TIDMLMP

RNS Number : 9636Z

LondonMetric Property PLC

27 May 2021

LONDONMETRIC PROPERTY PLC

("LondonMetric" or the "Group" or the "Company")

ANNUAL RESULTS FOR THE YEARED 31 MARCH 2021

SECTOR ALIGNMENT AND ASSET SELECTION DELIVER

RELIABLE AND GROWING INCOME WITH STRONG PORTFOLIO OUTPERFORMANCE

LondonMetric today announces its annual results for the year ended 31 March 2021.

 
 
                                EPRA (1,2)          IFRS 
                             ----------------  --------------- 
Income Statement                2021     2020     2021    2020 
                             -------  -------  -------  ------ 
Net rental income (GBPm)       123.3    115.9    119.7   111.1 
                             -------  -------  -------  ------ 
Earnings/Reported Profit 
 (Loss)(GBPm)                   85.6     74.5    257.3   (5.7) 
                             -------  -------  -------  ------ 
Earnings per share (p)          9.52     9.26     28.6   (0.7) 
                             -------  -------  -------  ------ 
Dividend per share (p)          8.65     8.30     8.65    8.30 
                             -------  -------  -------  ------ 
                                EPRA (1,2)          IFRS 
                             ----------------  --------------- 
Balance Sheet                   2021     2020     2021    2020 
                             -------  -------  -------  ------ 
NTA(3) / NAV (GBPm)          1,731.9  1,437.2  1,731.3  1431.8 
                             -------  -------  -------  ------ 
NTA(3) / NAV per share (p)     190.3    170.3    191.3   171.0 
                             -------  -------  -------  ------ 
LTV (%)                         32.3     35.9     32.3    35.9 
                             -------  -------  -------  ------ 
 
   1.        Including share of joint ventures, excluding non-controlling interest 

2. Further details on alternative performance measures can be found in the Financial Review and definitions can be found in the Glossary

3. EPRA net tangible assets (NTA) is a new reporting measure that replaces EPRA net asset value this year. Discussed further in the Financial review and note 8 to the financial statements

Continued focus on reliable, repetitive and growing income increases earnings and dividend

   -- Net rental income up 6% to GBP123.3m, on an IFRS basis increased by 8% 
 
   -- Rent collection strong with less than 1% forgiven or outstanding for the year 
 
   -- EPRA earnings up 15% to GBP85.6m, +3% on a per share basis 
 
   -- IFRS reported profit up 400% to GBP257.3m, after adjusting prior year for exceptional costs 
 
   -- Dividend progression of 4.2% to 8.65p, 110% covered, including Q4 dividend declared today of 2.35p 
 
   -- Continued progression expected with Q1 22 dividend guidance of 2.2p, a 4.8% progression on Q1 21 

Sector alignment and asset selection delivering strong portfolio valuation uplift

   -- Total Property Return of 13.4%, outperforming IPD All Property which delivered 1.2% 
 
   -- Capital return of 8.0% (IPD All Property: -3.2%), urban logistics assets delivered a capital return of 15.5% 
 
   -- EPRA NTA per share increased by 11.7% to 190.3p, driven by 19.3p valuation gain, on an IFRS basis increased by 
      11.9% 
 
   -- Total Accounting Return of 16.7% 

Distribution weighting at 71%, including urban logistics at 39% and grocery/roadside at 11%

   -- GBP245m of acquisitions let to strong credits with a WAULT of 17 years and 87% of rent subject to contractual 
      uplifts 
 
   -- GBP159m of disposals, largely shorter let urban logistics and long income assets, with a WAULT of nine years 
 
   -- Post year end, GBP68m acquired, increasing urban logistics portfolio to GBP1.1 billion, representing 41% of the 
      portfolio 

173 asset management initiatives completed and strong progress on developments

   -- GBP5.3m pa income uplift and 3.1% like for like income growth, with open market rent reviews +18% 
 
   -- Lettings signed with WAULT of 13 years, including a pre-let of 120,000 sq ft to Amazon at Tyseley 
 
   -- Under offer on 172,000 sq ft at Bedford Link development and in discussions on letting of the last unit 

Resilient GBP2.6bn portfolio focused on operationally light assets with strong income characteristics

   -- Occupancy of 98.7% with long income portfolio 100% let 
 
   -- WAULT of 11.4 years with only 8% of income expiring in next three years 
 
   -- Gross to net income ratio of 98.6% and contractual rental uplifts on 56.8% of income 

Balance sheet strengthened

   -- GBP120m equity raise in year and GBP780m of refinancing with green framework post year end 
 
   -- LTV of 32.3% with weighted average debt maturity increased to 8.2 years (2020: 4.7 years) and cost of debt at 
      2.5% 
 
   -- EPRA cost ratio reduced further to 13.6% (-60bps) 

Andrew Jones, Chief Executive of LondonMetric, commented :

"Whilst we have all experienced a truly unprecedented last 12 months, in many ways Covid-19 has merely accelerated longer term trends that were already being driven by technological advancement and changing consumer behaviour. Logistics, healthcare and grocery real estate have been significant beneficiaries of this acceleration delivering standout performances and enjoying an ever-wider margin of victory over other real estate sectors.

"The performance of our portfolio during the year reflects our alignment to the winning sectors and increasingly wanting to own the best assets. Our GBP2.6 billion portfolio has weathered the storm in fine shape evidenced by very strong rent collection, continued earnings growth and significant valuation uplift, all of which are as a result of longer term decisions to align to the winning macro trends. The urban logistics sector in particular, where we have now amassed over GBP1 billion of assets, has been our main conviction call for a number of years and is enjoying truly exceptional demand/supply dynamics resulting in material jumps in rents.

"Our strong shareholder alignment, disciplined approach and focus on quality assets that deliver a reliable, repetitive and growing income has positioned us well for the future as we progress towards our ambition of becoming a dividend aristocrat. After all, income compounding is the bedrock for attractive returns."

For further information, please contact:

LondonMetric Property Plc: +44 (0)20 7484 9000

Andrew Jones (Chief Executive)

Martin McGann (Finance Director)

Gareth Price (Investor Relations)

FTI Consulting: +44 (0)20 3727 1000

Dido Laurimore Londonmetric@fticonsulting.com

Richard Gotla

Andrew Davis

Meeting and audio webcast

A live audio webcast and conference call will be held at 8.30 am today.

The conference call dial-in for the meeting is: +44 (0) 330 336 9434 (Participant Passcode: 5638111).

For the live webcast see:

https://webcasting.brrmedia.co.uk/broadcast/6065d079560fbf10fcc50f21

An on demand recording will be available shortly after the meeting from the same link and from:

https://www.londonmetric.com/investors/report-presentation/year/2021

Notes to editors

LondonMetric is a FTSE 250 REIT that owns one of the UK's leading listed logistics platforms alongside a diversified long income portfolio, with 15 million sq ft under management. It owns and manages desirable real estate that meets occupiers' demands, delivers reliable, repetitive and growing income-led returns and outperforms over the long term. Further information is available at www.londonmetric.com

Neither the content of LondonMetric's website nor any other website accessible by hyperlinks from its website are incorporated in, or form part of this announcement nor, unless previously published by means of a recognised information service, should any such content be relied upon in reaching a decision to acquire, continue to hold, or dispose of shares in LondonMetric. This announcement may contain certain forward-looking statements with respect to LondonMetric's expectations and plans, strategy, management objectives, future developments and performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to future events and circumstances. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Certain statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of LondonMetric speak only as of the date they are made. LondonMetric does not undertake to update forward-looking statements to reflect any changes in LondonMetric's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast. Past share price performance cannot be relied on as a guide to future performance.

Alternative performance measures: The Group financial statements are prepared in accordance with IFRS where the Group's interests in joint ventures and non-controlling interests are shown as single line items on the income statement and balance sheet. Management reviews the performance of the business principally on a proportionately consolidated basis, which includes the Group's share of joint ventures and excludes non-controlling interests on a line by line basis. Alternative performance measures are financial measures which are not specified under IFRS but are used by management as they highlight the underlying performance of the Group's property rental business and are based on the EPRA Best Practice Recommendations (BPR) reporting framework which is widely recognised and used by public real estate companies.

Chair's statement

Due to the pandemic, we have had to work from home for most of the last financial year. Thanks to the incredible efforts of all of the team they have managed that difficulty, and delivered record results in testing conditions. I cannot thank them enough.

When we reported last year, I hoped that the world would be able to recover in the calendar year 2020. The coming of the variants put paid to that hope. Thankfully, the speed and effectiveness of the UK vaccine rollout, alongside extensive Government support schemes have allowed us to start to return to normal. We must offer our heartfelt thanks to the brilliant people who devised, mass produced and delivered vast numbers of high grade vaccines.

There are some parts of our lives that won't return to being as they were before. Covid-19 continues to challenge many long established practices and accelerated existing structural change. There is no doubt that some of the changes, such as routine internet shopping and working from home part time will continue to impact the way we live, work and socialise.

The enormous impact that the pandemic has had on commercial property is clear to see. No amount of economic stimulus and medical brilliance will undo some of the changes that Covid-19 has accelerated. As shopping and working patterns have shifted, a new economic reality has polarised sub-sector performance. Logistics and long income property continue to see highly supportive dynamics. There will be some shift back to physical shopping to animate our high streets and bring fun back to going out, but the shift to online shopping that was underway before Covid-19 has been accelerated by lockdowns and only part of that move will return to traditional shopping. It is unclear yet how office demand will evolve given the now proven ability of many to work successfully from home.

Notwithstanding potential inflationary pressures, Covid-19 has also prolonged the likely time horizon of very low interest rates. Well managed real estate is an asset class which we believe offers an outstanding ability to provide exceptional, compounding returns over the longer term.

The year also saw the finalisation of Brexit. The pandemic has rather taken the spotlight away from this major event, so its effects are still under reported. It will lead to demand for logistics space as firms rely less on 'just in time' and more on 'just in case'. The UK needs to be more self-reliant, which will be a very good thing. On the way to that state, there will be issues to overcome. I believe we are well placed to do so.

Our long term, disciplined approach, aligned to the winning sectors, has delivered a particularly strong performance in the year. Our total property return was 13.4% which significantly outperformed the IPD All Property index by 1,220 bps. Our total accounting return was 16.7%, rent collection levels exceeded 98%, EPRA earnings per share increased by 2.8% and EPRA net tangible assets per share rose by 11.7%. This performance and our confident outlook have allowed us to increase our dividend per share for the sixth year in a row, rising 4.2% and 110% covered by EPRA earnings. I am pleased to know that our team can go forward positively, without being distracted trying to collect unpaid rent.

Over the eight years since our merger, we have delivered a total shareholder return of 196%, significantly outperforming the FTSE 350 Real Estate Super Sector average of 59% as well as increasing our earnings by 144% to 9.52p per share.

During the year, our equity fundraising attracted overwhelming support from shareholders, for which I thank you. It has allowed us to execute on some high quality investment opportunities and enhance our portfolio further. We were also very well supported in the debt market, where post year end we managed to extend our debt maturity by 4.0 years to 8.2 years, which gives durability and diversity to our debt structure, at highly attractive borrowing rates.

Despite the pandemic, we have also maintained our strong stakeholder relationships. We recognise that the success of the Company depends on our people and I would again like to warmly thank the Board and all of our employees for their hard work in very difficult circumstances. We have also strengthened our Board during the year with the appointment of Kitty Patmore, who I would like to welcome on your behalf.

Looking forward, we believe the portfolio is stronger than ever. That will allow us to grow our income and asset value over the longer term. This, combined with the long experience of our team and our balance sheet discipline leaves the Company very well placed to deliver a sustainable and progressive dividend policy.

Patrick Vaughan

Chair

27 May 2021

Chief Executive's review

Overview

We continue to live in a world of ongoing disruption and social change

The last year has been truly extraordinary with a global pandemic, a global recession and bold, unprecedented central Government intervention.

Technology and changing consumer behaviour were already having a profound impact, but Covid-19 has accelerated these shifts with trends that were expected to take years, occurring in just months and in some cases weeks. The behavioural changes that surged during lockdown have been well-mapped; working from home, online retailing, gaming, video on demand, online banking etc. These shifts were only possible due to an exponential increase in technological capability.

At long last, society has reopened and lives are returning to near normality. However, whilst humans need real interaction with each other to thrive, the world continues to evolve and digitise at a rapid rate and Covid-19 has added to the seismic shift in the tectonic plates. The scale of these changes can be discussed, but certain conclusions are uncontroversial.

Firstly, online retailing took a quantum and permanent leap. Previously high barriers of entry were toppled in a matter of weeks and consumers quickly realised the convenience, safety and security of online shopping. Consequently, online retail sales grew by over 40% in 2020, accounting for 28% of total sales and peaking at 36% during the start of 2021, a level higher than the first lockdown. The change in online grocery has been most apparent, accounting for over 15% of food shopping at its peak after doubling from pre-pandemic levels.

Secondly, an unusually large number of retailers have failed or are seriously wounded. Many will blame the pandemic, but the truth is that too many failed to embrace change with an excessive physical estate and they failed to pivot. The pandemic has exacerbated their difficulties and accelerated their demise. Supporting business models that work and starving those that do not is how economies adapt and evolve.

Thirdly, Covid-19 has materially changed the way we work and has accelerated ongoing trends towards home working. Each day, it is becoming more apparent that a substantially higher percentage of office workers will spend some of their week working from home. The pandemic has certainly not generated any new demand for offices.

Unsurprisingly, real estate performances have polarised further. Logistics, healthcare and grocery remain the standout performers, enjoying an ever-wider margin of victory. Conversely, the acceleration of secular declines in physical retail has seen downward repricing of high streets and shopping centres to levels that may now start to encourage alternative use or demolition. For offices, less space is needed and this new reality is yet to be reflected in their yields.

After years of denial, many companies are now experiencing the full force of these structural changes. They are realising that it's not just cyclical, it's permanent, and they aren't quite what they were and are now worrying what they might become.

We continue to focus on the mega trends and disciplined investing

Most of our real estate decisions are influenced by trends that originate outside the property sector but that are fundamentally shaping its future. We believe the secular trends affecting the sector are as big a deal today as they were before the vaccines arrived.

Our eyes are wide open to the changing landscape and so, whilst we have had to react to the pandemic, our overriding focus has been to regularly position the portfolio to benefit from the medium and long term drivers of return. After all, mega trends are generally not affected by short term or sporadic shocks, however profound.

At 95%, our portfolio's alignment to logistics and long income assets puts us on the right side of change and is delivering an incredibly resilient performance as demonstrated by our strong financials in the year.

We continue to pride ourselves on our process, discipline and rationality. Over the year, we acquired GBP245 million of assets and completed further developments in strong geographies, let to good occupiers on long leases with strong income growth prospects. Whilst we could have acquired much more, our rigorous approach tempered our activity, ensuring that we remain well positioned for the long term. We would prefer to engage in the pursuit of excellent returns than the pursuit of assets under management.

We are obsessive about owning the best assets and have always focused on 'winning the losers game' - selling the laggards and running the winners. Whilst this sometimes involves unattractive transaction costs and income interruption, we will always do the right thing for long term performance. In the year, we disposed of nearly GBP160 million of assets that have made their contribution but are unlikely to excel in the future.

We are well positioned with a structurally supported portfolio that will deliver on our 'collect, compound and compress' income approach.

Own desirable real estate

Logistics continues to experience strong tailwinds and benefit from a weight of money

Investment volumes for UK logistics in 2020 totalled GBP9 billion, reflecting a resilient Covid-19 performance, strong sector dynamics and a rotation of capital out of legacy real estate. The sector has benefitted from significant overseas money, partly driven by an improved outlook for the UK following Brexit and a stronger than expected economy. Therefore, unsurprisingly, yields have compressed further and evidence suggests that prime yields could fall further.

Occupational activity for logistics in 2020 saw another record year, with 43 million sq ft taken up. Whilst a recent report estimated that new warehouse supply could double this year to 40 million sq ft, much of this is pre-let and being immediately absorbed by pent up and new demand, as evidenced by vacancy rates which remain low at just ten months' supply. At the end of March 2021, a record 16 million sq ft of logistics was under offer, representing a 40% uplift on a year ago, and this year is set to be another very strong year. For the first time on record, supply for both second hand and speculatively built units have fallen below 12 months of demand.

It is clear that short term occupier requirements experienced during Covid-19 have turned into longer term needs as online penetration continues its inexorable upward trajectory. Furthermore, 'just in case' logistics infrastructures rather than 'just in time' strategies are adding an extra layer of demand. Whilst Brexit concerns may have eased, supply chains are having to deal with new issues, primarily border related, which are increasing the need for localised inventory. A recent survey suggested that the UK was one of the top European markets for manufacturers looking to expand their occupational space.

With this almost perfect storm, logistics continues to generate attractive rental growth. Whilst pockets of rent affordability concerns have been raised, rents remain largely affordable and still represent a very small proportion of a company's overall operational costs.

Rental growth remains particularly strong in urban logistics and we saw open market rent reviews on our urban assets of 17%. Warehouse demand continues to grow to meet ever rising consumer expectations of quicker and more accurate deliveries in an environment where the supply response is challenged due to competition from higher value alternative uses. A recent survey of online retailers reported that nearly two thirds have expansion in urban locations as a high priority.

The combination of further yield compression and strong rental growth is reflected in our total distribution property returns for the year of 18.3%, with urban assets again delivering another strong performance. Urban is our largest sub sector exposure with c.GBP1.0 billion of assets and remains our strongest conviction call. Here, our ambitions remain undiminished despite fierce investment competition.

Reflecting this competition, we undertook GBP67 million of strategic urban disposals in the year which will position the portfolio for better longer term success. These decisions are driven by a belief that, even in logistics, not all assets will outperform.

The sale proceeds were rotated into GBP124 million of high quality and fairly priced urban investments leveraging our occupier insights and sector contacts. Our experiences have shown that we are more likely to benefit from positive surprises from high quality assets in strong geographies where returns can be levered by time and compounding.

Long income property is benefitting from zero interest rates and negligible bond yields

The long income sector has had a strong year reflecting its defensive, long dated, growing and collateral backed cash flow characteristics. Long income assets with low operational requirements and let to high quality occupiers at yields 400bps higher than Government bonds are an attractive proposition and increasingly sought after in a yield starved world.

Our investment in this sector is a simple one that we take seriously. In contrast to the scoring system used in diving competitions, you are not awarded bonus points in business for 'degree of difficulty'. We believe this 'alternative' sector is and will continue to be less alternative and will be a stronger and larger component of many real estate investors' portfolios.

As proponents of the sector, we were pleased to see our 'all weather' long income assets prove highly resilient to the pandemic, reflecting their essential or non discretionary attributes and a low susceptibility to the migration of spend online. Their focus on grocery and convenience food, roadside services, discount, trade and DIY means that they will continue to benefit from the ongoing changes in the way people work, shop and live.

During the year, our long income properties achieved very high rent collection levels and a total property return of 8.3%.

We acquired GBP122 million of long income assets let on average for 18 years to strong credits such as Waitrose, BP and Co-op and benefitting from guaranteed rental growth. Growing investor demand and improved liquidity for long income saw us sell GBP75 million of long income properties where the rental growth outlook was less certain.

Despite the yield compression that this sector has experienced, we believe there is more to come as investors increasingly appreciate the simplicities of collecting rent and compounding returns.

Physical retail continues to reprice but remains largely a value trap

The pandemic has acted as a catalyst for better integration of online and physical shopping and, like many of our customers, we do believe that some stores have a role to play in the retail supply chain as showrooms, click and collect, returns or fulfilment facilities.

However, many of the rents that retailers have committed to pay are completely inappropriate for the role that their shops are now performing. Therefore, we will continue to see retail rents resetting as leases expire, tenants operate break clauses or the premises are relet following the demise of the previous occupier. This is no longer a prediction, it is happening.

Therefore, whilst many will talk of repositioning opportunities or the offer of highly attractive yields, we remain of the opinion that the majority of UK retail is 'over-shopped' and 'under-demolished'. The simple truth is that retail stores remain at a fundamental and irreversible disadvantage to online competition. Savills estimates that 142 million sq ft of retail space in the UK, or 13% of all retail units, currently lie empty and that without intervention, as much as 25% of retail space could be redundant by the end of the decade. Furthermore, 40% of vacant units have been empty for three or more years.

The sector appears to be in a vicious circle as the longer the disruption continues, the less of the underlying cash flows will be reinvested into the assets to make them 'fit for purpose'. We see this creating a ticking capex timebomb as the assets that do survive will need investment and those that fail to invest will see value erosion accelerate.

This disruption has a lot further to go and we are living in a truly unprecedented world which makes it difficult to have a strong conviction on where it all lands. When something is too difficult to assess with a strong conviction, then we prefer to just move on to another opportunity. After all, these assets are often cheap for a reason and the correlation between price and value is far from perfect.

Generate income

The search for income continues to intensify

We believe that income will be the defining characteristic of this decade's investing environment and that income-led total return strategies will continue to outperform.

The pandemic and a temporary recession have lowered interest rates further and ensured that they will inevitably stay lower for longer as governments and central banks are unlikely to take their foot off the quantitative easing accelerator.

A world of zero interest rates, negligible bond rates and lower dividends is intensifying the demand for alternative assets that can deliver a reliable, repetitive and growing income. The wide availability of low cost debt, partially correlated to the 'lower-for-longer' promise, along with the re-emergence of inflationary pressures, continues to push demand towards real assets as capital seeks the combination of recurring cash flow and inflation protection.

Real assets typically benefit from strong collateral backed cash flows and these are highly attractive assets in today's backdrop. Consequently, there has been a migration from low yielding securities towards alternatives, which have become less alternative and are now a larger percentage of money managers' portfolios.

Amidst a bearish treasury market and a volatile equity market, there are green economic shoots taking hold. We believe that real estate will benefit disproportionately given its capacity to tap into both sides of the fixed income and equity spectrum. But smart investing will focus on structurally supported assets, credit strength as well as the reliability, sustainability and trajectory of income.

The strength and resilience of our own strategy is evidenced by our earnings and excellent rent collection. Collecting income is the bedrock of successful long term investing and, whilst many will focus on short term riches with higher risk strategies, we appreciate the true benefit of compounding lower risk and longer term returns. Everything worthwhile in investing comes from compounding and underestimation of persistent growth is a huge benefit to the patient investor.

Manage and enhance

We continue to strengthen our income and the quality of our assets

As I have said previously, each quarter of 2020/21 has felt like a year. As the pandemic ensued, we focused on ensuring that our balance sheet and cash flow were robust, maintaining our strong portfolio metrics and conservatively progressing developments.

Our assets have performed in line with or ahead of expectations. Rent collection was strong at 98% and this performance reflects the portfolio's resilience, the reliability of our income and the strength of our occupier relationships. Recognising the impact that the pandemic had on a few occupiers, we did offer rent free concessions in exchange for value enhancing asset management initiatives on 1% of our rent and forgave a further 0.4%. We also agreed some short term rental deferrals, all of which continue to be honoured.

Occupancy remains high at 98.7%, our gross to net income ratio of 98.6% continues to reflect our low operational costs and we continue to benefit from a high degree of contractual rental uplifts. During the year, we concluded 173 occupier initiatives, adding GBP5.3 million per annum of rent and delivering like for like income growth of 3.1%. Lettings were signed with a WAULT of 13.2 years, helping to increase the portfolio's WAULT from 11.2 years to 11.4 years.

We are pleased with progress at our developments. At Bedford, after successfully letting and completing phase one, we commenced the speculative build out of another 0.5 million sq ft and are in legals on letting 172,000 sq ft and in discussions on letting the last unit. At Tyseley, we also pre-let 120,000 sq ft to Amazon which will provide a state of the art last mile facility when it completes in the summer.

We continue to embed sustainability and high ESG standards across our activities driven by our own aspirations as well as those of our customers and occupiers. We maintained our GRESB green star over the year, formalised our Net Zero Carbon approach, installed further solar capacity at our properties and increased the proportion of the portfolio that is built to a BREEAM Very Good or Excellent standard.

Expertise and relationships

We continue to benefit from our strong team and their relationships

Our team's strong economic alignment to shareholders ensures a strong conviction to make the right property and financial decisions.

We maintain a highly rational and disciplined property approach, selling assets that don't meet our strict investment criteria and waiting patiently for attractive opportunities, even where this causes a short term disruption to our income. As a result, we continue to benefit from our decisions, as well as from some excellent execution and hard work across our investment and asset management teams.

Similarly, our finance team has performed strongly, delivering on our equity and debt strategy, as well as working closely with the property teams. GBP120 million of equity was raised through a significantly oversubscribed placing which enabled us to tap new and attractive investments that would seldom otherwise be available in a normalised market. Furthermore, we significantly refinanced GBP780 million of debt facilities which extended the maturity of our debt at attractive margins, further diversified our lending base and added a green financing framework to our borrowings.

Our response to the Covid-19 pandemic has focused on keeping our people safe and working closely with our occupiers and stakeholders. Our experienced team of 31 successfully and seamlessly transitioned to remote working and operated highly effectively in an intense period. It has been an amazing effort by all and reflects the strength of our team. Our recent employee survey again demonstrated our high levels of staff satisfaction, with all employees agreeing that they enjoy working at LondonMetric.

It was also pleasing to see that, despite the pandemic, we scored highly in our recent occupier survey, with an average score of 9.0 out of 10.0 for whether occupiers would recommend LondonMetric as a landlord. We will continue to put our occupiers at the forefront of our decision making.

Outlook

Despite a truly unprecedented year, lingering uncertainty and a fast changing environment, we believe that the macro backdrop is ideal for real estate, underpinned by almost zero interest rates, negligible bond yields and an ageing population.

It is clear that structural trends that have been accelerated by the pandemic are having a profound impact on future values across the sector with strategies that assume the world returns to its previous equilibrium severely disrupted. Therefore, in our view, continued access to reliable, repetitive and growing income requires investing in the winning sectors and the best credits.

This appreciation continues to frame our thoughts. Our pivot over the last eight years to logistics and long income has put us on the right side of change and getting the 'big' decisions right is fundamental to our strategy. But, in order to achieve sector leading returns, we are also conscious of making smart asset decisions and so, whilst many are motivated by 'fee driven' buying, we pride ourselves on process, discipline and rationality, opting to pass on supposedly 'unique' opportunities and instead focusing on quality.

Today, our GBP2.6 billion portfolio comprises a collection of excellent assets that offer reliable, predictable and growing income streams. Despite the recent strength in our capital values, we believe this is for all the right reasons; high occupancy, resilient cash flows and future rental growth.

For the time being, we think that pricing has further to travel and therefore, together with its strong income characteristics, we are optimistic about the portfolio's future performance. After all, when you own quality, time creates wealth.

We believe that a focus on quality, a strong personal alignment and an intense belief in the power of compounding will allow us to generate the best possible returns for the longest period of time and achieve our ambition to becoming a 'dividend aristocrat'.

Property Review

Overview

We invest in real estate that can deliver repetitive, reliable and growing income returns. Our actions aim to continuously improve the portfolio's quality, sustainability and income.

Delivering strong total property returns, driven by distribution

Over the year, the portfolio delivered a strong total property return of 13.4%, significantly outperforming the IPD All Property index of 1.2%:

-- Distribution delivered 18.3% with urban and regional seeing the strongest performance;

-- Long income delivered 8.3%; and

-- Offices delivered 0.3% and retail parks delivered 3.8%.

Outperformance was driven by both management actions and through capturing rental reversion which helped to deliver strong capital growth of 8.0%:

-- Distribution delivered a 13.7% capital return; and

-- Long income delivered a 2.6% capital return.

The investment portfolio's EPRA topped up net initial yield is 4.6% and the equivalent yield is 5.1% with a like for like valuation yield compression of 27 bps over the year.

ERV growth of 1.6% for the portfolio was driven by distribution which saw a 3.2% increase; urban logistics and regional distribution saw growth of 3.5% and 5.0% respectively, whilst mega was flat.

Very strong rent collection despite Covid-19

Despite the uncertainty caused by the Covid-19 pandemic, our assets have performed in line with or ahead of expectations which reflects their alignment to structurally supported sectors.

Our rent collection during the year was strong, with 98.1% of rent demanded in the year collected. We did, however, recognise the negative impact that the pandemic has had on a few of our occupiers and offered rent free concessions in exchange for value enhancing asset management initiatives on 1.1% of our rent. In addition, we forgave a further 0.4% leaving just 0.4% of rent unpaid.

Our collection rates for the first quarter of the new financial year are equally strong and we have collected 99% of March quarterly and monthly rents due.

Most of the rent that remains unpaid relates to companies in administration, some of which is associated with a property where we are obtaining vacant possession for a new letting to Lidl.

Of the total rent demanded in the year, GBP1.5 million is subject to deferred payment arrangements, all of which are being honoured.

Our portfolio metrics continue to reflect our focus on income

The portfolio's WAULT increased from 11.2 years to 11.4 years, continuing to provide good income security with only 8.4% of income expiring within three years.

Occupancy remains high at 98.7% and our gross to net income ratio of 98.6% continues to reflect the portfolio's very low operational requirements.

In the year, we undertook 173 occupier initiatives adding GBP5.3 million per annum of rent and helping to deliver like for like income growth of 3.1%. These consisted of:

-- Contractual rental uplifts which apply to 57% of our income, where 46 fixed and RPI linked reviews were settled delivering GBP0.5 million of increased rent at an average of 8% above passing on a five yearly equivalent basis;

-- Open market rent reviews, where 26 reviews were settled delivering GBP1.0 million of increased rent at an average of 18% above passing on a five yearly equivalent basis; and

-- Leasing activity, where we signed 101 new leases and regears, mostly on urban logistics, delivering GBP3.8 million of increased rent with a WAULT of 13.2 years.

Post year end, we are in legals and discussions on lettings which represent an additional GBP4.4 million per annum of rent, mainly relating to our Bedford Link development.

Investment activity continues to improve the portfolio's quality and resilience

In the year, we acquired GBP245 million of assets. Over half were urban logistics with the remainder primarily grocery-led convenience and roadside properties.

