss)/gain of property portfolio
Revenue (including service charge income)
Loss before tax3
1 January 2023 to
5 March 2023
£m1
6 March 2023 to
31 December 2023
£m2
Pro forma
Shaftesbury
PLC Group
£m
24.9
(1.7)
121.9
(64.3)
146.8
(66.0)
1. Shaftesbury Group revenue and loss before tax for the period 1 January 2023 – 5 March 2023 (pre-merger) was obtained from internal management accounts and have not
been adjusted for accounting policy alignments or fair value adjustments.
2. Shaftesbury Group revenue and loss before tax for the period 6 March 2023 – 31 December 2023 (post-merger) are included in the Group consolidated income statement and
take into account adjustments relating to accounting policy alignments and the unwind of the fair value adjustments on the borrowings and related deferred tax in Longmartin.
3. Loss before tax for the periods 1 January 2023 – 5 March 2023 and 6 March 2023 – 31 December 2023 includes revaluation movements and merger-related transaction and
integration costs. Excluding these items, estimated underlying earnings before tax for the period 1 January 2023 – 5 March 2023 were £5 million.
The pro forma information is provided for illustrative purposes only and is not necessarily indicative of the results that the
combined Group would have reported had the merger completed at the beginning of the financial year, or indicative of future
results of the combined Group.
14 Property Portfolio
At 1 January
Investment property acquired on merger at 6 March 2023 fair value
Additions from acquisitions
Additions from subsequent expenditure
Disposals
Transfer to owner-occupied property
Loss on revaluation
Carrying value of investment property
Adjustment in respect of fixed head leases
Adjustment in respect of tenant lease incentives and deferred letting fees
Market value of investment property
The investment property valuation comprises:
Freehold properties
Leasehold properties
Market value of investment property
Note
13
15
7
23
19
2023
£m
1,715.1
3,141.0
17.4
35.1
(81.5)
(18.4)
(68.5)
4,740.2
(3.0)
37.9
4,775.1
2022
£m
1,705.6
–
–
10.3
–
–
(0.8)
1,715.1
(6.1)
34.7
1,743.7
2023
£m
2022
£m
3,791.3
983.8
4,775.1
971.2
772.5
1,743.7
Note
14
15
Note
14
15
2023
£m
4,775.1
20.2
4,795.3
2022
£m
1,743.7
–
1,743.7
2023
£m
(68.5)
1.8
(66.7)
2022
£m
(0.8)
–
(0.8)
Revaluation loss reported in consolidated income statement
Revaluation gain reported in consolidated statement of comprehensive income
Total revaluation loss of wholly-owned property portfolio
Valuation process
The fair value of the Group’s wholly-owned investment property and owner-occupied property at 31 December 2023 was
determined by independent, appropriately qualified external valuers, CBRE and Cushman & Wakefield. The valuations conform
to the Royal Institution of Chartered Surveyors (“RICS”) Valuation Professional Standards. Fees paid to valuers are based on fixed
price contracts.
Each year the Company appoints the external valuers. The valuers are selected based on their knowledge, independence and
reputation for valuing assets such as those held by the Group.
Valuations are performed bi-annually and are performed consistently across all properties in the Group’s portfolio. At each
reporting date, appropriately qualified employees of the Group verify all significant inputs and review computational outputs.
Valuers submit and present summary reports to the Group’s Audit Committee, with the Executive Committee reporting to the
Board on the outcome of each valuation round.
Net Zero Carbon and EPC compliance
The Group published its Net Zero Carbon Pathway in November 2023 and has set 2030 as its target date to achieve this, aligning to a
1.5˚C pathway and the aim to be carbon neutral for scope 1 & 2 emissions by 2025. A key element in achieving this will come from
carbon efficiencies created through developments and refurbishments of the Group’s property portfolio. During 2023, the Group’s
additions from subsequent expenditure were £35.1 million (year ended 31 December 2022: £10.3 million). This included both capital
works, which enhanced the environmental performance of assets, and design stage work aimed at delivering environmental
enhancements. While new ground-up developments form a limited part of the Group’s activity, the design stage work on refitting
and refurbishment of units, particularly in heritage buildings, is equally important to deliver Whole Life Carbon Efficiency.
The Net Zero Carbon Pathway also highlights the aim for 75 per cent of commercial units to have a “B” or above EPC compliance
rating by 2027 and for all commercial units to have a “B” or above and residential units a “C” or above rating by 2030. Any
committed capital expenditure has been included in note 28 ‘Capital commitments’.
Valuation techniques
Valuations are based on what is determined to be the highest and best use. When considering the highest and best use a valuer
will consider, on a property-by-property basis, its actual and potential uses which are physically, legally and financially viable.
Where the highest and best use differs from the existing use, the valuer will consider the cost and the likelihood of achieving and
implementing this change in use in arriving at its valuation.
The fair value of the Group’s investment properties has primarily been determined using a market approach, which provides an
indication of value by comparing the subject asset with similar assets for which price information is available. The external valuers
use information provided by the Group, such as tenancy information and capital expenditure expectations. In deriving fair value,
the valuer also makes a series of assumptions, using professional judgement and market observations. These assumptions include,
but are not limited to, market yields, ERVs and void periods. The critical key assumptions are the equivalent yields and estimated
future rental income (ERVs), as set out within the Analysis of Property Portfolio on page 223. Equivalent yields are based on current
market prices, depending on, inter alia, the location, condition and use of the properties. ERVs are calculated using a number of
factors which include current rental income, market comparatives and local occupancy levels. Whilst there is market evidence for
the key inputs, and recent transaction prices for similar properties, there is still a significant element of estimation and judgement.
As a result of adjustments made to market observable data, these significant inputs are deemed unobservable.
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Financial statements | Notes to the financial statements
14 Property Portfolio continued
Non-financial assets carried at fair value, as is the case for investment property held by the Group, are required to be analysed
by level depending on the valuation method adopted under IFRS 13 ‘Fair Value Measurement’ (“IFRS 13”).
The different valuation levels are defined as:
Level 1: valuation based on quoted market prices traded in active markets;
Level 2: valuation based on inputs other than quoted prices included within Level 1 that maximise the use of observable data
either directly or from market prices or indirectly derived from market prices; and
Level 3: where one or more inputs to valuation are not based on observable market data. Valuations at this level are more
subjective and therefore more closely managed, including sensitivity analysis of inputs to valuation models.
When the degree of subjectivity or nature of the measurement inputs changes, consideration is given as to whether a transfer
between fair value levels is deemed to have occurred. Unobservable data becoming observable market data would determine a
transfer from Level 3 to Level 2. All investment properties held by the Group are classified as Level 3 in the current and prior year.
Sensitivity to changes in key assumptions
As noted in the critical accounting judgements and key sources of estimation and uncertainty section in note 1, the valuation of the
Group’s property portfolio is inherently subjective. As a result, the valuations are subject to a degree of uncertainty and are made
on the basis of assumptions which may not prove to be accurate, particularly in periods of volatility or low transaction flow in the
commercial property market.
The sensitivity analysis below illustrates the impact on the fair value of the Group’s properties, from changes in the key assumptions:
(Decrease)/increase in fair value
Increase/(decrease) in fair value
Change in ERV
–10%
£m
(406.0)
–5%
£m
(204.0)
+5%
£m
210.0
+10%
£m
421.6
Change in Yield
–50bps
–25bps
+25bps
+50bps
£m
656.0
£m
306.0
£m
£m
(271.2)
(512.1)
The table above shows movements in key assumptions in isolation. These key unobservable inputs are interdependent. All other
factors being equal, a higher equivalent yield would lead to a decrease in the valuation, and an increase in estimated rental value
would increase the capital value, and vice versa. However, there are interrelationships between the key unobservable inputs which
are partially determined by market conditions, which would impact these changes.
The methodology for the combined portfolio has been aligned and is based on the effective annual yield to a purchaser on the
gross market value, assuming rent is receivable annually in arrears, and that the property becomes fully occupied and that all rents
revert to the current market level (ERV as at 31 December 2023) at the next review date or lease expiry. Shaftesbury previously
reported the equivalent yield based on quarterly rents in advance, reflecting reversions to current market rent. On that basis, the
equivalent yield for the combined portfolio would have been 4.5 per cent (pro forma Dec 2022: 4.2 per cent).
At 31 December 2023, the Group was contractually committed to £24.8 million (31 December 2022: £1.7 million) of future
expenditure for the purchase, construction, development and enhancement of investment property. Refer to note 28 ‘Capital
commitments’ for further information on capital commitments.
15 Property, plant and equipment
Net carrying value at 1 January 2022
Additions
Depreciation
Net carrying value at 31 December 2022
Additions
Property, plant and equipment acquired on merger at 6 March 2023 fair value
Transfer from investment property
Depreciation
Revaluation
Net carrying value at 31 December 2023
Owner-
occupied
property
£m
Note
–
–
–
–
–
–
18.4
–
1.8
20.2
13
14
Other
£m
0.6
0.2
(0.2)
0.6
3.4
0.2
–
(0.4)
–
3.8
Total
£m
0.6
0.2
(0.2)
0.6
3.4
0.2
18.4
(0.4)
1.8
24.0
16 Investments in joint ventures and associates
Investments in joint ventures and associates are measured using the equity method. All the Group’s joint ventures and
associates are held with other investors on a 50:50 basis. At 31 December 2023, investments comprised the Longmartin
associate (“Longmartin”) and the Lillie Square joint venture (“LSJV”). The Group disposed of its interest in Innova Investment
joint venture (“Innova”) on 15 May 2023.
Longmartin
Longmartin is a joint venture arrangement with The Mercers’ Company. This 50:50 investment owns a long leasehold interest
in a number of mixed-use buildings, centred on St Martin’s Courtyard in Covent Garden, which offers a range of hospitality,
leisure and retail concepts, alongside over 100,000 square feet of office space and 75 apartments.
Pursuant to the terms of the Longmartin investment (forming 3 per cent of the Group’s property portfolio), the merger triggered the
right for The Mercers’ Company (the “Mercers”) to require the Company to offer to sell its shares in the Longmartin investment to
them (or to a third-party purchaser identified by them). The Mercers have elected to consider acquiring the Company’s shares in
the Longmartin investment and discussions are ongoing. As a result, it has been determined joint control is no longer demonstrated,
however it remains a 50 per cent investment with significant influence demonstrated, therefore the investment is now reflected as
an investment in an associate. There is no certainty that a transaction to sell the Company’s shares in the Longmartin investment
will be agreed and should the discussions conclude without agreement, the investment would revert to a joint venture.
The summarised income statement and balance sheet of Longmartin are presented below.
Summarised income statement
Revenue
Gross profit
Administration expenses
Loss on revaluation of investment property
Net finance costs
Taxation
Profit for the period after taxation
Dividends paid
Summarised balance sheet
Investment property
Cash and cash equivalents
Other non-current assets
Other current assets
Non-current borrowings
Amounts payable to partners1
Other non-current liabilities
Other current liabilities
Net assets
Capital commitments
6 March 2023 to
31 December
2023
£m
14.9
10.6
(0.2)
(1.9)
(7.5)
(0.6)
0.4
3.0
2023
£m
327.2
3.8
2.4
1.6
(114.4)
(23.1)
(21.9)
(8.8)
166.8
0.1
1. During the period, Longmartin repaid £5.3 million to its partners following the return of £5.3 million cash previously held on deposit as a waiver guarantee with its
external lender.
Investment properties owned by Longmartin have been valued at 31 December 2023 by professionally qualified external valuers,
Knight Frank LLP, who are members of the Royal Institution of Chartered Surveyors. Adjustments are made to the fair value of
Longmartin’s investment properties to arrive at the book value at 31 December 2023, as set out below:
Fair value of properties as valued by Knight Frank LLP
Finance lease asset
Lease incentives and costs included in receivables
Carrying value of investment property
317.4
11.2
(1.4)
327.2
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Financial statements | Notes to the financial statements
16 Investments in joint ventures and associates continued
LSJV
LSJV was established as a joint venture arrangement with the Kwok Family Interests (“KFI”) in August 2012. The joint venture was
established to own, manage and develop land interests at Lillie Square. LSJV comprises Lillie Square LP, Lillie Square GP Limited,
acting as general partner to the partnership, and its subsidiaries. All major decisions regarding LSJV are taken by the Board of Lillie
Square GP Limited, through which the Group shares strategic control.
The summarised income statement and balance sheet of LSJV are presented below.
Summarised income statement
Revenue
Gross loss
Loss on revaluation of investment property
Proceeds from the sale of trading property
Profit on transfer of trading property to investment property
Cost of sale of trading property
Agent, selling and marketing fees
Write down of trading property
Administration expenses
Net finance costs1
Loss for the year after taxation
2023
£m
7.3
(0.5)
(4.8)
7.0
9.0
(5.6)
(0.2)
(12.9)
(0.4)
(6.8)
(15.2)
2022
£m
6.8
(0.3)
–
6.6
0.6
(5.3)
(0.1)
(24.7)
(0.2)
(7.0)
(30.4)
1. Net finance costs include £7.4 million (2022: £7.0 million) interest payable on the interest bearing loans issued to the joint venture by the Group and KFI. Finance income
receivable by the Group from LSJV of £3.7 million (2022: £3.5 million) is recognised in the consolidated income statement within other finance income.
Summarised balance sheet
Investment property
Trading property
Cash and cash equivalents
Other non-current assets
Other current assets
Amounts payable to joint venture partners1
Other current liabilities
Net liabilities
Capital commitments
Carrying value of investment and trading property
Unrecognised surplus on trading property2
Market value of investment and trading property2
2023
£m
46.8
80.3
15.9
5.6
1.5
(224.9)
(1.7)
(76.5)
2022
£m
8.8
131.0
11.8
5.5
1.9
(217.5)
(3.1)
(61.6)
–
1.6
127.1
3.3
130.4
139.8
14.2
154.0
1. Amounts payable to joint venture partners include working capital facilities advanced by the Group and KFI of £29.0 million (2022: £28.2 million) and an interest bearing loan
of £163.0 million (nominal value) advanced by the Group and KFI to the joint venture. The carrying value of the loan before impairment, including accrued interest was £180.2
million (2022: £172.9 million). Recoverable amounts receivable by the Group, net of impairments, are recognised on the consolidated balance sheet within non-current trade
and other receivables.
2. The unrecognised surplus on trading property and the market value of LSJV’s property portfolio are shown for informational purposes only and are not a requirement of IFRS.
Trading property continues to be measured at the lower of cost and net realisable value.
16 Investments in joint ventures and associates continued
Reconciliation of investments in joint ventures and associates
The table below reconciles the opening to closing carrying value of investments in joint ventures and associates as presented on
the consolidated balance sheet.
Investments in joint ventures and associates
At 1 January 2022
At 31 December 2022
Investments in associate acquired at fair value on completion of merger
Share of profit/(loss) for the year1
Losses restricted1
Dividend received
Disposal of joint venture
At 31 December 2023
Longmartin
£m
LSJV
£m
Innova
£m
–
–
84.7
0.2
–
(1.5)
–
83.4
–
–
–
(7.6)
7.6
–
–
–
0.2
0.2
–
–
–
–
(0.2)
–
Total
£m
0.2
0.2
84.7
(7.4)
7.6
(1.5)
(0.2)
83.4
1. The loss from the Lillie Square joint venture for the year of £7.6 million has been restricted in accordance with the requirements of IAS 28. Restricted losses represent the
Group’s share of loss in LSJV in the year of £7.6 million (31 December 2022: £15.2 million) allocated to the cumulative losses which exceed the Group’s investment in the
joint venture. Cumulative losses of £38.4 million have been restricted to date (31 December 2022: £30.8 million) and as a result the carrying value of the investment in LSJV
is nil (31 December 2022: nil). The Group holds £76.0 million (2022: £84.0 million) of recoverable loans from LSJV within note 19 ‘Trade and other receivables’.
17 Financial assets at fair value through profit or loss
Financial assets mandatorily measured at fair value through profit or loss include the following:
Non-current assets
Listed equity securities1
1. Listed equity securities comprised 97.0 million shares in Shaftesbury held until completion of the all-share merger on 6 March 2023.
During the year, the following was recognised in the consolidated income statement:
Profit or loss
Fair value gain/(loss) on financial assets at fair value through profit or loss
2023
£m
–
2022
£m
356.9
2023
£m
52.0
2022
£m
(239.5)
The gain recognised during 2023 is based on the fair valuation movement until 3 March 2023, being the closing Shaftesbury PLC
share price prior to completion of the merger.
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Financial statements | Notes to the financial statements
18 Derivative financial instruments
21 Trade and other payables
Derivative financial assets
Non-current
Interest rate derivatives
Current
Interest rate derivatives
Derivative financial assets
Derivative financial liabilities
Non-current
Derivative liability – exchangeable bonds1
Derivative financial liabilities
2023
£m
1.4
8.3
9.7
2023
£m
7.2
7.2
2022
£m
12.1
–
12.1
2022
£m
3.3
3.3
1. On 30 November 2020 the Group issued £275 million of secured exchangeable bonds maturing in March 2026. The notes were originally exchangeable into cash or ordinary
shares of Shaftesbury but following the all-share merger are convertible into Shaftesbury Capital shares. The net proceeds received from the issue of the exchangeable
bonds have been split between the financial liability element and an option component, representing the fair value of the embedded option to convert the financial liability
into equity of Shaftesbury Capital. The debt component is accounted for at amortised cost at the effective interest rate method and the derivative liability is accounted for
at fair value through profit or loss.
During the year, the following movements on derivative financial instruments were recognised in profit or loss:
Profit or loss
Fair value (loss)/gain on interest rate derivatives
Fair value (loss)/gain on derivative liability – exchangeable bonds
Change in fair value of derivative financial instruments
19 Trade and other receivables
Non-current
Prepayments and accrued income1
Amounts receivable from joint ventures2
Amounts receivable from associates3
Trade and other receivables
Current
Rent receivable4
Other receivables5
Prepayments and accrued income1
Trade and other receivables
2023
£m
(7.4)
(3.9)
(11.3)
2023
£m
28.5
76.0
11.6
116.1
13.6
12.0
17.1
42.7
2022
£m
11.0
28.8
39.8
2022
£m
31.6
84.0
–
115.6
8.0
2.6
10.2
20.8
1. Includes tenant lease incentives and deferred letting fees of £37.9 million (2022: £34.7 million).
2. Amounts receivable from joint ventures represents an interest-bearing loan of £90.1 million (31 December 2022: £86.4 million) provided to LSJV. The loan bears interest at
4.25 per cent per annum and is repayable on demand. As it is not the intention of the Group to call on the loan in the next 12 months it has been presented as non-current. The
loan has been impaired by £14.1 million (31 December 2022: £2.4 million) to date. Included within current trade and other receivables is working capital funding of £29.0 million
due from LSJV (31 December 2022: £28.2 million) that has been fully impaired.
3. Amounts receivable from associates represents a loan of £11.6 million (31 December 2022: nil) provided to Longmartin. As it is not the intention of the Group to call on the loan
in the next 12 months it has been presented as non-current.
4. Rent receivable is shown net of an expected credit loss provision of £4.8 million (31 December 2022: £4.0 million).
5. Other receivables include £7.0 million of restricted cash held on deposit as security for the secured term loans and bank facilities with certain conditions restricting the use.
20 Cash and cash equivalents
Cash at hand
Cash on short-term deposits
Cash
Tenant deposits1
Cash and cash equivalents
2023
£m
10.4
175.3
185.7
14.5
200.2
2022
£m
2.1
114.4
116.5
13.4
129.9
1. Tenant deposits included above relate to cash held on deposit as security against tenant rent payments which are subject to certain restrictions and therefore not available
for general use by the Group. The deposits are held in bank accounts administered by Group Treasury and therefore included within cash and cash equivalents in the
consolidated balance sheet. Cash deposits against tenants’ rent payment obligations totalling £18.9 million (31 December 2022: nil) are held in bank accounts administered
by the Group’s managing agents which are not included within the consolidated balance sheet.
2023
£m
17.7
60.4
10.4
7.5
96.0
2022
£m
15.4
10.4
14.7
1.4
41.9
Nominal
value
£m
95.0
95.0
350.0
380.0
584.8
275.0
1,589.8
1,684.8
(185.7)
1,499.1
Nominal
value
£m
–
475.0
275.0
750.0
(116.5)
633.5
Rent in advance
Accruals
Other payables
Other taxes and social security
Trade and other payables
22 Borrowings
Current
Loan notes (USPPs)
Non current
Bank loans
Loan notes (USPPs)
Secured loans
Exchangeable bonds1
Total borrowings
Cash, excluding tenant deposits
Net debt
Secured
£m
Unsecured
£m
2023
Fixed
rate
£m
Floating
rate
£m
–
–
–
–
539.9
269.8
809.7
94.9
94.9
345.9
379.2
–
–
725.1
94.9
94.9
–
379.2
539.9
269.8
1,188.9
–
–
345.9
–
–
–
345.9
Fair
value
£m
93.0
93.0
350.0
340.7
569.5
256.9
1,517.1
Carrying
value
£m
94.9
94.9
345.9
379.2
539.9
269.8
1,534.8
1,629.7
1. Fair value of exchangeable bonds includes the fair value of the option component of £7.2 million as disclosed in note 18 ‘Derivative financial instruments’.
Non current
Bank loans
Loan notes (USPPs)
Exchangeable bonds1
Total borrowings
Cash, excluding tenant deposits
Net debt
Carrying
value
£m
(2.5)
473.9
266.9
738.3
Secured
£m
Unsecured
£m
2022
Fixed
rate
£m
Floating
rate
£m
–
–
266.9
266.9
(2.5)
473.9
–
471.4
–
473.9
266.9
740.8
(2.5)
–
–
(2.5)
Fair
value
£m
–
393.4
228.9
622.3
1. Fair value of exchangeable bonds includes the fair value of the option component of £3.3 million as disclosed in note 18 ‘Derivative financial instruments’.
£584.8 million (nominal value) of the Group’s borrowings are secured by fixed charges over certain investment properties
held by subsidiaries, with a market value of £1,624.2 million (31 December 2022: nil), and by floating charges over the assets
of certain subsidiaries.
There are currently no restrictions on the remittance of income from investment properties.
Certain borrowing agreements contain financial and other covenants that, if contravened, could alter the repayment profile. Details
of financial covenants are included in note 25 ‘Financial Risk management’. The Group has complied with the financial covenants of
all its borrowings during both periods presented.
The Group has a £300 million revolving credit facility, which is undrawn at 31 December 2023.
Undrawn facilities and cash attributable to the Group, excluding tenant deposits, at 31 December 2023 were £485.7 million
(31 December 2022: £416.5 million).
The fair value of the Group’s borrowings has been estimated using the market value for floating rate borrowings, which
approximates nominal value, and are classified as Level 2 fair values as defined by IFRS 13. The fair values of fixed rate
borrowings have been determined by using a discounted cash flow approach, using a current borrowing rate. The loans are
classified as Level 3 fair value measurements as defined by IFRS 13 due to the use of unobservable inputs, including own credit
risk. The different valuation levels are defined in note 14 ‘Property Portfolio’.
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Financial statements | Notes to the financial statements
22 Borrowings continued
Analysis of movement in borrowings
Balance at 1 January
Borrowings assumed on completion of merger
Borrowing drawn
Borrowings repaid
Other net cash movements
Other non-cash movements
Balance at 31 December
Analysis of movement in borrowings
Balance at 1 January
Borrowings repaid
Other net cash movements
Other non-cash movements
Balance at 31 December
The maturity profile of gross debt is as follows:
Wholly repayable in one year but not more than two years
Wholly repayable in more than two years but not more than five years
Wholly repayable in more than five years
23 Lease liabilities
Lease liabilities included within investment property
(a) Minimum lease payments under lease obligations
Not later than one year
Later than one year and not later than five years
Later than five years
Future finance charges on lease liabilities
Present value of lease liabilities
(b) Present value of minimum lease obligations
Not later than one year
Later than one year and not later than five years
Later than five years
2023
Current
borrowings
£m
Non-current
borrowings
£m
–
–
–
–
–
94.9
94.9
738.3
889.0
1,124.0
(1,151.0)
(12.3)
(53.2)
1,534.8
2022
Current
borrowings
£m
Non-current
borrowings
£m
–
–
–
–
–
2023
£m
95.0
887.5
702.3
1,684.8
2023
£m
0.3
1.2
7.6
9.1
(6.1)
3.0
2023
£m
0.3
1.0
1.7
3.0
934.9
(200.0)
(7.1)
10.5
738.3
2022
£m
–
582.5
167.5
750.0
2022
£m
0.7
2.9
18.0
21.6
(15.5)
6.1
2022
£m
0.7
2.3
3.1
6.1
Lease liabilities included under investment property are in respect of leasehold interests in investment property. Certain leases
provide for payment of contingent rent, usually a proportion of rental income in addition to the minimum lease payments above.
£0.3 million contingent rent has been paid during the year (2022: £0.3 million).
These lease liabilities are effectively secured obligations, as the rights to the leased asset revert to the lessor in the event
of default.
24 Operating leases
The Group earns rental income by leasing its investment property to tenants under operating leases.
In the United Kingdom standard commercial leases vary considerably between markets and locations but typically are for a term
of five to fifteen years at market rent with provisions to review every five years.
The Group is exposed to changes in the residual value of properties at the end of the current leases. This residual value risk is
mitigated through the implementation of active asset management initiatives which aim to ensure the Group enters into new leasing
deals prior to the expiry of current leases. The Group also offers lease incentives to encourage high quality tenants to remain in
properties for longer lease terms. Expectations about the future residual values are reflected in the fair value of the properties.
The future minimum lease amounts receivable under non-cancellable operating leases are as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
2023
£m
159.5
418.9
329.2
907.6
2022
£m
57.0
176.3
212.0
445.3
The consolidated income statement includes £0.4 million (2022: nil) recognised in respect of expected increased rent resulting from
outstanding reviews where the actual rent will only be determined on settlement of the rent review.
25 Financial risk management
The Group’s financial risk management strategy seeks to set financial limits for treasury activity to ensure they are in line with the
risk appetite of the Group. The Group is exposed to a variety of risks arising from the Group’s operations: market risk (including
interest rate risk and price risk), liquidity risk and credit risk.
The following table sets out each class of financial asset and financial liability as at 31 December:
Categories of financial instruments
Derivative financial assets
Total held for trading assets
Cash and cash equivalents
Other financial assets1
Total cash and other financial assets
Investment held at fair value through profit or loss
Total investment held at fair value through profit or loss
Derivative financial liabilities
Total held for trading liabilities
Borrowings
Lease liabilities
Other financial liabilities2
Total borrowings and other financial liabilities
2023
2022
Note
18
20
19
17
18
22
23
21
Carrying
value
£m
9.7
9.7
200.2
113.2
313.4
–
–
(7.2)
(7.2)
(1,629.7)
(3.0)
(78.5)
(1,711.2)
Gain/(loss)
to income
statement
£m
Carrying
value
£m
Gain/(loss)
to income
statement
£m
(7.4)
(7.4)
–
–
–
52.0
52.0
(3.9)
(3.9)
–
–
–
–
12.1
12.1
129.9
94.6
224.5
356.9
356.9
(3.3)
(3.3)
(738.3)
(6.1)
(26.5)
(770.9)
11.0
11.0
–
–
–
(239.5)
(239.5)
28.8
28.8
–
–
–
–
1. Includes rent receivable, amounts due from joint ventures and associates, tax assets and other receivables.
2. Includes trade and other payables (excluding rents in advance) and tax liabilities.
The majority of the Group’s financial risk management is carried out by the Group’s treasury function under policies approved by
the Board of Directors. The policies for managing each of these risks and the principal effects of these policies on the results for
the year are summarised on the following pages.
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Financial statements | Notes to the financial statements
25 Financial risk management continued
Market risk
Interest rate risk
Interest rate risk comprises both cash flow and fair value risks. Cash flow interest rate risk is the risk that the future cash flows of
a financial instrument will fluctuate due to changes in market interest rates. Fair value risk is the risk that the fair value of financial
instruments will fluctuate as a result of changes in market interest rates.
The Group’s interest rate risk arises from borrowings issued at variable rates that expose the Group to cash flow interest rate risk,
whereas borrowings issued at fixed interest rates expose the Group to fair value interest rate risk.
It is Group policy, and often a requirement of our lenders, to eliminate substantially all short and medium-term exposure to interest
rate fluctuations in order to establish certainty over medium-term cash flows by using fixed interest rate derivatives. Interest rate
derivatives have the economic effect of converting borrowings from floating to fixed rates. Interest rate caps protect the Group
by capping the maximum interest rate payable at the caps ceiling. Interest rate collars protect the Group by capping the maximum
interest rate payable at the collar’s ceiling but sacrifice the profitability of interest rate falls below a certain floor.
Group policy is to ensure that interest rate protection on Group external debt is greater than 25 per cent.
The Group has entered into various non-traded derivative instruments to manage its exposure to interest rate risk. These
derivatives have not been designated as hedging instruments and therefore they are classified as financial derivatives at fair
value through profit or loss.
The Group’s drawn debt is at fixed rates or currently has interest rate protection in place until the end of 2025. Interest rate collars
were already in place for £200 million of notional value through to December 2024, capped at 1.23 per cent. Additional interest
rate hedging was put into place in April 2023, capping SONIA exposure at 3.75 per cent for a further £300 million of notional value
for 2023 and £150 million of notional value for 2024 (resulting in £500 million of hedging for 2023 at an effective 2.7 per cent and
£350 million for 2024 at an effective 2.3 per cent). In December 2023, further hedging was put in place for £250 million of notional
value of SONIA exposure for 2025, which provides for a cap of 3.0 per cent and a floor of 2.0 per cent. The derivatives currently in
place cover more than 100% (2022:100%) of the variable loan principal outstanding.
The derivative contracts require settlement of net interest receivable or payable every 90 days. The settlement dates coincide with
the dates on which interest is payable on the underlying debt.
The sensitivity analysis below illustrates the impact of a 100 basis point (“bps”) shift, upwards and downwards, in the level of
interest rates on the movement in fair value of interest rate derivatives entered into by the Group.
Effect on profit before tax (change in fair value of derivative financial instruments):
Increase/(decrease)
Increase in
interest rates
by 100 bps
2023
£m
Decrease in
interest rates
by 100 bps
2023
£m
Increase in
interest rates
by 100 bps
2022
£m
Decrease in
interest rates
by 100 bps
2022
£m
4.9
(4.6)
3.5
(3.5)
The sensitivity analysis above is a reasonable illustration of the possible effect from the changes in slope and shifts in the yield curve
that may actually occur and represents management’s assessment of possible changes in interest rates. 100 bps has been used in
2023 (2022: 100 bps) to reflect current macroeconomic conditions of increasing costs. The fixed rate derivative financial instruments
are matched by floating rate debt, therefore such a movement would have a very limited effect on Group cash flow overall.
Liquidity risk
Liquidity risk is managed to ensure that the Group is able to meet future payment obligations when financial liabilities fall due.
The Group’s policy is to seek to minimise its exposure to liquidity risk by managing its exposure to interest rate risk and to
refinancing risk. The Group seeks to achieve an appropriate balance between a number of factors, including tenor and costs.
Liquidity analysis is intended to provide sufficient headroom to meet the Group’s operational requirements and investment
commitments.
The Group’s policy also includes maintaining adequate cash, as well as maintaining adequate committed and undrawn facilities.
A key factor in ensuring existing facilities remain available to the Group is the borrowing entity’s ability to meet the relevant
facility’s financial covenants. The Group has a process to regularly monitor both current and projected compliance with the
financial covenants.
The Group regularly reviews the maturity profile of its financial liabilities and will seek to avoid concentrations of maturities through
the regular replacement of facilities and by staggering maturity dates. Refinancing risk may be reduced by reborrowing prior to the
contracted maturity date, effectively switching liquidity risk for market risk. This is subject to credit facilities being available at the
time of the desired refinancing.
Liquidity risk continued
The tables below set out the maturity analysis of the Group’s financial liabilities based on the undiscounted contractual obligations
to make payments of interest and to repay principal. The RCF is not included for 2022 and 2023 and the standby loan facility is not
included for 2022 as these facilities were undrawn as at the respective balance sheet dates. Where interest payment obligations
are based on a floating rate, the rates used are those implied by the par yield curve.