These properties are let to strong credits for an average of 17.1 years and acquired at a NIY of 4.6% and a reversionary yield of 5.1%, with 87% of income subject to contractual rental uplifts. Reflecting our geographical focus, 53% of acquisitions were in London and the South East and a further 21% were in the Midlands.

Post year end, we have acquired a further GBP68 million of urban warehousing and long income properties.

Disposals in the year totalled GBP159 million and were at a NIY of 5.7%. The assets had a WAULT of nine years and offered less certainty of income and rental growth.

Long income assets accounted for just under half of total disposals, whilst urban logistics accounted for c.40% of total disposals. Whilst we continue to build our urban portfolio, we are prepared to sell where the market's future return expectation exceeds ours.

The balance of our disposals related to non core assets and consisted of:

-- Two offices in Bristol and Birmingham let to Regus and Highways England which were let for a further nine years;

-- Two retail assets in Kings Heath, Birmingham and the Isle of Man; and

-- Four residential flats.

Post year end, we have sold a further GBP22 million of properties consisting of:

-- Two long income assets for GBP12 million; and

-- An office for GBP10 million let to Beiersdorf in Birmingham which completes in September.

We have now sold 12 former Mucklow assets for GBP62 million, including nearly half of the Mucklow office portfolio. These properties delivered a total annualised return of 10.6% since acquisition.

 
Acquisitions in the year 
 (1) 
--------------------------------  --------- 
Urban Logistics                   GBP123.5m 
--------------------------------  --------- 
Long Income - Grocery & Roadside  GBP107.6m 
--------------------------------  --------- 
Long Income - Other                GBP14.2m 
--------------------------------  --------- 
 
 
Disposals in the year (2) 
--------------------------------  -------- 
Urban Logistics                   GBP66.6m 
--------------------------------  -------- 
Long Income - Grocery & Roadside  GBP19.5m 
--------------------------------  -------- 
Long Income - Other               GBP55.0m 
--------------------------------  -------- 
Office & Residential              GBP12.4m 
--------------------------------  -------- 
Retail Parks                       GBP5.4m 
--------------------------------  -------- 
 

1 Includes GBP35.7 million of acquisitions, predominantly urban, that exchanged in the year but that complete post year end

2 Excludes GBP64.4 million of disposals, predominantly larger box distribution, that exchanged in the previous year but completed in the year. Includes GBP15.2 million of disposals that exchanged in the year but completed post year end

Continued alignment to structurally supported distribution and long income

Assisted by a strong capital performance and further net investment into the sector, our distribution platform increased in value to GBP1,829 million, representing 70.8% of the portfolio and up from 69.8% last year.

The urban logistics sector is our key conviction call and is our largest weighting, representing 38.5% of the portfolio. Over the year, our weighting to mega distribution fell further to 13.6%, due to the completion of a mega warehouse sale that exchanged in the prior year.

Long income increased slightly to represent 24.5% of the portfolio, following the significant net investment into grocery and roadside assets, with this sub-sector now dominating our long income exposure.

The remaining 4.7% of the portfolio is deemed non core and split between eight offices, five retail parks and four London residential flats.

 
Urban Logistics         38.5% 
----------------------  ----- 
Regional Distribution   18.7% 
----------------------  ----- 
Mega Distribution       13.6% 
----------------------  ----- 
Long Income             24.5% 
----------------------  ----- 
Retail Parks             2.9% 
----------------------  ----- 
Offices & Residential    1.8% 
----------------------  ----- 
 

Including post year end activity, distribution now represents 72% of the portfolio, long income represents 24% and the remaining non core assets account for 4%.

We continue to focus on income diversification and occupier credit

Our investment and asset management actions over a number of years have increased the resilience of our portfolio by not only investing in structurally supported sectors but also by improving our income's diversification, granularity and security. We are very mindful of the credit strength of our occupiers and this focus has been reflected in our strong rent collection.

We have a diverse occupier base by type of activity:

-- Third Party & Retail Logistics accounts for 37% of income;

-- Business Services & Trade accounts for 32%, spread across a broad range of sectors;

-- Grocery & Roadside accounts for 12%;

-- Electrical, Home & Discount Stores account for 12%; and

-- Leisure & Other sectors account for 3% and 4% respectively.

Our top ten occupiers represent 36% of contracted income, compared to 36% in 2020 and 51% in 2019. In the year, we significantly increased our exposure to Amazon and Waitrose who are two of our ten largest occupiers.

Contracted rent increased over the year from GBP123.3 million to GBP124.3 million which, together with post year end investment activity, rises to GBP126.5 million.

Our occupier survey was carried out in March 2021 and we received very good feedback despite the difficult economic backdrop.

Our top occupiers numbering 89 and representing over 80% by income were contacted and responses were received from occupiers representing 55% of income.

We scored an average of 9.0 out of 10.0 in terms of whether occupiers would recommend us as a landlord, with our top 15 occupiers scoring us higher at 9.3.

In terms of how well our properties meet our occupiers' needs, we scored 8.3 out of 10.0 which shows an increase on our 2019 and 2018 survey scores.

Distribution review

Our warehouses provide critical infrastructure to our occupiers and continue to benefit from attractive supply/demand dynamics.

Overview

Our distribution assets are spread across the urban, regional and mega sub-sectors. Including developments, we increased our exposure to distribution over the year from GBP1,638 million to GBP1,829 million. As at 31 March 2021, this sector accounted for 70.8% of our overall portfolio with urban logistics the largest sub-sector weighting.

The average WAULT on these assets is 11 years, which is unchanged over the year. Occupancy remains high at 98.1%, also unchanged from the previous year, with all of our regional and mega assets now fully let and just 3.3% vacancy on our urban assets.

Our distribution assets performed well over the year, delivering a total property return of 18.3% and driven by strong yield compression, rental growth and further gains on development activity.

Urban and regional delivered strong returns of 20.1% and 17.3% respectively, whilst mega distribution delivered a return of 14.8%.

With stronger organic rental growth in urban logistics, we continue to prefer inflation linked/fixed rental uplifts on our larger box assets and open market rent review on our urban assets.

Increased alignment to urban logistics

In urban logistics, rental growth remains strongest, driven by severely restricted supply and strong occupier demand. Urban logistics has been our strongest conviction call and one that prompted our acquisition of Mucklow in 2019, which materially increased our urban platform.

Over the year, the value of our urban assets increased from GBP831 million to GBP994 million, accounting for 54% of distribution assets and totalling c.100 properties. At eight years, the WAULT on our urban assets is significantly lower than mega or regional, but these assets benefit from higher alternative use values and better income growth prospects, with average ERVs 9% higher than average passing rents of GBP6.90 psf.

All of our distribution investment activity in the year related to urban warehousing. Whilst strong investor appetite continues to reduce the number of compelling investment opportunities, we did acquire GBP124 million of long-let assets. Strong market pricing did, however, prompt us to sell GBP67 million of shorter let buildings in poorer geographies.

Including post year end activity, over 50% of our urban portfolio is now located in London and the South East with a further 34% in the Midlands.

Distribution Portfolio

 
As at 31 March 2021                           Urban                  Regional                        Mega 
------------------------------  -------------------  ------------------------  -------------------------- 
Typical warehouse size          Up to 100,000 sq ft  100,000 to 500,000 sq ft  In excess of 500,000 sq ft 
------------------------------  -------------------  ------------------------  -------------------------- 
Value(1)                                  GBP993.7m                 GBP483.5m                   GBP351.9m 
------------------------------  -------------------  ------------------------  -------------------------- 
WAULT                                       7.9 yrs                  13.1 yrs                    15.2 yrs 
------------------------------  -------------------  ------------------------  -------------------------- 
Average rent (psf)                          GBP6.90                   GBP6.40                     GBP5.70 
------------------------------  -------------------  ------------------------  -------------------------- 
ERV (psf)                                   GBP7.50                   GBP7.30                     GBP5.60 
------------------------------  -------------------  ------------------------  -------------------------- 
Topped up NIY                                  4.4%                      4.0%                        3.8% 
------------------------------  -------------------  ------------------------  -------------------------- 
Contractual uplifts                             37%                       76%                        100% 
------------------------------  -------------------  ------------------------  -------------------------- 
Total property return in 2021                 20.1%                     17.3%                       14.8% 
------------------------------  -------------------  ------------------------  -------------------------- 
 

1 including developments

Distribution investment activity

Acquisitions

GBP124 million of urban logistics was acquired across 12 assets with a WAULT of 16 years:

-- 137,000 sq ft new urban warehouse acquired for GBP20.5 million and let for 15 years to LSE Group Holdings, the UK's largest pure online retailer of home lighting. It has a low site density and is well located in Irlam, Manchester, between the M60 and M6. Built to a BREEAM Very Good standard;

-- 122,000 sq ft new urban warehouse acquired for GBP18.1 million and let for 15 years to ERIKS, with whom LondonMetric has a strong existing relationship. It is well located in Oldbury close to J2 of the M5. Built to a BREEAM Very Good standard;

-- 73,000 sq ft of warehousing acquired for GBP10.4 million and let mainly to IKEA for 6 years in Warrington;

-- 66,000 sq ft warehouse acquired for GBP23.9 million and let to TalkTalk for 26 years in Milton Keynes, near the city centre;

-- 46,000 sq ft new warehouse acquired for GBP5.5 million and let to Heartbeat Manufacturing for 16 years in Redditch; built to BREEAM Very Good standard;

-- 42,000 sq ft warehouse acquired for GBP7.3 million and let to Speedy Hire for 10 years in Milton Keynes;

-- 37,000 sq ft of vacant warehousing acquired for GBP13.5 million in Streatham and Brent Cross, London, with c.75% pre-let for 20 years to Jacuna Kitchens, a dark kitchens operator;

-- 32,000 sq ft warehouse acquired for GBP10.9 million and let at a rent of GBP13.40 psf to Ocado for 8 years in Walthamstow;

-- 20,000 sq ft warehouse acquired for GBP7.7 million and let to Ford for 15 years in Alperton, London near Park Royal;

-- 14,000 sq ft highly reversionary warehouse acquired for GBP3.2 million and let to Royal Mail in Epsom for 5 years; and

-- 7,000 sq ft highly reversionary warehouse acquired for GBP2.5 million and let for 15 years in Colliers Wood, London.

Post year end GBP53.1 million of urban logistics was acquired, including:

-- 115,000 sq ft for GBP43.8 million, let to Reynolds for 23 years in Waltham Cross;

-- 28,000 sq ft for GBP5.3 million, let to HTC Group for four years in Croydon; and

-- 19,000 sq ft for GBP3.0 million, let to Deralam Laminates for four years in Dunstable.

Disposals

GBP67m of urban logistics was disposed across nine shorter let assets with a WAULT of 8 years:

-- 500,000 sq ft portfolio disposal of six distribution warehouses sold for GBP57.3 million in various locations including Worcester, Leamington Spa, Royston, and Huyton. The assets are let to Hamleys, CEVA, ITAB, Transmec and Grupo Antolin (an automotive supplier to JLR), and have a WAULT to first break of 7.5 years;

-- 25,000 sq ft warehouse sold for GBP3.4 million in Edinburgh with three years left to break;

-- 21,000 sq ft warehouse sold for GBP3.5 million let to Fenton Packaging in Hemel Hempstead with a WAULT of less than a year, and

-- 12,000 sq ft warehouse sold for GBP2.4 million in Birmingham with a WAULT of less than a year.

Distribution asset management activity

Distribution lettings and regears

Distribution lettings and regears in the year were signed on 1.1 million sq ft. These deals added GBP4.2 million per annum of income, with a WAULT of 9.8 years and incentives equivalent to four months' rent free.

New lettings were signed on 0.5 million sq ft adding GBP4.0 million per annum of rent with a WAULT of 9.6 years. All deals apart from one were on urban warehouses and included:

-- 141,000 sq ft to Pets at Home at our previously vacant regional warehouse in Stoke;

-- 120,000 sq ft to Amazon at our Tyseley development where they have signed a 15 year pre-let;

-- 38,000 sq ft to Network Rail at Star Gate in Birmingham;

-- 34,000 sq ft to online pharmacy Echo at a recently refurbished property in Greenford;

-- 30,000 sq ft to National Grid at Nexus Point in Birmingham, where we have relet a vacant and recently refurbished warehouse on a ten year lease; and

-- 16,000 sq ft to Nicoman at our completed development at Tyseley.

Regears were signed across 0.6 million sq ft generating additional income of GBP0.2 million per annum and increasing the WAULT from six years to ten years. These regears included:

-- 78,000 sq ft in Thorne;

-- 70,000 sq ft in Barton;

-- 51,000 sq ft in Ashby-de-la Zouch;

-- 49,000 sq ft at Star Gate in Birmingham;

-- 48,000 sq ft in Fareham, where we also settled a rent review;

-- 41,000 sq ft in Milton Keynes; and

-- 35,000 sq ft in Wednesbury.

Distribution rent reviews

Distribution rent reviews in the year were settled across 3.0 million sq ft, adding GBP1.2 million per annum of income at 12% above previous passing rent*. These consisted of:

-- 23 urban reviews settled at 15% above passing rent*, with open market reviews achieving 17% uplifts on average;

-- Three regional reviews settled at 19% above passing rent*, with two open market reviews settled with DHL and Royal Mail achieving 27% uplifts; and

-- Two mega reviews, both contractual uplifts, settled at 8% above passing rent*.

Unsurprisingly, open market rent review increases in urban logistics were strongest in London and the South East at an average uplift of 28% and as high as 39%.

* on a five yearly equivalent basis

Long income review

Our long income assets offer long dated income with income growth aligned to grocery, roadside, trade and essential/discount shopping.

Our long income assets are typically single tenant assets with low operational requirements that are benefitting from the changes in the way people live and shop. They are insulated from structural dislocation, predominantly focused on grocery, wholesale, roadside services, discount and essential retail, trade and DIY.

The value of our long income assets is GBP635 million, representing 24.5% of our portfolio. They are 100% let to strong occupiers with a WAULT of 14.2 years, average rents of GBP15.60 psf and a topped up NIY of 5.4%. Average asset size is c.GBP5 million with 63% of income subject to contractual rental uplifts.

Long Income portfolio breakdown

 
As at 31 March 2021              Grocery & Roadside  NNN Retail  Trade, DIY & Other  Leisure(2) 
------------------------------   ------------------  ----------  ------------------  ---------- 
Value(1)                                  GBP285.4m   GBP175.7m           GBP122.0m    GBP52.1m 
------------------------------   ------------------  ----------  ------------------  ---------- 
WAULT                                    16.5 years   9.8 years          14.1 years  20.8 years 
------------------------------   ------------------  ----------  ------------------  ---------- 
Average Rent (psf)                         GBP18.40    GBP20.70             GBP8.50    GBP17.10 
------------------------------   ------------------  ----------  ------------------  ---------- 
Topped up NIY                                  4.7%        6.5%                5.0%        6.2% 
-------------------------------  ------------------  ----------  ------------------  ---------- 
Contractual uplifts                             89%         29%                 52%        100% 
-------------------------------  ------------------  ----------  ------------------  ---------- 
Total property return in 2021                  7.9%       10.0%               14.1%      -13.8% 
-------------------------------  ------------------  ----------  ------------------  ---------- 
 

1 Including developments

2 Leisure consists of five out of town cinemas let to Odeon and one Premier Inn hotel

Grocery & Roadside

Grocery-led convenience forms c.70% of this segment with the remainder made up of convenience stores with attached petrol filling stations, drive through coffee outlets and automated car washes, all located in high density urban areas. We have been significant net acquirers in this segment.

 
Key occupiers 
-------------    ------------ 
Aldi             Euro Garages 
-------------    ------------ 
BP               Lidl 
-------------    ------------ 
Co-op            M&S 
-------------    ------------ 
Costco           Waitrose 
-------------    ------------ 
 

NNN Retail

These are primarily single or cluster assets let to discount, essential, electrical and home retail occupiers. 49% of the assets are located in London and the South East, with the largest located in New Malden, London. These assets typically benefit from high alternative use values.

 
Key occupiers 
-------------    ------------- 
B&M              Halfords 
-------------    ------------- 
Currys PC 
 World           Home Bargains 
-------------    ------------- 
DFS              Pets at Home 
-------------    ------------- 
Dunelm           The Range 
-------------    ------------- 
 

Trade, DIY & Other

A significant proportion of this segment consists of assets that are trade/DIY focused. A recent addition to this sub-sector has been prominent roadside service centres concentrated around the South East, let at low rents to Kwik Fit, with high alternative use values.

 
Key occupiers 
-------------    ----------- 
Howdens          Safestore 
-------------    ----------- 
Jewson           Selco 
-------------    ----------- 
Kwik Fit         Topps Tiles 
-------------    ----------- 
MKM              Wickes 
-------------    ----------- 
 

Long Income investment activity

Acquisitions

GBP121.8 million of long income assets were purchased at a NIY of 4.9% and a reversionary yield of 5.3%. They were mainly grocery and roadside assets, had a WAULT of 18.3 years and mostly benefitted from contractual rental uplifts. They have strong residual value supported by alternative use, principally residential and, in some cases, the vacant possession value is above the purchase price.

Grocery acquisitions consisted of:

-- GBP62.0 million sale and leaseback portfolio let to Waitrose in Keynsham, Malmesbury, Paddock Wood, Towcester and Yateley. The assets are also used for online fulfilment; and

-- GBP5.9 million M&S Food Hall development in Derby.

Convenience service station acquisitions consisted of:

-- GBP12.5 million portfolio of four Co-op assets in Basingstoke, Dagenham and South Wales;

-- GBP10.8 million portfolio of BP/M&S assets in Brentwood, Pevensey and Lewes;

-- GBP5.4 million sale and leaseback of two London assets let to TG Convenience;

-- GBP5.0 million Co-op asset in Lymington;

-- GBP4.0 million asset let to MFG in Worcester; and

-- GBP2.0 million asset in Rushden let to Euro Garages with a drive through Starbucks.

Other acquisitions included:

-- GBP9.6 million sale and leaseback portfolio of five London service centres let to Kwik Fit; and

-- GBP4.6 million Wickes store in Wigston.

Disposals

GBP74.5 million was sold at a NIY of 5.6% and with a WAULT of 10.9 years, consisting of:

-- An asset in Leicester predominantly let to B&Q, sold for GBP26.3 million;

-- M&S food stores in Haslemere and Ferndown, sold for GBP14.7 million at a NIY of 4.0%;

-- 13 Kwik Fit service centres, sold for GBP10.8 million at yields c.100bps better than paid at purchase;

-- Two Wickes stores in Derby and Halesowen, sold for GBP9.9 million;

-- A NNN retail asset in Llanelli, sold for GBP9.2 million (LondonMetric share: GBP4.6 million);

-- An Aldi store in Hull, sold for GBP4.1 million;

-- A Matalan unit in Leicester, sold for GBP3.4 million; and

-- An IMO car wash, sold for GBP0.7 million.

The properties in Leicester, Halesowen and Hull, along with three of the Kwik Fits were sold as a GBP40.9 million portfolio to Realty Income. Combined, they delivered an ungeared IRR of 8% pa and were sold at a 7% premium to book value.

Post year end, GBP14.9 million of assets were acquired at a NIY of 6.0% and with a WAULT of 11 years. They consist of a Range store in Truro for GBP6.6 million, a portfolio of Halfords Autocentres for GBP5.8 million and a trade park in Bognor Regis for GBP2.5 million. We have also disposed of GBP12.2 million with a WAULT of 9 years, consisting of an M&S Foodhall in Derby and a NNN Retail asset in North Shields.

Long income asset management activity

In the year, we signed 11 deals with an overall WAULT of 21.1 years.

Ten of the deals were regears where leases were extended by five years to 21 years:

-- On our five Odeon cinemas, in response to the pandemic, we agreed to extend leases by four years in return for a rent free period;

-- On our NNN retail portfolio, we signed ten year lease extensions on three of our six DFS stores in exchange for a rebase of the rent. These assets were historically over rented and the new 19 year term certain significantly extends our security of income; and

-- On two Co-op stores, we signed a nine year lease extension which lengthens the leases on those properties to 20 years.

We signed one new lease with Lidl for 25 years at our repositioned asset in Orpington.

Rent reviews were settled on 39 assets in the year generating an uplift of GBP0.3 million at 9% above previous passing on a five yearly equivalent basis. Nearly all of these reviews were RPI or fixed uplifts, mostly relating to our Grocery and Roadside assets.

Development review

In the year, we completed 445,000 sq ft of developments representing GBP3.2 million of additional rent per annum at a yield on cost of 5.9%. A further 470,000 sq ft is under development that is expected to generate GBP4.1 million of additional rent per annum, reflecting a yield on cost of 7.3%.

 
                                                             Yield 
                                                  Income   on cost 
Completed in the year            Area sq ft '000    GBPm         % 
-------------------------------  ---------------  ------  -------- 
Croda, Goole (funding)                       232     1.3       5.2 
-------------------------------  ---------------  ------  -------- 
Bedford (Unit 2)(1)                          172     1.3       7.3 
-------------------------------  ---------------  ------  -------- 
Wallingford (funding)                         22     0.3       5.0 
-------------------------------  ---------------  ------  -------- 
Weymouth (Aldi)                               19     0.3       5.7 
-------------------------------  ---------------  ------  -------- 
Total                                        445     3.2       5.9 
-------------------------------  ---------------  ------  -------- 
Under construction at year end 
-------------------------------  ---------------  ------  -------- 
Bedford (Unit 1)(1)                          350     2.5       8.5 
-------------------------------  ---------------  ------  -------- 
Tyseley (Phase 2)                            120     1.6       6.0 
-------------------------------  ---------------  ------  -------- 
Total                                        470     4.1       7.3 
-------------------------------  ---------------  ------  -------- 
 

1 Anticipated yield on cost and rents

Croda funding

Completed development in the year of a 232,000 sq ft distribution warehouse pre-let to Croda for 20 years which was forward funded. The building is BREEAM Very Good.

Bedford - Unit 1

We are in discussions on a pre-let of the unit. The building is expected to complete in Q4 2021 and be BREEAM Excellent, with a 500kW solar PV scheme envisaged.

Bedford - Unit 2

Construction completed of a 172,000 sq ft distribution warehouse. We are under offer on a pre-let with an ecommerce packaging company on a long lease. The building is BREEAM Excellent, with a 250kW solar PV scheme envisaged.

Tyseley

Construction underway of a 120,000 sq ft distribution warehouse. The warehouse has been pre-let to Amazon on a new 15 year lease with inflation linked rent reviews. The building is expected to be BREEAM Excellent and a solar PV scheme is envisaged. Completion of the building is expected in summer 2021. The warehouse has a low site cover of 24% and forms part of a wider scheme which extends to over 250,000 sq ft.

Weymouth

A 19,000 sq ft convenience store let to Aldi completed in July 2020. The building is BREEAM Very Good and a 11kW solar PV system was installed. There is further development potential at the site of up to 70,000 sq ft.

Wallingford funding

We completed the forward funding development of a 22,000 sq ft trade counter in Wallingford let to MKM and Howdens with a WAULT of 18 years. The building is BREEAM Good.

Other smaller redevelopment opportunities

Many of our long income assets are well located in suburban locations with strong alternative use, such as residential, and have the potential to be repurposed over time. We continually look to upgrade existing long income assets and exploit potential opportunities.

Near term developments include reconfiguration of:

-- A 51,000 sq ft long income NNN retail asset in New Malden, London, which is predominantly let to Dixons and where planning has been received to accommodate an additional convenience food store;

-- A 48,000 sq ft asset in Orpington, London, previously let to Carpetright, where we have agreed a new 25 year lease with Lidl to accommodate them alongside a smaller Carpetright unit. Planning has been received and works have commenced; and

-- A 32,000 sq ft long income trade asset in Ashford, Surrey, where we are securing vacant possession and where planning is in progress to accommodate an additional store let to Lidl on a 25 year lease.

ESG

We continue to improve our ESG focus, particularly on environmental matters

Our aim is to minimise the environmental impact of our business, maximise energy efficiency and improve the resilience of our properties. We recognise the importance of a comprehensive ESG focus and each year set specific corporate targets.

As part of our environmental focus, during the year, we:

-- Extended ESG related personal objectives for all employees;

-- Established a Net Zero Carbon framework; and

-- Put in place GBP450 million of debt facilities with a green financing framework that specifically targets building improvements.

Over the year, we maintained our Green Star status in the Global Real Estate Sustainability Benchmark ('GRESB') survey. Our score of 65% continues to compare favourably against the peer score of 61% and is significantly up from the 34% achieved in 2014.

We also maintained our:

-- BBB rating by MSCI;

-- Gold Award by EPRA sBPR; and

-- Inclusion in the FTSE4Good Index.

Our Net Zero Carbon ('NZC') framework

We set three specific NZC ambitions as part of our longer term target of becoming NZC well before the UK's target date of 2050. These ambitions will be refined regularly to meet latest industry guidance:

1. Our operations will be net zero by 2023

Operationally, we continue to make good progress and have achieved an 88% reduction in our absolute landlord energy consumption since 2015 with significant like for like energy reductions also achieved.

We will continue to implement further reductions where possible and ensure that our energy supplies are all from renewable sources, aligned to industry procurement best practice. Furthermore, by 2023, we have committed to offset residual carbon to ensure our operations are NZC.

2. We will continue to reduce emissions from development activity and new developments will be NZC by 2030

Our development activity continues to focus on building highly efficient buildings. All of our large completed developments in the year were certified as BREEAM Very Good or Excellent and our major developments on site at Bedford Link and Tyseley are also expected to be BREEAM Excellent.

As part of our efforts to reduce carbon on developments, we are measuring embodied carbon and challenging our supply chains to minimise waste and select low carbon materials.

At Bedford Link, we have reduced embodied carbon over the different phases of development. We have looked to learn from the build out of phase one and this learning is expected to generate a c.25% reduction in embodied carbon from on site carbon reduction measures and amendments to material specification. 750 kW of solar PV capacity is envisaged under tenant incentive arrangements.

From 2022, we will introduce shadow carbon pricing on select flagship developments such that carbon is either offset or an equivalent value is reinvested into green initiatives.

3. We will assist occupiers to help them meet their NZC targets and, from 2035, we will offset any of their residual carbon

As part of our drive to upgrade the quality of our assets, we continue to explore and progress energy efficiency initiatives including solar PV, LED lighting upgrades, roof works and electric vehicle charging.

In our recent occupier survey, 73% of occupiers have now upgraded LED lighting installed. This level is higher than our own data suggested and reflects the quick payback achievable from LEDs, where in some cases energy consumption has been reduced by up to 40%.

Our activity in the year has increased the proportion of assets built to a BREEAM Very Good or Excellent standard from 20% to 26%. We have also increased the proportion of our assets with an EPC 'A - C' rating from 71% to 74%. Furthermore, 1.5 MW of solar PV was added with further solar opportunities identified.

As part of progressing our NZC targets, we are increasingly focused on understanding how we can increase the number of NZC ready buildings we own. An important part of this focus is measuring emissions from all occupiers and, in the year, we increased occupier energy data coverage to over 40%.

From 2035, we will aim to offset any occupier residual carbon at our buildings.

Financial review

The Covid-19 pandemic has dominated every aspect of our business and personal lives this past year. Our employees, tenants and other stakeholders have all faced unprecedented challenges with enforced lockdown restrictions impacting the way we live and work. Despite this backdrop, we are reporting another very strong set of results reflecting both earnings and NAV progression, which is testament to our resilient portfolio, considered investment decisions and proactive asset management actions. We were delighted with the support of investors, as both our GBP120 million equity placing and GBP380 million private placement were significantly oversubscribed. Our banking relationships have helped us agree new debt facilities and refinance existing short dated unsecured loans.

EPRA earnings per share increased by 2.8% to 9.52p, driven by a 6.4% increase in net rental income and a 13.8% reduction in net finance costs. Earnings growth includes a full year's contribution from the A&J Mucklow Group, which we acquired in June 2019.

Rent collection has been a key priority and our collection rates have been exceptionally good, with 98.1% of rent due in the year collected. We have continued to pay a dividend throughout the pandemic and to grow the total dividend. Our dividend for the year of 8.65p is 1.1 times covered by EPRA earnings and represents a 4.2% increase over last year.

IFRS reported profit is GBP257.3 million compared to a loss of GBP5.7 million last year and is predicated on a very strong portfolio performance and revaluation uplift of GBP173.7 million. The reported loss last year included one-off costs relating to the Mucklow acquisition of GBP57.2 million and a revaluation loss of GBP12.0 million. IFRS net assets have increased by 20.9% to GBP1,731.3 million. Our portfolio continues to be well positioned to weather any ongoing disruption, with 95.3% of our assets in the structurally supported logistics and long income sectors.

EPRA has introduced new reporting metrics for net asset value this year and we have adopted EPRA net tangible assets ('NTA') as our primary measure and key performance indicator to replace EPRA net asset value. EPRA NTA per share is on a fully diluted basis and prior year comparatives have been presented for the new measure accordingly. EPRA NTA per share increased 11.7% this year to 190.3p (2020: 170.3p per share).

Our financial position was strengthened by the GBP120 million equity placing in May 2020, which alongside asset disposals and the portfolio revaluation gain, has helped to reduce LTV to 32.3% (2020: 35.9%). This level of gearing provides flexibility to take advantage of investment opportunities whilst maintaining significant headroom under banking covenants.

Post year end in April, we entered into a new GBP380 million private debt placement with a number of institutional investors in North America and the UK. The placement, which was upsized from an initial GBP150 million due to demand, has a blended maturity of 11.1 years, coupon of 2.27% and a GBP50 million tranche that is subject to a green use of proceeds framework. Also in April, we entered into two new revolving credit facilities with three and five year terms for GBP225 million and GBP175 million respectively, both of which incorporate a green framework.

Taken together with the placement, we have completed GBP780 million of new debt, replacing the existing revolving credit facilities and other existing debt facilities that are approaching maturity. Our debt maturity has lengthened from 4.2 years at the year end to 8.2 years and our hedging has increased from 45% at year end to 83%. Following the refinancing, we have substantial headroom of GBP338 million (2020: GBP220 million) and our average debt cost is low at 2.6% (2020: 2.9%).