Group
Non-derivatives
Loan notes
Unsecured bank loans1
Secured loans
Exchangeable bonds
Other payables and tax liabilities
Total non-derivatives
Derivatives
Interest rate derivatives
Total derivatives
Carrying
value
1 yr
Between 1-2 yrs
Between 3-5 yrs
Over 5 yrs
Total
Interest
£m
Principal
£m
Interest
£m
Principal
£m
Interest
£m
Principal
£m
Interest
£m
Principal
£m
Interest
£m
Principal
£m
£m
2023
474.1
345.9
539.9
269.8
96.2
1,725.9
13.0
25.0
27.1
5.5
–
70.6
95.0
–
–
–
96.2
191.2
10.2
19.8
27.0
5.5
–
62.5
(9.7)
(9.7)
(7.0)
(7.0)
–
–
(1.2)
(1.2)
–
–
–
–
–
–
–
–
16.2
17.2
54.0
2.7
–
90.1
–
–
212.5
350.0
–
275.0
–
837.5
18.1
–
124.9
–
–
143.0
167.5
–
584.8
–
–
752.3
57.6
62.0
233.0
13.7
–
475.0
350.0
584.8
275.0
96.2
366.3 1,781.0
–
–
–
–
–
–
(8.2)
(8.2)
–
–
1. £150 million nominal value of the unsecured bank loans have been repaid post year end. The unsecured bank loan has an initial maturity in December 2026 with the option
to extend the tenor by a further two periods of one year each, subject to lender approval.
Group
Non-derivatives
Loan notes
Exchangeable bonds
Lease liabilities
Other payables
Total non-derivatives
Derivatives
Interest rate derivatives
Total derivatives
Carrying
value
1 yr
Between 1-2 yrs
Between 3-5 yrs
Over 5 yrs
Total
Interest
£m
Principal
£m
Interest
£m
Principal
£m
Interest
£m
Principal
£m
Interest
£m
Principal
£m
Interest
£m
Principal
£m
£m
2022
473.9
266.9
6.1
26.5
773.4
12.1
12.1
13.0
5.5
–
–
18.5
(6.3)
(6.3)
–
–
0.7
26.5
27.2
13.0
5.5
–
–
18.5
–
–
(6.5)
(6.5)
95.0
–
–
–
95.0
–
–
26.5
8.2
–
–
34.7
–
–
212.5
275.0
2.3
–
489.8
–
–
18.1
–
–
–
18.1
–
–
167.5
–
3.1
–
170.6
70.6
19.2
–
–
89.8
475.0
275.0
6.1
26.5
782.6
–
–
(12.8)
(12.8)
–
–
Contractual maturities reflect the expected maturities of financial instruments.
The interest payments on variable interest rate loans and bonds issued in the table above reflect market forward interest rates at
the reporting date and these amounts may change as market interest rates change. The future cash flows on derivative instruments
may be different from the amount in the above table as interest rates change. Except for these financial liabilities, it is not expected
that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts based on
the current drawn facility balances.
The Group has an unsecured revolving credit facility, loan notes, secured loans and an unsured corporate loan facility that contain
loan covenants. Details of these loans are disclosed in note 22 ‘Borrowings’. A future breach of covenant may require the Group to
repay the facilities earlier than indicated in the above table. Details of the loan covenants are set out below:
Financial covenants
Private placements (loan notes)
Exchangeable bond
Unsecured corporate facility2
Secured term loans
Secured term loans
Revolving credit facility (undrawn)
31 December 2023
Nominal at
31 December 20231
£m
LTV
covenant
Interest cover
covenant
475.0
275.0
350.0
134.8
450.0
300.0
60%
N/A
60%
60%
65%
60%
1.20x
N/A
1.20x
1.40x
1.35x
1.20x
Maturity
2024–2037
2026
2026
2029
2030-2035
2026
1. Balance sheet values of the loans include unamortised fees.
2. Unsecured corporate facility has an additional requirement that Group unencumbered assets are equal to or exceed 1.5x of Group unsecured debt
Under the various debt agreements, covenants are monitored on a regular basis and regularly reviewed by management to ensure
compliance with the agreement.
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Financial statements | Notes to the financial statements
25 Financial risk management continued
Credit risk
The Group’s principal financial assets are trade and other receivables, amounts receivable from joint ventures and associates
and cash and cash equivalents. Credit risk is the risk of financial loss if a tenant or counterparty fails to meet an obligation under
a contract. Credit risk arises primarily from trade receivables relating to tenants but also from the Group’s undrawn commitments
and holdings of assets such as cash deposits and loans with counterparties. The carrying value of financial assets recorded in the
consolidated financial statements represents the Group’s maximum exposure to credit risk without taking into account the value
of any deposits or guarantees obtained.
Trade and other receivables:
Credit risk associated with trade receivables is actively managed; tenants are managed individually by asset managers, who
continuously monitor and work with tenants, anticipating and wherever possible identifying and addressing risks prior to default.
Tenants are managed through a large and diverse tenant base to reduce the credit risk to the Group. Trade receivables are less
than one per cent of total assets at 31 December 2023 (2022: less than one per cent) and are £18.4 million as at 31 December 2023
(2022: £12.0 million).
Prospective tenants are assessed through an internally conducted review process, by obtaining credit ratings and reviewing
financial information. As a result, deposits or guarantees may be obtained. The amount of deposits held as collateral at 31
December 2023 was £33.4 million (2022: £13.4 million). £18.9 million (31 December 2022: nil) of the cash deposits held against
tenants’ rent payment obligations are in bank accounts administered by the Group’s managing agents which are not included
within the consolidated balance sheet.
During the year tenant default risk, and as such credit risk, has reduced due to improved trading conditions.
Rent receivable balances are provided against by applying the IFRS 9 expected credit loss model which uses a lifetime expected
loss allowance. In assessing the provision the Group identifies risk factors associated by sector and the type of rent receivable
outstanding (rent arrears, service charge, other). In determining the provision on a tenant by tenant basis, the Group considers
both recent payment history and future expectations of the tenant’s ability to pay or possible default in order to recognise an
expected credit loss allowance.
Trade receivable balances are written off when there is no reasonable expectation of recovery or when a rent concession is
provided for past due rent. Indicators that there is no reasonable recovery include the failure of the debtor to engage in a
repayment plan with the Group and a failure to make contractual payments.
The amounts of trade receivables presented in the consolidated balance sheet are net of impairment for doubtful receivables.
Ageing of gross trade receivables and loss allowances were as follows:
Not yet due
0-90 days
91-180 days
Over 180 days
Trade receivables
2023
£m
2022
£m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
0.5
9.1
4.5
4.3
18.4
–
(1.3)
(0.7)
(2.8)
(4.8)
0.4
6.1
0.6
4.9
12.0
(0.1)
(0.6)
(0.3)
(3.0)
(4.0)
As at 31 December 2023 there is a provision for trade receivables of £4.8 million (2022: £4.0 million). The total provision for the
year is £2.0 million (2022: a credit of £1.6 million), as shown in note 4 ‘Gross Profit’, reflecting impairments during the year and
movement in the provision.
As the Group operates predominantly in central London, it is subject to some geographical concentration risk. However, this
is mitigated by the extensive range of tenants from varying business sectors and the credit review process as noted above.
Amounts receivable from joint ventures and associates:
Included within receivables, net of impairment is nil (2022: nil) working capital facility advanced to the Lillie Square joint venture
and an interest bearing loan of £76.0 million (2022: £84.0 million). The carrying value of the investment in the joint venture
is nil (2022: nil) as the Group’s share of losses exceeds the cost of its investment. Total funding advanced to the joint venture,
including the working capital facility and an interest bearing loan has been impaired by £43.1 million cumulatively. Details of
the impairment are set out in note 8 ‘Change in value of investments and other receivables’.
Credit risk continued
The Lillie Square joint venture is in a net liability position due to carrying trading property at the lower of cost and net realisable
value and the amortisation of the previously issued deep discount bonds. However, based on a market valuation undertaken by
the Group’s valuers JLL, there is an unrecognised surplus of £1.5 million (Group share) as at 31 December 2023. This surplus will
only be evidenced on sale of trading property when significant risks and rewards have transferred to the buyer. Therefore, while
Lillie Square demonstrates positive pricing evidence commercially and funding provided is not deemed to be at risk of default,
for reporting purposes the Group is required to allocate losses against amounts advanced to the joint venture, to the extent that
losses do not exceed the investment, until the unrecognised surplus on trading property is realised through sale.
Included within receivables, net of impairments, is an interest bearing loan of £11.6 million, (2022: nil) advanced to Longmartin. The
carrying amount of the investment in Longmartin is £83.4 million (2022: nil).
Cash, deposits and derivative financial instruments:
The credit risk relating to cash, deposits and derivative financial instruments is actively managed by the Group’s treasury function.
Relationships are maintained with a number of institutional counterparties, ensuring compliance with Group cash investment policy
relating to limits on the credit ratings of counterparties. The maximum exposure to cash and deposits, excluding tenant deposits, as
at 31 December 2023 amounted to £195.6 million (2022: £122.6 million), including the Group’s share of joint venture and associate
cash. The maximum fair value exposure to derivative financial instruments is £9.7 million (2022: £8.8 million).
Gross carrying value and loss allowance of other receivables (excluding trade receivables) are set out in the table below:
Amounts receivable from joint ventures and associates
Other receivables1
1. £0.9 million (2022: £1.9 million) loss allowance relates to the provision against tenant lease incentives.
Capital structure
2023
£m
2022
£m
Gross
carrying
amount
130.7
58.5
Loss
allowance
43.1
(0.9)
Gross
carrying
amount
114.6
44.4
Loss
allowance
(30.6)
(1.9)
The Group seeks to enhance shareholder value both by investing in the business so as to improve the return on investment and
by managing the capital structure appropriately. The Group uses a mix of equity, debt and other financial instruments, and aims
to access both debt and equity capital markets efficiently.
The key ratios used to monitor the capital structure of the Group are loan-to-value and the interest cover ratio. The Group aims
not to exceed a loan-to-value ratio of more than 40 per cent and to maintain interest cover above 125 per cent. These ratios are
disclosed on a nominal value of debt and market value of investment properties. These metrics are discussed in the Financial
review on page 48.
Loan-to-value
Debt at nominal value
Less: cash
Net debt
Total property portfolio at market value
Loan-to-value
Interest cover
Finance costs
Finance income
Underlying operating profit:
Gross profit1
Other income
Administrative expenses
Less: non-underlying administrative expenses
Interest cover
1. 2023 adjusted for the change in accounting policy as discussed in note 1 ‘Changes to accounting policies’.
Note
22
22
22
14
Note
10
9
4
5
6
6
2023
£m
1,684.8
(185.7)
1,499.1
2022
£m
750.0
(116.5)
633.5
4,795.3
31.3%
1,743.7
36.3%
2023
£m
(67.5)
15.6
(51.9)
147.0
2.7
(83.8)
44.5
110.4
212.7%
2022
£m
(27.2)
2.6
(24.6)
57.3
13.5
(40.6)
14.6
44.8
182.1%
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Financial statements | Notes to the financial statements
25 Financial risk management continued
Fair value estimation
Financial instruments carried at fair value are required to be analysed by level depending on the valuation method adopted under
IFRS 13. The different valuation levels are defined in note 14 ‘Property portfolio’.
The table below present the Group’s financial assets and liabilities recognised at fair value at 31 December 2023 and 31 December
2022. There were no transfers between levels during the year.
Financial assets at fair value through profit or loss
Listed equity investment
Held for trading assets
Derivative financial assets
Total assets
Held for trading liabilities
Derivative financial liabilities
Total liabilities
2023
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Level 1
£m
2022
Level 2
£m
Level 3
£m
Total
£m
–
–
–
–
–
–
9.7
9.7
(7.2)
(7.2)
–
–
–
–
–
–
356.9
–
9.7
9.7
(7.2)
(7.2)
–
356.9
–
–
12.1
12.1
(3.3)
(3.3)
–
–
–
–
–
356.9
12.1
369.0
(3.3)
(3.3)
The fair values of derivative financial instruments are determined from observable market prices or estimated using appropriate
yield curves at 31 December each year by discounting the future contractual cash flows to the net present values. Listed equity
investments as at 31 December 2022 are carried at fair value on the consolidated balance sheet and representing Level 1 fair
value measurement. The fair value of listed equity investments are based on quoted market prices traded in active markets.
The fair values of the Group’s cash and cash equivalents, other financial assets carried at amortised cost and other financial
liabilities are not materially different from those at which they are carried in the consolidated financial statements.
26 Deferred tax
The change in corporation tax rate referred to in note 11 ‘Taxation’ has been enacted for the purposes of IAS 12 ‘Income Taxes’
(“IAS 12”) and therefore has been reflected in these consolidated financial statements based on the expected timing of the
realisation of deferred tax.
Deferred tax on investment property is calculated under IAS 12 provisions on a disposals basis by reference to the properties’
original tax base cost. Properties that fall within the Group’s qualifying REIT activities will be outside the charge to UK corporation
tax subject to certain conditions being met. The Group’s recognised deferred tax position on investment property as calculated
under IAS 12 is nil at 31 December 2023 (2022: nil).
A disposal of the Group’s trading properties at their market value, before utilisation of carried forward losses, would result in
a corporation tax charge to the Group of £0.4 million (25 per cent of £1.7 million).
Provided deferred tax provision:
At 31 December 2021
Recognised in income
Recognised directly in equity
Adjustment in respect of rate change
At 31 December 2022
Recognised in income
At 31 December 2023
Unrecognised deferred tax assets:
At 31 December 2021
Income statement items
At 31 December 2022
Income statement items
At 31 December 2023
Accelerated
capital
allowances
£m
Fair value of
derivative
financial
instruments
£m
Other
temporary
differences
£m
Non-REIT
group
losses
£m
0.3
–
–
0.1
0.4
0.1
0.5
–
–
–
–
–
(0.1)
–
0.1
–
–
0.9
0.9
–
–
–
–
–
(1.6)
1.3
–
(0.1)
(0.4)
0.4
–
–
(0.3)
(0.3)
(0.6)
(0.9)
(4.7)
4.7
–
–
–
(1.4)
(1.4)
(17.4)
(6.8)
(24.2)
2.8
(21.4)
Total
£m
(6.1)
6.0
0.1
–
–
–
–
(17.4)
(7.1)
(24.5)
2.2
(22.3)
In accordance with the requirements of IAS 12, deferred tax assets are only recognised to the extent that the Group believes it is
probable that future taxable profit will be available against which the deferred tax assets can be recovered. As at 31 December
2023, the Group has unrecognised deferred tax assets of £22.3 million in relation to £86.0 million of gross losses carried forward
within its residual business and £3.5 million of other deductible temporary differences.
27 Share capital and share premium
Group and Company
Issue type
At 1 January 2022
Reinstatement of void shares
Share buyback
Share-based payment2
At 31 December 2022
Issued to satisfy employee share scheme awards2
Issued on completion of all-share merger3
At 31 December 2023
Transaction
date
November
November
March
March
Issue
price
(pence)
Number
of shares
113
112
851,272,672
1,468,393
(1,468,393)
177,966
851,450,638
25
6,170,629
25 1,095,549,228
1,953,170,495
Share
capital
£m1
212.8
0.4
(0.4)
–
212.8
1.5
273.9
488.2
Share
premium
£m
232.5
–
–
–
232.5
–
–
232.5
1. Nominal value of share capital of 25 pence per share.
2. On 2 March 2023, 6,170,629 (2022: 177,966) new shares were issued to satisfy employee share scheme awards.
3. On completion of the all-share merger on 6 March 2023, 1,095,549,228 new shares were issued (including 128,350,793 shares issued to a Shaftesbury Capital controlled
entity in respect of secured shares previously held as collateral for the exchangeable bonds). See note 13 ‘Gain on bargain purchase’ for further details.
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Financial statements | Notes to the financial statements
28 Capital commitments
At 31 December 2023, the Group was contractually committed to £24.8 million (31 December 2022: £1.7 million) of future
expenditure for the purchase, construction, development and enhancement of investment property.