Presentation of financial information

The Group financial statements have been prepared in accordance with IFRS. Management monitors the performance of the business principally on a proportionately consolidated basis, which includes the Group's share of joint ventures ('JV') and excludes any non-controlling interest ('NCI') on a line by line basis. The figures and commentary in this review are presented on a proportionately consolidated basis, consistent with our management approach, as we believe this provides a meaningful analysis of overall performance. These measures are alternative performance measures, as they are not defined under IFRS.

The Group uses alternative performance measures based on the European Public Real Estate Association ('EPRA') Best Practice Recommendations ('BPR') to supplement IFRS, in line with best practice in our sector, as they highlight the underlying performance of the Group's property rental business and exclude property and derivative valuation movements, profits and losses on disposal of properties, financing break costs, goodwill and acquisition costs, all of which may fluctuate considerably from year to year. These are adopted throughout this report and are key business metrics supporting the level of dividend payments.

EPRA has introduced three new measures of net asset value as disclosed in note 8 to the financial statements. EPRA NTA is considered to be the most relevant measure for the Group and replaces EPRA NAV as the primary measure of net asset value. EPRA NTA per share is on a fully diluted basis and prior year comparatives have been presented for the new measure accordingly.

Further details, definitions and reconciliations between EPRA measures and the IFRS financial statements can be found in note 8 to the financial statements, Supplementary notes i to vii and in the Glossary.

Income statement

EPRA earnings for the Group and its share of joint ventures are detailed as follows:

 
                             100%                          100% 
                            owned     JV    NCI    2021   owned     JV    NCI    2020 
For the year to 31 March     GBPm   GBPm   GBPm    GBPm    GBPm   GBPm   GBPm    GBPm 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
Gross rental income         121.3    5.3  (1.5)   125.1   112.3    6.3  (1.3)   117.3 
Property costs              (1.6)  (0.2)      -   (1.8)   (1.2)  (0.2)      -   (1.4) 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
Net rental income           119.7    5.1  (1.5)   123.3   111.1    6.1  (1.3)   115.9 
Management fees               0.9  (0.4)      -     0.5     1.1  (0.5)      -     0.6 
Administrative costs       (15.8)      -      -  (15.8)  (15.8)  (0.1)      -  (15.9) 
Net finance costs          (21.5)  (1.2)    0.2  (22.5)  (24.9)  (1.5)    0.3  (26.1) 
Other                       (0.1)      -    0.2     0.1   (0.2)      -    0.2       - 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
EPRA earnings                83.2    3.5  (1.1)    85.6    71.3    4.0  (0.8)    74.5 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
 

Net rental income

Growing our earnings and delivering dividend progression for our shareholders continues to be a strategic priority. Supporting this is the growth in underlying net rental income which increased 6.4% to GBP123.3 million this year, largely due to the Mucklow portfolio contributing fully and delivering gross rental income of GBP26.2 million compared with GBP20.5 million for nine months last year. Other movements in net rental income are reflected in the table below.

 
                                               GBPm   GBPm 
--------------------------------------------  -----  ----- 
Net rental income 2020                               115.9 
Additional rent from existing properties(1)            1.4 
Additional rent from developments(1)                   1.9 
Additional rent from acquisitions(1)           13.4 
Rent lost through disposals(1)                (8.1) 
Additional rent from net acquisitions                  5.3 
Increase in rent provision(2)                        (0.8) 
Increase in property costs                           (0.4) 
--------------------------------------------  -----  ----- 
Net rental income 2021                               123.3 
--------------------------------------------  -----  ----- 
 

1 Properties held, developments completed and acquisitions and disposals since 1 April 2019

2 Represents increases in provisions against Group trade debtors of GBP0.5 million (as reflected in note 11 to the financial statements) and against MIPP JV rent debtors of GBP0.3 million

Additional income from lettings, rent reviews and regears of existing properties and developments generated additional rent of GBP3.3 million this year, which included GBP1.2 million additional surrender premium receipts. Income from net acquisitions of GBP5.3 million included the additional Mucklow contribution of GBP5.7 million and the impact of other net disposals which reduced income by GBP0.4 million compared to the previous year.

Property costs have increased by GBP0.4 million reflecting additional transactional charges for rent reviews and lettings compared to last year. However, our property cost leakage remains low at 1.4% (2020: 1.2%).

Rent collection

 
                                March    June  September                 Total for  March 
                                 2020    2020       2020  December 2020       2021   2021 
Quarter commencing                  %       %          %              %          %      % 
-----------------------------  ------  ------  ---------  -------------  ---------  ----- 
Rent received                    94.0    99.3       99.3           99.6       98.1   99.0 
Asset management initiatives      4.7       -          -              -        1.1      - 
Rent forgiven (rent free)         0.9     0.4        0.3              -        0.4      - 
Outstanding arrears               0.4     0.3        0.4            0.4        0.4    1.0 
-----------------------------  ------  ------  ---------  -------------  ---------  ----- 
Total                           100.0   100.0      100.0          100.0      100.0  100.0 
-----------------------------  ------  ------  ---------  -------------  ---------  ----- 
 

Rent collection levels across the real estate sector have been significantly impacted by the Covid-19 pandemic. Our collection rates have been exceptionally strong and reflect the tireless efforts of our dedicated team who have worked closely with customers to proactively support those who have been most affected by lockdown restrictions implemented in the year.

We have agreed deferred payment plans and initiatives on a case by case basis, which offer short term rental concessions in exchange for value enhancing asset management initiatives and have permitted monthly rental payments for some tenants.

The table above shows our rent collection statistics by quarter. In respect of the full year to March 2021, we have collected 98.1% of rents due and just 0.8% remains unpaid or has been forgiven, some of which relates to a property where we are securing vacant possession for a new letting to Lidl. The remaining 1.1% has been subject to asset management initiatives. Of the total rent demanded in the year, GBP1.5 million is subject to deferred payment arrangements, all of which are being honoured.

However, we have assessed the recoverability of our year end trade debtor and lease incentive balances in accordance with IFRS 9 and have increased our rent provision by GBP0.8 million to GBP1.4 million. This reflects a Group provision against trade debtors at 31 March 2021 of GBP0.9 million, comprising an allowance for specific trade debtors of GBP0.1 million and an expected credit loss charge of GBP0.8 million, and also a provision of GBP0.5 million against joint venture debtors. This level of provisioning takes into account the ongoing disruption and challenges our tenants face as lockdown restrictions ease and the continued uncertainty caused by the global pandemic anticipated over the next 12 months.

Administrative costs

Administrative costs have reduced marginally by GBP0.1 million to GBP15.8 million this year and are stated after capitalising staff costs of GBP2.2 million (2020: GBP2.1 million) in respect of time spent on development projects.

EPRA cost ratio

We continue to use the EPRA cost ratio to measure our effective management of operational costs. Having fallen 60 bps over the year to 13.6%, it remains one of the lowest in our sector.

 
                                                 2021  2020 
                                                    %     % 
-----------------------------------------------  ----  ---- 
EPRA cost ratio including direct vacancy costs   13.6  14.2 
EPRA cost ratio excluding direct vacancy costs   13.0  13.3 
-----------------------------------------------  ----  ---- 
 

The ratio reflects total operating costs as a percentage of gross rental income. The full calculation is shown in Supplementary note iv.

Net finance costs

Net finance costs, excluding the costs associated with repaying debt and terminating hedging arrangements on sales and refinancing in the year were GBP22.5 million, a decrease of GBP3.6 million over last year. This reflected lower interest charges as the average interest rate payable over the year was lower than in the previous year, due primarily to the cancellation in April 2020 of GBP350 million interest rate swaps that hedged our unsecured facilities at a cost of GBP4.9 million. This reduced the proportion of our drawn debt hedged and our average cost of debt, which at the year end were 45% (2020: 77%) and 2.5% (2020: 2.9%) respectively. Further detail is provided in notes 5 and 10 to the financial statements.

Share of joint ventures

EPRA earnings from joint venture investments were GBP3.5 million, a decrease of GBP0.5 million over the comparative period as reflected in the table below.

 
                                                    2021   2020 
For the year to 31 March                            GBPm   GBPm 
-------------------------------------------------  -----  ----- 
Metric Income Plus Partnership (MIPP)                3.6    4.0 
LMP Retail Warehouse JV (DFS)                          -    0.1 
LSP London Residential Investments (Moore House)   (0.1)  (0.1) 
-------------------------------------------------  -----  ----- 
EPRA earnings                                        3.5    4.0 
-------------------------------------------------  -----  ----- 
 

As reported last year, our interest in DFS is now consolidated in the Group accounts and our partner's 18% share reflected as a non-controlling interest.

Income from our MIPP joint venture fell by GBP0.4 million due to an increase in the rent provision for one property where we are securing vacant possession for a new letting to Lidl, and the development of a property in Orpington, where we have agreed a new 25 year lease with Lidl alongside a smaller Carpetright unit.

The Group received net management fees of GBP0.5 million for acting as property advisor to each of its joint ventures, which have fallen by GBP0.1 million as a result of movements in property valuations and sales.

 
IFRS reported profit/(loss) 
                                100%                         100% 
                               owned     JV    NCI   2021   owned      JV    NCI    2020 
For the year to 31 March        GBPm   GBPm   GBPm   GBPm    GBPm    GBPm   GBPm    GBPm 
----------------------------  ------  -----  -----  -----  ------  ------  -----  ------ 
EPRA earnings                   83.2    3.5  (1.1)   85.6    71.3     4.0  (0.8)    74.5 
Revaluation of property        169.9    3.4    0.4  173.7   (3.8)  (10.2)    2.0  (12.0) 
Fair value of derivatives        4.7    0.1      -    4.8   (3.2)   (0.4)      -   (3.6) 
Profit/(loss) on disposal        0.8  (0.1)      -    0.7   (4.9)   (2.3)      -   (7.2) 
Debt/hedging break costs       (7.5)      -      -  (7.5)   (0.2)       -      -   (0.2) 
----------------------------  ------  -----  -----  -----  ------  ------  -----  ------ 
IFRS reported profit before 
 exceptional costs             251.1    6.9  (0.7)  257.3    59.2   (8.9)    1.2    51.5 
Impairment of goodwill             -      -      -      -  (48.3)       -      -  (48.3) 
Acquisition costs                  -      -      -      -   (8.9)       -      -   (8.9) 
----------------------------  ------  -----  -----  -----  ------  ------  -----  ------ 
IFRS reported profit/(loss)    251.1    6.9  (0.7)  257.3     2.0   (8.9)    1.2   (5.7) 
----------------------------  ------  -----  -----  -----  ------  ------  -----  ------ 
 

A full reconciliation between EPRA earnings and IFRS reported profit is provided in the table above and also in note 8(a) to the financial statements.

The Group's reported profit for the year was GBP257.3 million compared with GBP51.5 million in the previous year before exceptional goodwill and acquisition costs. The GBP205.8 million increase was primarily due to the property revaluation being GBP185.7 million higher, profit on disposals being GBP7.9 million higher and increased EPRA earnings of GBP11.1 million.

Property sales in the year generated a GBP0.7 million profit over book value compared with a loss of GBP7.2 million last year. The total profit over original cost was GBP29.3 million, representing a return of 16.4%. Disposals are discussed in detail in the Property review.

The favourable movement in the fair value of derivatives of GBP4.8 million is offset by the swap break cost of GBP4.9 million and prepaid finance costs written off of GBP2.6 million, resulting in a charge of GBP2.7 million in the year compared to a total charge of GBP3.8 million last year.

Taxation

As the Group is a UK REIT, any income and capital gains from our qualifying property rental business are exempt from UK corporation tax. Any UK income that does not qualify as property income within the REIT regulations is subject to UK tax in the normal way.

The Group's tax strategy is compliance oriented: to account for tax on an accurate and timely basis and meet all REIT compliance and reporting obligations. We seek to minimise the level of tax risk and to structure our affairs based on sound commercial principles. We strive to maintain an open dialogue with HMRC with a view to identifying and solving issues as they arise. There were no issues raised in the year.

We continue to monitor and comfortably comply with the REIT balance of business tests and distribute as a Property Income Distribution ('PID') 90% of REIT relevant earnings to ensure our REIT status is maintained. The Group paid the required PID for the year to 31 March 2020 ahead of the deadline of 31 March 2021 and has already paid a large part of its expected PID for the year to 31 March 2021. The balance is expected to be paid in July 2021 as part of the fourth quarterly dividend. In accordance with REIT regulations, GBP6.7 million was withheld from distributions and paid directly to HMRC in the year.

Our tax strategy was updated and approved by the Board in the year and can be found on our website at www.londonmetric.com.

Dividend

The Company has continued to declare quarterly dividends and has offered shareholders a scrip alternative to cash payments.

In the year to 31 March 2021, the Company paid the third and fourth quarterly dividends for 2020 and the first two quarterly dividends for 2021 at a total cost of GBP75.6 million or 8.5p per share as reflected in note 7 to the financial statements.

The Company issued 1.5 million ordinary shares under the terms of the Scrip Dividend Scheme, which reduced the cash dividend payment by GBP3.2 million to GBP72.4 million. The first two quarterly payments for the current year of 2.1p per share were paid as Property Income Distributions ('PIDs') in the year. The third quarterly dividend was paid as a PID in April 2021 and the Company has approved a fourth quarterly payment of 2.35p in July 2021, of which 2.25p will be a PID. The total dividend payable for 2021 of 8.65p represents a 0.35p or 4.2% increase over the previous year.

The Board took the following into account when considering its dividend payments:

-- Its REIT obligations to distribute 90% of property rental business profits;

-- Its desire to pay a sustainable, covered and progressive return to shareholders;

-- Its EPRA earnings for 2021; and

-- The outlook for 2022.

At the year end the Company had distributable reserves of GBP1,006.7 million, providing substantial cover for the dividend payable for the year. When required and at least six monthly, the Company receives dividends from its subsidiaries which increase distributable reserves.

Balance sheet

 
                           100%                              100% 
                          owned      JV     NCI     2021    owned      JV     NCI     2020 
As at 31 March             GBPm    GBPm    GBPm     GBPm     GBPm    GBPm    GBPm     GBPm 
----------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
Investment property     2,504.6    94.4  (11.4)  2,587.6  2,273.6    92.4  (14.9)  2,351.1 
Trading property            1.1       -       -      1.1      1.1       -       -      1.1 
----------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
                        2,505.7    94.4  (11.4)  2,588.7  2,274.7    92.4  (14.9)  2,352.2 
Gross debt              (839.5)  (37.5)       -  (877.0)  (932.7)  (42.1)       -  (974.8) 
Cash                       51.4     3.4   (0.2)     54.6     81.8     5.1   (0.8)     86.1 
Other net liabilities    (39.1)   (0.5)     5.2   (34.4)   (34.3)   (0.6)     8.6   (26.3) 
----------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
EPRA NTA                1,678.5    59.8   (6.4)  1,731.9  1,389.5    54.8   (7.1)  1,437.2 
----------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
Derivatives                   -   (0.6)       -    (0.6)    (4.7)   (0.7)       -    (5.4) 
----------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
IFRS net assets         1,678.5    59.2   (6.4)  1,731.3  1,384.8    54.1   (7.1)  1,431.8 
----------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
 

EPRA net tangible assets ('NTA') replaces EPRA net assets this year as a key performance indicator that reflects both income and capital returns. It excludes the fair valuation of derivative instruments that are reported in IFRS net assets. A reconciliation between IFRS and EPRA NTA is detailed in the table above and in note 8(c) to the financial statements. EPRA NTA per share is on a fully diluted basis and prior year comparatives have been presented for the new measure accordingly.

IFRS reported net assets have increased 20.9% in the year to GBP1,731.3 million, largely as a result of the revaluation gain of GBP173.7 million and equity raise proceeds of GBP116.6 million.

Both IFRS NAV per share and EPRA NTA per share have increased by 11.9% and 11.7% in the year to 191.3p and 190.3p per share respectively. The movement in EPRA NTA and EPRA NTA per share is reflected in the table below.

 
                              EPRA    EPRA NTA 
                               NTA   per share 
                              GBPm           p 
-------------------------  -------  ---------- 
EPRA NTA at 1 April 2020   1,437.2       170.3 
EPRA earnings                 85.6         9.5 
Dividends(2)                (75.6)       (8.4) 
Property revaluation         173.7        19.3 
Equity raise                 116.6           - 
Other movements(1)           (5.6)       (0.4) 
-------------------------  -------  ---------- 
At 31 March 2021           1,731.9       190.3 
-------------------------  -------  ---------- 
 

1 Other movements include debt break costs (GBP7.5 million) and share based awards (GBP2.0 million), offset by scrip share issue savings (GBP3.2 million) and profit on sales (GBP0.7 million)

2 Dividend per share is based on the weighted average number of shares in the year. The actual dividend paid in the year was 8.5p as reflected in note 7 to the financial statements

The increase in EPRA NTA per share was principally due to the property revaluation gain of 19.3p per share, as EPRA earnings per share covered the dividend paid in the year. The movement in EPRA NTA per share, together with the dividend paid in the period, results in a total accounting return of 28.5p per share or 16.7%.

Total accounting return is a key performance indicator and component of the variable element of Directors' remuneration arrangements. The strong growth this year is significantly ahead of last year and over a three year period places us in the top quartile of the FTSE 350 Real Estate Super Sector. The full calculation can be found in supplementary note viii.

Equity raise

In May 2020, we successfully raised gross proceeds of GBP120 million through an equity placing that was substantially oversubscribed. A total of 66.7 million new ordinary shares were issued at a price of 180.0p per share, representing a discount of 1.5% to the previous day's closing share price. The net proceeds after issue costs of GBP116.6 million were used to acquire income producing assets as set out in the Property review.

Group cash flow

During the year, the Group's cash balances decreased by GBP30.4 million as reflected in the table below.

 
                                                         2021     2020 
For the year to 31 March                                 GBPm     GBPm 
-----------------------------------------------------  ------  ------- 
Net cash from operating activities                       99.6     63.2 
Net cash used in investing activities                  (46.4)  (193.7) 
Net cash (used in)/from financing activities           (83.6)    191.7 
-----------------------------------------------------  ------  ------- 
Net (decrease)/increase in cash and cash equivalents   (30.4)     61.2 
-----------------------------------------------------  ------  ------- 
 

The net cash inflow from operating activities of GBP99.6 million reflects an increase of GBP20.8 million compared to last year, after adjusting for exceptional acquisition costs paid last year of GBP15.6 million. This was primarily due to changes in working capital of GBP18.6 million.

The Group spent GBP229.0 million acquiring property in the year and received net cash proceeds of GBP210.2 million from property disposals and joint ventures. Capital expenditure on asset management and development activities cost the Group GBP27.7 million and interest received was GBP0.1 million.

Cash outflows from financing activities reflect net loan repayments of GBP93.0 million, dividend and distribution payments of GBP73.8 million, financing costs of GBP27.6 million and share purchases and awards of GBP5.8 million, offset by the net proceeds from the equity raise of GBP116.6 million. Further detail is provided in the Group cash flow statement.

Portfolio valuation

Our property portfolio including share of joint ventures grew by GBP237.1 million or 10.1% in the year to GBP2.58 billion as reflected in the table below. The Group invested GBP212.4 million in the year in our preferred sectors, acquiring GBP94.6 million distribution and GBP117.8 million long income assets.

Portfolio movement in the year

 
                               100% 
                              owned     JV     NCI     2021     2020 
                               GBPm   GBPm    GBPm     GBPm     GBPm 
--------------------------  -------  -----  ------  -------  ------- 
Opening valuation           2,269.0   92.4  (14.9)  2,346.5  1,846.2 
Acquisitions(1)               212.4      -       -    212.4    577.1 
Developments(2)                37.9      -       -     37.9     43.1 
Capital expenditure(3)          4.9    0.3   (0.1)      5.1     10.3 
Disposals                   (200.8)  (1.8)     3.3  (199.3)  (128.2) 
Revaluation                   169.9    3.4     0.4    173.7   (12.0) 
Lease incentives(4)             7.3    0.1   (0.1)      7.3     10.0 
--------------------------  -------  -----  ------  -------  ------- 
Property portfolio value    2,500.6   94.4  (11.4)  2,583.6  2,346.5 
--------------------------  -------  -----  ------  -------  ------- 
Head lease and ROU assets       5.1      -       -      5.1      5.7 
--------------------------  -------  -----  ------  -------  ------- 
Closing valuation           2,505.7   94.4  (11.4)  2,588.7  2,352.2 
--------------------------  -------  -----  ------  -------  ------- 
 

1 Group acquisitions include purchase costs and represent completed investment properties as shown in note 9 to the financial statements

2 Group developments include acquisitions and capital expenditure on properties under development as reflected in note 9 to the financial statements

3 Capital expenditure on completed properties

4 Comprises incentives and rent frees of GBP13.4 million (2020: GBP15.4 million) less amounts written off on disposal of GBP6.1 million (2020: GBP5.4 million)

We completed 35 commercial property disposals and four residential flat sales generating net proceeds of GBP206.1 million at share and reducing the book value of property by GBP205.4 million (including the cost of lease incentives written off of GBP6.1 million). During the year, we also exchanged to sell four assets for GBP15.2 million and to acquire three assets for GBP35.7 million, all of which will be accounted for on completion next year. Further information is provided in the Property review.

Property values have increased by GBP173.7 million in the year, driven by both management actions and through capturing rental reversion, representing 43% and 57% of the uplift respectively. The portfolio has delivered a strong total property return of 13.4%, significantly outperforming the IPD All Property Index of 1.2%, with distribution assets delivering the largest increase of 18.3%. A breakdown of the property portfolio by sector is reflected in the table below.

Property portfolio by sector

 
                              2021   2021     2020   2020 
As at 31 March                GBPm      %     GBPm      % 
-------------------------  -------  -----  -------  ----- 
Distribution               1,777.3   68.8  1,593.7   67.9 
Long income                  629.4   24.3    552.5   23.5 
Retail Parks                  73.9    2.9     83.3    3.6 
Offices                       41.1    1.6     55.1    2.4 
-------------------------  -------  -----  -------  ----- 
Investment portfolio       2,521.7   97.6  2,284.6   97.4 
Development(1)                59.8    2.3     57.0    2.4 
Residential                    2.1    0.1      4.9    0.2 
-------------------------  -------  -----  -------  ----- 
Property portfolio value   2,583.6  100.0  2,346.5  100.0 
-------------------------  -------  -----  -------  ----- 
Head lease and right 
 of use assets                 5.1             5.7 
-------------------------  -------  -----  -------  ----- 
                           2,588.7         2,352.2 
-------------------------  -------  -----  -------  ----- 
 

1 Represents urban logistics GBP51.8 million (2.0%), long income GBP5.8 million (0.2%), office and other land GBP2.2 million (0.1%) at 31 March 2021. Split of prior year comparatives was regional distribution GBP38.1 million (1.6%), urban logistics GBP6.2 million (0.3%), long income GBP10.5 million (0.5%), office and other land GBP2.2 million.

Investment in our preferred sectors of distribution and long income has increased to 95.3%, from 93.8% in March 2020. Our development exposure remains modest at 2.3% of the portfolio and includes the last remaining 350,000 sq ft unit at Bedford and our 120,000 sq ft Tyseley development site acquired as part of the Mucklow portfolio.

Our forward funded pre-let developments in Goole and Wallingford, our convenience store in Weymouth pre-let to Aldi and one of our distribution units in Bedford completed in the year and have been transferred to investment properties.

The Group had capital commitments of GBP93.3 million as reported in note 9 to the financial statements, relating primarily to remaining expenditure at Bedford and Tyseley. Further detail on property acquisitions, sales, asset management and development can be found in the Property review.

Financing

The key performance indicators used to monitor the Group's debt and liquidity position are shown in the table below. The Group and joint venture split is shown in Supplementary note iii.

 
                        Proforma post refinancing       2021       2020 
As at 31 March                               GBPm       GBPm       GBPm 
----------------------  -------------------------  ---------  --------- 
Gross debt                                  877.0      877.0      974.8 
Cash                                         54.6       54.6       86.1 
Net debt                                    822.4      822.4      888.7 
Loan to value(1)                            32.3%      32.3%      35.9% 
Cost of debt(2)                              2.6%       2.5%       2.9% 
Undrawn facilities                          283.0      170.5      133.8 
Average debt maturity                   8.2 years  4.2 years  4.7 years 
Hedging(3)                                    83%        45%        77% 
----------------------  -------------------------  ---------  --------- 
 

1 LTV at 31 March 2021 includes the impact of sales and acquisitions that exchanged in the year of GBP15.2 million and GBP35.7 million respectively (2020: sales of GBP64.4 million), and excludes the fair value debt adjustment of GBP2.5 million (2020: GBP2.7 million)

2 Cost of debt is based on gross debt and includes amortised costs but excludes commitment fees

3 Based on the notional amount of existing hedges and total debt drawn

Net debt has decreased by GBP66.3 million in the year, as proceeds from disposals and the equity raise exceeded property acquisitions in the year. Loan to value has fallen to 32.3% (2020: 35.9%) and our average debt cost at the year end remained low at 2.5% (2020: 2.9%).

Post year end, we entered into a new GBP380 million private debt placement with a number of institutional investors in North America and the UK. The placement, which was upsized from an initial GBP150 million due to demand, has a blended maturity of 11.1 years, coupon of 2.27% and a GBP50 million tranche that is subject to a green use of proceeds framework.

The additional funds raised will be used to repay our GBP130 million secured facility with Helaba, extending the maturity by eight years on an unsecured basis and at a lower all in cost of debt. Alongside this, we entered into two new revolving credit facilities for GBP400 million, which also incorporates a green framework.

Taken together with the placement, we have completed GBP780 million of new debt, replacing the existing revolving credit facilities and other existing debt facilities that are approaching maturity. These new facilities demonstrate the strength of our banking relationships and have lengthened our debt maturity from 4.2 years at the year end to 8.2 years and increased our hedging from 45% to 83%. Following this refinancing, we have substantial headroom of GBP338 million (2020: GBP220 million), providing operational optionality and flexibility and ample cover for our contracted capital commitments of GBP93.3 million, and our average debt cost remains low at 2.6%. The new facilities have the same financial covenants as existing unsecured and private placement loans.

As at the date of this report, we have total debt facilities of GBP1.2 billion, including 35% or GBP0.4 billion unsecured revolving credit facilities, providing operational flexibility at low average costs.

The Group has comfortably complied throughout the year with the financial covenants contained in its debt funding arrangements and has substantial levels of headroom. Covenant compliance is regularly stress tested for changes in capital values and income. The Group's unsecured facilities and private placement loan notes together account for 92% of our total debt facilities as at the date of this report and following the refinancing, and contain gearing and interest cover financial covenants. At 31 March 2021, the Group's gearing ratio as defined within these funding arrangements was 46% which is significantly lower than the maximum limit of 125%, and its interest cover ratio was 5.5 times, comfortably higher than the minimum level of 1.5 times. Property values would have to fall by 43% and rents by 65% before banking covenants are breached.

The Group's policy is to de-risk the impact of movements in interest rates by entering into hedging and fixed rate arrangements. However, in April this year we took advantage of the low interest environment and cancelled GBP350 million interest rate swaps that hedged our unsecured facilities and were due to expire in 2022. This reduced the proportion of our drawn debt hedged to 45% at the year end, mainly through our fixed coupon private placement and Scottish Widows' debt and has contributed to interest cost savings in the year and a lower average cost of debt of 2.5% at the year end. Following the refinancing post year end, the proportion of debt hedged by fixed coupon private placement facilities and existing fixed rate debt has increased to 83%. We are advised by Chatham Financial and continue to monitor our hedging profile in light of interest rate projections.

Risk management

Effective risk management reduces the negative impact of risk on the business and is critical to our strategy of investing in real estate that provides reliable, repetitive and growing income-led total returns and long term outperformance.

The Board's risk management responsibility

The Board has overall responsibility for establishing and maintaining a risk management framework critical to its decision making process and key to the long term success of the business. This framework gives the Board confidence that risks inherent in running the business are successfully being identified and mitigated to the extent possible to safeguard stakeholders' interests and achievement of the Company's strategic goals. The Board has a low risk appetite in respect of these objectives but acknowledges that no system can entirely eliminate risk.

The Board considers risk in all the decisions it makes and uses a high-level dashboard at each of its meetings to monitor material issues and new and emerging risks. The Board also receives an informative market overview from the Chief Executive at its meetings, which highlights overarching or longer term themes and evolving trends within the sector, wider economy and the risk environment that provide context for responsive strategic decision making.

The Audit Committee's oversight role

The Audit Committee assists the Board by providing a key oversight and assurance role. It does so by appraising the risk management framework in detail and seeking comfort that there is a robust system in place for the identification, assessment and mitigation of the principal risks faced by the Company. The Committee annually reviews the Company's risk register and systems of internal controls, considers their effectiveness and reports its findings to the Board. The Committee also undertakes thematic deep dives into significant or areas of increasing risk.

At its March 2021 meeting, the Committee scrutinised the risk register, which had recently been comprehensively updated, and an internal controls evaluation report from the Finance Director.

The Committee also received updated reports and presentations on the ESG agenda, corporate governance, cyber security and tenant covenant monitoring at that meeting. Based on its review and assessment, the Audit Committee is satisfied that no significant weaknesses have been identified in the Group's internal control structure and that an effective risk management system is in place. These findings were reported to the Board.

The Senior Leadership Team, identifies, implements and monitors

The Senior Leadership Team is responsible for ongoing risk identification and the design, implementation and maintenance of the system of internal controls in light of the risks identified. The team comprises individuals with a breadth of skills and experience from across the Company. Short reporting lines, low staff numbers and an embedded risk awareness culture within the organisation facilitate the early identification of risks and the development of appropriate mitigation strategies based on an assessment of the impact and likelihood of a risk occurring.