The Group’s share of joint ventures and associates capital commitments arising on LSJV amounts to nil (2022: £0.8 million)
and Longmartin amount to £0.1 million.
29 Contingent liabilities
The Group has contingent liabilities in respect of legislation, sustainability targets, legal claims, guarantees and warranties arising
from the ordinary course of business. There are no contingent liabilities that require disclosure or recognition in the consolidated
financial statements.
30 Cash flow information
(a) Cash generated from operations
Profit/(loss) before tax
Adjustments:
Loss on revaluation and profit on sale of investment property
Gain on bargain purchase
Change in value of investments and other receivables
Change in fair value of financial assets at fair value through profit or loss
Depreciation
Amortisation of tenant lease incentives and other direct costs
Provision for/(reversal of) expected credit loss
Profit from joint ventures and associates
Share-based payment
Finance income
Other finance income
Finance costs
Other finance costs
Change in fair value of derivative financial instruments
Change in working capital:
Change in trade and other receivables
Change in trade and other payables
Cash generated from operations
Note
7
13
8
17
6
16
32
9
9
10
10
18
2023
£m
750.6
65.0
(805.5)
12.5
(52.0)
0.4
0.1
2.0
(0.2)
7.9
(15.6)
(4.1)
67.5
31.3
11.3
(27.1)
(14.3)
29.8
2022
£m
(205.8)
0.8
–
7.9
239.5
0.2
(2.6)
(1.6)
–
2.4
(2.6)
(3.5)
27.2
6.5
(39.8)
2.0
2.9
33.5
(b) Reconciliation of cash flows from financing activities
The table below sets out the reconciliation of movements of liabilities to cash flows arising from financing activities:
Balance at 1 January
Cash flows from financing activities
Repayment of bank loans
Drawdown of revolving credit facility and secured loan
Total cash flows used in financing activities
Non-cash movements from financing activities
Debt acquired on completion of the merger
Reclassification from long term to short term at period end
Amortisation
Changes in fair value
Total non-cash flows from financing activities
Balance at 31 December
Long-term
borrowings
£m
Short-term
borrowings
£m
Note
22
22
13
22
18
738.4
(1,151.0)
1,126.0
(25.0)
889.0
(94.9)
27.3
–
821.4
1,534.8
–
–
–
–
–
94.9
–
–
94.9
94.9
Derivative
liability –
exchangeable
bond
£m
Total liabilities
from financing
activities
£m
3.3
741.7
–
–
–
–
–
–
3.9
3.9
7.2
(1,151.0)
1,126.0
(25.0)
889.0
–
27.3
3.9
920.2
1,636.9
31 Related party transactions
(a) Transactions with Directors
Key management compensation1
Salaries and short-term employee benefits
Share-based payment
2023
£m
5.3
0.7
6.0
2022
£m
4.7
1.8
6.5
1. Key management comprises the Directors of the Company who have been determined to be the only individuals with authority and responsibility for planning, directing and
controlling the activities of the Company.
Share dealings
No Director had any dealings in the shares of any Group company between 31 December 2023 and 28 February 2024, being a
date not more than one month prior to the date of the notice convening the Annual General Meeting.
Other than as disclosed in these consolidated financial statements, no Director of the Company had a material interest in any contract
(other than service contracts), transaction or arrangement with any Group company during the year ended 31 December 2023.
(b) Transactions between the Group and its joint ventures and associates
Transactions during the year between the Group and its joint ventures, which are related parties, are disclosed in notes 16
‘Investment in joint ventures and associates’, 19 ‘Trade and other receivables’ and 28 ‘Capital commitments’. During the year
the Group received management fees of £0.1 million (2022: nil) that were charged on an arm’s length basis.
Property purchased by Directors of the Company
A related party of the Group, Lillie Square GP Limited, entered into the following related party transactions as defined by IAS 24
‘Related Party Disclosures’:
– Each of Henry Staunton, Chairman of Capco up to 6 March 2023, and Situl Jobanputra, Chief Financial Officer of Shaftesbury
Capital, either solely or together with family members, own apartments (and, where applicable, car park space) in the Lillie
Square development. The disclosures in respect of these purchases were included in previous financial statements.
– As owners of apartments and car park space in the Lillie Square development, the Directors are required to pay annual ground
rent and insurance premium fees and bi-annual service charge fees. During 2023, £13,922.28 had been paid to a related party
of the Shaftesbury Capital Group, Lillie Square GP Limited, in relation to these charges. Certain payments in relation to these
charges were made in advance, equating to £54.35. A further £1,289 had been invoiced as at the date the Director retired
from the Company but was not yet due for payment.
The above transactions with Directors were conducted at fair and reasonable market price based upon similar comparable
transactions at that time. Where applicable, appropriate approval has been provided. Lillie Square GP Limited acts in the
capacity of general partner to Lillie Square LP, a joint venture between the Group and KFI.
32 Share-based payments
The Group operates a number of share-based payment schemes relating to employee benefits and incentives. All schemes are equity
settled with the increase in equity measured by reference to the fair value of the Group’s equity instruments at the grant date of the
share awards. The corresponding expense is recognised on a straight-line basis over the vesting period based on Group estimates
of the number of shares that are expected to vest. The total expense recognised in the consolidated income statement in respect of
share-based payments for 2023 was £7.9 million (2022: £2.3 million) of which £6.8 million has been included in non-underlying merger
related transaction costs as it relates to the vesting of the 2020, 2021 and 2022 share options on completion of the all-share merger.
All options have a vesting period of three years and a maximum contractual life of 10 years. The fair value of share awards is
determined by the market price of the shares at the grant date.
Full details of the performance criteria, vesting outcomes and any additional holding periods for the performance share plan
are set out within the Directors’ remuneration report on pages 127 to 152.
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Financial statements | Notes to the financial statements
32 Share-based payments continued
1. Performance share plan
Market value and nil cost options to subscribe for ordinary shares and conditional awards of free shares may be awarded under
the Performance Share Plan (“PSP”). The Company may make a proportion of awards as HMRC approved market value options.
Share options outstanding at 31 December 2023 has an exercise price of nil and a weighted average remaining contractual life of
six years and are exercisable between 2026 and 2033.
(a) Market value option awards
Outstanding at 1 January
Awarded during the year
Forfeited/lapsed during the year
Exercised during the year
Outstanding at 31 December
(b) Nil cost option awards
Outstanding at 1 January
Awarded during the year
Forfeited/lapsed during the year
Exercised during the year1
Outstanding at 31 December
Exercisable at 31 December
1. The weighted average share price at the date of exercise was 124.50 pence (2022: 102.8 pence).
(c) Deferred share awards
Outstanding at 1 January
Awarded during the year
Forfeited/lapsed during the year
Exercised during the year1
Outstanding at 31 December
Exercisable at 31 December
2023
2022
Number
of market
value
options
408,234
–
(408,234)
–
–
Weighted
average
exercise
price
(pence)
–
–
–
–
Number
of market
value
options
691,022
183,587
(466,375)
–
408,234
Weighted
average
exercise
price
(pence)
216.5
164.9
(234.4)
–
172.9
Number of nil cost options
2023
2022
8,382,021
7,409,650
(4,543,139)
(4,771,818)
6,476,714
–
6,933,460
3,094,396
(1,469,432)
(176,403)
8,382,021
87,275
Number of deferred
share awards
2023
2022
2,629,395
3,571,056
(1,571,493)
(1,398,811)
3,230,147
–
2,147,386
1,148,190
(664,618)
(1,563)
2,629,395
–
1. The weighted average share price at the date of exercise was 124.50 pence (2022: 169.7 pence).
2. Fair value of share-based payment
The fair value of share awards is calculated using the Black-Scholes option pricing model for the half that is subject to the total
return performance condition and using the stochastic pricing model for the half that is subject to the total shareholder return
performance condition. Inputs to the models for share awards during the year are as follows:
Year of share award
Closing share price at grant date
Exercise price
Expected option life
Risk-free rate
Expected volatility
Expected dividend yield
Fair value per option
2023
113p
0p – 113p
3 – 5 years
3.25%
30.16 – 37.04%
0%
73p – 113.0p
33 Related undertakings
The Company’s subsidiaries and other related undertakings at 31 December 2023 are listed below. All Group entities are included
in the consolidated financial statements.
Unless otherwise stated, the Company holds 100 per cent of the voting rights and beneficial interests in the shares of the subsidiaries
listed below. The share capital of each of the companies, where applicable, comprises ordinary shares unless otherwise stated.
Registered address: Regal House, 14 James Street, London, WC2E 8BU
Related undertakings
20 The Piazza Limited
20 The Piazza Management Limited1
22 Southampton Street Limited
22 Southampton Street Management Limited1
34 Henrietta Street Limited
34 Henrietta Street Management Company Limited1
C & C Management Services Limited2
C&C Properties UK Limited2
Carnaby Estate Holdings Limited1
Carnaby Investments Limited1
Carnaby Property Investments Limited1
Capco Covent Garden Limited2
Capco Covent Garden Residential Limited
Capco Group Treasury Limited2
Capco Investment London Limited1,2
Capco Investment London 2 Limited1,2
Capco Investment London (No.1) Limited
Capco Investment London (No.2) Limited
Capco Investment London (No.3) Limited
Capco Investment London (No.4) Limited
Capco Investment London (No.5) Limited
Capco London Limited1
Capital & Counties CG Limited
Capital & Counties CGP
Capital & Counties CG Nominee Limited1
Capital & Counties Limited2,3
CG Treasury Limited1,2,5
Charlotte Street Estate Holdings Limited1
Chinatown Estate Holdings Limited1
Chinatown London Limited1
Chinatown Property Investments Limited1
Covent Garden Estate Holdings Limited1
Covent Garden (43 Management) Limited1
Covent Garden (49 Wellington Street) Limited
Covent Garden Group Holdings Limited
Covent Garden Holdings (No.1) Limited1
Covent Garden Holdings (No.2) Limited1
Covent Garden Management Services Limited1,2
Floral Court Collection Management Limited1
Floral Court Limited
Innova Investment Group Holdings GP Limited1
Innova Investment Group Holdings LP
Innova Investment Group Holdings Nominee Limited1
Innova Investment Management Limited1
Lillie Square Clubhouse Limited (50%)1,4
Lillie Square Developments Limited (50%)4
Lillie Square GP Limited (50%)4
Lillie Square LP (50%)4
Lillie Square Management Limited (50%)4
Lillie Square Nominee Limited (50%)1,4
Longmartin Investments Limited (50%)4
Longmartin Properties Limited (50%)4
Shaftesbury AV Investment Limited
Shaftesbury AV Limited
Shaftesbury Carnaby PLC
Shaftesbury Charlotte Street Limited1
Shaftesbury Chinatown PLC
Shaftesbury CL Investment Limited
Shaftesbury CL Limited
Shaftesbury Covent Garden Limited
Shaftesbury Covent Garden Property Investments Limited1
Shaftesbury Investments 2 Limited1
Shaftesbury Investments 4 Limited1
Shaftesbury Investments 5 Limited1
Shaftesbury Investments 6 Limited1
Shaftesbury Investments 7 Limited1
Shaftesbury Investments 8 Limited1
Shaftesbury Investments 9 Limited1
Shaftesbury Investments 10 Limited1
Shaftesbury PLC2
Shaftesbury Soho Limited
Shaftesbury West End Limited1
St Martin’s Courtyard Limited (50%)1, 4
1. Dormant entity.
2. Direct undertakings of the Company.
3. Ordinary and non-voting deferred shares.
4. Equity accounted joint ventures and associates.
5. With effect from 20 January 2024, the company changed its name to Covent Garden Holdings (No.3) Limited and ceased to be a direct undertaking of the Company.
Registered address: C/O Shepherd and Wedderburn LLP, 9 Haymarket Square, Edinburgh, Scotland, EH3 8FY
Related undertakings
Capco Investment London (No.6) Limited1,2
Capco Investment London (No.7) Scottish Limited Partnership2
1. Direct undertaking of the Company.
2. Dormant entity.
Registered address: 27 Esplanade, St Helier, Jersey, JE1 1SG
Related undertakings
Capital & Counties Properties (Jersey) 3 Limited1,2
Capvestco 2 Limited1,2
Capvestco 3 Limited1,2
Capvestco 3 Holdings Limited2
Capvestco Earls Court Limited2
1. Direct undertakings of the Company.
2. Dormant entity.
Capvestco Limited1,2
Innova Investment Group Holdings LP Limited2
Innova Investment Holdings Limited2
Lillie Square LP Limited
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Financial statements | Notes to the financial statements
34 Events after the reporting date
In January 2024 the Group disposed of an investment property for gross proceeds of £56.5 million. The proceeds, together with
Group cash, were used to pay down the revolving credit element (£150 million) of the £350 million unsecured loan.
Shaftesbury Capital PLC Company
balance sheet
As at 31 December 2023
Non-current assets
Investment in Group companies
Current assets
Trade and other receivables
Total assets
Non-current liabilities
Borrowings
Derivative financial instruments
Current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Share capital
Other components of equity
Total equity
Note
II
III
IV
V
2023
£m
2,129.4
2,129.4
1,616.8
1,616.8
2022
£m
516.4
516.4
1,798.1
1,798.1
3,746.2
2,314.5
(616.6)
(7.2)
(623.8)
(3.7)
(3.7)
(265.7)
(3.3)
(269.0)
(1.5)
(1.5)
(627.5)
(270.5)
3,118.7
2,044.0
27
488.2
2,630.5
3,118.7
212.8
1,831.2
2,044.0
The loss for the year attributable to shareholders of the Company is £89.7 million (2022: £44.3 million profit). References in
roman numerals refer to the notes to the Company financial statements, references in numbers refer to the notes to the
Group financial statements.
These financial statements of Shaftesbury Capital PLC (registered number: 07145051) have been approved for issue by the Board
of Directors on 28 February 2024 and signed on its behalf by:
Ian Hawksworth
Chief Executive
Situl Jobanputra
Chief Financial Officer
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Financial statements
Shaftesbury Capital PLC Company
statement of changes in equity
Shaftesbury Capital PLC Company
statement of cash flows
For the year ended 31 December 2023
For the year ended 31 December 2023
Share
capital
£m
Share
premium
£m
Note
Own
Shares1
£m
Capital
redemption
reserve
£m
At 1 January 2022
Profit and total comprehensive income for the year
Ordinary shares issued
Share buyback
Dividends
Realisation of share-based payment reserve on issue of shares
Fair value of share-based payment
Balance at 31 December 2022
Loss and total comprehensive expenses for the year
Completion of all-share merger3
Dividends
Issue of shares and realisation of share-based payment reserve
on issue of employee share options4
Fair value of share-based payment
Balance at 31 December 2023
27
27
12
212.8
–
0.4
(0.4)
–
–
–
212.8
–
13 273.9
–
12
27
1.5
–
488.2
232.5
–
–
–
–
–
–
232.5
–
–
–
–
–
232.5
–
–
–
–
–
–
–
–
–
–
–
(0.8)
–
(0.8)
1.5
–
(0.4)
0.4
–
–
–
1.5
–
–
–
–
–
1.5
Merger
Reserve2
£m
293.7
–
–
–
–
–
–
293.7
–
930.2
–
–
–
1,223.9
Share-
based
payment
reserve
£m
Retained
earnings
£m
Total
equity
£m
7.7
–
–
–
–
(0.2)
2.3
9.8
–
–
–
44.3
1.7
(1.7)
(15.3)
1,264.7 2,012.9
44.3
1.7
(1.7)
(15.3)
(0.2)
2.3
1,293.7 2,044.0
(89.7)
– 1,204.1
(43.8)
(89.7)
(43.8)
–
(9.8)
1.3
1.3
11.9
–
2.8
1.3
1,172.1 3,118.7
Cash flows from operating activities
Cash (utilised in)/generated from operations
Interest paid
Net cash (outflow)/inflow from operating activities
Cash flows from financing activities
Issue of shares
Share buyback
Borrowings drawn
Borrowings repaid
Cash dividends paid
Net cash inflow/(outflow) from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Note
VI
12
2023
£m
(278.9)
(27.3)
(306.2)
–
–
926.0
(576.0)
(43.8)
306.2
–
–
–
2022
£m
22.5
(7.2)
15.3
1.7
(1.7)
–
–
(15.3)
(15.3)
–
–
–
1. Represents 3,146,886 shares held by the Group’s Employee Benefit Trust in respect of employee share awards.
2. Represents non-qualifying consideration received by the Group following the share placing in May 2014 and previous share placements. Current year amount represents
non-qualifying consideration received following the all-share merger with Shaftesbury completed on 6 March 2023. The amounts taken to the merger reserve do not currently
meet the criteria for qualifying consideration and therefore will not form part of distributable reserves as they form part of linked transactions.