Our risk register

The risk register is reviewed and updated at least annually by the Company Secretary assisted by members of the Senior Leadership Team. Within the risk register, specific risks are identified and their probability rated by management as having either a high, medium or low impact. A greater weighting is applied the higher the significance and probability of a risk. These weightings are then mathematically combined to produce an overall gross risk rating which is colour coded using a traffic light system. Risk specific safeguards are identified, detailed in the register and rated as strong, medium or weak. The stronger the safeguard, the greater the weighting applied. The gross risk rating and strength of the safeguards against that risk are then combined to produce a resultant overall net risk. Consideration is given to the implementation of further action to reduce risk where necessary. Finally, every risk is allocated an owner and details of how the safeguards are evidenced are noted. Owners and timelines are included for any action points arising out of the register's review.

Principal risks

Our principal risks and uncertainties are identified and reported on below. They refer to those risks with the potential to cause material harm to our operations and stakeholders and could affect our ability to execute our strategic priorities or exceed the Board's risk appetite.

Identifying emerging risk

Senior Leadership Team members are closely involved in day to day matters and have a breadth of experience across corporate and regulatory, property, banking, finance and risk management matters. Each member, within their field of expertise, considers emerging risk with the potential to adversely affect the business and stakeholders. Such risks are evaluated and monitored through Senior Leadership Team meetings, with appropriate mitigation measures implemented as required. Significant emerging risks are raised and discussed at Board level.

From a property perspective, strong occupier relationships inform management and help us to understand our tenant needs and contentment and gain insights into their businesses. These relationships are one of the key tools used to assist us, not only in sourcing potential off market opportunities but also in identifying emerging risks and trends which has been particularly useful throughout the Covid-19 pandemic when many businesses have undergone some form of restructuring.

Management also have strong banking relationships and, more broadly, regularly meet industry representatives, shareholders and analysts. These relationships are also used to identify emerging risks. In addition, reports are commissioned and briefings arranged on wide ranging pertinent topics to understand changes within the real estate sector and the wider economic outlook.

No new or emerging principal risks have been identified this year, but the pandemic has heightened the likelihood of some risks occurring.

Changes in risk factors

Covid-19

Last year we introduced Covid-19 as a new and emerging principal risk. We recognised that the disruption and risk of a prolonged and severe economic downturn would present unprecedented challenges to the business and its stakeholders, but also potentially opportunities. As identified then, Covid-19 has accelerated a number of structural changes that are having a profound and permanent impact on real estate. Combined with a continuation of a lower for longer interest rate environment, negligible bond rates and suppressed corporate dividends, it has intensified demand for the right real estate that can deliver reliable, repetitive and growing income and endorses our strategy to position the portfolio on the right side of these structural trends. As reported in the Chief Executive's review, logistics and long income, which comprise 95% of our portfolio, have been clear beneficiaries of the pandemic as businesses have sought to future proof their operations in response to the rise of ecommerce and respond to changes in the way we live and shop. Furthermore, sustained logistics demand is expected from Brexit uncertainties as 'just in time' strategies are replaced with 'just in case' as companies adapt to how the UK operates under its new arrangements with the EU and other trading partners raising new border related issues, which are increasing the need for more localised inventory.

We expect a period of prolonged uncertainty and continuing disruption as a result of Covid-19, notwithstanding the efficacy of the vaccine roll out. With strong performing assets, closely aligned to the structural tailwinds, we remain well placed, though not immune, to weather this disruption and navigate these uncertain times and believe our risk has reduced since this time last year. We continue to focus on improving the quality of our portfolio, keeping our people safe, working closely with occupiers, suppliers and other stakeholders, maintaining a strong financial position and helping local communities.

This year we have incorporated the risk posed by Covid-19 within other principal risk categories where they are inextricably interlinked.

Investment opportunities

In identifying investment opportunities, we assess potential returns and weigh them against the risks involved. Therefore, whilst the market presents many opportunities, as significant shareholders ourselves, we prefer to focus on quality investments that offer long term income, capital growth and downside protection from strong intrinsic value, priding ourselves on our process, discipline and rationality as we look to acquire the best assets, at the right price. This rigorous approach invariably tempers investment activity. We are mindful that investor demand and tightening yields for our preferred sectors make further investment difficult whilst tightening yields on non core and weaker assets encourage sales for the right property reasons but where redeployment of proceeds is difficult. We will aim to continue to maintain a fine balance and defer sales receipts where possible, to allow time for reinvestment and reduce the negative impact on earnings.

Responsible Business practices and climate change

Stakeholder focus on responsible business practices has continued to increase with particular attention on climate change and the Net Zero Carbon agenda from an environmental perspective. If we fail to keep pace, this could have a profound negative impact on our earnings, asset and share liquidity. More information can be found on our Responsible Business objectives, initiatives undertaken and progress against targets in our Responsible Business and ESG review.

Financial position

In May last year we successfully raised gross proceeds of GBP120 million through a substantially oversubscribed equity placing in order to take advantage of high quality investment opportunities we were seeing early on in the pandemic. Just before the year end we then priced a GBP380 million debt placement with a number of institutional investors in North America and the UK. This placement was upsized due to exceptional demand and has a blended maturity of 11.1 years and a blended coupon of 2.27%. The placement completed at the end of April. Alongside this, we refinanced existing revolving credit facilities with a three year syndicated facility of GBP225 million and a five year facility of GBP175 million. Both facilities are unsecured, revolving and have two, one year extension options. More information on the equity placing, debt placement and the refinancing, which have improved our financial position, can be found in the Financial review.

Viability Statement

Based on the results of their assessment which is detailed below, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period to 31 March 2024.

In accordance with the 2018 UK Corporate Governance Code, the Board has assessed the prospects of the Group over a period longer than the 12 months required by the 'Going Concern' provision. The Directors conducted this review taking account of the Group's financial position, business strategy, principal risks and outlook.

Assessment of viability review period

The Board review and challenge the period over which to assess viability on an annual basis and have determined that the three year period to 31 March 2024 remains an appropriate period over which to assess the Group's viability, as in previous years, for the following reasons:

-- The Group's financial business plan and detailed budgets cover a rolling three year period;

-- It is a reasonable approximation of the typical time it takes from obtaining planning permission for a development project to practical completion of the property. The average length of the Group's developments that completed in the year at Goole, Wallingford, Weymouth and Bedford was 14 months; and

-- Three years is considered to be the optimum balance between long term property investment and the difficulty in accurately forecasting ahead given the cyclical nature of property investment.

Although the Board's review focused on the three year viability assessment period, it also considered a number of other factors when assessing the Group's longer term assessment, including:

-- The weighted average unexpired lease length of 11.4 years;

-- The weighted average debt maturity after completion of the refinancing in April 2021 of 8.2 years; and

-- The longer term investment horizon and nature of the property cycle.

Assessment of prospects

The Group's strategy is reviewed by the Board at each meeting. The business plan is structured around the Group's strategy and consists of a rolling three year profit forecast, which factors in deals under offer, committed developments and reinvestment plans. It considers capital commitments, dividend cover, loan covenants and REIT compliance metrics.

The Senior Leadership Team provides regular strategic input to the financial forecasts covering investment, divestment and development plans and capital allocation. They also consider the impact to earnings and liquidity when assessing potential investment and development proposals.

Forecasts are reviewed against actual performance and reported quarterly to the Board. Short term cash flow forecasts and rent collection rates are closely monitored by the Senior Leadership Team on a weekly basis.

When assessing longer term prospects, the Board is mindful of the following:

-- Income certainty, with 57% of the Group's rental income benefitting from contractual uplifts, and diversity, with 36% of rent due from our top ten occupiers;

-- A proven track record of executing transactions, making good sector choices and growing income;

-- Strong rent collection rates throughout the Covid-19 pandemic with 98% of rents due in the year collected;

-- Strong relationships with debt providers, evidenced by the new GBP780 million debt arrangements; and

-- Substantial liquidity with undrawn debt facilities and cash of GBP338 million after the refinancing.

Assessment of viability

The business plan was stress tested to ensure it remained resilient to adverse movements in its principal risks including:

-- Changes to macro-economic conditions, reducing rent and property values;

-- Changes in the retail environment including tenant failures impacting occupancy levels and lettings;

-- Changes in the availability of funds and interest rates; and

-- Changes in property market conditions impacting investment and development opportunities.

In response to the pandemic, our scenario testing considered the longer term impact of the disruption caused to our occupiers, including potential rent defaults, increased vacancy costs and letting voids. Key assumptions included reducing rent and property values by 15%, removing uncommitted capital expenditure and increasing interest rates by 1%. Throughout the scenario testing, the Group had sufficient reserves to continue in operation and remain compliant with its banking covenants.

Reverse stress testing was also undertaken. Property values would need to fall by approximately 43% and rental income fall by 65% to breach the gearing and interest cover covenants under the Group's unsecured and private placement debt facilities, that together account for 92% of the Group's borrowing including its share of joint ventures as at the date of this report.

This scenario testing, when combined with the Group's strong financial position, rent collection evidence, and mitigation actions available including deferring non committed capital expenditure and selling assets, supports the Group's ability to weather unexpected and adverse economic and property market conditions including the Covid-19 pandemic over the longer term viability period.

Principal risks

Corporate risks

 
1. Strategy 
Risk                                                     Impact                                                   Mitigation                                                   Commentary                                                    Appetite      Change in the 
                                                                                                                                                                                                                                                           year 
Strategic objectives may be:                                                                                                                                                                                                                 The Board     Decreased risk 
 *    Inappropriate for the current economic climate or   *    Suboptimal returns for shareholders                 *    Strategy and objectives are regularly reviewed by the   *    Investor demand for distribution assets has increased,  continues to  We have focused 
      market cycle                                                                                                      Board to adapt to an ever-changing market and trends         attracted by limited new supply and growing occupier    view the      investment and 
                                                                                                                                                                                     demand fuelling rental growth                           Company's     asset 
                                                          *    Missed opportunities                                                                                                                                                          strategic     management 
 *    Not achieved due to Covid-19 or Brexit related                                                               *    Deep occupier relationships and experience within our                                                                priorities    activity on 
      disruption or poor implementation                                                                                 sectors shape portfolio decisions                       *    Investor demand for income has also intensified in a    as            improving the 
                                                          *    Ineffective threat management                                                                                         zero interest rate economy. Our long income assets      fundamental   quality of our 
                                                                                                                                                                                     have defensive and income growth characteristics        to its        'all 
                                                                                                                   *    Commissioned research assists our strategic decision                                                                 business      weather' 
                                                          *    Wrong balance of skills and resources for ongoing        making                                                                                                               and           portfolio which 
                                                               success                                                                                                          *    During the year we deployed GBP231 million across       reputation.   provides 
                                                                                                                                                                                     logistics, grocery and roadside and increased our       Its appetite  reliable, 
                                                                                                                   *    We have a UK based, predominantly logistics portfolio        urban logistic weighting where supply is restricted     for this      repetitive and 
                                                                                                                        in a world leading ecommerce market                          and rental growth strongest, to 38.5% and long-let      risk is low.  growing income 
                                                                                                                                                                                     grocery and roadside exposure with high quality                       whilst 
                                                                                                                                                                                     counterparties to 11.0%                                               providing 
                                                                                                                   *    Regular and rigorous portfolio reviews take into                                                                                   strong 
                                                                                                                        consideration sector weightings, tenant and                                                                                        intrinsic value 
                                                                                                                        geographical concentrations, perceived threats and      *    GBP159 million of disposals were predominantly of                     and capital 
                                                                                                                        market changes, the balance of income to non income          shorter let and poorer located logistics assets and                   protection. 
                                                                                                                        producing assets and asset management opportunities          non core office retail and residential assets.                        We anticipate 
                                                                                                                                                                                     Receipts on the majority of sales were deferred to                    no significant 
                                                                                                                                                                                     allow time to reinvest proceeds                                       change in this 
                                                                                                                   *    The three year forecast is regularly flexed and                                                                                    risk over the 
                                                                                                                        reported                                                                                                                           next 12 months. 
                                                                                                                                                                                *    Our dividend has increased and cover is strong at 1.1 
                                                                                                                                                                                     times EPRA earnings 
                                                                                                                   *    The Senior Leadership Team comprises departmental 
                                                                                                                        heads from all key business functions with diverse 
                                                                                                                        skills and experience                                   *    Our property cost leakage at 1.4% is low within the 
                                                                                                                                                                                     sector as assets are operationally light 
 
                                                                                                                   *    Our organisational structure is relatively flat 
                                                                                                                        making it easier to identify market changes and 
                                                                                                                        monitor operations 
 
 
                                                                                                                   *    The Board and senior management team's strong 
                                                                                                                        economic alignment to shareholders ensures a strong 
                                                                                                                        conviction to make the right property and financial 
                                                                                                                        decisions 
2. Economic and political factors 
Risk                                                     Impact                                                   Mitigation                                                   Commentary                                                    Appetite      Change in the 
                                                                                                                                                                                                                                                           year 
Market downturn or specific sector turbulence resulting                                                                                                                                                                                      The Board     Decreased risk 
from:                                                      *    Suboptimal returns for shareholders                 *    We remain focused on what we can control within the    *    Our fit for purpose distribution (70.8% portfolio       monitors the  The majority of 
 *    The severe adverse economic impact from Covid-19                                                                   business and the medium and long term drivers of            weighting) has benefitted from accelerated demand as    impact of     our assets are 
                                                                                                                         returns                                                     a result of Covid-19 and Brexit as businesses seek to   the pandemic  in structurally 
                                                           *    Occupier demand and solvency may be impacted                                                                         future proof their operations in response to the rise   and           supported 
 *    New trade arrangements with the EU and other                                                                                                                                   of ecommerce and how the UK operates with its trading   political     sectors and 
      economies following Brexit                                                                                    *    We commission economic and market research to better        partners                                                and economic  performing in 
                                                           *    Asset liquidity may reduce                               understand the potential impact of economic factors                                                                 developments  line with 
                                                                                                                         on our tenants and preferred asset classes                                                                          which         or ahead of 
 *    Other economic and political factors                                                                                                                                      *    The majority of our long income assets (24.5%           are outside   expectations. 
                                                           *    Debt markets may be impacted                                                                                         portfolio weighting) are considered non discretionary,  of its        We remain alert 
                                                                                                                    *    Our strong occupier relationships provide market            less susceptible to the migration of spend online and   control.      to the few 
                                                                                                                         intelligence and help us better understand our              are benefitting from changes in how we live and shop.   Focus         underperforming 
                                                                                                                         tenants needs and emerging trends                           Most were open for trade prior to the last Covid-19     remains on    in the extreme 
                                                                                                                                                                                     lockdown measures lifting with strong underlying        maintaining   conditions. 
                                                                                                                                                                                     trading performance as reflected in our high rent       a robust      We anticipate 
                                                                                                                    *    We regularly monitor tenant and contractor covenant         collection rates                                        'all          no significant 
                                                                                                                         strength                                                                                                            weather'      change in this 
                                                                                                                                                                                                                                             portfolio,    risk over the 
                                                                                                                                                                                *    2% of our portfolio is exposed to out-of-town leisure   and keeping   next 12 months. 
                                                                                                                    *    We limit development, particularly speculative              and hotels in good geographies which trade strongly     this risk to 
                                                                                                                         development exposure and letting risk                       in more normal times. Adversely impacted by the         a minimum. 
                                                                                                                                                                                     severity of lockdowns, these have delivered a 
                                                                                                                                                                                     property return of -13.8% in the year 
                                                                                                                    *    We maintain a high WAULT reducing reletting risk 
 
 
                                                                                                                    *    We have a low vacancy rate 
 
 
                                                                                                                    *    Income granularity reduces the impact of single 
                                                                                                                         tenant risk 
 
 
                                                                                                                    *    We have flexible funding arrangements with 
                                                                                                                         significant headroom in covenant levels 
 
 
3. Human resources 
Risk                                                       Impact                                          Mitigation                                                   Commentary                                                   Appetite     Change in 
                                                                                                                                                                                                                                                  the year 
                                                           The business may lack the skill set to                                                                                                                                    The Board    No 
 *    There may be an inability to attract, motivate and   establish and deliver strategy and maintain a    *    Our staffing plan focuses on experience and expertise   *    An external Board evaluation was undertaken, its       believes it  significant 
      retain high calibre employees                        competitive                                           necessary to deliver strategy                                findings extremely positive                            is vitally   change 
                                                           advantage.                                                                                                                                                                important    There was 
                                                                                                                                                                                                                                     that the     no 
 *    Covid-19 may be detrimental to the long term health                                                   *    Our organisational structure has clear                  *    The Senior Leadership Team introduced last year        Company has  significant 
      of key individuals                                                                                         responsibilities and reporting lines                         promotes talent development below Board level          the          change in 
                                                                                                                                                                                                                                     appropriate  perceived 
                                                                                                                                                                                                                                     level of     risk during 
                                                                                                            *    Executive Directors and senior managers are             *    The appointment of Kitty Patmore to the Board and      leadership,  the year. 
                                                                                                                 incentivised in a similar manner. Both have                  Audit Committee brings significant property and        expertise    We 
                                                                                                                 significant unvested share awards in the Company.            capital markets experience to enhance the existing     and          anticipate 
                                                                                                                 These incentivise long term performance and retention        skill set of the Board and supports succession         experience   no 
                                                                                                           ,                                                                  planning for Non Executive Directors which remains     to deliver   significant 
                                                                                                                 providing stability in the management structure              high on the Board's agenda                             its          change in 
                                                                                                                                                                                                                                     objectives   this risk 
                                                                                                                                                                                                                                     and adapt    over the 
                                                                                                            *    Annual appraisals identify training requirements and    *    Staff survey responses were highly positive with 100%  to change.   next 12 
                                                                                                                 assess performance                                           of respondents proud and happy to be working for       Its          months. 
                                                                                                                                                                              LondonMetric and confident in the decisions made by    appetite 
                                                                                                                                                                              senior management                                      for this 
                                                                                                            *    Specialist support is contracted where appropriate                                                                  risk is 
                                                                                                                                                                                                                                     low. 
                                                                                                                                                                         *    Our workforce engagement Non Executive Director 
                                                                                                            *    Staff satisfaction surveys are undertaken and staff          hosted a call with a cross section of employees in 
                                                                                                                 turnover levels are low                                      the year to hear their views and concerns 
 
 
                                                                                                            *    There is a phased Non Executive refreshment plan        *    No staff were furloughed and turnover is low at 6% on 
                                                                                                                                                                              average since merger 
 
                                                                                                            *    Key man insurance is in place for the Chief Executive 
                                                                                                                                                                         *    68% of employees participate in the LTIP 
4. Systems, processes and financial management 
Risk                                                       Impact                                          Mitigation                                                   Commentary                                                   Appetite     Change in 
                                                                                                                                                                                                                                                  the year 
Controls for safeguarding assets and supporting strategy                                                                                                                                                                             The Board's  No 
may be weak.                                                *    Compromised asset security                  *    The Company has a strong controls culture              *    Our IT systems have allowed us to remain fully         appetite     significant 
                                                                                                                                                                              operational over the Covid-19 lockdowns                for such     change 
                                                                                                                                                                                                                                     risk is low  There was 
                                                            *    Suboptimal returns for shareholders         *    We have IT security systems in place with back up                                                                  and          no 
                                                                                                                  supported and tested by a specialist advisor           *    During the year we upgraded our operating system and   management   significant 
                                                                                                                                                                              completed the integration of Mucklow onto the          continually  change in 
                                                            *    Decisions made on inaccurate information                                                                     LondonMetric IT platform and systems                   strive to    perceived 
                                                                                                             *    Our business continuity plan is regularly updated                                                                  monitor and  risk during 
                                                                                                                                                                                                                                     improve      the year. 
                                                                                                                                                                         *    Further improvements were made to our integrated       processes.   We 
                                                                                                             *    Our property assets are safeguarded by appropriate          sales ledger invoicing and reporting system to enable               anticipate 
                                                                                                                  insurance                                                   more billing to be brought in-house and away from                   no 
                                                                                                                                                                              managing agents and to improve the quality of credit                significant 
                                                                                                                                                                              control reports                                                     change in 
                                                                                                             *    We have safety and security arrangements in place on                                                                            this risk 
                                                                                                                  our developments, multi-let and vacant properties                                                                               over the 
                                                                                                                                                                         *    Increased remote working as a consequence of                        next 12 
                                                                                                                                                                              lockdowns has exposed the Company to a range of cyber               months. 
                                                                                                             *    Appropriate data capture procedures ensure the              attacks. The Company's cyber security measures have 
                                                                                                                  accuracy of the property database and financial             provided a strong level of protection 
                                                                                                                  reporting systems 
 
 
                                                                                                             *    We maintain appropriate segregation of duties with 
                                                                                                                  controls over financial systems 
 
 
                                                                                                             *    Management receive timely financial information for 
                                                                                                                  approval and decision making 
 
 
                                                                                                             *    Cost control procedures ensure expenditure is valid, 
                                                                                                                  properly authorised and monitored 
 
 
5. Responsible Business approach 
Risk            Impact                                            Mitigation                                                   Commentary                                                   Appetite        Change in 
                                                                                                                                                                                                            the year 
Non-compliance                                                                                                                                                                              The Board has   Increased 
with             *    Reputational damage                           *    We monitor changes in law, stakeholder sentiment and   *    We continue to hold meetings with large numbers of     a low           risk 
Responsible                                                              best practice in relation to Responsible Business           shareholders, analysts and potential investors,        tolerance for   ESG 
Business                                                                 practices such as sustainability, environmental             meeting 173 in the year                                non-compliance  significance 
practices.       *    Suboptimal returns for shareholders                matters and our societal impact and receive advice                                                                 with risks      continues to 
                                                                         and support from specialist consultants                                                                            that adversely  increase for 
                                                                                                                                *    We continue to score well in ESG benchmarks            impact          stakeholders 
                 *    Asset liquidity may be impacted                                                                                                                                       reputation,     , 
                                                                    *    We consider the impact of changes on strategy                                                                      stakeholder     particularly 
                                                                                                                                *    26% of our portfolio by area is rated BREEAM Very      sentiment       in relation 
                 *    Reduced access to debt and capital markets                                                                     Good or Excellent, an increase from 20% in 2020        towards the     to climate 
                                                                    *    We give proper consideration to the needs of our                                                                   Company and     change. 
                                                                         occupiers and shareholders by maintaining a high                                                                   asset           We 
                 *    Poor relationships with stakeholders               degree of engagement. We also consider our impact on   *    c.74% of our portfolio has an EPC rating of A-C and    liquidity.      anticipate 
                                                                         the environment and local communities                       we are targeting a minimum C rating on all assets                      this risk 
                                                                                                                                                                                                            will 
                                                                                                                                                                                                            continue to 
                                                                    *    Responsibility for specific obligations is allocated   *    Our Net Zero Carbon framework published in May sets                    increase 
                                                                         to Senior Leadership Team members                           out our ambitions to become a zero carbon business                     over the 
                                                                                                                                                                                                            next 12 
                                                                                                                                                                                                            months. 
                                                                    *    A Responsible Business Working Group meets at least    *    Our new revolving credit facilities incorporate a 
                                                                         three times a year and reports to the Board                 green framework 
 
 
                                                                    *    Staff training is provided                             *    We issued a GBP50 million green private placement 
                                                                                                                                     tranche, the first UK REIT to do so 
 
                                                                    *    EPC rating benchmarks are set to ensure compliance 
                                                                         with Minimum Energy Efficiency Standards ('MEES')      *    We have scored highly in stakeholder surveys, with 
                                                                         that could otherwise impact the quality and                 9.0 out of 10.0 occupiers recommending us as a 
                                                                         desirability of our assets leading to higher voids,         landlord in our latest occupier survey, despite the 
                                                                         lost income and reduced liquidity                           challenging Covid-19 backdrop 
 
 
                                                                    *    We consider environmental and climate change risk      *    Our Communities and Charity Committee, created in 
                                                                         relating to our assets and commission reports               response to the pandemic, has spent or committed most 
                                                                                                                                     of the GBP127,000 funded mainly through the Board and 
                                                                                                                                     senior managers waiving 20% of their salary and fees 
                                                                    *    We work with our occupiers to improve the resilience        for three months. 
                                                                         of our assets to climate change and a low carbon 
                                                                         economy 
                                                                                                                                *    ESG targets have been introduced into the wider staff 
                                                                                                                                     performance criteria 
                                                                    *    Sustainability targets are set, monitored and 
                                                                         reported 
 
 
                                                                    *    Contractors are required to conform to our 
                                                                         responsible development requirements 
6. Regulatory framework 
Risk            Impact                                            Mitigation                                                   Commentary                                                   Appetite        Change in 
                                                                                                                                                                                                            the year 
Non-compliance                                                                                                                                                                              The Board has   No 
with legal or     *    Compromised asset security                  *    We monitor regulatory changes that impact our           *    There have been no new significant regulatory changes  no appetite     significant 
regulatory                                                              business assisted by specialist support providers            which impact the Company this year                     where           change 
obligations.                                                                                                                                                                                non-compliance  There was no 
                  *    Suboptimal returns for shareholders                                                                                                                                  risks injury    significant 
                                                                   *    We consider the impact of legislative changes on        *    We continued to undertake health and safety site       or damage to    change in 
                                                                        strategy                                                     audits on our developments through an external         its broad       perceived 
                  *    Decisions made on inaccurate information                                                                      specialist consultancy. These included our smaller     range of        risk during 
                                                                                                                                     development at Carlisle this year and Tyseley post     stakeholders,   the year. 
                                                                   *    We have allocated responsibility for specific                year end. Feedback has been positive and no            assets and      New 
                                                                        obligations to individuals within the Senior                 significant issues were identified                     reputation.     regulations 
                                                                        Leadership Team                                                                                                                     and evolving 
                                                                                                                                                                                                            best 
                                                                                                                                *    Health and Safety Policy updated in the year                           practice 
                                                                   *    Our health and safety handbook is regularly updated                                                                                 will 
                                                                        and audits are carried out on developments to monitor                                                                               continue to 
                                                                        compliance                                                                                                                          impact the 
                                                                                                                                                                                                            business. 
                                                                                                                                                                                                            We 
                                                                   *    Our procurement and supply chain policy sets                                                                                        anticipate 
                                                                        standards for areas such as labour, human rights,                                                                                   no 
                                                                        pollution risk and community                                                                                                        significant 
                                                                                                                                                                                                            change in 
                                                                                                                                                                                                            this risk 
                                                                   *    Staff training is provided on wide ranging issues                                                                                   over the 
                                                                                                                                                                                                            next 12 
                                                                                                                                                                                                            months. 
                                                                   *    External tax specialists provide advice and REIT 
                                                                        compliance is monitored 
 

Property risks

 
7. Investment 
Risk                                                         Impact                                  Mitigation                                                  Commentary                                                     Appetite       Change in 
                                                                                                                                                                                                                                               the year 
We may be unable to source affordable investment             Ability to implement strategy and                                                                                                                                  The Board      Increased 
opportunities.                                               deploy capital into value and earnings    *    Management's extensive experience and their strong     *    We continue to build on our strong occupier,            continues to   risk 
                                                             accretive investments                          network of relationships provide insight into the           developer and industry relationships and attract off    focus on       Increased 
                                                             is at risk.                                    property market and opportunities                           market opportunities through these                      having the     investor 
                                                                                                                                                                                                                                right people   demand and 
                                                                                                                                                                                                                                and funding    tightening 
                                                                                                                                                                   *    We acquired GBP245 million of investment property       in place to    yields in 
                                                                                                                                                                        over the year, remaining disciplined and selective.     take           the 
                                                                                                                                                                        This included sourcing a number of opportunistic        advantage      Company's 
                                                                                                                                                                        deals of high quality assets as a result of Covid-19    of             favoured 
                                                                                                                                                                        which wouldn't ordinarily be available in a             opportunities  sectors make 
                                                                                                                                                                        normalised market                                       as they        further 
                                                                                                                                                                                                                                arise. The     investment 
                                                                                                                                                                                                                                Board's aim    difficult 
                                                                                                                                                                   *    Post year end, we have acquired a further GBP68         is to          whilst 
                                                                                                                                                                        million of urban warehousing and long income            minimise this  tightening 
                                                                                                                                                                        properties.                                             risk to the    yields on 
                                                                                                                                                                                                                                extent         non core or 
                                                                                                                                                                                                                                possible.      weaker 
                                                                                                                                                                                                                                               assets 
                                                                                                                                                                                                                                               encourage 
                                                                                                                                                                                                                                               sales 
                                                                                                                                                                                                                                               where the 
                                                                                                                                                                                                                                               redeployment 
                                                                                                                                                                                                                                               of proceeds 
                                                                                                                                                                                                                                               is 
                                                                                                                                                                                                                                               difficult. 
                                                                                                                                                                                                                                               We 
                                                                                                                                                                                                                                               anticipate 
                                                                                                                                                                                                                                               no 
                                                                                                                                                                                                                                               significant 
                                                                                                                                                                                                                                               change in 
                                                                                                                                                                                                                                               this risk 
                                                                                                                                                                                                                                               over the 
                                                                                                                                                                                                                                               next 12 
                                                                                                                                                                                                                                               months. 
8. Development 
Risk                                                         Impact                                  Mitigation                                                  Commentary                                                     Appetite       Change in 
                                                                                                                                                                                                                                               the year 
                                                                                                                                                                                                                                The Board      No 
 *    Excessive capital may be allocated to activities with   *    Poorer than expected performance   *    As an income focused REIT, development exposure as a     *    Our current development exposure is 2.3% of the        takes on       significant 
      development risk                                                                                     percentage of our total portfolio is limited,                 portfolio.                                             limited        change 
                                                                                                           typically well below 5%                                                                                              speculative    There was no 
                                                              *    Reputational damage                                                                                                                                          development,   significant 
 *    Developments may fail to deliver expected returns due                                                                                                         *    Our 120,000 sq ft urban logistics development at       although its   change in 
      to inconsistent timing with the economic and market                                             *    We only undertake short cycle and relatively                  Tyseley is pre-let to Amazon                           overall        perceived 
      cycle, adverse letting conditions, increased costs,                                                  uncomplicated developments on a pre-let basis or                                                                     tolerance for  risk during 
      planning or construction delays resulting from                                                       where there is high occupier demand                                                                                  this           the year. 
      contractor failure or supply chain interruption                                                                                                               *    We are under offer on the letting of the completed     risk is low.   Supply chain 
                                                                                                                                                                         Unit 2 at Bedford Link (172,000 sq ft) and in                         disruption 
                                                                                                      *    Development sites are acquired with planning consent          discussions on a pre-let of Unit 1                                    may increase 
                                                                                                           whenever possible                                                                                                                   as a result 
                                                                                                                                                                                                                                               of demand, 
                                                                                                                                                                    *    We work with a limited number of contractors which                    Covid-19 and 
                                                                                                      *    Management have significant experience of complex             helps us to stay close to their operations. All are                   Brexit over 
                                                                                                           development                                                   managing their cash flows and Covid-19 risks well                     the next 
                                                                                                                                                                                                                                               12 months. 
                                                                                                                                                                                                                                               Our 
                                                                                                      *    We use standardised appraisals and cost budgets and      *    We have not experienced any material construction                     development 
                                                                                                           monitor expenditure against budget to highlight               delays as a result of the pandemic and reopened sites                 exposure 
                                                                                                           potential overruns early                                      as soon as it was possible and safe to do so                          remains 
                                                                                                                                                                                                                                               limited. 
 