3. Represents share capital issued and non-qualifying consideration received following the all-share merger with Shaftesbury completed on 6 March 2023.
4. Represents the issue of 6,170,629 new shares and subsequent realisation of the outstanding share-based payment reserve on the close out of the Capco share scheme
prior to completion of the all-share merger. Following the vesting, 3,146,886 shares were purchased by the Group’s Employee Benefit Trust.
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Financial statements
Shaftesbury Capital PLC
Notes to the Company financial
statements
I Principal accounting policies
General information
II Investment in Group companies
At 1 January
Additions
At 31 December
2023
£m
516.4
1,613.0
2,129.4
2022
£m
516.4
–
516.4
Investments in Group companies are carried at cost less impairment losses, if any. An impairment test is performed on an annual
basis. An impairment charge of nil was recorded in the current year (2022: nil).
III Trade and other receivables
Shaftesbury Capital PLC (the “Company”) was incorporated and registered in England and Wales and domiciled in the United
Kingdom on 3 February 2010 under the Companies Act as a public company limited by shares, registration number 7145051.
The registered office of the Company is Regal House, 14 James Street, London, WC2E 8BU, United Kingdom. The principal activity
of the Company is to act as the ultimate parent company of Shaftesbury Capital PLC Group (the “Group”), whose principal activity
is the investment and management of property.
Current
Amounts owed by subsidiaries
Prepayments and accrued income
Trade and other receivables
2023
£m
2022
£m
1,616.3
0.5
1,616.8
1,795.8
2.3
1,798.1
Basis of preparation
The Company’s financial statements are prepared in accordance with IFRS and in conformity with the requirements of the
Companies Act 2006.
The financial statements have been prepared on a going concern basis under the historical cost convention as modified for
the revaluation of derivative financial instruments.
The Directors have taken advantage of the exemption offered by section 408 of the Companies Act 2006 not to present a separate
income statement or statement of comprehensive income for the Company.
In the current year, the Company has applied the amendments to IFRS Standards and Interpretations issued by the Board as set
out in the accounting policies of the Group on page 169 that are effective for annual periods that begin on or after 1 January 2023.
Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.
Investment in Group companies
Investment in Group companies, which eliminates on consolidation, is stated in the Company’s separate financial statements at
cost less impairment losses, if any. Impairment losses are determined with reference to the investment’s fair value less estimated
selling costs and value-in-use calculations. Fair value is derived from the subsidiaries’, and their subsidiaries’, net assets at the
balance sheet date. Value-in-use calculations which require the use of estimates, comprise discounted cash flows based on the
latest strategic plan. On disposal, the difference between the net disposal proceeds and its carrying amount is included in the
income statement.
Other
All accounting policies have been applied consistently and are the same as those applied by the Group as set out on pages
169 to 177. No significant areas of estimation and uncertainty have been identified. The Directors did not make any significant
judgements in the preparation of these financial statements.
The auditors’ remuneration for audit and other services is disclosed in note 6 to the Group financial statements.
An impairment test is performed on an annual basis to determine the recoverability of amounts owed by subsidiaries. The expected
credit loss was evaluated, and scenarios determined that may result in an impairment. An impairment of £96.9 million was raised
against the amounts owed by subsidiaries.
IV Borrowings
Non-current
Bank loans
Exchangeable bonds
Borrowings
Total borrowings
Non-current
Bank loans
Exchangeable bonds
Borrowings
Total borrowings
2023
Secured
£m
Unsecured
£m
Fixed rate
£m
–
269.8
269.8
346.8
–
346.8
–
269.8
269.8
2022
Secured
£m
Unsecured
£m
Fixed rate
£m
–
266.9
266.9
(1.2)
–
(1.2)
–
266.9
266.9
Floating
rate
£m
346.8
–
346.8
Floating
rate
£m
(1.2)
–
(1.2)
Fair
value
£m
350.0
256.9
606.9
Fair
value
£m
–
228.9
228.9
Nominal
value
£m
350.0
275.0
625.0
Nominal
value
£m
–
275.0
275.0
Carrying
value
£m
346.8
269.8
616.6
616.6
Carrying
value
£m
(1.2)
266.9
265.7
265.7
The fair values of the Company’s borrowings have been estimated using the market value for floating rate borrowings, which
approximates nominal value, and discounted cash flow approach for fixed rate borrowings, representing Level 2 fair value
measurements as defined by IFRS 13. The different valuation levels are defined in note 14 ‘Property portfolio’.
Analysis of movement in net debt
Balance at 1 January
Other net cash movements
Other non-cash movements
Balance at 31 December
2023
Current
borrowings
£m
Non-current
borrowings
£m
–
–
–
–
265.7
339.2
11.7
616.6
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Financial statements | Notes to the Company financial statements
IV Borrowings continued
Analysis of movement in net debt
Balance at 1 January
Other net cash movements
Other non-cash movements
Balance at 31 December
The maturity profile of gross debt is as follows:
Wholly repayable in more than two years but not more than five years
V Derivative financial instruments
Derivative liabilities
Non-current
Derivative liability – exchangeable bonds1
Derivative financial liabilities
2022
Current
borrowings
£m
Non-current
borrowings
£m
–
–
–
–
2023
£m
625.0
625.0
264.1
(6.7)
8.3
265.7
2022
£m
275.0
275.0
2023
£m
2022
£m
7.2
7.2
3.3
3.3
1. On 30 November 2020 the Company issued £275 million of secured exchangeable bonds maturing in March 2026. The notes were originally exchangeable into cash
or ordinary shares of Shaftesbury but following the all-share merger are convertible into Shaftesbury Capital shares. The net proceeds received from the issue of the
exchangeable bonds have been split between the financial liability element and an option component, representing the fair value of the embedded option to convert
the financial liability into equity of Shaftesbury. The debt component is accounted for at amortised cost at the effective interest rate method and the derivative liability
is accounted for at fair value through profit or loss.
VI Cash flow information
(a) Cash generated from operations
(Loss)/profit before tax
Adjustments:
Impairment of receivables
Finance costs
Other finance income
Change in fair value of derivative financial instruments
Change in working capital:
Change in trade and other receivables
Change in trade and other payables
Cash (utilised in)/generated from operations
2023
£m
(89.7)
97.0
35.2
(79.0)
3.9
(248.5)
2.2
(278.9)
2022
£m
44.3
–
8.8
(40.8)
(28.8)
38.4
0.6
22.5
(b) Reconciliation of cash flows from financing activities
The table below sets out the reconciliation of movements of liabilities to cash flows arising from financing activities:
Balance at 1 January
Cash movements from financing activities
Borrowings drawn
Borrowings repaid
Total cash flows from financing activities
Non-cash movements from financing activities
Amortisation
Changes in fair value
Total non-cash flows from financing activities
Balance at 31 December
Derivative
liability –
exchangeable
bond
£m
Long-term
borrowings
£m
Total
liabilities
from
financing
activities
£m
265.7
3.3
269.0
926.0
(576.0)
350.0
0.9
–
0.9
616.6
–
–
–
–
3.9
3.9
7.2
926.0
(576.0)
350.0
0.9
3.9
4.8
623.8
VII Related party transactions
(a) Transactions between the Company and its subsidiaries
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation for the Group.
Significant transactions between the Company and its subsidiaries are shown below:
Subsidiary
Nature of transaction
Funding activities
Capco Group Treasury Limited
Interest on intercompany loan
Significant balances outstanding at 31 December between the Company and its subsidiaries are shown below:
Subsidiary
Capco Group Treasury Limited
The amount due from Capco Group Treasury Limited is unsecured, interest bearing and repayable on demand.
2023
£m
2022
£m
79.0
40.8
Amounts owed
by subsidiaries
2023
£m
2022
£m
1,615.8
1,795.8
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Pro forma information (unaudited)
For the year ended 31 December 2023
The all-share merger of Capco and Shaftesbury to create Shaftesbury Capital completed on 6 March 2023. Pro forma information
has been included for the balance sheet to provide relevant comparative information. The table below details the summary pro
forma information and reconciliation on how the information has been calculated.
APM
EPRA NTA
EPRA NTA per share
Market value of
investment property
Net debt
Loan-to-value
Cash and undrawn
committed facilities
Commitments
Definition of measure
Net asset value adjusted to include properties and other
investment interests at fair value and to exclude certain
items not expected to crystallise in a long-term investment
property business model
EPRA NTA per the diluted number of ordinary shares
Market value of wholly-owned investment property portfolio
Nearest IFRS measure
Explanation and
reconciliation
Net assets attributable to
shareholders
Table 1
Net assets attributable to
shareholders per share
Investment properties
Total borrowings, at nominal value, less cash and cash
equivalents, excluding tenant deposits
Net debt divided by market value of investment property
Cash and cash equivalents, excluding tenant deposits, plus
undrawn committed facilities
Capital commitments of the Group as at the reporting date
N/A
N/A
N/A
N/A
Pro forma
31 December
2022
£3,526.4m
192.8p
£4,857.8m
£1,488.2m
30.6%
£521.6m
£35.6m
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Additional information
Alternative performance
measures (unaudited)
For the year ended 31 December 2023
The Group has applied the European Securities and Markets Authority guidelines on alternative performance measures (“APMs”)
in these results. An APM is a financial measure of historical or future finance performance, position or cash flow of the Group
which is not a measure defined or specified in IFRS. Set out below is a summary of the APMs used in this Annual Report.
Many of the APMs included are based on the EPRA Best Practice Recommendations reporting framework, a set of standard
disclosures for the property industry, which aims to improve the transparency, comparability and relevance of published results
of public real estate companies in Europe.
The Group also uses underlying earnings, property portfolio and financial debt ratio APMs. Financial debt ratios are supplementary
ratios which we believe are useful in monitoring the capital structure of the Group. Additionally, loan-to-value and interest cover
are covenants within many of the Group’s borrowing facilities.
APM
Definition of measure
Nearest IFRS measure
Explanation and
reconciliation
2023
20221
Profit/(loss) for the year
Note 3
£60.4m
£18.6m
Basic earnings/(loss) per
share
Note 3
Profit/(loss) for the year Note 3
Note 3
Basic earnings/(loss)
per share
Net assets attributable to
shareholders
3.7p
2.2p
£45.0m
2.7p
£57.3m
6.7p
Underlying earnings
Underlying earnings
per share
EPRA earnings
EPRA earnings
per share
EPRA NTA
EPRA NTA
per share
Market value of
property portfolio
Interest cover
Loan-to-value2
Gross debt with
interest rate
protection
Weighted average
cost of debt3
Cash and undrawn
committed facilities
Profit/(loss) for the year excluding items deemed non-
recurring or significant by virtue of size or nature
Underlying earnings per weighted number of ordinary
shares
Recurring earnings from core operational activity
EPRA earnings/(loss) per weighted number of ordinary
shares
Net asset value adjusted to include properties and other
investment interests at fair value and to exclude certain
items not expected to crystallise in a long-term investment
property business model
EPRA NTA per the diluted number of ordinary shares
Market value of wholly-owned property portfolio
Underlying operating profit divided by net underlying
finance costs
Net debt, at nominal value and excluding tenant deposits,
divided by market value of property portfolio
Proportion of gross debt with interest rate protection
Cost of debt weighted by the drawn balance of
external borrowings
Cash and cash equivalents, excluding tenant deposits, plus
undrawn committed facilities
Note 3
£3,479.4m
£1,552.2m
The table below details the summary pro forma information and reconciliation for rental income for the year ended 31 December
2022 and 2023. This information has been provided to calculate EPRA like-for-like rental growth.
Net assets attributable to
shareholders per share
Investment properties
Note 3
190.3p
182.1p
APM
Definition of measure
Note 14
£4,795.3m
£1,743.7m
Rental income
Rental income generated by the combined Group
Nearest IFRS measure
Revenue, excluding
service charge income
Explanation and
reconciliation
Pro forma
31 December
2023
Pro forma
31 December
2022
Table 7 and 8
£196.5m
£178.2m
N/A
N/A
N/A
N/A
N/A
Note 25
212.7%
182.1%
EPRA measures
Note 5
Note 25
30.9%
36.3%
100%
100%
Financial
Review, page 48
Financial
Review, page 48
4.2%
2.7%
£485.7m
£416.5m
1. Prior period comparatives have been restated based on changes to the definition following the all-share merger with Shaftesbury and the Board focus on the wholly-owned
portfolio. Due to the fair value exercise performed on merger, and the Shaftesbury debt accounted for at fair value, net debt metrics have been adjusted to be based on
nominal value rather than carrying value.
2. The 31 December 2022 loan-to-value represents the Capco only calculation which excludes the £356.9 million 25.2 per cent shareholding held in Shaftesbury but includes
the exchangeable bond which was secured by collateral on the shareholding. The net debt to gross assets ratio was 27.9 per cent.
3. As at 31 December 2023 the weighted average cost of debt reduces to an effective running cash cost of 3.4 per cent taking account of interest on cash deposits and interest
rate caps and collars.
Where this report uses like-for-like comparisons, these are defined within the Glossary.
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Additional information | Pro forma information
Table 1 – Pro forma balance sheet and EPRA NTA
A pro forma balance sheet and EPRA NTA have been provided to reflect the combined position of both companies as at
31 December 2022 property valuation and assumed all merger-related transaction costs have been incurred.
Capco and Shaftesbury had different reporting year ends being December and September respectively. In providing pro forma
information the latest reported results of each Company were used, adjusted for property valuations as at 31 December 2022 and
all merger-related transaction costs paid or accrued.
Investment property at carrying value
Investments in joint ventures and associates
Financial assets at fair value
Net debt
Other assets and liabilities
Net assets
Group adjustments:
Unrealised surplus trading property – joint venture
Fair value of derivative financial instruments and exchangeable bond
Dilutive effect of share options
Deferred tax adjustment
EPRA net tangible assets
EPRA net tangible assets per share (pence)
Adjusted, diluted number of shares5
Capco
31 December
20221
£m
Capco
adjustments2
£m
Shaftesbury
30 September
20223
£m
Shaftesbury
adjustments4
£m
Pro forma
2022
£m
1,715.1
0.2
356.9
(633.5)
122.9
1,561.6
7.1
(16.9)
–
0.4
1,552.2
–
–
(356.9)
(13.0)
(1.4)
(371.3)
–
–
–
–
(371.3)
3,144.4
86.6
–
(804.6)
32.1
2,458.5
–
–
0.5
8.9
2,467.9
(30.3)
–
–
(37.1)
(55.0)
(122.4)
–
–
–
–
(122.4)
4,829.2
86.8
–
(1,488.2)
98.6
3,526.4
7.1
(16.9)
0.5
9.3
3,526.4
192.8p
1,828.8m
1. Capco 31 December 2022 reflects the summarised IFRS information and EPRA NTA as reported in the Capco 2022 Annual Report.
2. The following adjustments have been made to the Capco 31 December 2022 reported numbers on a pro forma basis:
– Financial assets at fair value as at 31 December 2022 represents the 25.2 per cent investment in Shaftesbury held by Capco. On completion of the merger no separate
investment is held.
– Net debt has been increased by £13.0 million to reflect merger-related transaction costs paid between 31 December 2022 and completion of the merger.
– Other assets and liabilities have been adjusted by £1.4 million to reflect merger-related transaction costs accrued at merger date.
3. Shaftesbury 30 September 2022 reflects the summarised IFRS information and EPRA NTA as reported in the Shaftesbury 30 September 2022 Annual Report.
4. The following adjustments have been made to the Shaftesbury 30 September 2022 reported numbers on a pro forma basis:
– Investment property has been adjusted to reflect the 31 December 2022 valuation, as determined by external valuers and included in the Shaftesbury trading update
announced on 30 January 2023. Due to the fair value exercise performed on completion, the tenant lease incentives and deferred letting fees were derecognised. An
offsetting adjustment is included in other assets and liabilities and the impact of the adjustment on net assets is therefore neutral.