                                                                                                      *    External project managers are appointed                  *    The average length of the Group's developments that 
                                                                                                                                                                         completed in the year from obtaining planning 
                                                                                                                                                                         permission to practical completion was 14 months 
                                                                                                      *    Our procurement process includes tendering and the 
                                                                                                           use of highly regarded firms with proven track 
                                                                                                           records 
 
 
                                                                                                      *    We review and monitor contractor covenant strength 
 
 
9. Valuation 
Risk                                                       Impact       Mitigation                                                   Commentary                                                   Appetite       Change in the 
                                                                                                                                                                                                                 year 
Investments may fall in value.                             Pressure on                                                                                                                            There is no    Decreased 
                                                           NAV growth     *    Our portfolio is predominantly in structurally         *    The resilience of our portfolio is demonstrated by     certainty      risk 
                                                           and                 supported sectors                                           the GBP173.7 million valuation increase in the year,   that property  The majority 
                                                           potentially                                                                     with distribution providing the strongest valuation    values will    of our 
                                                           loan                                                                            contribution                                           be realised.   portfolio 
                                                           covenants.     *    Our focus is on sustainable income with lettings to                                                                This is an     remains 
                                                                               high quality tenants within a diversified portfolio                                                                inherent risk  strategically 
                                                                               of well located assets with a high weighted average    *    57% of our income has contractual uplifts, 39% of      in the         aligned to 
                                                                               unexpired lease term. This reduces the risk of              which are inflation linked                             industry. The  structurally 
                                                                               negative movements in a downturn                                                                                   Board's aim    supported 
                                                                                                                                                                                                  is to keep     sectors 
                                                                                                                                      *    Our portfolio metrics continue to be strong: WAULT     this risk to   where the 
                                                                          *    The property cycle is continually monitored with            11.4 years, with only 8.4% of rent expiring within 3   a minimum      prospects for 
                                                                               investment and divestment decisions made                    years                                                  through its    value 
                                                                               strategically in anticipation of changing conditions                                                               asset          preservation 
                                                                                                                                                                                                  selection and  and growth 
                                                                                                                                      *    Portfolio occupancy 98.7%                              management     are 
                                                                          *    Property portfolio performance is regularly reviewed                                                               initiatives.   significant 
                                                                               and benchmarked on an asset by asset basis                                                                                        and investor 
                                                                                                                                      *    173 occupier initiatives added GBP5.3 million to                      demand 
                                                                                                                                           contracted rent with an average WAULT on new lettings                 high. 
                                                                          *    The majority of our assets are single let and               of 13.2 years                                                         We anticipate 
                                                                               operationally light with little or no cost leakage                                                                                no 
                                                                               and defensive capital expenditure                                                                                                 significant 
                                                                                                                                      *    We are repurposing a number of historic triple net                    change in 
                                                                                                                                           assets into convenience led grocery                                   this risk 
                                                                          *    We monitor tenant covenants and trading performance                                                                               over the next 
                                                                                                                                                                                                                 12 months. 
10. Transactions and tenants 
Risk                                                       Impact       Mitigation                                                   Commentary                                                   Appetite       Change in the 
                                                                                                                                                                                                                 year 
                                                           Pressure on                                                                                                                            The Board has  Decreased 
 *    Property purchases and asset management initiatives  NAV,          *    Thorough due diligence is undertaken on all             *    For the year to March 2021, 98.1% of the rent          no appetite    risk 
      may be inconsistent with strategy                    earnings           acquisitions including legal and property, tenant            demanded has been or is being collected with deferred  for risk       Portfolio 
                                                           and                covenant strength and trading performance                    payment arrangements over GBP1.5 million. 1.1% of      arising out    resilience 
                                                           potentially                                                                     rent has been subject to asset management initiatives  of poor due    has been 
 *    Due diligence may be flawed                          loan                                                                            and 0.4% forgiven. Only 0.4% remains unpaid, some of   diligence      demonstrated 
                                                           covenants.    *    We screen all prospective tenants and undertake              which relates to a property where we are obtaining     processes on   through our 
                                                                              regular reviews thereafter                                   vacant possession for a new letting to Lidl            acquisitions,  rent 
 *    Tenant failure risk                                                                                                                                                                         disposals and  collection 
                                                                                                                                                                                                  lettings. A    statistics. 
                                                                         *    Portfolio tenant concentration is considered for all    *    The Company has limited exposure to poorly             degree of      We anticipate 
                                                                              acquisitions and leasing transactions                        capitalised tenants most adversely impacted by         tenant         no 
                                                                                                                                           pandemic disruption                                    covenant risk  significant 
                                                                                                                                                                                                  and lower      change in 
                                                                         *    We have a diversified tenant base and limited                                                                       unexpired      this risk 
                                                                              exposure to occupiers in bespoke properties             *    Dependency on our top ten occupiers is 36% and no      lease terms    over the next 
                                                                                                                                           single tenant accounts for more than 8.2% of income.   are            12 months 
                                                                                                                                                                                                  accepted on    although 
                                                                         *    Asset management initiatives undergo cost benefit                                                                   urban          further, 
                                                                              analysis prior to implementation                                                                                    logistics      extended 
                                                                                                                                                                                                  assets where   Covid-19 
                                                                                                                                                                                                  there is high  lockdowns may 
                                                                         *    External advisors benchmark lease transactions and                                                                  occupational   change this. 
                                                                              advise on acquisition due diligence                                                                                 demand, 
                                                                                                                                                                                                  redevelopment 
                                                                                                                                                                                                  potential or 
                                                                         *    Our experienced asset management team work closely                                                                  alternative 
                                                                              with tenants to offer them real estate solutions that                                                               site use. 
                                                                              meet their business objectives. This proactive 
                                                                              management approach helps to reduce vacancy risk 
 
 
                                                                         *    We monitor rent collection closely to identify 
                                                                              potential issues 
 

Financing risks

 
11. Capital and finance risk 
Risk          Impact          Mitigation                                                   Commentary                                                    Appetite     Change in 
                                                                                                                                                                      the year 
The Company   Strategy                                                                                                                                   The Board    Decreased 
has           implementation   *    We maintain a disciplined investment approach with      *    We raised GBP120 million through an equity placing      has no       risk 
insufficient  is at risk.           competition for capital. Assets are considered for           last May to fund a pipeline of investment               appetite     Our 
funds and                           sale when they have achieved target returns and              opportunities                                           for          significant 
available                           strategic asset plans                                                                                                imprudently  refinancing 
credit.                                                                                                                                                  low levels   activity 
                                                                                            *    We priced a GBP380 million private placement in March,  of           has 
                               *    Cash flow forecasts are closely monitored                    upsized following significant demand, which             available    extended 
                                                                                                 diversified our existing investor base. The             headroom in  debt 
                                                                                                 additional amount raised will enable us to repay our    its          maturity 
                               *    Relationships with a diversified range of lenders are        secured Helaba facility, eliminating future             reserves     whilst 
                                    nurtured                                                     refinancing risk and extending maturity on the GBP130   or credit    maintaining 
                                                                                                 million by eight years                                  lines. The   a broadly 
                                                                                                                                                         Board has    similar 
                               *    The availability of debt and the terms on which it is                                                                some         cost of 
                                    available is considered as part of the Company's long   *    Post year end we completed the refinancing of           appetite     debt. 
                                    term strategy                                                revolving credit facilities with a three year           for          We 
                                                                                                 syndicated facility of GBP225 million and a five year   interest     anticipate 
                                                                                                 facility of GBP175 million. Both have two one year      rate risk.   no 
                               *    Loan facilities incorporate covenant headroom,               extension options                                       Loans are    significant 
                                    appropriate cure provisions and flexibility                                                                          not fully    change in 
                                                                                                                                                         hedged.      this risk 
                                                                                            *    We have substantial headroom under our loan             This         over the 
                               *    Headroom and non financial covenants are monitored           covenants. Loan to value is 32.3%. Interest cover on    follows      next 12 
                                                                                                 unsecured facilities is 5.5 times                       cost         months. 
                                                                                                                                                         benefit 
                               *    A modest level of gearing is maintained                                                                              assessment 
                                                                                                                                                         and takes 
                                                                                                                                                         into 
                               *    The impact of disposals on secured loan facilities                                                                   account 
                                    covering multiple assets is considered as part of the                                                                that not 
                                    decision making process                                                                                              all loans 
                                                                                                                                                         are fully 
                                                                                                                                                         drawn 
                               *    Interest rate derivatives are used to fix or cap                                                                     all the 
                                    exposure to rising rates as deemed prudent following                                                                 time. 
                                    specialist hedging advice 
 

Directors' Responsibilities Statement

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards ('IFRSs') as adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union. The Directors have elected to prepare the Company financial statements in accordance with Financial Reporting Standard 101 ('FRS101') 'Reduced Disclosure Framework'. Under Company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing the Company financial statements, the Directors are required to:

-- Select suitable accounting policies and then apply them consistently;

-- Make judgements and accounting estimates that are reasonable and prudent;

-- State whether applicable FRS101 'Reduced Disclosure Framework' has been followed, subject to any material departures disclosed and explained in the financial statements; and

-- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

In preparing the Group financial statements, International Accounting Standard 1 requires that Directors:

-- Properly select and apply accounting policies;

-- Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

-- Provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

-- Make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge:

-- The financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

-- The Strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

-- The Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

By order of the Board

Martin McGann

Finance Director

27 May 2021

Andrew Jones

Chief Executive

27 May 2021

Group income statement

For the year ended 31 March

 
                                                                    2021    2020 
                                                            Note    GBPm    GBPm 
----------------------------------------------------------  ----  ------  ------ 
Revenue                                                        3   122.2   113.4 
Cost of sales                                                      (1.6)   (1.2) 
----------------------------------------------------------  ----  ------  ------ 
Net income                                                         120.6   112.2 
Administrative costs                                           4  (15.8)  (15.8) 
Impairment of goodwill on acquisition of subsidiaries                  -  (48.3) 
Acquisition costs                                                      -   (8.9) 
Profit/(loss) on revaluation of investment properties          9   169.9   (3.8) 
Profit/(loss) on sale of investment properties                       0.8   (4.9) 
Share of profits/(losses) of joint ventures                   10     6.9   (8.9) 
----------------------------------------------------------  ----  ------  ------ 
Operating profit                                                   282.4    21.6 
Finance income                                                       0.6     0.7 
Finance costs                                                  5  (24.9)  (29.0) 
----------------------------------------------------------  ----  ------  ------ 
Profit/(loss) before tax                                           258.1   (6.7) 
Taxation                                                       6   (0.1)   (0.2) 
----------------------------------------------------------  ----  ------  ------ 
Profit/(loss) for the year and total comprehensive income          258.0   (6.9) 
Attributable to: 
Equity shareholders                                                257.3   (5.7) 
Non-controlling interest                                      19     0.7   (1.2) 
----------------------------------------------------------  ----  ------  ------ 
 
Earnings per share 
----------------------------------------------------------  ----  ------  ------ 
Basic                                                          8   28.6p  (0.7)p 
Diluted                                                        8   28.5p  (0.7)p 
----------------------------------------------------------  ----  ------  ------ 
 

All amounts relate to continuing activities.

Group balance sheet

As at 31 March

 
                                                         2021     2020 
                                                Note     GBPm     GBPm 
----------------------------------------------  ----  -------  ------- 
Non current assets 
Investment properties                              9  2,504.6  2,273.6 
Investment in equity accounted joint ventures     10     59.2     54.1 
Other tangible assets                                     0.3      0.4 
----------------------------------------------  ----  -------  ------- 
                                                      2,564.1  2,328.1 
Current assets 
Trading properties                                        1.1      1.1 
Trade and other receivables                       11      9.8      7.8 
Cash and cash equivalents                         12     51.4     81.8 
----------------------------------------------  ----  -------  ------- 
                                                         62.3     90.7 
----------------------------------------------  ----  -------  ------- 
Total assets                                          2,626.4  2,418.8 
----------------------------------------------  ----  -------  ------- 
Current liabilities 
Trade and other payables                          13     46.0     42.6 
----------------------------------------------  ----  -------  ------- 
Non current liabilities 
Borrowings                                        14    837.5    926.7 
Derivative financial instruments                  14        -      4.7 
Lease liabilities                                 15      5.2      5.9 
----------------------------------------------  ----  -------  ------- 
                                                        842.7    937.3 
----------------------------------------------  ----  -------  ------- 
Total liabilities                                       888.7    979.9 
----------------------------------------------  ----  -------  ------- 
Net assets                                            1,737.7  1,438.9 
----------------------------------------------  ----  -------  ------- 
Equity 
Called up share capital                           16     91.0     84.2 
Share premium                                     17    219.3    106.3 
Capital redemption reserve                        17      9.6      9.6 
Other reserve                                     17    487.7    488.4 
Retained earnings                                 17    923.7    743.3 
----------------------------------------------  ----  -------  ------- 
Equity shareholders' funds                            1,731.3  1,431.8 
Non-controlling interest                                  6.4      7.1 
----------------------------------------------  ----  -------  ------- 
Total equity                                          1,737.7  1,438.9 
----------------------------------------------  ----  -------  ------- 
IFRS net asset value per share                     8   191.3p   171.0p 
----------------------------------------------  ----  -------  ------- 
 

The financial statements were approved and authorised for issue by the Board of Directors on 27 May 2021 and were signed on its behalf by:

Martin McGann

Finance Director

Registered in England and Wales, No 7124797

Group statement of changes in equity

For the year ended 31 March

 
                                                 Capital                              Equity 
                            Share      Share  redemption      Other  Retained  shareholders'  Non-controlling    Total 
                          capital    premium     reserve    reserve  earnings          funds         interest   Equity 
                  Note       GBPm       GBPm        GBPm       GBPm      GBPm           GBPm             GBPm     GBPm 
----------------  ----  ---------  ---------  ----------  ---------  --------  -------------  ---------------  ------- 
At 1 April 2020              84.2      106.3         9.6      488.4     743.3        1,431.8              7.1  1,438.9 
Profit for the 
 year and total 
 comprehensive 
 income                         -          -           -          -     257.3          257.3              0.7    258.0 
Equity placing                6.6      110.0           -          -         -          116.6                -    116.6 
Purchase of 
 shares held in 
 Employee 
 Benefit Trust                  -          -           -      (5.5)         -          (5.5)                -    (5.5) 
Vesting of 
 shares held in 
 Employee 
 Benefit Trust                  -          -           -        4.8     (5.1)          (0.3)                -    (0.3) 
Share based 
 awards                         -          -           -          -       3.8            3.8                -      3.8 
Distribution to 
 non-controlling 
 interest                       -          -           -          -         -              -            (1.4)    (1.4) 
Dividends            7        0.2        3.0           -          -    (75.6)         (72.4)                -   (72.4) 
----------------  ----  ---------  ---------  ----------  ---------  --------  -------------  ---------------  ------- 
At 31 March 2021             91.0      219.3         9.6      487.7     923.7        1,731.3              6.4  1,737.7 
----------------  ----  ---------  ---------  ----------  ---------  --------  -------------  ---------------  ------- 
 
 
                                                                                      Equity 
                                                 Capital                       shareholders' 
                            Share      Share  redemption      Other  Retained                 Non-controlling    Total 
                          capital    premium     reserve    reserve  earnings         funds          interest   Equity 
                  Note       GBPm       GBPm        GBPm       GBPm      GBPm           GBPm             GBPm     GBPm 
----------------  ----  ---------  ---------  ----------  ---------  --------  -------------  ---------------  ------- 
At 1 April 2019              70.0      100.8         9.6      221.7     814.7        1,216.8                -  1,216.8 
Loss for the 
 year and total 
 comprehensive 
 income                         -          -           -          -     (5.7)          (5.7)            (1.2)    (6.9) 
Share issue on 
 acquisition                 13.9          -           -      269.5         -          283.4                -    283.4 
Purchase of 
 shares held in 
 Employee 
 Benefit Trust                  -          -           -      (7.2)         -          (7.2)                -    (7.2) 
Vesting of 
 shares held in 
 Employee 
 Benefit Trust                  -          -           -        4.4     (4.4)              -                -        - 
Share based 
 awards                         -          -           -          -       2.9            2.9                -      2.9 
Investment from 
 non-controlling 
 interest                       -          -           -          -         -              -              8.7      8.7 
Distribution to 
 non-controlling 
 interest                       -          -           -          -         -              -            (0.4)    (0.4) 
Dividends            7        0.3        5.5           -          -    (64.2)         (58.4)                -   (58.4) 
----------------  ----  ---------  ---------  ----------  ---------  --------  -------------  ---------------  ------- 
At 31 March 2020             84.2      106.3         9.6      488.4     743.3        1,431.8              7.1  1,438.9 
----------------  ----  ---------  ---------  ----------  ---------  --------  -------------  ---------------  ------- 
 

Group cash flow statement

For the year ended 31 March

 
                                                                        2021     2020 
                                                               Note     GBPm     GBPm 
-------------------------------------------------------------  ----  -------  ------- 
Cash flows from operating activities 
Profit/(loss) before tax                                               258.1    (6.7) 
Adjustments for non cash items: 
(Profit)/loss on revaluation of investment properties                (169.9)      3.8 
(Profit)/loss on sale of investment properties                         (0.8)      4.9 
Share of post tax (profit)/loss of joint ventures                      (6.9)      8.9 
Movement in lease incentives                                          (11.3)   (11.0) 
Impairment of goodwill on acquisition                                      -     48.3 
Share based payment                                                      3.8      2.9 
Net finance costs                                                       24.3     28.3 
-------------------------------------------------------------  ----  -------  ------- 
Cash flows from operations before changes in working capital            97.3     79.4 
Change in trade and other receivables                                  (1.9)    (3.0) 
Change in trade and other payables                                       4.5   (13.0) 
-------------------------------------------------------------  ----  -------  ------- 
Cash flows from operations                                              99.9     63.4 
Tax paid                                                               (0.3)    (0.2) 
-------------------------------------------------------------  ----  -------  ------- 
Cash flows from operating activities                                    99.6     63.2 
-------------------------------------------------------------  ----  -------  ------- 
Investing activities 
Purchase of subsidiary undertakings                                        -  (119.6) 
Purchase of investment properties                                    (229.0)  (185.2) 
Capital expenditure on investment properties                          (25.6)   (18.1) 
Lease incentives paid                                                  (2.1)    (3.9) 
Sale of investment properties                                          208.4    117.5 
Investments in joint ventures                                          (4.7)    (0.3) 
Distributions from joint ventures                                        6.5     15.7 
Interest received                                                        0.1      0.2 
-------------------------------------------------------------  ----  -------  ------- 
Net cash used in investing activities                                 (46.4)  (193.7) 
-------------------------------------------------------------  ----  -------  ------- 
Financing activities 
Dividends paid                                                        (72.4)   (58.4) 
Distribution to non-controlling interest                               (1.4)    (0.4) 
Proceeds from issue of ordinary shares                                 116.6        - 
Purchase of shares held in Employee Benefit Trust                      (5.5)    (7.2) 
Vesting of shares held in Employee Benefit Trust                       (0.3)        - 
New borrowings and amounts drawn down                            18    316.0    304.9 
Repayment of loan facilities                                     18  (409.0)   (21.1) 
Financial arrangement fees and break costs                             (7.5)    (2.1) 
Interest paid                                                         (20.1)   (24.0) 
-------------------------------------------------------------  ----  -------  ------- 
Net cash (used in)/from financing activities                          (83.6)    191.7 
-------------------------------------------------------------  ----  -------  ------- 
Net (decrease)/increase in cash and cash equivalents             18   (30.4)     61.2 
Opening cash and cash equivalents                                       81.8     20.6 
-------------------------------------------------------------  ----  -------  ------- 
Closing cash and cash equivalents                                       51.4     81.8 
-------------------------------------------------------------  ----  -------  ------- 
 

Notes forming part of the Group financial statements

For the year ended 31 March 2021

1 Significant accounting policies

The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 March 2021 or 31 March 2020 but is derived from those accounts. Statutory accounts for the years ended 31 March 2021 and 31 March 2020 have been reported on by the independent auditor. The independent auditor's reports on the Annual Report and financial statements for 2021 and 2020 were unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year ended 31 March 2020 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 March 2021 will be delivered to the Registrar following the Company's Annual General Meeting. The financial information set out in this results announcement has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union. The accounting policies adopted in this results announcement are consistent with those used in preparing the financial statements for the year ended 31 March 2021, which are the same as those used in the financial statements for the year ended 31 March 2020.

a) General information

LondonMetric Property Plc is a company incorporated in the United Kingdom under the Companies Act. The address of the registered office is One Curzon Street, London, W1J 5HB. The principal activities of the Company and its subsidiaries ('the Group') and the nature of the Group's operations are set out in the Strategic report.

b) Statement of compliance

The consolidated financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards ('IFRS') as adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union.

c) Going concern

Given the backdrop of the Covid-19 pandemic and lockdown restrictions under which the Group is operating, the Board has continued to pay particular attention to the appropriateness of the going concern basis in preparing these financial statements.

The going concern assessment considers the principal risks and uncertainties facing the Group's activities, future development and performance, including those arising from the pandemic and are discussed in detail in the Strategic report. A key consideration is the Group's financial position, cash flows and liquidity, including its continued access to debt facilities and its headroom under financial loan covenants.

As reported in the Financial review, the Group refinanced its unsecured debt facilities in April 2021 and entered into two new revolving credit facilities and a new Private Placement totalling GBP780 million. These new facilities contain the same gearing and interest cover covenants as the existing unsecured and private placement loans.

The Group's unsecured revolving credit facilities and private placement loan notes, which together represent 92% of the Group's total borrowing as at the date of this report, contain gearing and interest cover covenants. At 31 March 2021, the Group had substantial headroom within these covenants. Gearing was 46%, substantially lower than the maximum limit of 125% and its interest cover ratio was 5.5 times, comfortably higher than the minimum level of 1.5 times. Property values would have to fall by 43% and rents by 65% before banking covenants are breached. Group borrowings, undrawn facilities and hedging are described in note 14 and in the Financial review.

The Directors have reviewed the current and projected financial position of the Group, making reasonable assumptions about future trading performance including the impact of Covid-19. They were mindful of the Group's income certainty and diversity, strong rent collection rates and long lease lengths when assessing the Group's going concern position.

In response to the pandemic, scenario testing considered the potential longer term impact of the disruption caused to occupiers, including rent defaults, increased vacancy costs and letting voids. Key assumptions included in the scenario testing were as follows:

-- Rents decline by 15% across the portfolio

-- Property values fall by 15% across the portfolio

-- There are no new developments or uncommitted capital expenditure

-- Interest rates increase by 1% on all floating rate loans

Throughout the scenario testing, the Group had sufficient reserves to continue in operation and remain compliant with its banking covenants.

On the basis of this review, together with available market information and the Directors' experience and knowledge of the portfolio, they have a reasonable expectation that the Company and the Group can meet its liabilities as they fall due and has adequate resources to continue in operational existence for at least 12 months from the date of signing these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements for the year to 31 March 2021.

d) Basis of preparation

The financial statements are prepared on a going concern basis, as explained above. The functional and presentational currency of the Group is sterling. The financial statements are prepared on the historical cost basis except that investment and development properties and derivative financial instruments are stated at fair value.

The directors have changed the way in which the Group's performance is presented on the face of the income statement. The underlying results have not been amended and this modified presentation has had no effect on operating profit or profit for the year.

The accounting policies have been applied consistently in all material respects except for the adoption of new and revised standards as noted below.

i) Significant accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period. If the revision affects both current and future periods, the change is recognised over those periods.

The accounting policies subject to significant judgements and estimates are considered by the Audit Committee and are as follows:

Significant areas of estimation uncertainty

Property valuations

The valuation of the property portfolio is a critical part of the Group's performance. The Group carries the property portfolio at fair value in the balance sheet and engages professionally qualified external valuers to undertake six monthly valuations.

The determination of the fair value of each property requires, to the extent applicable, the use of estimates and assumptions in relation to factors such as estimated rental value and current market rental yields. In addition, to the extent possible, the valuers make reference to market evidence of transaction prices for similar properties.

The fair value of a development property is determined by using the 'residual method', which deducts all estimated costs necessary to complete the development, together with an allowance for development risk, profit and purchasers' costs, from the fair valuation of the completed property.

Note 9(b) to the financial statements includes further information on the valuation techniques and inputs used to determine the fair value of the property portfolio.

The Covid-19 pandemic has led to a heightened degree of uncertainty surrounding property valuations and some real estate markets have experienced lower transactional activity. In March 2020, our three external valuers included material uncertainty clauses in their valuation reports. However, at the valuation date of 31 March 2021, all of our valuers consider that there is adequate market evidence upon which to base opinions of value and have not included material uncertainty clauses in their valuation reports.

Significant transactions

Some property transactions are large or complex and require management to make judgements when considering the appropriate accounting treatment. These include acquisitions of property through corporate vehicles, which could represent either asset acquisitions or business combinations under IFRS 3. Other complexities include conditionality inherent in transactions, and other unusual terms and conditions. There is a risk that an inappropriate approach could lead to a misstatement in the financial statements.

Management applied judgement to those property acquisitions made during the year to 31 March 2021 and determined that they were asset acquisitions rather than business combinations as disclosed in note 9 to the financial statements.

ii) Adoption of new and revised standards

Standards and interpretations effective in the current period

During the year, the following new and revised Standards and interpretations have been adopted and have not had a material impact on the amounts reported in these financial statements.

 
Name                                                        Description 
----------------------------------------------------------  ---------------------------------------------------------- 
IFRS 3 (amendments)                                         Definition of a Business 
----------------------------------------------------------  ---------------------------------------------------------- 
IAS 1 and IAS 8 (amendments)                                Definition of Material 
----------------------------------------------------------  ---------------------------------------------------------- 
IFRS 7, IFRS 9 and IAS 39 (amendments)                      Interest Rate Benchmark Reform 
----------------------------------------------------------  ---------------------------------------------------------- 
Amendments to references to the Conceptual Framework in     Amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 
IFRS Standards                                              8, IAS 34, IAS 37, IAS 38, IFRIC 
                                                            12, IFRIC 19, IFRIC 20, IFRIC 22 and SIC 32 
----------------------------------------------------------  ---------------------------------------------------------- 
 

iii) Standards and interpretations in issue not yet adopted

The IASB and the International Financial Reporting Interpretations Committee have issued the following standards and interpretations that are mandatory for later accounting periods and which have not been adopted early.

 
Name                                                     Description 
-------------------------------------------------------  ------------------------------------------------------------- 
IFRS 17                                                  Insurance contracts 
-------------------------------------------------------  ------------------------------------------------------------- 
IFRS 16                                                  Covid-related rent concessions 
-------------------------------------------------------  ------------------------------------------------------------- 
IFRS 3                                                   References to the conceptual framework 
-------------------------------------------------------  ------------------------------------------------------------- 
IAS 16                                                   Property, plant and equipment - proceeds before intended use 
-------------------------------------------------------  ------------------------------------------------------------- 
IAS 37                                                   Onerous contracts 
-------------------------------------------------------  ------------------------------------------------------------- 
IFRS 7, IFRS 9, IAS 39, IFRS 4 and IFRS 16 (amendments)  Interest Rate Benchmark Reform - phase 2 
-------------------------------------------------------  ------------------------------------------------------------- 
IAS 1 (amendments)                                       Classification of Liabilities as Current or Non Current 
                                                          Disclosure of Accounting Policies 
-------------------------------------------------------  ------------------------------------------------------------- 
IAS 8                                                    Definition of accounting estimates 
-------------------------------------------------------  ------------------------------------------------------------- 
IAS 12                                                   Deferred tax related to assets and liabilities arising from a 
                                                         single transaction 
-------------------------------------------------------  ------------------------------------------------------------- 
IFRS 4                                                   Applying IFRS 9 'Financial Instruments' with IFRS 4 
                                                         'Insurance Contracts' 
                                                         Extension of the Temporary Exemption from Applying IFRS 9 
-------------------------------------------------------  ------------------------------------------------------------- 
Annual improvements to IFRSs: 2018 -2020 cycle           Amendments to IFRS 1, IFRS 9, IFRS 16, and IAS 41 
-------------------------------------------------------  ------------------------------------------------------------- 
 

e) Basis of consolidation

i) Subsidiaries

The consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are those entities controlled by the Group. Control is assumed when the Group:

-- Has the power over the investee

-- Is exposed, or has rights, to variable returns from its involvement with the investee

-- Has the ability to use its power to affect its returns

In the consolidated balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair value at the acquisition date.

The results of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Where properties are acquired through corporate acquisitions and there are no significant assets or liabilities other than property, the acquisition is treated as an asset acquisition and in other cases the acquisition accounting method is used.

Under the acquisition accounting method, the identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at the acquisition date. The consideration transferred is measured at fair value and includes the fair value of any contingent consideration.

ii) Joint ventures

Joint ventures are those entities over whose activities the Group has joint control. Joint ventures are accounted for under the equity method, whereby the consolidated balance sheet incorporates the Group's share of the net assets of its joint ventures and the consolidated income statement incorporates the Group's share of joint venture profits after tax. The Group's joint ventures adopt the accounting policies of the Group for inclusion in the Group financial statements.