– Net debt has been increased by £37.1 million for working capital and merger-related transaction costs paid between 30 September 2022 and completion of the merger.
– Other assets and liabilities have been adjusted by £11.3 million to reflect merger-related transaction costs accrued on merger date and £43.7 million tenant lease
incentives and deferred letting fees derecognised on completion.
5. Adjusted, dilutive number of shares is based on 31 December 2023 issued share capital, which excludes 128.4 million shares held as collateral for the exchangeable bond and
3.1 million held within an approved Employee Benefit Trust, adjusted for dilutive effect of contingently issuable share option and deferred share awards. Total share capital in
issuance, including these components, is 1,953.2 million shares as at 31 December 2023. 1,095.5 million shares were issued on 6 March 2023 in relation to the merger.
Table 2 – Market value investment property
To provide a consistent metric on the performance of the portfolio, like-for-like valuation movements are included in the annual
results. The movement is based on the market value of investment property, with the opening position based on the 31 December
2022 external valuations. A reconciliation between reported carrying value and market value has been provided below:
Capco
31 December
20221
£m
Capco
adjustments
£m
Shaftesbury
30 September
20222
£m
Shaftesbury
adjustments3
£m
Pro forma
2022
£m
Carrying value investment property
Adjustment in respect of head leases, tenant lease incentives and deferred letting fees
Market value of investment property as at 31 December 2022
1,715.1
28.6
1,743.7
–
–
–
3,144.4
43.7
3,188.1
(30.3)
(43.7)
(74.0)
4,829.2
28.6
4,857.8
1. As reported in the Capco 31 December 2022 Annual Report.
2. As reported in the Shaftesbury 30 September 2022 Annual Report.
3. Reflects the 31 December 2022 valuation, as determined by external valuers and included in the Shaftesbury trading update announced on 30 January 2023. Due to the fair
value exercise performed on completion of the all-share merger, the tenant lease incentives and deferred letting fees have been derecognised.
Estimated rental value as at 31 December 2022 for both companies has been obtained from the external valuation reports
prepared by CBRE and Cushman & Wakefield. ERV is a key assumption determined by the external valuers and included the
Capco 2022 Annual Report and in the Shaftesbury trading update announced on 30 January 2023.
Annualised gross income is the sum of the last reported number of both companies.
2019 ERV and annualised gross income amounts are stated as the sum of 30 September 2019 Shaftesbury and 31 December 2019
Capco balances as previously reported, adjusted for disposals.
Table 3 – Net debt
Cash
Debt at nominal value
Net debt
Capco
31 December
20221
£m
Capco
adjustments3
£m
Shaftesbury
30 September
20222
£m
Shaftesbury
adjustments3
£m
Pro forma
2022
£m
116.5
(750.0)
(633.5)
(13.0)
–
(13.0)
155.2
(959.8)
(804.6)
(37.1)
–
(37.1)
221.6
(1,709.8)
(1,488.2)
1. As reported in the Capco 31 December 2022 Annual Report. Numbers reported on IFRS basis and not Group share.
2. As reported in the Shaftesbury 30 September 2022 Annual Report.
3. Reflects working capital and merger-related transaction costs paid prior to completion of the merger. The adjusted cash for Shaftesbury of £118.1 million is consistent with
the cash acquired within the Consolidated statement of cash flows.
Table 4 – Loan-to-value
Net debt at nominal value
Market value of investment property as at 31 December 2022
Loan-to-value
Table 3
Table 2
Table 5 – Cash and undrawn facilities
Pro forma
2022
£m
(1,488.2)
4,857.8
30.6%
Cash
Undrawn committed facilities4
Cash and undrawn committed facilities
Capco
31 December
20221
£m
Capco
adjustments3
£m
Shaftesbury
30 September
20222
£m
Shaftesbury
adjustments3
£m
Pro forma
2022
£m
116.5
300.0
416.5
(13.0)
–
(13.0)
155.2
–
155.2
(37.1)
–
(37.1)
221.6
300.0
521.6
1. As reported in the Capco 31 December 2022 Annual Report. Numbers reported on IFRS basis and not Group share.
2. As reported in the Shaftesbury 30 September 2022 Annual Report.
3. Reflects working capital and merger-related transaction costs paid prior to completion of the merger. The cash for Shaftesbury of £118.1 million agrees to the cash acquired
within the Consolidated statement of cash flows.
4. The Group has a £300 million RCF, which was undrawn at 31 December 2022 and remains undrawn at 31 December 2023.
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Additional information | Pro forma information
Table 6 – Commitments
Commitments
1. As reported in the Capco 31 December 2022 Annual Report.
2. As reported in the Shaftesbury 30 September 2022 Annual Report.
Table 7 – 2023 rental income
Rent receivable
Straight-lining of tenant lease incentives
Rental income
Capco
31 December
20221
£m
Shaftesbury
30 September
20222
£m
Pro forma
2022
£m
1.7
33.9
35.6
Shaftesbury
Capital
31 December
20231
£m
Shaftesbury
1 January to
5 March 2023
£m
171.9
3.9
175.8
21.2
(0.5)
20.7
Pro forma
2023
£m
193.1
3.4
196.5
1. As reported in note 4 ‘Gross profit’. Represents the standalone results of Capco for the 1 January to 6 March 2023 and that of the combined Group from 6 March to
31 December 2023.
2. Reflects the rental income for Shaftesbury for the period 1 January to 5 March 2023 obtained from internal management accounts of Shaftesbury. The amounts have not been
adjusted for accounting policy alignments or fair value adjustments.
Table 8 – 2022 rental income
Rent receivable
Straight-lining of tenant lease incentives
Rental income
1. As reported for the 12 months ended 31 December 2022 in the Capco 31 December 2022 Annual Report.
2. As reported for the 12 months ended 30 September 2022 in the Shaftesbury 30 September 2022 Annual Report.
Capco
31 December
20221
£m
Shaftesbury
30 September
20222
£m
61.5
6.3
67.8
113.3
(2.9)
110.4
Pro forma
2022
£m
174.8
3.4
178.2
EPRA measures (unaudited)
For the year ended 31 December 2023
EPRA Net Reinstatement Value (“EPRA NRV”), EPRA Net Tangible Assets (“EPRA NTA”) and EPRA Net Disposal Value (“EPRA NDV”)
are alternative performance measures that are calculated in accordance with the Best Practices Recommendations of the
European Public Real Estate Association (EPRA) to provide a transparent and consistent basis to enable comparison between
European property companies. EPRA NTA is considered to be the most relevant measure for the Group’s operating activity
and is the primary measure of net asset value.
The following is a summary of EPRA performance measures and key Group measures included within this Annual Report. The
measures are defined in the Glossary.
EPRA measure
Definition of measure
EPRA earnings
EPRA earnings per share
EPRA NTA
Recurring earnings from core operational activity
EPRA earnings per share based on the weighted number of ordinary shares
Net asset value adjusted to include properties and other investment interests at
fair value and to exclude certain items not expected to crystallise in a long-term
investment property business model
EPRA NTA per diluted number of ordinary shares
EPRA NTA amended to include the fair value of financial instruments and debt
EPRA NDV per diluted number of ordinary shares
EPRA NTA amended to include real estate transfer tax
EPRA NRV per diluted number of ordinary shares
Annualised rental income less non-recoverable costs as a percentage of market value
plus assumed purchaser’s costs
EPRA topped-up initial yield Net initial yield adjusted for the expiration of rent-free periods
EPRA vacancy
EPRA NTA per share
EPRA NDV
EPRA NDV per share
EPRA NRV
EPRA NRV per share
EPRA net initial yield
ERV of un-let units (including those under offer) expressed as a percentage of the ERV
of the wholly-owned property portfolio excluding units under development
Capital expenditure on acquisition and development of investment property portfolio
Total costs as a percentage of gross rental income (including direct vacancy costs)
Total costs as a percentage of gross rental income (excluding direct vacancy costs)
Capital expenditure
EPRA cost ratio
Adjusted Company cost ratio Total adjusted costs as a percentage of adjusted gross rental income (including direct
EPRA LTV (Loan-to-Value)
Like-for-like rental growth
vacancy costs)
Total adjusted costs as a percentage of adjusted gross rental income (excluding direct
vacancy costs)
Ratio of adjusted net debt, including net payables, to the sum of the net assets,
including net receivables, of the Group, its subsidiaries, joint ventures and associates,
all on a proportionate basis, expressed as a percentage
Rental income for properties which have been owned throughout both years without
significant capital expenditure in either year, so income can be compared on a like-for-
like basis
Table
2023
2022
Note 3
Note 3
Note 3
£45.0m
2.7p
£3,479.4m
£57.3m
6.7p
£1,552.2m
Note 3
Note 3
Note 3
Note 3
Note 3
1
190.3p
£3,511.7m
192.0p
£3,811.6m
208.4p
3.8%
182.1p
£1,690.1m
198.3p
£1,668.2m
195.7p
3.5%
1
2
3
4
4
4
4
5
6
4.2%
4.9%
£53.8m
65.6%
60.8%
39.9%
4.0%
2.5%
£12.0m
75.7%
71.0%
53.9%
35.2%
49.3%
30.9%
28.0%
13.2%
22.3%
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Additional information | EPRA measures
1. EPRA Net initial yield and EPRA ‘topped-up’ net initial yield
4. EPRA cost ratio
Investment property – wholly-owned
Investment property – share of joint ventures and associates
Trading property (including share of joint venture)
Less: developments
Completed property portfolio
Allowance for estimated purchasers’ costs
Gross up completed property portfolio valuation (A)
Annualised cash passing rental income
Property outgoings
Annualised net rents (B)
Add: notional rent expiration of rent periods or other lease incentives
Topped-up net annualised rent (C)
EPRA Net Initial Yield (B/A)
EPRA ‘topped-up’ Net Initial Yield (C/A)
2023
£m
4,795.3
182.2
41.8
(284.1)
4,735.2
316.8
5,052.0
202.7
(10.6)
192.1
18.2
210.3
3.8%
4.2%
2022
£m
1,743.7
4.4
72.6
(245.8)
1,574.9
105.3
1,680.2
62.1
(3.5)
58.6
8.8
67.4
3.5%
4.0%
The EPRA Net Initial Yield and EPRA ‘topped-up’ Net Initial Yield are calculated based on EPRA guidelines and includes the wholly-
owned property portfolio and the Group’s share of Lillie Square and Longmartin.
2. EPRA vacancy rate
Estimated rental value of vacant space
Estimated rental value of the portfolio less development and refurbishment estimated rental value
EPRA vacancy rate
2023
£m
10.9
223.0
4.9%
2022
£m
1.9
76.0
2.5%
EPRA vacancy rate is disclosed only for the wholly-owned property portfolio. This includes units under offer, net of which vacancy
relating to units available to let is 2.1 per cent. Investment properties held within the joint venture at Lillie Square and the
Longmartin associate totalling £182.2 million (our share) (2022: £4.4 million (our share)) is not included in the vacancy rate above.
3. Property related capex
Acquisitions
Development
Investment property
Incremental lettable space
No incremental lettable space
Tenant lease incentives
Capitalised interest
Total CapEx
Conversion from accrual to cash basis
Total CapEx on cash basis
20231
2022
Group
(excluding joint
ventures and
associates)
£m
Joint ventures
and associates
£m
Total Group
£m
Group
(excluding joint
ventures and
associates)
£m
Joint ventures
and associates
£m
Total Group
£m
17.4
–
5.1
28.5
1.5
–
52.5
(1.3)
51.2
–
0.8
–
0.5
0.3
–
1.6
1.0
2.6
17.4
0.8
5.1
29.0
1.8
–
54.1
(0.3)
53.8
–
–
–
9.0
1.3
–
10.3
0.8
11.1
–
0.6
–
–
–
–
0.6
0.3
0.9
–
0.6
–
9.0
1.3
–
10.9
1.1
12.0
The property-related capex represents the standalone performance of Capco for the period to 6 March 2023 and that of the
combined Group from that date to
31 December 2023.
Administrative expenses
Total property outgoings
Provision for/(reversal of) expected credit loss
Less: Service charge expense
Management fee
Share of joint ventures and associates expenses
Exclude:
Ground rent cost
EPRA Cost (including direct vacancy costs) (A)
Direct vacancy costs
EPRA Costs (excluding direct vacancy costs) (B)
Gross Rental Income less ground rent costs
Less: Service charge income
Share of joint ventures and associates property income
Adjusted gross rental income (C)
EPRA Cost Ratio (including direct vacancy costs) (A/C)
EPRA Cost Ratio (excluding direct vacancy costs) (B/C)
Company specific adjustments:
Non-underlying administrative expenses1
Impact of change in accounting policy on property outgoings2
Company specific adjustments for costs (D)
Adjusted Company Cost (including direct vacancy costs) (E = A+D)
Adjusted Company Cost (excluding direct vacancy costs) (F = B+D)
Impact of change in accounting policy on rental income2
Adjusted Company gross rental income (G)
Adjusted Company Cost ratio (including direct vacancy costs) (E/G)
Adjusted Company Cost ratio (excluding direct vacancy costs) (F/G)
2023
£m
83.8
51.2
2.0
(19.3)
(0.1)
3.5
(0.8)
120.3
(8.9)
111.4
194.3
(19.3)
8.3
183.3
2022
£m
40.6
18.4
(1.6)
(6.3)
–
0.6
(1.0)
50.7
(3.1)
47.6
73.1
(6.3)
0.2
67.0
65.6%
60.8%
75.7%
71.0%
(44.5)
(1.0)
(45.5)
74.8
65.9
4.1
187.4
39.9%
35.2%
(14.6)
–
(14.6)
36.1
33.0
–
67.0
53.9%
49.3%
1. Company specific adjustment relates to non-underlying administrative expenses and do not represent the recurring, underlying performance of the Group. Details of
non-underlying expenses are set out in note 6 ‘Administration expenses’.
2. Company specific adjustment relates to the impact on the change in accounting policies as discussed in note 1 ‘Changes in accounting policies’.
£0.3 million (2022: nil) of administrative expenses were capitalised during the year.
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Additional information | EPRA measures
5. EPRA LTV
Borrowings from financial institutions
Exchangeable bond
Net payables
Exclude:
Cash and cash equivalents1
Net debt (B)
Investment properties at fair value
Owner-occupied property at fair value
Properties under development
Total property value (A)
EPRA LTV (B/A)
2023
Share of joint
ventures and
associates
£m
60.0
–
80.4
(9.9)
130.5
182.2
–
41.8
224.0
Group
£m
1,409.8
275.0
(62.6)
(200.2)
1,422.0
4,775.1
20.2
–
4,795.3
Total
£m
1,469.8
275.0
17.8
(210.1)
1,552.5
4,957.3
20.2
41.8
5,019.3
30.9%
1. Includes tenant deposits of £14.5 million held as security against tenant rent payments which are subject to certain restrictions and therefore not available for general use by
the Group.
Borrowings from financial institutions
Exchangeable bond
Exclude:
Cash and cash equivalents1
Net debt (B)
Investment properties at fair value
Properties under development
Net receivables
Financial assets
Total property value (A)
EPRA LTV (B/A)
2022
Share of joint
ventures and
associates
£m
–
–
(6.1)
(6.1)
4.4
72.6
(75.8)
–
1.2
Group
£m
475.0
275.0
(129.9)
620.1
1,743.7
–
94.5
356.9
2,195.1
Total
£m
475.0
275.0
(136.0)
614.0
1,748.1
72.6
18.7
356.9
2,196.3
28.0%
1. Includes tenant deposits of £13.4 million held as security against tenant rent payments which are subject to certain restrictions and therefore not available for general use by
the Group.
6. Like-for-like rental growth
The like-for-like rental growth is presented for the wholly-owned property portfolio, where all assets are located in the West End
of London.
Rental income in current year
Adjusted for impact of:
Change in accounting policy1
Acquisitions
Disposals
Like-for-like rental income in current year (A)
Rental income in previous year
Adjusted for impact of:
Acquisitions
Disposals
Like-for-like rental income in prior year (B)
Like-for-like growth in rental income ((A-B)/B)
Table 7 pro forma
Table 8 pro forma
2023
£m
196.5
4.1
(0.4)
(4.1)
196.1
178.2
(0.1)
(4.8)
173.3
13.2%
1. As set out in note 1 ‘Changes in accounting policies’, there is a £4.1 million reduction to 2023 straight-lining of tenant lease incentives as a result of the alignment of accounting
policies following the merger. The alignment was considered immaterial and therefore no retrospective adjustment has been made, and the cumulative impact as at 1 January
2023 was adjusted in the current year.
Analysis of property portfolio
(unaudited)
For the year ended 31 December 2023
Wholly-owned portfolio valuation by use
31 December 2023
Fair value (£m)1
% of total fair value
L-f-L valuation movement
Annualised gross income (£m)
% of annualised gross income
ERV (£m)
L-f-L ERV movement
% of ERV
Average ERV (£ psf)
Net initial yield
Topped up net initial yield
Equivalent yield
WAULT (years)
Area (sq. ft. m)2
Units2
Retail
1,605.0
34%
–0.5%
64.8
34%
78.4
+6.7%
33%
108
3.6%
4.0%
4.4%
3.3
0.7
415
Hospitality
and leisure
Offices
Residential
1,621.7
34%
–0.8%
72.7
38%
82.0
+8.4%
35%
82
4.2%
4.4%
4.7%
8.3
1.0
423
879.1
18%
–0.5%
31.5
16%
50.2
+5.1%
21%
74
3.1%
3.6%
4.8%
2.7
0.7
418
687.4
14%
–1.8%
23.8
12%
26.3
+6.1%
11%
59
2.2%
n/a
2.8%
1.3
0.5
709
1. Excludes £2.1 million of Group properties primarily held in Lillie Square Holdings (a wholly-owned subsidiary).
2. Excludes long-leasehold residential interests.
Wholly-owned portfolio valuation by location
31 December 2023
Fair value (£m)1
% of total fair value
L-f-L valuation movement
Annualised gross income (£m)
% of annualised gross income
ERV (£m)
L-f-L ERV movement
% of ERV
Net initial yield
Topped up net initial yield
Equivalent yield
WAULT (years)
Area (sq. ft. m)2
Units2
Covent
Garden
2,521.6
53%
+0.3%
97.4
51%
122.3
+8.7%
52%
3.4%
3.7%
4.3%
4.9
1.5
850
Carnaby |
Soho
Chinatown
Fitzrovia
1,482.2
31%
–1.6%
59.0
31%
76.1
+4.2%
32%
3.4%
3.9%
4.5%
3.9
0.9
664
689.5
14%
–0.2%
31.2
16%
33.0
+7.6%
14%
4.0%
4.1%
4.2%
5.5
0.4
350
99.9
2%
–17.4%
5.2
2%
5.5
+0.7%
2%
4.5%
4.7%
4.7%
4.9
0.1
101
1. Excludes £2.1 million of Group properties primarily held in Lillie Square Holdings (a wholly-owned subsidiary).
2. Excludes long-leasehold residential interests.
Wholly-
owned
portfolio
4,793.2
100%
–0.8%
192.8
100%
236.9
+6.9%
100%
83
3.5%
3.8%
4.3%
4.6
2.9
1,965
Wholly-
owned
portfolio
4,793.2
100%
–0.8%
192.8
100%
236.9
+6.9%
100%
3.5%
3.8%
4.3%
4.6
2.9
1,965
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Additional information
Historical record (unaudited)
Board and advisers
For the year ended 31 December 2023
Continuing and discontinued operations
Consolidated income statement
Gross profit
Other income/(costs)
Loss on revaluation and sale of investment property
Change in value of investments and other receivables
Revaluation of equity investment
Non-recurring costs
Administration expenses
Operating profit/(loss)
Net finance income/(costs)
Profit/(loss) after finance costs
Profit/(loss) on disposal and IFRS 5 impairment of discontinued operation
Gain on bargain purchase
Profit/(loss) from joint ventures and associates
Loss before tax
Taxation
Loss for the year
Consolidated balance sheet
Investment property
Other non-current assets
Cash and cash equivalents
Other current assets
Total assets
Non-current borrowings
Other non-current liabilities
Current borrowings
Other current liabilities
Total liabilities
Net assets
Per share information
Basic (loss)/earnings per share
Underlying earnings/(loss) per share1
Basic net assets per share
EPRA NTA per share
Dividend per share
1. Underlying earnings as at 31 December 2023 is £60.4 million (2022: £18.6 million).
2023
£m
141.9
2.7
(65.0)
(12.5)
52.0
(44.5)
(39.3)
35.3
(90.4)
(55.1)
–
805.5
0.2
750.6
(0.2)
750.4
2022
£m
57.3
13.5
(0.8)
(7.9)
(239.5)
(14.6)
(26.0)
(218.0)
12.2
(205.8)
–
–
–
(205.8)
(6.0)
(211.8)
2021
£m
40.0
3.0
(4.1)
11.6
44.6
(2.8)
(20.0)
72.3
(36.8)
35.5
–
–
–
(46.7)
(0.7)
(47.4)
2020
£m
15.9
(1.0)
(693.1)
(28.2)
50.9
(6.2)
(24.8)
(686.5)
(18.2)
(704.7)
1.0
–
–
(684.9)
1.0
(683.9)
4,740.2
224.9
200.2
51.0
5,216.3
(1,534.8)
(9.9)
(94.9)
(96.5)
(1,736.1)
1,715.1
485.4
129.9
20.8
2,351.2
(738.3)
(8.7)
–
(42.6)
(789.6)
1,705.6
713.3
331.1
48.9
2,798.9
(934.9)
(37.5)
–
(39.7)
(1,012.1)
1,795.8
681.5
365.1
65.7
2,908.1
(1,070.7)
(30.8)
–
(46.9)
(1,148.4)
2019
£m
61.1
1.8
(43.3)
(20.9)
–
(8.4)
(35.0)
(44.8)
(14.0)
(58.8)
(195.0)
–
(2.5)
(256.3)
0.1
(256.2)
2,545.5
261.4
153.1
139.4
3,099.4
(546.1)
(3.6)
–
(63.0)
(621.9)
3,480.2
1,561.6
1,786.8
1,759.7
2,477.5
Pence
Pence
Pence
Pence
Pence
45.5
3.7
190.3
190.3
3.15
(24.9)
2.2
183.2
182.1
2.5
4.1
0.1
209.7
213.0
1.5
(82.6)
(0.7)
210.4
212.1
–
(22.4)
1.0
290.0
292.9
1.5
Chairman
Jonathan Nicholls
Executive Directors
Ian Hawksworth, Chief Executive
Situl Jobanputra, Chief Financial Officer
Non-executive Directors
Richard Akers
Ruth Anderson
Charlotte Boyle
Company Secretary
Desna Martin
Ruth Pavey
General Counsel
Alison Fisher
Registered office
Regal House
14 James Street
London
WC2E 8BU
Telephone: 020 3214 9150
Registered number
7145051
Websites
www.shaftesburycapital.com
www.carnaby.co.uk
www.chinatown.co.uk
www.coventgarden.london
www.thisissoho.co.uk
Independent auditors
PricewaterhouseCoopers LLP
Solicitors
Herbert Smith Freehills LLP
Financial adviser
Rothschild & Co.
Corporate brokers
Jefferies International Limited
Peel Hunt LLP
UBS AG London Branch
SA sponsor
Java Capital Trustees and Sponsors Proprietary Limited
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Dividends
The Directors of Shaftesbury Capital have proposed
a final cash dividend of 1.65 pence per ordinary share
(ISIN GB00B62G9D36) payable on Friday, 31 May 2024.
Dates
The following are the salient dates for payment of the
proposed 2023 final cash dividend:
Proposed 2023 final dividend announced
Thursday, 29 February 2024
Sterling/Rand exchange rate struck
Monday, 15 April 2024
Sterling/Rand exchange rate and dividend
amount in Rand announced by 11:00am
(South African time)
Last day to trade cum-dividend*
Ordinary shares listed ex-dividend on the
Johannesburg Stock Exchange
Ordinary shares listed ex-dividend on the
London Stock Exchange
Record date for the 2023 final dividend in
UK and South Africa
Deadline for submission of declaration of
eligibility to receive gross PID payment to
UK registrar (COB)
Annual General Meeting
Tuesday, 16 April 2024
Tuesday, 23 April 2024
Wednesday, 24 April 2024
Thursday, 25 April 2024
Friday, 26 April 2024
Friday, 26 April 2024
Thursday, 23 May 2024
Dividend payment date for shareholders
Friday, 31 May 2024
The proposed 2023 final cash dividend is subject to approval
at the Company’s Annual General Meeting, to be held on
Thursday, 23 May 2024.
*South African shareholders should note that, in accordance with
the requirements of Strate, the last day to trade cum-dividend
will be Tuesday, 23 April 2024. No dematerialisation of shares will
be possible from Wednesday, 24 April 2024 to Friday, 26 April
2024 inclusive. No transfers between the UK and South Africa
registers may take place from close of business on Tuesday,
16 April 2024 to Friday, 26 April 2024 inclusive.
The above dates are proposed and subject to change.
The Property Income Distribution (“PID”) element (being
0.65 pence) will be subject to a deduction of a 20 per cent
UK withholding tax unless exemptions apply. The non-PID
element (being 1.0 pence) will be treated as an ordinary UK
company dividend.
Information for shareholders
The information below is included only as a general guide
to taxation for shareholders based on Shaftesbury Capital’s
understanding of the law and the practice currently in force.
Any shareholder who is in any doubt as to their tax position
should seek independent professional advice.
UK shareholders – PIDs
Certain categories of shareholders may be eligible for
exemption from the 20 per cent UK withholding tax and may
register to receive their dividends on a gross basis. Further
information, including the required forms, is available from
the ‘Investor Information’ section of the Company’s website
(https://www.shaftesburycapital.com/en/investors/investor-
information.html), or on request from our UK registrars, Link
Group. Validly completed forms must be received by Link
Group no later than the dividend Record Date, as advised;
otherwise the dividend will be paid after deduction of tax.
South African shareholders
The proposed 2023 final cash dividend declared by the
Company is a foreign payment and the funds are sourced
from the UK.
PIDs: A 20 per cent UK withholding tax is applicable to a PID.
South African shareholders may apply to HMRC after payment
of the PID element of the proposed 2023 final cash dividend
for a refund of the difference between the 20 per cent UK
withholding tax and the UK/South African double taxation
treaty rate of 15 per cent.
The PID element of the proposed 2023 final cash dividend
will be exempt from income tax but will constitute a dividend
for Dividends Tax purposes, as it will be declared in respect
of a share listed on the exchange operated by the JSE. SA
Dividends Tax will therefore be withheld from the PID element
of the proposed 2023 final cash dividend at a rate of 20 per
cent, unless a shareholder qualifies for an exemption and the
prescribed requirements for effecting the exemption are in
place by the requisite date. Certain shareholders may also
qualify for a reduction of SA Dividends Tax liability to 5 per
cent, (being the difference between the SA dividends tax rate
and the effective UK withholding tax rate of 15 per cent) if the
prescribed requirements for effecting the reduction are in
place by the requisite date.
Non-PID: The non-PID element of the proposed 2023 final cash
dividend will be exempt from income tax but will constitute a
dividend for SA Dividends Tax purposes, as it will be declared
in respect of a share listed on the exchange operated by the
JSE. SA Dividends Tax will therefore be withheld from the non-
PID element of the proposed 2023 final cash dividend at a rate
of 20 per cent, unless a shareholder qualifies for an exemption
and the prescribed requirements for effecting the exemption
are in place by the requisite date.
Other overseas shareholders:
Other non-UK shareholders may be able to make claims
for a refund of UK withholding tax deducted pursuant to
the application of a relevant double taxation convention.
UK withholding tax refunds can only be claimed from HMRC,
the UK tax authority.
Additional information on PIDs can be found at
https://www.shaftesburycapital.com/en/investors/investor-
information/reit.html
Glossary
Alternative performance measure (APM)
A financial measure of historical or future financial performance,
position or cash flows of the Group which is not a measure
defined or specified in IFRS.
Annualised gross income
Total annualised actual and “estimated income” from leases
at a valuation date. It includes sundry non-leased income and
estimated turnover related rents. No rent is attributed to
leases which were subject to rent free periods at that date. It
does not reflect any head rents and estimated irrecoverable
outgoings at the valuation date. “Estimated income” refers
to gross ERVs in respect of rent reviews outstanding at the
valuation date and, where appropriate, ERV in respect of
lease renewals outstanding at the valuation date where the
fair value reflects terms for a renewed lease.
BREEAM
Building Research Establishment Environmental Assessment
Method is a method of assessing, rating and certifying
sustainability of buildings.
Contracted income
Includes rent frees and contracted rent increases.
Capco
Capco represents Shaftesbury Capital PLC, formerly Capital &
Counties Properties PLC, (also referred to as “the Company”)
and all its subsidiaries and group undertakings, collectively
referred to as “the Group”.
CDP
Carbon Disclosure Project Worldwide, a global not-for-profit
sustainability disclosure system. Shaftesbury Capital
participates in the CDP Climate Change Programme,
which measures progress on climate change disclosure.
CRREM
Carbon Risk Real Estate Monitor. The leading global standard
and initiative for operational decarbonisation of real estate asset.
Embodied Carbon
The total carbon emissions generated during the creation
or refurbishment of a product. Including the extraction,
manufacture, transportation, processing, assembly,
replacement and deconstruction of the materials
required to create or refurbish the product.
EPRA
European Public Real Estate Association, the publisher of
Best Practice Recommendations intended to make financial
statements of public real estate companies in Europe clearer,
more transparent and comparable.
EPRA cost ratio (including direct vacancy costs)
EPRA cost ratio (including direct vacancy costs) is a
proportionally consolidated measure of the ratio of net
overheads and operating expenses against gross rental
income (with both amounts excluding ground rents payable).
Net overheads and operating expenses relate to all
administrative and operating expenses, net of any service
fees, recharges or other income specifically intended to
cover overhead and property expenses.
EPRA cost ratio (excluding direct vacancy costs)
EPRA cost ratio (excluding direct vacancy costs) is the ratio
defined above, but with direct vacancy costs removed from
the net overheads and operating expenses balance.
EPRA earnings per share
Profit or loss for the year excluding valuation movements on
the wholly-owned, joint venture and associate properties, fair
value changes of financial instruments and listed investments,
cost of early close out of debt, gain on bargain purchase and
IFRS 3 merger-related transaction costs., divided by the
weighted average number of shares in issue during the year.
EPRA loan-to-value (LTV)
Ratio of net debt, including net payables, to the sum of the net
assets, including net receivables, of the Group, its subsidiaries
and joint ventures and associates, all on a proportionate basis,
expressed as a percentage. The calculation includes trading
properties at fair value and debt at nominal value.
EPRA net disposal value (NDV) per share
The net assets as at the end of the year including the excess
of the fair value of trading property over its cost, revaluation
of other non-current investments and the fair value of fixed
interest rate debt over their carrying value, divided by the
diluted number of ordinary shares.
EPRA net initial yield
Annualised net rent (after deduction of revenue costs such
as head rent, running void, service charge after shortfalls
and empty rates) on investment and development property
expressed as a percentage of the gross market value before
deduction of theoretical acquisition costs.
EPRA net tangible assets (NTA) per share
The net assets as at the end of the year including the excess of
the fair value of trading property over its cost and revaluation
of other non-current investments, excluding the fair value
of financial instruments and deferred tax on revaluations,
divided by the diluted number of ordinary shares.
EPRA net reinstatement value (NRV) per share
The net assets as at the end of the year including the excess
of the fair value of trading property over its cost and excluding
the fair value of financial instruments, deferred tax on
revaluations plus a gross up adjustment for related costs such
as Real Estate Transfer Tax, divided by the diluted number of
ordinary shares.
EPRA sBPR
European Public Real Estate Association Sustainability
Best Practice Recommendations for Reporting, a guidance
framework for reporting environmental performance. Capco
publishes details of its environmental performance in line with
the EPRA sBPR.