Joint venture management fees are recognised as income in the accounting period in which the service is rendered.

iii) Non-controlling interest

The Group's non-controlling interest ('NCI') represents an 18% shareholding in LMP Retail Warehouse JV Holdings Limited, which owns a portfolio of DFS assets.

The Group consolidates the results and net assets of its subsidiary in these financial statements and reflects the non-controlling interests' share within equity in the consolidated balance sheet and allocates to the non-controlling interest their share of profit or loss for the period within the consolidated income statement.

iv) Alternative performance measures

Our portfolio is a combination of properties that are wholly owned by the Group and part owned through joint venture arrangements or where a third party holds a non-controlling interest. Management reviews the performance of the Group's proportionate share of assets and returns, and considers the presentation of information on this basis helpful to stakeholders as it aggregates the results of all the Group's property interests which under IFRS are required to be presented across a number of line items in the financial statements.

v) Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values of assets and liabilities acquired and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition costs are recognised in the income statement as incurred.

Any excess of the purchase price of business combinations over the fair value of the assets, liabilities and contingent liabilities acquired is recognised as goodwill. This is recognised as an asset and is reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement.

f) Property portfolio

i) Investment properties

Investment properties are properties owned or leased by the Group which are held for long term rental income and for capital appreciation. Investment property includes property that is being constructed, developed or redeveloped for future use as an investment property. Investment property is initially recognised at cost, including related transaction costs. It is subsequently carried at each published balance sheet date at fair value on an open market basis as determined by professionally qualified independent external valuers. Changes in fair value are included in the income statement. Where a property held for investment is appropriated to development property, it is transferred at fair value. A property ceases to be treated as a development property on practical completion. In accordance with IAS 40 Investment Properties, no depreciation is provided in respect of investment properties.

Investment property is recognised as an asset when:

-- It is probable that the future economic benefits that are associated with the investment property will flow to the Group

-- The cost of the investment property can be measured reliably

All costs directly associated with the purchase and construction of a development property are capitalised. Capital expenditure that is directly attributable to the redevelopment or refurbishment of investment property, up to the point of it being completed for its intended use, is included in the carrying value of the property.

ii) Non current assets held for sale

An asset is classified as held for sale if its carrying amount is expected to be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable, the asset is available for sale in its present condition and management are committed to the sale and expect it to complete within one year from the date of classification.

Non-current assets classified as held for sale are measured at the lower of carrying amount and the fair value less costs to sell.

iii) Tenant leases

Leases - the Group as a lessor

Rent receivable is recognised in the income statement on a straight-line basis over the term of the lease. In the event that a lease incentive is granted to a lessee, such incentives are recognised as an asset, with the aggregate cost of the incentive recognised as a reduction in rental income on a straight-line basis over the term of the lease or to the first break option if earlier. When the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two separate contracts.

Leases - the Group as lessee

Where the Group is a lessee, a right of use asset and lease liability are recognised at the outset of the lease. The lease liability is initially measured at the present value of the lease payments based on the Group's expectations of the likelihood of the lease term. The lease liability is subsequently adjusted to reflect an imputed finance charge, payments made to the lessor and any lease modifications. The right of use asset is initially measured at cost, which comprises the amount of the lease liability, direct costs incurred, less any lease incentives received by the Group. The Group has two categories of right of use assets: those in respect of head leases related to a small number of leasehold properties and an occupational lease for its head office. Both right of use assets are classified as investment property and added to the carrying value of the leasehold investment property. The right of use asset in respect of its occupational lease is subsequently depreciated over the length of the lease.

iv) Net rental income

Rental income from investment property leased out under an operating lease is recognised in the profit or loss on a straight line basis over the lease term.

Contingent rents, such as turnover rents, rent reviews and indexation, are recorded as income in the periods in which they are earned. Rent reviews are recognised when such reviews have been agreed with tenants.

Surrender premiums receivable are recognised on completion of the surrender.

Where a rent free period is included in a lease, the rental income foregone is allocated evenly over the period from the date of lease commencement to the earlier of the first break option or the lease termination date. Lease incentives and costs associated with entering into tenant leases are amortised over the period from the date of lease commencement to the earlier of the first break option or the lease termination date.

Property operating expenses are expensed as incurred and any property operating expenditure not recovered from tenants through service charges is charged to the income statement.

v) Profit and loss on sale of investment properties

Profits and losses on sales of investment properties are recognised at the date of legal completion rather than exchange of contracts and calculated by reference to the carrying value at the previous year end valuation date, adjusted for subsequent capital expenditure.

g) Financial assets and financial liabilities

Financial assets and financial liabilities are recognised in the balance sheet when the Group becomes a party to the contractual terms of the instrument.

Financial instruments under IFRS 9

i) Trade receivables

Trade receivables are initially recognised at their transaction price and subsequently measured at amortised cost as the Group's business model is to collect the contractual cash flows due from tenants. An impairment provision is created based on lifetime expected credit losses, which reflect the Group's historical credit loss experience and an assessment of current and forecast economic conditions at the reporting date. The impact of Covid-19 has given rise to higher estimated probabilities of default for some occupiers.

ii) Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less, measured at amortised cost.

iii) Trade and other payables

Trade payables and other payables are initially measured at fair value, net of transaction costs and subsequently measured at amortised cost using the effective interest method.

iv) Borrowings

Borrowings are recognised initially at fair value less attributable transaction costs. Subsequently, borrowings are measured at amortised cost with any difference between the proceeds and redemption value being recognised in the income statement over the term of the borrowings using the effective interest method.

v) Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to interest rate risks. Derivative financial instruments are recognised initially at fair value, which equates to cost and subsequently remeasured at fair value, with changes in fair value being included in the income statement.

The Group does not apply hedge accounting under IFRS 9.

h) Finance costs and income

Net finance costs include interest payable on borrowings, net of interest capitalised and finance costs amortised.

Interest is capitalised if it is directly attributable to the acquisition, construction or redevelopment of development properties from the start of the development work until practical completion of the property. Capitalised interest is calculated with reference to the actual interest rate payable on specific borrowings for the purposes of development or, for that part of the borrowings financed out of general funds, with reference to the Group's weighted average cost of borrowings.

Finance income includes interest receivable on funds invested at the effective rate and notional interest receivable on forward funded developments at the contractual rate.

Finance costs and income are presented in the cash flow statement within financing and investing activities, respectively. For consistency, the prior year comparative presentation of these balances, together with the comparative presentation of movements in lease incentives, was amended within the cash flow statement.

i) Tax

Tax is included in profit or loss except to the extent that it relates to items recognised directly in equity, in which case the related tax is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, together with any adjustment in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. The amount of deferred tax provided is based on the expected manner or realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

As the Group is a UK REIT there is no provision for deferred tax arising on the revaluation of properties or other temporary differences. The Group must comply with the UK REIT regulation to benefit from the favourable tax regime.

j) Share based payments

The fair value of equity-settled share based payments to employees is determined at the date of grant and is expensed on a straight line basis over the vesting period based on the Group's estimate of shares that will eventually vest.

k) Shares held in Trust

The cost of the Company's shares held by the Employee Benefit Trust is deducted from equity in the Group balance sheet. Any shares held by the Trust are not included in the calculation of earnings or net tangible assets per share.

l) Dividends

Dividends on equity shares are recognised when they become legally payable. In the case of interim dividends, this is when paid. In the case of final dividends, this is when approved by the shareholders at the Annual General Meeting.

2 Segmental information

 
As at 31 March                                                   2021                              2020 
-----------------------------------  --------------------------------  -------------------------------- 
                                        100%   Share                      100%   Share 
                                       owned   of JV     NCI    Total    owned   of JV     NCI    Total 
Property value                          GBPm    GBPm    GBPm     GBPm     GBPm    GBPm    GBPm     GBPm 
-----------------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
Distribution                         1,777.3       -       -  1,777.3  1,597.0       -   (3.3)  1,593.7 
Long income                            547.6    93.2  (11.4)    629.4    475.2    88.9  (11.6)    552.5 
Retail parks                            73.9       -       -     73.9     83.3       -       -     83.3 
Office                                  41.1       -       -     41.1     55.1       -       -     55.1 
Residential                              0.9     1.2       -      2.1      1.4     3.5       -      4.9 
Development(1)                          59.8       -       -     59.8     57.0       -       -     57.0 
-----------------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
                                     2,500.6    94.4  (11.4)  2,583.6  2,269.0    92.4  (14.9)  2,346.5 
-----------------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
Head lease and right of use assets                                5.1                               5.7 
-----------------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
                                                              2,588.7                           2,352.2 
-----------------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
 

1 Includes trading property of GBP1.1 million

 
For the year to 31 March                           2021                          2020 
-------------------------  ----------------------------  ---------------------------- 
                             100%   Share                  100%   Share 
                            owned   of JV    NCI  Total   owned   of JV    NCI  Total 
Gross rental income          GBPm    GBPm   GBPm   GBPm    GBPm    GBPm   GBPm   GBPm 
-------------------------  ------  ------  -----  -----  ------  ------  -----  ----- 
Distribution                 78.1       -  (0.1)   78.0    76.3       -  (0.2)   76.1 
Long income                  34.7     5.3  (1.4)   38.6    25.7     6.1  (1.1)   30.7 
Retail parks                  4.7       -      -    4.7     7.1       -      -    7.1 
Office                        3.5       -      -    3.5     3.2       -      -    3.2 
Residential                   0.1       -      -    0.1       -     0.2      -    0.2 
Development                   0.2       -      -    0.2       -       -      -      - 
-------------------------  ------  ------  -----  -----  ------  ------  -----  ----- 
                            121.3     5.3  (1.5)  125.1   112.3     6.3  (1.3)  117.3 
-------------------------  ------  ------  -----  -----  ------  ------  -----  ----- 
 
 
For the year to 31 March                           2021                          2020 
-------------------------  ----------------------------  ---------------------------- 
                             100%   Share                  100%   Share 
                            owned   of JV    NCI  Total   owned   of JV    NCI  Total 
Net rental income            GBPm    GBPm   GBPm   GBPm    GBPm    GBPm   GBPm   GBPm 
-------------------------  ------  ------  -----  -----  ------  ------  -----  ----- 
Distribution                 77.2       -  (0.1)   77.1    75.5       -  (0.2)   75.3 
Long income                  34.5     5.2  (1.4)   38.3    25.7     6.1  (1.1)   30.7 
Retail parks                  4.3       -      -    4.3     6.7       -      -    6.7 
Office                        3.4       -      -    3.4     3.2       -      -    3.2 
Residential                   0.1   (0.1)      -      -       -       -      -      - 
Development                   0.2       -      -    0.2       -       -      -      - 
-------------------------  ------  ------  -----  -----  ------  ------  -----  ----- 
                            119.7     5.1  (1.5)  123.3   111.1     6.1  (1.3)  115.9 
-------------------------  ------  ------  -----  -----  ------  ------  -----  ----- 
 

An operating segment is a distinguishable component of the Group that engages in business activities, earns revenue and incurs expenses, whose results are reviewed by the Group's Chief Operating Decision Makers ('CODMs') and for which discrete financial information is available. Gross rental income represents the Group's revenues from its tenants and net rental income is the principal profit measure used to determine the performance of each sector. Total assets and liabilities are not monitored by segment. However, property assets are reviewed on an ongoing basis. The Group operates entirely in the UK and no geographical split is provided in information reported to the Board.

Included within the distribution operating segment are the sub-categories of urban logistics, regional distribution and mega distribution as reported throughout the Strategic report, however the sub-category results are not separately reviewed by the CODMs as they are not considered separate operating segments. Instead, the CODMs review the distribution sector as a whole as its own operating segment.

3 Revenue

 
                                               2021   2020 
For the year to 31 March                       GBPm   GBPm 
--------------------------------------------  -----  ----- 
Gross rental income                           121.3  112.3 
Property advisory fee income                    0.9    1.1 
--------------------------------------------  -----  ----- 
                                              122.2  113.4 
--------------------------------------------  -----  ----- 
 
                                               2021   2020 
For the year to 31 March                       GBPm   GBPm 
--------------------------------------------  -----  ----- 
Gross rental income                           121.3  112.3 
Cost of sales - property operating expenses   (1.6)  (1.2) 
--------------------------------------------  -----  ----- 
Net rental income                             119.7  111.1 
--------------------------------------------  -----  ----- 
 

No individual tenant contributed more than 10% of gross rental income in the current or previous year. The contracted rental income of the Group's top ten occupiers is shown in Supplementary note xvii.

4 Administrative costs

a) Total administrative costs

 
                              2021   2020 
For the year to 31 March      GBPm   GBPm 
---------------------------  -----  ----- 
Staff costs                   12.4   12.1 
Auditor's remuneration         0.2    0.2 
Depreciation                   0.7    0.7 
Other administrative costs     2.5    2.8 
---------------------------  -----  ----- 
                              15.8   15.8 
---------------------------  -----  ----- 
 

b) Staff costs

 
                                                                         2021   2020 
For the year to 31 March                                                 GBPm   GBPm 
----------------------------------------------------------------------  -----  ----- 
Employee costs, including those of Directors, comprise the following: 
Wages and salaries                                                        9.8   10.3 
Less staff costs capitalised in respect of development projects         (2.2)  (2.1) 
----------------------------------------------------------------------  -----  ----- 
                                                                          7.6    8.2 
Social security costs                                                     0.8    0.8 
Pension costs                                                             0.2    0.2 
Share based payment                                                       3.8    2.9 
----------------------------------------------------------------------  -----  ----- 
                                                                         12.4   12.1 
----------------------------------------------------------------------  -----  ----- 
 

The long term share incentive plan ('LTIP') that was created in 2013 allows Executive Directors and eligible employees to receive an award of shares, held in trust, dependent on performance conditions based on the earnings per share, total shareholder return and total accounting return of the Group over a three year vesting period. The Group expenses the estimated number of shares likely to vest over the three year period based on the market price at the date of grant. In the current year the charge was GBP3.8 million (2020: GBP2.9 million). The cost of acquiring the shares expected to vest under the LTIP of GBP5.5 million has been charged to reserves this year (2020: GBP7.2 million).

Directors' emoluments are reflected in the table below. Details of the Directors' remuneration awards under the LTIP are given in the Remuneration Committee report.

 
                                               2021   2020 
                                               GBPm   GBPm 
--------------------------------------------  -----  ----- 
Remuneration for management services            2.8    2.9 
Entitlement to pension scheme contributions     0.1    0.1 
--------------------------------------------  -----  ----- 
                                                2.9    3.0 
--------------------------------------------  -----  ----- 
 

The emoluments and benefits of the key management personnel of the Company, which comprise the Directors and certain members of the Senior Leadership Team, are set out in aggregate in the table below.

 
                                2021   2020 
                                GBPm   GBPm 
-----------------------------  -----  ----- 
Short term employee benefits     8.7    7.8 
Share based payments             2.5    2.3 
-----------------------------  -----  ----- 
                                11.2   10.1 
-----------------------------  -----  ----- 
 

No disclosures have been made in accordance with IFRS 2 for share based payments to employees other than those in the Remuneration Committee report on the basis of materiality.

c) Staff numbers

The average number of employees including Executive Directors during the year was:

 
                                 2021     2020 
                               Number   Number 
----------------------------  -------  ------- 
Property and administration        32       34 
----------------------------  -------  ------- 
 

d) Auditor's remuneration

 
                                                                                  2021     2020 
For the year to 31 March                                                        GBP000   GBP000 
-----------------------------------------------------------------------------  -------  ------- 
Audit services: 
Audit of the Group and Company financial statements, pursuant to legislation       201      179 
Audit of subsidiary financial statements, pursuant to legislation                    -        5 
Other fees: 
Audit related assurance services                                                    35       30 
-----------------------------------------------------------------------------  -------  ------- 
Total fees for audit and other services                                            236      214 
-----------------------------------------------------------------------------  -------  ------- 
 

In addition to the above audit fees, GBP24,200 (2020: GBP35,600) was due to the Group's auditor in respect of its joint venture operations. BDO LLP is responsible for the audit of other subsidiary entities at a cost to the Group of GBP36,500 (2020: GBP10,400).

5 Finance costs

 
                                                              2021   2020 
For the year to 31 March                                      GBPm   GBPm 
-----------------------------------------------------------  -----  ----- 
Interest payable on bank loans and related derivatives        19.4   22.8 
Debt and hedging early close out costs                         7.5    0.2 
Amortisation of loan issue costs                               1.8    1.5 
Interest on lease liabilities                                  0.1    0.1 
Commitment fees and other finance costs                        1.9    2.1 
-----------------------------------------------------------  -----  ----- 
Total borrowing costs                                         30.7   26.7 
Less amounts capitalised on developments                     (1.1)  (0.9) 
-----------------------------------------------------------  -----  ----- 
Net borrowing costs                                           29.6   25.8 
Fair value (gain)/loss on derivative financial instruments   (4.7)    3.2 
-----------------------------------------------------------  -----  ----- 
Total finance costs                                           24.9   29.0 
-----------------------------------------------------------  -----  ----- 
 

Net finance costs deducted from EPRA earnings as disclosed in Supplementary note ii exclude the fair value gain on derivative financial instruments of GBP4.7 million (2020: loss of GBP3.2 million) and early close out costs of GBP7.5 million (2020: GBP0.2 million), and include interest receivable of GBP0.6 million (2020: GBP0.7 million) as reflected in the income statement.

6 Taxation

 
                            2021   2020 
For the year to 31 March    GBPm   GBPm 
-------------------------  -----  ----- 
Current tax 
UK tax charge on profit      0.1    0.2 
-------------------------  -----  ----- 
 

The tax assessed for the year varies from the standard rate of corporation tax in the UK. The differences are explained below:

 
                                                                                             2021   2020 
For the year to 31 March                                                                     GBPm   GBPm 
-----------------------------------------------------------------------------------------  ------  ----- 
Profit/(loss) before tax                                                                    258.0  (6.7) 
Tax charge/(credit) at the standard rate of corporation tax in the UK of 19% (2020: 19%)     49.0  (1.3) 
Effects of: 
Tax effect of income not subject to tax                                                    (47.6)  (0.2) 
Share of post tax (profits)/losses of joint ventures                                        (1.3)    1.7 
-----------------------------------------------------------------------------------------  ------  ----- 
UK tax charge on profit                                                                       0.1    0.2 
-----------------------------------------------------------------------------------------  ------  ----- 
 

The current tax charge relates to tax arising on income attributable to the Group's non-controlling interest and other income that does not qualify as property income within the REIT regulations. As the Group is a UK REIT there is no provision for deferred tax arising on the revaluation of properties or other temporary differences.

7 Dividends

 
                                                           2021   2020 
For the year to 31 March                                   GBPm   GBPm 
--------------------------------------------------------  -----  ----- 
Ordinary dividends paid 
--------------------------------------------------------  -----  ----- 
2019 Third quarterly interim dividend: 1.9p per share         -   13.3 
2019 Fourth quarterly interim dividend: 2.5p per share        -   17.4 
2020 First quarterly interim dividend: 2.0p per share         -   16.7 
2020 Second quarterly interim dividend: 2.0p per share        -   16.8 
2020 Third quarterly interim dividend: 2.0p per share      16.7      - 
2020 Fourth quarterly interim dividend: 2.3p per share     20.8      - 
2021 First quarterly interim dividend: 2.1p per share      19.0      - 
2021 Second quarterly interim dividend: 2.1p per share     19.1      - 
--------------------------------------------------------  -----  ----- 
                                                           75.6   64.2 
--------------------------------------------------------  -----  ----- 
Quarterly dividend payable 
2021 Third quarterly interim dividend: 2.1p per share      19.0 
2021 Fourth quarterly interim dividend: 2.35p per share    21.3 
--------------------------------------------------------  -----  ----- 
 

The Company paid its third quarterly interim dividend in respect of the financial year to 31 March 2021 of 2.1p per share, wholly as a Property Income Distribution ('PID'), on 15 April 2021 to ordinary shareholders on the register at the close of business on 12 March 2021.

The fourth quarterly interim dividend for 2021 of 2.35p per share, of which 2.25p is payable as a PID, will be payable on 13 July 2021 to shareholders on the register at the close of business on 11 June 2021. A scrip dividend alternative will be offered to shareholders as it was for the first three quarterly dividend payments.

Neither dividend has been included as a liability in these accounts. Both dividends will be recognised as an appropriation of retained earnings in the year to 31 March 2022.

During the year the Company issued 1.5 million ordinary shares under the terms of the Scrip Dividend Scheme, which reduced the cash dividend payment by GBP3.2 million to GBP72.4 million.

8 Earnings and net assets per share

Adjusted earnings and net assets per share are calculated in accordance with the Best Practice Recommendations ('BPR') of the European Public Real Estate Association ('EPRA'). The EPRA earnings measure highlights the underlying performance of the property rental business.

The basic earnings per share calculation uses the weighted average number of ordinary shares during the year and excludes the average number of shares held by the Employee Benefit Trust for the year. The basic net asset per share calculation uses the number of shares in issue at the year end and excludes the actual number of shares held by the Employee Benefit Trust at the year end. The fully diluted calculations assume that new shares are issued in connection with the expected vesting of the Group's long term incentive plan. Further EPRA performance measures are reflected in the Supplementary notes.

a) EPRA earnings

EPRA earnings for the Group and its share of joint ventures are detailed as follows:

 
                            Group     JV    NCI    2021   Group     JV    NCI    2020 
For the year to 31 March     GBPm   GBPm   GBPm    GBPm    GBPm   GBPm   GBPm    GBPm 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
Gross rental income         121.3    5.3  (1.5)   125.1   112.3    6.3  (1.3)   117.3 
Property costs              (1.6)  (0.2)      -   (1.8)   (1.2)  (0.2)      -   (1.4) 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
Net rental income           119.7    5.1  (1.5)   123.3   111.1    6.1  (1.3)   115.9 
Management fees               0.9  (0.4)      -     0.5     1.1  (0.5)      -     0.6 
Administrative costs       (15.8)      -      -  (15.8)  (15.8)  (0.1)      -  (15.9) 
Net finance costs(1)       (21.5)  (1.2)    0.2  (22.5)  (24.9)  (1.5)    0.3  (26.1) 
Other(1)                    (0.1)      -    0.2     0.1   (0.2)      -    0.2       - 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
EPRA earnings                83.2    3.5  (1.1)    85.6    71.3    4.0  (0.8)    74.5 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
 

1 Group net finance costs reflect net borrowing costs of GBP29.6 million (note 5) less early close out costs of GBP7.5 million (note 5) and finance income of GBP0.6 million

The reconciliation of EPRA earnings to IFRS reported profit can be summarised as follows:

 
                                         Group     JV    NCI   2021   Group      JV    NCI    2020 
For the year to 31 March                  GBPm   GBPm   GBPm   GBPm    GBPm    GBPm   GBPm    GBPm 
---------------------------------------  -----  -----  -----  -----  ------  ------  -----  ------ 
EPRA earnings                             83.2    3.5  (1.1)   85.6    71.3     4.0  (0.8)    74.5 
Revaluation of property                  169.9    3.4    0.4  173.7   (3.8)  (10.2)    2.0  (12.0) 
Fair value of derivatives                  4.7    0.1      -    4.8   (3.2)   (0.4)      -   (3.6) 
Profit/(loss) on disposal                  0.8  (0.1)      -    0.7   (4.9)   (2.3)      -   (7.2) 
Debt and hedging early close out costs   (7.5)      -      -  (7.5)   (0.2)       -      -   (0.2) 
Impairment of goodwill                       -      -      -      -  (48.3)       -      -  (48.3) 
Acquisition costs                            -      -      -      -   (8.9)       -      -   (8.9) 
---------------------------------------  -----  -----  -----  -----  ------  ------  -----  ------ 
IFRS reported profit/(loss)              251.1    6.9  (0.7)  257.3     2.0   (8.9)    1.2   (5.7) 
---------------------------------------  -----  -----  -----  -----  ------  ------  -----  ------ 
 

b) Earnings per ordinary share attributable to equity shareholders

 
                                2021   2020 
For the year to 31 March        GBPm   GBPm 
---------------------------  -------  ----- 
Basic and diluted earnings     257.3  (5.7) 
EPRA adjustments above       (171.7)   80.2 
---------------------------  -------  ----- 
EPRA earnings                   85.6   74.5 
---------------------------  -------  ----- 
 
 
                                                                     2021          2020 
                                                                Number of     Number of 
                                                                   shares        shares 
For the year to 31 March                                       (millions)    (millions) 
-----------------------------------------------------------  ------------  ------------ 
Ordinary share capital                                              901.9         806.7 
Shares held in the Employee Benefit Trust                           (2.8)         (2.5) 
-----------------------------------------------------------  ------------  ------------ 
Weighted average number of ordinary shares - basic                  899.1         804.2 
Employee share schemes                                                4.8           6.0 
-----------------------------------------------------------  ------------  ------------ 
Weighted average number of ordinary shares - fully diluted          903.9         810.2 
-----------------------------------------------------------  ------------  ------------ 
Earnings per share 
Basic                                                              28.61p       (0.70)p 
Diluted                                                            28.46p       (0.70)p 
EPRA earnings per share 
Basic                                                               9.52p         9.26p 
Diluted                                                             9.47p         9.19p 
-----------------------------------------------------------  ------------  ------------ 
 

c) Net assets per share attributable to equity shareholders

In October 2019, EPRA published new best practice recommendations for financial disclosures by public real estate companies. The best practice recommendations introduced three new measures of net asset value: EPRA net tangible assets ('NTA'), EPRA net reinstatement value ('NRV') and EPRA net disposal value ('NDV').

These recommendations became effective for accounting periods commencing on 1 January 2020 and have been adopted by the Group in the year. The three new measures have replaced the previously reported metrics of EPRA net asset value ('NAV') and EPRA triple net asset value ('NNNAV').

EPRA NTA is considered to be the most relevant measure for the Group and replaces EPRA NAV as the primary measure of net asset value. All three measures are calculated on a diluted basis, which assumes that new shares are issued in connection with the expected vesting of the Group's long term incentive plan.

A reconciliation between the three new EPRA NAV metrics to IFRS NAV and the previously reported EPRA NAV is shown in the table below. For the Group, EPRA NDV is equivalent to EPRA NNNAV on a fully diluted basis and therefore no reconciliation is presented.

 
                                       EPRA net tangible assets  EPRA net disposal value  EPRA net reinstatement value 
As at 31 March 2021                                        GBPm                     GBPm                          GBPm 
-------------------------------------  ------------------------  -----------------------  ---------------------------- 
Equity shareholders' funds                              1,731.3                  1,731.3                       1,731.3 
Fair value of group derivatives                               -                        -                             - 
Fair value of joint ventures' 
 derivatives                                                0.6                      0.6                           0.6 
-------------------------------------  ------------------------  -----------------------  ---------------------------- 
EPRA net asset value (as previously 
 reported)                                              1,731.9                  1,731.9                       1,731.9 
-------------------------------------  ------------------------  -----------------------  ---------------------------- 
Fair value of derivatives                                     -                    (0.6)                             - 
Mark to market of fixed rate debt                             -                    (4.9)                             - 
Purchasers' costs(1)                                          -                        -                         176.0 
-------------------------------------  ------------------------  -----------------------  ---------------------------- 
EPRA net asset value (new measures)                     1,731.9                  1,726.4                       1,907.9 
-------------------------------------  ------------------------  -----------------------  ---------------------------- 
 

1 Estimated from the portfolio's external valuation which is stated net of purchasers' costs of 6.8%.

 
                                  EPRA net tangible assets                                EPRA net reinstatement value 
As at 31 March 2020                                   GBPm  EPRA net disposal value GBPm                          GBPm 
--------------------------------  ------------------------  ----------------------------  ---------------------------- 
Equity shareholders' funds                         1,431.8                       1,431.8                       1,431.8 
Fair value of group derivatives                        4.7                           4.7                           4.7 
Fair value of joint ventures' 
 derivatives                                           0.7                           0.7                           0.7 
--------------------------------  ------------------------  ----------------------------  ---------------------------- 
EPRA net asset value (as 
 previously reported)                              1,437.2                       1,437.2                       1,437.2 
--------------------------------  ------------------------  ----------------------------  ---------------------------- 
Fair value of derivatives                                -                         (5.4)                             - 
Mark to market of fixed rate 
 debt                                                    -                           1.7                             - 
Purchasers' costs                                        -                             -                         159.9 
--------------------------------  ------------------------  ----------------------------  ---------------------------- 
EPRA net asset value (new 
 measures)                                         1,437.2                       1,433.5                       1,597.1 
--------------------------------  ------------------------  ----------------------------  ---------------------------- 
 
 
                                                         2021                2020 
                                             Number of shares    Number of shares 
As at 31 March                                     (millions)          (millions) 
------------------------------------------  -----------------  ------------------ 
Ordinary share capital                                  909.6               841.5 
Shares held in Employee Benefit Trust                   (4.4)               (4.3) 
------------------------------------------  -----------------  ------------------ 
Number of ordinary shares - basic                       905.2               837.2 
------------------------------------------  -----------------  ------------------ 
Employee share schemes                                    4.7                 6.5 
------------------------------------------  -----------------  ------------------ 
Number of ordinary shares - fully diluted               909.9               843.7 
------------------------------------------  -----------------  ------------------ 
 
IFRS net asset value per share                         191.3p              171.0p 
------------------------------------------  -----------------  ------------------ 
EPRA net tangible assets per share                     190.3p              170.3p 
------------------------------------------  -----------------  ------------------ 
EPRA net disposal value per share                      189.7p              169.9p 
------------------------------------------  -----------------  ------------------ 
EPRA net reinstatement value per share                 209.7p              189.3p 
------------------------------------------  -----------------  ------------------ 
 

9 Investment properties

a) Investment properties

 
 
                                                                                2021                    Under     2020 
                                          Completed                            Total  Completed   development    Total 
As at 31 March                                 GBPm  Under development GBPm     GBPm       GBPm          GBPm     GBPm 
----------------------------------------  ---------  ----------------------  -------  ---------  ------------  ------- 
Opening balance                             2,212.0                    55.9  2,267.9    1,628.2          59.8  1,688.0 
Acquisitions                                  212.4                    16.8    229.2      634.2          31.9    666.1 
Capital expenditure                             4.9                    21.1     26.0       10.2          11.2     21.4 
Disposals                                   (200.8)                       -  (200.8)    (113.1)         (0.3)  (113.4) 
Property transfers                             55.5                  (55.5)        -       50.3        (50.3)        - 
Revaluation movement                          149.7                    20.2    169.9      (7.3)           3.5    (3.8) 
Movement in tenant incentives and rent 
 free uplifts                                   7.1                     0.2      7.3        9.5           0.1      9.6 
Property portfolio                          2,440.8                    58.7  2,499.5    2,212.0          55.9  2,267.9 
Head lease and right of use assets              5.1                       -      5.1        5.7             -      5.7 
----------------------------------------  ---------  ----------------------  -------  ---------  ------------  ------- 
                                            2,445.9                    58.7  2,504.6    2,217.7          55.9  2,273.6 
----------------------------------------  ---------  ----------------------  -------  ---------  ------------  ------- 
 

Investment properties are held at fair value as at 31 March 2021 based on external valuations performed by professionally qualified valuers CBRE Limited ('CBRE'), Savills (UK) Limited ('Savills') and Cushman & Wakefield Debenham Tie Leung Limited ('Cushman & Wakefield'). The valuation of property held for sale at 31 March 2021 was GBP22.4 million (2020: GBP67.8 million), representing GBP2.3 million distribution, GBP10.5 million long income and GBP9.6 million office assets.

The valuations have been prepared in accordance with the RICS Valuation - Professional Standards 2014 on the basis of fair value as set out in note 1. There has been no change in the valuation technique in the year. The total fees earned by CBRE, Savills and Cushman & Wakefield from the Company represent less than 5% of their total UK revenues. CBRE and Savills have continuously been the signatory of valuations for the Company since October 2007 and September 2010 respectively.

Long term leasehold values included within investment properties amount to GBP148.7 million (2020: GBP176.9 million). All other properties are freehold. The historical cost of all of the Group's investment properties at 31 March 2021 was GBP1,948.2 million (2020: GBP1,884.0 million).

Included within the investment property valuation is GBP79.4 million (2020: GBP72.1 million) in respect of unamortised lease incentives and rent free periods.

Capital commitments have been entered into amounting to GBP93.3 million (2020: GBP28.9 million) which have not been provided for in the financial statements.

Internal staff costs of the development team of GBP2.2 million (2020: GBP2.1 million) have been capitalised, being directly attributable to the development projects in progress.

Forward funded development costs of GBP15.5 million (2020: GBP9.9 million) have been classified within investment property as acquisitions.

At 31 March 2021, investment properties included GBP5.1 million for the head lease right of use assets in accordance with IFRS 16 (2020: GBP5.7 million).

b) Valuation technique and quantitative information

 
                                                                        ERV    Net initial yield   Reversionary yield 
                     Fair 
                    value                         Weighted                    Weighted             Weighted 
                     2021       Valuation          average            Range    average     Range    average     Range 
Asset type           GBPm       technique  (GBP per sq ft)  (GBP per sq ft)          %         %          %         % 
--------------  ---------  --------------  ---------------  ---------------  ---------  --------  ---------  -------- 
                                    Yield 
Distribution      1,777.3  capitalisation             7.06       4.00-21.40        4.1   1.4-7.1        4.5   2.4-7.4 
                                    Yield 
Long income         547.6  capitalisation            14.00      3.00-155.70        4.9  3.4-11.8        4.7  2.4-13.4 
                                    Yield 
Retail parks         73.9  capitalisation            14.03       6.00-18.70        7.5  6.2-12.4        6.7   6.0-9.4 
                                    Yield 
Office               41.1  capitalisation            17.38      11.50-33.90        6.0   5.0-7.4        6.5   5.6-9.3 
Development          58.7        Residual            10.21       8.35-25.00        4.2   3.9-5.7        3.9   3.7-5.7 
Residential           0.9      Comparison              n/a              n/a        n/a       n/a        n/a       n/a 
--------------  ---------  --------------  ---------------  ---------------  ---------  --------  ---------  -------- 
 
 

All of the Group's properties are categorised as Level 3 in the fair value hierarchy as defined by IFRS 13 fair value measurement. There have been no transfers of properties between Levels 1, 2 and 3 during the year ended 31 March 2021. The fair value at 31 March 2021 represents the highest and best use.

i) Technique

The valuation techniques described below are consistent with IFRS 13 and use significant 'unobservable' inputs such as Expected Rental Value ('ERV') and yield. There have been no changes in valuation techniques since the prior year.

Yield capitalisation - for commercial investment properties, market rental values are capitalised with a market capitalisation rate. The resulting valuations are cross-checked against the net initial yields and the fair market values per square foot derived from recent market transactions.

Residual - for certain investment properties under development, the fair value of the property is calculated by estimating the fair value of the completed property using the yield capitalisation technique less estimated costs to completion and a risk premium.

Comparison - for residential properties the fair value is calculated by using data from recent market transactions.

ii) Sensitivity

A 5% increase or decrease in ERV would increase or decrease the fair value of the Group's investment properties by GBP75.7 million or GBP73.8 million respectively.

An increase or decrease of 25 bps to the equivalent yield would decrease or increase the fair value of the Group's investment properties by GBP136.0 million or GBP152.0 million respectively.

There are interrelationships between the unobservable inputs as they are determined by market conditions; an increase in more than one input could magnify or mitigate the impact on the valuation.

iii) Process

The valuation reports produced by CBRE, Savills and Cushman & Wakefield are based on:

-- Information provided by the Group, such as current rents, lease terms, capital expenditure and comparable sales information, which is derived from the Group's financial and property management systems and is subject to the Group's overall control environment

-- Assumptions applied by the valuers such as ERVs and yields which are based on market observation and their professional judgement

10 Investment in joint ventures

At 31 March 2021, the following principal property interests, being jointly controlled entities, have been equity accounted for in these financial statements:

 
                                              Country of incorporation 
                                                    or registration(1)   Property sectors  Group share 
-------------------------------------------  -------------------------  -----------------  ----------- 
Metric Income Plus Partnership                                 England        Long income        50.0% 
LSP London Residential Investments Limited                    Guernsey        Residential        40.0% 
-------------------------------------------  -------------------------  -----------------  ----------- 
 

1 The registered address for entities incorporated in England is One Curzon Street, London, W1J 5HB. The registered address for entities incorporated in Guernsey is Regency Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 3AP.

The principal activity of joint venture interests is property investment in the UK in the sectors noted in the table above, which complements the Group's operations and contributes to the achievement of its strategy.

LSP London Residential Investments Limited disposed of four residential flats at Moore House for GBP4.5 million (Group share: GBP1.8 million) in the year, reducing the number held to four.

The Metric Income Plus Partnership ('MIPP'), in which the Company has a 50% interest, sold two properties post year end for GBP21.1 million (Group share: GBP10.6 million).

At 31 March 2021, the freehold and leasehold investment properties were externally valued by Royal Institution of Chartered Surveyors ('RICS') registered valuers of CBRE and Savills. The valuation of property held for sale by joint ventures at 31 March 2021 was GBP21.1 million (Group share: GBP10.6 million), (2020: GBP3.9 million and Group share GBP1.5 million).

The movement in the carrying value of joint venture interests in the year is summarised as follows:

 
                                      2021    2020 
As at 31 March                        GBPm    GBPm 
-----------------------------------  -----  ------ 
Opening balance                       54.1    98.9 
Additions at cost                      4.7     0.3 
Share of profit/(loss) in the year     6.9   (8.9) 
Disposals                                -  (20.5) 
Distributions received               (6.5)  (15.7) 
-----------------------------------  -----  ------ 
                                      59.2    54.1 
-----------------------------------  -----  ------ 
 

The Group's share of the profit after tax and net assets of its joint ventures is as follows:

 
                                                                LSP 
                                               Metric        London           Group 
                                          Income Plus   Residential   Total   share 
                                          Partnership   Investments    2021    2021 
                                                 GBPm          GBPm    GBPm    GBPm 
---------------------------------------  ------------  ------------  ------  ------ 
Summarised income statement 
Gross rental income                              10.7             -    10.7     5.3 
Property costs                                  (0.3)         (0.1)   (0.4)   (0.2) 
---------------------------------------  ------------  ------------  ------  ------ 
Net rental income                                10.4         (0.1)    10.3     5.1 
Administrative costs                            (0.1)             -   (0.1)       - 
Management fees                                 (0.8)         (0.1)   (0.9)   (0.4) 
Revaluation                                       8.0         (1.5)     6.5     3.4 
Net finance cost                                (2.5)             -   (2.5)   (1.2) 
Derivative movement                               0.3             -     0.3     0.1 
Loss on disposal                                    -         (0.2)   (0.2)   (0.1) 
---------------------------------------  ------------  ------------  ------  ------ 
Profit/(loss) after tax                          15.3         (1.9)    13.4     6.9 
---------------------------------------  ------------  ------------  ------  ------ 
Group share of profit/(loss) after tax            7.7         (0.8)     6.9 
---------------------------------------  ------------  ------------  ------  ------ 
EPRA adjustments: 
Revaluation                                     (8.0)           1.5   (6.5)   (3.4) 
Debt and hedging early close out costs            0.1             -     0.1       - 
Derivative movement                             (0.3)             -   (0.3)   (0.1) 
Loss on disposal                                    -           0.2     0.2     0.1 
---------------------------------------  ------------  ------------  ------  ------ 
EPRA earnings                                     7.1         (0.2)     6.9     3.5 
---------------------------------------  ------------  ------------  ------  ------ 
Group share of EPRA earnings                      3.6         (0.1)     3.5 
---------------------------------------  ------------  ------------  ------  ------ 
Summarised balance sheet 
---------------------------------------  ------------  ------------  ------  ------ 
Investment properties                           186.5           2.9   189.4    94.4 
Other current assets                              0.8             -     0.8     0.4 
Cash                                              4.6           2.8     7.4     3.4 
Current liabilities                             (2.6)             -   (2.6)   (1.2) 
Bank debt                                      (74.9)             -  (74.9)  (37.5) 
Unamortised finance costs                         0.5             -     0.5     0.3 
Derivative financial instruments                (1.1)             -   (1.1)   (0.6) 
---------------------------------------  ------------  ------------  ------  ------ 
Net assets                                      113.8           5.7   119.5    59.2 
---------------------------------------  ------------  ------------  ------  ------ 
Group share of net assets                        56.9           2.3    59.2 
---------------------------------------  ------------  ------------  ------  ------ 
 
 
                                                              LMP 
                                               Metric      Retail                  LSP           Group 
                                          Income Plus   Warehouse   London Residential   Total   share 
                                          Partnership      JV PUT          Investments    2020    2020 
                                                 GBPm        GBPm                 GBPm    GBPm    GBPm 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
Summarised income statement 
Gross rental income                              11.8         0.5                  0.3    12.6     6.3 
Property costs                                  (0.2)           -                (0.2)   (0.4)   (0.2) 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
Net rental income                                11.6         0.5                  0.1    12.2     6.1 
Administrative costs                            (0.1)           -                    -   (0.1)   (0.1) 
Management fees                                 (0.9)           -                (0.2)   (1.1)   (0.5) 
Revaluation                                    (20.3)           -                (0.3)  (20.6)  (10.2) 
Net finance cost                                (2.7)       (0.2)                    -   (2.9)   (1.5) 
Derivative movement                             (0.7)           -                    -   (0.7)   (0.4) 
Profit/(loss) on disposal                         0.2           -                (6.1)   (5.9)   (2.3) 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
(Loss)/profit after tax                        (12.9)         0.3                (6.5)  (19.1)   (8.9) 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
Group share of (loss)/profit after tax          (6.4)         0.1                (2.6)   (8.9) 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
EPRA adjustments: 
Revaluation                                      20.3           -                  0.3    20.6    10.2 
Derivative movement                               0.7           -                    -     0.7     0.4 
(Profit)/loss on disposal                       (0.2)           -                  6.1     5.9     2.3 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
EPRA earnings                                     7.9         0.3                (0.1)     8.1     4.0 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
Group share of EPRA earnings                      4.0         0.1                (0.1)     4.0 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
Summarised balance sheet 
Investment properties                           177.7           -                  8.9   186.6    92.4 
Other current assets                              0.9           -                  0.1     1.0     0.5 
Cash                                              5.6           -                  5.7    11.3     5.1 
Current liabilities                             (2.9)           -                (0.1)   (3.0)   (1.5) 
Bank debt                                      (84.3)           -                    -  (84.3)  (42.1) 
Unamortised finance costs                         0.9           -                    -     0.9     0.4 
Derivative financial instruments                (1.3)           -                    -   (1.3)   (0.7) 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
Net assets                                       96.6           -                 14.6   111.2    54.1 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
Group share of net assets                        48.3           -                  5.8    54.1 
---------------------------------------  ------------  ----------  -------------------  ------  ------ 
 

11 Trade and other receivables

 
                                  2021   2020 
As at 31 March                    GBPm   GBPm 
-------------------------------  -----  ----- 
Trade receivables                  4.8    5.8 
Prepayments and accrued income     3.5    1.1 
Other receivables                  1.5    0.9 
-------------------------------  -----  ----- 
                                   9.8    7.8 
-------------------------------  -----  ----- 
 

All amounts fall due for payment in less than one year. Trade receivables comprise rental income which is due on contractual payment days with no credit period. At 31 March 2021, trade receivables of GBP159,200 were overdue and considered at risk (2020: GBP69,800). Based on the IFRS 9 expected credit loss model, an impairment provision of GBP760,000 (2020: GBP340,000) has also been made against trade receivables.

12 Cash and cash equivalents

Cash and cash equivalents include GBP10.7 million (2020: GBP5.4 million) retained in rent and restricted accounts which are not readily available to the Group for day to day commercial purposes.

13 Trade and other payables

 
                                                          2021   2020 
As at 31 March                                            GBPm   GBPm 
-------------------------------------------------------  -----  ----- 
Trade payables                                             4.6    4.2 
Amounts payable on property acquisitions and disposals     1.3    0.4 
Rent received in advance                                  22.6   19.8 
Accrued interest                                           1.3    1.9 
Other payables                                             5.3    4.1 
Other accruals and deferred income                        10.9   12.2 
-------------------------------------------------------  -----  ----- 
                                                          46.0   42.6 
-------------------------------------------------------  -----  ----- 
 

The Group has financial risk management policies in place to ensure that all payables are settled within the required credit timeframe.

14 Borrowings and financial instruments

a) Non current financial liabilities

 
                             2021   2020 
As at 31 March               GBPm   GBPm 
--------------------------  -----  ----- 
Secured bank loans          192.5  192.7 
Unsecured bank loans        647.0  740.0 
--------------------------  -----  ----- 
                            839.5  932.7 
Unamortised finance costs   (2.0)  (6.0) 
--------------------------  -----  ----- 
                            837.5  926.7 
--------------------------  -----  ----- 
 

Certain bank loans at 31 March 2021 are secured by fixed charges over Group investment properties with a carrying value of GBP584.9 million (2020: GBP529.7 million).

 
                                         Floating rate(1)  Fixed rate  Total debt 
As at 31 March 2021                                  GBPm        GBPm        GBPm  Weighted average maturity (years) 
--------------------------------------   ----------------  ----------  ----------  --------------------------------- 
Secured bank loans: 
Helaba term loan                                    130.0           -       130.0                                3.3 
Scottish Widows fixed rate debt                         -        62.5        62.5                               10.7 
---------------------------------------  ----------------  ----------  ----------  --------------------------------- 
Unsecured bank loans: 
Revolving credit facility (syndicate)               258.0           -       258.0                                1.0 
HSBC revolving credit facility                       59.0           -        59.0                                2.0 
Wells Fargo revolving credit facility                50.0           -        50.0                                4.3 
Private Placement 2016 (syndicate)                      -       130.0       130.0                                3.7 
Private Placement 2018 (syndicate)                      -       150.0       150.0                                9.8 
---------------------------------------  ----------------  ----------  ----------  --------------------------------- 
                                                    497.0       342.5       839.5                                4.3 
 --------------------------------------  ----------------  ----------  ----------  --------------------------------- 
 

1 Interest rate caps of GBP19.6 million were used to hedge the Group's exposure to interest rate risk

 
                                         Floating rate(1)  Fixed rate  Total debt 
As at 31 March 2020                                  GBPm        GBPm        GBPm  Weighted average maturity (years) 
--------------------------------------   ----------------  ----------  ----------  --------------------------------- 
Secured bank loans: 
Helaba term loan                                    130.0           -       130.0                                4.3 
Scottish Widows fixed rate debt                         -        62.7        62.7                               11.7 
---------------------------------------  ----------------  ----------  ----------  --------------------------------- 
Unsecured bank loans: 
Revolving credit facility (syndicate)               410.0           -       410.0                                1.8 
Wells Fargo revolving credit facility                50.0           -        50.0                                5.3 
Private Placement 2016 (syndicate)                      -       130.0       130.0                                4.7 
Private Placement 2018 (syndicate)                      -       150.0       150.0                               10.8 
---------------------------------------  ----------------  ----------  ----------  --------------------------------- 
                                                    590.0       342.7       932.7                                4.8 
 --------------------------------------  ----------------  ----------  ----------  --------------------------------- 
 

1 Interest rate caps of GBP19.6 million and swaps of GBP350 million were used to hedge the Group's exposure to interest rate risk

b) Financial risk management

Financial risk factors

The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group's financial risk management objectives are to minimise the effect of risks it is exposed to through its operations and the use of debt financing.

The principal financial risks to the Group and the policies it has in place to manage these risks are summarised below.

i) Credit risk

Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual obligations.

The Group's principal financial assets are cash balances and deposits and trade and other receivables. The Group's credit risk is primarily attributable to its cash deposits and trade receivables.

The Group mitigates financial loss from tenant defaults by dealing with only creditworthy tenants. Trade receivables are presented at amortised cost less loss allowance for expected credit losses. The loss allowance balance is low relative to the scale of the balance sheet and therefore the credit risk of trade receivables is considered to be low. Cash is held in a diverse mix of institutions with investment grade credit ratings. The credit ratings of the banks are monitored and changes are made where necessary to manage risk.

The credit risk on liquid funds and derivative financial instruments is limited due to the Group's policy of monitoring counterparty exposures with a maximum exposure equal to the carrying amount of these instruments. The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties.

ii) Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group actively maintains a mixture of long term and short term committed facilities that are designed to ensure that the Group has sufficient available funds for operations. The Group's funding sources are diversified across a range of banks and institutions. Weekly cash flow forecasts are prepared for the Senior Leadership Team to ensure sufficient resources of cash and undrawn debt facilities are in place to meet liabilities as they fall due.

The Group had cash reserves of GBP51.4 million (2020: GBP81.8 million) and available and undrawn bank loan facilities at 31 March 2021 of GBP170.5 million (2020: GBP133.8 million).

The following table shows the contractual maturity profile of the Group's bank loans, interest payments on bank loans and derivative financial instruments on an undiscounted cash flow basis and assuming settlement on the earliest repayment date. Other financial liabilities as disclosed in note 14c(i) include trade payables and accrued interest and are repayable within one year. The contractual maturity profile of lease liabilities disclosed in the balance sheet is reflected in note 15.

 
                      Less than      One to       Two to    More than 
                       one year   two years   five years   five years  Total 
As at 31 March 2021        GBPm        GBPm         GBPm         GBPm   GBPm 
--------------------  ---------  ----------  -----------  -----------  ----- 
Bank loans                 20.3       332.5        317.4        274.3  944.5 
--------------------  ---------  ----------  -----------  -----------  ----- 
 
 
                                   Less than      One to       Two to    More than 
                                    one year   two years   five years   five years    Total 
As at 31 March 2020                     GBPm        GBPm         GBPm         GBPm     GBPm 
---------------------------------  ---------  ----------  -----------  -----------  ------- 
Bank loans                              24.4       120.5        588.0        332.8  1,065.7 
Derivative financial instruments         1.6         1.6            -            -      3.2 
---------------------------------  ---------  ----------  -----------  -----------  ------- 
                                        26.0       122.1        588.0        332.8  1,068.9 
---------------------------------  ---------  ----------  -----------  -----------  ------- 
 

iii) Market risk - interest rate risk

The Group is exposed to interest rate risk from the use of debt financing at a variable rate. It is the risk that future cash flows of a financial instrument will fluctuate because of changes in interest rates. It is Group policy that a reasonable portion of external borrowings are at a fixed interest rate in order to manage this risk.

The Group uses interest rate swaps, caps and fixed rates to manage its interest rate exposure and hedge future interest rate risk for the term of the bank loan. Although the Board accepts that this policy neither protects the Group entirely from the risk of paying rates in excess of current market rates nor eliminates fully the cash flow risk associated with interest payments, it considers that it achieves an appropriate balance of exposure to these risks.

In April 2020, the Group cancelled GBP350 million interest rate swaps that hedged its unsecured facilities and were due to expire in 2022. At 31 March 2021, 43% of the Group's debt drawn was hedged (45% including share of joint ventures), mainly through fixed coupon debt arrangements. Post year end in April, we entered into new private placement and revolving credit facilities of GBP780 million, replacing the existing revolving credit facilities and other existing debt as described in the Financial review. This increased the percentage of Group and share of joint venture debt hedged to 83%.

The average interest rate payable by the Group (including share of joint ventures) on all bank borrowings at 31 March 2021 including the cost of amortising finance arrangement fees, was 2.5% (2020: 2.9%). A 1% increase or decrease in interest rates during the year would have decreased or increased the Group's annual profit before tax by GBP5.1 million or GBP0.7 million respectively.

iv) Capital risk management

The Group's objectives when maintaining capital are to safeguard the entity's ability to continue as a going concern so that it can provide returns to shareholders and as such it seeks to maintain an appropriate mix of debt and equity. The capital structure of the Group consists of debt, which includes long term borrowings and undrawn debt facilities, and equity comprising issued capital, reserves and retained earnings. The Group balances its overall capital structure through the payment of dividends, new share issues as well as the issue of new debt or the redemption of existing debt.

The Group seeks to maintain an efficient capital structure with a balance of debt and equity as shown in the table below.

 
                             2021      2020 
As at 31 March               GBPm      GBPm 
---------------------    --------  -------- 
Net debt                    792.6     857.4 
Shareholders' equity      1,731.3   1,431.8 
-----------------------  --------  -------- 
                          2,523.9   2,289.2 
  ---------------------  --------  -------- 
 

c) Financial instruments

i) Categories of financial instruments

 
                                                     Measured at amortised cost    Measured at fair value 
-------------------------------------------------  ----------------------------  ------------------------ 
                                                            2021           2020         2021         2020 
As at 31 March                                              GBPm           GBPm         GBPm         GBPm 
-------------------------------------------------  -------------  -------------  -----------  ----------- 
Current assets 
Cash and cash equivalents (note 12)                         51.4           81.8            -            - 
Trade receivables (note 11)                                  4.8            5.8            -            - 
Other receivables (note 11)                                  1.5            0.9            -            - 
-------------------------------------------------  -------------  -------------  -----------  ----------- 
                                                            57.7           88.5            -            - 
-------------------------------------------------  -------------  -------------  -----------  ----------- 
Non current liabilities 
Derivative financial instruments (see 14c (iii))               -              -            -          4.7 
Borrowings (note 14a)                                      837.5          926.7            -            - 
Lease liabilities (note 15)                                  5.2            5.9            -            - 
Current liabilities 
Trade payables (note 13)                                     4.6            4.2            -            - 
Accrued interest (note 13)                                   1.3            1.9            -            - 
-------------------------------------------------  -------------  -------------  -----------  ----------- 
                                                           848.6          938.7            -          4.7 
-------------------------------------------------  -------------  -------------  -----------  ----------- 
 

ii) Fair values

To the extent financial assets and liabilities are not carried at fair value in the consolidated balance sheet, the Directors are of the opinion that book value approximates to fair value at 31 March 2021.

iii) Derivative financial instruments

Details of the fair value of the Group's derivative financial instruments that were in place at 31 March 2021 are provided below:

 
As at 31 March                  Average rate    Notional amount      Fair value 
----------------------------  --------------  -----------------  -------------- 
                                2021    2020      2021     2020    2021    2020 
Interest rate caps - expiry        %       %      GBPm     GBPm    GBPm    GBPm 
----------------------------  ------  ------  --------  -------  ------  ------ 
Less than one year               2.0       -      19.6        -       -       - 
One to two years                   -     2.0         -     19.6       -       - 
----------------------------  ------  ------  --------  -------  ------  ------ 
                                 2.0     2.0      19.6     19.6       -       - 
----------------------------  ------  ------  --------  -------  ------  ------ 
 
 
As at 31 March                   Average rate    Notional amount      Fair value 
-----------------------------  --------------  -----------------  -------------- 
                                 2021    2020      2021     2020    2021    2020 
Interest rate swaps - expiry        %       %      GBPm     GBPm    GBPm    GBPm 
-----------------------------  ------  ------  --------  -------  ------  ------ 
Two to five years                   -     1.1         -    350.0       -   (4.7) 
-----------------------------  ------  ------  --------  -------  ------  ------ 
Total fair value                                                       -   (4.7) 
-----------------------------  ------  ------  --------  -------  ------  ------ 
 

All derivative financial instruments are non current interest rate derivatives, and are carried at fair value following a valuation as at 31 March 2021 by Chatham Financial. In accordance with accounting standards, fair value is estimated by calculating the present value of future cash flows, using appropriate market discount rates. For all derivative financial instruments this equates to a Level 2 fair value measurement as defined by IFRS 13 Fair Value Measurement.

The valuation therefore does not reflect the cost or gain to the Group of cancelling its interest rate protection at the balance sheet date, which is generally a marginally higher cost (or smaller gain) than a market valuation.

15 Leases

The Group's minimum lease rentals receivable under non cancellable leases, excluding joint ventures, are as follows:

 
                                2021     2020 
As at 31 March                  GBPm     GBPm 
---------------------------  -------  ------- 
Less than one year             114.2    113.6 
Between one and five years     416.8    421.6 
Between six and ten years      392.6    399.6 
Between 11 and 15 years        265.8    240.7 
Between 16 and 20 years        129.4    121.5 
Over 20 years                   25.3     32.5 
---------------------------  -------  ------- 
                             1,344.1  1,329.5 
---------------------------  -------  ------- 
 

In accordance with IFRS 16, the Group has recognised a right of use asset for its head office lease and other head lease obligations. The Group's minimum lease payments are due as follows:

 
                                                                 Present value of minimum     Present value of minimum 
                                                                           lease payments               lease payments 
                             Minimum lease payments  Interest                        2021                         2020 
As at 31 March                                 GBPm      GBPm                        GBPm                         GBPm 
---------------------------  ----------------------  --------  --------------------------  --------------------------- 
Less than one year                              0.7     (0.1)                         0.6                          0.6 
Between one and two years                       0.7     (0.1)                         0.6                          0.6 
Between two and five years                      0.5     (0.2)                         0.3                          1.0 
Over five years                                 7.3     (3.6)                         3.7                          3.7 
---------------------------  ----------------------  --------  --------------------------  --------------------------- 
                                                9.2     (4.0)                         5.2                          5.9 
---------------------------  ----------------------  --------  --------------------------  --------------------------- 
 

16 Share capital

 
                                          2021   2021         2020   2020 
As at 31 March                          Number   GBPm       Number   GBPm 
---------------------------------  -----------  -----  -----------  ----- 
Issued, called up and fully paid 
Ordinary shares of 10p each        909,643,040   91.0  841,498,022   84.2 
---------------------------------  -----------  -----  -----------  ----- 
 

The movement in the share capital and share premium of the Company during the current and previous year is summarised below.

 
                                                 Ordinary shares  Ordinary shares  Share premium 
Share capital issued, called up and fully paid            Number             GBPm           GBPm 
-----------------------------------------------  ---------------  ---------------  ------------- 
At 1 April 2019                                      699,991,840             70.0          100.8 
Share issue on acquisition                           138,615,684             13.9              - 
Issued under scrip share scheme                        2,890,498              0.3            5.5 
At 1 April 2020                                      841,498,022             84.2          106.3 
Issued under equity placing                           66,666,666              6.6          110.0 
Issued under scrip share scheme                        1,478,352              0.2            3.0 
-----------------------------------------------  ---------------  ---------------  ------------- 
At 31 March 2021                                     909,643,040             91.0          219.3 
-----------------------------------------------  ---------------  ---------------  ------------- 
 
 

On 7 May 2020, the Company issued 66,666,666 new ordinary shares in connection with an equity placing that raised gross proceeds of GBP120 million at an issue price of 180.0p per share. In addition, the Company issued 1,478,352 ordinary shares under the terms of its Scrip Dividend Scheme during the year. Post year end in April, the Company issued a further 118,874 ordinary shares under the terms of its Scrip Dividend Scheme.

The movement in the shares held by the Employee Benefit Trust in the year is summarised in the table below.

 
                                                   Ordinary 
                                                     shares  Ordinary shares 
Shares held by the Employee Benefit Trust            Number             GBPm 
----------------------------------------------  -----------  --------------- 
At 1 April 2020                                   4,330,731              0.4 
Shares issued under employee share schemes      (2,404,362)            (0.2) 
Shares acquired by the Employee Benefit Trust     2,463,826              0.2 
----------------------------------------------  -----------  --------------- 
At 31 March 2021                                  4,390,195              0.4 
----------------------------------------------  -----------  --------------- 
 

In June 2020, the Company granted options over 1,914,457 ordinary shares under its Long Term Incentive Plan. In addition, 2,151,447 ordinary shares in the Company that were granted to certain Directors and employees under the Company's Long Term Incentive Plan in 2017 vested along with 252,915 ordinary shares in the Director's Deferred Bonus Plan. The average share price on vesting was 225.3p. As at 31 March 2021, the Company's Employee Benefit Trust held 4,390,195 shares in the Company to satisfy awards under the Company's Long Term Incentive and Deferred Bonus Plans.