EPRA topped-up initial yield
EPRA net initial yield adjusted for the expiration of rent-free periods.
EPRA vacancy
ERV of un-let units, including those under offer, expressed as a
percentage of the ERV of the wholly-owned property portfolio
excluding units under development.
ESC
Environment, Sustainability and Community.
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Valuation growth/decline
The valuation movement and realised surpluses or deficits
arising from the Group’s investment property portfolio
expressed as a percentage return on the valuation at the
beginning of the period adjusted, on a time weighted basis,
for acquisitions, disposals and capital expenditure. When
measured on a like-for-like basis, the calculation excludes
those properties acquired or sold during the period.
Weighted average unexpired lease term (WAULT)
The unexpired lease term to the earlier of break or lease
expiry weighted by ERV for each lease.
Whole Life Carbon
The total embodied and operational emissions that occur over
the lifetime of a building, including the carbon associated with
decommissioning at end of life.
Zone A
A means of analysing and comparing the rental value of retail
space by dividing it in to zones parallel with the main frontage.
The most valuable zone, Zone A, falls within a 6m depth of the
shop frontage. Each successive zone is valued at half the rate
of the zone in front of it. The blend is referred to as being
‘ITZA’ (“In Terms of Zone A”).
Glossary continued
Estimated rental value (ERV)
The external valuers’ estimate of the open market rent which,
on the date of valuation, could reasonably be expected to
be obtained on a new letting or rent review of the property.
FTSE4GOOD
FTSE4GOOD Index Series, hosted by FTSE Russell, a
sustainability index in which Shaftesbury Capital participates.
F&B
Food and Beverage.
FRC
Financial Reporting Council.
GRESB
The Global Real Estate Sustainability Benchmark, a
sustainability index. Shaftesbury Capital participates
in the GRESB Real Estate Assessment.
Gross income
The Group’s share of passing rent plus sundry non-leased income.
FTSE 350 Real Estate Index
London Stock Exchange index derived from real estate
companies in the FTSE 100 and FTSE 250 indices.
Headline earnings
Headline earnings per share is calculated in accordance
with Circular 1/2023 issued by the South African Institute
of Chartered Accountants (“SAICA”), a requirement of the
Group’s JSE listing. This measure is not a requirement of IFRS.
LETI
The London Energy Transformation Initiative, a network
of built environment professionals working to put London
on the path to Net Zero Carbon.
Like-for-like property
Property which has been owned throughout both years
without significant capital expenditure in either year, so
income can be compared on a like-for-like basis. For the
purposes of comparison of capital values, this will also
include assets owned at the previous balance sheet date
but not necessarily throughout the prior year.
Loan-to-value (LTV)
LTV is calculated on the basis of net debt divided by the
market value of the wholly-owned property portfolio.
Longmartin
The Longmartin associate is a 50 per cent investment
arrangement between Shaftesbury Capital and The
Mercers’ Company.
LSJV
The Lillie Square joint venture is a 50 per cent joint venture
between the Group and KFI.
MSCI
Producer of an independent benchmark of property returns.
NAV
Net Asset Value.
Net initial yield
The net initial income at the valuation date expressed as a
percentage of the gross valuation. Yields reflect net income
after deduction of any ground rents, head rents and rent
charges and estimated irrecoverable outgoings at the
valuation date.
Net debt
Total borrowings, at nominal value, less cash and cash
equivalents, excluding tenant deposits.
Net Zero Carbon
When there is a balance between the amount of Greenhouse
Gas (“GHG”) emissions produced and the amount removed
from the atmosphere targeting initially reduction in GHG
emissions resulting from our buildings and operations and then
offset of any unavoidable residual emissions.
Nominal equivalent yield
Effective annual yield to a purchaser on the gross market
value, assuming rent is receivable annually in arrears, and
that the property becomes fully occupied and that all rents
revert to the current market level (ERV) at the next review
date or lease expiry.
Occupancy rate
The ERV of let and under offer units expressed as a
percentage of the ERV of let and under offer units plus ERV
of un-let units, excluding units under development. This is
equivalent to 100 per cent less the EPRA vacancy rate.
Passing rent
Contracted annual rents receivable at the balance sheet date.
This takes no account of accounting adjustments made in
respect of rent-free periods or tenant lease incentives, the
reclassification of certain lease payments as finance charges
or any irrecoverable costs and expenses, and does not
include excess turnover rent, additional rent in respect
of unsettled rent reviews or sundry income.
Property Income Distributions (PID)
Distribution under the REIT regime that constitutes at least
90 per cent of the Group’s taxable income profits arising from
its qualifying property rental business, by way of dividend.
PIDs can be subject to withholding tax at 20 per cent. If the
Group distributes profits from its non-qualifying business, the
distribution will be taxed as an ordinary dividend in the hands
of the investors.
Real Estate Investment Trust (REIT)
A REIT is exempt from corporation tax on income and gains
of its property rental business (qualifying activities) provided a
number of conditions are met. It remains subject to corporation
tax on non-exempt income and gains (non-qualifying activities)
which would include any trading activity, interest income and
development and management fee income.
Real Estate Transfer Tax
Purchasers’ cost as included within the independent valuation
of investment and trading properties.
Reversionary potential
The amount by which ERV exceeds annualised gross income,
measured at a valuation date.
RICS
Royal Institution of Chartered Surveyors.
S&P Global Corporate Sustainability Assessment
A sustainability index of Standard & Poor Global to which
Shaftesbury Capital submits information.
Section 106
Section 106 of the Town and Country Planning Act 1990,
pursuant to which the relevant planning authority can impose
planning obligations on a developer to secure contributions
to services, infrastructure and amenities in order to support
and facilitate a proposed development.
Shaftesbury
Shaftesbury represents Shaftesbury PLC and all its
subsidiaries and group undertakings, collectively referred to
as the Shaftesbury Group.
Shaftesbury Capital PLC
With effect from 6 March 2023, Capital & Counties Properties
PLC changed its name to Shaftesbury Capital PLC (also
referred to as “the Company” or “Shaftesbury Capital”),
and all its subsidiaries and Group undertakings, collectively
referred to as “the Group”.
Sterling Overnight Interbank Average Rate (SONIA)
The average overnight Sterling risk-free interest rate, set
in arrear, paid by banks for unsecured transactions.
Tenant lease incentives
Any incentives offered to tenants to enter into a lease.
Typically incentives are in the form of an initial rent-free
period and/or a cash contribution to fit-out the premises.
Under IFRS the value of incentives granted to tenants
is amortised through the consolidated income statement on
a straight-line basis to the earlier of break or lease expiry.
Task Force on Climate-related Financial Disclosure
The TCFD developed a framework to help companies more
effectively disclose climate-related risks and opportunities
through existing reporting processes.
Total accounting return (TAR)
The movement in EPRA NTA per share plus dividends per
share paid during the year.
Total property return (TPR)
Capital growth including gains and losses on disposals plus
rent received less associated costs, including ground rent.
Total shareholder return (TSR)
The movement in the price of an ordinary share plus dividends
paid during the year assuming re-investment in ordinary shares.
Underlying earnings
Underlying earnings reflects the underlying financial
performance of the Group’s core West End property rental
business. The measure aligns with the main principles of EPRA
earnings. Additional adjustments are made to exclude items
considered to be non-recurring or significant by virtue of size
and nature.
Underlying earnings per share (EPS)
Underlying earnings divided by the weighted average number
of shares in issue during the year.
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Shaftesbury
Capital
Greenhouse Gas
emissions
methodology
2023
Shaftesbury Capital monitors and reports our greenhouse gas
emissions (“GHG”) and operational energy consumption in
compliance with the requirements of the Companies Act 2006
(Strategic Report and Directors Report) Regulations 2013 and
the extension of these regulations to include the Streamlined
Energy and Carbon Emissions Reporting (“SECR”).
Our Scope 1, 2 and 3 emissions statements cover the
reporting period 1 January 2023 to 31 December 2023 and
are detailed on page 87 and 88.
The GHG emissions data is prepared by following the
‘Greenhouse Gas (“GHG”) Protocol: A Corporate Accounting and
Reporting Standard’ published by the World Resources Institute
(“WRI”). We use the GHG Protocol operational control approach
as this reflects where Shaftesbury Capital has the ability to
influence GHG emissions. 100 per cent of emissions and energy
use reported are applicable for UK only, as Shaftesbury Capital
does not have any other global operations.
Scope 1 emissions, defined as direct emissions including
fuel combustion in owned or controlled boilers, backup
generators and vehicles and fugitive emissions from air
conditioning, are included where they are our responsibility
within the managed portfolio.
Scope 2 is defined as indirect energy emissions which include
purchased electricity throughout the Group’s operations
within landlord-controlled parts. The figures relate to landlord
controlled common parts such as lobbies, staircases or vacant
units, including when small refurbishments are under way and
are therefore minimal. Shaftesbury Capital are responsible
for all Scope 1 and Scope 2 emissions disclosed on page 87
and 88.
For Scope 2 emissions, those arising from generated
electricity usage are reported in two ways. Firstly, Shaftesbury
Capital calculates the ‘location-based’ emissions which reflect
emissions according to the energy mix of the National Grid.
Secondly, Shaftesbury Capital reports ‘market-based’
emissions which reflect the energy mix provided by our energy
suppliers. This helps Shaftesbury Capital to demonstrate the
reduction in emissions as a result of purchasing energy from
suppliers who generate renewable energy.
In addition, we report Scope 3 emissions comprising other
indirect emissions from sources not owned or controlled by
Shaftesbury Capital, including customer and supply chain
emissions. This includes emissions relating to tenant
consumption in our properties where the leasing arrangements
put responsibility for energy operation and direct payment for
supply on the tenants.
Where material (more than £250,000) refurbishments take
place, electricity used in refurbishment projects is included as
Scope 3, as this is part of the carbon cost of project delivery.
The energy consumption at refurbishment projects below
these criteria is captured within Scope 2 emissions as
explained above.
Shaftesbury Capital has engaged Carbon Footprint Limited to
provide independent verification of the 2022 Greenhouse Gas
emissions assertion, in accordance with the industry
recognised standard ISO 14064-3.
The energy and carbon statements disclosed in this report, on
pages 87 and 88, have been calculated in accordance with the
following standards:
– WRI/WBCSD (World Business Council for Sustainable
Development) (2004). Greenhouse Gas Protocol: Corporate
Accounting and Reporting Standard – Revised Edition;
– WRI/WBCSD (2015). Greenhouse Gas Protocol: Scope 2
Guidance for market-based reporting; and
– Department for Environment, Food & Rural Affairs
(“DEFRA”) and Department for Business, Energy &
Industrial Strategy (2019): Environmental reporting
guidelines: Including Streamlined Energy and Carbon
Reporting requirements’.
We have applied the appropriate greenhouse gas conversion
factors from UK Department for Energy Security and Net Zero
Greenhouse gas reporting: conversion factors (June) 2023.
We have used accurate consumption data for reporting of the
majority of Scope 1 and Scope 2 emissions. Where there have
been data gaps, we have used reasonable estimations such as
pro-rata extrapolation to ensure complete coverage for the
reporting year.
For Scope 3 occupier emissions we have used various
methods, including meter reads, proptech feeds and letters of
authority from occupiers for approximately 35 percent of the
downstream leased assets and applied industry benchmarks
for the remaining 65 per cent.
For Scope 3 embodied carbon, we use accurate embodied
carbon data for all projects which are sufficiently material
to warrant detailed whole life carbon assessments and
monitoring. This covers c.43 per cent of our spend in 2023
and 18 per cent of our embodied carbon. For smaller projects,
not yet covered by whole life carbon assessments, we use
DEFRA conversion factors which covers 57 per cent of our
spend and 82 per cent of our embodied carbon. We are
committed to reducing the proportion of spend required
to use benchmarks over time.
Shareholder information
Electronic communication
As part of our commitment to sustainability Shaftesbury
Capital has adopted electronic communications. This means
that shareholders will receive documents from the Company
electronically unless they elect to receive hard copies.
All of Shaftesbury Capital’s annual results and interim
results will be published on the Company’s website
www.shaftesburycapital.com. If you are a shareholder
who receives hard copies of documents and you wish to
elect to receive electronic communications, please contact
the appropriate Registrar.
Shareholders may revoke an election to receive electronic
communications at any time.
Registrars
All enquiries concerning shares or shareholdings, including
notification of change of address, queries regarding loss of a
share certificate and dividend payments should be addressed to:
For shareholders registered in the UK:
Link Group, Central Square, 29 Wellington Street, Leeds,
LS1 4DL
Telephone: 0371 664 0300
Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be
charged at the applicable international rate. Lines are open
between 09.00 – 17.30, Monday to Friday excluding public
holidays in England and Wales.
Email: shareholderenquiries@linkgroup.co.uk
Website: www.linkgroup.eu
For shareholders registered in South Africa:
Computershare Investor Services Proprietary Limited,
Rosebank Towers, 1st Floor, 15 Biermann Avenue, Rosebank,
2196, South Africa
Postal address: Private Bag X9000, Saxonwold, 2132,
South Africa
Telephone: +27 (0) 11 370 5000 or 086 1100 933 (lines are
open 8.00 –16.30 Monday to Friday)
Email: web.queries@computershare.co.za
Website: www.computershare.com
Web-based enquiry service for shareholders
Shareholders registered in the UK can register at
www.signalshares.com to access a range of online
services including:
– Updating your address details or registering a mandate to
have your dividends paid directly to your bank account
– Online proxy voting
– Electing to receive shareholder communications
electronically
– Viewing your holding balance, indicative share price
and valuation
– Viewing transactions on your holding including any
dividend payments you have received
– Accessing a wide range of shareholder information,
including downloadable forms
To register to use this service, you will need your investor
code (“IVC”), which can be found on your share certificate(s).
Share price information
The latest information on the Shaftesbury Capital PLC share
price is available on the Company’s website
www.shaftesburycapital.com.
The shares are traded on the LSE with LSE code SHC, SEDOL
B62G9D3, ISIN GB00B62G9D36. The shares are traded on the
JSE under the abbreviated name SHBCAP and JSE code SHC.
Share dealing services
Many banks, building societies and investment managers offer
share dealing services. Additionally, UK shareholders may trade
their shares using the online and telephone dealing service that
Link Group provide. To use this service, shareholders should
contact Link: info@linksharedeal.com or telephone 0371 664
0445 (calls are charged at the standard geographic rate and
will vary by provider; calls outside the UK are charged at the
applicable international rate. Lines are open 8.00 – 16.30
Monday to Friday, excluding public holidays in England and
Wales). Alternatively, you can log on to www.linksharedeal.com.
This service is only available to private individuals resident in
the UK, the EEA, Channel Islands and the Isle of Man who hold
shares in a company for which Link Group provides share
registration services, or a nominee programme administered
by Link Market Services Trustees Limited.
ShareGift
ShareGift is a charity share donation scheme for shareholders
who may wish to dispose of a small quantity of shares where
the market value makes it uneconomical to sell on a
commission basis. Further information can be found on its
website www.sharegift.org, by telephoning 020 7930 3737 or
by emailing help@sharegift.org.
Strate Charity Shares (SCS)
SCS is an independent non-profit and registered charity share
donation scheme for shareholders who may wish to dispose of
small holdings of shares that are too costly to sell via a stock
broker on a commission basis. Further information can be
found at www.strate.co.za, by emailing
charityshares@computershare.co.za or by calling 0800 202
363 or +27 (0) 11 870 8207 if you are phoning from outside
South Africa.
Investment scams
Shareholders are advised to be wary of any unsolicited calls,
mail or emails that offer free advice, the opportunity to buy
shares at a discount or to provide free company or research
reports. Such approaches are often investment scams.
Information on how to protect yourself from investment
scams can be found at www.fca.org.uk/scams or by calling
the FCA’s consumer helpline on 0800 111 6768.
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This Report includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements of Shaftesbury Capital PLC to
be materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements. Any information contained in this Report on the price at which shares or other securities in Shaftesbury Capital PLC
have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to
future performance.
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Shaftesbury Capital PLC | 2023 Annual Report
Shaftesbury Capital PLC | 2023 Annual Report
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Shaftesbury Capital PLC
Regal House
14 James Street
Covent Garden
WC2E 8BU