17 Reserves

The following describes the nature and purpose of each reserve within equity:

 
Share capital               The nominal value of shares issued. 
--------------------------  ------------------------------------------------------------------------------------------ 
Share premium               The premium paid for new ordinary shares issued above the nominal value. 
--------------------------  ------------------------------------------------------------------------------------------ 
Capital redemption reserve  Amounts transferred from share capital on redemption of issued ordinary shares. 
--------------------------  ------------------------------------------------------------------------------------------ 
Other reserve               A reserve relating to the application of merger relief in the acquisition of LondonMetric 
                            Management Limited, Metric Property Investments Plc and A&J Mucklow Group Plc by the 
                            Company 
                            and the cost of shares held in trust to provide for the Company's future obligations under 
                            share award schemes. A breakdown of other reserves is provided for the Group below. 
--------------------------  ------------------------------------------------------------------------------------------ 
Retained earnings           The cumulative profits and losses after the payment of dividends. 
--------------------------  ------------------------------------------------------------------------------------------ 
 
 
                                                                2021                                              2020 
                       Merger   Employee Benefit         Total other    Merger    Employee Benefit         Total other 
                      reserve       Trust shares            reserves   reserve        Trust shares            reserves 
As at 31 March           GBPm               GBPm                GBPm      GBPm                GBPm                GBPm 
-------------------  --------  -----------------  ------------------  --------  ------------------  ------------------ 
Opening balance         497.4              (9.0)               488.4     227.9               (6.2)               221.7 
Employee share 
schemes: 
Purchase of shares          -              (5.5)               (5.5)         -               (7.2)               (7.2) 
Vesting of shares           -                4.8                 4.8         -                 4.4                 4.4 
Acquisition of A&J 
 Mucklow                    -                  -                   -     269.5                   -               269.5 
-------------------  --------  -----------------  ------------------  --------  ------------------  ------------------ 
Closing balance         497.4              (9.7)               487.7     497.4               (9.0)               488.4 
-------------------  --------  -----------------  ------------------  --------  ------------------  ------------------ 
 

18 Analysis of movement in net debt

 
                                                              Non cash movements 
                                               ------------------------------------------------- 
                                                                                        Interest 
                                                                                          charge 
                                                 Impact of                                   and 
                         Financing      Other    issue and                             unwinding 
                1 April       cash       cash  arrangement   Early close   Fair value         of   31 March 
                   2020      flows      flows        costs     out costs  adjustments   discount       2021 
                   GBPm       GBPm       GBPm         GBPm          GBPm         GBPm       GBPm       GBPm 
------------  ---------  ---------  ---------  -----------  ------------  -----------  ---------  --------- 
Bank loans 
 and 
 derivatives      931.4     (97.9)          -          1.4           2.6            -          -      837.5 
Interest 
 payable and 
 fees               1.9     (22.7)          -          2.7             -            -       19.4        1.3 
Lease 
 liabilities        5.9          -          -            -             -            -      (0.7)        5.2 
------------  ---------  ---------  ---------  -----------  ------------  -----------  ---------  --------- 
Total 
 liabilities 
 from 
 financing 
 activities       939.2    (120.6)          -          4.1           2.6            -       18.7      844.0 
Cash and 
 cash 
 equivalents     (81.8)          -       30.4            -             -            -          -     (51.4) 
------------  ---------  ---------  ---------  -----------  ------------  -----------  ---------  --------- 
Net debt          857.4    (120.6)       30.4          4.1           2.6            -       18.7      792.6 
------------  ---------  ---------  ---------  -----------  ------------  -----------  ---------  --------- 
                                                              Non cash movements 
                                               ------------------------------------------------- 
                                                                                        Interest 
                                                                                          charge 
                                                 Impact of                                   and 
                         Financing      Other    issue and                             unwinding 
                1 April       cash       cash  arrangement                 Fair value         of   31 March 
                  2019       flows      flows        costs  Acquisitions  adjustments   discount       2020 
                   GBPm       GBPm       GBPm         GBPm          GBPm         GBPm       GBPm       GBPm 
------------  ---------  ---------  ---------  -----------  ------------  -----------  ---------  --------- 
Bank loans 
 and 
 derivatives      560.5      283.8          -            -          84.0          3.1          -      931.4 
Interest 
 payable and 
 fees               0.9     (26.1)          -          3.5           0.8            -       22.8        1.9 
Lease 
 liabilities          -          -          -            -           6.0            -      (0.1)        5.9 
------------  ---------  ---------  ---------  -----------  ------------  -----------  ---------  --------- 
Total 
 liabilities 
 from 
 financing 
 activities       561.4      257.7          -          3.5          90.8          3.1       22.7      939.2 
Cash and 
 cash 
 equivalents     (20.6)          -     (61.2)            -             -            -          -     (81.8) 
------------  ---------  ---------  ---------  -----------  ------------  -----------  ---------  --------- 
Net debt          540.8      257.7     (61.2)          3.5          90.8          3.1       22.7      857.4 
------------  ---------  ---------  ---------  -----------  ------------  -----------  ---------  --------- 
 
 

19 Related party transactions

a) Joint ventures

Management fees and profit distributions receivable from the Group's joint venture arrangements in which it had an equity interest during the year were as follows:

 
                                                       Management fees    Profit distributions 
-----------------------------------  --------------  -----------------  ---------------------- 
                                                         2021     2020        2021        2020 
For the year to 31 March             Group interest      GBPm     GBPm        GBPm        GBPm 
-----------------------------------  --------------  --------  -------  ----------  ---------- 
LSP London Residential Investments            40.0%       0.1      0.2         2.8         8.3 
Metric Income Plus Partnership                50.0%       0.8      0.9         3.7         4.0 
-----------------------------------  --------------  --------  -------  ----------  ---------- 
                                                          0.9      1.1         6.5        12.3 
-----------------------------------  --------------  --------  -------  ----------  ---------- 
 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.

b) Non-controlling interest

The Group's non-controlling interest ('NCI') represents an 18% shareholding in LMP Retail Warehouse JV Holdings Limited, which owns a portfolio of DFS assets. The Group's interest in LMP Retail Warehouse JV Holdings Limited is 82%, requiring it to consolidate the results and net assets of its subsidiary in these financial statements and reflect the non-controlling share as a deduction in the consolidated income statement and consolidated balance sheet.

As at the year end, the non-controlling interest share of profits and net assets was GBP0.7 million and GBP6.4 million respectively, with distributions of GBP1.4 million paid during the year.

20 Post balance sheet events

Since the year end, we have completed acquisitions totalling GBP78.8 million, of which GBP11.8 million had exchanged in the year, and have exchanged on a further GBP1.0 million. We also exchanged to acquire an asset in Milton Keynes for GBP23.9 million which is expected to complete in the next financial year.

In addition, we exchanged in the year to sell assets totalling GBP10.6 million, of which GBP2.4 million completed post year end, and we have also exchanged to sell a further GBP15.8 million of assets.

In April, we entered into a new GBP380 million private debt placement with a number of institutional investors in North America and the UK. We also entered into two new revolving credit facilities with three and five year terms for GBP225 million and GBP175 million respectively. Taken together, we have completed GBP780 million of new debt, replacing the existing revolving credit facilities and other existing debt facilities that are approaching maturity.

Supplementary information (not audited)

i EPRA summary table

 
                                                      2021    2020 
--------------------------------------------------  ------  ------ 
EPRA earnings per share                              9.52p   9.26p 
EPRA net tangible assets per share                  190.3p  170.3p 
EPRA net disposal value per share                   189.7p  169.9p 
EPRA net reinstatement value per share              209.7p  189.3p 
EPRA vacancy rate                                     1.3%    1.4% 
EPRA cost ratio (including vacant property costs)    13.6%   14.2% 
EPRA cost ratio (excluding vacant property costs)    13.0%   13.3% 
EPRA net initial yield                                4.3%    4.3% 
EPRA 'topped up' net initial yield                    4.6%    5.0% 
--------------------------------------------------  ------  ------ 
 

The definition of these measures can be found in the Glossary.

ii EPRA proportionally consolidated income statement

 
                             100%                 Total    100%                 Total 
                            owned     JV    NCI    2021   owned     JV    NCI    2020 
For the year to 31 March     GBPm   GBPm   GBPm    GBPm    GBPm   GBPm   GBPm    GBPm 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
Gross rental income         121.3    5.3  (1.5)   125.1   112.3    6.3  (1.3)   117.3 
Property costs              (1.6)  (0.2)      -   (1.8)   (1.2)  (0.2)      -   (1.4) 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
Net rental income           119.7    5.1  (1.5)   123.3   111.1    6.1  (1.3)   115.9 
Management fees               0.9  (0.4)      -     0.5     1.1  (0.5)      -     0.6 
Administrative costs       (15.8)      -      -  (15.8)  (15.8)  (0.1)      -  (15.9) 
Net finance costs          (21.5)  (1.2)    0.2  (22.5)  (24.9)  (1.5)    0.3  (26.1) 
Other                       (0.1)      -    0.2     0.1   (0.2)      -    0.2       - 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
EPRA earnings                83.2    3.5  (1.1)    85.6    71.3    4.0  (0.8)    74.5 
-------------------------  ------  -----  -----  ------  ------  -----  -----  ------ 
 

iii EPRA proportionally consolidated balance sheet

 
                              100%                    Total     100%                    Total 
                             owned      JV     NCI     2021    owned      JV     NCI     2020 
As at 31 March                GBPm    GBPm    GBPm     GBPm     GBPm    GBPm    GBPm     GBPm 
-------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
Investment property        2,504.6    94.4  (11.4)  2,587.6  2,273.6    92.4  (14.9)  2,351.1 
Trading property               1.1       -       -      1.1      1.1       -       -      1.1 
-------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
                           2,505.7    94.4  (11.4)  2,588.7  2,274.7    92.4  (14.9)  2,352.2 
Gross debt                 (839.5)  (37.5)       -  (877.0)  (932.7)  (42.1)       -  (974.8) 
Cash                          51.4     3.4   (0.2)     54.6     81.8     5.1   (0.8)     86.1 
Other net liabilities       (39.1)   (0.5)     5.2   (34.4)   (34.3)   (0.6)     8.6   (26.3) 
-------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
EPRA net tangible assets   1,678.5    59.8   (6.4)  1,731.9  1,389.5    54.8   (7.1)  1,437.2 
-------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
Derivatives                      -   (0.6)       -    (0.6)    (4.7)   (0.7)       -    (5.4) 
-------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
IFRS net assets            1,678.5    59.2   (6.4)  1,731.3  1,384.8    54.1   (7.1)  1,431.8 
-------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
Loan to value                32.2%   32.8%       -    32.3%    35.7%   40.0%       -    35.9% 
Cost of debt                  2.5%    3.0%       -     2.5%     2.9%    3.1%       -     2.9% 
Undrawn facilities           170.5       -       -    170.5    133.8       -       -    133.8 
-------------------------  -------  ------  ------  -------  -------  ------  ------  ------- 
 

iv EPRA cost ratio

 
                                                                                   2021   2020 
For the year to 31 March                                                           GBPm   GBPm 
--------------------------------------------------------------------------------  -----  ----- 
Property operating expenses                                                         1.6    1.2 
Administrative costs                                                               15.8   15.8 
Share of joint venture property costs, administrative costs and management fees     0.6    0.8 
Less: 
Joint venture property management fee income                                      (0.9)  (1.1) 
Ground rents                                                                      (0.1)  (0.1) 
--------------------------------------------------------------------------------  -----  ----- 
Total costs including vacant property costs (A)                                    17.0   16.6 
--------------------------------------------------------------------------------  -----  ----- 
Group vacant property costs                                                       (0.7)  (0.9) 
Share of joint venture vacant property costs                                          -  (0.1) 
--------------------------------------------------------------------------------  -----  ----- 
Total costs excluding vacant property costs (B)                                    16.3   15.6 
--------------------------------------------------------------------------------  -----  ----- 
Gross rental income                                                               121.3  112.3 
Share of joint venture gross rental income                                          5.3    6.3 
Share of non-controlling interest gross rental income                             (1.5)  (1.3) 
--------------------------------------------------------------------------------  -----  ----- 
                                                                                  125.1  117.3 
--------------------------------------------------------------------------------  -----  ----- 
Less: 
Ground rents                                                                      (0.1)  (0.1) 
--------------------------------------------------------------------------------  -----  ----- 
Total gross rental income (C)                                                     125.0  117.2 
--------------------------------------------------------------------------------  -----  ----- 
Total EPRA cost ratio (including vacant property costs) (A)/(C)                   13.6%  14.2% 
--------------------------------------------------------------------------------  -----  ----- 
Total EPRA cost ratio (excluding vacant property costs) (B)/(C)                   13.0%  13.3% 
--------------------------------------------------------------------------------  -----  ----- 
 

v EPRA net initial yield and 'topped up' net initial yield

 
                                                      2021     2020 
As at 31 March                                        GBPm     GBPm 
-------------------------------------------------  -------  ------- 
Investment property - wholly owned                 2,499.5  2,267.9 
Investment property - share of joint ventures         94.4     92.4 
Trading property                                       1.1      1.1 
Less development properties                         (59.8)   (57.0) 
Less residential properties                          (2.1)    (4.9) 
Less non-controlling interest                       (11.4)   (14.9) 
-------------------------------------------------  -------  ------- 
Completed property portfolio                       2,521.7  2,284.6 
-------------------------------------------------  -------  ------- 
Allowance for: 
Estimated purchasers' costs                          171.5    155.4 
Estimated costs to complete                           14.7     18.7 
-------------------------------------------------  -------  ------- 
EPRA property portfolio valuation (A)              2,707.9  2,458.7 
-------------------------------------------------  -------  ------- 
Annualised passing rental income                     112.6    102.1 
Share of joint ventures                                6.2      6.0 
Less development properties                          (2.3)    (1.9) 
-------------------------------------------------  -------  ------- 
Annualised net rents (B)                             116.5    106.2 
Contractual rental increase across the portfolio       7.7     16.0 
-------------------------------------------------  -------  ------- 
'Topped up' net annualised rent (C)                  124.2    122.2 
-------------------------------------------------  -------  ------- 
EPRA net initial yield (B/A)                          4.3%     4.3% 
-------------------------------------------------  -------  ------- 
EPRA 'topped up' net initial yield (C/A)              4.6%     5.0% 
-------------------------------------------------  -------  ------- 
 

vi EPRA vacancy rate

 
                                                        2021   2020 
As at 31 March                                          GBPm   GBPm 
-----------------------------------------------------  -----  ----- 
Annualised estimated rental value of vacant premises     1.7    1.7 
Portfolio estimated rental value(1)                    127.7  124.4 
-----------------------------------------------------  -----  ----- 
EPRA vacancy rate                                       1.3%   1.4% 
-----------------------------------------------------  -----  ----- 
 

1 Excludes residential and development properties

vii EPRA capital expenditure analysis

 
                            100%                   Total     100%                    Total 
                           owned     JV     NCI     2021    owned      JV     NCI     2020 
As at 31 March              GBPm   GBPm    GBPm     GBPm     GBPm    GBPm    GBPm     GBPm 
-----------------------  -------  -----  ------  -------  -------  ------  ------  ------- 
Opening valuation        2,274.7   92.4  (14.9)  2,352.2  1,688.0   158.2       -  1,846.2 
Acquisitions(1)            212.4      -       -    212.4    635.3  (41.2)  (17.0)    577.1 
Developments(2,4)           37.9      -       -     37.9     43.1       -       -     43.1 
Capital expenditure(3)       4.9    0.3   (0.1)      5.1     10.2     0.3   (0.2)     10.3 
Disposals                (200.8)  (1.8)     3.3  (199.3)  (113.4)  (15.1)     0.3  (128.2) 
Revaluation                169.9    3.4     0.4    173.7    (3.8)  (10.2)     2.0   (12.0) 
Lease incentives             7.3    0.1   (0.1)      7.3      9.6     0.4       -     10.0 
Head lease ROU asset       (0.6)      -       -    (0.6)      5.7       -       -      5.7 
-----------------------  -------  -----  ------  -------  -------  ------  ------  ------- 
Closing valuation        2,505.7   94.4  (11.4)  2,588.7  2,274.7    92.4  (14.9)  2,352.2 
-----------------------  -------  -----  ------  -------  -------  ------  ------  ------- 
 

1 Group acquisitions in the year include completed investment properties as reflected in note 9 to the financial statements

2 Group developments include acquisitions and capital expenditure on properties under development as reflected in note 9

3 Capital expenditure on completed properties, of which GBP0.6 million created additional lettable space

4 Includes capitalised interest of GBP1.1 million (2020: GBP0.9 million)

viii Total accounting return

 
                                           2021        2020 
                                          pence       pence 
For the year to 31 March              per share   per share 
-----------------------------------  ----------  ---------- 
EPRA net tangible assets per share 
- at end of year                          190.3       170.3 
- at start of year                        170.3       173.7 
-----------------------------------  ----------  ---------- 
Increase/(decrease)                        20.0       (3.4) 
Dividend paid                               8.5         8.4 
-----------------------------------  ----------  ---------- 
Net increase                               28.5         5.0 
-----------------------------------  ----------  ---------- 
Total accounting return                   16.7%        2.9% 
-----------------------------------  ----------  ---------- 
 

ix Portfolio split and valuation

 
                                        2021   2021      2020   2020 
As at 31 March                          GBPm      %      GBPm      % 
-----------------------------------  -------  -----  --------  ----- 
Mega distribution                      351.9   13.6     349.6   14.9 
Regional distribution                  483.5   18.7     419.5   17.9 
Urban logistics                        941.9   36.5     824.6   35.1 
-----------------------------------  -------  -----  --------  ----- 
Distribution                         1,777.3   68.8   1,593.7   67.9 
Long income                            629.4   24.3     552.5   23.5 
Retail parks                            73.9    2.9      83.3    3.6 
Offices                                 41.1    1.6      55.1    2.4 
-----------------------------------  -------  -----  --------  ----- 
Investment portfolio                 2,521.7   97.6   2,284.6   97.4 
-----------------------------------  -------  -----  --------  ----- 
Development(1)                          59.8    2.3      57.0    2.4 
Residential                              2.1    0.1       4.9    0.2 
-----------------------------------  -------  -----  --------  ----- 
Total portfolio                      2,583.6  100.0   2,346.5  100.0 
Head lease and right of use assets       5.1              5.7 
-----------------------------------  -------  -----  --------  ----- 
                                     2,588.7          2,352.2 
-----------------------------------  -------  -----  --------  ----- 
 

1 Represents urban logistics GBP51.8 million (2.0%), long income GBP5.8 million (0.2%), office and other land GBP2.2 million (0.1%) at 31 March 2021. Split of prior year comparatives was regional distribution GBP38.1 million (1.6%), urban logistics GBP6.2 million (0.3%), long income GBP10.5 million (0.5%), office and other land GBP2.2 million.

x Investment portfolio yields

 
                                                       2021                                  2020 
---------------------  ------------------------------------  ------------------------------------ 
                                           EPRA  Equivalent                      EPRA  Equivalent 
                       EPRA NIY   topped up NIY       yield  EPRA NIY   topped up NIY       yield 
As at 31 March                %               %           %         %               %           % 
---------------------  --------  --------------  ----------  --------  --------------  ---------- 
Distribution                3.8             4.1         4.7       3.9             4.6         5.1 
Long income                 5.2             5.4         5.7       5.0             5.6         5.9 
Retail parks                7.1             7.6         7.1       6.7             7.5         7.3 
Offices                     4.9             6.0         6.5       5.8             5.8         6.5 
---------------------  --------  --------------  ----------  --------  --------------  ---------- 
Investment portfolio        4.3             4.6         5.1       4.3             5.0         5.5 
---------------------  --------  --------------  ----------  --------  --------------  ---------- 
 

xi Investment portfolio - Key statistics

 
                                         WAULT            WAULT 
                              Area   to expiry   to first break  Occupancy 
As at 31 March 2021     '000 sq ft       years            years          %  Average rent GBP per sq ft 
---------------------  -----------  ----------  ---------------  ---------  -------------------------- 
Distribution                12,150        10.6              9.5       98.1                        6.50 
Long income                  2,719        14.2             13.1      100.0                       15.60 
Retail parks                   379         8.6              7.5      100.0                       15.80 
Offices                        164         5.4              5.1       91.8                       17.50 
---------------------  -----------  ----------  ---------------  ---------  -------------------------- 
Investment portfolio        15,412        11.4             10.3       98.7                        8.30 
---------------------  -----------  ----------  ---------------  ---------  -------------------------- 
 

xii Total property returns

 
                           All property  All property 
                                   2021          2020 
For the year to 31 March              %             % 
-------------------------  ------------  ------------ 
Capital return                      8.0             - 
Income return                       5.1           5.1 
-------------------------  ------------  ------------ 
Total return                       13.4           5.1 
-------------------------  ------------  ------------ 
 

xiii Contracted rental income

 
                              2021   2020 
As at 31 March                GBPm   GBPm 
---------------------------  -----  ----- 
Distribution                  77.6   77.3 
Long income                   35.8   33.9 
Retail parks                   6.0    6.8 
Offices                        2.6    3.4 
---------------------------  -----  ----- 
Investment portfolio         122.0  121.4 
---------------------------  -----  ----- 
Development - distribution     1.7    1.3 
Development - long income      0.6    0.6 
---------------------------  -----  ----- 
Total portfolio              124.3  123.3 
---------------------------  -----  ----- 
 

xiv Rent subject to expiry

 
                      Within 3 years  Within 5 years  Within 10 years  Within 15 years  Within 20 years  Over 20 years 
As at 31 March 2021                %               %                %                %                %              % 
--------------------  --------------  --------------  ---------------  ---------------  ---------------  ------------- 
Distribution                    11.6            22.5             45.9             75.3             94.0          100.0 
Offices                         11.6            50.1            100.0            100.0            100.0          100.0 
Long income                      1.8             5.9             27.1             52.0             82.6          100.0 
Retail parks                     4.7            19.7             74.6             85.6            100.0          100.0 
--------------------  --------------  --------------  ---------------  ---------------  ---------------  ------------- 
Total portfolio                  8.4            18.1             42.9             69.5             91.1          100.0 
--------------------  --------------  --------------  ---------------  ---------------  ---------------  ------------- 
 

xv Contracted rent subject to RPI or fixed uplifts

 
                    2021  2021    2020  2020 
As at 31 March      GBPm     %    GBPm     % 
----------------  ------  ----  ------  ---- 
Distribution        46.2  58.2    46.1  58.7 
Long income         22.9  63.1    19.7  57.2 
Retail parks         0.8  14.0     1.1  15.7 
Offices              0.6  22.5     0.3   8.5 
----------------  ------  ----  ------  ---- 
Total portfolio     70.5  56.8    67.2  54.5 
----------------  ------  ----  ------  ---- 
 

xvi Top ten assets (by value)

 
                                       Contracted                  WAULT            WAULT 
                                 Area        rent  Occupancy   to expiry   to first break 
As at 31 March 2021        '000 sq ft        GBPm          %       years            years 
------------------------  -----------  ----------  ---------  ----------  --------------- 
Primark, T2, Islip              1,062         5.8        100        19.5             19.5 
Eddie Stobart, Dagenham           454         4.1        100        22.5             22.5 
Argos, Bedford                    658         4.1        100        13.0             13.0 
Primark, Thrapston                785         4.3        100        11.5             11.5 
Tesco, Croydon                    191         1.9        100         7.1              7.1 
Amazon, Warrington                357         2.1        100        10.7             10.7 
DHL, Reading                      230         2.3        100         4.3              4.3 
Ollerton, Clipper                 364         2.0        100        16.5             16.5 
Oak Furniture, Swindon            357         1.9        100        14.6             14.6 
New Malden                         51         1.9        100        10.6              6.0 
------------------------  -----------  ----------  ---------  ----------  --------------- 
 

xvii Top ten occupiers

 
                                                Contracted 
                                Contracted   rental income 
As at 31 March 2021     rental income GBPm               % 
--------------------   -------------------  -------------- 
Primark                               10.1             8.2 
DFS                                    4.3             3.5 
Amazon                                 4.2             3.4 
Argos                                  4.2             3.4 
Eddie Stobart                          4.1             3.3 
M&S(1)                                 3.9             3.2 
DHL                                    3.6             2.9 
Odeon                                  3.3             2.7 
Waitrose                               3.3             2.7 
DSG                                    3.3             2.6 
---------------------  -------------------  -------------- 
Top ten                               44.3            35.9 
---------------------  -------------------  -------------- 
 

1 Excludes income from post year end sales

Glossary

A&J Mucklow Group or A&J Mucklow or Mucklow

A&J Mucklow Group Plc acquired on 27 June 2019 and re-registered as A&J Mucklow Group Limited on 24 September 2019.

Building Research Establishment Environmental Assessment Methodology ('BREEAM')

A set of assessment methods and tools designed to help construction professionals understand and mitigate the environmental impacts of the developments they design and build.

Capital return

The valuation movement on the property portfolio adjusted for capital expenditure and expressed as a percentage of the capital employed over the period.

Chief operating decision makers ('CODMs')

The Executive Directors, Senior Leadership Team members and other senior managers.

Contracted rent

The annualised rent excluding rent free periods.

Cost of debt

Weighted average interest rate payable.

Debt maturity

Weighted average period to expiry of debt drawn.

Distribution

The activity of delivering a product for consumption by the end user.

Energy Performance Certificate ('EPC')

Required certificate whenever a property is built, sold or rented. An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and is valid for ten years. An EPC contains information about a property's energy use and typical energy costs, and recommendations about how to reduce energy use and save money.

EPRA cost ratio

Administrative and operating costs (including and excluding costs of direct vacancy) as a percentage of gross rental income.

EPRA Earnings Per Share ('EPS')

Underlying earnings from the Group's property rental business divided by the average number of shares in issue over the period.

EPRA NAV per share

Balance sheet net assets excluding fair value of derivatives, divided by the number of shares in issue at the balance sheet date.

EPRA net disposal value per share

Represents the shareholders' value under a disposal scenario, where assets are sold and/or liabilities are not held to maturity. Therefore, this measure includes an adjustment to mark to market the Group's fixed rate debt.

EPRA net reinstatement value per share

This reflects the value of net assets required to rebuild the entity, assuming that entities never sell assets. Assets and liabilities, such as fair value movements on financial derivatives that are not expected to crystallise in normal circumstances, are excluded. Investment property purchasers' costs are included.

EPRA net tangible assets per share

This reflects the value of net assets on a long term, ongoing basis assuming entities buy and sell assets. Assets and liabilities, such as fair value movements on financial derivatives that are not expected to crystallise in normal circumstances, are excluded.

EPRA net initial yield

Annualised rental income based on cash rents passing at the balance sheet date, less non recoverable property operating expenses, expressed as a percentage of the market value of the property, after inclusion of estimated purchaser's costs.

EPRA topped up net initial yield

EPRA net initial yield adjusted for expiration of rent free periods or other lease incentives such as discounted rent periods and stepped rents.

EPRA vacancy

The Estimated Rental Value ('ERV') of immediately available vacant space as a percentage of the total ERV of the investment portfolio.

Equivalent yield

The weighted average income return expressed as a percentage of the market value of the property, after inclusion of estimated purchaser's costs.

Estimated Rental Value ('ERV')

The external valuers' opinion 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 a property.

European Public Real Estate Association ('EPRA')

EPRA is the industry body for European Real Estate Investment Trusts ('REITs').

Gross rental income

Rental income for the period from let properties reported under IFRS, after accounting for lease incentives and rent free periods. Gross rental income will include, where relevant, turnover based rent, surrender premiums and car parking income.

Group

LondonMetric Property Plc and its subsidiaries.

IFRS

The International Financial Reporting Standards issued by the International Accounting Standards Board and adopted by the European Union.

IFRS net assets

The Group's equity shareholders' funds at the period end, which excludes the net assets attributable to the non-controlling interest.

IFRS net assets per share

IFRS net assets divided by the number of shares in issue at the balance sheet date.

Income return

Net rental income expressed as a percentage of capital employed over the period.

Investment portfolio

The Group's property portfolio excluding development, land holdings and residential properties.

Investment Property Databank ('IPD')

IPD is a wholly owned subsidiary of MSCI producing an independent benchmark of property returns and the Group's portfolio returns.

Like for like income growth

The movement in contracted rental income on properties owned through the period under review, excluding properties held for development and residential.

Loan To Value ('LTV')

Net debt expressed as a percentage of the total property portfolio value at the period end, adjusted for deferred completions on sales.

Logistics

The organisation and implementation of operations to manage the flow of physical items from origin to the point of consumption.

Net debt

The Group's bank loans net of cash balances at the period end.

Net rental income

Gross rental income receivable after deduction for ground rents and other net property outgoings including void costs and net service charge expenses.

Occupancy rate

The ERV of the let units as a percentage of the total ERV of the Investment Portfolio.

Passing rent

The gross rent payable by tenants under operating leases, less any ground rent payable under head leases.

Property Income Distribution ('PID')

Dividends from profits of the Group's tax-exempt property rental business under the REIT regulations. The PID dividend is paid after deducting withholding tax at the basic rate.

Real Estate Investment Trust ('REIT')

A listed property company which qualifies for and has elected into a tax regime which is exempt from corporation tax on profits from property rental income and UK capital gains on the sale of investment properties.

Total Accounting Return ('TAR')

The movement in EPRA Net Tangible Assets per share plus the dividend paid during the period expressed as a percentage of the EPRA net tangible assets per share at the beginning of the period.

Total Property Return ('TPR')

Unlevered weighted capital and income return of the property portfolio as calculated by IPD.

Total Shareholder Return ('TSR')

The movement in the ordinary share price as quoted on the London Stock Exchange plus dividends per share assuming that dividends are reinvested at the time of being paid.

Weighted average interest rate

The total loan interest and derivative costs per annum (including the amortisation of finance costs) divided by the total debt in issue at the period end.

Weighted Average Unexpired Lease Term ('WAULT')

Average unexpired lease term across the investment portfolio weighted by contracted rent.

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END

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May 27, 2021 02:00 ET (06:00 GMT)

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